Ugandan private security firm sued for refusing to hand over gold in its custody
Gold-bearing stones. PHOTO | COURTESY
What you need to know:
- According to Mr Jacob Alituha, the lawyer of Mr Steven, the security company was supposed to hand over the collateral the moment the seller, Mr Kamate failed to deliver the gold.
A Ugandan private security firm has been sued for allegedly refusing to hand over gold to a South African buyer that had been kept in its custody.
Court documents seen by this publication show that on September 19, 2024, Mr Edgar Valentino Steven alongside Victor Yugo Kevin Kamate, a Congolese national and a Ugandan private security firm, Quantico Security Ltd entered into a collateral management agreement over a gold deal.
Core to the gold agreement, the South African buyer and the Congolese man were desirous of securing safe custody of one kilogram of gold (collateral) which was security for the performance of obligations by the Congolese.
Under the collateral management contract, Mr Steven and Mr Kamate appointed Quantico Security Ltd as a neutral keeper of the one kilogram of gold until the transaction between them was concluded.
The security company was to be paid 100 USD per day (about Shs370,000) for safe custody of the collateral.
Mr Steven and Mr Kamate covenanted that in case the latter fails to perform its obligations under the sale and purchase agreement, the former would automatically assume ownership of the 1 kilogram of gold (collateral) in the custody of the security company.
Court documents seen by this publication indicate that Mr Steven and Mr Kamate entered an agreement in which the latter agreed to supply to Mr Steven with five kilograms of gold amounting to USD 256,000 (over Shs970m).
Under the collateral management agreement Mr Kamate, had only 10 days within which to perform the obligations under the sale and purchase of gold agreement lest Mr Steven assume legal ownership of the collateral, which he failed to deliver.
Further, the security company had an obligation to hand over the collateral to Mr Steven without the consent of Mr Kamate in case he defaulted on the agreement.
“Despite the automatic right of ownership of the collateral by the plaintiff, the 2nd defendant has neglected to refuse to hand over the collateral to the plaintiff,” read in part the court documents
Adding: “The 2nd defendant continues to charge USD 100 per day for the custody of the collateral and yet it has refused or neglected to hand over the said collateral to the plaintiff."
According to Mr Jacob Alituha, the lawyer of Mr Steven, the security company was supposed to hand over the collateral the moment the seller, Mr Kamate failed to deliver the gold.
“The original contract indicated that the 1st defendant (Kamate) had undertaken to supply gold equivalent to 5KGs and each kilogram according to the contract was to be bought at USD 53000. To show his commitment, the 1st defendant (Mr Kamate) availed 1kg of gold as collateral which was entrusted to the security company. The security company was to automatically give the collateral to the plaintiff if the 1st defendant failed to supply the said gold within 10 days from the date of execution of the contract,”
Mr Steven avers that because of the breach of the contract by the Congolese man, he has been plunged into a financial loss, for which he is seeking the intervention of the court.
“The plaintiff shall aver and contend that the 2nd defendant’s failure to hand over the collateral is a material breach of the agreement between the plaintiff and the defendants. As a result of the breach, the plaintiff has suffered financial loss; inconvenience, and special damages to the 2nd defendant and the amount of money paid in accommodation and feeding while in Kampala.
Through his lawyers of Angualia Busiku & Co. Advocates, Mr Steven wants the court to declare that the Ugandan private security firm breached the contract. He also wants an order of specific performance to be issued against the security company.
Further, he wants the court to issue general damages, special damages, and costs of the suit.
Quantico in their defence acknowledged receipt of the gold, however, the security firm claims outstanding storage fees to the tune of USD 4600 (over Shs17m) which has not been cleared yet.
