Wakilii

Barclays Bank (U) Ltd v Global Supplies Ltd & 3 Ors (Civil Suit No. 741 of 2004)

High Court · [2009] UGCOMMC 24 · 2009 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Summary suit for debt brought by bank against customer and personal guarantors; defendants granted leave to defend
Decision
First and second defendants jointly and severally liable for Shs 203,591,955 plus interest; third and fourth defendants not liable; counterclaim dismissed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The bank successfully recovered Shs 203,591,955 credited to the first defendant's account by mistake following a forged instruction letter. The court held that the bank owed no duty of care to ensure the transfer's validity to a customer who knowingly received funds under a mistake of fact. The first defendant and its managing director were jointly and severally liable, but the personal guarantees had lapsed. The bank was entitled to set off the mistaken deposit. The counterclaim was dismissed.

Outcome

First and second defendants jointly and severally liable for Shs 203,591,955 plus interest; third and fourth defendants not liable; counterclaim dismissed

Facts

On 31 August 2004, Shs 350,000,000 was transferred from Petro Uganda Ltd's account to Global Supplies Ltd's account at Barclays Bank pursuant to what was later revealed to be a forged instruction letter. On 2 September 2004, Ponsiano Kizito, managing director of Global Supplies, withdrew Shs 207,600,000. He claimed he was facilitating two men, Kamya and Fred, who allegedly had no bank account and were due payment from Petro Uganda Ltd. Kizito converted part of the sum to USD 120,000 for them. Petro Uganda immediately queried the transfer. The bank reversed the credit, creating a debit balance of Shs 203,591,955 on Global Supplies' account. The two men disappeared. Petro Uganda's officers testified the instruction letter bore forged signatures. Two bank employees were dismissed for the processing error.

Issues

  1. Whether there is any cause of action disclosed against the defendants.
  2. Whether the first defendant is indebted to the plaintiff and if so in what sum.
  3. Whether the plaintiff owed a duty of care to the first defendant in ensuring that the transfer to its account was valid.
  4. Whether the first and second defendants owed a duty of care to the plaintiff to ensure that forged instructions for payment were not presented to the first defendant's account.
  5. Whether the indebtedness is covered by the documents entitled 'guarantee'.
  6. Whether the plaintiff is indebted to the first defendant in the sum claimed in the counterclaim.
  7. Remedies.

Orders

  • The first defendant is liable to the plaintiff in the sum of Shs 203,591,955.
  • The second defendant is jointly and severally liable with the first defendant.
  • The third and fourth defendants are not liable.
  • The sum is payable with interest at 20% per annum from 2 September 2004 until payment in full.
  • Costs of the suit are awarded to the plaintiff against the first and second defendants.
  • The counterclaim is dismissed with costs.

Rules and key headnotes

Civil Procedure — Pleadings — Cause of action — Whether reply can cure deficiency in plaint
Where a reply is filed in answer to a defence, it must be considered together with the plaint with the result that it may supplement or cure any deficiency in the plaint.
Banking & Finance — Banker-customer relationship — Duty of care — Bank crediting account under mistake of fact
A bank does not owe a duty of care to ensure the validity of a transfer to a customer who knowingly receives funds on his account under a mistake of fact, where the customer was not expecting the funds and had no genuine connection with the source.
Banking & Finance — Banker-customer relationship — Customer's duty to bank — Warranty of authority
A customer has a duty to act in good faith when transacting on his account, including a duty to notify the bank of unexpected deposits. In using such deposits, the customer warrants to the bank that he has the authority to use them.
Banking & Finance — Mistaken payments — Equitable remedy of tracing — Set-off
Where a customer has received a deposit on his account under a mistake of fact, the bank is entitled to the equitable remedy of tracing the money, which includes the right of set-off on the account where the deposit was mistakenly made to recover the wrongly deposited money.
Contract Law — Guarantee — Duration and termination — Lapse by effluxion of time
A guarantee may lapse by reason of time where there is no evidence of continuing credit facilities, no reference to the guarantee in subsequent facility letters, and no notice of termination has been expressly given but the circumstances indicate the guarantee was renewed with each credit facility.
Company Law — Corporate veil — Lifting the veil — Director's personal liability
A director who plays a pivotal role in a transaction that causes loss to a third party cannot hide under the veil of incorporation and may be held jointly and severally liable with the company where his individual actions as managing director facilitated the wrongful transaction.

Legislation cited (6)

Cases cited (10)

  • Auto Garage v Motokov (No. 3) [1971] EA 514
  • Swan Air Travel & Safari FK1 and Another v Sabrina EL-Hail (HCCS No. 377 of 2004)
  • Makula International v Cardinal Wamala Nsubuga [1982] HCB 11
  • Prof Huq v IUIU (SCCA No. 47 of 1995)
  • Sullivan v Allimohamed Osman [1959] EA 239
  • Cottar v Attorney General (1938) 5 EACA 18
  • Moses Katuramu v Attorney General and Another [1986] HCB 39
  • Silayo v Centenary Rural Development Bank (1996) Ltd [2001] EA 288
  • Byaruhanga v Barclays Bank (U) Ltd [1978] HCB 150
  • Barclays Bank of Kenya v Janday [2004] 1 EA 8

Full judgment

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

Barclays Bank (U) Ltd v Global Supplies Ltd & 3 Ors (Civil Suit No. 741 of 2004) [2009] UGCommC 24 (16 February 2009)
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.