Bank of Uganda v Caring for Orphans, Widows & Elderly Ltd (Civil Appeal No. 35 of 2007) [2009] UGCA 36 (26 August 2009)

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\fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\insrsid10181004\charrsid741016 THE REPUBLIC OF UGANDA \par \par IN THE COURT OF APPEAL OF UGANDA AT KAMPALA \par \par }\pard \ql \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\b\insrsid10181004\charrsid741016 CORAM:\tab HON. JUSTICE A. E. N. MPAGI-BAHIGEINE, JA. \par \tab \tab HON. JUSTICE C. N. B. KITUMBA, JA. \par \tab \tab HON. JUSTICE A. S. NSHIMYE, JA. \par \par }\pard \qc \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\b\ul\insrsid10181004\charrsid741016 CIVIL APPEAL NO.35 OF 2007 \par \par }\pard \ql \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\b\insrsid10181004\charrsid741016 BANK OF UGANDA\tab \tab \tab \tab :::::::::::::::::::: APPELLANT \par \tab \tab }{\insrsid10181004\charrsid741016 \par }\pard \qc \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\b\insrsid10181004\charrsid741016 VERSUS \par \par }\pard \ql \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\b\insrsid10181004\charrsid741016 CARING FOR ORPHANS, WIDOWS & ELDERLY LTD:RESPONDENT \par \par }\pard \qc \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\b\i\insrsid10181004\charrsid741016 [Appeal from the Ruling and Orders of the High Court of Uganda at Kampala (Akiiki-Kiiza J) dated 14/11/2006 ) in Miscellaneous Cause No. 202 of 2006 arising out of Miscellaneous Cause No. 188 of 2006] \par }{\b\i\insrsid12210343\charrsid741016 \par }{\b\ul\insrsid10181004\charrsid741016 JUDGEMENT OF }{\b\ul\insrsid11613652\charrsid741016 KITUMBA JA.}{\b\ul\insrsid10181004\charrsid741016 \par }\pard \ql \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\insrsid10181004\charrsid741016 \par }\pard \qj \li0\ri0\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\insrsid10181004\charrsid741016 This is an appeal }{\insrsid7691963\charrsid741016 from the ruling and orders of the High Court}{ \insrsid7293746\charrsid741016 ,}{\insrsid7691963\charrsid741016 }{\insrsid4589369\charrsid741016 }{\insrsid7691963\charrsid741016 given in Miscellaneous Cause No. 202 of 2006}{\insrsid7293746\charrsid741016 ,}{\insrsid7691963\charrsid741016 in which the respondent}{\insrsid11613652\charrsid741016 successfully}{\insrsid7691963\charrsid741016 applied for the prerogative order}{\insrsid11613652\charrsid741016 s}{\insrsid7691963\charrsid741016 of certiorari and prohibiti on against the appellant\rquote s decision to freeze the respondent\rquote s bank accounts.}{\insrsid85610\charrsid741016 \par }{\insrsid7691963\charrsid741016 The background to the appeal}{\insrsid11613652\charrsid741016 is briefly as follows;}{\insrsid7630818\charrsid741016 }{\insrsid11613652\charrsid741016 T}{\insrsid7630818\charrsid741016 he appellant is the Central Bank and the respondent is a company limited by guarantee to o}{\insrsid11613652\charrsid741016 ffer charitable assistance to }{\insrsid2122895\charrsid741016 venerable}{\insrsid16720541\charrsid741016 ,}{ \insrsid7630818\charrsid741016 disadvantaged widows, orphans and elderly persons throughout Uganda.}{\insrsid7691963\charrsid741016 \par }{\insrsid7630818\charrsid741016 On the 4}{\super\insrsid7630818\charrsid741016 th}{\insrsid7630818\charrsid741016 September 2006, the appellant in its capacity as the Central Bank wrote to the respondent. It informed the respondent that it had received information that the respondent was taking deposits }{\insrsid11613652\charrsid741016 from the public without a licenc}{\insrsid7630818\charrsid741016 e in contravention of section 4 (1) of the Financial Institutions Act 2004. The appellant requested the respondent to stop taking deposits and to refund all deposits taken from account holders. The appel lant further requested the respondent to submit to it records of the refund of deposits within three weeks. \par On 5}{\super\insrsid7630818\charrsid741016 th}{\insrsid7630818\charrsid741016 September 2006, the appellant wrote another letter to the respondent requesting it to provide specific documents to enable the appellant to assess the operation }{ \insrsid4938040\charrsid741016 of the respondent. On the 15}{\super\insrsid4938040\charrsid741016 th}{\insrsid4938040\charrsid741016 September 2006, the appellant wrote to the respondent requesting for information and assured it that all information provided will be treated in confidence. On Monday 18}{\super\insrsid4938040\charrsid741016 th}{\insrsid4938040\charrsid741016 September 2006 at approximately 9.00 am, the appellant f}{\insrsid11613652\charrsid741016 roze the respondent\rquote s accounts c}{\insrsid4938040\charrsid741016 ountry wide.}{\insrsid7630818\charrsid741016 \par }{\insrsid4938040\charrsid741016 The respondent applied to the High Court for judicial review of the appellant}{\insrsid7293746\charrsid741016 \rquote s}{\insrsid4938040\charrsid741016 decision and sought for the orders of certiorari and prohibition. It was challenging the manner in which the decision was made.}{\insrsid9467190\charrsid741016 }{\insrsid4938040\charrsid741016 The learned review judge decided the application in favour of the applicants/respondents and made the following orders; - \par {\listtext\pard\plain\i\lang1033\langfe1033\langnp1033\langfenp1033\insrsid9467190\charrsid741016 \hich\af0\dbch\af0\loch\f0 a)\tab}}\pard \qj \fi-461\li821\ri1109\sb120\sl360\slmult1\widctlpar \jclisttab\tx825\aspalpha\aspnum\faauto\ls1\adjustright\rin1109\lin821\itap0\pararsid741016 {\i\insrsid9467190\charrsid741016 \'93}{\i\insrsid4938040\charrsid741016 The decision of the Respondent freezing the Applicant\rquote s Bank accounts countrywide is hereby quashed. \par {\listtext\pard\plain\i\lang1033\langfe1033\langnp1033\langfenp1033\insrsid4938040\charrsid741016 \hich\af0\dbch\af0\loch\f0 b)\tab}The matter b e remitted to the Respondent with directions that the Respondent carry out proper investigations on the alleged breach of the relevant Acts governing Financial institutions which investigations must include giving a chance to the Applicant to explain thei r case before the Respondent exercises its powers of control under the said Financial Institutions Act. \par {\listtext\pard\plain\i\lang1033\langfe1033\langnp1033\langfenp1033\insrsid15955152\charrsid741016 \hich\af0\dbch\af0\loch\f0 c)\tab}}{\i\insrsid15955152\charrsid741016 The Respondent is prohibited from taking further decisions in regard to the Applicant \rquote s Bank accounts basing on their earlier and now quashed orders to freeze the Applicant\rquote s Bank accounts.}{\i\insrsid4938040\charrsid741016 \par {\listtext\pard\plain\i\lang1033\langfe1033\langnp1033\langfenp1033\insrsid15955152\charrsid741016 \hich\af0\dbch\af0\loch\f0 d)\tab}}{\i\insrsid15955152\charrsid741016 The Respondent is also prohibited from interfering with the Business of the Applicant until it carried out proper investigations and give the Applicant an opportunity to be heard in the process. \par {\listtext\pard\plain\i\lang1033\langfe1033\langnp1033\langfenp1033\insrsid15955152\charrsid741016 \hich\af0\dbch\af0\loch\f0 e)\tab}The Applicant is awarded General damages to the tune of Ug. Shillings 3,000,000/- (Three million shillings). \par {\listtext\pard\plain\i\lang1033\langfe1033\langnp1033\langfenp1033\insrsid15955152\charrsid741016 \hich\af0\dbch\af0\loch\f0 f)\tab}The Applicant is awarded costs of both the Application for leave and the substantive Application}{ \i\insrsid9467190\charrsid741016 \'94}{\i\insrsid15955152\charrsid741016 . \par }\pard \qj \li0\ri0\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\insrsid15955152\charrsid741016 The appellant being dissatisfied with the ruling and orders}{\insrsid11613652\charrsid741016 of the High Court, has filed }{\insrsid7293746\charrsid741016 an}{\insrsid15955152\charrsid741016 appeal to this court on the following grounds; - \par {\listtext\pard\plain\b\lang1033\langfe1033\langnp1033\langfenp1033\insrsid15955152\charrsid741016 \hich\af0\dbch\af0\loch\f0 1.\tab}}\pard \qj \fi-504\li1584\ri1109\sb120\sl360\slmult1\widctlpar \jclisttab\tx1590\aspalpha\aspnum\faauto\ls1\ilvl1\adjustright\rin1109\lin1584\itap0\pararsid741016 {\b\insrsid15955152\charrsid741016 The learned judge erred in law in quashing the respondent\rquote s decision to freeze the applicant\rquote s accounts.

\par {\listtext\pard\plain\b\lang1033\langfe1033\langnp1033\langfenp1033\insrsid15955152\charrsid741016 \hich\af0\dbch\af0\loch\f0 2.\tab}The learned judge erred in law and in fact in holding that the respondent made its decision to freeze the applicant \rquote s accounts without first giving it a hearing. \par {\listtext\pard\plain\b\lang1033\langfe1033\langnp1033\langfenp1033\insrsid15955152\charrsid741016 \hich\af0\dbch\af0\loch\f0 3.\tab}The learned judge erred in law and in fact in holding that it was necessary for the respondent to give applicant a hearing }{\b\insrsid6584743\charrsid741016 first before declaring the applicant\rquote s activities illegal.}{\b\insrsid15955152\charrsid741016 \par {\listtext\pard\plain\b\lang1033\langfe1033\langnp1033\langfenp1033\insrsid6584743\charrsid741016 \hich\af0\dbch\af0\loch\f0 4.\tab}}{\b\insrsid6584743\charrsid741016 The learned judge erred in law and in fact in interp}{\b\insrsid11613652\charrsid741016 reting statutory provisions whos}{\b\insrsid6584743\charrsid741016 e purpose is to prevent criminal activities and avert their consummation. \par {\listtext\pard\plain\b\lang1033\langfe1033\langnp1033\langfenp1033\insrsid6584743\charrsid741016 \hich\af0\dbch\af0\loch\f0 5.\tab}The learned judge erred in law in not holding that Bank of Uganda was immune from the procee dings out of which the appeal is brought. \par }\pard \qj \li0\ri0\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\insrsid6584743\charrsid741016 It prayed court to allow the appeal with costs in this court and in the High Court. \par During the hearing of the appeal the appellant was represented by}{\insrsid11613652\charrsid741016 , learned senior c}{\insrsid6584743\charrsid741016 ounsel}{\insrsid11613652\charrsid741016 ,}{\insrsid6584743\charrsid741016 Dr. Joseph Byamugisha and learned counsel Mr. Caleb Alaka, appeared for the respondent.}{\insrsid11613652\charrsid741016 Dr. Byamugisha argued grounds 1,2,3 and 4 together followed by ground 5. Mr. Alaka argued the grounds in the same way.}{ \insrsid6584743\charrsid741016 \par }{\insrsid11613652\charrsid741016 In this judgment I will deal with the grounds in the same }{\insrsid9467190\charrsid741016 manner}{\insrsid11613652\charrsid741016 counsel }{\insrsid9467190\charrsid741016 argued}{\insrsid11613652\charrsid741016 them.

\par Regarding grounds 1,2,3 and 4, Dr. Byamugisha complaint }{\insrsid9467190\charrsid741016 i}{\insrsid11613652\charrsid741016 s that the learned judge erred in law in holding that the appellant made a decision to freeze the respondent\rquote s accounts without first hearing}{\insrsid7293746\charrsid741016 it}{\insrsid11613652\charrsid741016 and that the appellant\rquote s action was contrary to the rules of natu}{\insrsid7293746\charrsid741016 ral}{\insrsid11613652\charrsid741016 justice.

\par }{\insrsid6584743\charrsid741016 He submitted that according to the evidence contained in the affidavit of Margaret Kaggwa Kasule, the legal counsel of the appellant, the Bank of Uganda received information that the respondent was taking deposits from the public and engag}{ \insrsid12274359\charrsid741016 ing in}{\insrsid6584743\charrsid741016 lending }{\insrsid12274359\charrsid741016 money though it was not licensed to do so by the appellant. He argued that according to section 118 of the Financial Institutions Act (Act 20 of 2004), the appellant has the duty to inform anybody who is contravening the Act. In counsel\rquote s view this does not require hearing.}{\insrsid15955152\charrsid741016 \par }{\insrsid12274359\charrsid741016 The appellant wrote to the respondent a letter dated 4}{\super\insrsid12274359\charrsid741016 th}{\insrsid12274359\charrsid741016 September 2006 which is Annex}{\insrsid9467190\charrsid741016 ture C to Ms Margaret Kaggwa Kas}{\insrsid12274359\charrsid741016 u}{\insrsid9467190\charrsid741016 l}{\insrsid12274359\charrsid741016 e affidavit. The appellant wrote a letter dated 5}{\super\insrsid12274359\charrsid741016 th}{ \insrsid12274359\charrsid741016 September 2006 requiring the respondent to provide documents but the lat}{\insrsid5993167\charrsid741016 t}{\insrsid12274359\charrsid741016 er refused to comply.}{\insrsid11613652\charrsid741016 As soon as the respondent received the inquiry, it began withdrawing large sums of money from its accounts.}{\insrsid12274359\charrsid741016 The appellant\rquote s members}{\insrsid4930690\charrsid741016 of staff}{\insrsid12274359\charrsid741016 from its Bank Supervision Department embarked on investigation of the respondent\rquote s activities but the la}{\insrsid9467190\charrsid741016 t}{\insrsid12274359\charrsid741016 ter was not co-operative. It did not allow the appellant\rquote s staff full and free access to the books of accounts. Counsel contended that}{\insrsid4930690\charrsid741016 , conduct}{\insrsid12274359\charrsid741016 was prima farce evidence that the respondent was}{\insrsid3239775\charrsid741016 operating without a licens}{\insrsid10225983\charrsid741016 e}{\insrsid3239775\charrsid741016 contrary to section 6}{\insrsid5993167\charrsid741016 of t}{\insrsid3239775\charrsid741016 he }{\insrsid4930690\charrsid741016 M}{ \insrsid3239775\charrsid741016 icro Finance Deposit}{\insrsid4930690\charrsid741016 -Taking}{\insrsid3239775\charrsid741016 Insti}{\insrsid4930690\charrsid741016 tuti}{\insrsid3239775\charrsid741016 ons Act. Counsel argued that it was not, therefore, true that the appellant froze the respondent\rquote s bank account}{\insrsid4930690\charrsid741016 s}{\insrsid3239775\charrsid741016 without investigations }{\insrsid4930690\charrsid741016 because}{ \insrsid3239775\charrsid741016 there is ample evidence from the affidavit of Ms Margaret Kaggwa Kasule and annextures thereto}{\insrsid4930690\charrsid741016 , showing that investigations were done}{\insrsid3239775\charrsid741016 . \par Counsel submitted cru}{\insrsid7293746\charrsid741016 c}{\insrsid3239775\charrsid741016 ial }{\insrsid4930690\charrsid741016 avermen}{\insrsid3239775\charrsid741016 ts in the af}{\insrsid4930690\charrsid741016 fidavit in reply were not contro}{ \insrsid3239775\charrsid741016 verted by the respondent. Dr. Byamugisha contended that when the respondent got t}{\insrsid4930690\charrsid741016 he letter from the appellant }{\insrsid7293746\charrsid741016 querying}{\insrsid3239775\charrsid741016 their activities they should have explained. In support of his submissions he relied on }{\b\ul\insrsid3239775\charrsid741016 Post Louis Corporation vs Attorney General of Mauritius [1965] AC 1111}{\insrsid3239775\charrsid741016 . }{ \insrsid4930690\charrsid741016 \par }{\insrsid3239775\charrsid741016 He contended that before the appellant closed the respondent\rquote s accounts it did not have the duty to hear it}{\insrsid9529337\charrsid741016 . Counsel argued that the statutory law has enough safe guards. In his view }{\insrsid9467190\charrsid741016 ,}{\insrsid9529337\charrsid741016 on receipt of the letter from the appellant, the respondent should have replied. Even after freezing of the accounts}{\insrsid9467190\charrsid741016 ,}{\insrsid9529337\charrsid741016 the respondent should have approached the appellant instead of filing a suit in the High Court for review. Counsel compared the situation in the instant appeal to a criminal investigation and submitted that the police do not have to hear the accused before arresting hi m/her. For that submission he relied on }{\b\ul\insrsid9529337\charrsid741016 Wiseman vs Borneman and Others [1971] AC 297}{\insrsid9529337\charrsid741016 . }{\insrsid4930690\charrsid741016 in which, t}{\insrsid9529337\charrsid741016 he }{ \insrsid4930690\charrsid741016 H}{\insrsid9529337\charrsid741016 ouse of Lords}{\insrsid4930690\charrsid741016 discussed at length }{\insrsid9529337\charrsid741016 the application of the rules of fair hearing before a}{\insrsid4930690\charrsid741016 decision is made by a tribunal}{\insrsid9529337\charrsid741016 .}{\insrsid12274359\charrsid741016 \par }{\insrsid10568116\charrsid741016 Mr. Alaka for the respondent}{\insrsid9467190\charrsid741016 ,}{\insrsid10568116\charrsid741016 oppose d the appeal and supported the ruling of the learned review judge. Counsel submitted that he was only challenging the decision making process by the appellant but not the decision that was made. He contended}{\insrsid11948600\charrsid741016 ,}{ \insrsid10568116\charrsid741016 that it }{\insrsid7293746\charrsid741016 is }{\insrsid10568116\charrsid741016 settled law that}{\insrsid11948600\charrsid741016 ,}{\insrsid10568116\charrsid741016 the respondent had}{\insrsid7293746\charrsid741016 a}{ \insrsid10568116\charrsid741016 right to fair hearing }{\insrsid4930690\charrsid741016 which}{\insrsid10568116\charrsid741016 is provided by Article, 28 (1) and 42 of the Constitution. He }{\insrsid4930690\charrsid741016 referred this}{ \insrsid10568116\charrsid741016 court}{\insrsid4930690\charrsid741016 to the}{\insrsid10568116\charrsid741016 decision }{\insrsid4930690\charrsid741016 of}{\insrsid10568116\charrsid741016 }{\b\ul\insrsid10568116\charrsid741016 Pius Niwagaba vs Law Development Centre, Civil Application No. 18 of 2005}{\insrsid10568116\charrsid741016 }{\insrsid4930690\charrsid741016 (}{\insrsid10568116\charrsid741016 un reported}{\insrsid4930690\charrsid741016 )}{\insrsid10568116\charrsid741016 . \par Counsel argued that under section 118 of the Financial Institution}{\insrsid9467190\charrsid741016 s}{\insrsid10568116\charrsid741016 }{\insrsid16146471\charrsid741016 Act}{\insrsid10568116\charrsid741016 a hearing is not required. He submitted that the above section is used where the appellant believes that the funds on the account are proceeds of crime.}{\insrsid9773230\charrsid741016 He argued that the section should be literally interpreted. Counse l contended that in section 118 of the Financial Institution}{\insrsid9467190\charrsid741016 s}{\insrsid9773230\charrsid741016 }{\insrsid16146471\charrsid741016 Act}{\insrsid9773230\charrsid741016 , crime is not defined.}{\insrsid16146471\charrsid741016 }{\insrsid9773230\charrsid741016 In an attempt to give instances when one is not entitled to benefits from crime, he relied on }{\b\ul\insrsid9773230\charrsid741016 Halsbury\rquote s Laws of England 4}{\b\ul\super\insrsid9773230\charrsid741016 th}{ \b\ul\insrsid9773230\charrsid741016 Edition para 572 p. 349}{\insrsid9773230\charrsid741016 . }{\insrsid16146471\charrsid741016 \par }{\insrsid9773230\charrsid741016 Counsel }{\insrsid7293746\charrsid741016 vehemently}{\insrsid9773230\charrsid741016 argued that all along the appellant did not use the Financial Institution}{\insrsid9467190\charrsid741016 s}{ \insrsid9773230\charrsid741016 }{\insrsid16146471\charrsid741016 Act}{\insrsid9773230\charrsid741016 but tried to widen its scope of operation by using both the Financial Institutions Act and the Micro-Finance Deposit \endash }{ \insrsid16146471\charrsid741016 Taking}{\insrsid9773230\charrsid741016 Institutions Act. According to counsel}{\insrsid16146471\charrsid741016 ,}{\insrsid9773230\charrsid741016 the appellant had to}{\insrsid5580407\charrsid741016 use one}{ \insrsid16146471\charrsid741016 Act}{\insrsid5580407\charrsid741016 at the time and not both, otherwise those concerned would suffer double jeopardy.}{\insrsid9773230\charrsid741016 \par }{\insrsid5580407\charrsid741016 Counsel argued that from the chronology of events, the appellant did not act fairly. He submitted that the appellant got}{\insrsid7293746\charrsid741016 a}{\insrsid5580407\charrsid741016 complaint from the Chairma n of the District of Ibanda and swung in}{\insrsid7293746\charrsid741016 to}{\insrsid5580407\charrsid741016 action that very day. The appellant wrote a letter on 4/9/2006, directing the respondent to stop taking deposits from the account holders, refund deposits and submit records of such refunds to the appellants. On the following day, they requested for}{ \insrsid16146471\charrsid741016 several}{\insrsid5580407\charrsid741016 documents}{\insrsid16146471\charrsid741016 like}{\insrsid5580407\charrsid741016 certificate of }{\insrsid16146471\charrsid741016 incorporation}{\insrsid5580407\charrsid741016 . By their letter 15/9/2006, the appellant still requested for information but before such information could}{\insrsid11737364\charrsid741016 be}{\insrsid5580407\charrsid741016 gather}{\insrsid9467190\charrsid741016 ed and sent on Monday 18/9/2006,}{ \insrsid5580407\charrsid741016 }{\insrsid9467190\charrsid741016 the Central Bank}{\insrsid5580407\charrsid741016 froze the respondent\rquote s accounts without giving the respondent a hearing. He submitted that the letter of 5/9/2006 was different. Counsel contended that the re}{\insrsid15498313\charrsid741016 spondent did not refuse to corpe}{\insrsid5580407\charrsid741016 rate. He submitted that the learned review judge was right. He prayed court to dismiss the appeal. \par In reply, Dr. Byamugisha submitted that by annexture E to Ms. Kaggwa Kasule\rquote s affidavit, the appellant informed the respondent that it had not allowed}{\insrsid9467190\charrsid741016 the staff of the Central Bank}{\insrsid5580407\charrsid741016 access to their books of accounts. }{\insrsid4539379\charrsid741016 This letter }{\insrsid16146471\charrsid741016 remained}{\insrsid9467190\charrsid741016 un-contro}{\insrsid4539379\charrsid741016 va}{\insrsid5580407\charrsid741016 ted }{ \insrsid4539379\charrsid741016 and the respondent is bo}{\insrsid16146471\charrsid741016 und by}{\insrsid4539379\charrsid741016 it.}{\insrsid5580407\charrsid741016 \par }{\insrsid4539379\charrsid741016 Dr. Byamugisha submitted that all along the respondent are challenging the decision making process by the appellant and not the application of section 118 of the Financial Institution}{\insrsid16146471\charrsid741016 s}{ \insrsid4539379\charrsid741016 Act. The judge made no finding regarding the sect}{\insrsid16146471\charrsid741016 ion}{\insrsid9467190\charrsid741016 .}{\insrsid16146471\charrsid741016 }{\insrsid9467190\charrsid741016 S}{\insrsid16146471\charrsid741016 ince counsel did not cross-}{\insrsid4539379\charrsid741016 appeal or file grounds affirming the decision of the judge, he should not submit about the above section. \par I have carefully perused the record, listened to the submissions of both counsel. }{\insrsid883946\charrsid741016 The crucial point for decision in this appeal is whether the appellant acted}{\insrsid7293746\charrsid741016 contrary to the rules of natural}{\insrsid883946\charrsid741016 justice, when it froze the respondent\rquote s back accounts country wide without first giving the respondent a fair hearing. \par }\pard \qj \li0\ri29\sb120\sl360\slmult1\widctlpar\tx9000\aspalpha\aspnum\faauto\adjustright\rin29\lin0\itap0\pararsid741016 {\insrsid4539379\charrsid741016 The record shows}{\insrsid883946\charrsid741016 that}{\insrsid4539379\charrsid741016 the appellant which is the Central }{\insrsid883946\charrsid741016 B}{\insrsid4539379\charrsid741016 ank of Uganda}{\insrsid1931530\charrsid741016 , is empowered to freeze bank accounts under s}{\insrsid4539379\charrsid741016 ection 118 of the Financial Institution Act}{\insrsid1931530\charrsid741016 , which provides}{\insrsid4539379\charrsid741016 ;}{\insrsid2572422\charrsid741016 \par }\pard \qj \fi-720\li720\ri1109\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1109\lin720\itap0\pararsid741016 {\insrsid2572422\charrsid741016 \tab }{\b\insrsid2572422\charrsid741016 118 (1) The Central Bank shall if it has reason to believe that any account held in any financial institution has funds on the account which are the proceed}{\b\insrsid1931530\charrsid741016 s}{\b\insrsid2572422\charrsid741016 of crime, direct in writing the financial institution at which the account is maintained to freeze the account in accordance with the direction.}{\b\insrsid4539379\charrsid741016 \par }{\b\insrsid2572422\charrsid741016 \tab (2) A financial institution acting in compliance with a direction under subsection (1) of this section shall incur no liability solely as a result of that action. \par }\pard \qj \li0\ri0\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\insrsid2572422\charrsid741016 The submissions by appellant\rquote s counsel that no hearing is provided for before the Central Bank orders for the freezing of the account is correct. \par }{\insrsid9907649\charrsid741016 Section 4 of the Micro-Finance Deposit \endash Taking Institution}{\insrsid1931530\charrsid741016 s}{\insrsid9907649\charrsid741016 Act (Act 5 of 2005) makes its mandatory that any one who transacts micro finance businesses must be licensed by the appellant. The sections states; - \par }\pard \qj \li720\ri1109\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1109\lin720\itap0\pararsid741016 {\b\insrsid9907649\charrsid741016 4. }{\b\insrsid4336481\charrsid741016 (1) No microfinance business shall be transacted in Uganda except by a company, which is }{\b\insrsid4213682\charrsid741016 in }{\b\insrsid4336481\charrsid741016 possession of a valid license granted by the Central Bank authorizing it to conduct microfinance business in Uganda.}{ \b\insrsid9907649\charrsid741016 \par }{\b\insrsid4336481\charrsid741016 (2) Any person who contravenes subsection (1) commits an offence and is liable on co nviction to a fine not exceeding two hundred and fifty currency points or imprisonment not exceeding two years or both; and in case of a continuing offence to a higher fine not exceeding fifty currency points for each day following which the offence conti nues after conviction. \par }\pard \qj \li0\ri0\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\insrsid4336481\charrsid741016 Section 6 of the same Act further provides; - \par }\pard \qj \fi-720\li720\ri1109\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1109\lin720\itap0\pararsid741016 {\b\insrsid4336481\charrsid741016 6 (1) Whenever the Central Bank has reasons to believe that a person is transacting microfinance business in Uganda without licence, the Central bank shall, at all times ;- \par }\pard \qj \li1555\ri1109\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1109\lin1555\itap0\pararsid741016 {\b\insrsid4336481\charrsid741016 a) have full and free access to the premises at}{\b\insrsid7486519\charrsid741016 which that person is suspected of transacting microfinance business without a licence or at which that person may have books, accounts and records; and}{\b\insrsid4336481\charrsid741016 \par }{\b\insrsid7486519\charrsid741016 b) have the power to examine, copy or take possession of the books, acc ounts and records of that person in order to ascertain whether or not that person has contravened, or is contravening any of the provisions of this Act.}{\insrsid7486519\charrsid741016 \par }\pard \qj \fi-720\li720\ri1109\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1109\lin720\itap0\pararsid741016 {\b\insrsid7486519\charrsid741016 (2) Any refusal to allow full and free access to the premises referred to in subsection (1) or to submit any books, accounts or records to which subsection (1) applies shall be prima facie evidence of the fact of operation without a licence. \par }\pard \qj \li0\ri0\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\insrsid7486519\charrsid741016 According to the evidence on record, on 4/9/2006, the appellant wrote to the}{ \insrsid3539832\charrsid741016 Director General Secretary of the}{\insrsid7486519\charrsid741016 respondent}{\insrsid3539832\charrsid741016 , informing it that the Central Bank has received information and documents that the company was taking deposits from the public without licence. This was in contravention of section 4 (1) of the Financial Institution Act. The respondent was requested to cease from taking such deposits and to refund deposits taken from account holders. The respondent was further requested to submit the records of the refund to the Bank of Uganda.}{\insrsid7486519\charrsid741016 \par }{\insrsid3539832\charrsid741016 By the letter dated 5/9/2006, the appellant requested the respondent to pr ovide certain documents e.g. copy of certificate of incorporation of COWE Ltd etc. This request was made for the purpose of assessing the operation of the respondent. Again on 15/9/2006, the appellant wrote to the respondent requesting it for information} {\insrsid1931530\charrsid741016 ,}{\insrsid3539832\charrsid741016 for example}{\insrsid1931530\charrsid741016 ,}{\insrsid3539832\charrsid741016 list of all branches, sub-branches or agencies}{\insrsid9467190\charrsid741016 ,}{ \insrsid3539832\charrsid741016 }{\insrsid1931530\charrsid741016 among others}{\insrsid9467190\charrsid741016 ,}{\insrsid1931530\charrsid741016 }{\insrsid3539832\charrsid741016 by 15/9/2006}{\insrsid9710395\charrsid741016 .}{ \insrsid3539832\charrsid741016 \par }{\insrsid9710395\charrsid741016 It should be noted that the information required by each of the two letters was different. We appreciate the argument by counsel for the appellant that the Bank of Uganda ordered for the freezing of the accounts after the} {\insrsid4213682\charrsid741016 respondent had refused to corpe}{\insrsid9710395\charrsid741016 rate}{\insrsid1931530\charrsid741016 .}{\insrsid9710395\charrsid741016 }{\insrsid1931530\charrsid741016 P}{\insrsid9710395\charrsid741016 aragraph 9 of the}{ \insrsid5851276\charrsid741016 affidavit in support of the }{\insrsid9710395\charrsid741016 application by Balikoowa Nixon,}{\insrsid5851276\charrsid741016 is not true }{\insrsid9710395\charrsid741016 where he stated; - \par }\pard \qj \fi-720\li720\ri1109\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1109\lin720\itap0\pararsid741016 {\insrsid9710395\charrsid741016 \tab }{\b\i\insrsid9710395\charrsid741016 \'93 9. The Respondent in reaching its decision to demand that the Applicant makes a refund of deposits to the Public and ordering the freezing of the Applicant\rquote s Bank accounts relied on information that it did not independently verify by investigations, giving the Applicant an opportunity to be heard or a fair hearing\'94. \par }\pard \qj \li0\ri0\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\insrsid16279409\charrsid741016 There is on record un-contro}{\insrsid9710395\charrsid741016 veted evidence of annexture \lquote }{ \insrsid16279409\charrsid741016 E}{\insrsid9710395\charrsid741016 \rquote of Ms. Kaggwa Kasule\rquote s affidavit. This is a letter dated 13}{\super\insrsid9710395\charrsid741016 th}{\insrsid9710395\charrsid741016 September 2006 from the appellant. The letter was written by the Executive Director Inspection. The letter reads in part; - \par }\pard \qj \li720\ri389\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin389\lin720\itap0\pararsid741016 {\insrsid9710395\charrsid741016 \tab }{\b\i\insrsid9710395\charrsid741016 \lquote I have been informed}{ \b\i\insrsid3172111\charrsid741016 that staff from Bank Supervision Function were denied by COWE Ltd Head Office to carry out examination of the books of accounts because such information is confidential. Please take note that refusal to allow full and free access to the books of accounts shall be prima facie evidence of the fact of operation without a Micro Deposit taking Institution licence (see section 6 of MDI Act 2003).}{\b\i\insrsid9710395\charrsid741016 \par }{\b\i\insrsid3172111\charrsid741016 In this regard, you are hereby directed to cooperate with staff from Supervision, Bank of Uganda and avail all the necessary information to enable them accomplish their assignment\rquote .}{ \i\insrsid3172111\charrsid741016 \par }\pard \qj \li0\ri0\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\insrsid3172111\charrsid741016 Annexture }{\insrsid5708119\charrsid741016 \lquote }{\insrsid3172111\charrsid741016 F}{ \insrsid5708119\charrsid741016 \rquote }{\insrsid3172111\charrsid741016 to Kaggwa Kasule\rquote s affidavit is evidence of the investigations that were done by the appellant}{\insrsid9467190\charrsid741016 in}{\insrsid3172111\charrsid741016 respect of the respondent. \par }{\insrsid9467190\charrsid741016 W}{\insrsid3172111\charrsid741016 hen the respondent did not allow the appellant\rquote s staff to examine its record and books of accounts that }{\insrsid4213682\charrsid741016 was }{\insrsid3172111\charrsid741016 prima facie evidence that it was transacting business without a licence from the Central Bank.}{\insrsid16279409\charrsid741016 }{\insrsid5708119\charrsid741016 The respondent by transacting micro-finance business without a licence from the ap pellant had committed a criminal offence as it is specified in section 4 (1) (2) of the Micro-Finance Deposit \endash Taking Institution}{\insrsid4213682\charrsid741016 s}{\insrsid5708119\charrsid741016 Act. \par The argument by respondent\rquote s counsel that crime is not defined in section 118 of the Financial Institutions Act is not tenable. The authority of }{\b\ul\insrsid5708119\charrsid741016 Hasbury\rquote s Law of England paragraph 349}{ \insrsid5708119\charrsid741016 , is not applicable to the instant appeal. \par Dr. Byamugisha\rquote s argument is quite correct, that the learned judge did not make a finding on section 118 of the Financial Institutions Act. The ruling of the High Court was entirely on the way the decision to freeze the respondent\rquote s}{ \insrsid16279409\charrsid741016 bank}{\insrsid5708119\charrsid741016 accounts was made. \par Taking into account the functions of the appellant as provided in the Constitution, the Financial Institutions Act,}{\insrsid16279409\charrsid741016 and the Micro-Finance Deposit T}{\insrsid5708119\charrsid741016 a king Institutions Act, the appellant did not have to hear the respondent before taking the action that it did. Requiring such a hearing would be stretching}{\insrsid16279409\charrsid741016 the}{\insrsid5708119\charrsid741016 right to fair hearing too far}{\insrsid3697526\charrsid741016 .}{\insrsid5708119\charrsid741016 \par }{\insrsid3697526\charrsid741016 I respectfully agr}{\insrsid16279409\charrsid741016 ee with the statement of Lord Re}{\insrsid3697526\charrsid741016 id in }{\b\ul\insrsid3697526\charrsid741016 Wiseman & another vs Born}{ \b\ul\insrsid9467190\charrsid741016 e}{\b\ul\insrsid3697526\charrsid741016 man and Others}{\insrsid16279409\charrsid741016 (s}{\insrsid3697526\charrsid741016 upra) where }{\insrsid16279409\charrsid741016 he stated}{\insrsid3697526\charrsid741016 ; -

\par }\pard \qj \li720\ri389\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin389\lin720\itap0\pararsid741016 {\b\insrsid3697526\charrsid741016 \'93}{\b\insrsid11565821\charrsid741016 Natural justice requires that the procedure before any tribunal which is acting judicially shall be fair in all circumstances, and I}{\b\insrsid3697526\charrsid741016 }{\b\insrsid11565821\charrsid741016 would be sorry to see this fundamental general principle degene rate into a series of hard-and-fast rules. For along time the courts have, without objection from Parliament, supplemented procedure laid down in legislation where they have found that to be necessary for this purpose. }{ \b\ul\insrsid11565821\charrsid741016 But before this unusual kind of power is exercised it must be clear that the statutory}{\b\ul\insrsid9467190\charrsid741016 procedure is insufficient to achieve}{\b\ul\insrsid11565821\charrsid741016 justice and that to require additional steps would not frustrate the apparent purpose of the leg}{\b\ul\insrsid12590289\charrsid741016 islation\'94}{\b\insrsid12590289\charrsid741016 .}{\b\insrsid16279409\charrsid741016 }{ \insrsid16279409\charrsid741016 (Underlining is mine)}{\b\insrsid12590289\charrsid741016 \par }\pard \qj \li0\ri0\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\insrsid12590289\charrsid741016 With due respect}{\insrsid16279409\charrsid741016 ,}{\insrsid12590289\charrsid741016 the learned trial judge was wrong to hold that the respondent should have been given a hearing before the freezing of the accounts.}{\insrsid3697526\charrsid741016 \par }{\insrsid11948600\charrsid741016 I}{\insrsid12590289\charrsid741016 now consider the last issue and ground 5 in this appeal which is a complaint that the learned judge erred in law in not holding that the Bank of Uganda was immune from proceedings out of which this appeal is brought. \par }{\insrsid16279409\charrsid741016 Dr. Byamugisha}{\insrsid3408332\charrsid741016 contended that the appellant is immune for anything intended to be done or is done in good faith under both the Financial Institution}{\insrsid9467190\charrsid741016 s}{ \insrsid3408332\charrsid741016 }{\insrsid16279409\charrsid741016 Act}{\insrsid3408332\charrsid741016 and the Micro Finance Deposit \endash Taking Institutions Act. Since the respondent did not plead or prove that the appellant acted in bad faith it did not have a cause of action. \par Counsel for the respondent contended that since the responde}{\insrsid7293746\charrsid741016 nt did not fall under the ambit}{\insrsid3408332\charrsid741016 of the Fin}{\insrsid16279409\charrsid741016 ancial Institution}{\insrsid9467190\charrsid741016 s} {\insrsid16279409\charrsid741016 Act or Micro-}{\insrsid3408332\charrsid741016 Finance Deposit \endash Taking Institutions there was no need to plead bad faith. \par Section 124 of the Financial Institutions Act and section 86 of the Micro-Finance Deposit Taking Institutions have}{\insrsid16279409\charrsid741016 similar provisions which state}{\insrsid3408332\charrsid741016 ; - \par }\pard \qj \li720\ri1109\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1109\lin720\itap0\pararsid741016 {\b\insrsid3408332\charrsid741016 \'93No suit or other legal proceedings shall lie against the Central Bank}{ \b\insrsid9129376\charrsid741016 \'85\'85for anything which is done or intended to be done in good faith under this Act\'94}{\insrsid9129376\charrsid741016 .}{\insrsid3408332\charrsid741016 \par }\pard \qj \li0\ri0\sb120\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\insrsid9129376\charrsid741016 Since the re}{\insrsid16279409\charrsid741016 spondent received communication}{ \insrsid9129376\charrsid741016 from the appellant whereby it was alleged that it was contravening the Financial Institutions Act and the Micro-Finance Deposit-Taking Institutions Ac}{\insrsid16279409\charrsid741016 t it had the obligation to plead}{ \insrsid9129376\charrsid741016 and prove bad faith on part of the appellant. \par In view of the above}{\insrsid16279409\charrsid741016 ,}{\insrsid9129376\charrsid741016 the application for review before the High Court was incompetent. }{\insrsid16279409\charrsid741016 \par }{\insrsid9129376\charrsid741016 I find merit in the whole appeal. I would allow the appeal with costs to the app}{\insrsid16279409\charrsid741016 el}{\insrsid9129376\charrsid741016 l}{\insrsid16279409\charrsid741016 ant}{\insrsid9129376\charrsid741016 in this }{\insrsid16279409\charrsid741016 C}{\insrsid9129376\charrsid741016 ourt and in the High Court.}{\insrsid11948600\charrsid741016 The award of general damages of Shs. 3,000,000/- is set aside.}{\insrsid9129376\charrsid741016 \par \par }\pard \qc \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\b\insrsid9129376\charrsid741016 Dated this\'85\'85}{\b\insrsid13833004\charrsid741016 26}{\b\super\insrsid13833004\charrsid741016 th}{ \b\insrsid13833004\charrsid741016 }{\b\insrsid9129376\charrsid741016 \'85\'85\'85day of\'85\'85}{\b\insrsid13833004\charrsid741016 August}{\b\insrsid9129376\charrsid741016 \'85\'85\'85\'852009. \par \par \par C. N. B. KITUMBA \par }{\b\ul\insrsid9129376\charrsid741016 JUSTICE OF APPEAL}{\b\insrsid9129376\charrsid741016 . \par }{\b\insrsid4589369\charrsid741016 \par }\pard \ql \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\b\ul\insrsid4589369\charrsid741016 JUDGMENT OF HO. A. E. MPAGI BAHIGEINE, JA \par }{\b\insrsid4589369\charrsid741016 \par }{\insrsid4589369\charrsid741016 I am entirely in agreement with the findings of Kitumba JA in the lead judgment. \par \par Since A. Nshimye, JA also agrees, the appeal succeeds with costs here and below, as proposed by Kitumba JA. \par \par \par Dated this \'85\'8526}{\super\insrsid4589369\charrsid741016 th}{\insrsid4589369\charrsid741016 \'85.day of\'85. August,\'85\'85 2009. \par \par \par HON JUSTICE A. E. N. MPAGI-BAHIGEINE, \par Justice of Appeal \par \par }{\b\ul\insrsid4589369\charrsid741016 JUDGMENT OF A. S. NSHIMYE, JA \par }{\insrsid4589369\charrsid741016 \par I have had the benefit of reading in draft, the judgment of Hon Justice C. N. B. Kitumba. I agree that the appeal be allowed in terms as proposed by her. \par \par Dated this .26}{\super\insrsid4589369\charrsid741016 th}{\insrsid4589369\charrsid741016 \'85\'85.day of \'85. Aug\'85\'852009 \par }{\insrsid16131557\charrsid741016 HON A. S. NSHIMYE \par JUSTICE OF APPEAL \par }{\insrsid4589369\charrsid741016 \par }\pard \qc \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid741016 {\b\insrsid9129376\charrsid741016 \par }}