Mulagwe v Lanex Forex Bureau Limited and 4 Others (HCT - 00 - CC - CS - 358 - 2006)
Observed later treatment
No later-treatment classification is recorded for this judgment.
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Holding
Held that forex bureaus are prohibited from taking deposits from the public under the Exchange Control (Forex Bureau) Order 1991, making such transactions illegal. However, the first Defendant was liable to repay US$160,000 as money had and received. The Plaintiff was not entitled to the contracted interest as this would contravene regulatory prohibition of non-spot transactions. The second to fifth Defendants were not liable as the Plaintiff failed to establish grounds to lift the corporate veil based solely on allegations of common management and shareholding.
Outcome
First Defendant liable to repay US$160,000; claims against second to fifth Defendants dismissed
Facts
In 2003, the Plaintiff made a financial deposit of US$160,000 with the first Defendant, a forex bureau, in consideration of monthly interest of US$12,000. The deposit was accumulated over time starting from December 2003, with US$20,000 initially deposited. The first Defendant issued an acknowledgment dated 3 October 2005 confirming receipt of the deposit. Upon demand for repayment, the first Defendant failed to refund the money. The first and second Defendants were later closed following statutory intervention by the Central Bank. The Plaintiff alleged the second to fifth Defendants shared common management, directorship and shareholding with the first Defendant and were therefore jointly liable. A manager of the first Defendant, Mr. Roopesh Solanki, testified that he had signed the acknowledgment and that deposits had been taken from the public, contrary to regulatory requirements.
Issues
- Whether the first Defendant could lawfully take deposits from the public?
- Whether the Plaintiff did make a deposit with the first Defendant of US$160,000 as alleged?
- If the Issue No. 2 above is answered in the affirmative, whether the Defendants or any of them is liable to pay the Plaintiff the said sum with interest as claimed?
- Remedies.
Orders
- The 1st Defendant pays to the Plaintiff US$160,000 being the total sum had and received by the 1st Defendant from the Plaintiff.
- The Plaintiff's case against the 2nd, 3rd, 4th and 5th Defendants is dismissed.
- Each party to the suit bears his/its own costs of the suit.
Rules and key headnotes
Legislation cited (10)
- Foreign Exchange Act 2004 s.3
- Foreign Exchange Act 2004 s.21
- Foreign Exchange Act 2004 s.20(2)
- Foreign Exchange Act 2004 s.18
- Exchange Control (Forex Bureau) Order S.I. No. 7 of 1991 Reg. 3
- Exchange Control (Forex Bureau) Order S.I. No. 7 of 1991 Reg. 15
- Evidence Act s.15
- Evidence Act s.91
- Evidence Act s.92
- Civil Procedure Rules Order 15 rule 5(1)
Cases cited (3)
- Kiriri Cotton Ltd v Ranchhoddas K. Dewani [1960] EA 193
- Coffee Marketing Boards v Kigezi Growers Cooperative Union (High Court Civil Suit No. 437 of 1994)
- Wamala Nanseefa v North Bukedi Cotton Company Ltd (High Court Civil Suit No. 755 of 2005)
Full judgment
The original judgment as reported. Read the original PDF before relying on any passage.