Banax Limited v Gold Trust Bank Limited (Civil Appeal 29 of 1993)

Observed later treatment

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

Holding

The Supreme Court held that the change in the company's directors, having been duly registered with the Registrar of Companies, was an internal management matter that, under the rule in Royal British Bank v Turquand, the bank was bound to accept; it could not be put on notice of any internal irregularity. By suspending the account from October 1987 until the High Court judgment, the bank breached its banking contract with the customer. However, the customer failed to prove general damages or loss of business, and projected lost profits and currency-depreciation losses were unsupported and too remote. The trial judge's figure of Shs.100,000, being more than nominal, was left standing as compensation for the inconvenience of losing the use of the account. Appeal allowed.

Outcome

Appeal allowed; judgment entered for the appellant company for Shs.100,000 with interest at court rate; bank ordered to unblock the account. Claims for specific performance and a permanent injunction refused.

Facts

Banax Limited opened a current account with Gold Trust Bank around 1985–1986; the account stood at Shs.148,000 to the company's credit. Its signatories were the managing director, Mr. Magumba, and a director, Mr. Mulika. Following a dispute in the running of the company, a meeting held at the Registrar of Companies on 17 September 1987 removed Mr. Mulika as a director, and Mrs. Magumba was elected in his place and proposed as a new signatory. When informed of the change, the bank's manager, Mr. Konde, refused to recognise the new director or signatory, insisting that Mr. Mulika's approval first be obtained, so the company could not operate its account. Efforts by the company's lawyers to resolve the impasse failed; the bank maintained the account but refused to allow it to be operated. The company sued for breach of contract on 16 November 1987, claiming general damages, loss of business, specific performance, a permanent injunction, interest and costs.

Issues

1. Whether the bank acted correctly, in the circumstances, in refusing to recognise the company's newly registered director and signatory and in suspending the operation of the company's account.
2. Whether, if the bank wrongly froze the account, the customer was entitled to substantial damages, and what other remedies (specific performance, permanent injunction) were available.

Orders

• Appeal allowed.
• Judgment and decree of the High Court set aside.
• Judgment substituted for the plaintiff company, Banax Limited, in the sum of Shs.100,000/= with interest at court rate.
• The bank to unblock the wrongfully suspended account, or place the frozen amount at the company's disposal.
• Costs of the suit and of the appeal awarded to the appellant.

Rules and key headnotes

Cases cited (8)

• Royal British Bank v Turquand (1856) 5 E & B 327
• Mahony v East Holyford Mining Co (1875) LR 7 HL 869
• Ernest v Patent Ivory Manufacturing Co (1888) 38 Ch D 156
• Houghton & Co v Nothard Lowe & Wills Ltd [1927] 1 KB 246
• Gibbons v Westminster Bank [1939] 2 KB 882
• Ugiguru vs Bank of Kenya (1974) E.A. 339
• Hadley v Baxendale (1854) 9 Exch 341
• Kibimba Rice Co Ltd v Umar Salim (Civil Appeal No. 7 of 1988)

Cases citing this judgment (1)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

• Turyatemba v Musinguzi (Civil Appeal No. 10 of 2013)

The original judgment as reported. Read the original PDF before relying on any passage.