Stanbic bank wins appeal in motor vehicle transaction dispute
The appeal arose from a dispute over a failed telegraphic transfer of $ 2,800 intended to facilitate the purchase of a motor vehicle from Star Trade Japan.
The matter was first handled by the Chief Magistrate’s Court of Mengo before the appeal was filed. (File photo)
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The Civil Division of the High Court has set aside the decision of the Mengo Chief Magistrate’s Court in a dispute involving a $2,800 (about sh10.34 million) transaction between Stanbic Bank and its client.
In a judgment delivered on July 15, 2026, Justice Bernard Namanya overturned the decision of Mengo Chief Magistrate Dr Alex Karocho Mushabe, which had been issued on December 15, 2020, holding the bank liable for the failed transaction in favour of Deus Kamunyu Muhwezi.
The appeal arose from a dispute over a failed telegraphic transfer of $ 2,800 intended to facilitate the purchase of a motor vehicle from Star Trade Japan.
According to court records, Muhwezi had instructed Stanbic Bank to transfer the money to Reiji Katagawa at Bank of Tokyo UFJ on October 20, 2019. The bank agreed to process the transaction for a commission of $15(about sh55,400).
The bank denied any negligence, arguing that it had acted on Muhwezi’s instructions and processed the transfer in the ordinary course of banking business. The matter was first handled by the Chief Magistrate’s Court of Mengo before the appeal was filed.
Stanbic Bank, dissatisfied with the decision of the lower court, filed an appeal on three grounds. The bank argued that the Chief Magistrate erred in law and fact by finding that it had breached its duty of care by failing to execute the respondent’s instructions as given.
The bank also challenged the finding that although the funds were transferred, the transaction was not carried out in accordance with the respondent’s (bank's) instructions. In addition, it contested the award of general damages to Muhwezi.
Court’s decision
The evidence before court suggested that Muhwezi may have fallen victim to an online fraud scheme involving a person in Japan, who allegedly posed as a motor vehicle seller.
The court found that although the appellant made an error by entering the sender’s details, it confirmed with Bank of Tokyo Japan that the funds were successfully credited to Katagawa’s account and later withdrawn. The court held that the bank could not be held liable for the fraud that Muhwezi was allegedly lured into.
The court further ruled that the bank had fulfilled its duty of care after processing the customer’s payment instructions and receiving confirmation from the correspondent bank that the funds had been received and withdrawn by the purported vehicle seller in Japan.
It held that where a customer is deceived into making a fraudulent transaction, the bank is not responsible for assessing the wisdom or risks associated with the customer’s own payment instructions.