High Court Clears Equity Bank After Controversial UGX 65 Million Withdrawal From a Customer's Savings Account, Says Court Orders Must Be Obeyed

Waboga David
Nov 22
7 min read

FACTS

The Plaintiff, Beatrice Aber, operated Savings Account No. 1033101048850 with Equity Bank (U) Ltd since 2018.

She left Uganda for South Sudan, leaving UGX 63,492,018 on the account, which later became dormant.

In 2020, while the Plaintiff was abroad and unreachable, Equity Bank was served with a Garnishee Order Nisi (11 Aug 2020) and subsequently a Garnishee Order Absolute (24 Aug 2020) issued by the High Court at Mukono in Misc. Cause No. 51 of 2020 arising from an arbitral award allegedly in favour of Prudence Construction & Civil Engineering Ltd. kuru- The bank verified the order with the Mukono High Court registry (certified true copy obtained on 17 Sep 2020) and debited UGX 65,557,210 (principal + costs + interest) in September 2020 and paid the judgment creditor.

The Plaintiff only discovered the debit in January 2022 upon her return to Uganda. She sued the bank (and initially the judgment creditor, later struck out) claiming the garnishee order was fraudulent/forged and that the bank was grossly negligent or colluded in the fraud.

The Plaintiff relied heavily on 2020 circulars from the Financial Intelligence Authority (FIA) and the Judiciary warning banks and courts about a criminal syndicate using fake or irregularly obtained garnishee orders to raid dormant accounts.

The Plaintiff contended that: the Court order was forged; she was never served with any process; and Equity Bank acted negligently and breached its fiduciary duty.

Prudence Construction was later struck off the suit after URSB confirmed it was no longer an active company.

The matter proceeded against Equity Bank alone.

ISSUES

The Court considered:

Whether the debit of UGX 65,557,210 from the Plaintiff’s account was lawful.
Whether Equity Bank colluded or participated in fraud.
What remedies were available.

The Court also resolved two preliminary objections:

Whether the suit was barred by law due to the Defendant being misnamed (“Equity Bank” instead of “Equity Bank (U) Ltd”).
Whether the Plaintiff departed from her pleadings.

SUBMISSIONS

Plaintiff’s Arguments

The Plaintiff submitted that the garnishee order was fraudulent, obtained without notifying or serving her.

Equity Bank ignored FIA advisories warning banks about dormant accounts and fraudulent court orders.

The Bank failed to:

verify the legitimacy of the order properly;
exercise due diligence;
contact the Plaintiff;
report a suspicious transaction;
comply with its fiduciary duty to protect customer funds.

The bank had clear “red signals” (dormant account, unreachable customer, suspiciously quick progression from nisi to absolute, known fraudulent entities) yet failed to contact her further or report to FIA.

Alleged collusion or at least gross negligence by bank staff.

She relied on Ridge v Baldwin, KCCA v Ssebuwufu, and FIA circulars.

Defendant’s Arguments (Equity Bank)

The Bank acted in compliance with a garnishee order absolute verified by the High Court at Mukono.

Once the Court freezes or orders attachment of an account, the bank’s duty to the customer is suspended.

Cited HM Commissioners of Customs & Excise v Barclays Bank (2006)—a bank assuming a neutral position when served with court orders.

Argued the Plaintiff was unreachable through known contacts.

Claimed no fraud, negligence, or collusion.

LEGAL REPRESENTATION

Plaintiff, Mr. Kalule Godfrey, Mr. Balondemu Godfrey & Mr. Ntende Raymond
Defendants, Mr. Allan Mark Lutaaya & Mr. Martin Ssekatawa

COURT’S FINDINGS

Preliminary Objection on Wrong Party Sued (Misnomer)

Issue Raised

The Defendant argued that the suit was incompetent because the Plaintiff sued “Equity Bank” instead of the correct legal entity, “Equity Bank (U) Ltd.” The Defendant claimed that the suit should be struck out for suing a non-existent or wrong party.

Court’s Analysis

The court held that the error in the name of the Defendant did not go to the root of the suit. It was simply a misnomer, meaning a mistake in the description of an existing party, not the introduction of a completely different party.

The intention of the Plaintiff was clearly to sue the bank operating in Uganda.

“Equity Bank” is a name commonly used in the course of business, even though the formal corporate name is “Equity Bank (U) Ltd.”

The Defendant clearly understood that it was the intended party because it entered appearance and responded to the suit.

No injustice or prejudice was suffered by the Defendant as a result of the misdescription.

The court determined that this was a curable misnomer, not a fatal defect. Courts generally allow amendment of pleadings to correct such minor naming errors.

“The reference to the Defendant as ‘Equity Bank’ and not ‘Equity Bank (U) Ltd’ was a misnomer that can be cured… this objection is devoid of merit.”

The objection was dismissed, and the suit proceeded against the correctly described defendant.

Preliminary Objection on the Alleged Departure from Pleadings

Issue Raised

The Defendant argued that the Plaintiff improperly introduced fraud as an issue, claiming it amounted to a departure from the original pleadings. The Defendant insisted that fraud had not been properly pleaded from the outset.

Court’s Analysis

The court reviewed the pleadings and found that Fraud was explicitly pleaded in the Plaint. The allegations of fraud were sufficiently detailed to meet the legal requirement of pleading fraud, meaning the fraudulent acts were particularised. The Defendant had responded to the fraud allegations in its written statement of defence, indicating that it understood the case it had to meet. Since the Defendant had already addressed the issue in its pleadings, there was no prejudice and no surprise introduced by the Plaintiff.

The court emphasised that a preliminary objection cannot stand where the party raising it has already substantively engaged with the issue being complained about.

The court ruled that there was no departure from pleadings, and the fraud issue was properly before the court.

“The Defendant has not been prejudiced by the addition of the issue of fraud… this objection is hereby overruled.”

The objection was dismissed, and the matter proceeded with fraud as one of the issues for determination.

1. On the Lawfulness of the Debit

The Court reaffirmed the long-established principle that a valid court order supersedes the banker–customer contractual and fiduciary relationship. Justice Rubagumya emphasized that once a garnishee order absolute is served and verified, the bank has no discretion to ignore or question it.

The Court held that:

“It is my finding that the debit of the Plaintiff’s account was based on the garnishee order absolute issued by the High Court at Mukono… Court orders have to be respected, whether valid or invalid, ex parte or inter-party.”

The Court relied on Arim Felix Clive v Stanbic Bank and the foundational authority of Hadkinson v Hadkinson, underscoring that obedience to court orders is mandatory, regardless of a party’s dissatisfaction with the underlying process.

The Judge further stated:

“In view of the authorities above, I find that the Defendant carried out the necessary due diligence and had an overarching duty as it was expected to obey the Court order… the debit of UGX 65,557,210/=… was lawful pursuant to a Court order served on the Defendant.”

Accordingly, the bank’s actions were lawful, and the debit was made in compliance with a binding judicial directive.

2. On Alleged Breach of Fiduciary Duty

The Court examined whether the bank breached its fiduciary obligations when it acted on the order. In doing so, it adopted both English and Ugandan jurisprudence on freezing and garnishee orders, particularly the landmark decision in Customs & Excise Commissioners v Barclays Bank Plc, later followed by the Supreme Court of Uganda in Arim v Stanbic.

Justice Rubagumya quoted Lord Bingham’s principle:

“A bank’s relationship with its customers is subject to the law of the land… It seems to me in the final analysis unjust and unreasonable that the Bank should, on being notified of an order which it had no opportunity to resist, become exposed to liability.”

The Court found that:

The Defendant verified the authenticity of the order directly with the issuing court.
The bank attempted, unsuccessfully, to contact both the Plaintiff and her next of kin.
These steps amounted to sufficient due diligence.

Because the garnishee order took precedence, the bank’s duty to obey the Court superseded its fiduciary obligations to the customer. No breach was established.

3. On Alleged Fraud or Collusion

The Court reiterated the stringent standard for proving fraud, referencing Kampala Bottlers v Damanico, which requires fraud to be proven strictly and with cogent evidence, exceeding the usual civil standard.

The Plaintiff alleged:

Collusion between bank officials and third parties,
Unauthorized disclosure of her account details,
Participation in or facilitation of fraudulent court proceedings.

However, the Court held that no evidence whatsoever was adduced to link the bank or its employees to any fraudulent scheme.

Justice Rubagumya stated:

“The Plaintiff has failed to impute any fraud, collusion, or suspicious activity… The failure of the Plaintiff to impute or show that the Defendant or its employees did anything fraudulent negates the requirement of ‘intentional perversion’ of the truth.”

The Court noted that:

The order was genuine,
The bank was not involved in the underlying dispute or arbitration,
Attempts to contact the customer satisfied regulatory advisories.

Thus, the Plaintiff had not met the strict legal threshold required to prove fraud.

Holding

The debit of UGX 65,557,210 from the Plaintiff’s account was lawful, having been executed pursuant to a valid and verified court order.
No fraud, collusion, or breach of fiduciary duty by the bank was proven.
The suit was dismissed, and costs were awarded against the Plaintiff.

KEY TAKEAWAYS

Court Orders Override Customer Instructions
Banks must obey valid, verified court orders even when they conflict with customer mandates.
No Duty of Care to Third Parties Regarding Court Orders
Banks owe their duty to the Court—not the judgment debtor or creditor—when executing freezing or garnishee orders.
Fraud Must Be Strictly Proven
Allegations alone—without evidence—cannot sustain a claim of fraud.
Dormant Accounts Alone Do Not Imply Bank Misconduct
Dormancy and unreachable contacts trigger due diligence, not automatic liability.
FIA and Judiciary Circulars Provide Guidance, Not Automatic Liability
Compliance with these advisories is contextual; failure to act beyond what is required does not establish negligence.
Banks Are Protected When Acting Under Compulsion of Law
When a bank verifies a court order and complies with it, liability is highly unlikely unless evidence shows collusion or bad faith.