liason t ltd vs aar insurance t ltd 2012 tzhccomd 31 27 february 2012

THE UNITED REPUBLIC OF TANZANIA IN THE HIGH COURT OF TANZANIA COMMERCIAL DIVISION AT DAR ES SALAAM COMMERCIAL CASE NO 80 OF 2010 LIASON TANZANIA LIMITED....................................... PLAINTIFF VERSUS AAR INSURANCE TANZANIA LIMITED..................... DEFENDANT EXPARTE JUDGMENT BUKUKUJ. This is an ex-parte judgment. The plaintiff proved his claim ex- parte following the defendant's failure to file a written statement of defence within the time prescribed under the law. Understandably, Ms. Kirethi, made an application to prove the case ex parte by oral evidence. I readily granted the prayer under Order VIII rule 14(2) (b) of the Civil Procedure Code, 1966 which provides- "(2) In any case in which case a defendant who is required under sub rule (2) o f Rule 1 to present his written statement o f defence fails to do so within the period specified in the summons op where such period has been extended in accordance with the proviso to the sub-rule, within the period o f such extension, the court may- i (b) in any case, fix a day for ex-parte proof and may pronounce judgment in favour o f the plaintiff upon such proof o f this claim." As indicated, the period within which to file the defence had already expired and there was no application made by the defendant to enlarge the period. On the 28th July, 2011, hearing of the suit commenced. The plaintiff who is represented by Ms. Annette Kirethi, Advocate, filed a suit against the defendant praying for judgment and decree for the following: (i) Declaration that the defendant's conduct constitutes default on the terms of the agreement between the plaintiff and the defendant, breach of the usage of trade, customs and norms of the market. (ii) An order for payment of USD 34,426.93. (iii) An order of payment of interest on the principal sum (ii above) at the commercial rate of 14% per annum from the date the cause of action arose (August 2008) to the date of judgment. (iv) An order for payment of general and punitive damages (v) An order for payment of interest on the decretal sum at the court rate of 7% from the date of judgment to the date of full satisfaction. (vi) An order for payment of costs. 2 (vii) An order of payment of interest on costs at the rate of 7% per annum. (viii) Any other relief as the court shall deem just. For an easy appreciation of the facts which forced the plaintiff to bring this suit, a brief background is necessary. It is as follows: The Plaintiff being a broker and consultant in respect of risk services, including health and medical service, was appointed by Barclays Bank Tanzania Ltd to be its insurance broker and/or consultant with effect from 1st September, 2008. The plaintiff was also appointed by UMB Metrica Tanzania Project to be intermediary and broker on all matters relating to its medical insurance scheme with effect from 22nd August, 2008. Subsequent to the appointment and notification to the defendant, and upon expiry of the previous medical service agreement between Barclays Bank Tanzania Ltd and the defendant and UMB Metrica Tanzania Project, the plaintiff undertook complete market survey, recommended and placed the business with the defendant, as a result of which the agreement between the defendant and Barclays Bank Tanzania Ltd was renewed with effect from September, 2008 and the agreement between UMB Metrica Tanzania Project was also renewed with effect from August and December, 2008 and consequently in August, 2009 respectively. According to the plaint, it was a custom of the market and the usage of the trade and the Insurance Act, 2009 that, upon plaintiff acting as a broker placing business with the defendant, or maintaining business with the defendant or renewing business with the defendant, 3 for any period of such validity of agreement for which the defendant is paid, the plaintiff shall be entitled to be paid and receive commission known as brokerage, of 10% of the contract price. Being a custom in the insurance industry, both plaintiff and the defendant were aware of the custom and usage of trade. Despite that knowledge and despite Barclays Bank Tanzania Ltd and UMB Metrica Tanzania paying the contract price, the defendant failed and or refused to pay the commission/ brokerage fee amounting to USD. 34,426.93 as required. Subsequent to the failure of the defendant to pay, the plaintiff engaged the defendant in order to resolve this matter amicably. It seems the parties could not agree on an amicable settlement and hence, upon the defendant's failure and/or refusal to heed to plaintiff's request, reminders or demands, on 22nd September, 2011, the plaintiff instituted this suit in this court, hence this ex parte judgment. As it transpired, one of the terms of the agreement was that the plaintiff will be entitled to 10% brokerage fee which in insurance business it is termed as trade custom. Both the parties were aware of the said trade customs. It is also on record that both Barclays Bank Tanzania Ltd and UMB Metrica paid their contract price to the defendant but the defendant failed/refused to pay the commission to the plaintiff. As such the plaintiff suffered to the tune of USD 34,426.93. In response the defendant categorically denied the claim, arguing that, defendant has never entered into any brokerage agreement for placing, maintaining and renewing insurance business with Barclays bank Tanzania Ltd and UMB Metrica Tanzania Project and that, the 4 insurance broker has a direct relationship with its own client and not with an insurance company and therefore the plaintiff has no any kind of contract relationship with the defendant. However, the defendant admitted that, the plaintiff was appointed by Barclays bank Tanzania Limited as a broker with effect from 1st September, 2008 but, by that time, the defendants sales representative had already worked for Barclays account and the plaintiff was appointed by Barclays while already the renewal policy for Barclays was concluded, and the commission already paid to the sales representative of the defendant company. As for UMB Metrica Tanzania Project account, the defendant alleged that, they had already engaged the services of another insurance broker who placed the deal with the defendant and payment of premium was made on 31st July, 2008. The defendant thus concluded by praying that, the suit be dismissed with costs. On the date the case came for ex parte hearing, the plaintiff's Counsel framed the following issues and were recorded by this Court for purposes of resolving the matter. They are as follows: 1. Whether the plaintiff placed insurance business with the defendant on behalf of Barclays bank Tanzania Ltd and UMB Metrica Tanzania project. 2. Whether there was an agreement. 3. Whether the defendant was entitled to pay commission in respect of business. 4. Whether there was breach of the contractual terms 5. To what reliefs are parties entitled to. 5 Ms. Kirethi, learned counsel, presented and argued the case for the plaintiff. In proving its case, the plaintiff called two witnesses, PW1 Mr. Benson Okoth Doo who is the Principal Officer of Plaintiff's Company, and PW2 Mr. Amon Auckland Kitaa who is the Director of Operations at Milembe Insurance Company. A total of eight documentary Exhibits (Exhibits P1-P8) were tendered in court. Let us turn to the evidence adduced. Mr. Benson Okoth Doo, testified for the plaintiff as PW1. His testimony was that, his company was appointed by both Barclays bank and UMB Metrica to be its medical insurance brokers. Having been appointed, his duty was to seek quotations from insurance firms and discuss the terms given by the insurance firm with his client. He further testified that, they had an implied terms of agreement with the defendant such that, when one places business, the broker is entitled to some kind of commission. The implied agreement ran for twelve months and after the expiry of the same, the parties could renew the agreement. PW1 testified further that, there was renewal of the agreement whereby he tendered in court Exh. P3 which showed a list of members who were to be covered under the medical insurance scheme of the defendant. Asked how he communicated with the defendant, PW1 said that, in insurance, most communications is done verbally through phone or e- mail, since it is very convenient rather than writing letters. He testified further that, having been appointed broker, they placed business with the defendant in September, 2008 which was to run for one year. Once 6 they placed business they also issued a debit note to the defendant and to the insurer. As for Barclays, PW1 said that, the premium was USD. 260,000 and for UMB it was USD. 31,935 and upon renewal they placed business of USD. 4,385. It is the further testimony of PW1 that the debit notes were received by the defendant, tendering in court Exh. P5. As it transpired, the defendant did not pay the commission alleging that, he had paid the commission to another broker going by the name of Outer Insurance Brokers for UMB and that, they had paid commission to a sales representative who placed business with Barclays. According to PW1, the defendant has breached the agreement for not paying them the commission and therefore they are asking this court to order the defendant to pay the said commission, interest and costs as prayed in the plaint. Mr. Amon Auckland Kitaa, testified as PW2. In his testimony, he explained in detail how and what happens when a placement is done. It is his testimony that, once a placement is done the client receives a risk note and thereafter, the commission will be calculated based on the premium amount. It is his further testimony that, in some instances, the client pays the broker or in the alternative, the insurance company pays the broker the brokerage fee agreed. The above is the evidence upon which I have to base my findings. Although the plaintiff has been allowed to prove his case ex-parte, this court has a duty of seeing to it that, the standard required has been reached. It is trite law that, even in ex-parte proofs the plaintiff has to prove his case up to the standard required- the balance of probability 7 (CAT) Civil Appeal No. 10 of 1998,Peter Ng'homango V. Gerson M.K Mwanga & The Attorney General. Now, on the evidence available, I am satisfied that indeed, the plaintiff was appointed by Barclays bank and UMB Metrica on August and September 2010 to act as its insurance broker on the agreed terms. This fact is evidenced by the appointment letters which were admitted in court as Exh. P l and P2 and also the admission by the defendant in his written statement of defence to the effect that, indeed the plaintiff was appointed by Barclays bank and UMB Metrica on August and September 2010 to act as its insurance broker. In my opinion, the submission of the defendant that at the time of the appointment, the defendant's sales representative had already worked for Barclays account and therefore the plaintiff was appointed by Barclays while already the renewal policy for Barclays was concluded and the commission paid, has no merit. In the case at hand, the act of the defendant paying brokerage fees to other people other than the plaintiff, has amounted to breach of the terms of the agreement. This is elaborated by the testimony of PW1 who said that, there was renewal of the agreement, whereby he tendered in court Exh.P3 which was a list of members who were to be covered under the medical insurance scheme of the defendant. Going by the testimony of PW1, I am satisfied that, there was an implied term of agreement between the plaintiff and the defendant which ran for twelve months and after that, parties could renew the agreement. According to the evidence tendered, there was a breach of the contractual terms, since the plaintiff had placed business with the 8 defendant and therefore it was the duty of the defendant to pay the commission to the plaintiff. The defendant was aware that, it was the trade custom in the insurance business and therefore he cannot deny liability. According to the testimony of the witnesses, there was implied terms regarding the brokerage fee. As testified by PW1, it was agreed and it was the trade custom. Normally, customary contracts are implied contracts and are enforceable, in the case o f UPTON ON SEVERN RURAL DISTRICT V POWELL (1942) pg. 171. It was held that a contract by implied promise when one renders service that requires payment even though the other may not be aware that the service requires payment ha to abide by it. With regard to issue No. 3, I hold that, the defendant was entitled to pay the plaintiff the commission in respect of the business. I say so because, as a general principle, brokers are normally paid commission by the company whose policies they recommend, though there are a small number of insurance companies which do not pay commission to brokers. Payment of commission is normally considered where business has been earned, and provision for it to be paid is included in any agreement reached concerning the policy itself. In this particular case, PW1 testified that, they had issued a debit note to the defendant after placing business and according to Exh. P5, the said debit note was received by the defendant. Instead of paying the plaintiff, the defendant allegedly paid another company. Under such circumstances, since business was earned, the defendant is liable to pay the plaintiff the commission. 9 For reasons discussed above, it is evident that the plaintiff has proved his case. Judgment is hereby entered in favour of the plaintiff as follows: (i) Payment of USD 34,426.93, being the principle amount claimed, (ii) Interest at the commercial rate 14% per annum from the date the cause of action arose to the date of judgment, (iii) Interest at the courts rate of 7% from the date of judgment to the date of full satisfaction plus cost. It is ordered accordingly. A.EBUKUKU JUDGE 27 FEBRUARY, 2012 io