SM Holdings v NBC

1 IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA COMMERCIAL DIVISION AT DAR ES SALAAM COMMERCIAL CASE NO. 134 OF 2022 SM HOLDINGS LIMITED ……………………………………………… PLAINTIFF VERSUS NATIONAL BANK OF COMMERCE LIMITED ……………………… DEFENDANT SANLAM GENERAL INSURANCE TANZANIA LIMITED………..NECESSARY PARTY JUDGMENT July 1st, 2024 & Aug. 16th, 2024 Morris, J In this suit, the plaintiff sued the defendant and necessary party on allegations that through his instructions to the defendant; his stock in trade (bales of cotton lint) was insured by the necessary party against fire and allied perils. The plaintiff claimed further that both the defendant and necessary party breached the insurance policy by not indemnifying him fully and/or the defendant breached the duty of care by failing to purchase the appropriate insurance cover from the necessary party for his goods. He thus, moved the Court to order the opposite parties to pay him TZS 1,588,091,380; 2 interest thereon along other auxiliary reliefs. The plaintiff’s claims were totally denied by the defendant and the necessary party respectively. From the history of this matter, allegedly the plaintiff obtained the Multi Option Facility (MOF) from the defendant. The MOF was for an Overdraft Facility (USD 2,000,000); a Short-Term Loan (USD 5,000,000) and the Letters of Credit (USD 2,000,000). An appropriate agreement was signed by both parties on 27.01.2021. The plaintiff secured the MOF by using his properties including fixed and floating debentures on his assets. Under the MOF agreement, the plaintiff was obliged to renew the insurance policies for the securities throughout the tenor of the facilities thereunder. On such insurance policies, the defendant was to be included as the first loss payee. Per the record, the plaintiff procured or renewed the insurance policies individually from 2019 to 2021. However, around July 2021, the defendant allegedly offered to renew the policies on behalf of the plaintiff which request was approved by the latter. Subsequently, the insurance cover for 01.08.2021-31.07.2022 tenure was purchased from the necessary party by the defendant accordingly. Further allegations were that on 12.12.2021 the 3 plaintiff’s stock at his Mwanambaya – Mkuranga warehouse was destroyed by fire leading to the plaintiff’s loss herein. On presenting his claim to the necessary party for TZS 1,588,091,380/- which was the maximum sum insured, indemnification was denied on the ground that the burnt premises was outside the geographical scope of cover. In alternative, the necessary party stated that his liability under the policy was limited to not more than TZS 20,000,000. Efforts of parties to reach at the consensus regarding the scope of cover and indemnity amount proved futile. Consequently, the contentions between the parties above gave rise to this suit. The proceedings for this matter took a bit of a zigzagging-route. Initially, the plaintiff sued the defendant and NBC Insurance Agency. For suitable reasons, the Court (Hon. Nangela, J) granted leave to the plaintiff to drop the insurance agency from the suit and substitute it with the insurance company above as a necessary party in lieu thereof. The pleadings were amended accordingly. The suit thus, proceeded on the basis of the amended pleadings. After the preliminary procedural compliances, the matter was scheduled for final pre-trial conference on September 5th, 2023. 4 Consequently, the parties were ordered to file respective witnesses’ statements under the High Court (Commercial Division) Procedure Rules, 2012 as amended by the High Court (Commercial Division) Procedure (Amendment) Rules, 2019 (elsewhere, the Rules). However, following a successful preliminary objection (PO) raised by the plaintiff; the witness statement of one Jackson Kindikwili, for the defendant, was struck out for being filed out of time. The Court’s ruling to that effect was handed down on April 19th, 2024. The defendant thus, remained without the witness statement. Therefrom, the plaintiff was ordered to prove his case ex-parte the defendant. Nonetheless, the necessary party’s documentation was in order. On such basis, hearing of the suit proceeded between the plaintiff and the necessary party only. In line with rival pleadings of the parties herein, the Court framed eight (8) issues for determination. They were; 1. Whether the defendant had breached the Multi Option Facility (MOF) Agreement by failure to procure insurance on behalf of the plaintiff. 5 2. If the first issue is in the negative, whether there was a separate agreement between the plaintiff and the defendant to procure the insurance policy. 3. If the issue number 2 is in the affirmative what were the terms and conditions of such agreement and whether such terms were breached by the defendant. 4. Whether the plaintiff was aware of the nature and extent of the insurance cover by the defendant from the necessary party in favour of the plaintiff. 5. Whether the defendant was negligent in procuring the renewal of the insurance policy on behalf of the plaintiff. 6. Whether the stock in trade destroyed by fire at Mkuranga warehouse belonged to the plaintiff, if so whether the plaintiff suffered loss and to what extent. 7. Whether the claim of the plaintiff do tally within the scope of the insurance policy procured by the defendant from the necessary party in favour of the plaintiff. 6 8. To what relief(s) are the parties entitled. Both the plaintiff and the necessary party were under the respective legal representation of Ms. Linda Bosco and Mr. Oscar Msechu, learned counsel. For the plaintiff’s case, two witnesses testified. That is, Messrs. Fahad Nahdi (PW1) and Amani Tuntufye (PW2) respectively. The necessary party called and relied on the testimony of Mr. Morgan Mecky (NPW1) only. Further, pursuant to rules 49 and 50 of the Rules, all respective witnesses’ statements were adopted by the Court as evidence in chief; and thereafter cross and re-examination sessions followed. Both sides had exhibits to tender. On his part, the plaintiff reinforced the case by tendering the Multi Option Facility Agreement (P1); certificates of charge (P2); facility letters, interim cover note, insurance policy and endorsement thereto (P3); email of 31.07.2021 and premium quotation (P4); email of 31.07.2021 and revised premium quotation (P5); email of 31.07.2021, tax invoice and account statement (P6); insurance policy, fire accident report, loss acceptance form, insurance claim form and stock movement documents (P7); letter of 30.05.2022 (P8); letter of 19.05.2022 (P9); and emails thread from 08.09.2021 to 31.08.2022 (P10-12). 7 The necessary party tendered four (4) exhibits. That is, the company’s board resolution (NP1); the Geographical Extension Endorsement (NP2); a letter of 19.05.2022 from the defendant to the necessary party (NP3); and a letter of 30.05.2022 from the necessary party to the defendant (NP4) correspondingly. The exhibits, where applicable, are specifically cited by the Court in the analysis of evidence herein. The parties’ evidence is summarised below. I will kick off with the plaintiff’s evidence. The testimony by Mr. Fahad Nahdi (PW1) was to the effect that the defendant breached the MOF Agreement because the latter covenanted to renew the insurance policy for the cargo covered under the MOF Agreement on the then existing basis. That is, the plaintiff approved the insurance cover on floater basis in line with his previous insurance policies with Alliance Insurance Corporation Limited (Alliance) and Reliance Insurance Company (T) Limited (Reliance) respectively. PW1 stated further that, to the contrary, the defendant renewed the cover for the charged assets on one location (Plot No. 1 Nkalalo Ginnery Area – Kwimba, Mwanza). As a result, when fire outbroke and destroyed the goods at the plaintiff’s premises at Mwanambaya - Mkuranga warehouse, the underwriter repudiated the claim 8 for want of geographical cover. Consequently, the plaintiff could not get indemnity of TZS 1,588,091,380.00. It was PW1’s further testimony that, it was clear from the defendant’s correspondence with the necessary party (email of 31.08.2022 & exhibits P8, P9/NP3, NP4) that the scope of geographical cover was at the instructions of the former. He was insistent that the necessary party had made it clear to the defendant that the policy issued to the plaintiff had no clause regarding fire insurance on floater basis. Hence, the plaintiff suffered loss because of the defendant’s failure, neglect or negligence to act according to the plaintiff’s specific instructions pursuant to the MOF Agreement. The plaintiff’s second witness (PW2), apart from identifying himself as an insurance and reinsurance expert, he stated that under the Bancassurance Guidelines by Tanzania Insurance Regulatory Authority (TIRA) the defendant bank was the insurance agent of the necessary party (para 8 of his statement). He also gave his opinion in respect of various aspects including the status of renewal where the policyholder does not communicate any changes to the expiring insurance cover; that by its nature, the Geographical Extension Endorsement (NP2) did not reflect the cover 9 envisaged by the plaintiff; and that given his business structure and operations, the plaintiff’s suitable cover was the floater policy (para 11 of the statement). However, during cross examination PW2 was express enough that details of the case and the plaintiff’s business were availed to him by the plaintiff’s counsel and gathered from his reading of the pleadings. On its part, the necessary party’s defence was armor-plated by the testimony of a solo witness NPW1 - Mr. Morgan Mecky. He primarily complimented the assertions by the plaintiff that the proposed policy related to multiple locations. However, he was consistent that the necessary party required full disclosure of such locations for survey, risk assessment and necessary underwriting decisions. It was his further testimony that the defendant did not heed which inaction prevented the necessary party to issue the proposed cover (NP3 and NP4). He also asserted that, after a long discussion of all parties to this case, the plaintiff and defendant opted for one location (Plot No.1 Nkalalo- Kwimba); and that later the necessary party issued the Geographical Extension Endorsement (NP2) for “satellite warehouses” at the instance of the defendant. However, such extension was subject to the maximum limit 10 of liability at TZS 30,000,000/- less policy deductible (excess) of TZS 10,000,000/-. Moreover, he contended that the presented claim by the plaintiff totaling TZS 1,588,091,380/- was not payable because the fire occurred at the location not covered by the policy; and that if it were to be covered, the necessary party’s liability would be TZS 20m/- in line with the limitation of cover and deductible. In addition to their testimonies above, the parties filed respective final submissions. Unsurprisingly, the submissions pointed at strengths of own side and discredited the case of the opposite party. Nonetheless, the necessary party’s counsel submitted in respect of the last three issues only. That is, the 6th - 8th issues. Hence, his arguments thereof are correspondingly reflected in the analysis of those issues only. For the first issue, the plaintiff submitted that the defendant was totally to blame for both blatant breach of the MOF Agreement and negligence which caused the loss to the former. It was reiterated that the plaintiff was always keeping insured the security stock from inception of the MOF Agreement until 2021/2022 tenure when the defendant offered to renew the insurance cover on his (plaintiff’s) 11 behalf. According to the latter, by offering to renew the policy, the defendant voluntarily undertook to perform the duty on the required contractual basis. It was the plaintiff’s conclusion that, because the necessary party confirmed that the defendant did not renew the policy or insure the goods on floater scope, the first issue should be answered positively. Regarding the second and third issues, it was argued that the defendant sent the insurance quotation to the plaintiff who approved it. Consequently, the defendant debited the applicable premium from the plaintiff’s account. Thus, to the plaintiff, the parties accordingly entered into a separate agreement (see pages 5-6). Nonetheless, the plaintiff submitted further that the separate agreement (regarding renewal of insurance over) was also breached by the defendant. She thus, prayed that the two issues were accordingly discharged. Next to the foregoing, the plaintiff argued that the established factors in the first issue were indicative that the answers to the fourth and fifth issues were straightforward. To him, the defendant understood clearly the need of the plaintiff (P9) but went ahead and procured a completely different product. He also maintained that the plaintiff was unaware of any alterations 12 to his specific instruction to the defendant which warranted the purchase of the insurance cover that was not of his choice. Concerning the sixth issue, the submissions of the plaintiff were that the stock belonged to him. Reliance was put on the testimony of PW1 together with exhibit P7. Further arguments were that it was clear that the details in P7 established that out of the TZS 11 billion loss caused by fire damage to stock, TZS 3.2 billion belonged to the plaintiff. In addition, it was submitted that the goods movement documents (P7) indicated that the name of the owner was the plaintiff’s; and that paragraph 4(c) of the fire damage report (P7), the warehouse which was gutted by fire belonged to the plaintiff. To the contrary, the necessary party argued that it is undisputed that the covered location in the policy was Plot No.1 Nkalalo – Kwimba (P8) only; and that the whole policy contained no floater insurance clause. Further, he argued that the quantum of loss was not established satisfactorily because PW1 admitted that he was not the author of the report (P7) nor was he a qualified accountant. To him, the pleaded loss was way too far from the policy scope. The testimony of PW1 notwithstanding, the necessary party 13 argued that the plaintiff did not produce supportive evidence to justify the reliefs herein. In addition, it was his submissions that the plaintiff did not prove that the alleged goods were actually in the premises which was burnt. To reinforce his position, he argued that documents such as audited financial statements or stock taking reports were not tendered by the plaintiff to prove the alleged loss. He reiterated the orthodox principle that he who alleges must prove. Hereof, reference was made to Bamprass Star Services Station Limited v Mrs. Fatuma Mwale, Civ. Appeal No. 27 of 1993; NBC Holding Corporation v Hamson Erasto, Civ. Appeal No.35 of 1995; Rock Beach Hotel Ltd v Tanzania Revenue Authority, Civ. Appeal No. 521 of 2023; Alliance Insurance Corporation Ltd v Arusha Art Ltd., Civil Appeal No. 297 of 2017; Maxinsurance v Yukos and others, Civ. Appeal No. 424 of 2022 (all unreported); and section 110 of the Evidence (supra). Thus, he concluded that this issue deserved a negative answer. In regard to issue number seven, the plaintiff argued that he claimed TZS 1.6b/- instead of the actual damage because the claim amount was the sum insured under the policy. He also attacked the Geographical 14 Extension Endorsement (NP2) on two grounds that: the same related to “satellite warehouses” instead of stock in a floating form; and it was issued to apply retrospective the inception date. To the plaintiff, because the destroyed warehouse at Mkuranga was not the “satellite locus” envisaged in the subject endorsement, the seventh issue is to be answered in the affirmative. To the necessary party, the 7th issue did not attract an affirmative holding at all. It was submitted that, the testimonies of PW1 and NPW1 together with exhibits P7- P12 and NP1-NP4 did not establish that the alleged loss attached against the necessary party under the policy or otherwise. It was the necessary party’s further argument that there was no floater policy in place to cover Mkuranga warehouse; and that the Geographical Extension Endorsement (NP2) was issued by him to limit the scope of his liability under the policy to TZS 30m/-. To finalise, the counsel for the plaintiff argued that the case was proved fully in line with section 110 of the Evidence Act, Cap. 6 R.E. 2022. Hence, to her, all claims alleged in the plaint were substantiated to warrant 15 success of the suit in favour of the plaintiff. On such note, it was the plaintiff’s argument that the eighth and last issue was accordingly discharged. Regarding the reliefs under this issue, the necessary party submitted that, the plaintiff did not prove the quantum of loss. Further, it was argued that clearly the evidence in Court proved that the scope of cover never extended beyond Nkalalo Ginnery. On such basis, the necessary party prayed for dismissal of the plaintiff’s case with costs. The first issue entails the Court’s investigation if the defendant breached the MOF Agreement by failing to purchase insurance on behalf of the plaintiff. The plaintiff and the necessary party recorded no issue about existence of MOF between the former and the defendant. Naturally, while the plaintiff maintained that he had concluded a binding MOF Agreement with the defendant, the necessary party was absolutely not combatant in that regard. Indeed, in the absence of privity to the subject agreement, the necessary party would be elongating the dispute beyond its obvious elasticity. Further, as the matter proceeded ex-parte the defendant, contention over existence of the MOF Agreement or otherwise would be 16 presumptuous. Henceforth, this agreement is being analysed basing on the plaintiff’s pleadings, evidence and arguments only. In determining the present issue, the Court sets out auxiliary inquiries for further interrogation. One, was there a duty to insure the stock used as security in the MOF? My reading of the MOF Agreement (P1), concludes that the agreement was categorical under the “insurance section” and additional conditions precedent [clause 4(i)] that the security assets therein were to remain insured throughout the tenor of the facility. Two, what kind of insurance was contracted in the MOF? It is express under the stated section above (of P1) that the insurance policy required ought to cover the security assets “against all risks and for their replacement value”. Admittedly, the type of insurance product was not made specific under the agreement. Relevant to this case, however, the plaintiff’s pleadings and evidence indicate that he arranged for fire and allied perils policy for “stock in trade and related items on floater basis at various locations in Tanzania” for the 2018/2019 and 2019/2020 tenures (P3). The two policies were respectively issued by Alliance and Reliance and were accepted by the defendant as satisfactory under the MOF Agreement. Thus, I raise it an 17 argument that by accepting the policies and discharging his duties under the MOF; by conduct the defendant was satisfied that the plaintiff purchased the requisite insurance policy as contracted. Three, equally important is the query regarding the party on whom the duty to purchase the insurance cover was placed. Primarily, it was the borrower’s (plaintiff’s) duty. However, upon plaintiff’s failure to purchase/renew the policy; on optional basis, the defendant would do so on the former’s behalf at the plaintiff’s expenses (see the “insurance section” of P1). I have not found any term therein which compulsorily obliged the defendant to purchase/renew the insurance for the security assets. Hence, it remained the plaintiff’s duty to have the stock covered throughout the existence of the MOF. Four, another enquiry is whether whoever was duty bound to insure the security assets performed it. After concluding above that the duty to buy/renew the cover was that of the plaintiff, I have to ask if he actually performed it. On record is the evidence that the plaintiff kept appropriate insurance covers. However, when the cover for 2019/2020 was about to come to an end, the defendant solicited the plaintiff to place the insurance 18 policy through him (lender-defendant). Further, it was revealed that the defendant sent to the plaintiff the applicable premium quotations (P4 and P5) which were accepted by the latter after some exchange of offers and counter offers (P6). In the pleadings and evidence, it was asserted that the defendant purchased the insurance cover from the necessary party on behalf of the plaintiff under the “bancassurance arrangement”. In this regard thus, the plaintiff discharged his obligation of having the assets insured. Further, question number five is whether the defendant’s offer to purchase/renew the insurance policy on behalf of the plaintiff amounted to novation of the MOF Agreement. The answer to this is an outright no. In terms of the MOF, the plaintiff was not obliged to place the cover under a specified insurance intermediary and/or underwriter. All that parties contracted was the assets to remain fully covered throughout the MOF lifetime. Further, the defendant in this connection was not the insured. The plaintiff retained his position as the policyholder. This fact is evident from the names of parties on policy between him and the necessary party (P7). Hence, the contract (MOF) remained unaltered. Obligations of parties therein remained intact. 19 The six and last interrogation relates to whether the MOF was thus, breached; and if so, if the breach was by the defendant. As the plaintiff’s duty was to have the goods insured, which he did through the defendant; his obligation under the MOF in this regard was duly performed, the difference in the type of cover procured notwithstanding. Further, I have endeavoured to explicate the argument that the defendant had no contractual duty to insure the stock under the MOF. The contract bears no such condition upon him howsoever. Moreover, as I have explained earlier on, by intermediating the insurance business between the plaintiff (insured) and the necessary party (insurer), the defendant did not transform himself into a policyholder for the security assets. Consequently, he did not breach the MOF. The first issue is therefore, answered in disaffirmation. Having answered the foregoing issue negatively, the second issue is whether the plaintiff and the defendant concluded a separate agreement for procurement of the insurance policy. The answer to this question is complemented partly by the text under questions four and five set and answered in the first issue. To reiterate, the defendant solicited the plaintiff 20 to place the cover through him (as an insurance agent/intermediary) of the necessary party. Moreover, the defendant earned the applicable commission. The arrangements and placement of the insurance cover subject of this matter is per exhibits P4 – P7. Before journeying this discussion to an ultimate conclusion, I feel inclined to brief on the tenets of bancassurance and/or proposer-agent- underwriter business relationship. The only objective of taking this approach is to lay the legal foundation of obligations to parties thereof. My discussion is premised on the Insurance (Bancassurance) Regulations, 2019; the Bancassurance Guidelines for Banks and Financial Institutions, 2019; and the Bancassurance (Conduct of Business) Guidelines, 2022. The two Guidelines were promulgated by the Bank of Tanzania (BoT) and the Tanzania Insurance Regulatory Authority (TIRA) respectively. Under the trio instruments, bancassurance refers to “a mechanism by which banks or financial institutions and insurers collaborate to distribute and market insurance products”. Through bancassurance, the bank gains the benefits of additional income from selling the insurance products to its clientele on behalf of the insurer. 21 Further, in line with the provisions of the Insurance (Bancassurance) Regulations, 2019, GN 216 of 2019; the duly registered and/or authorised banks and financial institutions are bancassurance agents of the insurance companies. In principle, the underwriter and bancassurance agent operate on the principal-agent basis; and in accordance with terms of the applicable agency agreement between them [regulations 3(c) and 4]. Consequently, in regard to this case therefore, subject to the discussion below; generally put, the defendant was an agent of the necessary party. The foregoing illustration shows the relationship between the defendant and the necessary party. Thus, the remaining segment in the tripartite equation is the affiliation between the plaintiff (policyholder) and the defendant (bancassurance agent), on the one hand; and the plaintiff (policyholder) and the necessary party (underwriter), on the other. The second category of the two relationships is straightforward. The former party is the insured and the other one is the insurer. The two are bound by the terms and condition of the insurance policy. As for the policyholder and the bancassurance agent, the equation balances with the proposer-turn policyholder, on one side; and the bank 22 jointly with the underwriter, on the other. That is, when the bank sells the insurer’s products, it does so on behalf of the underwriter. It is the agent, sensu stricto. Hence, pursuant to the rule that the agent’s actions bind the principal; the product sold to the insured is vended to him by insurer through insurance agent (the bank). In other words, the agreement between the proposer/policyholder and bancassurance agent, acting for and on behalf of the underwriter, binds the subject insurer accordingly. Nevertheless, in insurance jurisprudence and practices, the principal- agent relationship is sometimes dependent on the role performed by the insurance intermediary. Consequently, it is not uncommon for insurance brokers and agents to become agents of the policyholders in suitable circumstances. The present case stands out as one of such incidents. I will elucidate this position in a five-limb analysis below. Firstly, the Court now turns to examine if the plaintiff and the defendant had a separate binding agreement in terms of the placement of insurance business. The answer is yes. This kind of agreement was complemented with, inter alia, invitation to the plaintiff by the defendant for purchase of the insurance from the necessary party through the 23 bancassurance agent; the supply of and negotiations over premium quotation; holding discussions for the cover to fruition; payment of consideration (premium); and issuance of the policy, to name but a few. Secondly, the MOF Agreement was complete and independent of whether or not the insurance cover for the security assets was purchased through the bancassurance business of the defendant. The previous covers were purchased by the plaintiff from Reliance and Alliance without involving the defendant howsoever (P3). Thirdly, the correspondences between the bank and the necessary party are evident that the defendant was pursuing the plaintiff’s cause than selling the necessary party’s insurance products. The letter from the defendant of 19.05.2021 (P9), for instance, has the following express assertion in this regard. “It is our surprise that, as the Insurer, you either ignored, neglected, omitted, or changed, deliberately or otherwise, clear instructions from the bank on the requirements of floater basis and maximum sum insured per location…We strongly object to the improperly issued policy…” (emphasis added). 24 Fourthly, according to the evidence on record, the plaintiff specifically instructed the defendant to purchase the cover on his behalf (P6). The instructions were as a result of the defendant’s supplying the plaintiff with the premium quotation (P4 and P5); parties’ negotiations and exchange of offers/counter offers; plaintiff’s approval of the product; and the defendant’s debit of premium from the plaintiff’s account (P6 and P7). Fifthly, the premium which was proposed by the defendant to the plaintiff was debited by the former from the plaintiff’s account at the sanction of the latter. Sixthly, after the plaintiff’s confirmation of the quotation from the defendant and the mode of payment of premium, the latter’s email (P6) was categorical that the bank “would like to assure you (plaintiff) of a good insurance services”. All these aspects in perspective, thus, the plaintiff and defendant had a separate agreement between them in respect to procurement of the insurance policy. In this connection, therefore, the defendant performed his duty as an agent of the plaintiff. Consequently, the second issue is answered positively. Having answered the foregoing issue in the affirmative, the third issue is in respect of the terms and conditions of the subject agreement and 25 if the defendant breached them. The terms of the agreement can be extracted from instructions of the plaintiff to the defendant. According to exhibits P4-P6, the plaintiff instructed the defendant to renew the then existing policy. In the same connection, the defendant covenanted to purchase the cover from the necessary party (per the supplied quotation). Furthermore, the premium was payable by the plaintiff through debiting of his bank account by the defendant. In addition, there is no evidence on record that the plaintiff changed or altered or proposed change of cover or terms thereof. To determine whether the terms and condition above were breached by the defendant, one needs to examine the foregoing terms seriatim. The pleadings and evidence of the plaintiff do not display his claim that the defendant breached any of the terms/conditions above. Primarily, the dispute between the plaintiff and the defendant hinges on the allegation that the latter did not purchase the suitable insurance product as instructed. The plaintiff asserted that his instructions were express that the cover to be procured was for stock in all of his warehouses across the country. In technical insurance terms, when a policy sold to the insured contains 26 misleading information or is issued without due assessment of the policyholder’s needs; such business transaction is regarded as mis-selling. The Court finds the similar situation in the present case. Nonetheless, the necessary party maintained that he did not sell the floater cover to the plaintiff. The policy, according to him, was in respect of Plot No. 1 Nkalalo -Kwimba, Mwanza only. If anything, the latter led evidence that he issued the Geographical Extension Endorsement (NP2) to cover undisclosed locations subject to liability limit of TZS 30m/- and the minimum policy deductible of TZS 10m/-. Working on the premises that the defendant purchased the product which was different from the plaintiff’s previous policies with Alliance and Reliance (P3), the former did not renew the policy as instructed. On such basis, I reason that the defendant specifically did breach this particular term. The foregoing investigation warrants no overemphasis that parties should honour own parts of the bargain in the agreements they execute freely. I refer to the cases of Unilever Tanzania Ltd v Benedict Mkasa t/a Bema Enterprises, Civ. App. No. 41 of 2009; and Philipo Joseph Lukonde v Faraja Ally Said, Civ. App. No. 74 of 2019; Simon Kichele v 27 Aveline M. Kilawe, Civ. App. No. 160 of 2018; and Joseph Mbwiliza v Kobwa Mohamed Lyeseelo Msukuma & Others, Civ. App. No. 227 of 2019 (all unreported). The interrogation hereof thus, settles the present issue accordingly. The fourth issue is whether the plaintiff was aware of the nature and extent of the cover purchased by the defendant hereof. From the outset the plaintiff is suggestive and insistent that he became aware of the details of the policy after his premises was destroyed by fire. I had to revisit pleadings, witness statements and exhibits to establish the basis of that stance. I have however, keenly read the subject documents and I will give my observations. According to paragraph 19 of the plaint, for instance, the plaintiff averred that upon review of the policy he received from the defendant he discovered that the policy was different from his instructions. Though the date of the alleged review is not disclosed, it is no doubt after the fire occurred. This is so because the chronology of events, the averment is given after the necessary party repudiated the presented claim. After all, if he had discovered the anomaly earlier than such date, he would have challenged or withdrawn from the policy coverage. 28 Further, tendered policy (P7) revealed the nature and extent of the cover. In this connection, under “Location Section”, the policy conspicuously and expressly provide that the cover was for Plot No.1 Nkalalo-Kwimba only. The pertinent question hereof is whether the policy was supplied to the plaintiff before the fire incident. As alluded to above, the policy was forwarded to the plaintiff before the inferno. To reinforce this view, the plaintiff instructed the defendant to supply the cover in his office (P6). Further, NPW1 testified that the plaintiff was consulted during the negotiations towards issuance of the policy. This evidence was not specifically contradicted by the plaintiff in order to discredit its veracity. Law is settled for such omission. The assertion should be regarded as being the truth. Moreover, assuming that the policy document was not supplied to the plaintiff; in line with the findings of this Court in respect of the second issue: namely, the defendant acting as his agent, the plaintiff’s knowledge was through such agent. Further, as the plaintiff did not lead any evidence to the contrary; and on the basis that it was him (through PW1) who tendered the policy without testifying when exactly it was served upon him, the Court 29 concludes that the plaintiff was aware of/or ought to know the nature of the insurance cover purchased on his behalf by the defendant. The Court was also moved to determine if the defendant was negligent in procuring renewal of the insurance policy on behalf of the plaintiff. This is the gist of issue number five hereof. While determining the second/third issues, the Court has explained at length that the defendant did not act as per the plaintiff’s specific instructions in regard to purchasing the cover from the necessary party. At the risk of over-repeating myself; I reiterate that the defendant was under fiduciary duty to work on the plaintiff’s instructions thereof. This duty is manifest in a number of aspects. One, the defendant was the reason the assets were insured in the first place (so as to keep intact the security under the MOF). Under the policy, he was entered as the “First Loss Payee/Additional Insured”. That is, indemnity under the policy was supposed to be paid to the defendant so that the insured (plaintiff) would get the balance (if any) after the defendant’s debt is paid in full. Two, the MOF Agreement was particular under clause 4 (additional conditional precedent) that the insurance to be 30 purchased/renewed by the plaintiff was to cover the assets against all risks at full value. Three, the defendant knew the cover required by the plaintiff. In this regard, PW1 and NPW1 were assertive there were meetings in which the defendant was pushing for the floater fire policy but the necessary party set condition precedents which were not met by the defendant and/or the plaintiff. The tread of correspondence between both parties (P8, P9/NP3, NP4) supports this position. Four, the premium paid by the plaintiff was quoted and debited by the defendant from the account of the former. Six, the bancassurance legal system compels the bank/financial institution to conduct itself in an upright professional manner. For instance, regulation 17 of the Insurance (Bancassurance) Regulations, 2019; provides for protection of the policyholder’s interest by the bancassurance agent disclosing all information of scope of cover and guiding him professionally. Further, clause 3.1.2(c) of the TIRA’s Bancassurance (Conduct of Business) Guidelines, the bank is prohibited to prejudice the insured. In addition, under clause 11 of the BoT Bancassurance Guidelines for Banks and Financial Institutions, 31 2019; the bancassurance agent is supposed to be manned by the trained personnel and should not misrepresent or mislead the insured. With all this explanation and analysis, the fifth issue is determined in the affirmative. The sixth issue is whether the stock destroyed by fire belonged to the plaintiff; and if so, if he suffered any ascertainable loss. Thus, under this issue three facets call for the Court’s examination: the plaintiff’s ownership of the destroyed stock; the occasioning of loss to him; and the magnitude of such loss, if any. The plaintiff relied on the goods movement documents, fire loss report and the closing stock (P7) to prove that the said credentials indicated that the plaintiff was the owner of both the stock and warehouse at Mwanambaya – Mkuranga. The plaintiff’s PW1 also testified that the subject exhibit proved that out of the stock valued at TZS 11bn/-, TZS 3.2bn/- belonged to the plaintiff. However, the necessary party contested that the plaintiff did not prove the stock ownership or loss to the required standard under the law. The Court took a keen-sight of all the documents constituting exhibit P7. For instance, the goods delivery notes indicated that the goods were transported from Nkalalo Area and received at Mwanambaya. The owner of 32 the cargo was inscribed thereon as SM Holdings Ltd (plaintiff). Further, the fire loss report was issued for the warehouse owned by the plaintiff. To indicate that there was stock in the warehouse, the subject indicated that fire propagation was attributed to the cotton lint that was stored in the warehouse. The report provided, in part that: “4(b) Sababu za usambazaji moto (fire propagation) na kusababisha kuteketea kwa marobota ya pamba pamoja na jengo hilo….kutokana na aina ya malighafi zilizohifadhiwa…..”(bolding rendered for emphasis). From the foregoing passage, it is evident to me that existence of stock in the Mwanambaya warehouse was accordingly unveiled and proved. Furthermore, as the said fire loss report is conclusive that the warehouse contained bales of cotton; and the delivery notes indicated bales of cotton were received at the said location between October 2021 and end of November 2021, in the absence of any contrary proof; the Court is inclined to hold that the two facts corroborate to establish that the part of the burnt stock belonged to the plaintiff. Moreover, the contention regarding the quantum payable under the policy notwithstanding; the necessary party 33 made a decision to indemnify the plaintiff after establishing that the insured suffered loss covered under the policy. However, the trickiest of the three facets above is the extent of loss suffered by the plaintiff due to the blaze. The delivery notes, fire report and risk did not indicate expressly that the destroyed stock was of the ascertainable value. The so-called closing stock report indicates that it was prepared by the plaintiff to reflect stock on the closing date of 21.12.2021. Nonetheless, when PW1 was cross examined by Mr. Msechu, he blatantly confirmed that the said report was under the plaintiff’s authorship and that he was not a qualified accountant. This affirmation, in my settled view, evidences that the so-called report is susceptible to biasness, exaggeration of loss and wishful afterthoughts on the part of the plaintiff. The above discussion leads to the Court’s conclusion that the sixth issue is answered to the extent that; the part of the stock in trade destroyed by fire at Mkuranga warehouse belonged to the plaintiff. Further, such damage caused loss to the plaintiff. However, the plaintiff failed to establish the extent of loss to the requires standard. Nonetheless, the discussion of 34 the loss suffered by the plaintiff, if at all any; will be reintroduced and settled in deliberation of the last (8th) issue hereinbelow. I now turn to the seventh issue. The Court framed this issue with the view to determining if the plaintiff’s claim tallied with the scope of cover purchased by the defendant from the necessary party. It has been established above that the cover purchased from the necessary party covered partly, the “stock in trade and related items and commodities being part of the insured business” for Plot No.1 Nkalalo-Kwimba Mwanza (P7- insurance policy). The sum insured for the said stock was TZS 1,588,091,380/-. However, on 15.09.2021 the necessary party issued a policy endorsement (NP2) altering/extending the geographical scope of the cover from the Nkalalo warehouse to “various locations”. The endorsement was passed to apply retrospective the policy’s inception date. In addition, it limited that scope of liability to TZS 30m/- minus deductible of 10% or TZS 10m/- whichever was the higher policy excess. The plaintiff attacked the subject endorsement from two fronts. On the one hand, he argued that the same was void because it was passed to apply retrospectively; and that same covered ‘satellite warehouses’ which was a 35 completely different scope/product from the plaintiff’s envisaged floater cover, on the other hand. I have dispassionately read the endorsement. While I agree with the plaintiff that it was passed to run retrospectively (effectively from inception of the policy), I did not find the basis for invalidating it. For instance, there was no authority cited to establish the rule that endorsements made on insurance policies cannot bear retrospectivity qualities. Furthermore, the plaintiff did not exhibit how advantageous the same would be to him, if it was to be applied post its promulgation day. Furthermore, in a standard form contract, insurance policy being one of them; the author dictates what terms to include and/or the phraseology of such terms. The law, only intervenes to interpret the contract against the maker if term is ambiguous. That is, verba forties accipiuntur contra proferentem rule. This Latin maxim literally means "against the offeror" or "guilt of the drafter". See, Rajdip Housing Development Ltd v Wambugu [1999] 2 EA 279; and Cheleta Coffee Plantations Ltd v Mehlsen [1966] E.A. 203. 36 The type and scope of cover under the policy (P7) notwithstanding, the plaintiff presented the claim for TZS 1,588,091,380/-. This figure, represented the maximum value at risk/sum insured indicated in the policy. Thus, two aspects of cover arise here; id est, the insured-value scope and the geographical/territorial scope. First, in so far as the tallying of the sum insured and the claimed indemnity is concerned, one arrives at one clear answer: the figure is the same. Thus, the scope of the policy and the amount claimed tally squarely. Second, the original (pre-endorsement) policy limits the location of cover to Plot No.1 Nkalalo-Kwimba. With the changes in the endorsement, the altered (post-endorsement) policy widened the geographical scope of the cover. But the latter was subject to limitation of liability to the maximum of TZS 30m/- less the TZS 10m/- deductible. Consequently, if one works on the basis of the pre-endorsement policy, the claim falls outside the geographical scope of the policy. The fire occurred at Mwanambaya- Mkuranga not the covered location in the policy (Plot No.1 Nkalalo-Kwimba). Further, invocation of the post-endorsement policy throws the claimed amount out of the policy’s maximum scope. The plaintiff’s claim of about TZS 1.6bn/- is defeated by the application of the TZS 30m/- 37 maximum limit and TZS 10m/- excess arithmetic. Resolutely, in view of this whole evaluation, the seventh issue is determined in disaffirmation. That is, the plaintiff’s claim is incongruous with the policy scope. In accomplishment of this judgment, the Court takes up the eighth and last issue. This issue interrogates the reliefs parties are entitled to. As a matter of principle, determination of the same is exceedingly dependent upon the findings of all the preceding issues. Manifestly, the first seven issues can conveniently be grouped into two major categories. One group represents issues regarding establishment of rights, duties and liabilities of the parties for the proved breach. The other category involves the last-solo enquiry about suitable remedies to the parties. For clarity, the first and seventh issues have been determined negatively. Issues number two, three, four and five attracted the affirmative answer. However, the sixth issue has been found partly positive and partly unfavourable to the plaintiff. Undeniably, the remaining task for the Court is to translate the above findings in terms of the parties’ reliefs. To answer the last issue straightforwardly, I will seek to answer if the plaintiff is entitled to the remedies sought in this suit; one by one. 38 The plaintiff prayed for several reliefs. One of them is an order for payment of TZS 1,588,091,380.00 being the amount that the plaintiff would be indemnified if the defendant renewed the insurance policy for the 01.08.2021 – 31.07.2022 tenure. The Court considers a number of features surrounding this remedy. It is clear that this claim is for specific damages. The law obliges the plaintiff to specifically plead and prove such damages. That is, special damages require strict proof. See, for example, Bamprass case(supra); Zuberi Augustino v Anicet Mugabe [1992] T.L.R 137; and Stanbic Bank Tanzania Ltd v Abercrombie & Kent (T) Ltd, Civ. Appeal No. 21 of 2001 (unreported). Looking at the pleadings in this matter, the Court finds necessary facts constituting such claims. The plaintiff thus, duly discharged the duty of pleading them. However, the other twin-duty was not adequately performed. On record, PW1 testified to the effect that the stock in trade was insured at TZS 1,558,091,380.00; the destroyed stock was worth a total of TZS 3,230,887,902.60; and that the policy issued by the necessary party was for one location instead of the floater cover. To prove the actual loss, the plaintiff 39 tendered the goods movement credentials, the fire loss report and the closing stock report (as part of exhibit P7). Nevertheless, none of the foregoing documents contains the value of the stock save for the last one. I am loath to hold that the plaintiff proficiently proved the value of the damaged stock. It has to be borne in mind that the matter to be proved was in regard to the loss suffered not the presence and/or existence of stock in the warehouse. For instance, he did not produce any purchase receipts or the audited financial reports or returns for the stock or valuation report thereof. I have already remarked on the probative value of the closing stock report. All that can be restated here is that the same is less credible in the absence of corroborative evidence. However, the Court has noted from exhibit P7 copies of tax invoice and EFD receipt for transport charges by GTS Logistics (28.11.2021). But there is no specific corresponding pleadings, depositions or testimonies that the indicated charges form part of the value of the stock. Even then, such papers and related sheets indicate insignificant sum against the claim for about TZS 1.6bn/-. Principally, the plaintiff did not sufficiently prove to the Court how 40 the loss equivalent to the maximum insured sum was arrived at under this section of the reliefs. Pursuant to the analysis of pleadings, evidence and law rendered above, the onus of proving the special damages rested on the plaintiff (See section 110 of the Evidence Act (supra). Accordingly, the plaintiff who claimed to be entitled to payment of money presented in his pleadings, was duty bound to account for full value of the stock damaged by fire therein. In other words, despite pleading the specific damages, the plaintiff did not prove them precisely as required by the law [Paulina Samson Ndawavya v Theresia Thoams Madaha Civ. Appeal No. 45 of 2017 (unreported)]. The above failure by the plaintiff to prove the special damages strictly aside, the Court appreciates the cardinal rule that the burden of proof is not supposed to shift the opposite party; unless the party on whom the duty lies has fully discharged his obligation. This position of the law notwithstanding, I hold the view that, such rule may be departed from if there are sufficient or compelling reason(s). Consequently, the rule is subject to exceptions. I take it to be justice if, for example, such exception is invoked where the adverse party admits to certain liability. 41 In the matter at hand, the necessary party’s solo witness (NPW1) testified and tendered in Court, dense evidence that after effective observance of the insurance claims procedures, it was established that the loss suffered and/or substantiated by the plaintiff attracted indemnity at TZS 20m/- after applying the policy deductible. That is, per exhibit NP4 it is evident that the necessary party was express that; “I have perused the policy issued many times, looked at the claims processing and amount offered and cannot find any wrong as to the timing of process and conformity to policy terms, conditions and warranties. Sanlam legitimate offer is still open in accordance with the terms of the cover…” (bolding rendered for emphasis). In addition, the loss acceptance form (NP7) precisely reveals that the insurer’s liability was assessed after valuation of the plaintiff’s claim. Such evidence was not controverted or contradicted during the hearing of this matter. Further, during cross-examination session, NPW1 reiterated that the necessary party’s liability was such amount. Consequently, in the absence of any contrary evidence; and in view of the fact that the same testimony was given by or in favour of the necessary party’s case; and that the said witness 42 was not declared hostile; I am exceedingly of the conviction that the necessary party technically admitted that the stated amount was his due liability against the plaintiff. In this regard, I also rely on sections 19, 20 and 22 of the Evidence Act (supra). In law, admissions may be in the form of oral, documentary or written statements of the party to suit or his authorised agent. Specifically, section 22 hereof renders the statement by NPW1 as admission. Further, I am mindful that admissions under the Evidence Act (supra) differ from conditions warranting the grant of judgment on admission under the Civil Procedure Code, Cap 33 R.E 2019 [see, Full Gospel Bible Fellowship Church vs Elgoodness Emmanuel Rwatto, Civil Rev, No. 4 of 2021(unreported)]. But, in the present case, the necessary party gave testimony under oath in the said connection. To me, the plaintiff cannot justifiably dissociate himself from such evidence or confirmation of liability. Basing on such examination, I hold that the plaintiff is accordingly entitled to such unequivocally admitted amount (TZS 20m/-); the lack of specific proof on his part notwithstanding. For avoidance of doubt, this liability is exclusive upon the necessary party. 43 In addition, the plaintiff claimed for interest of 22% on decretal sum from 22.12.2021 to the date of judgment; court rate interest at 7% from the date of judgment to full settlement; general damages; costs of the suit; and any discretionary reliefs by the Court. I will start by determining the commercial interest claim. Having read the record of this suit, I have not been able to locate the basis of this remedy. Apart from pleading it, the plaintiff did not give any proof establishing its basis. PW1’s main testimony did not substantiate this remedy either. Further, both PW1 and PW2 did not testify or elaborate how the plaintiff was legally entitled to it, even in passing. The law dictates that, claims for interest must be pleaded, particularised and proved for them to pass. See, for instance, National Insurance Corporation (T) Limited v China Civil Engineering Construction Corporation, Civil Appeal No. 119 of 2004; Zanzibar Telecom Ltd v. Petrofuel Tanzania Ltd, Civil Appeal No. 69 of 2014; Alfred Fundi v. Geled Mango and Two Others, Civil Appeal No. 49 of 2017; and Ami Tanzania Limited v Prosper Joseph Msele, Civ. App. No. 159 of 2020 (all unreported). 44 Further, the Court appreciates that in Yara Tanzania Limited v Ikuwo General Enterprises Limited, Civil Appeal No.309 of 2019; and Amani Safari Adventure Limited v Petrofuel (T) Limited, Civil Appeal No. 67 OF 2023 (both unreported) it was laid a principle that mercantile practices may be used to allow interest to a victor-litigant even where he has not proved it specifically. Nevertheless, in the matter at hand, the plaintiff somewhat contributed to his plight. On record it is proved that the indemnity amount was ready at his disposal long ago. The plaintiff did not complain about tardiness in processing the claim either. Furthermore, despite the second, fifth and seventh issues being determined in his favour, the plaintiff was duty-bound to establish the specific loss occasioned by the breach of agreement, duty of care or non- compliance of the defendant for him to justify claiming for interest thereof. As explained above, the actual loss suffered by the plaintiff was not explicitly proved. Henceforth, in so far as the indemnity under the policy is concerned, the necessary party cannot be blamed fully for the whole pack of circumstances of this suit. Hence, the plaintiff’s prayer for interest hereof is accordingly disallowed. 45 I now turn to the prayer for general damages. The operating principle in allowing such damages is that the Court should award general damages judiciously. A number of factors guide the Court thereof. They include: the directness of the defence’s wrong which caused the damages to the plaintiff; the damages being the natural or probable outcome of the wrong complained of; whether or not, the defence is the sole or particularly significant contributor to the established consequences; and the remarkableness of magnitude of the damages (see, Tanzania Saruji Corporation v African Marble Company Limited [2004] T.L.R 155). In this matter, it was established that the plaintiff specifically instructed the defendant for a specified type of cover; the cover was purchased at the instance of the defendant’s intervention; he paid the requisite premium; he banked on the defendant’s fiducial capacity in expecting the adequate cover of his property; he complied with the policy conditions in claim handling; and he made follow ups for the claim to be paid according to the sum insured. That is, the plaintiff took necessary precautions to cushion himself against the risks hereof. Moreover, by the conclusions of the necessary party that the plaintiff was entitled to the maximum amount under the cover, the Court 46 considers such step to appreciate that the plaintiff suffered loss of some sort; though he has failed to prove it specifically as argued above. Furthermore, the relationship of the defendant and necessary party under the law is that of the principal-agent. Hence, both the defendant and necessary party cannot completely avoid being blamed for what befell the plaintiff. Accordingly, on the weight of available evidence and circumstances of this case; the plaintiff’s claim for general damages is pivoted on the justifiable legal axis. On such basis, he is awarded TZS 100,000,000/- to be paid jointly by the defendant and the necessary party. In addition to the above damages, the Court allows 7% interest on the decretal sum from the date of this judgment to full payment in favour of the plaintiff. Lastly, the plaintiff is granted costs of this suit from the opposite parties. To sum up, the following reliefs are granted to the plaintiff: payment of TZS 20,000,000/- being indemnity for the insurance claim payable by the necessary party only; TZS 100,000,000 general damages; interest at 7% from the day of this judgment to full settlement of the decree; and his costs incurred hereof to be paid jointly by the defendant and the necessary party. 47 In fine, this case accordingly succeeds to the scope stated in this judgment. It is so ordered. The right of appeal is explained to parties. C.K.K. Morris Judge August 16th, 2024 Judgement delivered this 16th day of August 2024 in the presence of Ms. Winfrida Hombee for the plaintiff; Mr. Bedda Kapinga for the defendant; and Mr. Mudhihir Magee for the necessary party. C.K.K. Morris Judge August 16th, 2024