Wakilii

Kato Alex v Johnny Wycliffe Matsiko and Others (Civil Suit No. 514 of 2021)

High Court · [2025] UGCOMMC 183 · 2025 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of contract, compensation for loss of motor vehicle, and damages
Decision
Plaintiff's suit allowed with declarations, damages, interest and costs awarded against the 1st and 2nd Defendants jointly and severally

Observed later treatment

Cited — treatment unverified cited in 1 (treatment unverified) Sequitur — Uganda’s citator · Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

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.

No adverse treatment recorded Cited 1 time with no adverse treatment recorded; not yet tested on the merits. Derived from citing cases in the Wakilii corpus — a deterministic signal, not legal advice.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

The court held that the 1st Defendant breached the contract of guarantee by failing to indemnify the Plaintiff guarantor after the Plaintiff's motor vehicle was sold to clear the 1st Defendant's debt. The transfer of the motor vehicle from the Plaintiff's name to the 2nd Defendant's name was illegal under the Security Interest in Movable Property Act, as security interests do not operate as transfers of property. However, the sale itself was lawful as it occurred after default and at the forced sale value following valuation. The 2nd Defendant breached the guarantee contract by failing to notify the Plaintiff before selling the vehicle. The Plaintiff was awarded general damages, special damages, and punitive damages against the Defendants.

Outcome

Plaintiff's suit allowed with declarations, damages, interest and costs awarded against the 1st and 2nd Defendants jointly and severally

Facts

On 24 January 2020, the 1st Defendant borrowed UGX 14,000,000 from the 2nd Defendant for four months at 5% monthly interest. The Plaintiff acted as guarantor and pledged his motor vehicle, Toyota Hilux Pick-Up Registration Number UAZ 087E, as security. On 13 June 2020, the parties executed an addendum extending the loan repayment period to 24 March 2021. The Plaintiff paid UGX 4,500,000 towards loan repayment. The 2nd Defendant transferred the motor vehicle into its own name on 24 January 2020 and subsequently sold it to Mr. Paul Kaahwa Mugisa on 30 November 2020 for UGX 20,000,000 to clear the 1st Defendant's debt. The Plaintiff discovered the transfer and sale after making payments, believing the guarantee agreement was still in effect. The 1st Defendant defaulted on monthly repayments from July 2020, with only one payment of UGX 4,500,000 made on 9 September 2020. The 3rd Defendant was dismissed from the suit for lack of cause of action.

Issues

  1. Whether the 1st Defendant is liable for breach of contract?
  2. Whether the sale by the 2nd Defendant of motor vehicle Reg. No. UAZ 087E to Mr. Paul Kaahwa Mugisa was in breach of contract, fraudulent and illegal?
  3. Whether there are any proceeds from the sale of the motor vehicle, Reg. No. UAZ 087E to be paid by the 2nd Defendant to the Plaintiff?
  4. What are the remedies available to the parties?

Orders

  • The 1st and 2nd Defendants are jointly and severally liable for breach of contract.
  • The transfer of motor vehicle Reg. No. UAZ 087E from the Plaintiff's name to the 2nd Defendant's name was illegal.
  • The 1st Defendant shall indemnify and or compensate the Plaintiff for the loss of his motor vehicle Reg. No. UAZ 087E.
  • The 1st Defendant shall pay the Plaintiff the sum of UGX 4,500,000/= being the money paid by the Plaintiff in respect of the 1st Defendant's loan obligation under the Contract.
  • The Plaintiff is hereby awarded general damages of UGX 8,000,000/= which shall be paid jointly and severally by the 1st and 2nd Defendants.
  • The Plaintiff is hereby awarded punitive/exemplary damages of UGX 5,000,000/= which shall be paid by the 2nd Defendant.
  • Interest is awarded on the general and punitive damages at the rate of 6% per annum from the date of Judgment until payment in full.
  • Costs of the suit are awarded to the Plaintiff and are to be paid by the 1st and 2nd Defendants jointly and severally.

Rules and key headnotes

Contract of Guarantee — Implied Promise to Indemnify — Guarantor's Right to Indemnity from Principal Debtor
In every contract of guarantee, there is an implied promise by the principal debtor to indemnify the guarantor, and a guarantor is entitled to recover from the principal debtor any sum the guarantor rightfully paid under the guarantee on the contract.
Security Interest in Movable Property — Transfer of Title as Security — Void Transfer
A security interest shall be taken as given by the grantor to a creditor for the sole purpose of creating a security interest and shall not operate as a transfer of an interest in property from the grantor to the creditor. Where a grantor signs a transfer as a condition for a grant of a security interest, the transfer shall be void.
Privity of Contract — Collateral Contracts — Exception to Privity Doctrine
A collateral contract is an exception to the doctrine of privity of contract. Where there is a collateral contract between one of the parties to a main contract and a third party arising from the terms of the main contract, any of the parties to the main contract has the right to sue the third party to enforce terms of the collateral contract and vice versa.
Contract of Guarantee — Notice to Guarantor — Breach of Contract
Failure to issue notice of default or sale to a guarantor amounts to breach of the contract of guarantee, even where the principal debtor has been notified, if the guarantee contract requires that notices be addressed to the guarantor.
Sale of Collateral — Valuation — Forced Sale Value
Where collateral is sold at its forced sale value as determined by a valuation conducted before the sale, the sale is lawful and within the estimated price, even if below the market value.
Guarantor's Liability — Extent of Liability — Outstanding Debt
The liability of a guarantor is to the extent to which the principal debtor is liable and takes effect upon default by the principal debtor. The guarantor remains liable to pay the balance of the loan, along with any interest, penalty or charges as agreed, unless the outstanding debt has been cleared.

Legislation cited (17)

Cases cited (34)

  • Ronald Kasibante v Shell Uganda Ltd (High Court Civil Suit No. 542 of 2006)
  • Wakanyira George David v Ben Kavuuya and Others (Court of Appeal Civil Appeal No. 36 of 2010)
  • Sebuliba Busuulwa Vs Co-operative Bank Ltd [1982] HCB 129
  • William Kasozi v DFCU Bank Ltd (High Court Civil Suit No. 1326 of 2000)
  • Meridiana Africa Airlines (U) Ltd v Avmax Spares (EA) Ltd (Civil Suit No. 111 of 2017)
  • Omega Bank Plc Vs O.B.C. Limited (2005) 8 NWLR (pt.928)
  • Jiwali Vs Jiwali [1968] EA 547
  • Fina Bank Ltd Vs Spares and Industries Ltd [2000] 1 EA 52
  • Makula International Limited v His Eminence Cardinal Nsubuga and Others (Supreme Court Civil Appeal No. 4 of 1981)
  • Frederick Zabwe v Orient Bank (Supreme Court Civil Appeal No. 4 of 2006)
  • Fam International Limited and Another v Mohamed Hamid El-Fatih (Supreme Court Civil Appeal No. 16 of 1993)
  • Kampala Bottlers Ltd v Damanico (U) Ltd (Supreme Court Civil Appeal No. 22 of 1992)
  • Uganda Electricity Transmission Company Ltd v Citibank Uganda Limited and 2 Others (High Court Miscellaneous Application No. 1397 of 2022)
  • Shanklin Pier Ltd v. Detel Products Ltd [1951] 2 KB 854
  • City and Westminister Properties [1934] Ltd Vs Mudd [1959] 1 Ch 129
  • Don Muwanguzi v Pride Microfinance Ltd (High Court Miscellaneous Application No. 49 of 2016)
  • 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)
  • Uganda Commercial Bank Vs Deo Kigozi [2002] 1 EA 305
  • Bonham Carter Vs Hyde Park Hotel Ltd [1948] 64 TLR 177
  • Mugabi John v Attorney General (High Court Civil Suit No. 133 of 2002)
  • W.M. Kyambadde Vs Mpigi District Administration [1983] HCB 44
  • Gapco (U) Ltd v A.S Transporters (U) Ltd (Court of Appeal Civil Appeal No. 18 of 2004)
  • Haji Asuman Mutekanga v Equator Growers (U) Ltd (Supreme Court Civil Appeal No. 7 of 1995)
  • Luzinda Marion Babirye v Ssekamatte (Alias Mulwana Samuel) and Others (Civil Suit No. 366 of 2017)
  • Obongo Orude & Another Vs Municipal Council of Kisumu [1971] 1 EA 91
  • O'Connor Vs Hewiston [1979] Crim. LR 46, CA
  • Archer Brown [1985] QB 401
  • Wallersteiner Vs Moir [1975] 1 All ER 849
  • Waiglobe (U) Ltd v Sai Beverages Ltd (High Court Civil Suit No. 16 of 2017)
  • Milly Masembe v Sugar Corporation (U) Ltd and Another (Supreme Court Civil Appeal No. 1 of 2000)
  • Mohanlal Kakubhai Radia v Warid Telecom Uganda Ltd (High Court Civil Suit No. 224 of 2011)
  • Surgipharm Uganda Ltd v Anatoli Batabane (Civil Appeal No. 11 of 2020)
  • Uganda Development Bank Vs Muganga Construction Co. Ltd [1981] HCB 35

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.

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Kato Alex v Johnny Wycliffe Matsiko and Others (Civil Suit No. 514 of 2021) [2025] UGCommC 183 (24 June 2025)
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.