Meanwood General Insurance Company v Multi-Industry Limited (2020/HPC/0161) [2022] ZMHC 59 (25 August 2022)

IN THE HIGH COURT FOR ZAMBIA AT THE PRINCIPAL REGISTRY HOLDEN AT LUSAKA (Commercia l Division) BETWEEN 2020/HPC/0161 MEANWOOD GENERAL INSURANCE COMPANY LIMITED PLAINTIFF AND MULTI-INDUSTRY LIMITED Before Judge B. G Shonga this 25th day of August, 2 022 For the Plaintiff: Ms. C. Banda, Messrs. Tembo Ng ulube Associates For the Defendant: In Person JUDGMENT ' Cases Referred to: 1 . Priscilla Mwenya Kamanga V Attorney-General, Peter N'gandu Magande (2008) Z. R. 7 Vol. 2 (S. C.). 2. Monarch Steel Limited v. Jessons Insurance Agency Limited Appeal No. 106/2008. 3 . Wilson Masauso Zulu v Avondale Housing Project Limited (1982) Z. R. 172. Legislation and Other Materia ls referred to: l. Commercial Law in Zambia, Cases and Mate rial, Mumba Malila (UNZA Press for School of Law, Universit y of Zambia, 2006). 2 . T h e Insurance Act, 1 997: s. 2 and 76. J2 The Claim l. This is an action commenced by the plaintiff by way of a writ of summons, accompanied by the statement of claim, filed into Court on 6 th March,2020. 2. The plaintiff's claim, as endorsed on the writ, 1s for: (i) payment of the sum of Kl53,864.06 allegedly owed to the plaintiff by the defendant. This is in respect of unpaid insurance premiums on motor vehicle insurance policies and bonds insurance policies which were purchased on credit by the defendant; (ii) interest on the sum due; and (iii) costs. The Defence 3 . The defendant did not enter appearance or file a defence notwithstanding h aving been served. The action is, therefore, undefended. 4. With respect to service, I draw comfort from the affidavit of service filed into court on 17th August, 2020. It demonstrates that the plaintiff effected service by way of substituted service in accordance with the order of the Court obtained on 23rd April, 2020. The Evidence s. The plaintiff relied on the testi1nony of Gershom Ngosa (PWl), an accountant. Mr. Ngosa's witness statement dated l 7Lh February, 2021 was admitted in court as evidence in chief. In ' • J3 addition, PW 1 adduced and relied on the plaintiffs bundle of documents dated 4th February, 2021. 6. PW l's testament was that the plaintiff is in the business of providing insurance covers for various risks, including motor vehicle and contractual risks. 7 · He avowed that the defendant was the plaintiff's client for about five years from August, 2013, to December, 2018. It was PW 1 evidence that during that period, the defendant purchased the following types of policies from the plaintiff: (i) motor vehicle insurance policies; bid bonds insurance policies; advance bonds insurance policies; and performance bond insurance policies. 8. PWl referred m e to page 7 of the plaintiffs bundles of documents, a summary of the insurance policies that the defendant had purchased from the plaintiff. The summary indicates the particular risk that was to be covered by the plain tiff. 9. According to PW 1, the defendant fully paid for a number of insurance policies soon after they were purchased. He also stated that some policies were partially paid for by instalment payments. Further, that some policies were not paid. 10. Payments made by the defendant, he is avowed, were reflected on the statement of account exhibited on pages 1 to 6 of the plaintiff's bundle of docun1ents. l l. PWl explained the meaning of the columns on the statement of account. In his view the statement revealed that as of 30th September, 2019, the defendant had an outstanding balance of Kl53,864.06 in unpaid premiums. • • J4 12 · Ultimately, PW 1 attested that notwithstanding demand having been made, the defendant had failed to settle the outstanding balance of Kl53,864.06 that it owes to the defendant. The Plaintiffs Submissions 13. The plaintiff submitted that the plaintiff and defendant enjoyed a contractual relationship that entailed the purchase, by the defendant, of various insurance policies from the plaintiff. 14. According to the plaintiff, the defendant entered into a contract of insurance the plaintiff. The plaintiff referred me to the definition of a contract of insurance contained in the book Commercial Law in Zambia, Cases and Material, Mumba Malila (UNZA Press for School of Law, University of Zambia, 2006). The erudite defines a contract of insurance as follows: " .. . a n agreement in which persona called the insurer agrees for a cons ideration called the premium to pay a sum of money or to provide a service for the benefit of another person called the ins ured or assured on the occurrence of a special event whose happening is uncertain. " 15. The plaintiff advan ced the argument that under the contract, the defendant had a contractual obligation to settle all premiums due . 16. With respect to the law, the plaintiff cited section 76 of the Insurance Act, 1997 (hereinafter referred to as the Act). In doing so, the plaintiff acknowledged that section 76 (1) of the Act states that a contract of insurance ceases to operate if a premium is not paid within thirty days after the due date. • t I 17 · The plaintiff proceeded to submit that in this case the evidence revealed that the parties agreed that the plaintiff would and in fact did continue to cover the defendant d espite the defendant having not paid their premiums. 18. The plaintiff further submitted that the parties had an agreement to allow the defenda nt to pay on credit within an agreed period outside the thirty days. 19 • Finally, the plaintiff invited the court to find that the defendant has an outstanding balance and owes the plaintiff the sum of Kl53,864 .06 in outstanding premiums. Analysis of Evidence 20 . The evidence before Court consists of the testimony of PWl, as evidence in chief, in th e form of a witness statement. In addition, PWl adduced documentary evidence in the form of a statement of account and a schedule of policies contained in the plaintiffs bundle of documents. 2 J . The testimony of PW 1 gives m e some disquiet because the statement does not specify PW 1 's relationship with either party or his role in the transaction. 22. In the case of Priscilla Mwenya Kamanga V Attorney- General, Peter N'gandu Magande (2008) Z . R. 7 Vol. 2 (S. C.) the Supreme Court held that a witness must be somebody who h as some personal knowledge of what is being adjudicated upon . 23. In applying the principle enunciated by the Supreme Cour t, I establish that the plaintiff h as not introduced s ufficient evidence to support a finding that PW 1 has J6 personal knowledge of the m a tters 1n issue 1n the present case. 24. I recognize that such proof can be d emonstrated by the witness's own testimony . In this case, PWl failed or neglected to speak to his personal knowledge of the issues before me in his witness statement. 25. Absent evidence th at reveals that PW 1 holds some personal knowledge of the facts in this case, I opine that I cannot give any, or significant, weight to his testimony or the documents that he tendered. t Issues to be determined 26. Having considered the evidence and submissions before Court, I am of the view that this case turns on whether the parties en tered a contract of general insurance; and whether the contract was operable and ther efore enforceable. Applicable Law 27. The plaintiff a lluded to section 76 ( 1) of the Act which rea ds as follows : "76. (1) A contract of general insurance shall cease to operate if a premium is not paid within thirty days after the due date of the premium, or within such period as the contract may stipulate. (2) For the purposes of this section, a premium paid to a brolcer who arranged the contract shall be deemed to have been paid to the insurer. " 28 . I h a ve analyzed section 76 (1) a nd understand that it specifically a pplies to contracts of genera l insurance. It is trite law tha t a contract of gen eral insura nce refers to an ,17 insurance contract that does not fall under the ambit of insurance contracts that are referred to as life insurance. 29 . This proposition is supported by the definition of the term "general insurance business" that is contained 1n section 2 of the Act. Section 2 reads, in part, as follows: "general insurance business means insurance business other than life insurance business." 30. In this case, it is not disputed that the contracts of insurance that underpin the plaintiff's claim are contracts of general insurance. Thus, I accept that section 76 of the Act applies to this case. 31. In my opinion, section 76(1) of Act envisages one of two scenarios: the first being where a due date for payment of a pre mium is stated in the contract; and the second being w here the contract stipulates a period within which the premium must be paid. ' t 32 . It is clear to me that in the first scenario, the contract of insurance ceases to operate, in accordance with section 76 ( 1) of the Act, if the premium is not paid within thirty days after the stipulated due date. 33. Equally clear to me is that where the second scenano applies, the contract of insurance ceases to operate where the premium is not paid within an otherwise agreed period between the parties. J8 34. What I p erceive from section 76 (1) is, therefore, that t he statute renders a contract of general insurance inoperable where a premium is not paid within either 30 days of the due date or within a period agreed by the parties. 3 5 · I have also reflected on the meaning of the term "due date". Section 2 of the Act d efines it as follows: "means the date of commencement of the period of insurance cover referable to that premium u nder the contract of insurance". 36. Additionally, I am aware that Guidelines 3 iss u ed under Circular No. 1 of 2005, under Section 99 of t h e Act, by the Registrar of Pensions and Insurance states as follows: "3. A Contract of General Ins urance shall incorporate a cancellation condition which shall stipulate that the Policy shall be cancelled if the pre mium is not paid by the due date. " 37 . From section 76 of the Act, as read with the Guidelines , I perceive tha t it is a requirement for a contract of general insurance to not only specify a due date, but to also include a mandatory condition tha t states tha t the policy shall be cancelled if the premium is not paid by the stated due date . 38. Also germane to this dispute is the case of case of Monarch Steel Limited v. Jessons Insurance Agency Limited Appeal No. 106/2008. The facts of that case were that on different dates between 1s t July 2005 and 1st July 2006, the appellant obtained six (6 ) Insurance Covers, from the Respondent. The total Ins urance premium was K57,770,155.91. The appellant could not pay the p remium sum within the stipulated p eriod of 60 days . It subsequ en tly ' t Jg verbally undertook to pay the su1n of K57, 770,155 .91 , in installment, over a period of three months. The appellant fully paid premium for only one policy, which was fully paid about 11 months from inception of the policy. It substantially defaulted on the other policies. 3 9. In defence to the respondent's clairn for the balance of K49,950,155.91, the appellant pleaded that the policies not paid for had lapsed after 60 days, under Section 76(1) of the Act, 1997 and therefore, it was not bound to pay the claimed sum. 40. In dismissing the appeal, the Court held that section 76 of the Act p ermits parties to pay premiums outside the then prescribed period of 60 days from the due date. Thus, I am ,. I bound by the doctrine of stare decisis to accept that section 76 of the Ac t law permits parties to agree a period within w hich an insurance premium can be paid. t Determination 41. Turning back to the case unde r m y consideration, I b e lieve it relevant for m e to point out t hat if I were to elect to a ttach we ight to PWl 's unchallen ged testimony, then I must accept that the parties e ntered into a contract of insurance which incorporated an agreed p eriod within which the d e fendant was required to pay the premiums . The n e t result would be a finding of fact that the plain tiff's claim arose from the d efendant's failure to pay premiums w ithin a p eriod for payment tha t was agreed by the p arties in compliance with section 76 (1) of the Act. • JlO 42. As I have indicated above, my opinion is that the failure to pay premiums within an agreed period under a contract of general insurance renders the contract inoperable under section 76 (1) of the Act. Consequently, if I accept that the contract existed, the plaintiff's case would fail on the ground that the contract ceased to operate when the defendant failed or neglected to pay the premiums within the agreed period. As I see it liability cannot ensue from an inoperable contract b ecause it is unenforceable. 43. Nonetheless, upon careful reflection of the position taken by the Supreme Court in the Priscilla Mwenya Kamanga case, I have elected not to attach any weight to the evidence te ndered by PW 1. 44. Because th e p laintiff failed to call a witness that could demonstrate personal knowledge of the matter b efore Court, I find that there is insufficient evidence to justify a conclusion that there was a valid and enforceable relationship of insurance between the parties. This is buttressed by the plaintiffs failure to present an insurance contract or an insurance policy or any other form of an insurance cover to persuade me to come to any other conclusion. Consequently, r reject the submission that the parties enjoyed a contract relationship in the form of a contract of insurance. 45. In light of the foregoing I take the view that the plaintiff has failed to prove its case on a balance of probabilities. 46 _ Where a plaintiff fails to prove its case, it is not entitled to judgment. For this I rest on the decision of the Supreme Court in the case of Wilson Masauso Zulu v Avondale Housing t J 1 J 11 Project Limited (1982) z. R. 172 where the Court succinctly stated that: ''A plaintiff who has failed to prove his case cannot be entitled to Judgm.ent, whatever may be said of the opponent's case." 4 7 · I take leaf therefrom and hold that the plaintiff in this case is not entitled to judgment. As a result, the plaintiff's claims fail and the action is dismissed. Dated this 25th day of August, 2022 °ti . . . . . .. . . :~ . . . B. citi.toNGA HIGH COURT JUDGE . . . . . . . . . I ·I f I