GSM Group Ltd Another vs Zanzibar Insurance Corporation Civil Case No

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA DAR ES SALAAM SUB-REGISTRY AT DAR ES SALAAM CIVIL CASE NO. 18471 OF 2024 GSM GROUP LTD………………………………………………….1ST PLAINTIFF GSM FOAM COMPANY LIMITED……………………………….2ND PLAINTIFF VERSUS ZANZIBAR INSURANCE CORPORATION……………………….DEFENDANT RULING Date of last order:25/10/2024 Date of ruling: 08/11/2024 A.A. MBAGWA, J. This ruling stems from the preliminary objection raised by the defendant. Although the ruling does not determine the merits of the suit, it is pertinent in the circumstances of this case to provide a brief account of what triggered the institution of the suit and subsequently the raising of the objection. The facts of the matter as deciphered from the pleadings go as follows; The 1st plaintiff, GSM GROUP LTD is a holding company of various manufacturing 1 and trading entities whereas the 2nd plaintiff, GSM FOAM COMPANY LIMITED is a subsidiary of the 1st plaintiff tailored in manufacturing of rubber foam mattresses. It is contended that on the 16th day of February 2022, the 1st plaintiff entered into an insurance contract with the defendant. The contract aimed to insure and cover all the asset risks relating to manufacturing and non-manufacturing risks over the 1st plaintiff’s buildings across the country including the 2nd respondent’s plant (GSM Foam Industry). The insured assets were valued at TZS 55, 718, 000,000/=. Hardly a month later, that is, on 13th March 2022 the fire erupted and destroyed the whole manufacturing plant and the building. Consequently, the plaintiffs lodged the claims to the tune of TZS 33,857,808,039 to the defendant. However, upon investigation, the defendant adjusted the claims to TZS 12,475,934, 236. The plaintiffs were not satisfied with the defendant’s assessment and for that reason, the two parties engaged in a settlement that resulted in a consensual amount of TZS 15,431,730,155. In honouring the settlement, on the 2nd day of September 2024, by way of a bank transfer, the defendant paid GSM GROUP LIMITED (the 1st plaintiff) 2 into her bank account No. 129488108012 at NCBA Bank Tanzania LTD a sum of Tanzania shillings four billion (TZS 4,000,000,000/=) as exhibited in the annexure GMS5 to the plaint. Further, on 22nd February 2024, the defendant paid GSM GROUP LIMITED (the 1st plaintiff) another sum of Tanzania Shillings one billion (1,000,000,000/=) as evidenced via CRDB Bank Transfer and cheque (annexure GSM 5 to the plaint) thereby making a total sum of Tanzania shillings five billion (TZS 5,000,000,000/=). Thereafter, the defendant defaulted on the payment as per their settlement. Despite several reminders by the plaintiffs, the defendant neglected to make good on the outstanding amount. As such, the plaintiffs were left with no other option than instituting the present suit claiming for the following reliefs; (a) An order for specific performance compelling the defendant to pay the plaintiffs the remaining settlement amount of Tshs. 10,431,730,155/= being the balance of the agreed settlement amount as indemnity for the losses suffered by the plaintiffs from fire accident at the Plaintiffs' manufacturing plant as prior agreed and committed by the defendant; 3 (b) An order for payment of compensation for the loss of business profit amounting to Tshs.450,000,000/= for each year from the date of shutting down the factory to the date of judgment: (c) An order for payment of specific damages amounting to USD 692,277 and Tshs. 1,779,367,050/= being bank interests and penalties specifically charged by the plaintiffs bank, NCBA Bank Ltd, on accumulated loan instalments resulting from the delay by the defendant to discharge his obligation to pay to the plaintiffs’ banker who was contracted as a loss payee in the insurance policy; (d) An order for payment of general damages amounting to Tshs.5,000,000,000/= for loss of business opportunities; (e) An order for payment of interest on the outstanding contractual settlement amount of Tshs. 10,431,730,155/= at a commercial rate and the adjudged amount at the court rate. (f) An order for payment of interest at a current commercial rate on compensation for the loss of business profit under prayer (b) hereinabove. 4 (g) Costs of this Suit. (h) Any other relief which the honorable court shall deem fit to grant. Upon service, the defendant filed a written statement of defence (WSD) along with a notice of preliminary objection. The notice contained one ground of objection to the following effect: ‘That, this Plaintiffs (sic) does not have locus stand and cause of action against the defendant.’ Following the existence of the notice of preliminary objection, according to the rule of practice, this court was obliged to dispose of the preliminary objection before delving into the merits of the case. See the case of SGS Societe Generale De Surveillance SA and Another Vs VIP Engineering & Marketing Limited and Another, Civil Appeal No. 124 of 2017, CAT at Dar es Salaam. As such, the matter was scheduled for a hearing of the preliminary objection. On that day, the plaintiffs were represented by Mr. Jovin Ndungi, the learned advocate whilst the defendant had the services of Mr. Salimu Salimu, the learned advocate as well. 5 Submitting in support of the preliminary objection, Mr. Salimu had it that the suit has been brought by the plaintiffs who are not parties to the contract from which the dispute allegedly arises. He opined that since both plaintiffs are strangers to the contract, they naturally lack locus standi to institute the suit against the defendant. To reinforce his argument, the defendant’s counsel cited the case of Peter Mpalanzi vs Christina Mbaruka, Civil Appeal No. 153 of 2019, CAT at Iringa. Mr. Salimu expounded that on page 8, the Court of Appeal held that the respondent lacked locus standi because she was not mentioned in the contract. He thus urged the Court to borrow a leaf from the above decision and find the objection merited. He added that the preliminary objection must be determined based on the pleadings without requiring further evidence. In fine, he beseeched this Court to strike out the suit with no costs. In rebuttal, Mr. Jovin Ndungi vehemently contested the preliminary objection for allegedly being unfound. He assailed the defence counsel’s submission saying that he failed to distinguish the plaintiffs from the parties who entered into the contract. The plaintiff’s learned counsel argued that the 1st plaintiff 6 is the same person as GSM GROUP OF COMPANIES. He added that it is the 1st plaintiff who paid the defendant the insurance cover and it is the same person the defendant paid after the fire incident. Mr. Ndungi continued that, as per annexure GSM 1, the defendant acknowledges that she is indebted to the 1st plaintiff and that the defendant has made part payment as evidenced through annexures GSM4 and GSM5 to the plaint. The learned counsel clarified that the defendant has paid GSM GROUP LIMITED (1st plaintiff) Tanzania shillings five billion out of fifteen billion as such, the plaintiffs are now seeking specific performance. He remarked that, if anything, the defendant is barred by estoppel principle from denying the 1st plaintiff. Mr. Jovin Ndungi distinguished the case of Peter Mpalanzi (supra) saying that it was on land matter where the wife was suing on a contract entered into between her husband and another person. He explicated that, in the instant suit, the 1st plaintiff entered into the contract with the defendant by using the business name to wit, GSM GROUP OF COMPANIES. He insisted that the defendant’s counsel has not differentiated GSM GROUP OF 7 COMPANIES from GSM GROUP LIMITED. In view thereof, it was Mr. Ndungi’s submission that the point of the preliminary objection raised falls short of the requisite qualifications within the purview of the case of Mukisa Biscuit Manufacturing Co. Ltd vs West End Distributors Ltd [1969] E.A. 696. On this, he candidly submitted that it would require evidence to resolve the controversy. In the end, Mr. Ndungi implored the Court to dismiss the objection with costs. In rejoinder, Mr. Salumu submitted that payment is different from the contract which gave rise to the present suit. He was of the view that the parties to which the payment was made cannot be equated to the parties who entered into a contract. He maintained that the preliminary objection is on all fours of the principles enunciated in Mukisa’s case. Having canvassed the rival submissions, and upon going through the pleadings, the pertinent question for determination is whether the defendant’s point is worth a preliminary objection. It is a settled position that a preliminary objection must raise a pure point of 8 law which is argued on the assumption that all facts pleaded by the other side are correct. It can not be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. The authorities on this are without a number including Jackline Hamson Ghikas vs Mllatie Richie Assey, Civil Application No. 656/01 of 2021, CAT at Dar es Salaam, and Legal And Human Rights Centre vs The Minister of Health, Community Development, Gender, Elderly and Children and Another, Civil Appeal No. 48 of 2020, CAT at Mbeya. I have keenly scanned the pleadings along with the annexures thereto. It is common cause through an insurance contract (annexure GSM 1 to the plaint) that the defendant entered into a contract with GSM GROUP OF COMPANIES. It is also undisputed that upon the occurrence of a fire incident, the two parties amicably sat together and agreed on the compensation amount of Tanzania shillings fifteen billion four hundred thirty-one million seven hundred thirty thousand one hundred fifty-five (TZS 15,431,730,155/=). It is also undisputed that in a bid to execute the settlement amount, the defendant paid the 1st plaintiff a total sum of Tanzania shillings five billion 9 out of Tanzania shillings fifteen billion four hundred thirty-one million seven hundred thirty thousand one hundred fifty-five (TZS 15,431,730,155/=) that agreed upon through settlement. The payment was made to the 1st plaintiff into her account No. 129488108012 at NCBA Bank Tanzania LTD. The plaintiffs contend that GSM GROUP OF COMPANIES is the same as GSM GROUP LIMITED in that GSM GROUP OF COMPANIES is a business name of GSM GROUP LIMITED. Based on the above-undisputed facts, the relevant question to ponder is, is the information available in the pleadings sufficient for this Court to rule out that the plaintiffs were not parties to the contract? My quick answer is no. This is because the transactions that gave rise to this suit interchangeably used both names to wit, GSM GROUP OF COMPANIES and GSM GROUP LIMITED. Whereas the insurance contract indicates GSM GROUP OF COMPANIES, the defendant indemnified GSM GROUP LIMITED after the fire incident as seen in annexures GSM4 and GSM5. In the circumstances, this Court would require more evidence to ascertain who exactly entered into the 10 contract with the defendant and whether GSM GROUP OF COMPANIES is the same person as GSM GROUP LIMITED. Further, the Court would need to establish why the defendant voluntarily made part payment to the 1st plaintiff who apparently is not a party to the insurance contract. Musch as the determination of the issue requires further evidence, it necessarily follows that the raised objection lacks the prerequisites of a pure point of law worth a preliminary objection. That said and done, I overrule the objection with no order as to costs. It is so ordered. A.A. Mbagwa JUDGE 08/11/2024 Court: The ruling has been delivered in the presence of Mr. Mickdard Hassan Rwamakungu, learned counsel for the plaintiffs, Ms. Kamala Nyamwiza, 11 Compliance Officer of the plaintiffs, and in the absence of the defendant. A.A. Mbagwa JUDGE 08/11/2024 12