KAMPALA — The Court of Appeal has ordered Absa Bank to pay 77.5 million shillings to a haulage firm after finding that the bank unlawfully seized the company’s trailer during a 2008 loan dispute.
The ruling, delivered by a panel led by Justice Eva K. Luswata, overturns an earlier High Court decision that required the haulage firm, Kawa Distributors, to pay the bank 65 million shillings. Justices Florence Nakachwa and Stella Alibateese also sat on the panel.
The legal battle began in March 2008 when Kawa Distributors entered into a lease-purchase agreement with Barclays Bank, which has since rebranded as Absa. Under the arrangement, the bank provided 100 million shillings to acquire two truck heads, an Iveco and a Mercedes-Benz, which were then leased back to Kawa for monthly payments of 3 million shillings per truck over a 24-month period.
The contract fell apart later that year after Kawa missed rental payments in September, November and December. The bank terminated the agreement and dispatched bailiffs to repossess the vehicles.
According to court records, bailiff Patrick Kasalita of Ken Associates and Godfrey Twinamasiko, the bank’s manager of corporate recoveries, impounded both truck heads in the Nalukolongo neighborhood.
However, the Iveco truck was attached to a trailer owned by Kawa that was not part of the financing agreement. The bailiffs seized the trailer anyway and moved it to a Shumuk Bond warehouse under the name of the bank’s agent.
When Kawa Director Fred Washaba attempted to recover the trailer, he was told he must first pay 15 million shillings in parking fees. Court testimony later revealed the trailer had been secretly moved to another trading company in Ndeeba because the parking charges at the initial warehouse had escalated. Its location was only disclosed during the court proceedings.
Kawa sued the bank in the High Court, where Justice Geoffrey Kiryabwire ruled in 2013 that the firm was entitled to 37.5 million shillings for the value of the detained trailer and 40 million shillings in general damages for loss of business. However, the High Court also awarded Absa 65 million shillings in a counterclaim for rental arrears, prompting both parties to appeal.
In the Court of Appeal, Kawa argued that the bank could not legally charge rent for the vehicles after it had already terminated the agreement and repossessed them. Kawa also contended that the bank failed to properly verify the 65 million shilling figure.
Absa Bank, represented by Derrick Kizito of MMAKS Advocates, argued that the financing contract allowed the bank to recover all financial losses resulting from Kawa’s breach of contract, including outstanding rental balances.
The appellate judges ruled in favor of the haulage firm.
“After a careful perusal of the Master Flexi Agreement, I find no indication that permits the recovery of rental arrears accumulated after the termination date,” Luswata wrote in the ruling.
The court also found that the bank breached its own contract by sending bailiffs without providing proper written notice of termination, especially after writing to Kawa in November 2008 to discuss restructuring the payments. As a result, the 65 million shilling award to the bank was canceled.
Regarding the trailer, the panel concluded that the seizure by the bank’s agents was unlawful.
“The physical removal of the trailer from its location and its delivery to the Shumuk bond constitutes a positive act of taking, sufficient to ground a claim in detinue,” Luswata stated.
The appellate court maintained the High Court’s award of 37.5 million shillings for the trailer, reclassifying it as damages, and upheld the 40 million shillings in general damages for loss of business.
In addition to the 77.5 million shilling total award, the court ordered Absa to pay half of Kawa’s legal costs.
