Authored By: ACAN JENNIFER
- CASE TITLE & CITATION
Aida Atiku Versus Centenary Rural Development Bank Limited
Civil Suit No. 0754 Of 2020
(2022)Ug COC 146 (18 July 2022)
- COURT NAME & BENCH
HIGH COURT OF UGANDA SITTING AT KAMPALA
By Hon Justice Stephen Mubiru.
Bench type (SINGLE JUDGE)
COMMERCIAL DIVISION)
- DATE OF JUDGMENT
18th July 2022
- PARTIES INVOLVED
AIDA ATIKU ( Plaintiff).
The plaintiff is the bank customer who opened a personal savings account with the defendant’s bank at the Nairembe Road Branch in January 2020.
CENTENARY RURAL DEVELOPMENT BANK LIMITED( Defendant)
The defendant is a commercial bank offering digital banking services including cente mobile services
- FACTS OF THE CASE
The plaintiff sued the defendant seeking recovery of shs. 55,616,000/= claimed to have been negligently debited from her bank account with the defendant, general damages for breach of fiduciary duty, interest, and costs. On 2nd January, 2020, she opened up a personal savings account at the defendant’s branch along Namirembe Road in Kampala. Between 4th and 10th January 2020, she deposited a total of shs. 56,320,000/= into the said account. She thereafter made only one withdrawal in the sum of shs. 700,000/= on 13th January, 2020. When she subsequently went to the bank on 27th August, 2020, to withdraw the rest of the amount, intending to use it for the purchase of land, she was shocked to learn that her account had zero balance. She was informed by the bank staff that someone had been electronically withdrawing diverse sums of money from the account using the “CenteMobile” platform, although she had never applied for such a service. The defendant denied the claim. It contended that although the plaintiff indeed opened up the said account and made the deposit pleaded, at the opening of the account, she registered for the “CenteMobile” service offered by the bank
- ISSUES RAISED
- Whether or not the plaintiff’s account was fraudulently and / or negligently debited by the defendant.
- Whether or not the defendant is liable for the fraudulent and/or negligent withdrawals made on the plaintiff’s account.
- What are the remedies available to the parties?
- ARGUMENTS OF THE PARTIES
PLAINTIFFS ARGUMENT
The plaintiff argues that she opened up a bank account and signed the account opening for without understanding it due to poor sight.
She argues that the bank failed to explain the cente mobile service, ATM, card sms alerts and the associated risk. She claims that she never applied for cente mobile transactions and that she received only one sms alert, therefore could not have known about the withdrawals. She argues further that this implies that the bank reached its duty of care and should refund UGX 56,616000 plus general damages and costs.
DEENDANTS ARGUEMENT
The defendant, on the other hand, argues that the plaintiff signed the centre mobile declaration section that her daughter (PW 2), aged 42, Mirembe Hadijah, whose presence at the time was primarily to assist the plaintiff in reading and filling in that application form, assisted her in reading and filling in the form. That all the transactions were executed using the plaintiff’s registered phone number and USSD PIN. Between the month of January 2020 and May 2020, she withdrew or permitted the withdrawal of a total of shs. 56,616,000/= using that service, by means of her mobile phone number 0773710 077. SMS alerts were sent for the transaction.
The plaintiff activated the system‑generated PIN within 24 hours, proving her participation. SMS alerts were sent for all transactions; failure to read or act on them was her own negligence. If unauthorized persons accessed her account, it was due to her negligence in safeguarding her phone or PIN.
Despite having received alerts of all transactions undertaken on her account, the plaintiff never reported to the defendant any of them to have been fraudulent. Although she claimed to have made a report to the police, no corroborative evidence was adduced.
- JUDGMENT / FINAL DECISION
The court held that the defendant was not negligent and Bore no liability for the loss that occurred to the plaintiff since the plaintiff compromised her own security by allowing her daughter access to her phone. The bank had commercial reasonable two-factor authentication system, and the fact that the plaintiff signed the center mobile declaration, she was bound by her signature. All the transactions were therefore executed using the plaintiff’s phone and sim card.
The case was dismissed with costs to the defendant.
- LEGAL REASONING / RATIO DECIDENDI
(A) BINDING NATURE OF SIGNED CONTRACTS
The court relied heavily on the principle from L’Estrange v Graucob [1934] 2 KB 394, holding that a person is bound by their signature on a contractual document, whether or not they read or understood it.
The general rule, therefore, is that a party of full age and understanding is normally bound by his or her signature to a contractual document, whether he or she reads it or understands it or not. Equity does not save people from the consequences of their own folly, but will save them from being victimised by other people.
The plaintiff admitted signing the form. Her daughter assisted her. There was no evidence of:
- fraud,
- misrepresentation,
- duress,
- undue influence, or
- Incapacity.
Thus, she was bound by the CenteMobile declaration.
(B) PAROLE EVIDENCE RULE
Under section 92 of the Evidence Act (Cap 6), oral evidence cannot contradict the terms of a written contract unless fraud or mistake is proven. Any information leading up to or during a contract that is not included in writing is considered inadmissible evidence and is excluded (Bank of Australasia v. Palmer [1897] A. C. 540 at 545).
The plaintiff’s claim that she did not understand the form could not override the written agreement.
(C) NON EST. FACTUM
The court considered but rejected the doctrine of non est. factum (as explained in Saunders v Anglia Building Society [1971] AC 1004). Non est factum applies where the person asserting it (i) did not sign the document, or (ii) signed the document but is blind, illiterate, and had to trust someone to tell them what they were signing; 6 or signed the document but has no understanding of the document without fault, due to defective education, illness, or innate capacity.
The plaintiff was not blind, illiterate, or misled about the nature of the document. She took reasonable precautions by involving her daughter.
(D) CONSUMER PROTECTION GUIDELINES
The plaintiff relied on the Bank of Uganda Financial Consumer Protection Guidelines (2011), which require banks to explain products clearly. The court held that even if the bank failed to explain the services fully, the plaintiff did not prove that such failure caused her to sign something she otherwise would not have signed.
(E) DIGITAL BANKING DUTIES
The court acknowledged the bank’s duty to maintain secure digital systems. Evidence showed:
- PIN was sent and activated within 24 hours.
- The system linked transactions to the plaintiff’s registered SIM card.
- A reactivation occurred on 5 February 2020, consistent with customer‑initiated activity.
The plaintiff did not prove system failure or bank negligence.
(F) CUSTOMER’S DUTY OF CARE
The court emphasized that customers must safeguard their:
- phone,
- SIM card,
- PIN, and
- Login credentials.
If a customer negligently exposes their credentials, the bank is not liable for resulting losses.
(G) BURDEN OF PROOF
The plaintiff bore the burden to prove negligence on a balance of probabilities. She failed to:
- show that the bank authorized withdrawals without proper authentication,
- prove that she did not activate the PIN,
- demonstrate system malfunction, or
- provide evidence of fraud
- Thus, the bank could not be held liable.
- CONCLUSION
The court concluded that the plaintiff failed to prove that the defendant fraudulently or negligently debited her account. She was bound by her signature on the CenteMobile declaration, and the bank’s systems showed that all transactions were authenticated through her registered phone number.
The suit was therefore dismissed with costs.
REFERENCE(S):
- L’Estrange v Graucob Ltd [1934] 2 KB 394.
- Saunders v Anglia Building Society [1971] AC 1004.
- Royal Bank of Scotland v Etridge (No 2) [2002] 2 AC 773.
- Evidence Act (Cap 6).
- Saunders v Anglia Building Society [1971] AC 1004).
- Bank of Uganda, Financial Consumer Protection Guidelines (2011).
- Atiku v Centenary Rural Development Bank Ltd [2022] UGCommC 146.
