Kaaya L. Enterprises Ltd v KCB Bank (U) Ltd (Civil Suit No. 531 of 2013)

Observed later treatment

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

Holding

A bank that negotiates with a customer's supplier to accept letters of credit instead of cash, promises to issue the letters within one week, and conducts itself in a manner creating the belief that it will send the letters, breaches its duty of care when it fails to send them without notifying the customer. The bank's conduct held the customer to believe performance would occur, and its failure caused delays resulting in demurrage and storage costs. Special damages must be specifically pleaded and strictly proved. Proved special damages awarded; general damages of UGX 100,000,000 awarded. Counterclaim for loan arrears succeeded in part.

Outcome

Plaintiff succeeded on main claim with damages awarded. Counterclaimant succeeded in part on counterclaim for loan arrears.

Facts

Kaaya L. Enterprises Limited was a successful bidder for three UNRA tenders to supply spare parts. KCB Bank financed 30% of the contract price after UNRA's bank issued irrevocable letters of credit favouring plaintiff. The supplier shipped goods and required 70% payment before releasing bills of lading. When plaintiff returned to defendant bank for further funding, the bank negotiated with the supplier to accept letters of credit instead of cash. The supplier agreed. KCB promised to issue the letters within one week and instructed plaintiff to extend expiry dates on UNRA's letters of credit. Plaintiff complied. However, KCB failed to send the letters without informing plaintiff. Plaintiff eventually obtained letters from Stanbic Bank via UNRA, but the delay caused goods to remain at Mombasa port for over two months, accruing demurrage and storage costs. Kenya Ports Authority auctioned one container. Plaintiff had borrowed UGX 80,000,000 from defendant to clear goods, paid UGX 30,000,000, leaving arrears of UGX 80,000,000. Defendant counterclaimed UGX 127,308,931 as principal and interest.

Issues

1. Whether the defendant is in breach of contract and fiduciary duty owed to the plaintiff.
2. Whether the plaintiff is indebted to the defendant/counterclaimant.
3. What remedies are available to the parties.

Orders

• Judgment entered for the plaintiff against the defendant.
• Special damages of Ksh 1,481,126 and USD 8,387.13 awarded to plaintiff.
• General damages of UGX 100,000,000 awarded to plaintiff.
• Interest at 13% per annum on Kenyan Shilling award and 2% per annum on USD award from date of filing suit till payment in full.
• Interest at 20% per annum on general damages from date of judgment till payment in full.
• Costs of the suit awarded to plaintiff.
• Judgment entered for the counterclaimant/defendant against the counter defendant/plaintiff.
• Payment of UGX 80,000,000 awarded to counterclaimant.
• Interest at 20% per annum on counterclaim sum from date of filing suit till payment in full.
• Costs of the counterclaim awarded to counterclaimant.

Rules and key headnotes

Cases cited (3)

• Bolag v Hutchson [1950] AC 515
• Livingstone v Rawyards Coal Co (1880) 5 App Cas 25
• Victoria Laundry v Newman [1949] 2 KB 528

Cases citing this judgment (1)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

• KCB Bank v Kaaya L. Enterprises Ltd (Civil Appeal No. 131 of 2019)

The original judgment as reported. Read the original PDF before relying on any passage.