The Commercial Court has ordered DFCU Bank to pay Real Marketing, a consulting firm $266,000 (about Shs944m) over breach of contract.
The debt was inherited as part of assets and liabilities DFCU acquired when it took over Global Trust Bank five years ago. DFCU also acquired Crane Bank in 2017 leading to a Parliament probe that pointed to irregularities in the take-overs.
The commercial court’s order follows the bank having failed to hand over land titles to Real Marketing, which it intended to develop and resale.
The initial price of the land was $139,201 (about Shs520m) but an accumulated 30 percent interest since 2013 was factored in when making the judgement.
“Denying the plaintiff title for five years was to create a painful economic upset,” Commercial Court head Justice David Wangutusi judgement read in part.
“In conclusion, judgement is entered in favour of the plaintiff … the defendant delivers the certificate of title for the suit land together with the transfer instrument within 30 days (by April 19). In default of which they will refund Shs523.55m ($140,000).
How DFCU inherited the transaction
The matter arose out of defunct real estate dealers Hossana failing to finance a 43-acre mortgage. Real Marketing acquired 10 of the said acres from Global Trust Bank with a cash payment and a mortgage from the bank.
According to the agreement, Global Trust Bank was supposed to hand over vacant possession of the land after Real Marketing completed paying the mortgage. However, DFCU took over Global Trust Bank before Real Marketing completed the payment.
Upon completion, DFCU issued Real Marketing a certificate but did not hand over the land title leading to the legal battle.