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Bank of Baroda (U) Ltd v Wilson Buyonjo Kamugunda

Supreme Court · [2005] UGSC 28 · 2005 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second appeal to the Supreme Court from a Court of Appeal decision which had reversed the High Court's dismissal of a civil suit for recovery of money
Decision
Appeal dismissed; award of shs 80,000,000 special damages affirmed, but the 26% interest set aside and replaced with tiered rates of 10%, 8% and 6%

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Holding

The Supreme Court upheld the Court of Appeal's finding that the bank was negligent in failing to verify the identity of strangers who, introduced by one David Mukasa, opened an account in the names of two deceased payees and withdrew an 80m/= government compensation cheque. As administrator of his father's estate, the respondent had title to the proceeds; he need not plead 'money had and received'. Under section 106 of the Evidence Act, facts about how the account was opened lay especially within the bank's knowledge, so the burden was on the bank, which led no evidence. The appeal was dismissed, but the 26% interest was set aside as excessive and replaced with tiered rates.

Facts

Two brothers, Ham Kamugunda and Godfrey Katanywa, owned land in Lake Mburo National Park which the Government acquired, undertaking to compensate them. Both died in 1988 before payment. In 1996 a Bank of Uganda cheque for shs 80,000,000 was issued in their names. Strangers impersonating the deceased, introduced by one David Mukasa, were allowed by the bank to open an account in the deceased's names, deposit the cheque and withdraw the proceeds, then disappeared. The respondent, son of Ham Kamugunda and administrator of his estate, sued the bank in negligence, conversion and fraud to recover the money. The bank admitted collecting the cheque and crediting the account but relied on section 82 of the Bills of Exchange Act and denied negligence. It called no evidence at trial. The High Court dismissed the suit; the Court of Appeal, by majority, reversed and awarded the respondent the 80,000,000 with interest.

Issues

  1. Whether the bank was negligent in opening an account in the names of the deceased payees and in collecting and paying out the cheque without verifying the identity of those operating the account.
  2. Whether the respondent, as administrator of his father's estate, proved title to the cheque and its proceeds.
  3. Whether the respondent's failure to plead 'money had and received' barred his entitlement to the proceeds.
  4. Whether the burden of proving the manner in which the account was opened lay on the bank under section 106 of the Evidence Act.
  5. Whether the Court of Appeal's award of interest at 26% per annum from 23 December 1996 was excessive.

Orders

  • Appeal dismissed with costs to the respondent in this Court and in the courts below.
  • Award of interest at 26% per annum set aside.
  • Interest substituted at 10% per annum from 1/1/1997 to 31/12/1998 (prior to institution of the suit).
  • Interest at 8% per annum from 31/12/1998 (date suit instituted) to 3/3/2004 (Court of Appeal judgment).
  • Interest at 6% per annum from the date of judgment until payment in full.
  • Decree of the Court of Appeal varied as to the rate of interest.

Key headnotes

Banking — Collecting Banker — Duty to Verify Customer Identity — Negligence Toward True Owner
A collecting bank owes a duty not to disregard the interests of the true owner of a cheque and must make inquiry where the circumstances arouse suspicion; opening an account for unknown persons and collecting a large government cheque in the names of strangers, without verifying their identity or respectability, is negligence depriving the bank of statutory protection.
Evidence — Burden of Proof — Facts Especially Within a Party's Knowledge — Evidence Act s.106
Where facts about how an account was opened and a cheque collected are especially within the knowledge of the bank, section 106 of the Evidence Act places the burden of proving those facts on the bank, and its failure to call available evidence entitles the court to draw an adverse inference.
Conversion — Entitlement to Proceeds — Administrator Standing in the Shoes of the Deceased
An administrator of a deceased payee's estate has title to a cheque issued to the deceased and may recover its proceeds; he need not plead 'money had and received' where his claim is framed in negligence, and need not prove title to a particular portion where no rival claimant exists.
Pleadings — Effect of Summary of Evidence Under the Civil Procedure (Amendment) Rules 1998 — Failure to Lead Listed Evidence
Under Order 6 Rule 1 of the Civil Procedure Rules as amended in 1998, a party's summary of evidence and listed witnesses and documents form part of its pleadings; pre-1998 authority on the effect of a bare non-admission must be read in this light, and a party that lists but fails to call such evidence invites an adverse inference.
Interest — Discretion Under Civil Procedure Act s.26(2) — Excessive Rate
An award of interest under section 26(2) of the Civil Procedure Act is discretionary and must be exercised judiciously and explained; an unexplained award of 26% per annum is excessive and may be set aside and replaced with rates reflecting pre-suit, post-suit and post-judgment periods.

Legislation cited (6)

  • Bills of Exchange Act s.82
  • Bills of Exchange Act s.81
  • Bills of Exchange Act s.89
  • Evidence Act s.106
  • Civil Procedure Act s.26(2)
  • Civil Procedure (Amendment) Rules 1998 Order 6 Rule 1

Cases cited (3)

  • Joshi v Uganda Sugar Factory (1968) EA 570
  • Commissioner of Taxation v English, Scottish and Australian Bank Ltd [1920] AC 683
  • Milton Obote Foundation v Kennon Training Ltd (Civil Appeal No. 25 of 1995)
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.