milembe insurance co ltd vs jaffari hussein selemani 2018 tzhc 2777 29 june 2018

IN THE UNITED REPUBLIC OF TANZANIA IN THE HIGH COURT OF TANZANIA (DAR ES SALAAM DISTRICT REGISRTY) AT PAR ES SALAAM CIVIL APPEAL NO. 150 OF 2017 (Originating from the Judgement and Decree of Kisutu Resident Magistrate Court issued by Hon. Riwa SRM on 3CP September 2015 in Civil Case No. 217 of 2014 and Corrected on 24h May 2017 through Misc. Civil Application No. 123 of 2016) MILEMBE INSURANCE CO LTD................... APPELLANT VERSUS JAFFARI HUSSEIN SELEMANI..................... RESPONDENT JUDGEMENT Date o f the last Order OS”June, 2018 Date o f Judgement 2&hJune, 2018 SAMEJI R.K. 3: This matter has a long history it started way back in 2010, when the respondent's a motor vehicle was involved in a road car accident. That, on 22nd November 2010 at about 0545hrs along Bagamoyo Road at Makonde area, a motor vehicle with Registration No. 578BJN Toyota Cresta owned by one Salimu Isihaka Sengo (the 1st defendant then) and being driven recklessly and negligently by Emmanuel Mhango, the driver and an employee of 1st defendant knocked the respondent's motor vehicle with Registration No. T 558 AAR Toyota Collora and caused bodily harm to the respondent's driver one Sudi l Mohamed and the respondent's motor vehicle was badly damaged to the extent of not being used without major repair. The matter of reckless driving by 1st defendant's driver was lodged before the Kinondoni District Court via Traffic Case No. 1733 of 2010 where the 1st defendant's driver was convicted on his own plea of guilty and sentenced to pay fine at the tune of Tshs 50,000/- for each count or jail for six months. The 1st defendant's motor vehicle was insured by the appellant (2nd defendant) under comprehensive insurance cover and the respondent's motor vehicle was insured with the Real Insurance Tanzania Limited under the third party cover. Since the 1st defendant's comprehensive insurance cover is also covering the 3rd party and him (the respondent) being a 3rd party in the said accident he decided via his letter dated 18th April 2012 to submit his claims to the 2nd defendant for the repair of his motor vehicle. There were number of correspondences and negotiations between appellant and the respondent together with the involvement of the Tanzania Insurance Regulatory Authority where the appellant made an offer to pay the respondent's claim at the tune of Tshs. 2,17,177/= which amount was not acceptable to the respondent, hence he decided to institute a Civil Case No. 217 of 2014 before the 2 Kisutu Resident Magistrate Court against the 1st defendant and the appellant (2nd defendant) praying for the following reliefs that the defendants pay the plaintiff the:- (a) sum o f Tshs. 8,890,000/= being the intended payment costs for repair o f damaged motor vehicle from NIPPON AUTOMOBILE GARAGE; (b) sum o f Tshs. 10,870,000/= being the storage costs up to the date o f filing the plaint and other storage charges that the plaintiff will incur till the date o f repair o f the motor vehicle; (c) sum o f Tshs. 350,000/= being the cost for breakdown after the accident; (d) sum o f Tshs. 30,240,000/= as general damages; (e) interest o f 30% from the date when the cause o f action arose till the date o fjudgement; (f) interest on the decretal amount at the court's rate from the date o fjudgement till full payment; and (g) costs o f the suit; and (h) any other relief(s) that the Court will deem fit and just to grant. 3 It is on record that, the 1st defendant, was served through a substituted service on the Mwananchi Newspaper of 12th August 2014 and he appeared only once, but never filed any Written Statement of Defence. As such, the matter proceeded exparte against him. On her part the appellant (2nd defendant) filed her Written Statement of Defence vehemently disputing all claims by the respondent. In addition the appellant (2nd defendant) raised preliminary objection to the effect that the respondent (plaintiff) has no cause o f action against her. The said preliminary objection was dismissed by the trial court and the matter was determined on merit, where the respondent paraded two (2) witnesses, PW1 - the respondent himself and PW2 - the diver, while the appellant's side summoned one witness, DW1 - the insurance officer. After full trial the matter was determined in favour of the respondent. Being aggrieved by that decision the appellant has lodged this Appeal with four (4) grounds that, the trial Magistrate erred in law and facts by:- (a) holding that the respondent had direct cause o f action against the appellant, while the respondent was not a 4 party to the insurance contract in which his claims was based; (b) not analyzing the evidence tendered by the parties and applying such evidence on each issue before making a finding and decision on the issues framed; (c) turning and treating the appellant who is an insurer, as a tortfeasor; and (d) Mis-interpreting and applying section 10(1) o f the Motor Vehicles Insurance Act, Cap. 169 R.E.2002 to justify the respondent's claims against the appellant. At the hearing of this Appeal the appellant was under the legal services of Ms. Christina Ilumba, the learned Counsel, while the respondent was represented by Mr. F.C. Bruder, the learned Counsel. By consent of the parties, the Appeal was argued by way of written submissions. This was adequately done and I am grateful to the Counsel for the parties for the energy and industrious research involved in canvassing the issues herein. It is important to point out right at the outset that in the course of perusing the grounds of the Appeal herein, among others, I have 5 observed that, it seek to question the competence of the matter before the trial court. Since this is one of the fundamental issues in determining this Appeal, I shall begin with that ground, as it is my considered view that the same disposes of the Appeal. In support of the 1st ground of appeal Ms. Ilumba argued that, the respondent in this case does not have direct cause of action against the appellant, because there is no insurance contract between the appellant and the respondent. She said, the appellant has direct claim against the 1st defendant in the original suit, who was the owner of the insured motor vehicle. She insisted that the insurance contract is between the insured and the insurer. She said, in the absence of contractual relationship between the appellant and the respondent, the said respondent has no direct right to sue under the insurance contract which he is not a party. The respondent is a stranger thereto. As such, he has no cause of action against the appellant. To buttress her position Ms. Ilumba cited the case of Attorney General V Hassan Abdirahaman Mohamed and Phoenix Tanzania Assurance Company LTD, Civil Case No. 141 of 2007, High Court of Tanzania at Dar es Salaam, (unreported), where Shaidi, J as he then was stated that:- 6 " The plaintiff not being a party to the insurance contract issued by the 2nd defendant to the 1st defendant has no legal or contractual right to sue under it. The legal principle that a stranger or a person who is not privy to a contract cannot sue under it, is so well established and accord with common sense that no remind. It would be paranoid to attempt to argue otherwise" In addition Ms. Ilumba cited cases of Aubrey Stephano Kisimbo (the Administrator of the Estate of the late Dignas Marco Kisimbo) V Yassin Ally M/S Hari Singh & Sons and Jubilee Insurance (T) LTD, Civil Case No. 5 of 2009 and Dunlop Pneumatic Tyre V Selfrige & Co. Ltd (1915) AC, 847 HL, where the principle of 'no stranger to the contract can enforce it was articulated and pronounced. Ms. Ilumba argued further that although Section 10 (1) of the Motor Vehicle Insurance Act, (supra) imposes responsibility on the insurers to satisfy judgments obtained against the persons insured in respect of 3rd party risks, still that judgement must have been first obtained in accordance with the well established principles of the law. She referred to the decision of Court of Appeal 7 in National Insurance Corporation, Consolidated Holding Corporation (formerly PSRC) V Johanes Jeremiah Beltasazar L.B. Luka, Freight Consultants (T) Limited, Civil Appeal No. 61 of 2008, where the Court of Appeal, Mwarija, J when determining as whether a 3rd party has a claim against the insurer, quoted with approval a persuasive decision in Kenyan case of Kayanja V New India Assurance Company Limited (1968) 1 EA 295, in which the Court among others held that, "A stranger to a contract cannot sue upon the contract unless given statutory right to do sd'. That, the same Shaidi J, again in Attorney General V Hassan Abdirahaman Mohamed, (supra) quoted with approval another Kenyan decision in Kenindia Assurance Company Limited V James Otiene (1989) 2 KAR 162, where it was held that, "A third Party cannot sue on a contract if he is not a party to". [Emphasis added]. She then submitted that, since in the case at hand the respondent was not party to the insurance contract it was improper for him to sue the appellant directly. She said the respondent has no any claim against the appellant and she thus prayed the Court to allow the Appeal and set aside the decision of the trial court. 8 Responding on this ground, Mr. Bruder started by narrating the gist of the matter and submitted that, the purpose of insurance law is to ensure that the insured after the loss/peril is restored in the same position he would have been if the loss did not occur or to the same position he was in immediately before the loss. He said, the principle of indemnity is based on contractual agreement between two parties in which one party agrees to pay or compensate for potential losses or damages caused by other party in return of consideration (premium) paid. Mr. Bruder said in this case the respondent is enjoying the award granted by the trial court through the principle of third party, which means a liability of insurance brought by insured (1st part) from insurer (2nd part) for protection against another person (3rd part). He said, the appellant (insurer) was informed by the insured about the respondent (third party's claim) and the appellant and the respondent were in communication to the extent of the appellant offering to pay the respondent Tshs. 2,177,177/= which was rejected by the respondent. He challenged all unreported authorities cited by Ms. Ilumba that they are irrelevant and not applicable in this case. 9 Mr. Bruder also challenged the applicability of the 3rd Part Notice governed under Order 1 Rule 14 of the Civil Procedure Code, Cap. 33 [R.E. 2002]. He said, the said provision could have been invoked if the appellant was not an original party to the case. I have given a careful consideration to the record of the entire case and arguments of the Counsel for the parties on this matter and the issue before me for determination is whether the matter was competent before the trial court and whether there is a valid Judgement before this Court. There is no dispute that, the insurance agreement which is at issue is between the appellant and the 1st defendant (in the original suit). Therefore, the respondent in this case does not have direct cause of action against the appellant, because there is no insurance contract between the appellant and the respondent. I am aware that, the said insurance agreement that was between the appellant and the 1st defendant was on comprehensive insurance cover which covers also claims against the 3rd party. Pursuant to Section 10 of the Motor Vehicles Insurance Act, a third party who is a victim of a motor vehicle accident has a right to enforce, against the 10 Responding on this ground, Mr. Bruder started by narrating the gist of the matter and submitted that, the purpose of insurance law is to ensure that the insured after the loss/peril is restored in the same position he would have been if the loss did not occur or to the same position he was in immediately before the loss. He said, the principle of indemnity is based on contractual agreement between two parties in which one party agrees to pay or compensate for potential losses or damages caused by other party in return of consideration (premium) paid. Mr. Bruder said in this case the respondent is enjoying the award granted by the trial court through the principle of third party, which means a liability of insurance brought by insured (1st part) from insurer (2nd part) for protection against another person (3rd part). He said, the appellant (insurer) was informed by the insured about the respondent (third party's claim) and the appellant and the respondent were in communication to the extent of the appellant offering to pay the respondent Tshs. 2,177,177/= which was rejected by the respondent. He challenged all unreported authorities cited by Ms. Ilumba that they are irrelevant and not applicable in this case. 9 My reading and understanding of the above provision is that until the Judgement has been obtained against the insured, then the said Judgement can be enforced by the 3rd party and in this case the respondent. If such a judgement has not been obtained then the 3rd party cannot sue directly on the insurance agreement which he is not a party. I the case at hand, I have perused the trial court's Judgement and have failed to glean therefrom a specific paragraph, which is indicating that, there is a judgement issued against the 1st defendant to enable the respondent to enforce the same through the appellant. What I read is misconception of both law and fact, as the final submission by the Counsel for the respondent before the trial court indicated at page 4 of the 2nd paragraph of the typed Judgement, that PW1 testified that, the 1st defendant was charged with reckless driving and he was convicted and sentenced to pay a fine of Tshs. 50,000/=. [Emphasis added]. (See trial court typed proceedings at 20 - 24). Furthermore, under page 6, paragraph 3 of the same trial court's typed Judgement, the trial Magistrate indicated that, "whether the 12 motor vehicle was for Jafari or any other person it does not make sense"...but the good reason is that the motor vehicles were in the road accident and the same were insured". Finally, at page 9 first paragraph 4th line the trial Magistrate concluded that, "the defendant has failed to prove on the compensation wanted to compensate the plaintiff on the 1st time the company wanted to compensate him does not show on how they raised that money o f Tshs, 2.200.000/=" He then declared the punishment to the appellant and the amount of money the appellant is required to pay the respondent. With due respect to the trial Magistrate, the figures he is mentioning herein were not indicated anywhere in the record of the case. The person who was convicted and sentenced to pay Tshs 50,000/= per each count, to make a total of Tshs 100,000/ and not Tshs 50,000/= is one Emmanuel Mhango, the driver and an employee of 1st defendant and not the 1st defendant himself. There is no any Judgement entered against the 1st defendant to be enforced by the plaintiff against the insurer in terms of section 10 (1) of the Motor Vehicles Insurance Act, (supra). Even the amount of Tshs. 13 2.200,000/=" was not offered by the appellant or even reflected anywhere in the record of this case. I wonder where the trial Magistrate obtained this fact. This is a misconception of facts. I have as well noted that, though it was never established as whether the driver committed the offence in the course of his employment to be able to invoke the principle of vicarious liability but the trial Magistrate only concluded that the appellant was liable to pay the respondent. Therefore, the issue was not only that the motor vehicles were on the road and insured, but whether the 1st defendant was responsible and liable towards the respondent. After determining that fact, the trial Magistrate was required to first enter Judgement against the 1st defendant, the judgement which could have enable the respondent to claim or enforce against the appellant. Failure by the trial Magistrate to enter Judgement against the 1st defendant, the respondent has nothing to enforce against the appellant. The plaintiff has not obtained judgement against the 1st defendant. I do therefore appreciate the submission and authorities cited by Ms. Ilumba that, the respondent has no direct cause of action against the appellant. In the decision of the Court of Appeal Tanzania in National Insurance Corporation, Consolidated Holding Corporation (formerly PSRC), (supra), the Court of Appeal at page 21 -22 agreed with the decision in the Kenyan case of Kayanja v New India Assurance Company Ltd, (supra) that:- (i) A stranger to a contract cannot sue upon the contract unless given a statutory right to do so; 00 ... (Hi) An authorized driver to whom an indemnity is given under the terms o f a polity effected by another is a person insured by the policy...; (iv) Therefore, the insurance company in such circumstance is under a duty to satisfy a judgement obtained against such an authorized driver". [Emphasis added]. Now, in the case at hand, I have since perused the trial court Judgement and observed that there is no judgement entered against the 1st defendant to be enforced by the respondent against the appellant. I therefore find that, it was not improper for the trial court to enter Judgement directly against the appellant without first ensuring that the 1st defendant was responsible for the offence and specifically the accident caused by the driver and enters judgement 15 against the 1st defendant to that extent. As such, the respondent could have now enforcing the said judgement against the appellant. The appellant was only required to satisfy the Judgement entered against the 1st defendant and not otherwise. The act of the trial Magistrate of not determining first the case of the 1st defendant and entering a Judgement against him is indeed a procedural irregularity on the face of the record, which had vitiated the trial and occasioned a miscarriage of justice. It is also a fact that, there was again confusion in evaluating the evidence tendered and quoting the sum of amount of money (fine) to be paid by the 1st defendant's driver and the amount proposed by the appellant. It goes without saying that, this case was succumbed by eccentric procedures amounting to serious irregularities hence confusing and nulland voidab initio. In view of the above findings and reasons, I don't see the need to tackle other grounds of the appeal. This appeal is hereby allowed with costs. I hereby nullify the entire proceedings of the trial court and the judgment and the decree therein. The respondent is at 16 liberty to institute a fresh suit against the 1st defendant, subject to the law of limitation. It is so ordered. DATED at DAR ES SALAAM this 20*1day of June 2018. R. K. t>ameji. < JUDGE 29/06/2018 COURT- Judgement delivered in Court Chambers in the presence of Ms. Felista Msoka, the learned Counsel for the appellant and Mr. Mr. F.C. Bruder, the learned Counsel for the respondent. A right of appeal explained. MJl*' R.K.Sameji. JUDGE 29/06/2018 w 17