Wakilii

Bank of Uganda v Caring for Orphans, Widows and Elderly Limited (Civil Appeal 35 of 2007)

Court of Appeal · [2008] UGCA 21 · 2008 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from High Court decision granting judicial review orders of certiorari and prohibition
Decision
Appeal allowed; High Court orders and general damages award set aside; the judicial review application held incompetent

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Court of Appeal held that the Bank of Uganda was not required to give the respondent a fair hearing before freezing its bank accounts. Section 118 of the Financial Institutions Act empowers the Central Bank to freeze accounts believed to hold proceeds of crime, and no hearing is provided for. The respondent's refusal to allow access to its books was prima facie evidence of operating without a licence contrary to the Micro-Finance Deposit-Taking Institutions Act. Because the Bank is statutorily immune from suit for acts done in good faith, the respondent was obliged to plead and prove bad faith, which it did not do; the review application was therefore incompetent. The appeal was allowed and the general damages award set aside.

Outcome

Appeal allowed; High Court orders and general damages award set aside; the judicial review application held incompetent

Facts

The appellant, the Central Bank of Uganda, received information that the respondent, a company limited by guarantee assisting orphans, widows and the elderly, was taking deposits from the public without a licence contrary to the Financial Institutions Act. On 4 September 2006 the Bank wrote directing the respondent to stop taking deposits and refund account holders. Further letters on 5 and 15 September requested documents and information. The Bank's supervision staff attempted to examine the respondent's books but were denied access, which the Bank treated as prima facie evidence of unlicensed operation. On 18 September 2006 the Bank froze the respondent's accounts countrywide. The respondent obtained High Court orders of certiorari and prohibition quashing the freeze, plus general damages, on the ground that it had not been given a fair hearing.

Issues

  1. Whether the Central Bank acted contrary to the rules of natural justice by freezing the respondent's bank accounts without first giving it a fair hearing.
  2. Whether the Financial Institutions Act and the Micro-Finance Deposit-Taking Institutions Act require a hearing before the Central Bank freezes 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 this Court and in the High Court.
  • The award of general damages of Shs. 3,000,000 is set aside.

Rules and key headnotes

Natural Justice — Fair Hearing — Statutory Regulatory Action by Central Bank
Where a statute empowering a regulator to freeze accounts believed to hold proceeds of crime provides no requirement for a hearing, the regulator is not obliged to hear the account holder before acting, and requiring such a hearing would stretch the right to fair hearing too far.
Central Bank Powers — Freezing of Accounts — Financial Institutions Act s.118
Under section 118 of the Financial Institutions Act, the Central Bank may direct a financial institution to freeze an account where it has reason to believe the funds are proceeds of crime, without any statutory requirement to first hear the account holder.
Micro-Finance Regulation — Refusal of Access to Records as 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 premises, books and records constitutes prima facie evidence of the fact of operating a micro-finance business without a licence.
Statutory Immunity — Requirement to Plead and Prove Bad Faith
Where a statute provides that no suit shall lie against the Central Bank for anything done in good faith, a party challenging the Bank's action must plead and prove bad faith; failure to do so renders the proceedings incompetent for lack of a cause of action.

Legislation cited (8)

Cases cited (3)

  • Post Office Corporation vs Attorney General of Mauritius [1965] AC 1111
  • Wiseman v Borneman [1971] AC 297
  • Pius Niwagaba v Law Development Centre (Civil Application No. 18 of 2005)

Full judgment

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

Bank of Uganda v Caring for Orphans, Widows and Elderly Limited (Civil Appeal 35 of 2007) [2008] UGCA 21 (24 October 2008)
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.