Wakilii

Excellent Assorted Manufactureres Limited and Another v DFCU Bank Limited and Others (Civil Suit 338 of 2017)

High Court · [2023] UGHCCD 231 · 2023 Judgment for Plaintiffs (Partial) AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for declarations, orders, general and punitive damages for breach of banking contract, irregular account debits, and challenge to land title cancellation; 1st Defendant filed counterclaim for debt recovery
Decision
Plaintiffs succeed on issues 1-4 with multiple orders for refund of unlawfully debited sums with interest; counterclaim and remaining issues to be determined separately

Observed later treatment

Cited — treatment unverified cited in 1 (treatment unverified) Sequitur — Uganda’s citator · Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

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.

No adverse treatment recorded Cited 1 time with no adverse treatment recorded; not yet tested on the merits. Derived from citing cases in the Wakilii corpus — a deterministic signal, not legal advice.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

Held that the 1st Defendant assumed liability for Crane Bank Ltd's acts and omissions as it took over the assets and liabilities; that audit reports by an unqualified person practicing accountancy illegally were incompetent and expunged; that numerous debits from Plaintiffs' accounts as legal fees, documentation charges, search fees, registration fees, survey fees, utilization fees, and interest were irregular, unlawful, or unexplained where the bank failed to establish mandate, provide documentation, or prove payment was for the customer's benefit; that the bank owed a fiduciary duty to maintain proper records, notify customers of charges, and act transparently in accordance with Bank of Uganda Consumer Protection Guidelines; that charges termed 'documentation fees' were ambiguous and unenforceable under the contra proferentem rule; that utilization fees not published by the regulator were illegal; and that multiple sums debited without lawful mandate were ordered refunded with interest at 24% per annum for UGX amounts and 12% per annum for USD amounts. Judgment on counterclaim and remaining issues reserved.

Outcome

Plaintiffs succeed on issues 1-4 with multiple orders for refund of unlawfully debited sums with interest; counterclaim and remaining issues to be determined separately

Facts

The Plaintiffs were customers of Crane Bank Ltd operating various accounts and obtaining loan facilities secured by mortgages over multiple properties between 2010 and 2016. In January 2017, DFCU Bank Ltd (1st Defendant) took over Crane Bank's assets and liabilities including the Plaintiffs' loan portfolio. The Plaintiffs alleged that Crane Bank and subsequently the 1st Defendant debited their accounts with irregular, unlawful, and unexplained charges including legal fees, documentation charges, stamp duty, registration fees, search fees, survey fees, utilization fees, arrangement fees, and interest overcharges totaling hundreds of millions of Ugandan Shillings and hundreds of thousands of US Dollars. The Plaintiffs challenged specific debits as made without notice, authorization, supporting documentation, or proof of payment to alleged service providers. The 1st Defendant defended on the basis that all charges were authorized by facility letters signed by the Plaintiffs and that amounts were properly debited. The 1st Defendant counterclaimed for outstanding loan sums. The Plaintiffs also sued the Commissioner Land Registration over threatened cancellation of a certificate of title.

Issues

  1. Whether the 4 Audit/investigation reports issued by the 1st Defendant's Head of Internal Audit are competent and whether DW3 was competent to render professional audit reports and professional opinions.
  2. Whether the 1st Defendant is liable for the acts and omissions of Crane Bank Limited in relation to the queried transactions, the subject matter of this suit.
  3. Whether specified sums of money were deducted from the 1st Plaintiff's accounts and, if so, whether the said deductions were lawfully made.
  4. Whether specified sums of money were deducted from the 2nd Plaintiff's accounts and, if so, whether the said deductions were lawfully made.
  5. Whether the Plaintiffs/Counter Defendants are indebted to the 1st Defendant/Counter Claimant as claimed in the counterclaim and, if so, by how much.
  6. Whether the Counter Defendants are liable to the Counter Claimant as guarantors for the amounts due and owing under the respective facilities guaranteed.
  7. Whether the actions of the Statutory Manager of Crane Bank Ltd were lawful and, if so, whether they adversely affected the Plaintiffs.
  8. Whether the 1st Defendant is entitled to enforce the securities over specified properties to recover the amounts outstanding under the respective loans.
  9. Whether the title comprised in FRV 1352 Folio 5 Plot 302 Block 21 is valid and, if so, whether the actions taken or proposed to be taken by the 2nd Defendant to cancel the said title are lawful.

Orders

  • The four audit reports issued by DW3 as the 1st Defendant's Head of Internal Audit are expunged from the record.
  • DW3's evidence is expunged from the record.
  • The 1st Defendant is liable for the acts and omissions of Crane Bank Ltd in relation to the queried transactions.
  • The sum of UGX 25,000,000 shall be refunded to the 1st Plaintiff with interest at 24% per annum from 21st August 2013 until full payment.
  • The sum of UGX 2,240,000 was lawfully deducted and is not refundable.
  • The sum of UGX 50,000,000 (debited 24th April 2014) shall be refunded to the 1st Plaintiff with interest at 24% per annum from 24th April 2014 until full payment.
  • The sum of UGX 60,000 shall be refunded to the 1st Plaintiff with interest at 24% per annum from 11th March 2013 until full payment.
  • The sum of UGX 427,600 shall be refunded to the 1st Plaintiff with interest at 24% per annum from 21st March 2014 until full payment.
  • The sum of UGX 50,985,471 was lawfully deducted and is not refundable.
  • The sum of UGX 17,402,785 was lawfully deducted and is not refundable.
  • The sum of UGX 2,860,000 shall be refunded to the 1st Plaintiff with interest at 24% per annum (UGX 820,000 from 20th September 2013; UGX 2,040,000 from 14th October 2013) until full payment.
  • The sum of UGX 10,000,000 shall be refunded to the 1st Plaintiff with interest at 24% per annum from 25th May 2013 until full payment.
  • The sum of USD 51,952 (USD 38,952 plus USD 13,000) shall be refunded to the 1st Plaintiff with interest at 12% per annum (USD 38,952 from 3rd August 2013; USD 13,000 from 8th April 2014) until full payment.
  • The sum of USD 5,472.92 shall be refunded to the 1st Plaintiff with interest at 12% per annum from 30th June 2016 until full payment.
  • The sum of UGX 15,660,000 and UGX 30,000,000 shall be refunded to the 2nd Plaintiff with interest at 24% per annum from 14th January 2011 until full payment.
  • The sum of UGX 21,175,000 shall be refunded to the 2nd Plaintiff with interest at 24% per annum from 26th March 2011 until full payment.
  • The sum of UGX 23,015,000 was lawfully deducted and is not refundable.
  • The sum of UGX 31,288,000 shall be refunded to the 2nd Plaintiff with interest at 24% per annum from 13th May 2011 until full payment.
  • The sum of UGX 5,680,000 shall be refunded to the 2nd Plaintiff with interest at 24% per annum from 20th May 2011 until full payment.
  • The sum of UGX 20,280,000 shall be refunded to the 2nd Plaintiff with interest at 24% per annum from 28th September 2011 until full payment.
  • The sum of UGX 5,780,000 shall be refunded to the 2nd Plaintiff with interest at 24% per annum from 4th April 2012 until full payment.
  • The sum of UGX 53,740,000 shall be refunded to the 2nd Plaintiff with interest at 24% per annum from 23rd April 2012 until full payment.
  • The sum of UGX 850,000 shall be refunded to the 2nd Plaintiff with interest at 24% per annum from 8th June 2012 until full payment.
  • The sum of UGX 4,050,000 shall be refunded to the 2nd Plaintiff with interest at 24% per annum from 13th September 2012 until full payment.
  • Judgment on remaining issues and counterclaim reserved.

Rules and key headnotes

Banking Law — Accountancy Regulation — Competence of Internal Audit Reports
Where a person employed as head of internal audit in a bank (a public interest entity under the Accountants Act) is neither a qualified accountant nor a member of the Institute of Certified Public Accountants of Uganda, and lacks a practicing certificate, any audit or investigation reports authored by such person constitute practicing accountancy illegally and are incompetent before the Court, and the person is incompetent to render evidence based on such reports.
Banking Law — Successor Bank Liability — Assumption of Liabilities
Where a bank takes over the assets and liabilities of another bank including a customer's loan portfolio, and admits such takeover in pleadings and agreed facts, it cannot at the stage of submissions introduce a defence of excluded liabilities based on a private agreement not pleaded, not proved in evidence, and not left to the court for determination; such departure from pleadings is offensive to the law and the successor bank is liable for acts and omissions of its predecessor relating to the customer's accounts.
Banking Law — Banker-Customer Relationship — Fiduciary Duty and Duty of Care
The relationship between a bank and customer is both contractual and fiduciary in nature; the bank owes the customer a fiduciary duty of utmost good faith, trust, confidence, and candor to treat accounts with meticulous care, observe the highest standards of integrity and performance, maintain proper records, keep the customer informed of transactions affecting the account, and act with fairness, reliability, and transparency in accordance with Bank of Uganda Consumer Protection Guidelines, which have persuasive authority in the absence of superior legal instruments.
Contract Law — Interpretation — Ambiguous Terms and Contra Proferentem Rule
Where a facility agreement contains an undefined and unexplained charge termed 'documentation fees' with no indication of what it encompasses, and the bank subsequently debits various sums under different labels (legal fees, stamp duty, search fees, registration fees), the term is rendered ambiguous; applying the contra proferentem rule, the ambiguity is construed against the drafter (the bank), and it does not make sound business sense for the bank to charge a block sum as documentation fees and then separately charge the same customer for individual mortgage processing fees, constituting an unconscionable bargain.
Banking Law — Account Debits — Burden of Proof and Mandate
Where a customer shows that withdrawals from its accounts were made by the bank in breach of mandate, the burden shifts to the bank to prove that the withdrawals were lawful, made for discharging the customer's liabilities or for the customer's benefit, and did not occasion loss to the customer; the bank that cannot keep and avail accountable records showing authorization, supporting documents, proof of actual payment to alleged service providers, and nexus between invoices and debited amounts will be hard-pressed to sustain its defense and cannot determine issues of accounts based on guesswork.
Banking Law — Third Party Charges — Notice and Customer Consent
The existence of a general clause in a facility letter requiring the customer to incur costs on non-standardized services such as legal fees does not grant the bank permission to debit the customer's account in payment for such services without notice or information to the customer; the customer must be clearly informed of the nature of service, the service provider, and must be given an opportunity to negotiate the charge or choose from available service providers in accordance with Bank of Uganda Consumer Protection Guidelines requiring that for third party charges, a customer must be informed in advance to enable negotiation, and the bank has no mandate to negotiate on behalf of the customer and debit the account with any sums.
Banking Law — Unlawful Bank Charges — Utilization Fees Not Published by Regulator
Where a bank charges 'utilization fees' that are not among the charges published by Bank of Uganda to be charged by the bank during the relevant period, and the bank itself cannot define what utilization fees entail, such charges are illegal and contrary to banking practice; once a regulator issues and publishes official charges with no general clause permitting additional fees, a regulated entity cannot act outside such regulation, and the practice of banks charging fees contrary to what has been endorsed by the regulator is illegal and dangerous to the economy, vitiating that part of the loan facility agreement.

Legislation cited (16)

Cases cited (31)

  • Sheema Co-operative Society & 31 Others v Attorney General (High Court Civil Suit No. 103 of 2010)
  • Aliganyira Betty v Uganda (High Court Criminal Appeal No. 001 of 2021)
  • Shakil Pathan v DFCU Bank Ltd (High Court Civil Suit No. 236 of 2017)
  • Republic vs Institute of Certified Public Secretaries of Kenya, HCMA No. 322 of 2008
  • Luyimbazi Sulaiman v Stanbic Bank (Supreme Court Civil Appeal No. 02 of 2019)
  • Attorney General v Paul Ssemogerere & Another (Supreme Court Constitutional Appeal No. 3 of 2004)
  • Stanbic Bank (U) Ltd v Uganda Crocs Ltd (Supreme Court Civil Appeal No. 04 of 2004)
  • Philippine National Bank vs. Norman Y Pie, G.R. No. 157845 September 20, 2005
  • Ezekiel Osugo Angwenyi & Another v National Industrial Credit Bank Limited [2017] eKLR
  • Robert Mugo Wa Karanja v Ecobank (Kenya) Limited & another [2019] eKLR
  • General Industries Ltd v NPART (Supreme Court Civil Appeal No. 5 of 1998)
  • Andrew Akol Jacha v Noah Doka Onzivua (High Court Civil Appeal No. 0001 of 2014)
  • F.L Schuler AG v Wickman Machine Tools Sales Limited [1973] 2 All ER 39
  • Multi-Link Leisure Developments Ltd v Lanarkshire Council [2011] 1 All ER 175
  • Mitsui Construction Co Ltd v Attorney General of Hong Kong (1986) 33 BLR 14
  • Premchandra Shenoi and Another v Maximov Oleg Petrovich (Supreme Court Civil Appeal No. 9 of 2003)
  • Harbutt's 'placticine' Ltd V Wayne tank & pump Co. Ltd [1970] QB 447
  • Kinyera v Management Committee of Laroo Building Primary School (High Court Civil Suit No. 099 of 2013)
  • Eric Butime Katabarwa v Standard Chartered Bank (High Court Civil Suit No. 963 of 2020)
  • Behange Vs. School Outfitters (U) Ltd (2000) 1 EA 20
  • C & A Tours Travel Operators Ltd v TPS (U) Ltd t/a Serena Hotels (High Court Miscellaneous Application No. 195 of 2012)
  • Vantage Mezzanine Fund II Partnership v Simba Properties Investments CP Ltd (High Court Miscellaneous Application No. 201 of 2020)
  • Golf View Inn (U) Ltd v Barclays Bank (U) Ltd (High Court Civil Suit No. 358 of 2009)
  • DSS Motors Ltd v Afri Tours and Travels (High Court Civil Suit No. 12 of 2003)
  • Yaya Farajallah v Obur Ronald & Others (High Court Civil Suit No. 081 of 2018)
  • Ligget (Liverpool) Ltd Vs. Barclays Bank Ltd [1928]1 KB 48
  • Fidelity Commercial Bank Limited v Italian Market Kenya Limited [2017] eKLR
  • Mugobi Traders Ltd v Standard Chartered Bank Limited (High Court Miscellaneous Application No. 269 of 2016)
  • Muwanga Kivumbi v Attorney General (Supreme Court Civil Appeal No. 6 of 2001)
  • Odd Jobbs v Mubia [1970] 1 EA 476
  • Sinba (K) Ltd & 4 Others v Uganda Broadcasting Corporation (Supreme Court Civil Appeal No. 003 of 2014)

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.

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Excellent Assorted Manufactureres Limited and Another v DFCU Bank Limited and Others (Civil Suit 338 of 2017) [2023] UGHCCD 231 (16 August 2023)
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.