Court Dismisses Dfcu Move To withdraw Defunct Crane Bank Mortgages Case

The High Court’s  Commercial division has rejected a move by the Dfcu Bank to withdraw a case in which it had sued the Commissioner of Land Registration and New Masters Electronics in the fight over property that was used as security when securing loans of Shs 14 billion from the now defunct Crane Bank.

However, in court documents filed by directors of New Masters Electronics, they deny ever receiving the said loans.

Whereas  Dfcu had shown intent to follow through with the case on April 13, 2023, the bank entered into a consent judgement with Baker Mugaino, the Acting  Commissioner Land Registrar on a number of terms.

Though New Master  Electronics had been listed as one of the respondents, the consent judgement says that the dispute between Dfcu and the  Commissioner Land Registration had been settled.

In earlier court filings, the Commissioner of Land Registration had insisted on how it’s legally untenable to transfer Crane Bank mortgages to Dfcu, in the consent judgement, he contradicts that position.

“As advised by the Attorney General’s opinion set out in his letter dated  August 22, 2022 addressed to the Deputy Governor Bank of Uganda and copied to the first defendant [Commissioner Land  Registration]  hereby acknowledges that the plaintiff [Dfcu],  is pursuant to the Purchase of Assets and Assumption of labilities Agreement dated January 25, 2017 and the Deed of Assignment dated 25  January 2017 between the plaintiff [ Dfcu] and Bank of Uganda [ As Statutory Receiver of Crane Bank Limited], the lawful assignee of all the Crane Bank Limited (CBL) mortgage charges and the plaintiff [ Dfcu] shall as a such lodge for registration at the lands Registry the Deed of Assignment of CBL mortgage portfolio duly stamped and pay the requisite registration fees thereon and thereupon be registered mortgages of all said CBL assigned mortgages charges,” the consent judgement reads in part.

The  Commissioner Land Registration,  according to the consent judgement, had agreed to recall the notice calling for a public hearing in which Dfcu and the directors were to face off.

When the case came up this week before Justice Stephen  Mubiru, New Master Electronics lawyers led by Fred Muwema and Friday Roberts Kagoro contested the idea that Dfcu was withdrawing the case after securing consent judgement with the Commissioner Land Registration .

Muwema who led New Master Electronics legal team attacked the consent judgement saying it prejudiced his
clients.

“ This was collusion between Dfcu and the Commissioner Land Registration without involving your clients and prejudiced their property,” Muwema said.

Muwema also contended that by the time Dfcu and the Commissioner Land Registration signed and filed the consent judgement on  April 12 , 2023  at 6:40 pm, they had received a notice from the directors of New Master Electronics objecting to it.

“ That  by the time this honourable court admitted/signed the impugned consent  judgement on 13 April 2023 at 4: 29 am, this honourable court was already aware of the applicants’ grievance with the
consent judgement,” Muwema said.

“That the impugned consent judgment was therefore procured dishonestly by the  respondent [ Dfcu] who misled this honourable court to endorse it as a way of perfecting its grand scheme to defeat the public hearing before the commissioner for land registration.”

In response, Ernest  Sembatya, who led Dfcu’s lawyers insisted that New Master Electronics had no right to stop Dfcu from withdrawing the case since its bank had filed the case.

“Our clients filed the case now after reaching consent judgement they have chosen to withdraw the case,” Sembatya said.

The main claim by the directors of New Master Electronics is that the Ministry of Lands should remove their mortgages on grounds that “they are maintained illegally on the land register” after Crane Bank, which got the securities, was declared by the Supreme Court to be non-existent after it was taken over by Bank of Uganda in 2017.

Dfcu, on the other hand,  says on January 25, 2017, BoU—in its capacity as the Crane Bank receiver—sold and assigned it the bank’s loan portfolio, mortgages and other securities.

This included those of New Master Electronics yet the business entity went on to question its indebtedness to Crane Bank. In his ruling, on Wednesday,  Justice  Mubiru didn’t allow Dfcu to withdraw the case but gave New
Master Electronics legal time more time to amend its defence and include reasons why it’s opposed to the withdrawal.

“ We can just rely on the technicality of a consent in case that affects other people who were not involved in the drafting of the consent judgement,” Justice Mubiru said before giving New Master Electronics leave to amend its defence.

“ You must understand the orders we make have consequences. They affect people’s rights over property.”