Wakilii

Sanlam General Insurance Uganda Limited v Finance Trust Bank Limited (Civil Appeal No. 0046 of 2024)

High Court · [2025] UGCOMMC 423 · 2025 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from Insurance Appeals Tribunal decision awarding professional indemnity claim to respondent
Decision
Decision of the Insurance Appeals Tribunal set aside; respondent's claim dismissed for lack of locus standi

Observed later treatment

No later-treatment classification is recorded for this judgment.

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.

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 High Court held that a third party who is not a party to a professional indemnity insurance policy cannot enforce that policy unless the conditions under Section 64 of the Contracts Act are met. The policy in question did not expressly allow the respondent bank to enforce it, nor did it confer a benefit on the bank — the benefit was conferred on the insured surveyor. Section 12 of the Insurance Act 2017, which allows third parties to file complaints with the Insurance Regulatory Authority, does not override the doctrine of privity of contract or grant third parties the right to enforce insurance contracts. The appeal was allowed.

Outcome

Decision of the Insurance Appeals Tribunal set aside; respondent's claim dismissed for lack of locus standi

Facts

Finance Trust Bank contracted Katuramu & Company Consulting Surveyors to provide property valuation services before advancing credit to customers. Katuramu & Company held a professional indemnity insurance policy issued by Sanlam General Insurance. Some borrowers defaulted, and the bank alleged that independent reviews revealed valuation errors by Katuramu & Company, including valuation of wrong properties and undisclosed encumbrances. The bank attributed its loan recovery losses to the surveyor's professional negligence and sought indemnity from Sanlam under the policy. Sanlam refused payment. The bank lodged a complaint with the Insurance Regulatory Authority Complaints Bureau, which ruled in the bank's favour and directed payment of UGX 1,905,148,996. Sanlam appealed to the Insurance Appeals Tribunal, which upheld the Bureau's decision. Sanlam then appealed to the High Court.

Issues

  1. Whether the Respondent, who was not a party to the professional indemnity insurance policy issued to Katuramu & Company, had locus standi to claim under the policy.
  2. Whether Section 12(1)(j) and (k) of the Insurance Act 2017 and Guideline 6 of the Complaints Bureau Guidelines conferred a right on the Respondent to enforce the insurance contract as a third party.
  3. Whether the Insurance Appeals Tribunal erred in law by concluding that the Respondent could enforce the policy despite not being a party to it.

Orders

  • Grounds III and IV of the appeal struck out as they raised questions of fact or mixed law and fact.
  • Grounds I and II upheld.
  • Appeal allowed.
  • Costs awarded to the Appellant.

Rules and key headnotes

Privity of Contract — Third Party Rights — Professional Indemnity Insurance
The doctrine of privity of contract bars a third party who is not a party to an insurance contract from enforcing that contract, even where the contract is intended to protect third parties who may suffer loss through the insured's negligence.
Contracts Act — Section 64 — Conditions for Third Party Enforcement
Under Section 64 of the Contracts Act, a third party can enforce a contract term only where the contract expressly allows them to do so or where a contract term confers a benefit on them. A professional indemnity policy that undertakes to indemnify the insured against claims made by clients confers a benefit on the insured, not on the third party claimant.
Insurance Act 2017 — Section 12 — Complaints Procedure — Distinction from Contractual Enforcement
Section 12(1)(j) and (k) of the Insurance Act 2017, which empowers the Insurance Regulatory Authority to receive and resolve complaints from members of the public, does not confer on third parties the right to enforce insurance contracts to which they are not a party. The right to file a complaint is distinct from the right to enforce a contract.
Statutory Interpretation — Guidelines Cannot Override Legislation
Administrative guidelines issued by a regulatory authority cannot amend or override an Act of Parliament. The Insurance Complaints Bureau Guidelines, which allow third parties to lodge complaints, cannot override the statutory conditions for third party enforcement of contracts set out in the Contracts Act.
Statutory Reform of Privity — Express Legislative Intention Required
Privity of contract is a long-standing common law doctrine that can only be reformed by statute. Where Parliament intends to derogate from the conditions for third party enforcement set out in the Contracts Act, it must do so expressly. The Insurance Act 2017, enacted after the Contracts Act, does not expressly grant third parties the right to enforce insurance contracts.
Professional Indemnity Insurance — Third Party Claims — Requirement to Sue Insured First
In the absence of express statutory provision, a third party claiming under a professional indemnity policy must first establish liability against the insured professional. The insurer's obligation arises only after the insured has been found liable. This principle is analogous to the regime under the Motor Vehicle Insurance (Third Party Risks) Act, where a third party must first sue the insured and obtain judgment before claiming directly against the insurer.

Legislation cited (9)

Cases cited (3)

  • Tweddle v Atkinson [1861-73] All ER Rep 369
  • Re Harrington Motor Co Ltd, ex p. Chaplin [1928] Ch 105
  • Lubanga Jamada v Dr. Dumba Edward (Civil Appeal No. 10 of 2011)

Full judgment

↓ Download PDF

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

Sanlam General Insurance Uganda Limited v Finance Trust Bank Limited (Civil Appeal No. 0046 of 2024) [2025] UGCommC 423 (31 October 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.