lancent laboratoriestanzania ltd vs navan healthcare company ltd 2022 tzhccomd 407 22 august 2022

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT DAR ES SALAAM COMMERCIAL CASE NO. 87 OF 2021 LANCENT LABORATORIES TANZANIA LIMITED............. PLAINTIFF VERSUS NAVAN HEALTHCARE COMPANY LIMITED...................... DEFENDANT Date of Last Order: llthAugust 2022 Date of Judgment: 22nd August 2022 JUDGMENT MKEHA, J. The Plaintiff is a limited liability company incorporated under the laws of Tanzania engaging herself in provision of laboratory services in Tanzania. On the other hand, the defendant is a limited liability company also registered under the laws of Tanzania for providing health care services through corporate and health insurance schemes. The defendant also provides health ■ i, ■ care services for cash paying patients in Dar es Salaam and Dodoma Cities. 1 | Page The plaintiff's claim against the defendant is for payment of Tanzania Shillings Four Hundred Thirty One Millions Five Hundred Seventy Eight Thousand Nine Hundred Eighty Three and Thirty Six Cents (TZS 431,578,983.36/=) being outstanding amount in respect of laboratoryservices supplied by the plaintiff to the defendant's hospitals from April 2016 to December 2019 collected from patients undep corporate and health insurance schemes. In terms of the piaint, the plaintiff entered into an agreement with the defendant for purposes of outsourcing Laboratory Operation Services in which the plaintiff was to provide to the defendant, laboratory services at the defendant's hospitals at Kigamboni- Dar es Salaam and in Dodoma.According to the plaintiff, the agreement recognized three kinds of patients who would be serviced by the plaintiff: cash paying patients, those under health insurance scheme and those under corporate scheme. It was further agreed that upon invoicing patients under Medical Insurance and Corporate Schemes, collected amount relating to laboratory services would be remitted to the plaintiff by the defendant within thirty (30) days from the date of receipt of the plaintiff's invoices. 2 | Page However, in terms of the plaint, up to when the plaintiff opted to institute this suit, the defendant had failed to honour her obligation under the contract by failing to remit the amount due and payable to the plaintiff from corporate and health insurance schemes. Specifically, the plaintiff prays for judgment and decree against the defendant as follows: - (i) An order for immediate payment of Tanzania ShillingsFour Hundred Thirty One Millions Five Hundred Seventy Eight Thousands Nine Hundred Eighty Three and Thirty Six Cents (TZS 431,578,983.36/=) being the total outstanding amount collected by the defendant from corporate and insurance scheme patients in respect of laboratory services supplied by the plaintiff to the defendant's hospitals at Kigamboni and in Dodoma; (ii) An order for payment of interest on the decretal amount mentioned in paragraph (i) above at the court rate of 12% per annum from the date of judgment to the date of payment in full; 3 | Page (iii) An order for payment of general damages in respect of unbearable stress and disturbance to the plaintiff, costs and loss of productive time and resources in following up and engaging in exchange of tedious correspondences in attempts to ensure the defendant's performance of their (sic) contractual obligations; (iv) Costs of this suit be borne entirely by the defendant; (v) Any other orders or reliefs as the Honourable court may deem fit and just to grant. On the other hand, through her written statement of defence, the defendantadmitted existence ofthe outsourcing contract. However, shedenied indebtedness and obligation tocollect laboratory service fees and payments in respect of invoice patients under the medical insurance and corporate schemes.She further deniedhaving access to the plaintiff's Laboratory Information System. Before commencement of hearing, the following were framed as issues for determination: 4 | Page 1. Whether the defendant had an obligation to collect laboratory service fees and payments in respect of invoice patients under the medical insurance and corporate schemes. 2. Whether the defendant is liable to pay the plaintiff. If the answer is in the affirmative, to what extent/amount. 3. To what reliefs are the parties entitled. Mr. Claudio Msando learned advocate represented the plaintiff. On the other hand, Mr. Daimu Khalfan learned advocate represented the defendant. Each side of the case offered one witness for cross examination. Mr. Godliving Nkya, Acting Country Manager of the plaintiff, appeared as the sole witness for the plaintiffs' case. He commenced his testimony in court by tendering his own witness statement as evidence in chief. The said statement was admitted without objection on part of the defendant. In the said statement, the witness stated that, the plaintiff had entered into a contract with the defendant for outsourcing laboratory operations in which the plaintiff was obliged to provide laboratory services at the defendant' s hospital located in Dar es Salaam and Dodoma. Contract for outsourcing Laboratory services between the plaintiff and the defendant was admitted without objection as Exhibit Pl. It was further stated that, the said 5 I Page contract recognized three kinds of customers or patients who would be serviced by the plaintiff, that is, cash paying patients, those serviced under health insurance scheme and those under corporate scheme. It was agreed further that the plaintiff would bill directly and collect laboratory service fees payable in cash bycash paying customers at the defendant's hospitals while the defendant was required to bill and collect laboratory service fees from patients under medical insurance and corporate schemes. It was further stated in the witness statement that, the defendant was then obliged under the contract upon invoicing patients under medical insurance and corporate schemes, to remit the collected amount of money relating to laboratory services to the plaintiff within thirty days from the date of receipt of the plaintiff' s invoices. According to PWl, the plaintiff, in. fulfillment of her obligations under the contract, provided laboratory services to the defendant's patients who received health services at the defendant's hospitals as agreed. It was further stated that, between 2016 and 2020 the plaintiff issued numerous invoices to the defendant. However,according to PWl, upon receipt of the plaintiff' s invoices, the defendant without any legal justification defaulted to remit the amount collected from the patients under corporate and health 6 | Page insurance schemes. The invoices issued by the plaintiff to the defendant were tendered and admitted into evidence as Exhibit P2 collectively. PWl stated further that, despite the fact that the defendant defaulted to remit to the plaintiff the collected amount of money as per the terms of contract, the plaintiff continued honouring her contractual obligations by continuing providing laboratory services to the defendant's hospitals. That, following the defendant's continued default; the plaintiff opted to take legal steps in view of recovering the outstanding amount. It was further stated in the witness statement that, the plaintiff made several attempts to remind the defendant regarding the outstanding debts. Email correspondences between the plaintiff and the defendant, evidencing the reminders, were collectively tendered as Exhibit P3. Statement of accounts indicating the outstanding amount was admitted and marked as Exhibit P4. PWl stated further that, deliberate reluctance and omission by the defendant to perform her contractual obligations caused monetary loss, unbearable stress and disturbance to the plaintiff. That, in spite of being served with two demand notices as gentle reminders, the defendant never 7 | Page responded to the same. The demand notices were collectively tendered and admitted as Exhibit P5. Upon being cross examined, PWl told the court that it was the plaintiff's obligation to keep records. PWl conceded that, the plaintiff had failed bringing in court the actual invoices to prove what was at issue. Upon being re -examined, PWl told the court that in no way could clients' information be produced in court because of the confidentiality principle applicable in provision of health services. That marked the end of the plaintiff' s case. Dr. Albert Robert appeared as the sole witness in support of the defendant's case. When he appeared in court, he started by tendering his witness statement to be adopted as his evidence in chief. The same was admitted without objection. The witness statement of 'this witness indicates that, he I was one of the Managing Directors who entered into and acted upon the outsourcing contract between the plaintiff and the defendant. He also told the court that, the defendant outsourced the plaintiff's laboratory operations at her premises at Kigamboni- Dar es Salaam on 13th April 2016. 8 | Page DWl stated further that, the contract was for three years commencing on April 2016 and there was an option for automatic extension up to eight years on mutual consent of the parties. DWI stated in his witness statement that, after expiry of the first term on l551 April 2019, the parties had no mutual consent to extend the contract period. The witness statement indicates that, the defendant had an obligation to refer patients to the plaintiff's laboratories. The plaintiff was entitled and free to accept and work on the laboratory tests requested by the defendant. The statement indicates that, the parties had agreed on the responsibilities of billing and collecting revenues from the patients. According to DWl, the plaintiff was required by contract and had actually placed the billing system within the defendant's reception area and discharge desk to facilitate easy billing. DWl added that, the plaintiff hada responsibility of directly invoicing patients who received her laboratory services. According to DWl, it was agreed that for patients covered by medical insurance scheme and those under corporate scheme who had direct relationship with the defendant and who wished to be invoiced by the defendant, these would always be invoiced by the defendant and the 9 | Page plaintiff would afterwards invoice the defendant for collection of the said payments. DWl stated in his witness statement that, he never received communication from the plaintiff regarding patientswho declared having direct relationship with the defendant, stating the kind of relationship and who wished only to ■ be invoiced by the defendant. The witness further stated in his statement that, for the plaintiff to invoice the defendant, the plaintiff had to establish that the two conditions were complied with, that, the patients had direct relation with the defendant and that, the patients wished only to be invoiced by the defendant. The witness stated in his statement that, the plaintiff had an obligation under the contract to supply bar coded laboratory numbers and keep the same in its Laboratory Information System for proper record keeping of all patients who received services so as to ascertain the tests conducted to patients referred to the plaintiff by the defendant. According to DWl, that was not done by the plaintiff. In view of the witness, it was impracticable to compute 10% of the total realized revenue as generated from all tests conducted to patients referred to the plaintiff by the defendant. 10 | P a g e The defendant stated how on three different occasions, attempted to communicate with the plaintiff regarding the issue of reconciliation of the records to ascertain patients who were related to the defendant and wished to be invoiced by the defendant. According to the witness, the plaintiff provided no such list of such patients thereby rendering the reconciliation exercise impossible. DWI finally concluded that, in the circumstances whereby the condition precedent for invoicing the defendant was not met by the plaintiff, the defendant was not in any way liable to satisfy the plaintiff's claims. The witness pressed for dismissal of the plaintiff' s suit. When DWl was cross-examined, he told the court that indeed, the plaintiff and the defendant had a series of talks regarding some outstanding claims. He then added that, the defendant afterwards mistakenly made some payments to the plaintiff. He produced no documentary evidence to prove the said fact. The Final Written submissions filed by the learned advocates for the parties have been read and are considered without necessarily reproducing them, in the course of responding to the framed issues. Analysis of evidence and determination of the framed issues is a task that follows. 11 | P a g e The first issue is whether the defendant had an obligation to collect laboratory service fees and payments in respect of invoice patients under the medical insurance and corporate schemes. According to clause 5.1.2 and 5.1.3 of the agreement (Exhibit Pl) signed by the parties, the obligation to collect laboratory service fees and payments in respect of invoice patients under medical insurance as well as corporate schemeswasof the plaintiff. Under the agreement between the parties, the defendant could only collect payments in respect of invoice patients under medical insurance and corporate schemes if two conditions co-existed. That is, if the patients had direct relationship with the defendant and if the patients wished only to be invoiced by the defendant. In such a situation, the plaintiff would invoice the defendant for services rendered to such patients and the defendant would in turn invoice and collect payments from such patients or whichever entity responsible to the defendant for the bills of such patients. The court received no specific evidence from the plaintiff, of specific patients who had direct relationship with the defendant and who only wished to be invoiced by the defendant. The invoices issued by the plaintiff to the defendant (Exhibit P2) and the statement of accounts indicating the outstanding amount (Exhibit P4) do not prove the fact that the claims are in 12 | P a g e respect of patients who had direct relationship with the defendant and who only wished to be invoiced by the defendant. In the absence of such proof, the first issue is answered in the negative. Following an answer to the first issue in the negative, an obligation of the defendant to pay the claimed sum to the plaintiff cannot arise. The second issue is consequently answered in the negative. The suit is dismissed with no order as to costs. DATED at DAR ES SALAAM this 22ndday of August 2022. C.P JUDGE 22/08/2022 Court: Judgment is delivered in the presence of Mr.Claudio Msando learnedadvocate for the plaintiff and Mr. Daimu Khalfan learned advocate for the Defendant. JUDGE 22/08/2022