19990216 TZHC Dar es Salaam

.. IN THE HIGH COURT OF TANZANIA AT DAR ES SALAAM •,i.. CIVI_L; APPEAL NO. 26 OF 1998 NATIONAL INSURANCE CORPORATION ................ APPELLANT VERSUS G. K. ISHENGOMA t/a TANZANIA INSURANCE AGENCY ................................................ RESPONDENT JUDGMENT ... Mapigano, J: The decree of the resident magistrate's court at Kisutu in Civil case No: 30 of 1994, from which tt,lis appeal is brought, allowed the respondent's claim for D • Shs. 9,079,628/45, ~it~ interests at the rate of 31 % per annum, which is open to question, as well as costs. ~ . As the name suggests, the appellant corporation is in the business of insurance. In 1974 the corporation concluded an agency agreement with the respondent whereby the respondent was to look for clients on behalf of the corporation and to receive a remuneration in the form of commission and bonus calculated with reference to the amounts of premiums paid on the policies taken by ' . st..-• l . the clients. In January, 1991 the agency was suspended pending som~•-,~0'?· investigations. which were to be carried out in relation to the agency business. At the corporation's behest the respondent returned all the corporation's books and documents with which he had been furnished. On August 13th , 199t the agency . a was terminated but only to be restored later: 2 4·. The respondent's story;,is , that he continued to carry on the business of the agency during the period ofsuspension, and that he did so because the agency ~ agreement contains no term as to suspension, which is true. He then lodged a claim to the corporation for commission and bonus, in terms of the agreement, which had accrued from the business. Upon the rejection of the claim he instituted the suit to recover the commission and bonus. The corporation resisted the action on the facts and in law, and its case 9an be summarised in three sentences: The respondent was not supposed to conduct such business during \t the suspension of the agency. He actually did not conduct the business during that period. And, all he did was to direct people who had been theretofore his clients to the corporation's office in an apparent endeavour to retain their goodwill . ... As indicated afthe outset, the trial magistrate found for the respondent. He expressed the opinions that the respondent was entitled to continue carrying on the agency business as there was no stipulatiqm in the agreement to the contrary; that the respondent did conduct the business; and that the respondent had a right to the remuneration claimed in the plaint. The appeal is directed against those findings, and is based upon the contentions that the learned magistrate went wrong in finding that the respondent was legally entitled to transact the agency business during suspension; and that in any case there was no preponderate evidence that the respondent did transact. such business. :. 3 Ms. Tenga who advocated for the appellant both here and below has urged two points in her submission. The first point, a strong one, is that the learned magistrate ignored or did not attach due weight to the uncontroverted fact that the respondent did not possess any documents for transacting the business at the material time. Her second point is that the respondent must have known, upon receiving the letter of suspension, that he was to stop carrying on the business of the agency. On behalf of the respondent, Mr. Kashumbugu, learned advocate, has laid emphasis on the absence of any suspension clause in the body of the agreement. He has also made reference to the appellant's internal memorandum dated July 8, 1992, exhibit P7, which, according to Rftn, bears out the respondent's assertion at the trial that it was a general practice in the business of the corporation for a suspended agent to do what the respondent alleged to have done. On the question whether the respondent did actually transact the business of the agency, it is necessary to examine the evidence bearing on the point. It is sufficient to just take up the matter in the words of the respondent himself before the trial Court: "I had carried out the a·gency business. I took my business to Unit_l, a branch of the N.I.C. For example, if a client came to renew insurance, I took the renewal •f<.;. notice, premium to NIC where the Branch Unit I 4 ; processed the renewal of policies ... NIC gave me some documents, cover note books and receipts. They belong to N.I.C. I am not supposed to print my own covernotes. In case of suspension I return the receipt books. I had returned them when I was suspended." In my evalutation this evidence is far from being positive. I am at one with Ms. Tenga, therefore, that the learned magistrate was in error when he answered the question in the affirmative. In reaching this finding I have borne in mind that the respondent carried the onus of presenting·:evidence whose probabilities proponderated in his_ favour. There is hardly any need to engage in semantics. "Suspension" is not a ,C;: term of art. As used in employment relationships the word has a very clearly defined meaning in the minds of employers and employees. It has the sense of stopping a service or function or business for a time. Accordingly, it is not only to pervert the word "suspension" but to render it completely meaningless to argue that an agent can properly continue to carry on the business of his agency even when the agency has been suspended. Ordinarily, an agent's right to renumeration is co-terminous with his agency, and therefore ceases temporarily or permanently upon the suspension or termination, as the case may be, of the . agency. . But it is said that it was a normal practice for an agent of the corporation to continue conducting the business of his agency notwithstanding that ~the agency has been suspended .. In this respect, as mentioned already, some reliance was 5 ~ placed by Mr. Kashumbugu upon exhibit P7. That document was a memorandum communicated by the corporation's regional.manager, Unit I, to the corporation's Acting general Manager.. The relevant part~ thereof.read as follows: "Re payment of commission.. and. bonus to Tanzania Insurance Agency: The above capJi.oned subject _refers. We would like to confirm that the receipts·issu'ed to vario~s clients claimed by the above Agency to be his business are originated from our office .. However, all the business transacted and issued receipts of this branch were treated as direct business. Furthermore it is a procedare to collect the premium and utilize it to t~e branch code number while the agency is on suspension." It seems to me, on a proper reading of the above quoted passages, that the respondent's contention cannot be maintained. In my opinion there is nothing in the words of thqse passages which bears the inference that such a practice obtained in the corporation. The r~spondent could not have transacted business 01'.l, beha,J of the corporation without"the reqyisite documents. I accept it as true ::t- .' ":; .', ' the evide·nce adduced by the corporation that what the respondent did during that period was· to direct or bring his clients to the h~_anch; and I also accept it as plausible Ms. Tenga's surmise that in doing so tfie respondent was actuated by a desire to keep his clientele'~ goqwill. 6 . There has bee~,"a belabouring of tge point, on the· parfof the respondent, c o r, . c' ,,.., ,• C that the agenc~- agreement contain~d no susp~nsion clause. Fo~,my part," I take the view that it is the prerogative of a princ,ikal t ('. to suspend ( , ~ his agent if he ,has ~- ,, L 0 . -~ .• • ' 0 reasonable ground to suspect :that-the agent, has violated the .terms of his agency. , ' ,-, :· 'r· (: . : \J '[\ While the regulation oftfhat prer6g~tive ·ri)ay::be the sµbject of an agreement ;t. V~\ ··t,,_,1 :. . . ( ~ •. .~ ~ between the p~rties theretoror of written law, it does ·not however commend itself ~•, .• , t-w/. \ r, , "' . .J,I to reason ·Qt good sense that the principal shouldr,'be wholly depr.ived ·r~ ofthat right. , ..... _ ' ; e Let me illustrate: Suppose a bank ;ppoints~j)e~son to coll~pts its debts on a • . , l:...,._· .., t~ comission, and at a certain point during the subsistence of t'~,')agency the ba.nk is reasonably given to suspect that that person i~ :converting part of the money collected, surely it Y{p,uld be inprudent and risky for the bank to let him continue '"' ).._,I \'- ,.' with the collection of the debts, and it would be absurd for any tribunal to validate his continuing to do so simply by reason of an absence of a suspension clause in the terms of the agency agreement. 0 I am accordingly disposed to come to the conclusion that there are merits in this appeal and that it should secceed. The trial judgment and decree are set aside, and the respondent's claim is dismissed with costs here and below. • Delivered. c Mr. Mgale for the Appellant R~spondent in person. D. P. Mapigano, JUDGE '\ ·\,' ·. 16/02/1999 J Certify that this is a true ·copy of thEforiginal. 6 - ,. •