20140828 TZHC Dar es Salaam

:l • 1 I-" IN TH:E HIGH COURT OF TANZANIA (DAR ES SALAAM DISTRICT REGISTRY) AT DAR ES SALAAM CIVIL CASE NO. 51 OF 2007 LESHEY A INVESTMENT CO. LTD .............................. PLAINTIFF VERSUS ALLIANCE INSURANCE CORPORATION LTD ... DEFENDANT ..... JUDGMENT MURUKE,J. The plaintiff Lesheya Investment Co. Ltd who was at different times advocated for by Mr. Ngundugi, Mr. Shadrack and Mr. Buberwa advocates, has brought this suit claiming for a sum of Tshs. 657,412,450/- alfegedly being the a1nount of money due from the defendant to the plaintiff as indemnity for the loss of the plaintiffs property by fire. The plaintiff has also requested for a grant of interest on the principal sum at the bank rate from the date of the fire; interest on the decretal amount at the court rate from the date of judgment to the date of full payment; and costs of the suit. It is alleged in the plaint that the plaintiff was at all 1naterial times insured with the defendant against fire at the plaintiffs shop and go-down at Block 'H' Medium Density, Mbezi Area along Bagamoyo Road, Dar es Salaa1n. Fire insurance policy no. 1 81000172 between the parties, relevant cover note and receipts were issue by the defendant's agent MS NBC Ltd, Mlimani Branch. The plaintiff has averred that on 17/6/2001 at night, the plaintiff's shop and go-down insured by the defendant were gutted down by fire and the plaintiff lost everything that was stored therein. The plaintiff has alleged further that the fire incidence was reported to police and fire department and each authority gave its report. The property lost was valued at Tshs. 657,412,450/-. The plaintiff's complaint is that the defendant has repudiated the plaintiff's indemnity claim and has given no reason for such repudiation. It has been averred that the defendant's repudiation is in breach of the contract of insurance between the plaintiff and the defendant. To manifest her opposition to the suit, the defendant who was under representation of Mr. Mwandambo and Mr. Sinare advocates filed her written statement of defense but, on 21/10/2008, this court (Shaidi, J.) struck out the referred written statement of defense for being filed out of time. Consequently, the hearing was conducted ex parte against the defendant. The following issues were recorded before hearing: 1. Whether the plaintiff has a valid indemnity claim against the defendant. 2. Whether the defendant had notice of fire eruption. 3. Whether the goods alleged to have been destroyed had the value indicated in the plaintiffs claim. 4. What are the reliefs. 2 \ . . The plaintiff called three witnesses to prove her case and the first one was Nicholaus Mokirya -PWl. He is currently the NBC Branch Manager, Mwanza Branch. PWl testified that he worked at the NBC Mlimani Branch from 2001 as the Branch Manager. The witness stated that he knows the plaintiff as one of the NBC (the bank) customers who took a loan of Tshs. 400,000,000/- from the bank. PW 1 disclosed that the loan was secured by the plaintiff's business at Mwenge and at Mbezi near Shamo Industries. He stated further that before granting the loan to the plaintiff, they verified the stock in the plaintiff's business and its value and they wanted her to insure the business. PWl explained that the plaintiff's stock was insured and the branch manager (PWl) together with the credits officer went to the site (Mwenge and Mbezi) to verify the stock in the plaintiff's business. He clarified that the verification is done by itemizing the goods available and the corresponding prices. He stated that, as the Branch Manager, he prepared the quarterly inspection report dated 6/4/2001 showing that the value of the plaintiff's goods as of that date was Tshs. 799,574,922/-. The said report was admitted as exhibit Pl. PWl contended that he prepared the report for the purpose of taking it to the NBC head office and for the purpose of insurance because it was mandatory that, for the bank to issue a loan, the plaintiff's goods should be insured. He revealed that there was variation of the plaintiffs stock level every month thus the plaintiff was submitting to the bank the stock and debt report 3 . monthly. He explained for instance that the plaintiffs stock in April 2001 was different from that of May, 2001. PWl stated that after the fire incidence, the plaintiff notified the NBC Mlimani Branch. According to PWl, the fire accident occurred in June 2001 and they (NBC Mlimani Branch) visited the scene of accident. He stated further that the fire incidence took place at night and the bank was informed on the following day. PWI testified that at the scene there were only remains of t_he destroyed goods and added that the value of the goods destroyed was Tshs. 500,000,000/-. The witness identified the plaintiffs insurance policy issued by Alliance Insurance Corporation Ltd (defendants) covering fire and theft at the value of Tshs. 700,000,000/-. PWl explained that the insured in the said policy were the plaintiff and the NBC Mlimani Branch. PWl disclosed that in the first place the insurance cover for the Mbezi stock was Tshs. 83,000,000/- which was later changed to Tshs. 500,000,000/-. The insurance policy between the plaintiff and NBC Mlimani Branch on the one part and the defendant on the other was admitted as exhibit P2. The premium payment receipt no. 3701 dated 10/1/2001 was received as exhibit P3. PWl testified that the defendant prepared the corporate plus endorsement advice dated 16/1/2001 declaring that the stock under the policy is subject to monthly declarations and the rate applied is 75% of the fire rate. PWl maintained that the monthly declaration was the basis of the premium. He contended that the policy covered the period of overdraft to the date of incidence. The corporate plus endorsement advice was admitted as exhibit 4 . P4. PWl testified that the premium paid was Tshs. 3,770,117 /- for the goods at Mwenge and Mbezi and the amount increased after the endorsement advice -exhibit P4 although he wasn't sure. When asked by the court what did the words "It is hereby declared and agreed that with effect from inception the stock under the section of the mentioned policy is subject to monthly declarations and the rate applied will be 75% of the fire rate" mean?, PWl replied that it meant the stock would be taken to be at 75% rate after fire. PW2 -Emily W oiso is the principal share holder and the managing director of the plaintiff. He is a business man dealing with hardware and school business. PW2 stated that he has been in the business of hardware for about 20 years and he has the business centers (plaintiffs centers of business) at Mwenge, Mbezi and Tegeta. The business involves selling of all kinds of building materials. PW2 testified that the plaintiff runs business through share holders' capital and loans from banks, specifically NBC Mlimani Branch (the bank). He revealed that he knew the defendant after he took the loan from the bank under a condition that the borrower should take an insurance cover for the loan. He stated that the bank acted as the defendant's agent. After being shown the insurance policy -exhibit P2, PW2 stated that the parties to the said insurance contract were the plaintiff, the defendant and NBC Mlimani Branch. The plaintiff and NBC Mlimani Branch were the insured while the defendant was the insurer. PW2 contended that the policy covered the stock on trade for a period of one year with effect from 10/1/2001. The policy 5 . insured the stock on trade against fire and burglary. PW2 asserted that he paid the pre1nium and he recognized, in court, a premium payment receipt -exhibit P3 which is in the name of the plaintiff and the bank. A temporary cover note issued by the defendant on 10/1/2001 for a period of one year covering commodities worth Tshs. 279,842, 774/- at Mwenge and Tshs. 83, 170,390/- at Mbezi shop and go-down was admitted as exhibit PS. PW2 maintained that prior to the plaintiff's insurance with the defendant, he filled the proposal form itemizing various goods to be insured which included paints for automobiles and houses, car batteries and car tires. PW2 revealed that he was asked in the proposal form whether the goods to be insured included explosive items and he answered 'yes'. The form was submitted to the insurance company. He repeated that he had to ensure the business because he had taken a loan of Tshs. 400,000,000/- from the bank. PW2 contended that the officers from NBC Mlimai Branch used to inspect his stock after every three years; one copy of the inspection report was given to PW2 and the other copy was served on the insurer (defendant). He asserted that the bank was making a declaration of the stock in the plaintiff's shops and go-down after every three months and thereafter the bank would automatically deduct some amount from the plaintiffs account to pay the insurance costs to the defendant. PW2 stated that, in that way, NBC Mlimani Branch was acting as the plaintiffs agent to the defendant insurance company. From then on, there was no new proposal form filled by the plaintiff, the insurer only acted on the stock verified by the bank. 6 . PW2 recognized the corporate plus endorsement advice -exhibit P4 and stated that according to it, the policy was subject to monthly declaration at the rate of 75% of the fire. The witness testified that, n 17/6/2001; fire destroyed the building and all the items therein including files and documents. After the said fire, PW2 reported the incidence orally and in writing to police and to the insurance company (defendant). A correspondence dated 2/8/2001 between the plaintiff and Interstate Surveyors and Loss Adjusters Ltd was admitted as exhibit P6. PW2 informed the court that after the fire report, the officers from the defendant's office and from the bank visited the scene of fire accident. He was issued with a form in which he was required to fill all the information concerning the fire incidence. He maintained that the said forms together with the claim form were sent to the defendant who told the plaintiff to wait. PW2 revealed that from then he never received any information from either the defendant insurance company or from the bank. PW2 repeated the prayers in the plaint that the plaintiff be awarded Tshs. 657,421,450/- the value of the items destroyed by the fire and interest o that amount at the bank rate. He also prayed that the plaintiff be granted interest on the decretal sum until such time when the sum is paid and costs of the suit. John Kuyola who works with the Ultimate Security Co. as a security guard testified as PW3. He has been working on that post since 1983. PW3 testified that by 1999, his duty station was at Leshaya Investment Co. Ltd's go-down and shop. He stated that, on 17/6/2001 at around 02.15 hrs during the night, he saw some 7 smoke and then fire erupted. Together with other security guards, they failed to fight the fire. They then reported the fire incidence to fire department and police. The fire brigade arrived later and tried to stop the fire but failed because the fire was just too strong. PW3 stated that nothing was rescued from the go-down or shop. He disclosed that the fire continued until morning when he went home and left his duty station in the hands of his superiors. PW3 stated that he worked with the police force from 1984 to 1989. He is a form four leaver. He conceded that he knew Mr. Shirima who was the Manager of Lesheya Investment Co. Ltd. I now turn on the question whether the plaintiff has a valid indemnity claim against the defendant. In my opinion, this question invites consideration of whether there is a valid insurance contract between the plaintiff and the defendant giving the plaintiff right of indemnity and the defendant liability to indemnify the plaintiff in case of the occurrence of the events stipulated in the contract. When one takes a glance at the insurance policy no. 81000172 -exhibit P2, temporary cover note no. 91000201 -exhibit PS and the premium payment receipt no. 00003701 -exhibit P3, all issued by the defendant, it is not difficult to realize that there existed a contract of insurance between the defendant as the insurer on the one part and the plaintiff and NBC Ltd Mlimani Branch as insured on the other part. According to the corporate plus schedule (part of exhibit P2) and the cover note, the policy covered a period of one year with effect from 10/1/2001. As regards the insured subject matter and the sum insured, the corporate plus -fire section form which is part 8 of exhibit P2 and the particulars of risk/ cover under exhibit PS read as follows: Exhibit P2 Corporate Plus -Fire Section Policy No. 81000172 Effective Date 10-Jan-2001 Serial No Description Sum Insured 1 Location: MBEZI BLOCK 'H' MD PLOT NO. 2333, - - - --- -- - -- 2332-& -23Jl - - -- -- - - - ---- --·· Building occupied as Godown 83,170,390 2 Location: MWENGE MARKET AREA, SAM NUJOMA RD OPPS. JWTZ (UJENZI) Building occupied as Shop & Godown 279,842,774 Exhibit PS Particulars of Risk/Cover Sum Premium Insured Subject matter insured 9 L FIRE POLICY (STOCK IN TRADE) (a) SAM NUJOMA RD. MWENGE MARKET AREA OPPS. JWTZ Tshs. Tshs. (UJENZI) 279,842,774 839,528.30 Shop and Godown (b)MBEZI BLOCK 'H' MD PLOT NOS. Tshs. Tshs. 2333, 2332 & 2331. 83,170,390 249,511.15 Godown 2. BURGLARY POLICY (STOCK IN ~-TRADE}_ _ ______________ _ -- -Tshs: - -- -Tsh-s-. - - (a) SAM NUJOMA RD. MWENGE 279,842,774 1,679,056 MARKET AREA OPPS. JWTZ Tshs. Tshs. (UJENZI) 83,170,390 499,022 (b)MBEZI BLOCK 'H' MD PLOT NOS. 2333, 2332 & 2331. Special Conditions: A per policy. From the above quoted parts of exhibits P2 and PS, it is evident that the plaintiff insured her go-down and shop at Mwenge area and a go-down at Mbezi area against fire and burglary. The insurable value which is the face amount of the policy for the plaintiffs go-down and shop at Mwenge was Tshs. 279,842,774 while for the go-down at Mbezi was Tshs. 83,170,390. The insurable value was the same for both risks (fire and burglary) insured against. The above evidence has proved also that the plaintiffs shop at Mbezi was not among the subject matters 10 insured against fire by the defendant under the insurance policy - exhibit P2. There is uncontroverted oral evidence of PWl, PW2 and PW3 that, on 17/6/2001, the plaintiffs go-down and shop at Mbezi were gutted down by fire thereby destroying everything that was kept in the said go-down and shop. The three witnesses testified further that the fire incidence was reported to the police, fire department and the defendant who visited the scene later. A correspondence between the plaintiff and Interstate Surveyors and Loss Adjusters Ltd (the defendant's agents) -exhibit P6 indicates that the defendant was informed at the earliest moment and, therefore, had notice of the fire eruption at the plaintiff's go-down and shop at Mbezi; and this affirmatively answers issue no. 2 supra. All the above evidence put together, and since fire is among the risks for which the defendant insured the plaintiff in respect to the go-down at Mbezi, the plaintiff has a valid indemnity claim against the defendant as far as the said burnt down go-down is concerned; but, to what extent is the question to be dealt with next. I must admit that having gone through oral and written evidence in support of the plaintiff's case, I am unable to agree that the value of the plaintiff's insured goods allegedly destroyed by fire is as indicated in the plaintiff's statement of claim i.e. Tshs. 657,412,450/-. Simply, there is no evidence in support of that claim. The plaintiff's contention was pegged on the stock verification report of 31/5/2001 which valued the stock in the plaintiff's yard and g~-down at Mbezi 11 "In most property insurance today, all policies are valued; not in the technical • sense . . . but in the simple sense of the fair value of the property being established by a property surveyor or otherwise agreed on by the parties as the insurable value at the insurance is taken out. The upper most limit of the face amount of the policy would be the insurable value. Similarly, it seems to be the general rule that, subject to the face amount of the policy, the maximum recovery would be measured by the insurable value at the time of loss." With the above two authorities in mind, and having established that the value of the plaintiff's stock in trade in the burnt down go- down at the time of fire (loss) was Tshs. 16,470,000/-, the plaintiff is entitled to be indemnified to that extent by the defend ant. Thus, the defendant is ordered to pay the plaintiff the sum of Tshs. 16,470,000/- as indemnity for the loss of her properties by fire. The plaintiff to have interest on the decretal amount at the court rate of 7% from the date of judgment to the date of full payment. Z. G. JUDGE 28/08/2014 Judgment delivered in the presence of Mr. Shedrack for the plaintiff and Mr. Shedrack holding brief of Mr. Sinare Zahran for the defendant. JUDGE 28/08/2014 14