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Bank of Uganda v Masaba and 2 Others (Civil Appeal 23 of 1997; Civil Appeal 45 of 1997)

Court of Appeal · [1998] UGCA 31 · 1998 Appeals Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Consolidated civil appeals from two High Court judgments in favour of former employees
Decision
Appeals dismissed; High Court judgments in favour of the former employees upheld

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Court of Appeal dismissed the Bank of Uganda's consolidated appeals. It held that the Bank's circulars inducing employees to retire voluntarily contained negligent misrepresentations actionable at law, since the Bank recklessly promised not to deduct housing loans without first ascertaining the source of funds. A binding contract had formed through offer, acceptance and consideration, supported by promissory estoppel under Hughes and High Trees principles and Evidence Act s.113. The Bank could not unilaterally alter accepted and acted-upon terms by deducting the housing loans, constituting a serious breach. The trial judges properly assessed damages on established principles, and the appellate court found no basis to interfere.

Outcome

Appeals dismissed; High Court judgments in favour of the former employees upheld

Facts

The Bank of Uganda, facing financial difficulties, circulated letters in September and November 1994 to staff outlining a Voluntary Termination Scheme offering an attractive compensation package to employees who retired early. The November letter represented that housing loans would be repaid over a period to be agreed and would not be deducted from the retirement package. The respondents, permanent and pensionable employees with 12 to 20 years of service remaining, applied to retire voluntarily on the basis of these representations. Their applications were accepted. However, upon receiving their cheques, they found that the Bank had deducted the whole of their housing loans from their retirement packages, contrary to its promise, leaving them with ridiculously small sums. The respondents were reduced to penury; one suffered his wife leaving and his children dropping out of school. Two separate suits were filed against the Bank, and the trial judges found the Bank had made false representations and breached the contract, awarding general and special damages and ordering a refund of the deducted loans.

Issues

  1. Whether the circular complained of constituted false representations actionable at law.
  2. Whether there was a contract between the appellant and the respondents that the housing loans would not be deducted.
  3. Whether there was a breach of contract by the appellant.
  4. Whether the High Court awarded the correct amount of damages.

Orders

  • Appeals dismissed.
  • Costs to the respondents both in the Court of Appeal and in the courts below.

Rules and key headnotes

Negligent Misrepresentation — Duty of Care Arising from Special Relationship — Employer's Reckless Representation
An action for negligent misrepresentation, though honest or innocent, will lie where damage is occasioned by breach of a duty to take care arising from a special relationship between the parties; an employer who makes representations recklessly without ascertaining whether they can be fulfilled is liable to employees who act on them to their detriment.
Formation — Offer, Acceptance and Consideration in Voluntary Retirement Scheme
Where an employer offers a voluntary termination package and an employee accepts and acts upon it, a binding contract is formed containing offer, acceptance and consideration; the mutual surrender of rights under an existing employment contract in exchange for the promised package constitutes valuable consideration.
Promissory Estoppel — Binding Effect of Promise Intended to and in Fact Acted Upon
A promise intended to create legal relations and to be acted upon, which is in fact acted upon by the promisee, will be treated by the court as binding on the promisor to the extent that he cannot act inconsistently with it, even where the promise is not supported by consideration in the strict sense; this equitable principle is embodied in Evidence Act s.113.
Breach — Unilateral Alteration of Accepted Terms
Once an offer has been accepted and acted upon by the other party, the offeror cannot unilaterally alter the terms of the concluded contract; doing so constitutes a serious breach for which the innocent party is entitled to damages.
Assessment — Measure for Negligent Misrepresentation Inducing Contract — Appellate Interference
Where a cause of action is negligent representation inducing a contract, damages are measured by the loss suffered so as to place the innocent party where he would have been had the misrepresentation not been made; an appellate court will not interfere with the trial judge's assessment unless he acted on a wrong principle of law or the award is so high or low as to be an entirely erroneous estimate.

Legislation cited (1)

Cases cited (13)

  • Patel -v- Lalji Makanji [1957] E.A. 314
  • Katarahweire - vs - Kwanga [1988-89] HCB 86.87
  • Esso Petroleum Co. Ltd vs Mardon [1975] 2 All. ER 5
  • Hedley Byrne & Co Ltd vs Heller and Partners
  • Hughes v Metropolitan Railway [1877] 2 A.C. 439
  • Central London Property Trust Limited vs High Trees Ltd [1947] KB 130
  • Edwards - vs - Skyways Ltd [1964] 1 WLR 349
  • Evans Ltd - vs - Andrea Merzario Ltd [1976] 1 WLR 1078
  • May & Butcher vs R [1934] 2 KB
  • Flint - vs - Lovell [1935] 1 KB 354
  • Currie & Others vs Misa (1873-75) 10 Exh.153
  • Nance vs British Columbia Electric (1951) 50 LS
  • Mavanja-Nkangi - vs - NHC [1972] HCB 37

Full judgment

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

Bank of Uganda v Masaba and 2 Others (Civil Appeal 23 of 1997; Civil Appeal 45 of 1997) [1998] UGCA 31 (25 April 1998)
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.