The High Court has dismissed a defamation case filed by Lt Gen Charles Otema Awany and his wife, Elizabeth, against DFCU Bank, after the bank advertised their properties for sale over an uncleared loan.
The case dates back more than a decade to when the couple entered into a banking relationship with DFCU.
According to court records, the couple took out a loan in March 2010 of Shs 568.1 million to finance furniture for Acholi Inn Hotel, which they own.
In July 2011, they secured another loan of Shs 470 million to acquire heavy machinery and refinance an earlier home loan.
Over time, the loans were restructured and consolidated, and by December 2016, the bank had combined the facilities into a single loan of about Shs 722.3 million.
The dispute began when the Otemas fell behind on the repayments.
DFCU told the court that the couple defaulted on their loan obligations as early as 2019.
It issued several notices, including a notice of sale in February 2019, warning that the mortgaged properties could be sold to recover the debt.
The bank also gave the borrowers relief during the COVID-19 period by restructuring the loan for six months.
But even after that, the couple failed to meet repayment terms.
By April 2023, the outstanding balance had risen to more than Shs 612.2 million.
With the debt still unpaid, the bank moved to enforce its rights.
On September 12, 2022, DFCU placed an advertisement in the Daily Monitor announcing the intended sale of two properties offered as security, one in Mutungo and another in Gulu.
That advertisement became the centre of the dispute.
Otema and his wife argued that the advert was defamatory because it was published without proper notice and contained inaccurate and misleading information about their financial position.
The Otemas said the advert portrayed them as defaulters in a way that damaged their standing as business people.
The impact, they told the court, went far beyond the newspaper notice.
The advert was picked up by online platforms, including Mulengera News, and circulated widely on social media such as WhatsApp, TikTok, and YouTube.
They argued that this widespread circulation amplified the damage.
The Otemas said business associates began to avoid them, leading to a decline in income and reputation.
Despite serving the bank with a notice of intention to sue, they said the bank failed to correct what they described as a false narrative.
The couple then went to court seeking damages for defamation and negligent misrepresentation.
In court, DFCU denied all wrongdoing.
The bank, using the law firm AF Mpanga Advocates, insisted that the advertisement was lawful and justified.
It told the court that the notice was a standard step taken under the law to recover money from borrowers who had defaulted.
“The advertisement was not an act of negligence or defamation, but rather a lawful exercise of its contractual rights,” the bank argued.
It added that publishing a notice of sale for mortgaged property does not amount to defamation.
The bank also rejected responsibility for what happened after the advert was published.
It said it had no control over independent media outlets or social media users who picked up the story.
It told the court it “did not generate, authorize, or circulate” those secondary publications and could not be blamed for any reputational harm caused by them.
The legal fight then turned on a technical issue.
Before the case could proceed to trial, DFCU asked the court to dismiss it outright, saying it did not meet the legal requirements for a defamation claim.
They said the advertisement was “a neutral, truthful, factual, and statutorily mandated notice of sale” issued under the Mortgage Act.
More importantly, they argued that the couple had failed to include the exact words they claimed were defamatory.
Without those words, the bank said, the court could not properly assess the claim.
Otema’s lawyers from Lens Advocates pushed back.
They argued that the case clearly showed a violation of the couple’s rights and should be heard fully.
They said the advertisement disclosed sensitive financial information without proper care and breached the duty of confidentiality owed by the bank.
They also argued that questions about whether the advert was accurate or misleading required evidence and could not be decided at an early stage.
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In her ruling, Justice Joyce Kavuma focused on the strict legal requirements for defamation claims.
She explained that a plaintiff must clearly set out the exact words complained of.
“The actual words complained of, and not merely their substance, must be set out verbatim,” she said.
In this case, the couple did not reproduce those words in their plaint.
Instead, they described the advert in general terms and attached it as an annex. She said this approach was not acceptable.
“Annexing the publication complained of does not cure the irregularity,” Justice Kavuma ruled.
She explained that this rule serves two key purposes.
First, it ensures that the defendant knows exactly what they are accused of saying. Second, it allows the court to determine whether the words are capable of being defamatory.
“The precise words of a publication are the very bedrock of a defamation claim,” she said.
Without those words, the case cannot proceed.
She concluded that the defect in the couple’s case was fundamental.
Even if all their allegations were true, the claim still did not meet the legal threshold required to proceed.
Justice Kavuma therefore upheld the bank’s preliminary objection and struck out the case.
The court did not award damages. It also made no order as to costs, meaning each side will bear its own legal expenses.
The outcome is a clear win for DFCU Bank.
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