LIAISON T LTD VS REGISTERED TRUSTEES OF JHPIEGO COMM CASE NO

IN T H E H IG H C O U R T O F T A N Z A N IA ( C O M M E R C IA L D IV IS IO N ) AT DAR ES SALAAM COMMERCIAL CASE NO. 139 OF 2016 LIAISON TANZANIA LIMITED .....•.......•... P L A IN T IF F V ERSUS REGISTERED TRUSTEES OF JHPIEGO (AS AFFILIATE O F J O H N S H O P K IN S U N IV E R S IT Y ) . D E FE N D A N T JUD G M EN T Date of the Last Order: 24/07/2018 Date of the Judgment 03/08/2018 SEHEL. J. This judgment arose from a claim for payment of premiums over Group Life Assurance Policy cover. The plaintiff, who introduced itself as a limited liability company duly incorporated to carry insurance broking and pension consultation business, alleges that on 19th December, 2014 it received a request from the defendant for the plaintiff to place one 1 - month extension of the Group Life cover policy number TL045 for the month of January, 2015 of which the plaintiff placed it, issued an invoice No. 0609/14 dated 22nd December, 2014 to the tune of Tshs. 8, 169,728/=; and the defendant acknowledged receipt by stamping it on 5th March, 2015. The Plaintiff further alleges that on 29th May, 2015 the defendant instructed the plaintiff to place Group Life Assurance for the year 2015/2016 valued at Tshs. 99,389,247 /= by issuing Local Purchase Order dated 29th May, 2015 which was accepted and approved by the plaintiff on 16th June, 2015. It is s h o w n i n t h e p la i n t t h a t t h e r e a f t e r t h e p la i n t if f is s u e d in v o i c e d a t e d 3 0 th June, 20 15 fo r p o lic y No . TL045 w h ic h th e d e fe n d a n t acknowledged receipt by stamping it on 2nd July, 2015. The plaintiff complains that the defendant, despite repeated demands, failed and/or neglected to honour its obligation by refusing to pay the premiums totalling to Tshs. 106,587,895/=. The p la in t if f t h e r e f o r e in s t i t u t e d t h e p r e s e n t s u it s e e k i n g f o r : - 1. A declaration that the defendant has breached the parties' - s e r v i c e a g r e e m e n t f o r f a i l u r e t o p a y p r e m i u m s d u e o n is s u e d 2 Grovp Lif~ lnsuronce Covers issued by the plclnfiff on 22nd December, 2014 and 29th May, 2015; 2. An order that the defendant pay the sum of Tshs. 106,587,895/= being the principal amount due as at 29th August, 2016 to the plaintiff; 3. General damages for breach of contract; 4. Interest on amount in ( 1) and (2) above at the commercial rate of 24% per annum from the date of default to the date of judgment; 5. Interest on decretal amount at the Court's rate of 12% per annum from the date of judgment to the date of payment in full; 6. Costs of the suit; 7. Interest on the costs at Court's rate of 12% per annum from the date of taxation until payment in full; ~ 3 8. Any other relief (s) that the Court rnov deem just and fit to grant. The defendant after being served with the plaint filed its written statement of defence wherein it denied to have accepted and/or utilised any cover from the plaintiff and averred that there was no cover issued by the plaintiff for the period from June, 2015 to June. 2016. The defendant acknowledged in its defence that it received the invoice issued by the plaintiff and there was no payment made. The defendant further averred that though it issued instructions for placing life assurance cover with Jubilee Insurance but the said instruction was retracted after the approval team of the defendant directed the defendant for procurement of tender to be advertised for bids. Generally, the defendant disputed to be indebted to the plaintiff and put the plaintiff to strict proof. At the final pre-trial conference the following issues were framed for Court's determination:- 1) Whether the plaintiff was the insurance agent vnder the Group Life Insurance policy no GLT045; 4 ~ 2) W hether an lnsurcnce cover existed at the time w hen the defendant failed to pay prem ium s: and 3) To w hat reliefs are parties entitled. Whether the plaintiff was the insurance agent under the Group Life Insurance policy no GLT045 It is not disputed that there existed a life cover policy number GLT no. 045 that expired in August, 2012 (Exhibit D2). It is further not disputed that the said policy was entered between the defendant and Jubilee Insurance Company. It was testified by PWl and DWl that the modality of putting in place the said policy was through the plaintiff. PWl testified that the defendant has to issue LPO to the plaintiff and the plaintiff places the required insurance for the defendant thereon. This testimony is confirmed by DW 1 when he stated, and I quote: "The defendant b e in g an international NGO and VAT exempted entity, it was not practical for Jubilee Insurance to p r o v id e proforma in v o ic e in c l u s i v e of VAT. In th e ~ 5 circvm stanc~s, the Jut> ile~ lnsurQnc e c;/irected the defend ont to m ake paym ents of pr~m ivm throvgh the plaintiff at no additional costs on part of the defendant. The arrangement was to the effect that the defendant would issue a local purchase order and the plaintiff will issue an invoice for premium payment, the defendant would therefore pay the premium and then Jubilee Insurance would place an insurance cover." It is further on records and not disputed that the insurance cover was automatically renewed twice for the period between August 2012 to August, 2013 and August, 2013 to August, 2014. It is also not disputed that the defendant requested four months extensions whereby as usual the LPO and invoice were issued. It is further not disputed by DWl that on 19th December, 2014 the defendant requested for another extension of one month. The LPO was issued and the plaintiff raised an invoice of Tshs. 8, 169,728/=. It is on records and admitted by the defendant that in May, 2015 the defendant requested the plaintiff to place insurance cover for the ~ 6 ye a r 2015/2016 b y issu in g LP O a n d th e p la in tiff rc lse d o n in vo ic e o f Tsh s. 98,4 18,167 /=. Basing on the above undisputed facts, the counsel for the defendant submitted that the plaintiff acted on behalf of Jubilee Insurance Company Limited in the undertaking as such the plaintiff has no right to bring the present suit since what the plaintiff is claiming belongs to the Jubilee Insurance Company Limited. It was responded by the counsel for the respondent that the plaintiff in terms of the provisions of Sections 134 and 139 of the Law of Contract Act, Cop. 345 was an insurance agent for the defendant and it was also the insurance broker for the Jubilee Insurance Company of Tanzania in that respect the plaintiff was the defendant's insurance agent under the Group Life Insurance Policy Cover No. GLT 045. From the submissions made by the counsels, the issue here is whether the plaintiff is privy to the contract. The defendant's argument I presume stem from the provision of Section 182 of the Law of Contract Act, Cap 345 which provides: 7 "*" " ( 1) In the absence of any contract to that effect, on agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. (2) A contract referred to in subsection ( 1) shall be presumed to exist in the following cases- (a) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad; (b) where the agent does not disclose the name of his principal; (c) where the principal, though disclosed, cannot be sued." My reading to Section 182 of the Law of Contract Act, Cap. 345 is to the effect that an agent cannot inter alia personally enforce a contract when there is a contract to the contrary and when the principal's name is disclosed by the agent. Further the opening phrase of Section 182 of the Law of Contract Act, Cap. 345 suggests that there may be circumstances where the agent can enforce a contract on its capacity. This is the foundation of Section 178 of the 8 -- La w o f Controct Act, Cap 34-? that contemplores contracts entered into through on agent, and obligations arising from acts done by an agent, moy be enforced in the same manner, and will have the same legal consequences, as if the contracts had been entered into and the acts done by the principal in person. In the matter at hand, we are told by the defendant that LPO was issued to the plaintiff's name and it has been clearly established by the plaintiff through the testimony of PWl and Exhibits Pl and PS that the request was made in the name of the plaintiff. The contents of two LPOs dated 20th October, 2011 and dated 29th May, 2015 clearly reveal that the defendant placed the request to the plaintiff and not to Jubilee Insurance Company Tanzania. Therefore according to the facts of this case, it is immaterial as to whether the plaintiff was acting as an agent of Jubilee Insurance Company Tanzania or not. The fact remains that the defendant placed the order directly to the plaintiff and it was the plaintiff who issued the invoices to the defendant for the payment of premiums. In such a situation, it is obvious that the plaintiff has a right to enforce its right. ~ 9 Th e re fo re , th e d e fe n d a n t's co n te n tio n o n thls issue thot the plaintiff is not privy to the contract, must fail. Issue number one is thus answered in the affirmative. Whether an insurance cover existed at the time when the defendant failed to pay premiums It wos the defence of the defendant that Pursuant to clause 5 to the third schedule to the Group Policy and Regulation 35 (a) and (c} of the Insurance Regulations, 2009, the policy ceased to remain in force for the defendant's failure to pay the premiums invoiced. It was argued that consideration in insurance contract is payment of premiums. Therefore, if premium is not paid then there is no contract in place. He quoted the book titled "The Law of Insurance" by Sidney Preston and Raoul P. Colinvaux, 2nd Edition published by Sweet & Maxwell Limited London, 1961 where at pages 3, 14 and 15 it was stated: "The aim of insurance is to make provision against the dangers which beset human life and dealings. Those who seek it endeavour to avert disaster from themselves by shifting possible 10 ~ losses onto the shovlders of otMers, who are willing, for money or some other consideration, to take the risk of them, and in the case of life insurance, they con assure to those dependent on them o certain provision in ace of their death, or provide a tuna ovt of which their creditors can be satisfied." And at pages 14 and 15: "A contract of insurance is, however, generally embodies in a formal document called a "policy", a term borrowed from the Italian merchants who introduced the practice of insurance into this country. While the word is generally used to describe suet: a formal document, it may be used to describe any contract of insurance however informal." The Counsel thus reasoned that from the general principle of insurance· whereby numerous persons who are exposed to certain risks contribute to a general pool by paying premium so that any of them will be compensated when suffers damages out of a risk assured, then if one does not contribute to the general pool, he will not be entitled to compensation . .__ 11 C o u n s e l f o r t h e p la i n t if f o r g v e d t h a t t h e r e is n o ~ ~ n e r a l r u l e r e q u i r i n g t h e a c t u a l p a y m e n t o f p r e m i u m s b e f o r e t h e in s u r e r is a t r i s k . The counsel cited the book titled "Birds' Modern Insurance Law" by J o h n B ir d s & N o r m a n J . H ir d , 5th Edition, published by Sweet & Maxwell London 2001 where at page 158 stated: " ... there is no general rule requiring the actual payment of the premium before the insurer is at risk.... the proposer for insurance is deemed to have applied for the usual form of policy issued by the insurer in respect of the particular type of insurance in question. He is thus deemed to have agreed to the usual terms and conditions to be found in the insurer's policy." And at page 72, the author cited the case of General Accident Insurance Corporation V Cronk (1901) 17 T.L.R 233 which the counsel also cited in her submission where: "the defendant declined to pay premium arguing that the sending of the policy with different terms was merely a counter offer which he chose not to accept but the Court held that he ~ 12 w a s liobl~ for the premivm cs he is oeemec;i to riov» ogrfted to the usual terms and conditions." The counsel for the plaintiff then argued that there is valid insurance cover since there was a request made by the defendant and the plaintiff acted on the said request as such the argument that there was no premium paid does not have any weight. The issue here is whether the insurance cover was in existence at the time the defendant failed to pay premiums. I have shown herein that the defendant acknowledged that the plaintiff issued two invoices, an invoice dated 22nd November, 2014 of an amount of Tshs. 8,169,728.00 (Exhibit P3) and an invoice dated 3Qth June, 2015 of an amount of Tshs. 98,418,167.00 (Exhibit P4). The defendant throughout the testimony of DWl acknowledged that it did not pay them. Since the defendant did. not pay the premiums then it argues that there was no cover in place. Birds (Supra) at page 158 said: ~ 13 "Th e p r~m ivm is the consideration given by the insvred in retvrn for the insurer's undertaking to cover the risks insured against in the policy of insurance." It went on further to state: " ... there is no general rule requiring the actual payment of the premium before the insurer is at risk, although this will frequently particularly in life insurance, be required by a term of the policy." Preston (Supra) at page 114 stated almost the same thing when he said: "The premium is the price for which the insurer undertakes his liabilities." He further stated: "Actual payment of the premium is not necessary to the creation of a complete and binding contract of insurance, and a stipulation that the insurance shall not attach until the premium is paid will not be implied."~ 14 It follows then that though generolly consideration in insvrance contract is the payment of premiums but the octuol payment of premiums is not always the case especially when there is a policy in place. By the very term "a policy" one anticipates that there must be a formal document. in place but the term may be used to describe any contract of insurance however informal. (See "The Law of Insurance" (Supra) at page 15). I have shown in issue number one that there was in place the Group Life Assurance Cover entered between the defendant and Jubilee Insurance for August, 2011 to August, 2012 (Exhibit D2). The modality for the said cover to take effect was through the plaintiff. The arrangement was such that the defendant issues LPO; plaintiff places the insurance cover with Jubilee Insurance and then the plaintiff raises invoice. It is on records and not disputed by the defendant that the cover was automatically renewed twice for the period between August 2012 to August, 2013 and August, 2013 to August, 2014. For the renewal of the cover to take place, the defendant issued LPO to the plaintiff, the plaintiff placed the cove~ 15 w it h J u b i le e In s u r a n c e t h e n t h e p la in t if f r o l s e d t h ~ in v o i c e . T h is is proved by exhibit Pl. The invoice dated 9th September, 2013 reeds: Mashaka Nyeza Human Resource Manager Jhpiego Tanzania P.O.BOX 9170 Dar es Salaam D E S C R IP T IO N A M O U N T -TS H S Premium charged in respect of Group Life 95,204,406.00 Assurance cover for Staff of Jhpiego Tanzania Period: From 15/08/2013 To: 14/08/2014 Insurer: Jubilee Insurance Company (T) Ltd 95,204,406.00 TO TA L It follows then that renewal was being done through issuance of LPO by the defendant. The plaintiff after receiving the LPO, places the cover with Jubilee Insurance thereafter issues an invoice. Therefore, though payment of premium is the proof that there was consideration in place for the insurance cover to take effect bu~ 16 cc cordlnq -to th e arrangem ents existed betw een the plaintiff end the defend ant and as per the industry proctic e the actua l paym ent of prem ium w as not alw ays the case. The case and the m ode of contrac t existed betw een the parties w as such that there w as a policy in plac e w hic h expired but it w as being renew ed by defendant by issuing LPO to the plaintiff, the plaintiff plac es the cover w ith the Jubilee Insuranc e and then the plaintiff raises an invoice to the defenda nt and prem ium is paid later. C onsequently, though generally prem ium is the consideration in insuranc e contrac t but the actua l paym ent of it for the relationship betw een the plaintiff and defendant w as not nec essary sinc e there is a policy in plac e that had its ow n and unique m odality of com ing into place . The argum ent by the defendant that the policy ceased to r e m a i n in f o r c e f o r t h e d e f e n d a n t ' s f a i lu r e t o p a y t h e p r e m i u m s invoiced has no m erit. Issue num ber tw o is therefore answ ered in the affi rm ative that there w as in existenc e an insuranc e· cover at the t im e t h e d e f e n d a n t f a ile d t o p a y p r e m iu m s . ~ 17 The last issue is to what reliefs are parties entitl~d. The counsel for the defendant argued that it rescinded the contract before payment of premium was made as such the suit shall be dismissed with costs. The counsel for the plaintiff argued that there are three main grounds for rescission of a validly existing contract of insurance which are mistake by both parties as to material fact; mutual mistake of law; and misrepresentation of a material fact. The learned advocate argued none of these grounds existed in the matter at hand. She contended that the ground for rescission was due to internal decision that directed the defendant to advertise for invitation of bids from other vendors. It is on records and indeed the defence of the defendant that the contract was rescinded. The reason for rescission as correctly submitted by the counsel for the plaintiff was due to internal decision that decided to advertise the tender and this is gathered from the pleadings and statement of the defendant's witness. I have held herein that there was in existence an insurance cover at the time the defendant failed to pay the premium. Therefore, the internal ~ 18 communicotion for advertisement, even if true, does not entitle the defendant to rescind the contract. In that regard, the plaintiff is entitled to sue the defendant who is in default for any sum due and owing which sum according to the plaintiff are enumerated in the plaint. Therefore, in the end judgment is hereby entered against the defendant in favour of the plaintiff and it is hereby decreed that:- l. The defendant breached the parties' service agreement for failure to pay premiums due on issued Group Life Insurance Covers issued by the plaintiff on 22nd December, 2014 and 29th May, 2015; 2. The defendant shall pay the plaintiff the sum of Tshs. 106,587,895/= being the principal amount due as at 29th August, 2016; 3. The defendant shall pay the plaintiff interest on Tshs. 106,587,895/= at the commercial rate of 16% per annum from the date of default to the date of judgment; 4l)L.. 19 4. The defendant shall pay the plolnfiff interest on decretol amount at the Court's rate of 7% per annum from the date of judgment to the date of payment in full; and 5. The defendant shall pay the plaintiff the costs of the suit which shall be taxed. The claim for general damages is declined because the award of interest at the commercial rate of 16% per annum on the outstanding amount suffices to cover the inconvenience caused to the plaintiff. It is so ordered. Dated at Dar es Salaam this 03rd day of August, 2018. B.M.A Sehel JU D G E 03rd day of August, 2018 20