Court in Kampala, Uganda has ordered DFCU Bank to pay consulting firm Real Marketing Sh994,268,100 ($266,000) for breach of contract.
The court’s orders follow a trial involving the two companies after the bank failed to hand over land titles to Real Marketing that was meant for resale and other developments.
This dispute arose from a loan and its collateral from the defunct Global Trust Bank, whose assets and liabilities it inherited after the latter’s closure by the Central Bank about five years ago.
The High Court’s Commercial Division gave the bank 30 days until April 19 from March 19, to make the payment.
“Denying the plaintiff title for five years was to create a painful economic upset,” reads Justice David Wangutusi’s judgment.
The court also awarded interest on that money at 30 per cent, which reflects the commercial value of money since 2013 when the transaction was initiated. From an initial $139,201 price of land, and an accumulated interest fixed at 30 per cent, the costs have been pushed higher.
At the time, Real Marketing bought 10 acres of land that formed part of 43 acres from Global Trust Bank.
The title of the land was held by the bank as a mortgage from defunct real estate dealer, Hossana.
At the time Global Trust Bank was placed under receivership, Real Marketing had not completed repayment.
DFCU bank took over the closed bank’s liabilities and assets in 2014, and hence became responsible for the transaction involving Real Marketing. DFCU also bought Crane Bank in 2017.
On its part, Real Marketing paid partly by cash and borrowed some more from the same bank to pay. The agreement between Global Trust Bank and Real Marketing was that upon completion of loan repayment, the bank would pass over vacant possession of the 10 acres.
Even when Real Marketing completed repayment of the loan balance through the new DFCU’s ownership, and even issued with a certificate, the bank back tracked and did not hand over the land in spite of several remainders, leading to the legal battle.