Wakilii

Blue Nile Distilleries Limited and Another v Tight Security Limited and Another (Civil Suit 78 of 2020)

High Court · [2024] UGCOMMC 379 · 2024 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of loss under insurance subrogation following theft at plaintiff's premises guarded by defendant
Decision
Plaintiff awarded UGX 500,000 special damages from Third Party and UGX 20,000,000 general damages from Defendant, plus interest and costs

Observed later treatment

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Holding

Held that theft occurred at the plaintiff's warehouse guarded by the defendant's employee, who confessed to stealing 400 boxes. The defendant was liable for the loss, breached the guarding contract, and was grossly negligent. The defendant was vicariously liable for its employee's actions. The contractual limitation clause limiting liability to UGX 500,000 was enforceable despite fundamental breach. The third party insurer was liable to indemnify the defendant to the extent of UGX 500,000. General damages of UGX 20,000,000 were awarded alongside the limited special damages.

Outcome

Plaintiff awarded UGX 500,000 special damages from Third Party and UGX 20,000,000 general damages from Defendant, plus interest and costs

Facts

Blue Nile Distilleries contracted Tight Security to provide guarding services at its factory and subsequently at its Bombo Road warehouse through an addendum executed on 25 March 2019. On 30 April 2019, when staff attempted to deliver stock to the warehouse, the padlocks had been changed and could not be opened. Police investigation revealed that 2,160 boxes of Empire Cane Spirit were missing. Emwodu Sam, the defendant's guard on duty, confessed to stealing 400 boxes by conniving with an accomplice called Alur. They broke the original padlocks, replaced them with new ones, and sold the stolen goods. Police recovered 102 boxes. APA Insurance had issued an Industrial All Risks Policy to Blue Nile and paid out UGX 78,051,394 for the loss and incurred investigation expenses of UGX 2,589,562. The insurer brought suit under subrogation rights. The security guarding contract contained a limitation clause capping liability at UGX 500,000. Tight Security had taken out a public liability policy with CIC General Insurance.

Issues

  1. Whether there was theft at the 1st Plaintiff's premises
  2. Whether the Defendant is liable to the Plaintiffs for the loss arising out of the alleged theft or any part thereof
  3. Whether the Defendant breached the Guarding Contract between it and the 1st Plaintiff
  4. Whether the Defendant and its guards/employees were grossly negligent
  5. Whether the Defendant is vicariously liable for the actions of its employees
  6. Whether the exclusion/limitation clause is enforceable in the circumstances
  7. Whether the Defendant is entitled to indemnity from the Third Party in the event of any liability on the part of the Defendant
  8. Whether the Plaintiffs are entitled to the remedies sought

Orders

  • It is declared that the Defendant breached the Guarding Contract between it and the 1st Plaintiff.
  • The Third Party shall pay the 2nd Plaintiff UGX 500,000 as per the limitation clause in the Guarding Contract.
  • General damages of UGX 20,000,000 shall be paid by the Defendant to the Plaintiffs.
  • Interest is awarded on the sum at the rate of 12% per annum from the date of filing this suit until payment in full.
  • Costs of the suit are awarded to the Plaintiffs.

Rules and key headnotes

Contract Law — Breach of Contract — Fundamental Breach — Security Guarding Contracts
Where a security company is contracted to guard premises and minimize risks of theft, and its employee on duty participates in the theft of the client's property, the company is in fundamental breach of the guarding contract regardless of whether the contract requires complete elimination of risk or merely minimization of risk.
Tort Law — Negligence — Duty of Care — Security Guards
A security company contracted to provide guarding services owes a contractual duty of care to minimize risks of theft at the client's premises and must take necessary supervisory measures to ensure guards perform as expected. Failure to put in place measures to minimize the risk of guards stealing or conniving in theft amounts to negligence and breach of duty.
Tort Law — Vicarious Liability — Employee Theft — Security Guards
An employer is vicariously liable for the tortious acts of an employee committed in the course of employment. Where a security guard deployed by a security company connives in the theft of a client's property while on duty, the security company is vicariously liable for the guard's actions, as the guard was under the company's control and acted within the course of employment.
Contract Law — Exclusion and Limitation Clauses — Fundamental Breach — Enforceability
A limitation clause in a contract limiting liability to a specified sum remains enforceable even where there is a fundamental breach of the contract. The doctrine of fundamental breach does not nullify or render inapplicable a clear contractual limitation of liability. There is no rule of law that an exemption clause can be eliminated from consideration merely because a fundamental breach occurred.
Contract Law — Exclusion and Limitation Clauses — Freedom of Contract — Notice
Where a limitation clause is clearly set out in a contract, the parties have notice of it, and the contract provides an opportunity to increase liability by special arrangement, parties are bound by their freely negotiated terms. A party who signs a contract with a limitation clause is bound by its terms in the absence of fraud or misrepresentation.
Contract Law — Damages — General Damages — Limitation Clauses
While a limitation clause may cap special damages to an agreed contractual sum, general damages for breach of contract and negligence are not similarly limited. A limitation clause with no specifics regarding general damages cannot be interpreted to absolve the breaching party from liability for general damages, as parties cannot completely limit the power of the court to award damages by their bilateral arrangement.
Insurance — Subrogation — Insurer's Rights — Recovery
Under the doctrine of subrogation, an insurer who indemnifies an insured party steps into the shoes of the insured and acquires the rights and remedies available to the insured against third parties responsible for the loss. The insurer may bring suit in its own name for the benefit of the insured to recover amounts paid out under the policy.

Legislation cited (9)

Cases cited (40)

  • Fam International Limited and Another v Mohamed Hamid El-Fatih (Supreme Court Civil Appeal No. 16 of 1993)
  • Sebuliba Busuulwa v Co-operative Bank Ltd [1982] HCB 129
  • Omega Bank Ltd Vs O.B.C Limited (2005) 8 NWLR (pt.928) 547
  • Kabagambe Mathias v Kahire Nobert (High Court Civil Suit No. 389 of 2016)
  • Nakawa Trading Co. Ltd v Coffee Marketing Board (Civil Suit No. 137 of 1991)
  • William Kasozi v DFCU Bank Ltd (High Court Civil Suit No. 1326 of 2000)
  • Annette Tumusiime v Luis Gugones Aranel & Another (High Court Civil Suit No. 269 of 2005)
  • Donoghue v Stevenson [1932] AC 362
  • Security 2000 Ltd v Cumberland (Court of Appeal Civil Appeal No. 916 of 2014)
  • H. Kateralwire v Paul Lwanga [1989-90] HCB 56
  • Simon Apollo Nangiro and Another v Uganda Electricity Distribution Company Ltd (Civil Suit No. 489 of 2004)
  • Simon Apollo Nangiro & Another v Uganda Electricity Distribution Company Ltd (Court of Appeal Civil Appeal No. 38 of 2013)
  • Blyth v Birmingham Water Works (1856) 11 Ex 781
  • Re Polemis & Furness Withy & Co. [1921] 3 KB 560
  • Oil Energy Ltd v Komakech Robert (High Court Civil Appeal No. 111 of 2019)
  • Jane Nakawungu v H.K. Kafureka (High Court Civil Suit No. 19 of 1993)
  • Security Group Uganda Ltd v Hajjati Zam Zawedde (Administrator of the Estate of Tamale Ahmed) (Court of Appeal Civil Appeal No. 160 of 2019)
  • Akena Martin v Attorney General (High Court Civil Suit No. 31 of 2020)
  • Paul Byekwaso v Attorney General (Court of Appeal Civil Appeal No. 10 of 2002)
  • Jubilee Insurance Company of Uganda Ltd and Another v Askar Security Services Ltd (High Court Civil Suit No. 94 of 2015)
  • Securicor Courier (K) Ltd v Benson David Onyango & Another (Civil Appeal No. 323 of 2002)
  • Curtis v Chemical Cleaning & Dyeing Co. Ltd [1951] 1 All ER 631
  • Photo Production Ltd v Securicor Transport Ltd [1980] 1 All ER 556
  • L'Estrange v F. Graucob Ltd [1934] 2 KB 394
  • Suisse Atlantique Société d' Armament Maritime S.A v N.V Rotterdamsche Kolen Centrale [1966] 2 All ER 61
  • Petro City Enterprises (U) Ltd v Security Group (U) Ltd (High Court Civil Suit No. 869 of 2004)
  • Tight Security Ltd v Chartis Uganda Insurance Company Ltd & Another (Civil Appeal No. 16 of 2014)
  • Stanbic Bank Uganda Limited v Hajji Yahaya Sekalega t/a Sekalega Enterprises (High Court Civil Suit No. 185 of 2009)
  • W.M Kyambadde v Mpigi District Administration [1983] HCB 44
  • Suffish International Food Processors (U) Ltd and Another v Egypt Air Corporation (Supreme Court Civil Appeal No. 15 of 2001)
  • Takiya Kashwahiri and Another v Kajungu Denis (Court of Appeal Civil Appeal No. 85 of 2011)
  • Kabandize John Baptist and 21 Others v Kampala Capital City Authority (Court of Appeal Civil Appeal No. 36 of 2016)
  • Wallersteiner v Moir [1975] 1 All ER 849
  • Uganda Development Bank v Muganga Construction Co. Ltd [1981] HCB 35
  • Sharif Osman v Haji Haruna Mulangwa (Supreme Court Civil Appeal No. 38 of 1995)
  • Greenboat Entertainment Ltd v City Council of Kampala (High Court Civil Suit No. 580 of 2003)
  • Birmingham and District Land Co. v London and North Western Railway Co. (1887) 34 Ch D 261
  • D.S.S. Motors Limited v Afri Tours and Travels Limited and Amin Tejani (Civil Suit No. 12 of 2003)
  • Musiime James and Kasule Samuel v Mubezi James and Others (High Court Civil Suit No. 180 of 2005)
  • Candiru Asina Binnia v Centenary Rural Development Bank Limited (High Court Civil Suit No. 22 of 2016)

Full judgment

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Blue Nile Distilleries Limited and Another v Tight Security Limited and Another (Civil Suit 78 of 2020) [2024] UGCommC 379 (13 June 2024)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.