Ruling on PO Civil Case No 180 uof 2023 Byabusha

IN THE HIGH COURT OF TANZANIA (DAR ES SALAAM SUB-REGISTRY) AT DAR ES SALAAM CIVIL CASE NO 180 OF 2023 HAMIDU BURHAN BYABUSHA (An Administrator of the Estate of the Late Zaiyana Buruhan Byabusha).…………………………………..…….PLAINTIFF VERSUS ATHUMAN HASAN…………………………………..……………..1ST DEFENDANT MOHAMED SALUM ABDALLAH……………………….……………2ND DEFENDANT PHOENIX OF TANZANIA ASSURANCE CO. LTD…………………3RD PARTY RULING 20th May & 15th July, 2024 \ BWEGOGE, J. The plaintiff herein commenced civil proceedings against the 1st and 2nd defendants herein for payment of TZS 237, 521, 600/= being the specific damages for tortious act. The 2nd defendant herein, having asserted the right for indemnity, sought and obtained leave of this court to serve the 3rd party notice to the insurance company (Phoenix of Tanzania Assurance 1 Co. Ltd.) which insured the vehicle involved in the accident that culminated in debilitating injuries to the plaintiff herein. In tandem with filing defence, the 3rd party herein raised a notice of preliminary objection on the point of law that: “The plaintiff has no cause of action against the 3rd party as the 2nd defendant was not insured by the 3rd party.” During the hearing of the above-mentioned objection, the plaintiff and defendants were represented by Messrs Allen Nanyaro and Abdallah Kunambi; and the 3rd party herein was represented by Mr. Julius Manjeka, learned advocate. In substantiating the objection, Mr. Manjeka submitted that the doctrine of privity of contract entails that only the parties to the contract hold the right to sue each other and claim damages or enforce the terms of the contract. That the provision of section 40 of the Law of Contract Act [Cap. 345 R.E. 2019] provides that the party who is not expressly a party to the contract cannot legally demand performance of the contract by the other party. Further, the counsel argued that the 2nd defendant herein is not a party to the insurance contract involving the 3rd party herein. Therefore, the same is precluded to demand performance by the insurer. That the joint 2 statement of defence pleads that the motor vehicle involved in the accident, which is the mainstay of the plaintiff case herein, was not insured by the 3rd party herein. That the vehicle owner is one Abdalah Salimu Abdallah, not Mohamed Salum Abdallah, the 2nd defendant herein. Hence, the 2nd defendant is not privy to the contract of insurance involving the 3rd party herein and he cannot sue under such contract and, or claim indemnity against the 3rd party herein if this court finds him liable to compensate the victim. The counsel cited the case; Moshi Mashoto Auto Garage vs. National Insurance Corporation (Civil Case 210 of 2000) [2000] TZHC 31 to bolster his point. On the above premises, the counsel prayed this court to dismiss the proceedings against the 3rd party herein with costs. In reply, Mr. Kunambi contended that the 3rd party was joined in this case on the ground that the vehicle involved in the alleged accident was validly insured by the same. Hence, it is a mandatory requirement of the law that in a suit of like nature, the insurer should be joined in the suit by the defendant for indemnity. Therefore, the 2nd defendant has the right of indemnity against the 3rd party herein if found liable by this court to compensate the plaintiff. 3 Further, the counsel contended that the case cited to bolster the objection is distinguishable from this case as in such a case, the insurer was not joined in the case as a 3rd party, but as the defendant who was sued by the plaintiff. In tandem with the above, the counsel enlightened this court that there is an endorsement for payment of indemnity communicated by the 3rd party to the 2nd defendant. Otherwise, the counsel argued that the question of whether the 2nd defendant has the right of indemnity against the 3rd party needs evidence which cannot be procured in this objection proceedings. Hence, the plea herein doesn’t fit to feature as an objection in law. He prayed for the objection to be overruled in the interest of justice. In rejoinder, Mr. Manjeka submitted that the counsel for the defendant has not denied the fact that the party insured by the 3rd party herein is not the 2nd defendant herein. Hence, the 2nd defendant is not privy to the contract of insurance. And pertaining the contention that the objection herein needs evidence is misleading as it is apparent on the record filed herein that the insured person is one Abdalah Salimu Abdallah. Hence, the fact is on the face of the record, not one needing evidence. The counsel reiterated that the case he cited to buttress the objection is 4 relevant to the circumstances of this case. In the same vein, the counsel contended that the purported endorsement for payment of indemnity by the 3rd party is fictitious. Moreso, the counsel opined that, if the 2nd defendant has any legal claim against the 3rd party, he is not precluded from suing her in future for indemnity if found liable by this court. It is noteworthy to mention that Mr. Nanyaro, the plaintiff’s counsel, refrained from responding to the charge made by the counsel for the 3rd party for the reason that it was not the plaintiff, but the defendants herein who dragged the 3rd party in this case. Primarily, a preliminary objection is expected to raise a pure point of law based on ascertained facts from the pleadings which, if argued, should be capable of disposing the case. It is a law that a preliminary objection cannot be raised if what is sought is the exercise of judicial discretion. See the cases of Attorney General vs. The Board of Trustees of the Cashewnut Industry Development Trust Fund, (Civil Appeal 72 of 2015) [2015] TZCA and Mukisa Biscuits vs. West End Distributors Ltd [1969] EA 696, among others. The objection raised by the 3rd party herein, properly stated, is that the 2nd defendant has no contractual right of indemnity against the 3rd party 5 herein. The pertinent question arising herein is whether the objection raised by the 3rd party herein is tenable in law. Foremost, upon scrutiny of the pleading filed herein, it is undisputed fact that the accident which is the mainstay of the plaintiff case occurred on 14th October, 2022. It has been brought to the attention of this court that the owner of the vehicle, as per the motor vehicle registration card, is one Mohamed Salum Abdallah, the 2nd defendant herein. The insurance policy, one of the annextures to the defence made by the defendants herein, entails that the vehicle which was involved in the accident was insured by the 3rd party herein for the period from 09th January 2022 to 08th January, 2023. The insured party thereto is one Abdalla Salim Abdallah, the previous owner of the vehicle. It suffices to say that, as rightly submitted by Mr. Manjeka, during the period in which the respective vehicle was involved in the accident, the ownership of the vehicle had devolved to the 2nd defendant herein. However, despite the transfer of ownership of the vehicle, the parties to the insurance contract remained the same namely, Abdalla Salim Abdallah and Phoenix of Tanzania Assurance Co. Limited, the 3rd party herein. It is trite law that only the parties to a contract could incur rights and obligations under it. It is described as the doctrine of privity. The principle 6 is appositely expounded in the case of Austack Alphonce Mushi vs. Bank of Africa Tanzania Ltd & Another (Civil Appeal 373 of 2020) [2021] TZCA 521 thus: “On our part, .........we would add that contract, as a juristic concept, is the intimate if not the exclusive relationship between the parties who made it – see Furmston, M.P., Cheshire, Fifoot and Furmston’s Law of Contract (16th edn), Oxford University Press, Oxford, 2013 - Online Edition, at page 698. A contract, being principally a matter between the contracting parties, will normally state the rights and duties of the parties but having nothing to do with other parties. In Tarlok Singh Nayar & Another v. Sterling General insurance Com pany Lim ited [1966] 1 EA 144 and K ayanja v. New I ndia Assurance Com pany Lim ited [1968] EA 295, the Court of Appeal for East Africa recognised the application of the common law doctrine of privity of contract as it held that a stranger to a contract cannot sue upon it unless he is given a statutory right to do so.” In the same vein, though the case of D. Moshi t/a Mashoto Auto Garage vs. National Insurance Corporation (supra) cited by Mr. Manjeka in buttressing his objection is slightly distinguished from this case; yet the principle applied in the respect case squarely applies herein. In the respective case, the plaintiff sued the defendant for monetary payment in respect of repair work done on the motor vehicle owned by the third party. The plaintiff alleged that the claim of right arose from a letter written by the vehicle owner/third party directing the defendant to effect payment to the plaintiff. The defendant raised an objection to the 7 effect that the plaint doesn’t disclose the cause of action against the same as the motor vehicle on which the insurance claims were founded was insured by owners; hence, the plaintiff was not privy to the insurance contract under reference. The trial court found that there was no privity of contract between the plaintiff and defendant, the breach of which would entitle either of the parties to bring action before the court of law; for only a party to the agreement in terms of the doctrine of privity of contract can sue or be sued. The suit was accordingly dismissed. Thus, based on the foregoing, I purchase wholesale the submission made by the counsel for the 3rd party herein that the 2nd defendant is a stranger to the insurance contract entered between the 3rd party herein and one Abdalla Salim Abdallah; hence, the 2nd defendant cannot sue upon it. Otherwise, the 2nd defendant herein, being the stranger to the insurance mentioned above, could only acquire right of indemnity against the 3rd party herein and standing to join the same in this case if the change of ownership of the motor vehicle insured by the 3rd party herein would have been followed with “valid assignment of insurance policy" as a contract of insurance constitutes a highly personal contract [Principles of Insurance Law, Fifth Edition Butterworths Asia, 2000, at page 1193]. Assignment insurance refers to the transfer of ownership of an insurance 8 policy from one party to another. An assignee becomes the owner of the policy and enjoys all rights thereunder including the contractual right of indemnity. In this respect, I find it pertinent to borrow a leaf from Mahinder Singh’s book [Sidhu Mahinder Singh Sidhu, Casebook on Motor Insurance Law in Malaysia and Singapore - with synopsis and principles; International Law Book Services, 1995, at page 25] as follows: “A m otor insurance contract is alw ays personal in the sense that som e hum an elem ent is inevitably involved, and in a technical sense, the insurer’s decision to enter on the contract depends on the personal qualities of the insured and the insurer’s confidence in him . The insurers have the right to question and investigate the proposed insured and vary the terms of the contract. If an assignment takes place it is termed as a “novation”, since the assignment virtually creates a new contract with the assignee. A valid assignment gives the assignee the right to sue and gives the insurance company a good legal discharge without the necessity of joining the assignor. Where there is a conditional sale of a car to the new purchaser, the ownership of the car still remains with the insured, and does not amount to any transfer of his insurable interest. But w here there has been a com plete sale and transfer of the vehicle and handing over of the policy docum ents to the purchaser, it does not create a valid assignm ent, though there is a transfer of interest of the subject m atter of the insurance. The transfer of the insurable interest causes the policy to lapse, 9 and the purchaser has no insurance cover if he drives the car and m eets w ith an accident.” [Emphasis added]. See also the decision rendered by the Court of Appeal in England in the case of P eters vs. General Accident, Fire & Life Assurance Corporation (1938) 2 All ER 267 (CA): (1938) 60 LI.L.Rep. 311 in which it was opined, among others, that when the insured vehicle is sold, the purchaser drives it by virtue of his right as owner, and not by seller’s order or permission. The above excerpts speak volumes that unless the insurable interest vested with owner of the vehicle is validly assigned to the purchaser, the subsequent owner has no insurance cover entitled to the previous owner in the policy. And I would simply put it that; where there is transfer of the ownership of the vehicle, the insurer needs to be aware of the arrangement, lest the insurable interest lapses. Thus, I am on all fours with Mr. Manjeka in that the 2nd defendant is a stranger to the contract of insurance between the previous owner of the vehicle and the 3rd party herein. Needless to reiterate that the change of ownership of the vehicle involved in the accident was not accompanied with valid assignment of insurance policy which would entitle the 2nd 10 defendant the right of indemnity against the 3rd party herein. Hence, the 2nd defendant being not privy to the relevant contract, and in the absence of a valid assignment of insurance policy, the same has no contractual legal right to claim for indemnity against the 3rd party in case he is found liable for the alleged tortious act. Hence, the 3rd party herein was improperly joined in this suit. Given the foregoing, I find the preliminary objection on point of law advanced by the 3rd party herein meritorious. I hereby sustain the objection. The order to join the 3rd party in this case is hereby vacated. Accordingly, the defence filed by the 3rd party herein is hereby expunged from the record of this case. Nevertheless, as rightly opined by Mr. Manjeka, if the 2nd defendant still feels has justifiable legal recourse against the 3rd party herein, he is not barred from commencing separate action against the same in future. Based on the circumstances of this case, I would refrain to enter an order for costs. I so rule. DATED at DAR ES SALAAM this 15th July, 2024 O. F. BWEGOGE JUDGE 11