Wakilii

Turkish Airlines Inc. v KK Fresh Produce Exporters Limited & 2 Others (Civil Suit 221 of 2023)

High Court · [2024] UGCOMMC 178 · 2024 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 and fraud arising from unpaid freight services
Decision
Judgment entered for the Plaintiff. Defendants ordered to pay jointly and severally outstanding freight fees, general damages, special damages, aggravated damages, interest and costs.

Observed later treatment

Cited — treatment unverified cited in 2 (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 2 times 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 High Court held that the 2nd Defendant, acting as Managing Director of the 1st Defendant, fraudulently misrepresented a conditional bank guarantee as unconditional and as issued by the 1st Defendant when it was issued by the 3rd Defendant, thereby obtaining freight services with intent to defraud the Plaintiff. The court ruled that failure to liquidate a bank guarantee is not a defence to indebtedness as a guarantee is a security that may be pursued alongside direct debt recovery. The Defendants were jointly and severally liable for breach of contract and fraud.

Outcome

Judgment entered for the Plaintiff. Defendants ordered to pay jointly and severally outstanding freight fees, general damages, special damages, aggravated damages, interest and costs.

Facts

Turkish Airlines Inc (Plaintiff) provided freight services to KK Fresh Produce Exporters Limited (1st Defendant) between 2018 and 2022. To secure payment, the 1st Defendant provided bank guarantees including one for USD 1,000,000 issued by United Trust Bank SARL on 7 October 2021. Between October 2021 and May 2022, the Plaintiff provided freight services for which the 1st Defendant failed to pay, accumulating a debt of USD 576,334.8. When the Plaintiff attempted to liquidate the bank guarantee, it discovered the guarantee was conditional upon consent of Dr. Dattatrey Nagireddy (3rd Defendant) and was issued by the 3rd Defendant personally, not by the 1st Defendant as represented. Dr. James Kanyije (2nd Defendant), acting as Managing Director of the 1st Defendant, had procured the freight services and represented the guarantee as unconditional and issued by the 1st Defendant. The 3rd Defendant refused consent to liquidate the guarantee, and the 2nd Defendant subsequently revoked earlier consents. The Plaintiff incurred substantial legal fees in Tanzania, Uganda and the UK attempting to enforce the guarantee before it expired.

Issues

  1. Whether the 2nd Defendant is liable together with the 1st and 3rd Defendants for the Plaintiff's claims in the suit.
  2. Whether the Defendants failed and/or refused to enforce the Bank Guarantee to recover the outstanding sum.
  3. What remedies are available to the parties.

Orders

  • Declaration that the 1st Defendant breached the forwarder agent agreement executed with the Plaintiff dated 14 January 2022.
  • Declaration that the 2nd and 3rd Defendants obtained freight services from the Plaintiff through the 1st Defendant with intent to defraud and cheat the Plaintiff.
  • Declaration that the Defendants fraudulently obtained freight services from the Plaintiff by misrepresenting the nature and character of the guarantee issued by UTBS.
  • The Defendants to pay jointly and severally to the Plaintiff USD 10,000 as general damages.
  • The Defendants to pay jointly and severally to the Plaintiff USD 576,334.8 being unpaid freight fees.
  • The Defendants to pay jointly and severally to the Plaintiff interest at a rate of 10% on USD 576,334.8 from the date of judgment until payment in full.
  • The Defendants to pay jointly and severally to the Plaintiff USD 29,390 and UGX 46,401,444.8 being special damages.
  • The Defendants to pay jointly and severally to the Plaintiff UGX 50,000,000 being aggravated damages.
  • The Defendants to pay jointly and severally to the Plaintiff interest at a rate of 10% on special damages and aggravated damages from the date of cause of action until payment in full.
  • The Defendants to pay jointly and severally to the Plaintiff the costs of the suit.

Rules and key headnotes

Misrepresentation — Distinction Between Contractual Misrepresentation and Tort of Deceit
There is a distinction between contractual misrepresentation and the tort of deceit. Misrepresentation of facts which does not constitute a contractual promise justifies the grant of remedies to the innocent party to reflect the part such misrepresentation played in inducing entry into the contract.
Misrepresentation — Liability of Company Director for Fraudulent Misrepresentation
A company director who fraudulently misrepresents the nature and character of a bank guarantee in order to induce a party to provide services to the company is personally liable for fraud jointly and severally with the company, notwithstanding that he was not a party to the contract between the supplier and the company.
Bank Guarantees — Nature and Enforceability — No Requirement to Exhaust Guarantee Before Suing on Debt
A guarantee is a security. Unless it is a statutory or contractual pre-condition, the failure or refusal to liquidate a guarantee is not a defence to indebtedness. Once a default occurs entitling a party to liquidate the guarantee, the creditor may sue to recover the sums outstanding, choose to liquidate the guarantee, or take both options simultaneously. The non-liquidation of a guarantee is not a ground of defence against an action for recovery of the debt where there was no statutory or contractual pre-condition to liquidate the guarantee before commencing the action.
Bank Guarantees — Liability of Guarantor
Under Contracts Act 2010 section 71, the liability of a guarantor is to the extent to which the principal debtor is liable unless otherwise provided by contract, and the liability of a guarantor takes effect upon default by the principal debtor.
Fraud — Standard of Proof
Allegations of fraud are of a serious nature and must be strictly proved, calling for a standard, although not as high as proof beyond reasonable doubt, that is higher than the ordinary balance of probabilities that is normally applicable to civil matters.
Special Damages — Assessment of Legal Fees
In assessing special damages for legal fees, the court must determine whether the fees were actually incurred and whether they were reasonably incurred. The Advocates (Remuneration & Taxation of Costs) Regulations create a statutory minimum, not a maximum. Legal practice is a business and legal services will not cost the same across all firms. Firms with a strong reputation for excellent service will typically cost more, and a client cannot be faulted for engaging such a firm merely because the fees exceed the statutory minimum, provided the fees are reasonable.
Aggravated Damages — Grounds for Award — Malice, Ill-will and Persistence in Falsehood
Aggravated damages may be awarded when aggravating circumstances exist in the act or intention of the wrongdoer. Common aggravating factors include malice, ill-will, or persistence in a falsehood exhibited by a defendant to the detriment of the plaintiff. Where defendants knowingly misrepresent the character of a bank guarantee, lead the plaintiff on a prolonged effort to secure payment involving lawyers from multiple jurisdictions, provide and then withdraw consent to enforce the guarantee, and then file an evasive defence instead of settling the claim, this amounts to malice, ill-will and persistence in falsehood warranting an award of aggravated damages.

Legislation cited (13)

Cases cited (44)

  • Laura Kinalwa v Compuscan CRB Ltd (High Court Civil Suit No. 237 of 2020)
  • Fredrick K. Zaabwe v Orient Bank Limited (Supreme Court Civil Appeal No. 4 of 2006)
  • Lawrence Tumusiime v Patrick Idringi Salvado (High Court Civil Suit No. 321 of 2018)
  • AZK Services Ltd v Crane Bank Ltd (High Court Civil Suit No. 334 of 2016)
  • Ratlal G. Patel v Baiji Makayi (1957) EA 31 at 317
  • KCB Bank v Paul Alinda (High Court Civil Appeal No. 37 of 2016)
  • Barclays Bank of Uganda v Jing Hong & Guo Odong (High Court Civil Suit No. 35 of 2009)
  • Moschi V Lep Air Services and Ors [1973] AC 345
  • Paul Kasagga and Another v Barclays Bank (u) Ltd (High Court Miscellaneous Application No. 113 of 2008)
  • MTK Uganda Limited v Housing Finance Bank (High Court Miscellaneous Application No. 62 of 2021)
  • Pamela Anyoti v Root Capital Inc (High Court Miscellaneous Application No. 244 of 2023)
  • Hall Brothers SS Co. Ltd V. Young [1939] 1 KB748
  • Storms versus Hutchinson (1905) AC 515
  • Ongom & Another v. Attorney-General [1979] HCB 267
  • Bhadelia Habib Ltd. v. Commissioner General, URA [1997-2001] UCL 202
  • Ssendi Edward v. Crown Beverages Ltd [2005] 2 ULSR 7
  • Karim Hirji v. Kakira Sugar Works Ltd. [2005] 2 ULSR 60
  • Neville v. London Express Newspaper Ltd [1919] A.C. 368
  • Johnson v. Agnew [1979] 2 W.L.R. 487
  • Waigobe (U) Limited v Sai Beverages Limited (High Court Civil Suit No. 16 of 2017)
  • Musoke v. Departed Asians Custodian Board [1990-1994] EA 219
  • Uganda Telecom v. Tanzanite Corporation [2005] EA 351
  • Mutekanga v. Equator Growers (U) Ltd [1995-1998] 2 EA 219
  • Uganda Breweries Ltd v Uganda Railways Corporation (Supreme Court Civil Appeal No. 6 of 2001)
  • WSO Davies v. Mohanlal Karamshi Shah [1957] 1 EA 352
  • Singh v. Kumbhal (1948) 15 EACA 21
  • Henry. H. Ilanga Vs M. Manyoka (1961) EA 705
  • Oketha Dafala v The Attorney General of Uganda (High Court Civil Suit No. 69 of 2004)
  • Obongo & Another v. Municipal Council of Kisumu [1971] EA 91
  • Kyambadde v. Mpigi District Administration [1983] HCB 44
  • Nsaba Buturo v. Munansi Newspaper [1982] HCB 134
  • Ntabgoba v. Editor-in-chief of the New Vision & Another [2004] 2 EA 234
  • Ahmed Ibrahim Bholm v Car & General Ltd (Supreme Court Civil Appeal No. 12 of 2002)
  • Mifumi (U) Ltd & 12 Ors v AG & Kenneth Kakuru (Constitutional Petition No. 12 of 2007)
  • Gbaniyi Osafile and John Emeri vs Paul Odi and Okwumaso Nwaje / SC 149/1987
  • George Okodoi & Anor v Okello Sam Opaire (High Court Miscellaneous Application No. 143 of 2016)
  • Sietco v Noble Builders U Ltd (Supreme Court Civil Appeal No. 31 of 1995)
  • Kengrow Industries Ltd v C.C. Chandran (Supreme Court Civil Appeal No. 7 of 2001)
  • Premchandra Shenoi & Anor v Maximov Oleg Petrovich (Supreme Court Civil Appeal No. 9 of 2003)
  • Harry Ssempa v Kambagambire David (High Court Civil Suit No. 408 of 2014)
  • Iyamuleme David v AG (Supreme Court Civil Appeal No. 4 of 2013)
  • Kinyera George v Victoria Seeds Limited (High Court Civil Suit No. 604 of 2015)
  • Candiru Alice v Amandua Festo & Anor (High Court Civil Suit No. 19 of 2014)
  • Anglo-Cyprian Trade Agencies Ltd v. Paphos Wine Industries Ltd, [1951] 1 All ER 873

Cases citing this judgment (2)

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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Turkish Airlines Inc. v KK Fresh Produce Exporters Limited & 2 Others (Civil Suit 221 of 2023) [2024] UGCommC 178 (24 June 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.