Wakilii

Shell Uganda Ltd v Captain Naeem Chaudry (HCT-00-CC-CS 179 of 2004)

High Court · [2008] UGCOMMC 80 · 2008 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of debt under guarantee
Decision
Plaintiff awarded special damages of UGX 241,707,213 with interest at 20% per annum from date of judgment. Defendant's counter-claim dismissed with costs.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that a guarantor who pays the principal debtor's liability to a creditor is entitled to indemnity from the principal debtor for the amount actually paid, provided it does not exceed the advanced amount. The defendant's counter-claims were dismissed: the refundable interest claim failed for lack of proof of retrospective commitment; the price adjustment loss claim was rejected as already settled and a dishonest double claim; and the evaporation loss claim was barred by limitation and unsupported by evidence of the plaintiff's contractual obligation to remedy all such losses.

Outcome

Plaintiff awarded special damages of UGX 241,707,213 with interest at 20% per annum from date of judgment. Defendant's counter-claim dismissed with costs.

Facts

The plaintiff guaranteed a loan facility from Citibank to the defendant, a dealer operating Shell service stations. The defendant originally operated on a credit limit of UGX 150 million, later increased to UGX 250 million. The defendant defaulted on his obligations to Citibank. In accordance with the guarantee terms, the plaintiff paid UGX 241,707,213 to Citibank on 22 November 2002. The plaintiff then sued to recover this amount from the defendant. A letter dated 12 April 2002 from the plaintiff to Citibank stated the defendant's credit limit as UGX 60 million, which the defendant relied upon to contest liability. The defendant counter-claimed for refundable interest (UGX 39,315,977.76), price adjustment losses (UGX 82,039,855.16), and evaporation losses (UGX 311,602,877.54).

Issues

  1. Whether the plaintiff is entitled to any indemnification from the defendant and if so the amount.
  2. Whether the defendant is entitled to his counter-claim.

Orders

  • Judgment entered for the plaintiff against the defendant.
  • Special damages awarded: UGX 241,707,213.
  • Interest at 20% per annum on special damages from date of judgment till payment in full.
  • Costs of the suit awarded to the plaintiff.
  • Counter-claim dismissed.
  • Costs of the counter-claim awarded to the plaintiff/defendant by counter-claim.

Rules and key headnotes

Contract Law — Guarantee — Relationship between Guarantor and Principal Debtor
A guarantee is a secondary agreement in which the guarantor is liable for the debt or default of the principal debtor. The guarantee is a promise by the guarantor to the creditor, not to the principal debtor, and there is not necessarily any privity of contract between the guarantor and the principal debtor.
Contract Law — Guarantee — Right of Indemnity
A surety who has actually met the liability which he has undertaken to answer for is entitled to be indemnified by the principal debtor. The right to indemnity arises on actual payment by the guarantor and is limited to the amount advanced by the creditor to the principal debtor.
Contract Law — Guarantee — Notice of Demand to Principal Debtor
It is immaterial that the creditor issued no notice of demand to the principal debtor before proceeding against the guarantor, as the guarantee is enforceable as between the parties to it, namely the guarantor and the creditor.
Contract Law — Damages — Interest on Liquidated Debt
Where a person is entitled to a liquidated amount and has been deprived of it through the wrongful act of another person, he should be awarded interest from the date of filing the suit. Where damages have to be assessed by the court, interest is given from the date of judgment because the right to damages does not arise until they are assessed.
Contract Law — Damages — General Damages for Breach
General damages are awarded to compensate the plaintiff and not to punish the defendant. An order for payment of the full contract price would place the plaintiff in the same financial position as if the contract had been performed, rendering a separate award of general damages unnecessary.
Civil Procedure — Limitation — Raising Limitation at Any Stage
Limitation is a matter of law that cannot be condoned or waived and can be raised at any time in the proceedings, whether or not it was pleaded in the defence.
Contract Law — Special Damages — Proof Required
Special damages must be pleaded and strictly proved by the party claiming them if they are to be awarded. In the absence of contractual obligation and strict proof of loss, a claim for special damages will fail.

Legislation cited (3)

Cases cited (3)

  • Francis Xavier Muhoozi t/a Kabale Kobil Station v National Bank of Commerce (U) Ltd (HCT-00-CC-CS-0303-2006)
  • SIETCO v Noble Builders (U) Ltd (SCCA No. 31 of 1995)
  • Allen Nsibirwa v National Waters & Sewerage Corporation (HCCS No. 811 of 1992)

Full judgment

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

Shell Uganda Ltd v Captain Naeem Chaudry (HCT-00-CC-CS 179 of 2004) [2008] UGCommC 80 (9 December 2008)
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.