• Tue. Oct 3rd, 2023

KCCA Sued Over Loan Advanced Against Cancelled Title

UGANDA, Kampala | Real Muloodi News | The High Court has given Kampala Capital City Authority (KCCA), Commissioner Land Registration, and Attorney General (AG) 15 days to defend itself against claims that it failed advise a money lending firm not to lend money against a land title that was cancelled.

In a case filed before the Commercial Division of the High Court, GroFin Africa, a specialist, impact-driven SME financier, is seeking recovery of about USh 2.5b from KCCA, Commissioner Land Registration, AG, Victoria Best, and guarantors of the loan. Among the guarantors are Ms Justine Namugenyi, Mr Alex Patrick Ssemanda, Mr Herman Ssenyondo Sekaziga, Ms Barbra Namanda Sekaziga.

According to the court documents, GroFin, on September 4, 2014, advanced Victoria Best $400,000 at a 12.50 per cent repayable within five years in 60 monthly instalments. 

However, according to GroFin’s “Investment Criteria”, entrepreneurs (borrowers) are expected to (partly) secure the loan. Furthermore, personal guarantees of the entrepreneur(s) are required.

Therefore, in this case, Victoria Best took out a mortgage in favour of GroFin on a property comprised on Plot 348 in Namirembe, Kampala, to secure the loan in fulfilment of the fore-mentioned criteria. KCCA successfully registered this in December 2014. 

Furthermore, the court documents show that Ms Namugenyi, Ms Ssemanda, Ms Ssenyondo, and Ms Namanda also issued personal guarantees as additional security.

However, GroFin, acting through S&L Advocates, contends that in 2015 all attempts to have a Deed of Variation registered failed and was advised to submit the original title to the Commissioner of Land Registration with a request to have the Deed of Variation registered manually. 

Court documents show that Victoria Best had already defaulted on loan repayments, and thus the total amount due growing to US$453,264 because of unpaid interest. 

The Commissioner Lands Registration rejected GroFin’s request for a Deed Variation and special title after discovering the title on the land had been cancelled after the original owners of the land had been found.

Therefore, it’s against the above background that Grofin sues KCCA and the Commissioner Land Registration that, despite many advertisements, none of the two ever raised any claim and even went ahead to issue search reports that reflected the existence of a special certificate of title. 

GroFin claims to have relied on information provided by KCCA and Commissioner Land Registration to make the lending decision.

GroFin says it will prove that the process had been shrouded in illegalities and negligence of duty, for which KCCA and the Commissioner of Land Registration are liable.

Therefore, GroFin wants the court to issue aggravated damages against KCCA, Commissioner Land Registration, and Attorney General. 

Furthermore, GroFin is is also seeking judgment against all the defendants for payment of US$717,962 (Shs2.5b) at contracted commercial interest, general damages, and the cost of the suit, among others. 

Since its inception in 2004, GroFin has invested in 761 SMEs and sustained nearly 84,500 jobs. Headquartered in Mauritius, it offers financing and support to SGBs in 14 countries in Africa and the Middle East. 

Additionally, GroFin receives support from 34 international finance institutions, development organisations, and private funders with a commitment of nearly $540 million in capital to its funds.


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