THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

HCCS NO. 858 OF 2015

REAL MARKETING LIMITED:::::::::::::::::::::::::::::::::::: PLAINTIFF

                                               VERSUS

DFCU BANK            ::::::::::::::::::::::::::::::::::::::::::::::::::::::::: DEFENDANT

BEFORE: THE HON.  JUSTICE DAVID WANGUTUSI

JUDGMENT

The Defendant DFCU Bank was the Mortgagee of the land mortgaged to it by Hossana Real Estates.

The Defendant had power under the mortgage to sell the property without recourse to court and could sell by private treaty without reference to court if the money owed to it by Hossana Real Estates were not paid on demand.

Hossana Real Estates failed to pay its debt to the Defendant Bank and the latter exercised her rights.

On the 22^nd May 2013 the Plaintiff being desirous to buy 10 of the 43 acres mortgaged by Hossana Real Estates, entered into an agreement Exhibit P.1 with the Defendants.

The 10 acres were to cost UGX 52,355,000 per acre, bringing the entire purchase to UGX 523,550,000/=.

The Defendant undertook to hand over vacant possession of the property on the Plaintiff’s completion of the purchase price.

The Defendant also undertook to indemnify the Plaintiff against “actions, proceedings, claims, cost, losses and all expenses, that would be suffered or incurred in respect of the property occasioned by any encumbrances not disclosed to the Plaintiff if they arose from breach of the Defendant’s obligations.

The parties further agreed under clause 5 of Exhibit P.1 headed Transfer and Completion that the Defendant would sign release of mortgage and transfer documents in respect of the property in favour of the Plaintiff which would be handed over together with documents of ownership to the Plaintiff.

The parties further agreed in clause 6 to have the purchase price refunded by the Defendant in event of the Defendant defaulting or a court setting aside the sale on the basis of want of title on the part of the Defendant, or defect in the title or lack of authority to transfer the property.

To pay for the property, the Plaintiff on 23^rd May 2013 borrowed from Global Trust Bank itself and then struggled to pay back.  At the time the Defendant took over from Global Trust Bank the Plaintiff still owed UGX 45,210,435 Exhibit P.3.  The Plaintiff paid back all the money and was cleared on 17^th June 2015 through a letter Exhibit P.4 from the Defendant in these words;

                        “Reference is made to the loan facility that you have been servicing with DFCU bank.  This is to confirm that you have cleared your loan on account number             01274110551653 and thus have no loan obligations with  DFCU Bank.”

On receiving this Plaintiff demanded for release of Certificate of Title, but the Defendant did not have it claiming that it was with Commissioner land Registration Exhibit P.5.

To show that she was sorry, the Defendant offered in the same Exhibit P.5 dated 22^nd June 2015 to stand by the Plaintiff if she wanted any facility from a third party.  The Defendant wrote in part;

                        “In a show of our commitment and goodwill, the bank is prepared to issue letters of comfort/guarantee to you or any other third party affected by the absence  of this title so far as it may be necessary to prove the  fact that the title was delivered to the Bank and is pending  retrieval from the Commissioner for Land Registration.”

The letters of comfort do not seem to have been issued because as late as 20^th November 2015 the Advocates of the Plaintiff wrote to the Defendant demanding that they be issued or face court action.

On 21^st December having received no letters of comfort nor the certificates of title the Plaintiff filed this suit seeking delivery of title, transfer instrument and release of mortgage instrument in default refund of UGX 523,550,000/=.  Plaintiff also sought general damages with interest of 30% pa plus costs.

It is worthwhile noting at this stage that the transaction that led to this situation were originally between the Plaintiff and Global Trust Bank.  The Defendant came onto the scene because the former was liquidated and the Defendant took over assuming all the assets and liabilities as stated by herself in Exhibit P.10 wherein writing to the Commissioner Land Registration on 20^th July 2015 she wrote;

                        “We refer to the above captioned subject property mortgaged by M/s Hossana Real Estate Limited  to Global Trust Bank Limited (GTB) (In Liquidation),                                   whose assets and liabilities were taken over by M/s dfcu Bank Limited.”

The issues for determination as agreed upon by the parties are;

1. Whether the Defendant is liable for the breach.
2. Whether the Defendant is liable to pay for loss and damages.
3. Remedies.

On whether the Defendant breached the contract between the parties the Plaintiff alleged that the Defendant was supposed to handover the certificate of title and transfer instruments together with the release of mortgage instruments for the 10 acres that the Plaintiff had paid for. He stated that this was supposed to be done immediately on completion of payment.

He submitted that payment was completed and the Defendant on the 17^th June 2015 acknowledged completion of the loan facility that was used to pay ExhP4. The Plaintiff relied on Clause 3 of the Purchase Agreement. Clause 3(a) provides as follows;

                        “The vendor covenants that it will handover vacant                           possession of the property forming the subject matter                   of this agreement on completion of payment of the                             purchase price and the purchaser purchases it on as                         is, where basis per the terms and conditions                                            herein.”

It is therefore the Plaintiff’s contention that the Defendant’s failure to handover the land title and signed transfer forms with a mortgage release instrument committed a breach of their agreement and she has therefore suffered damage.

The Defendant on her part conceded that indeed this agreement was entered into by the parties. She also conceded that the Plaintiff had fully paid the agreed sum and fulfilled all her obligations in the agreement. The Defendant however denied liability stating that at the time when she was expected to handover the title, it was not in her possession but that of the Commissioner of Land Registration.

The Defendant submitted that the Plaintiff was aware of this fact all throughout. This defence is however watered down by the fact that eventually when the Defendant got the title they did not handover the same. They in fact continued denying that they were in possession of the title. Payment was finished in June 2015 and certificate acknowledging completion of loan facility ExhP4 was written to the Plaintiff in these words;

                        “Reference is made to the loan facility that you have  been     servicing with DFCU Bank. This is to confirm  that you have cleared your loan on account number             01274110551653 and thus have no loan obligations with DFCU Bank.”

On 22^nd June 2015 the Defendant wrote to the Plaintiff ExhP5 regretting its inability to handover the certificate to the Plaintiff for reason that it was with the Commissioner for Land Registration. ExhP5 in part reads;

                        “While the bank regrets the delay in retrieving the  certificate of title and is willing to do whatever is  necessary to have the title retrieved/replaced, it is our   humble request that     given the circumstances  explained   above, you continue to  exercise your  patience in the matter.”

By these words the Defendant depicts itself as a bank anxious to handover the certificate. In other words that as soon as it gets it, it would handover.

From the evidence of DW1 the Bank actually got the certificate in November 2016. If the bank was anxious to surrender the title to the Plaintiff, that was the time when it should have communicated to her. It was not until the hearing of this case began and through rigorous cross examination of DW1 that she admitted that they had been keeping the title since 2016.

The foregoing is not conduct of a party willing to meet its obligation. The obligation of the Defendant was clearly spelt in Clause 3 of ExhP1 in these words;

                        “The vendor covenants that it will handover vacant                           possession of the property forming the subject matter                   of this agreement on completion of payment of the                             purchase price.”

While one would say the bank could not produce a title that was not in its possession by this covenant in Clause 3 of ExhP1 the bank was expected to act immediately it came into possession of the title deed. It did not do so. By this conduct of remaining silent in 2016 when it received the title, it is clear that it was not willing to fulfill its obligations.

It in the premises breached the contract.

Turning to the issue of whether the Defendant is liable to pay for loss and damages the Plaintiff’s prayer besieged Court to order the Defendant to deliver the certificate of title for the suit land and transfer instrument. In the alternative to refund the UGX. 523,550,000/= being the purchase price.

Since Court has found that the Plaintiff fulfilled all her obligations of purchase, it is ordered that the Defendant delivers the certificate of title for the suit land together with the transfer instrument within 30 days in default of which they refund UGX. 523,550,000/=.

The Court realizes that since 2013 the land has appreciated and to bring the Plaintiff to her rightful possession should the Defendant opt to refund the money it will attract interest of 30% per annum from 22^nd July 2013 till payment in full.

The Plaintiff also sought general damages. These are damages that a court awards in its discretion and will be presumed to be the natural and probable consequence of the Defendant’s act or omission; James Fredrick Nsubuga vs Attorney General HCCS No. 13 of 1993.

It follows that a Plaintiff who has suffered damage due to the wrongful act of the Defendant must be put in a position as near as he should have been in had he or she not suffered the wrong. In assessing the quantum of damages, courts are namely guided by the value of the subject matter, and the economic inconvenience that a party may have been put through; Kibimba Rice Limited vs Umar Salim SCCA No. 17 of 1992.

In the instant case the Plaintiff bought land for economic reasons. Land is normally used for economic purposes for example as security or reselling or for construction purposes all of which in an urban setting can only be done when in possession of certificate of title. If you want to resell, the prospective buyer would want to look at the title. If you want to mortgage, the prospective creditor would want to look at the title and if you want to construct, the local authority will certainly demand for your title before it approves your building plans.

Denying the Plaintiff title for five years was to create a painful economic upset.

From the evidence of the Plaintiff it prevented her from establishing a hatchery. This evidence was not dislodged. Taking all these circumstances into consideration Court finds that the Plaintiff suffered loss and damage and would in its view find general damages of UGX. 200,000,000/= appropriate in the circumstances which it hereby awards.

This sum of money will attract interest at court rate from date of judgment until payment in full. The Plaintiff is also entitled to costs of this suit.

In conclusion judgment is entered in favour of the Plaintiff against the Defendant in the following terms;

• Declaration that there was breach of contract by the Defendant.
• The Defendant delivers the certificate of title for the suit land together with the transfer instrument within 30 days. In default of which they refund UGX. 523,550,000/=.
• Should the Defendant opt to refund the UGX. 523,550,000/= it will attract interest of 30% per annum from 22^nd July 2013 till payment in full.
• Defendant to pay general damages of UGX. 200,000,000/=
• Interest on d) at court rate from date of judgment till payment in full.
• Costs of the suit.

Dated at Kampala this 19^th day of March 2019.

...................................................

HON. JUSTICE DAVID WANGUTUSI

JUDGE