Wakilii

Blue Nile Distilleries Limited & Another v Tight Security Limited & CIC General Insurance (U) Limited (Civil Suit 78 of 2020)

High Court · [2024] UGCOMMC 182 · 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 arising from theft under a security guarding contract, with third party claim for indemnity under insurance policy
Decision
Plaintiffs awarded contractual sum of UGX 500,000 from third party insurer plus general damages of UGX 20,000,000 from defendant plus interest and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that theft occurred at the plaintiff's warehouse as confessed by the defendant's employee; that the defendant was liable in contract and negligence for loss caused by its guard who connived with third parties to steal goods while on duty; that the defendant breached the guarding contract; that the limitation clause restricting liability to UGX 500,000 was enforceable despite fundamental breach; that general damages were not limited by the contractual clause; that the third party insurer was liable to indemnify the defendant to the extent of the contractual limit.

Outcome

Plaintiffs awarded contractual sum of UGX 500,000 from third party insurer plus general damages of UGX 20,000,000 from defendant plus interest and costs

Facts

Blue Nile Distilleries contracted Tight Security to provide guarding services at its warehouse in Kawempe. On 30 April 2019, when the plaintiff's manager attempted to access the warehouse, he discovered the padlocks had been changed. Police investigations revealed 2,160 boxes of Empire Cane Spirit were missing. Emwodu Sam, the defendant's security guard on duty, confessed to breaking into the store with accomplices and stealing 400 boxes of the plaintiff's alcoholic products. 102 boxes were recovered. The second plaintiff, APA Insurance, had issued an Industrial All Risks Policy to Blue Nile and paid the claim. APA then brought suit against the security company under the doctrine of subrogation, and the security company joined its insurer CIC as a third party.

Issues

  1. Whether there was theft at the 1st Plaintiff's premises and if so
  2. Whether the Defendant is liable to the Plaintiffs for the loss arising out of the alleged theft or on 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

  • 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 suit until payment in full.
  • Costs of the suit awarded to the Plaintiffs.

Rules and key headnotes

Contract Law — Breach of Contract — Security Guarding Services — Duty to Minimise Risk of Theft
Where a security company contracts to provide guarding services with proper care to minimise the risk of theft and its deployed guard participates in stealing the client's property while on duty, the security company is in fundamental breach of the guarding contract.
Tort Law — Negligence — Duty of Care — Security Guards
A security company providing guarding services owes a contractual duty of care to its client to minimise the risk of theft and a security guard deployed at the client's premises owes a general duty not to facilitate theft; failure to put in place supervisory measures to minimise the risk of guards stealing or conniving in theft constitutes negligence.
Tort Law — Vicarious Liability — Employer Liability for Employee's Tortious Acts
Where a security guard is deployed by a security company at a client's premises and commits theft while on duty and under the control of the security company, the security company is vicariously liable for the guard's negligent and criminal acts committed in the course of employment.
Contract Law — Exemption Clauses — Limitation of Liability — Fundamental Breach
A contractual limitation clause restricting a security company's liability to a fixed sum for loss caused by negligence or connivance of its employees is enforceable even where there is fundamental breach of contract; the law does not nullify a limitation clause because of fundamental breach where the clause clearly covers the type of loss that occurred and the parties freely contracted on those terms.
Damages & Quantum — General Damages — Limitation Clauses — Fundamental Breach
Where there is a fundamental breach of a security guarding contract, general damages may not be limited by a contractual limitation clause; while parties may contractually limit special damages, the limitation clause has no effect on the court's power to award general damages for inconvenience and loss suffered as a result of fundamental breach.
Insurance — Indemnity — Public Liability Policy — Scope of Cover
Where a security company has taken out a public liability policy indemnifying it for loss arising from connivance or negligence of its guards, the insurer is liable to indemnify the security company to the extent of the contractual limitation of liability agreed between the security company and its client, provided the policy covers such liability.

Legislation cited (9)

Cases cited (40)

  • Musiime James and Kasule Samuel v Mubezi James and Others (High Court Civil Suit No. 180 of 2005)
  • 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)
  • Greenboat Entertainment Ltd v City Council of Kampala (High Court Civil Suit No. 580 of 2003)
  • 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
  • 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
  • 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)
  • 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 (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 SA v NV 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)
  • Candiru Asina Binnia v Centenary Rural Development Bank Limited (High Court Civil Suit No. 22 of 2016)
  • 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)

Full judgment

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Blue Nile Distilleries Limited & Another v Tight Security Limited & CIC General Insurance (U) Limited (Civil Suit 78 of 2020) [2024] UGCommC 182 (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.