A former employee of Standard Chartered Bank, Peter Victor Kwagala, and his wife, Priscilla Mbabazi, have emerged victorious in a legal battle against the bank. Lady Justice Patricia Mutesi ruled in their favor after the bank terminated Kwagala’s employment in the credit department and refused to extend a loan of over Shs 200 billion, which had been approved for them to purchase land in Kawempe, Kampala.
The couple sued Standard Chartered Bank for breach of contract, professional negligence, and breach of fiduciary duty. Despite fulfilling all the necessary requirements, the bank failed to disburse the agreed-upon staff mortgage loan.
The court determined that the mortgage deed and facility letter were binding contracts. The bank’s unilateral recall of the loan citing anticipated departmental restructuring was deemed unjustified. The ruling found that this action violated Section 4(1) of the Mortgage Act, 2009, and Clause 6(1) of the BOU Financial Consumer Protection Guidelines, 2011, both of which emphasize fairness, honesty, and reasonableness in financial transactions.
In a ruling delivered on February 17, 2025, the court rejected the bank’s argument that the contract was frustrated due to restructuring. It noted that restructuring was foreseeable and that the plaintiffs had alternative means of repaying the loan.
As a result, the court awarded the plaintiffs: Shs 9,011,000 in special damages, Shs 50,000,000 in general damages, interest at 21% per annum on special damages from September 4, 2020, until full payment and interest at 16% per annum on general damages from the date of judgment until full payment and full costs of the suit
The court emphasized that financial institutions must act fairly and transparently, especially in mortgage transactions. Banks cannot arbitrarily recall approved loans without proper justification.
It remains unclear whether Standard Chartered Bank intends to appeal the ruling.
