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Bank of Uganda v Caring for Orphans, Widows & Elderly Ltd (Civil Appeal No. 35 of 2007)

Court of Appeal · [2009] UGCA 36 · 2009 Appeal Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal from High Court judicial review decision quashing the Central Bank's decision to freeze the respondent's accounts
Decision
Appeal allowed; High Court orders and award of general damages set aside; application for review held incompetent

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Holding

The Court of Appeal allowed the Bank of Uganda's appeal, holding that the Central Bank was not required to grant a hearing before freezing the respondent's accounts. The statutory scheme under the Financial Institutions Act and the Micro-Finance Deposit-Taking Institutions Act provided sufficient safeguards, and requiring a prior hearing would stretch the right to fair hearing too far. The respondent's refusal to allow access to its books was prima facie evidence of operating without a licence. Because the Central Bank enjoyed statutory immunity for acts done in good faith, the respondent had to plead and prove bad faith; having failed to do so, the application for review was incompetent. The award of general damages was set aside.

Facts

The Bank of Uganda, as Central Bank, received information that the respondent, a company limited by guarantee offering charitable assistance, was taking deposits from the public without a licence, contrary to the Financial Institutions Act. On 4 September 2006 the Bank wrote requiring the respondent to stop taking deposits and refund account holders. Further letters on 5 and 15 September 2006 requested documents and information to assess the respondent's operations. Bank Supervision staff embarked on investigations, but the respondent denied them full and free access to its books of accounts. On 18 September 2006 the Bank froze the respondent's accounts countrywide. The respondent obtained orders of certiorari and prohibition from the High Court, which quashed the freezing decision, remitted the matter for proper investigation with a hearing, and awarded general damages of UGX 3,000,000. The Bank appealed.

Issues

  1. Whether the Central Bank acted contrary to the rules of natural justice by freezing the respondent's bank accounts without first affording it a fair hearing.
  2. Whether section 118 of the Financial Institutions Act requires a hearing before the Central Bank orders the freezing of an account.
  3. Whether the Bank of Uganda was immune from the proceedings, requiring the respondent to plead and prove bad faith.

Orders

  • Appeal allowed with costs to the appellant in the Court of Appeal and in the High Court.
  • Award of general damages of Shs. 3,000,000/- set aside.

Key headnotes

Natural Justice — Right to Fair Hearing — Statutory Regulatory Action
Where a statutory scheme provides sufficient safeguards, a regulatory authority is not required to grant a hearing before taking protective action; requiring a prior hearing in such circumstances would stretch the right to fair hearing too far.
Central Bank Powers — Freezing of Accounts — Section 118 Financial Institutions Act
Section 118 of the Financial Institutions Act empowers the Central Bank to direct the freezing of an account it reasonably believes holds proceeds of crime, and the provision does not require a hearing before the freezing order is made.
Microfinance Regulation — Refusal of Access to Records — Prima Facie Evidence
Under section 6 of the Micro-Finance Deposit-Taking Institutions Act, refusal to allow the Central Bank full and free access to books and records is prima facie evidence of operating microfinance business without a licence.
Statutory Immunity — Good Faith — Requirement to Plead and Prove Bad Faith
Where the Central Bank enjoys statutory immunity for acts done in good faith under the Financial Institutions Act and the Micro-Finance Deposit-Taking Institutions Act, a claimant challenging its action must plead and prove bad faith; failure to do so renders the application incompetent.

Legislation cited (8)

  • Financial Institutions Act 2004 s.4(1)
  • Financial Institutions Act 2004 s.118
  • Financial Institutions Act 2004 s.124
  • Micro-Finance Deposit-Taking Institutions Act 2005 s.4
  • Micro-Finance Deposit-Taking Institutions Act 2005 s.6
  • Micro-Finance Deposit-Taking Institutions Act 2005 s.86
  • Constitution of Uganda Article 28(1)
  • Constitution of Uganda Article 42

Cases cited (3)

  • Post Louis Corporation vs Attorney General of Mauritius [1965] AC 1111
  • Wiseman vs Borneman and Others [1971] AC 297
  • Pius Niwagaba v Law Development Centre (Civil Application No. 18 of 2005)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.