Wakilii

Esso Standard (U) Limited v Uganda Commercial Bank (Civil Appeal 14 of 1992)

Supreme Court · [1992] UGSC 29 · 1992 Appeal Allowed in Part ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal from a High Court judgment dismissing the appellant's claim against the respondent as collecting bank.
Decision
Appeal allowed in part; the appellant's claim for the value of the dishonoured cheques failed because it suffered no actual loss, the drawer having lacked funds to meet the cheques.

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Cited — treatment unverified cited in 5 (treatment unverified) Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions — always read the source judgment before relying on it.

Holding

The Supreme Court (Oder JSC) held that although the respondent collecting bank had a duty to collect the proceeds of the cheques within a reasonable time and failed to do so, the appellant suffered no recoverable loss. Under s.74 of the Bills of Exchange Act, a party is discharged only to the extent of the actual damage caused by delayed presentment; because the drawer lacked funds to meet the cheques even on timely presentment, they would never have been honoured and the appellant lost nothing. The delay was also procured through instructions from the appellant's own agent. The appeal succeeded only in part, the substantive monetary claim failing, with costs apportioned between the parties.

Facts

The appellant oil company operated a depot at Mbale managed by its employee Nabudere and maintained a collection current account at the respondent bank's Mbale branch. Between 1 September and 11 October 1989, Haji Wandera, who ran a service station supplied by the appellant, paid for oil products by 14 cheques totalling Shs.15,723,726, drawn on his account at Co-operative Bank, Mbale. Nabudere deposited the cheques into the appellant's collection account. Through a fraudulent arrangement between Nabudere, Wandera and Dorothy Atok (the respondent's cashier), the cheques were deliberately withheld and not presented for payment in time, with false banking slips produced to conceal the delay. When the appellant noticed that the proceeds were not reaching its head office and complained, the branch manager presented all 14 cheques on 25 October 1989, but they were dishonoured for lack of funds in Wandera's account. The appellant sued the respondent as collecting bank for the value of the cheques, alleging breach of a duty to present them and give notice of dishonour.

Issues

  1. Whether the respondent, as collecting bank, owed the appellant a duty to present the cheques for payment and give notice of dishonour in the circumstances.
  2. Whether the appellant suffered any recoverable loss as a result of the delay in presenting the cheques, given that the drawer lacked funds to meet them.
  3. Whether the respondent was liable for the fraudulent conduct of its cashier in withholding the cheques from presentment.

Orders

  • Appeal allowed in part.
  • Appellant awarded one-third of the costs of the appeal and of the costs in the court below.
  • Respondent awarded two-thirds of the costs of the appeal and of the costs in the court below.

Key headnotes

Banking — Collecting Bank — Duty to Present Cheques Within a Reasonable Time
A collecting bank owes its customer a duty to present cheques deposited for collection and to obtain payment within a reasonable time.
Bills of Exchange Act s.74 — Delayed Presentment — Discharge to the Extent of Actual Damage
Where a cheque is not presented within a reasonable time of issue and is consequently dishonoured, the responsible party is discharged only to the extent of the actual damage suffered through the delay; if the drawer's account lacked funds to meet the cheque even on timely presentment, no actual damage arises and nothing is recoverable.
Damages — Proof of Actual Loss — Cheque That Would Not Have Been Honoured
A claimant cannot recover for delay in presenting a cheque unless it proves actual loss; where the cheque would not have been honoured in any event because the drawer had no funds, the claim fails for want of recoverable damage.
Agency — Acts of a Customer's Agent — Bank Acting on the Agent's Instructions
A principal who entrusts an agent with managing its business is bound by instructions the agent gives within the apparent scope of that authority, so that a collecting bank acting on instructions from the customer's agent is not liable for the resulting delay in presentment.
Vicarious Liability — Master's Liability for a Servant's Wrongful or Criminal Acts
A master may be liable for a servant's act done in the course of employment even where the act is wrongful, unauthorised or criminal, provided it is merely a wrongful mode of carrying out an authorised task.

Legislation cited (2)

  • Bills of Exchange Act (Cap 76) s.71
  • Bills of Exchange Act (Cap 76) s.74

Cases cited (2)

  • Barclays Bank Plc v Bank of England [1985] 1 All ER 385
  • Judgment of Newbold, P. (East African authority on a master's liability for the acts of servants — citation not legible in the source text)
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.