Blue Nile Distilleries and APA Insurance have lost a Shs 89.3 million lawsuit against Tight Security Ltd.
On January 29, 2020, Blue Nile Distilleries and its insurer, APA Insurance, filed a suit in the Commercial Division of the High Court seeking to recover Shs 89.3 million following the theft of 2,160 boxes of Empire Cane Spirit from a warehouse.
On March 26, 2013, Blue Nile Distilleries contracted Tight Security Ltd to provide 24-hour security guarding services at its factory in Kawempe, effective April 1, 2013. Due to increased production, the company rented a warehouse along Bombo Road in Kawempe to store finished products. On March 25, 2019, it extended Tight Security’s services to the new warehouse under the same terms and conditions.
However, on April 30, 2019, the company’s manager discovered that the warehouse locks had been tampered with. The incident was reported to Kawempe Police Station, and investigations revealed that 2,160 boxes of Empire Cane Spirit were missing. Blue Nile Distilleries also filed a claim with APA Insurance, which assessed the loss and conducted its own investigation.
The investigations revealed that a man identified as Emwodu Sam had orchestrated the theft. APA Insurance subsequently paid Shs 78 million to Blue Nile Distilleries and incurred Shs 2.5 million in investigation costs. The plaintiffs sought to recover the full amount from Tight Security Ltd.
In its defense, Tight Security Ltd denied liability, arguing that the security contract explicitly limited its liability to Shs 500,000. The company also stated that it had taken out an insurance policy with CIC General Insurance (U) Ltd to cover such incidents.
CIC General Insurance, joined to the case as a third party, also denied full liability, maintaining that any claim arising from the contract was subject to the Shs 500,000 cap specified in the agreement between Blue Nile Distilleries and Tight Security Ltd.
In her ruling, Justice Patience T. E. Rubagumya found that the theft occurred through the willful connivance of a guard, and held Tight Security Ltd contractually and vicariously liable.
However, the judge upheld the limitation of liability clause in the security contract, which capped the defendant’s liability at Shs 500,000. She noted that the plaintiffs had prior knowledge of the clause and had not negotiated to increase the liability limit.
“Although breach, negligence, and vicarious liability were established, the Court also ruled that CIC General Insurance, as the third-party insurer, was only obliged to indemnify up to the capped amount. The rest of the plaintiffs’ claims, including special damages, were dismissed due to the enforceability of the limitation clause,” Justice Rubagumya ruled.
