NKUMBA UNIVERTSITY

SCHOOL OF LAW AND INSTITUTE OF CRIMINAL JUSTICE

Course work

COURSE: Bachelor of Laws (LLB)

ACADEMIC YEAR: Year 2, Semester 2

COURSE UNIT: Law of Banking

LECTURER: Mr.Kabakubya Bashir

STUDENT NUMBER: 2200100635

STUDENTS INDEX NO.: 2022/AUG/LLB/B230747/DAY

DATE OF SUBMISSION: 9th April 2024.

 MEMORANDUM OF LAW

To: Mr. Marcley

From: Mrs. Hellena
Date : 09th April ,2024.
Re: Margarida and 4 ors v Goldtrus bank and anor

Brief facts:
The joint investment account at the Goldtrust Bank was initially established in the sole name of
Kiwanuka . While various family members, including his children and nephew Mr.Sentamu were added
as co-signatories, the account remained in Kiwanuka’s sole name. However, after a series of events,
including family disputes and discussions with the bank officials, kiwanuka eventually transferred the
assets to anew account in the jount names of himself and Mr.Sentamu. The mandate for the new account
is indicated that the funds and assets deposited were in their beneficial ownership, and in the event of
death , the survivor would be entitled to the entire assets. Following kiwanuk’s death, his widow and
Mr.Sentamu were involved in dispute regarding the division of income and assets from the account. Mrs.
Kiwanuka initially provided revised instructions directing the transfer of the assets to Acalens Trust, but
subsequent communications suggested disagreement between the parties on the intended distribution of
funds. The Goldtrust Bank arranged for the transfer of assets to the Acalens Trust under Mrs Kiwanuka’s
settlor ship, but later revised this to have Mr.Sentamu as the settlor based on discussions with him. The
question is whether goldtrust bank wrongfully paid money or transferred assets out of the account at the
direction of Mr.Sentamu, possibly contradicting the original wishes of Kiwanuka and causing further
disputes among the heirs.
Issues:

1. Whether or not there was relationship between the bank and kiwanuka (customer)?
2. Whether or not the bank breached any of their duties towards kiwanuka’s wishes?
3. Whether or not the Goldtrust Bank wrongfully paid money or transferred assets out of
the account at the direction of Mr.Sentamu after Kiwanuka’s death?
4. Whether there are any remedies available?

Laws applicable:

1. 1995 Constitution (as amended)

2. Bank of Uganda Act, Cap 5
3. The financial institutions Act of 2004
4. Evidence (Bankers Book) Act, Cap 7
5. Succession Act, Cap 162
 Resolution of issues:

1. WHETHER OR NOT THERE WAS RELATIONSHIP BETWEEN THE BANK AND KIWANUKA
(CUSTOMER)?
A BANK: according to section.1 (a) of the Evidence (Banker’s books) 1 “bank” or “banker” means any
person carrying on the business of banking in Uganda (including the Post Bank Uganda Limited
established under the Uganda Communications Act, and any branch of that bank). Sec.1 of the Bill of
Exchange Act,2 defines ‘’banker ‘’ to include a body of persons whether incorporated or not who carry
on the business of banking. This Act makes no attempt to define the business of banking.

Section 3 (c) of the financial institutions 3; defines a bank as any company licensed to carry on financial
institution business as its principal business. Lord Denning in United Dominions Trust Ltd v.
Kirkwood4. Stated that a company would only constitute a bank if it; accepts money from and collects
cheques from customers, places funds in their customers credit, honors cheques drawn on the bank by
customers when presented for payment, keeping some current or running accounts for entries of a
customer’s credit and debits. According to the Bank of Uganda Financial Consumers Protection
Guidelines, a customer means an individual who uses, has used any products, services provided by the
financial service provider. According to the facts kiwanuka opened an accounts with goldtrust bank which
therefore means that she is customer of the bank.

Customer: The main determination whether or not a person is a customer must depend on whether or not
that person has or will have an account in the Bank. In Great Western Railway Vs. London and
Country Banking Co. Ltd5 it was held that a person was not a customer of the bank who had no account
of any sort with the bank and nothing to his credit in any book or paper, held by the bank. The fact that
the bank does render some casual services to him does not make him a customer and the bank isn’t liable
to him as it would be to its customer. A bank customer is legally defined as someone who has an account
with a bank or who is in such a relationship with the bank that the relationship of a banker and customer
exists. In Commissioner of Taxation vs. English, Scottish and Australian Bank Limited 6 court
defined a customer of the bank as a person who has a more permanent relationship with the bank, for
instance, having an existing account with the bank. Habit or continued dealings will not make a party a
customer unless there is an account in his name. According to the facts, kiwanuka opened an accounts
with goldtrust bank which therefore means that he was a customer of the bank.

ISSUE 2. WHETHER THE BANK BREACHED ANY OF THEIR DUTIES TOWARDS

KIWANUKA?
According to the black law dictionary Henry Campbell Black, M. A.7 a duty is a human action which
is exactly conformable to the laws which require us to obey them as it was in R. Co. v. Filson, 35 Oki8
The words, "it shall be the duty," in ordinary legislation, imply the assertion of the power to command

1
Act Cap 7
2
Cap 65
3
Act of 2004
4
[1966] 2 QB 431
5
[1914] 19 Com. Cas 256
6
[1920] AC 683,
7
page 595
8
89, 91, 128 P. 298.
and to coerce obedience was it was stated in Kentucky v. Dennison, 24 How. 66, 107,9 duty is a legal
obligation that is owed by the bank towards the customer. The bank has a duty to honor customers
mandate in a way that it’s their duty to operate a customer’s account in accordance with the instructions
that the customer gives. In Stanbic Bank Ltd v. Uganda Crocs Ltd civil appeal10 the bank authorized
and honored the cheque which was presented to it by Suzan with a forged signature of the late Dr. Alex
alleging that he endorsed the cheque. Court held that the bank was guilty for acting negligently to its
customers account not inline to honor customers’ mandate. A customer has a duty to give a clear and
unambiguous instructions to the bank. In Stanbic Bank Uganda Ltd vs. Uganda Crocs Limited
SCCA11 Court stated that the duty of a bank is to act in accordance with the lawful requests of its
customer in normal operation of its customer’s account.In Makua Nairuba Mabel vs. Crane Bank Ltd
12
Justice Hellen Obura stated that as regards the duty of banker to customer, it is stated in a book titled
‘The Law Relating to Domestic Banking’’ Vol 1 by G.A. Penn, A.M. Shea and A. Arora at13 that;-‘It
is not the case that a banker has a duty to honor all his customer’s instructions. Rather there is a duty to
honor all instructions which the banker has, at the time of the original contract. Therefore considering the
facts below, the bank complied with the original request of Mr.Kiwanuna to open up anew bank account.
He got advised by his friend Horsley. Therefore the bank’s compliance with Mr sentamu’s request was of
no breach to the original contract. Thus the bank operated inaccordance to the letters of wishes of
Mr.Kiwanuka.

ISSUE 3. . WHETHER OR NOT THE GOLDTRUST BANK WRONGFULLY PAID MONEY OR

TRANSFERRED ASSETS OUT OF THE ACCOUNT AT THE DIRECTION OF MR.SENTAMU
AFTER KIWANUKA’S DEATH?
Joint Accounts: An account opened in the name of two or more customers is known as a joint account.
In a joint account the owners, either jointly or severally, act on behalf of themselves. In the ordinary joint
accounts, there is a rebuttable presumption that all those whose names the account stands must combine
in drawing the mandate or authorize one or more of their number to do so. The instructions give rise to a
dispute where the bank honors a cheque bearing the required signature or a cheque on which the
mandatory signature is missing. In Jackson v. White & Midland Bank Ltd14, the plaintiff entered in to
negotiations for a contract which he was to become a partner in or joint owner, of the first defendant
business.The first defendant forged the plaintiff’s signature on the several cheques which were honored in
the due course by the bank. The business negotiations between the plaintiff and defendant broke down
and the plaintiff sued for reverse of the debit expenses arising from payment of forged cheques. Court
held that the bank made an agreement with the plaintiff and the first defendant jointly that it should honor
any cheque signed by them jointly and a separate agreement with the plaintiff and the first defendant
severally that it would not honor any cheque unless he had signed them, that the plaintiff was entitled to
sue for breach of that separate agreement.
On the death of a joint account holder the survivor or survivors is or are under normal circumstances
entitled to the whole amount either under the law of devolution between joint owners or by custom of
banker or by express or implied agreement. However the rule of survivorship as applied to joint accounts
9
16 L.Ed. 717
10
4 of 2oo4 [2005]
11
ibid
12
HCCS No. 380/2009
13
page 65
14
(1967) 2 Lloyds Rep 68
can be rebutted. In Russel v. Scott (1936)15 Court observed that the right at law to the balance standing at
the credit of the account on each of the deceases party was thus vested in the survivor.
When the joint account holders are husband and wife, on the death of the husband the rule on
survivorship depends on the intentions of the parties. That is whether the method of keeping and working
the account was for convenience or for purpose of providing for the wife in case she was a survivor. In
Marshall v. Crutwell (1875)16, the husband was in bad health at time of opening the joint account. When
he died, it was held that the intention was not to make provision for the wife but merely to manage the
husband’s affairs conveniently and therefore she had no claim of the joint account. According to the facts
above,Mr. Kiwanuka opened a joint account with Mr.Sentamu before he died. This implied that Mr.
Sentamu had a legal obligation to control and the account. His decisions on directing the bank to transfer
the asssets to anew account A371 was a legal one. It’s also import to put clearly that Mr. kiwanuka before
his death had opted and wished to open up anew a count because his children had started misbehaving. So
Mr. Sentamu was right to do so. In addition to the above, Mrs. Kiwanuka was of no obligation to stop
MR.Sentamu from opening up the bank account since she wasn’t not a joint holder. She only has an
obligation of 30% as was stated by the late from the latters of wishes.

ISSUE 4: WHETHER THERE ARE ANY REMEDIES AVAILABLE?

Remedies can be in form of damages if at any case the bank breached the duty of care to the customer.
However basing on the above analysis and resolutions, it clear that neither the bank nor the client
breached any duty.

CONCLUSION:
Basing on the evidence presented , it’s clear that Kiwanuka intended for the joint investment account held
at the Goldtrust Bank to be in his sole beneficial ownership as indicated by the various actions he took in
relation to the account. It is not surprising that the assets were transferred out of the account at the
direction of Mr.Sentamu after kiwanuka’s death. This is because Mr.Sentamu was a joint partner in the
new account.

BIBLIOGRAPHY
MAIN STATUTES:
15
55 CLR 440
16
LR 20 Eq 328
 1. The Constitution of Uganda 1995

2. The Bank of Uganda Act, Cap 51

3. The Bill of Exchange Act, Cap 68

4. The Financial Institutions Act, 2004

5. The Companies Act, 2012

6. The Evidence (Bankers Books) Act Cap 7

BOOKS:
1. G.P Tumwine Mukubwa & Others, Essays in African Banking Law and Practice Second Edition.
(2009).
2. Chalmer’s Bills of Exchange 13th Ed.
3. Byles on Bills of Exchange
4. Hart’s Law of Banking
5. Grant on Banking
6. Byamugisha J. Negotiable Instruments 1978.

CASE LAWS:

1. United Dominions Trust Ltd v. Kirkwood[1966] 2 QB 431

2. Great Western Railway Vs. London and Country Banking Co. Ltd[1914] 19 Com. Cas 256
3. Commissioner of Taxation vs. English, Scottish and Australian Bank Limited[1920] AC 683
4. R. Co. v. Filson, 35 Oki 89, 91, 128 P. 298.
5. Kentucky v. Dennison, 24 How. 66, 10716 L.Ed. 717
6. Stanbic Bank Ltd v. Uganda Crocs Ltd civil appeal4 of 2oo4 [2005]
7. Makua Nairuba Mabel vs. Crane Bank Ltd HCCS No. 380/2009