Wakilii

Bukoto Farmers & General Merchandise Limited v Libyan Arab Uganda Bank & Another (Civil Appeal 37 of 1993)

Supreme Court · [1994] UGSC 40 · 1994 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from a High Court judgment dismissing the plaintiff's suit to recover currency-exchange losses
Decision
Appeal dismissed; the High Court judgment dismissing the suit affirmed.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Supreme Court dismissed the appeal. Under the Bank of Uganda Act (ss.20 and 23(1)) the central bank could buy and sell the shilling against external currencies and quote different rates of exchange for different spot transactions, and the Currency Reform Statute 1987 did not abrogate its existing exchange-rate regulations. The appellant neither pleaded nor proved that the second respondent was bound to repurchase its unutilised Kenya currency at the new post-reform rate of Shs.1/70 rather than the original purchase rate of Shs.86/80. The burden lay on the appellant, which it failed to discharge on the balance of probabilities. The court criticised the central bank's failure to identify the legal basis of its policy and its inconsistent application.

Outcome

Appeal dismissed; the High Court judgment dismissing the suit affirmed.

Facts

The appellant, an import/export company, applied through its banker (the first respondent) to the second respondent, the Bank of Uganda, to purchase Kenya Shs.596,494 to import animal feeds from Unga Ltd of Kenya, depositing Uganda shilling cover and opening letters of credit at the then rate of Uganda Shs.86/80 to one Kenya shilling. When Unga Ltd failed to supply the feeds, the appellant instructed cancellation of those letters of credit and the opening of new ones, in pounds sterling, in favour of a UK supplier. On or about 10 August 1987 the first respondent recovered the Kenya currency from Unga Ltd and resold it to the second respondent at the old rate of Shs.86/80, rather than the new rate of Shs.1/70 introduced by the Currency Reform Statute 1987 and the accompanying devaluation. The appellant alleged this caused it a loss of about Uganda Shs.10,000,000, plus a shortfall it had to top up, and sued for those sums and a declaration that it was entitled to sell the Kenya currency to the second respondent at the new rate.

Issues

  1. Whether the second respondent (Bank of Uganda) was entitled to accept back the appellant's unutilised Kenya currency at the old exchange rate of Uganda Shs.86/80 rather than the prevailing post-reform rate of Shs.1/70.
  2. Whether the appellant discharged the burden of pleading and proving that the second respondent was legally bound to repurchase the Kenya currency at the new exchange rate after the Currency Reform Statute 1987.

Orders

  • Appeal dismissed with costs.

Rules and key headnotes

Banking & Finance — Central Bank Powers — Buying and Selling External Currency at Differing Rates
Under sections 20 and 23(1) of the Bank of Uganda Act, the central bank may purchase and sell the shilling against any external currency and may quote different rates of exchange in respect of different spot transactions, enabling it to buy or sell the shilling at any rate it deems appropriate in a given transaction.
Banking & Finance — Currency Reform — Effect on Existing Exchange-Rate Regulations
The Currency Reform Statute 1987 was intended to reform and devalue the shilling and to provide for demonetisation; it did not abrogate the existing exchange-rate regulations and policies of the central bank, which continued to apply except where expressly abolished.
Civil Procedure — Burden of Proof — Plaintiff Must Plead and Prove Defendant's Legal Obligation
A plaintiff who alleges loss arising from a defendant's conduct bears the burden of pleading and proving, on the balance of probabilities, that the defendant was legally bound to act in the manner contended; failure to plead or prove that obligation defeats the claim.
Banking & Finance — Exercise of Statutory Powers — Duty to Identify Basis of Policy
Where a public authority such as the central bank relies on public policy and statutory powers as a defence, it ought to indicate clearly the basis of that policy, the nature of its powers and where they may be found, and to apply the policy consistently among customers.

Legislation cited (7)

Full judgment

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Bukoto Farmers & General Merchandise Limited v Libyan Arab Uganda Bank & Another (Civil Appeal 37 of 1993) [1994] UGSC 40 (11 April 1994)
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.