DFCU Bank has been granted permission by the High Court to appeal against an earlier decision in a long-running commercial dispute with Colline Hotel Limited, a case whose roots stretch back nearly a decade.
In her ruling, Justice Susan Abinyo of the Commercial Division allowed DFCU Bank to challenge part of a ruling made in May 2024 and ordered that the main suit be temporarily halted until the Court of Appeal determines the matter.
In the May 22, 2024 ruling, DFCU Bank had asked the Commercial Court to review and set aside an earlier order that had dismissed its application in relation to a loan dispute with Colline Hotel.
DFCU argued that the court had made mistakes and that a default judgment, that barred it from attaching Colline Hotel’s property, had been wrongly entered against interests linked to Crane Bank, whose business DFCU later acquired.
The dispute involves Colline Hotel Limited and Mukono Bookshop Printing and Publishing Limited on one side and banking institutions on the other. The two entities are owned by Augustine Kasozi, a prominent businessman in Mukono.
Initially Kasozi’s companies acquired loans from Crane Bank worth billions of shillings. When the bank went into recevership, the loan was taken over by DFCU.
When DFCU tried to recall the loan in 2019, Colline Hotel went to court and in 2024, it received some relief after DFCU failed to “properly file a written statement of defence.”
The technicality on which the case was dismissed was that the bank had not proved that it had paid “filing fees.”
Years later, DFCU Bank sought to step into the matter, arguing that it had inherited loans linked to Crane Bank Limited, which had been placed under receivership. DFCU attempted to undo the default judgment by filing an application which, too, was dismissed.
In 2023, DFCU returned to court asking it to review its earlier decision and quash the default judgment. The bank argued that there were errors on the court record and that filing fees had in fact been paid.
But on May 22, 2024, court dismissed that application, finding it lacked merit. It was that dismissal that prompted DFCU to file the latest application, seeking leave to appeal and a stay of proceedings.
In her ruling, Justice Abinyo explained that the law requires a party seeking leave to appeal to show that the intended appeal raises serious and arguable issues deserving judicial consideration.
DFCU’s legal manager, Muhammad Senoga, swore an affidavit setting out the grounds the bank intended to raise before the Court of Appeal. These included claims that the trial judge erred in finding no error apparent on the face of the record and wrongly concluded that court records had been altered.
The bank also argued that the judge erred in holding that filing fees were not paid for its written statement of defence and that the court exercised its discretion “injudiciously” by placing undue emphasis on technicalities rather than substantive justice.
DFCU’s lawyers, led by Brian Kajubi of MMAKS Advocates, argued that the bank had raised serious legal questions that deserved consideration by the Court of Appeal. They relied on the precedent of Sango Bay Estates Ltd v Dresdner Bank, which holds that leave should be granted where arguable grounds exist.
Kajubi told court that the bank had acted promptly, filing the application just nine days after the May 2024 ruling. He rejected claims that the bank had delayed the case.
On the other side, lawyers for Colline Hotel argued that DFCU’s application was an abuse of court process.
They said the bank was guilty of “inexcusable and unreasonable dilatory conduct” and had no plausible grounds of appeal. They further argued that DFCU was neither a party to the original suit nor a proper successor to Crane Bank in the circumstances.
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Justice Abinyo rejected Colline Hotel’s arguments and found that DFCU had met the legal threshold for leave to appeal.
“It is my considered view that the applicant (DFCU) has established arguable grounds of appeal to be considered by the Court of Appeal,” she ruled.
She also dismissed claims of delay, noting that the application was filed within nine days, well inside the 14-day window allowed by law.
On the question of whether the main suit should be paused, Justice Abinyo agreed with DFCU that allowing proceedings to continue would render the appeal meaningless.
Justice Abinyo therefore granted DFCU Bank leave to appeal and ordered a stay of proceedings until the Court of Appeal determines the matter.
