Crane Management Services Limited v DFCU Bank Limited (Civil Suit 109 of 2018)

Observed later treatment

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

Holding

The High Court held that DFCU Bank Limited, upon executing the Purchase of Assets and Assumption of Liabilities Agreement with Bank of Uganda (as receiver of Crane Bank Limited) and by its subsequent conduct, assumed the position of Crane Bank Limited as tenant under existing tenancy agreements. DFCU Bank breached those tenancies by failing to pay rent for the period of occupation (January to May 2017) and by unilaterally vacating without notice. The court rejected DFCU Bank's defences that it occupied for verification purposes or under a new dispensation, finding these unpleaded and unsupported. Bank of Uganda's purported notices terminating the tenancies were held to be nullities, issued without legal authority after Crane Bank had been placed into receivership and its assets sold. DFCU Bank's counterclaim for prepaid rent failed as those amounts had already been offset against restoration costs.

Outcome

Judgment entered in favour of the Plaintiff with orders for payment of rental arrears, interest, general damages and costs. Counterclaim dismissed with costs.

Facts

Crane Management Services Limited acted as letting agent for Meera Investments Limited, which owned various commercial properties rented to Crane Bank Limited under multiple tenancy agreements. On 20 October 2016, Bank of Uganda took over management of Crane Bank and on 24 January 2017 placed it in receivership. On 25 January 2017, Bank of Uganda as receiver executed a Purchase of Assets and Assumption of Liabilities Agreement (P&A) with DFCU Bank, transferring Crane Bank's assets and liabilities. DFCU Bank took possession of the suit premises on 26 January 2017, rebranded them, paid some of Crane Bank's rental arrears and outstanding utility bills, and operated banking business from the properties until late April/early May 2017. DFCU Bank paid no rent for its period of occupation and vacated without notice. In April 2017, Bank of Uganda issued notices purporting to terminate the tenancies. DFCU Bank counterclaimed for prepaid rent it alleged had been transferred to it, which it said related to two properties not subject to the main claim.

Issues

1. Whether upon the execution of the Purchase of Assets and Assumption of Liabilities Agreement (P&A Agreement) and by the Defendant's conduct, the Defendant/Counterclaimant became bound by the terms and conditions of the tenancy agreements/arrangements between the Plaintiff/Counter Defendant and Crane Bank Limited in respect of the suit properties?
2. Whether the Defendant/Counter Claimant breached the terms of the subject tenancy agreements/arrangements? And if so; Whether the Defendant is liable to pay the sums claimed by the Plaintiff?
3. Whether the tenancy agreements previously entered into between Crane Bank Limited and the Plaintiff/Counter Defendant were effectively terminated by Bank of Uganda?
4. Whether the Counterclaimant is entitled to the pre-paid rent which was transferred to the Counter Defendant by Bank of Uganda?
5. What remedies are available to the Parties?

Orders

• The Defendant shall pay to the Plaintiff USD $385,728.54 and UGX 2,998,558,624 being rental arrears inclusive of unpaid rent, interest on unpaid rent, rent for unexpired periods and payment in lieu of notice of termination.
• The Defendant shall pay interest on the sums awarded at a rate of 10% per annum from 15th February 2018 until payment in full.
• The Defendant shall pay UGX 400,000,000 as general damages to the Plaintiff.
• The Defendant shall pay costs of the suit to the Plaintiff.
• The Counterclaim by the Defendant is hereby dismissed with costs of the counterclaim payable to the Counter-defendants.

Rules and key headnotes

Legislation cited (16)

• Financial Institutions Act No.2 of 2004 s.95(1)(b)
• Financial Institutions Act 2004 s.87(3)
• Financial Institutions Act 2004 s.88(1)(a)
• Financial Institutions Act 2004 s.88(1)(b)
• Financial Institutions Act 2004 s.89(2)(i)
• Financial Institutions Act 2004 s.94
• Evidence Act Cap 8 s.57
• Evidence Act s.101
• Evidence Act s.102
• Evidence Act s.103
• Contracts Act s.42(1)
• Civil Procedure Act Cap 71 s.26(2)
• Civil Procedure Act s.27(1)
• Civil Procedure Rules Order 6 Rule 7
• Civil Procedure Rules Order 8 Rule 3
• Civil Procedure Rules Order 1 Rule 14

Cases cited (24)

• Premier Commodities (U) Ltd v Kiir for Services & Construction Co. Limited (High Court Civil Suit No. 126 of 2019)
• Takiya Kashwahiri & Anor v Kajungu Dennis (Court of Appeal Civil Appeal No. 85 of 2011)
• Bank of Africa Limited v Ssuuna Fred (High Court Civil Suit No. 1036 of 2023)
• Kampala District Land Board and Anor v NHCC Ltd (Supreme Court Civil Appeal No. 2 of 2004)
• Brian Kaggwa v Peter Muramira (Court of Appeal Civil Appeal No. 26 of 2009)
• Digital Displays Limited v T/M Construction Company Limited (High Court Civil Suit No. 21 of 2015)
• Shakil Pathan Ismail v Dfcu Bank Ltd (High Court Civil Suit No. 236 of 2017)
• Inter-Freight Forwarders (U) Limited v EADB (Supreme Court Civil Appeal No. 33 of 1992)
• Luyimbazi Sulaiman v Stanbic Bank (U) Limited (Supreme Court Civil Appeal No. 2 of 2019)
• Alfred Tajar versus Uganda EACA Criminal Appeal No. 167/196
• Dison Okumu & Others v UETCL & Others (Supreme Court Civil Appeal No. 18 of 2020)
• Ronald Kasibante v Shell Uganda Ltd (High Court Civil Suit No. 542 of 2006)
• Vincent R. Rubarema v Jacqueline Rugasira (High Court Civil Suit No. 411 of 2017)
• Komakech & 7 Ors v Ayaa & Anor (High Court Civil Appeal No. 28 of 2016)
• Sudhir Ruparelia & Anor v Crane Bank Limited (Miscellaneous Application No. 320 of 2019)
• Attan Okia Moses & EC v Ariko Herbert Edmund Okworo (Election Petition Appeal No. 7 of 2021)
• Advocates Coalition for Development and Environment & Others v AG & Anor (Constitutional Petition No. 14 of 2011)
• Kenya Commercial Bank Ltd v Popatlal Madhavji & Brothers Ltd (Court of Appeal Civil Appeal No. 215 of 2013)
• Fang Min v Belex Tours & Travels Limited (Supreme Court Civil Appeal No. 6 of 2013)
• Riches v Westminster Bank [1947] AC 390
• Begumisa Financial Services Ltd v General Holdings Ltd and Another [2007] 1 EA 28
• Clessy Barya Kiiza v Jomo Robert Kashaija (Civil Suit No. 894 of 2019)
• Uganda Commercial Bank v Kigozi [2002] EA 305
• Kampala District Land Board & George Mitala v Venansio Babwaya (Court of Appeal No. 2 of 2007)

Cases citing this judgment (1)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

• Idd Sengooba v Nakamya Marion Ssozi and Others (Civil Suit No. 392 of 2019)

The original judgment as reported. Read the original PDF before relying on any passage.