Wakilii

Sanlam General Insurance (Uganda) Limited v Finance Trust Bank (Application 4 of 2024)

Tribunal · [2024] UGIAT 5 · 2024 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from decision of Insurance Regulatory Authority directing payment of insurance claim
Decision
Appeal and cross-appeal dismissed; insurer directed to pay adjusted loss amount of UGX 1,905,148,996 to respondent bank within 30 days

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Holding

The Insurance Appeals Tribunal upheld the Insurance Regulatory Authority's decision directing Sanlam General Insurance to pay UGX 1,905,148,996 to Finance Trust Bank. The Tribunal held that a third-party beneficiary of a professional indemnity insurance policy has locus to claim for losses arising from the insured's professional negligence. The Tribunal found that the policy was a claims-made policy with distinct retroactive dates for each renewal period. Only one of six claims (relating to property mortgaged by Ssimbwa Robert) was reported within the extended discovery period and was therefore payable. The Tribunal rejected the insurer's fraud defence, finding only professional negligence proved on the balance of probabilities.

Outcome

Appeal and cross-appeal dismissed; insurer directed to pay adjusted loss amount of UGX 1,905,148,996 to respondent bank within 30 days

Facts

Finance Trust Bank contracted Katuramu & Company Consulting Surveyors Ltd to conduct property valuations before extending credit facilities. Katuramu & Company held professional indemnity insurance with Sanlam General Insurance. The bank extended loans to various borrowers based on valuation reports signed by Katuramu & Company's Managing Director, Nicholas Ssali. The borrowers later defaulted. Subsequent investigations revealed errors in the valuation reports including valuation of wrong properties, undisclosed graveyards, and vacant land reported as developed. The bank notified Sanlam of a claim for UGX 3,671,851,668 under the professional indemnity policies. Sanlam declined the claim on grounds including late reporting. The bank complained to the Insurance Regulatory Authority, which directed Sanlam to pay UGX 1,905,148,996. Sanlam appealed to the Insurance Appeals Tribunal.

Issues

  1. Whether the Respondent has the locus to make a claim under the insurance policies issued to Katuramu & Company.
  2. Whether the hearing by the Complaints Bureau of the Insurance Regulatory Authority was fair, just, and legal.
  3. Whether the six claims as presented by the Respondent are payable under the insurance policies issued by the Applicant to the insured Katuramu & Company.
  4. Whether the insurance contract between the insured and the Applicant was ambiguous and full of contradictions.
  5. What remedies are available to the parties.

Orders

  • Appeal wholly dismissed.
  • Cross-appeal wholly dismissed.
  • Decision of the Insurance Regulatory Authority upheld.
  • Applicant directed to pay the Respondent the adjusted loss amount of UGX 1,905,148,996 subject to policy terms and conditions within 30 days.
  • Each party to bear its own costs in both the appeal and cross-appeal.

Rules and key headnotes

Professional Indemnity Insurance — Third Party Beneficiary — Locus Standi to Claim
A third party who suffers economic loss as a result of professional negligence by an insured professional has locus to claim under a professional indemnity insurance policy where the policy was obtained by the insured for the benefit of third parties who relied on the insured's professional skill.
Privity of Contract — Exception for Third Party Beneficiaries
The doctrine of privity of contract does not bar a third party from enforcing a contract where the contract was made expressly for the benefit of that third party in circumstances that it was intended to be enforceable by the third party, or where the third party is the ultimate beneficiary of a professional indemnity policy.
Insurance Regulatory Authority — Jurisdiction to Receive Third Party Complaints
Under Section 12(1)(j) and (k) of the Insurance Act 2017 and Guideline 6 of the Complaints Bureau Guidelines, the Insurance Regulatory Authority has jurisdiction to receive and resolve complaints from third parties and beneficiaries of insurance policies, not only from policyholders.
Claims-Made Policies — Retroactive Date — Renewal Policies
In a claims-made professional indemnity policy, each renewal policy has a distinct cover period and retroactive date. Where endorsement advice at renewal indicates a distinctive cover period for each policy, there is not a single retroactive date running from the original policy inception date.
Claims-Made Policies — Extended Reporting Period — Time Bar
Under a claims-made professional indemnity policy with an extended reporting period of six months, a claim arising from a valuation conducted during a policy period but reported after the expiry of the extended reporting period is time-barred and not payable.
Professional Negligence — Duty of Care to Third Parties
A professional valuer who signs valuation reports confirming property values owes a duty of care to third parties who rely on those reports to extend credit facilities. Signing reports negligently without verifying the contents breaches that duty of care.
Fraud — Standard of Proof in Civil Matters
Allegations of fraud must be proved strictly, the burden being heavier than the balance of probabilities generally applied in civil matters. Fraud must be fully and carefully inquired into and requires proof of intentional perversion of truth for the purpose of inducing another in reliance upon it to part with something of value.

Legislation cited (4)

Cases cited (11)

  • Uganda National Roads Authority v Parombot Breweries Ltd & Another (Civil Appeal No. 321 of 2019)
  • Marvin Byaruganga versus Attorney General, Miscellaneous Cause
  • Reid Crowther & Partners Ltd v Simcoe & Erie General Insurance Co [1993] 1 SCR 252
  • Dowhower v W. Bend Mut. Insurance Co Ltd 613 N.W.2d 557, 565(2000)
  • Dunlop Pneumatic Tyre Co Ltd v. Selfridge Ltd [1915] AC 847
  • Gulf Cross Ltd & Another v Shree Hari Tiles Ltd (Civil Suit No. 753 of 2018)
  • Drive Yourself Hire Co (London) Ltd v Strutt: CA 1954
  • Marchinston v. Vernon (1787) 1 Bos.& P. 101 n. (c): 126 ER. 801 n.
  • Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd 1964 AC 465
  • Fredrick Zabwe & Ors v Orient Bank & 5 Ors UGSC
  • Kampala Bottlers Ltd v Damanico (U) Ltd (Civil Appeal No. 22 of 1992)

Full judgment

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

Sanlam General Insurance (Uganda) Limited v Finance Trust Bank (Application 4 of 2024) [2024] UGIAT 5 (1 August 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.