Wakilii

Swift Commercial Establishment Ltd v New Uganda Securiko Ltd (HCCS 340 of 2013)

High Court · [2015] UGCOMMC 104 · 2015 Judgment for Plaintiff; Counterclaim Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of contract and damages; defendant counterclaimed for unpaid fees.
Decision
Plaintiff's claim for breach of contract succeeded; awarded damages totalling UGX 122,936,000 plus interest and costs. Defendant's counterclaim partly succeeded; awarded UGX 12,502,000 plus interest and costs.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the defendant security company fundamentally breached its contract by failing to prevent theft by its own employee. The exemption clause limiting liability to UGX 500,000 did not cover deliberate criminal acts (theft) by the defendant's own servants, as such acts contradict the core purpose of a security contract. Plaintiff awarded UGX 114,936,000 in general damages. Defendant's counterclaim for unpaid fees partly succeeded: awarded UGX 10,502,000. Contracts Act 2010 held inapplicable as it had not commenced when the contract was executed and cause of action arose.

Outcome

Plaintiff's claim for breach of contract succeeded; awarded damages totalling UGX 122,936,000 plus interest and costs. Defendant's counterclaim partly succeeded; awarded UGX 12,502,000 plus interest and costs.

Facts

Plaintiff Swift Commercial Establishment Ltd, a distributor of Uganda Breweries products, contracted with Defendant New Uganda Securiko Ltd on 27 April 2010 for security guard services at its Najjanankumbi depot. On 9 May 2010, the premises were broken into during the night shift; a safe containing weekend sales proceeds of UGX 102,226,000 was stolen, along with other property. Police investigations revealed that one of the guards on duty, Joseph Omwony (the Defendant's employee), participated in the robbery alongside Bayo Felix (an employee of another security firm, Securex Ltd, who had previously worked at the premises) and a third suspect. Omwony and the other suspects were prosecuted, convicted, and sentenced for theft and store-breaking at Nakawa Chief Magistrate's Court. Plaintiff sued for recovery of the stolen money and property. Defendant denied liability, citing contractual limitation clauses capping liability at UGX 500,000 and requiring plaintiff to carry comprehensive insurance. Defendant counterclaimed for UGX 21,062,800 in unpaid security fees. The contract continued until May 2013 when the Defendant terminated it for non-payment.

Issues

  1. Whether the parties breached the security guard services contract?
  2. Whether the liability cover set out in clause 5 of the security guard services contract limits the Defendant's liability?
  3. What remedies are available to the parties?

Orders

  • Plaintiff awarded UGX 114,936,000 as general damages for loss of property occasioned by theft and breakages.
  • Plaintiff awarded UGX 8,000,000 as general damages for inconvenience caused by the robbery.
  • Interest awarded at 19% per annum on the principal award from the date of filing suit until date of judgment.
  • Interest awarded at 19% per annum on the aggregate sums from the date of judgment until payment in full.
  • Plaintiff awarded costs of the suit.
  • Defendant awarded UGX 10,502,000 on the counterclaim for unpaid security services.
  • Defendant awarded UGX 2,000,000 as damages on the counterclaim.
  • Interest awarded on counterclaim at 19% per annum from date of filing counterclaim until date of judgment.
  • Interest awarded on counterclaim aggregate sum at 19% per annum from date of judgment until payment in full.
  • Defendant awarded costs of the counterclaim.

Rules and key headnotes

Contract Law — Exemption Clauses — Fundamental Breach — Effect on Enforceability of Limitation Clause
A contractual exemption or limitation clause will not protect a party from liability for a fundamental breach that goes to the root of the contract. Where a security company's own employee commits theft of property the company was contracted to protect, this constitutes a fundamental breach that defeats reliance on a limitation clause capping damages at a nominal sum.
Contract Law — Exemption Clauses — Construction — Scope of Exclusion
An exemption clause in a security services contract excluding liability for 'deliberately wrongful acts' of servants must be construed narrowly. The primary duty of a security company is to prevent theft and protect property; a clause purporting to exclude liability for theft by the company's own guards contradicts the core purpose of the contract and will not be enforced in such circumstances.
Tort Law — Vicarious Liability — Security Services — Theft by Employee
A security company is vicariously liable for criminal acts of theft committed by its employees in the course of their employment. Where a guard deployed by a security firm to protect premises participates in the theft of property from those premises, the employer is answerable for the manner in which the servant carried out his duties, regardless of contractual limitation clauses.
Contract Law — Bailment — Duty of Care — Custodian's Liability for Theft by Servant
Where a person takes charge of goods for reward, there is an implied duty to take reasonable care to keep them safe. If goods are lost or damaged while in that person's possession, liability arises unless the custodian shows the loss occurred without neglect, default, or misconduct of himself or his servants. This duty exists independently of express contractual terms and creates liability in tort as well as contract.
Statutory Interpretation — Retrospective Effect — Contracts Act 2010 — Commencement Date
A statute does not apply retrospectively unless clear words provide otherwise. The Contracts Act 2010, assented to on 22 April 2010 but commenced by statutory instrument on 15 September 2011, does not apply to contracts executed or causes of action arising before its commencement date. Section 62(1) on liquidated damages and penalties cannot be applied to a contract signed in April 2010 and breached in May 2010.
Commercial Law — Security Services Contracts — Implied Terms — Reasonable Expectations
No reasonable person running a business would enter a contract for security services and pay for those services if they knew the security company was incapable of fulfilling its primary obligation and would be absolved from liability for theft by its own employees. Courts will not enforce an exemption clause that would make the contract commercially absurd or defeat its essential purpose.
Damages & Quantum — General Damages — Proof of Loss — Special Damages Distinguished
Loss of property on account of theft is recoverable as general damages where proved on the balance of probabilities, even if the amount is particularised in the pleadings. However, claims for loss of future earnings or prospective pecuniary loss must establish a direct causal connection between the breach and the alleged loss; general assertions of reduced profits without supporting evidence linking them to the breach will not suffice.

Legislation cited (6)

Cases cited (15)

  • Kasibante v Shell (U) Ltd (HCCS 542 of 2006)
  • Lloyds Forex Bureau versus Securex and Agencies Ltd
  • Transami (U) Ltd v Nsibambi Enterprises (Civil Appeal 56 of 2006)
  • Photo Production Ltd v Securicor Transport Ltd [1980] 1 All ER 556
  • Re Athlumney Ex Parte Wilson, (1898) 2 QB 547
  • Re School Board Election for the Parish of Pulborough (1894) 1 QB 725
  • Harbutt's Plasticine Ltd v Wayne Tank and Pump Co Ltd [1970] 1 All ER 225
  • Suisse Atlantique Société d'Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1966] 2 All ER 61
  • United Service Co., Johnston's claim (1870) 6 Ch App 212
  • Coldman v Hill [1919] 1 K.B. 443
  • Morris v C.W. Martin and Sons Ltd [1956] 2 ALL ER 725
  • Jackson v Mayfair Window Cleaning Co. Ltd [1952] 1 ALL ER 215
  • Chesworth v Farrar and Another [1966] 2 All ER 107
  • Cellulose Acetate Silk Company versus Wildness Foundry (1925) Ltd, [1933] AC 30
  • L'Estrange v Graucob

Full judgment

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Swift Commercial Establishment Ltd v New Uganda Securiko Ltd (HCCS 340 of 2013) [2015] UGCommC 104 (11 September 2015)
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.