KWIZERA v RADIANT INSURANCE COMPANY LTD

KWIZERA v RADIANT INSURANCE COMPANY LTD

- Source: Amategeko - Section: Decisions (Judgements) - Date: 2023-05-18 - Case/document no.: RS/INJUST/RC 00014/2022/SC - Collection: Supreme Court

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KWIZERA v RADIANT

INSURANCE COMPANY LTD [Rwanda SUPREME COURT - RS/INJUST/RC 00014/2022/SC (Mukamulisa, P.J., Nyirinkwaya, Cyanzayire, J.) May 18, 2023] Civil Procedure – Claims relating to accident – Requirements for payment of damages – Damages for self-employed individuals – Self-employed individuals (like motorcyclists) must provide evidence of their minimum average income for the 12 months preceding the accident. Civil Procedure – Claims relating to accident – Requirements for payment of damages – Damages for self-employed individuals who cannot obtain authentic deeds to prove their income – If authentic deeds to prove their income are unavailable and the injured party’s profession is known, damages are determined by comparing it with the gross salary of a person engaged in the same or a similar profession as the injured party. Civil Procedure – Claims relating to accident – Procedure for determination of damages - Income used to determine economic damages – Damages for self- employed individuals - In determination of economic damages for self-employed individuals, the annual net income is considered instead of the gross income from which the tax provided for by law is deducted.

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Facts: The case started from the Intermediate Court of Nyagatare. Kwizera, who was injured in an accident by a motorcycle insured by Radiant Insurance Company Ltd (Radiant), sued the insurance company, requesting that it should be ordered to pay to him damages resulting from the accident. The Court ordered to Radiant to pay to him various damages. Radiant appealed to the High Court, Rwamagana Chamber, which, based on the fact that Kwizera was unable to demonstrate his daily or monthly income, found that he should not have been awarded economic damages based on his monthly income of 200,000 Frw, instead, it would be based on the guaranteed minimum interprofessional wage (SMIG) equivalent to 3,000 Frw per day, resulting in a reduction of the damages awarded to Kwizera. Kwizera applied for the review of the judgment on grounds of being vitiated by injustice, and it was decided that the judgment should be heard by the Supreme Court. During the hearing, the parties argued over the issue of the calculation modalties for the economic damages claimed. The claimant submits that he should not be included among persons without a known salary in order to be entitled to economic damages based on the SMIG of 3,000 Frw. He relies on evidence including a card stating that he is a motorcyclist, and a document issued by RRA stating that a motorcyclist earns 2,400,000 Frw per year. Radiant contends that these damages should be calculated on the basis of the guaranteed minimum interprofessional wage (SMIG), as this is the basis when the claimant is

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unable to prove his/her daily or monthly income, as upheld by the High Court. Held: 1. Self-employed individuals (like motorcyclists) must provide evidence of their minimum average income for the 12 months preceding the accident.

3. When the authentic deeds indicating the salary are not produced and the injured party's profession is known, the damages are determined by comparing it with the gross salary of a person who works in the same or similar profession as the injured party.

2. In determination of economic damages for self- employed individuals, the annual net income should be considered by taking the gross income and deducting the taxes provided by law. An application for the review a judgment on the grounds of injustice has merit. Statutes and statutory instruments referred to: Law n°22/2018 of 29/04/2018 relating to civil, commercial, labour and administrative procedure, article 111; Law n° 41/2001 of 19/09/2001 determining compensation calculation modalities for people injured or whose property has been damaged by automobiles, article 4; Law n° 75/2018 of 07/09/2018 determining the sources of revenue and property of decentralized entities, article 5; Law nº 027/2022 of 20/10/2022 establishing taxes on income, article 14;

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Presidential Order n0 31/01 of 25/08/2003 on compensation for personal injury resulting from accidents caused by motor vehicles, article 14; 18. Case laws referred to: RCAA 0049/14/CS, SORAS AG Ltd v. Umuhoza Pacifique and others, rendered by the Supreme Court on 25/11/2016; RS/INJUST/RC 00010/2021/SC, Prime Insurance Company Ltd v. Uwimanimpaye Jean Claude, rendered by the Supreme Court on 02/12/2022.

Judgment I. BACKGROUND OF THE CASE

On 25/08/2018, at Kiziguro, in Gatsibo District, Eastern Province, a motorcycle accident occurred in which a motorcycle with plate number RD 42V, ridden by Nshimiyimana Gilbert, hit another Victor TVS motorcycle with plate number RD 950Q, ridden by Kwizera Eric, injuring him and causingto him 90% permanent disability. The motorcycle that hit him was insured by Radiant Insurance Company Ltd, hereinafter referred to as Radiant.

After unsuccessful attempts to amicable settlement, Kwizera Eric filed a claim in the Intermediate

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Court of Nyagatare against Radiant, seeking damages resulting from the accident calculated as follows: ● Aesthetic damages: 240,000 Frw X 12 X 150%= 4,320,000 Frw; ● Moral damages: 240,000 Frw X 12= 2,880,000 Frw; ● Economic damages: (240,000Frw X 12 X 35 X 90) /1+ (35 X 8%) = 90,720,000/3.8 = 23,873,684, 2 Frw; ● Expenses incurred due to accident including medical expenses, travel expenses, money paid for accident case file and amounts paid for obtaining documents from local administration.1

In the judgment n0 RC 00048/2020/TGI/NYG rendered on 09/06/2021, the Intermediate Court of Nyagatare ruled that Kwizera Eric's claim was well- founded and ordered to Radiant to pay to him damages amounting to 23,700,867 Frw, including counsel's fee of 600,000 Frw.

1 In his submissions, Kwizera Eric did not specify this amount of money he is requesting. However, during the hearing of 12/05/2021, his counsel, Shema Déo, informed the Intermediate Court of Nyagatare that they were requesting economic damages amounting to 19,018,867 Frw, moral damages of 1,620,000 Frw, aesthetic damages of 1,200,000 Frw, expenses incurred due to the accident, including transport costs of 500,000 Frw, medical expenses of 396,232 Frw, counsel’s fee of 1,000,000 Frw, and court fees of 20,000 Frw, totalling to 23,755,099 Frw.

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In making that decision, the Court found that Kwizera Eric had been incapacitated as a result of the accident caused by a motorcycle insured by Radiant, and ruled that he deserved to be awarded the following damages: ● Economic damages: (200,000 Frw × 12 × 36 × 90%) 1+ (8%- current savings rate × 36) = 20,041,237 Frw ; ● Moral damages (pretium doloris): (3000 Frw × 30 × 12) × 150% = 1,620,000 Frw; ● Aesthetic damages: (3000 Frw × 30 × 12) × 150% = 1,620,000 Frw. All amounting to 20,041,237 Frw + 3,240,000 Frw = 23,281,237 Frw (The Court added that the total amount requested by the claimant is 22,000,867 Frw). To these damages, the Court stated that it would be added 1,700,000 Frw awarded at its discretion, covering the travel expenses, procedural fees including looking for various documents, medical expenses, counsel's fees and court fee. Thus, the total damages are 22,000,867 Frw + 1,700,000 Frw = 23,700,867 Frw 2.

Radiant appealed to the High Court, Rwamagana Chamber, requesting for the analysis of the economic damages arguing that the awarded amounts were

2 It is clear that the figures in the judgment rendered by the Intermediate Court contain errors because, in the claimant’s court submissions, during the pre-trial conference, and during the hearing, there is nowhere it appears that the damages requested by Kwizera Eric amounts to a total of 22,000,867 Frw.

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excessive and unlawful, same for other amounts awarded by the Court, which are unclear due to a lack of supporting elements of evidence.

In the judgment n0 RCA 00051/2021/HC/RWG, rendered on 11/01/2022, the High Court, Rwamagana Chamber, declared Radiant's appeal founded in part, the decision of the judgment n0 RC 00048/2020/TGI/NYG rendered on 09/06/2021, modified only issues relating to economic damages. The Court ordered to Radiant to pay to Kwizera Eric economic damages amounting to 9,208,421 RWF, as well as 1,700,000 RWF awarded in the appealed case for case-related expenses, including counsel's fees.

In making this decision, the Court noted that the economic damages awarded to Kwizera Eric were unlawful as he failed to demonstrate his daily or monthly income, and ruled that he should be awarded economic damages based on the guarantted minimum interprofessional wage (SMIG) of 3,000 Frw as upheld by the Supreme Court in the judgment n0 RCAA 0049/14/CS, rendered on 25/11/2016, they were calculated as follows: 3,000 Frw x 30 x 12 x 36 x 90%: 1 + (7,992% x 36) = 9,208,421 Frw.

On 06/02/2022, Kwizera Eric wrote to the President of the Court of Appeal requesting the review of judgment n0 RCA 00051/2021/HC/RWG rendered by the High Court, Rwamagana Chamber on 11/01/2022 on grounds of being vitiated by injustice. After considering his request, the President of the Court of Appeal wrote to the President of the Supreme Court requesting that the

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above-mentioned judgment should be reviewed on grounds of injustice. The President of the Supreme Court, after examining the report made on the case, on 22/08/2022, issued Decision n0 130/CJ/2022 ordering the review of the judgment n0 RCA 00051/2021/HC/RWG by the Supreme Court on grounds of being vitiated by injustice, and the case was registered under n0 RS/INJUST/RC 00014/2022/SC.

The case was heard in public on 27/03/2023, Kwizera Eric represented by Counsel Shema Deo and Radiant represented by Counsel Uwamariya Agnès, the parties argued on the issues of determining the modalties of calculating the economic damages requested by Kwizera Eric and whether there were other damages that should be awarded in this instant case. After the closure of the hearing, the parties were notified that the judgment would be pronounced on 21/04/2023, but it was not pronounced as there were pending matters under consideration, its pronouncement was adjourned to 18/05/2023 at 10:00 a.m. II. ANALYSIS OF LEGAL ISSUES 1. Determine the procedure in which the economic damages claimed by Kwizera Eric should be calculated

Counsel Shema Deo states that, at the first instance, the Intermediate Court of Nyagatare ruled that Kwizera Eric earned 200,000 Frw per month based on various elements of evidence including RRA certificate,

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bank statement from Remera Sacco Giribakwe indicating that he paid a quarterly tax of 18,000 Frw, and RRA tax declaration documents for the year 2018. Additionally, there is an evidence of a repayment plan indicating how Kwizera Eric was repaying the loan for the motorcycle he was using, which he had acquired through a loan from Remera Sacco Giribakwe.

He further explains that all the money mentioned in the evidence came from the income generated by the motorcycle that Kwizera Eric used for his work as a motorcyclist. He also states that a document of 18/08/2020 from Remera Sacco Giribakwe attests that the motorcycle Kwizera Eric was using was acquired through a loan, which he was still repaying. However, the motorcycle had not yet been registered in his name because he had not completed the payments. He adds that when all the presented elements of evidence are considered together with the RRA document of 27/02/2017, which establishes that all motorcyclists earn 2,400,000 Frw per year, it clearly demonstrates that Kwizera Eric also was earning 2,400,000 Frw per year.

He concludes by requesting that the RRA document, as an authentic deed, should be the basis for determining the damages that Kwizera Eric should be paid because it is unclear how he could be classified among casual workers while being a motorcyclist who pays tax.

Counsel Uwamariya Agnès, representing Radiant, argues that the judgment nº RCA 00051/2021/HC/RWG is not vitiated by injustice since no evidence was ever submitted to the High Court, Rwamagana Chamber, and

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was ignored, which means that the fact that Kwizera Eric is not satisfied with the decision of that Court cannot be a reason for the case he lost to be reviewed on grounds of injustice.

He further states that the High Court, Rwamagana Chamber, explained that the evidence provided by Kwizera Eric, including a service card, a certificate of 08/05/2017 issued by the Cooperative COTAMNDAGA showing that he was earning 200,000 Frw per month, and an RRA document of 27/02/2017 showing that he was earning 2,400,000 Frw per year, were insufficient to declare that he was actually earning 200,000 Frw per month. He therefore finds that he has not been wronged because, apart from the fact that the RRA document was written to someone named Hanyurwimfura Vincent, and was not intended for Kwizera Eric, and he did not even present the employment contract because it was the only one that would indicate the salary he was paid.

He concludes by stating that Kwizera Eric does not prove that he actually was earning 200,000 Frw per month, the reason why Radiant continues requesting that the economic damages should be calculated based on the SMIG, as it serves as the standard for claimants who fail to demonstrate the income generated from their work.

DETERMINATION OF THE

COURT

Article 5 of the Law n° 41/2001 of 19/09/2001 relating to the compensation of victims of physical

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accidents caused by motor vehicles, states that when the injury has resulted in a permanent incapacity, the victim is entitled to an indemnity meant to compensate the physical and psychological reduction that he/she suffered and the unfavourable consequences of the incapacity on him/her professional earnings. The compensatory indemnity is determined in accordance with the Presidential Order”.

Article 18 of the Presidential Order n0 31/01 of 25/08/2003 on compensation for personal injury resulting from accidents caused by motor vehicles provides the following: “where permanent incapacity exceeds 30%, economic damages shall be granted in accordance with the following rules: where a victim has a paid work, a calculated capital shall be granted according to net income, degree of incapacity and age. Where a victim earns salary but is out of work for less than six months, a capital shall be granted according to his/her latest net salary, degree of incapacity and age. Where the victim does not have a paid work or he/she only does domestic chores, or the legal claimants cannot determine the victim’s real professional income and the victim was above 16 years old at the time of accident, the capital granted shall be calculated on the basis of the guaranteed minimum interprofessionak wage for a year only. Compensation shall be granted according to the following formula: Net annual income x number of years of lucrative survival x percentage of incapacity 1 + (compensation rate for loss of earnings x number of years of lucrative survival). In all cases, this compensation shall

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not exceed eighty times the guaranteed minimum interprofessional wage”.

The Court finds that the parties agree that Kwizera Eric had an accident on 25/08/2018 while working as a motorcyclist, and that he was 30 years old and suffered a permanent incapacity of 90%. The Court also finds that the motorcycle that Kwizera Eric was riding belonged to him because, as indicated in the case file, on 23/02/2018 he received a loan from Remera Sacco Giribakwe in the amount of 900,000 Frw which he would have to repay over 18 months, at an interest rate of 24% per annum, paying 60,000 Frw per month, and the entire loan would be repaid not later than 23/08/2019. This means that he was working as a motorcyclist.

The parties also agree that, due to the accident he suffered, Kwizera Eric is entitled to economic damages. What they disagree about, which is also a matter of dispute in this present case, is that his legal counsel claims that the damages should be calculated based on the fact that motorcyclists earn 2,400,000 Frw per year, as confirmed by the Deputy Commissioner for Small and Medium Taxpayers, while the legal counsel of Radiant claims that the damages should be calculated based on the guaranteed minimum interprofessinal wage (SMIG) because he cannot demonstrate his actual income.

The Court finds that, as explained in article 18 of Presidential Order n0 31/01, mentioned above, a victim who has suffered a permanent incapacity exceeding 30% and has a paid work, is entitled to an amount calculated according to his/her net income, the degree of incapacity

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and his/her age. While where the victim has no paid work, or where his/her beneficiaries cannot prove his/her actual income from work, he/she is entitled to damages calculated on the basis of the guaranteed minimum interprofessional wage (SMIG) of 3,000 Rwf per day3.

The Court finds, however, that among the victims referred to in article 18 above, there are no self-employed individuals like motorcyclists; the reason why, in determining the standard income that can be used to calculate the economic damages, should apply paragraph 3 of article 14 of Presidential Order n0 31/01 of 25/08/2003 mentioned above, which provides that self- employed individuals must demonstrate tangible activities that indicate their minimum average income for the 12 months preceding the accident. Paragraph 5 of article 4 of Law n0 41/2001 of 19/09/2001 adds that if authentic deeds are unavailable and the profession of the victim is well known, damages shall be determined by comparing it with the gross salary of a person working in a same or similar profession as that of the victim.

The Court finds that, as explained, Kwizera Eric was a self-employed motorcyclist, and therefore, in calculating his economic damages, it is appropriate to base it on the annual income of others working in the similar profession, instead of calculating the damages based on the guaranteed minimum interprofessional wage (SMIG) as ruled by the High Court, Rwamagana

3 As upheld in various cases decided by the Supreme Court, such as case n0 RCAA 0049/14/CS decided on 25/11/2016, SORAS AG Ltd v UMUHOZA Pacifique et al, paragraph 28.

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Chamber. However, since, in accordance with the provisions of article 18 of Presidential Order n0 31/01 of 25/08/2003, in determining economic damages, the annual net income is taken into account, instead of the gross income, it is necessary to first determine the net income of the person working as a motorcyclist after deducting tax.

Paragraph 3 of article 14 of Law n0 027/2022 of 20/10/2022 establishing taxes on income, provides that a person who operates a small enterprise pays a lumpsum tax of three percent (3%) of his or her annual turnover. In its final paragraph, it provides that without prejudice to the right to be governed by the real profit tax regime, the activities of road transport of persons and goods are imposed a flat amount of tax determined as indicated in the annex to this Law. That annex sets out the rates of the tax on production of vehicles used for the transport of persons and goods. In the case of big motorcycles, the annual tax is set at 72,000 Frw.

Point 2o of article 5 of Law no 75/2018 of 07/09/2018 determining the sources of revenue and property of decentralized entities provides for the trading licence tax paid to decentralized entities. Article 32 of the above Law provides that the trading licence tax is paid by any person for each place in which he/she opens a business activity within a district, while article 34 provides that the trading licence tax is calculated on the basis of tables annexed to this Law, where by the table II, b shows that Transporters of people and goods on

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motorcycle pay the trading licence tax of 8.000 Frw (per year).

As explained above, Kwizera Eric, as the owner of a motorcycle, is considered as a taxpayer in the category of those earning 2,400,000 Frw per year, because as recalled, the tax of 72,000 Frw determined by the Law to be paid annually by motorcycles, is lumpsum tax equal to 3% of the annual income, paid by the owner of a small enterprise as explained in paragraph 2 of article 14 of Law Nº 027/2022 mentioned above. In other words, 72,000 Frw of tax per year is equivalent to 3% of the annual income of 2,400,000 Frw, which is (72,000 Fw×100): 3 = 2,400,000 Frw.

The Court also finds that Kwizera Eric, as a transporter of people and goods on motorcycle, must pay the trading license tax based on Table II, b in the annex to Law n0 75/2018 of 07/09/2018 mentioned above.

The Court therefore finds that the annual net income of a person owning a motorcycle after deducting the income tax and the trading license tax, is 2,400,000 Frw - 72,000 Frw - 8,000 Frw = 2,320,000. This means that per month he/she earns 2,320,000 Frw: 12 = 193,333 Frw; and per day he/she earns 193,333 Frw: 30 = 6,444 Frw.

As the Supreme Court ruled in the judgment n0 RS/INJUST/RC 00010/2021/SC, rendered on 02/12/2022, the deposit rate used to calculate the economic damages is set by the National Bank of Rwanda (Central Bank rate), which is published on its website on

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the judgment pronouncement date4. The Court also finds that the working days for the basis of calculating this damages are 30 days and the BNR deposit rate to be used is 7%5. Therefore, the economic damages should be calculated as follows: 6,444 Frw × 30 × 12 × 35 × 90% = 21,181,147 Frw 1+ (7% × 35) 2. With regard to other damages claimed in this case

Counsel Shema Deo, reperesenting Kwizera Eric, states that if the injustice suffered by Kwizera Eric in the judgment RCA 00051/2021/HC/RWG is confirmed, he requests the Supreme Court to award to him the counsel's fee of 1,000,000 Frw and procedural fee of 500,000 Frw.

Counsel Agnès Uwamariya, representing Radiant, submits that Kwizera Eric should not be awarded the counsel's and the procedural fees because he is the one who continued to engage in unnecessary lawsuits.

DETERMINATION OF THE

COURT

4 See judgment no RS/INJUST/RC 00010/2021/SC rendered on 02/12/2022, Prime Insurance Company Ltd v Uwimanimpaye Jean Claude 5 https://www.bnr.rw/home / (website visited on 08/05/2023)

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Article 111 of Law nº 22/2018 of 29/04/2018 relating to the civil, commercial, labour and administrative procedure as amended to date, provides as follows: “The claim for representation fees is an incidental claim to the principal claim aiming to repay expenses incurred during judicial proceedings...”.

Based on the above-mentioned issue, the Court finds that, even if Kwizera Eric's claim was taken into consideration, there is no evidence in the case file to prove that he spent 500,000 Frw in pursuing this case and that he paid 1,000,000 Frw of counsel's fee. The Court has no where to base in deciding that this money should be reimbursed as requested.

The Court finds that, at its discretion, he should be awarded 500,000 Frw for counsel's fee and 300,000 Frw for procedural fee, the total is 800,000 Frw. III.

DECISION OF THE

COURT

Declares that the application filed by Kwizera Eric seeking the review of the judgment nº RCA 00051/2021/HC/RWG rendered by the High Court, Rwamagana Chamber on 11/01/2022, on grounds of being vitiated by injustice, is well founded;

Orders that the ruling in the judgment nº RCA 00051/2021/HC/RWG rendered by the High Court, Rwamagana Chamber on 11/01/2022, is only reversed with regard to the economic damages;

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Orders to Radiant Insurance Company Ltd to pay to Kwizera Eric the economic damages equal to 21,181,147 Frw upheld to this level;

Orders to Radiant Insurance Company Ltd to pay to Kwizera Eric 1,620,000 Frw of moral damages (pretium doloris) and 1,620,000 Frw of aesthetic damages decided by the Intermediate Court of Nyagatare, in addition to 1,700,000 Frw of legal cost including counsel’s fee, and 40,000 Frw of the court fees ordered by the High Court, Rwamagana Chamber ;

Orders to Radiant Insurance Company Ltd to pay to Kwizera Eric 500,000 Frw of counsel’s fee and 300,000 Frw of procedural fee at this level, the total is 800,000 Frw.