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THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF
UGANDA AT KAMPALA
(COMMERCIAL COURT
DIVISION)
HCT-00-CC-CS-0861 OF 2004
JONATHAN KIRASHA :::::::::::::::::::::::::::
PLAINTIFF
VERSUS
UNITED ASSURANCE CO. LTD ::::::::::::::::::::
DEFENDANT
BEFORE: THE HONOURABLE MR. JUSTICE YOROKAMU
BAMWINE
J U D G M E N T:
The
plaintiff’s claim against the defendant is for an indemnity for loss under
the defendant’s private car motor policy
and the goods in transit
insurance policy; interest thereon, general damages and costs of the
suit.
From the evidence, the plaintiff and the defendant executed an
agreement of insurance on 19/5/2004 by which the defendant issued a
private car
policy [No. 010/080/1/000680/2004] and goods-in-transit insurance policy [No.
010/062/1/000427/2004] where unto the plaintiff
embarked on the payment of the
respective premium. The effect of the two policies was that effective the date
of the agreement,
the defendant would indemnify the plaintiff against the loss
of or damage to the insured property. The loss or damage covered under
the
policy included fire, among others.
The plaintiff’s case is that on
29/6/2004, less than two months into the execution of the agreement, he
purchased goods worth
Shs.39,500,000- which he loaded into the insured vehicle.
The following day, 1/7/2004, while the vehicle was on its way to Kabale,
at a
place after Lyantonde Town on the Masaka – Mbarara Rd, it is said to have
caught fire which burnt the goods to ashes and
seriously damaged the
vehicle.
The plaintiff turned to the defendant for indemnification in the
terms of the insurance policies but the defendant refused. Hence
the suit.
The defendant’s stated reasons for refusing to indemnify the
plaintiff are that:
a. The plaintiff deliberately misrepresented to the
defendant the value of the motor vehicle UAA 463W.
b. The alleged goods
purchased from Joho Enterprises were not in the vehicle UAA 463W at the time of
the fire or alternatively and
without prejudice to the answer in this
paragraph, the defendant deliberately misrepresented the value of the said
goods and the
amount of the goods lost in fire.
The only point of
agreement between the parties is the existence of the two insurance policies.
The rest is disputed.
Four issues were framed for
determination:
1. Whether the plaintiff’s motor vehicle was destroyed
as alleged.
2. Whether the plaintiff lost the goods as claimed.
3. Whether
the defendant is liable for the loss and damage occasioned to the plaintiff, if
any.
4. Whether the plaintiff is entitled to the reliefs
claimed.
Counsel:
Mr. Arinaitwe Tony for the plaintiff.
Mr. Luswata
Joseph for the defendant.
Before I delve into the assessment of evidence,
I consider it necessary to state the law on proof of claims of this
nature.
In law, a fact is said to be proved when Court is satisfied as to
its truth. The general rule is that the burden of proof lies on
the party who
asserts the affirmative of the issue or question in dispute. When such party
adduces evidence sufficient to raise
a presumption that what he asserts is true,
he is said to shift the burden of proof: that is, his allegation is presumed to
be true,
unless his opponent adduces evidence to rebut the presumption. The
standard of proof is on a balance of probabilities. Relating
the above to this
case, the plaintiff has alleged that his insured vehicle and goods in it were
destroyed by fire while the goods
were in transit. The burden rests on him to
prove those two allegations.
First, whether the plaintiff’s motor
vehicle was destroyed as alleged.
I have considered the evidence of the
plaintiff, PW1 Kirasha. He was the undisputed owner of the vehicle in question,
UAA 463W, a
Toyota Hiace mini-bus. His evidence is that the vehicle caught fire
shortly after Lyantonde Town on 1/7/2004 as he was proceeding
to Kabale. His
testimony is that he was in his Pajero and the vehicle in issue was under the
stewardship of a driver and a turn
boy. That police rushed to the scene and
found it burning and upon disclosing to them that it was insured, he was advised
to report
the matter to the defendant’s branch in Mbarara. Some official
of the defendant’s branch in Mbarara is said to have
gone back with the
plaintiff to the scene of the accident and found the tyres still burning. This
unnamed official did not appear
as a witness for either party. He would have
been a material witness for the defence. PW2 Alex Zoreka was the man behind the
steering
wheel when the accident occurred. His evidence is that some short
distance after Lyantonde town, he saw some smoke coming from the
car’s
dash board. He stopped to check its source. Then he saw fire under the
driver’s seat. He tried to put it out
but failed. It quickly spread to
the goods he was carrying in the vehicle and destroyed them completely. He too
said that as he
was still there, confused, police men came. They advised him
and his boss (who had been driving ahead of them in his pajero and
had come back
upon getting reports of the fire) to report the matter to Mbarara police station
and they did just that.
PW3 No. 3345 P.C. Sasya Samuel was at the time
material to this case with Mobile Police Patrol Unit, Mbarara Detach. According
to
him, around 5 a.m of 1/7/2004, he was on patrol duty at a place popularly
known as Kaguta Road on the Masaka-Mbarara Highway when
the vehicle in question
stopped at a police check point. They allowed it to continue its journey
towards Mbarara. After sometime,
they were alerted about a vehicle which had
caught fire a short distance ahead of where they were. Police men, including
himself,
rushed to the scene and found the vehicle burning. The fire was too
much. They could not control it.
From the defence evidence, they too do
not deny destruction of the plaintiff’s vehicle. At the scheduling stage,
counsel for
the defendant had intimated to Court that the defence would lead
evidence to show that the vehicle was never damaged or burnt by
fire. Such
evidence was never adduced. Instead, DW1 Mukwana, the defendant’s
Assistant Legal Manager in charge of claims,
admitted seeing the wreckage of the
burnt vehicle. Also, DW4 Bhattacharya, an insurance assessor and loss adjuster,
said that he
traveled to the spot of the accident and found, on the way to
Mbarara, a wreckage of a Toyota Hiace in a burnt condition, lying by
the road
side.
I have seen no reason to doubt the above evidence. It is evidence
that shows very clearly that the plaintiff’s vehicle was
lost in fire.
The said fire burnt it and left a ‘skeleton’ of it. It is evidence
that renders counsel’s word
from the bar that the vehicle was never
damaged or burnt as alleged mere gossip. I accept the evidence of the witnesses
who saw
the vehicle on fire and its wreckage there after. It is evidence that
proves to the satisfaction of Court that the plaintiff’s
vehicle was
destroyed as alleged.
Accordingly, the first issue is answered in the
affirmative.
Second, whether the plaintiff lost the goods as
claimed.
The plaintiff’s case is that he bought goods worth
Shs.39,500,000- from Joho Enterprises in Kampala. He claims that after loading
them, they went to the defendant’s head office to show that they had done
so. He apparently did this in accordance with the
policy requirements. One
Sarah, an employee of the defendant, is said to have come out of office and
inspected them. This Sarah
did not appear as a witness. I thought she would be
a material witness for the defence, in as far as the stated loading of the goods
is concerned.
Be that as it may, PW2 Alex Zoreka, the driver of the
ill-fated vehicle, testified that 6 boxes of goods were loaded into the vehicle
and that they were destroyed by the fire which gutted it. PW5 Hope Mwesigye
states that she sold merchandize worth Shs.39,500,000-
to the plaintiff, as
indicated in P. Exh. IV, a receipt dated 29/6/2004 from Joho Enterprises. Some
defence witnesses claimed that
when they asked her to produce the receipt book
from which P. Exh. IV was extracted, she failed to do so. However, she produced
the same at the hearing.
PW3, the police officer who rushed to the scene
of the accident after getting a report about the fire said that by the time he
arrived
with his colleagues, the whole vehicle had been engulfed by fire and
that none of its cargo could be saved. There is evidence that
PW1 Kirasha made
an attempt to brave the fire but he was advised against it. PW3 had earlier on
seen boxes in its hold at the police
check point. As I have already said, the
defence case is that no such goods were in the vehicle or if they were there,
the value
is overstated. Their argument is not based on any account of an
eye-witness who may have seen an empty vehicle or empty boxes at
the time of the
accident or anywhere else but on the feeling that if the vehicle truly carried,
as claimed, trousers, shoes, etc
they would have expected to see things like
zippers, buttons and remains of rubber products. The argument appears
attractive at
face value. However, it does not address a number of
issues:
1. We are considering the possible impact of petrol fire on
substances like the ones in question. Petrol fire cannot in my view
be treated
at the same level as wood or grass fire. The defendant’s concerns do not
address this fact.
2. The accident occurred on 1/7/2004. A report was
immediately made to the defendant. PW4 Bhattacharya went to Lyantonde on
25/7/2004,
a cool 24 days after the event to inspect the vehicle and its
declared cargo. There is no evidence of any attempt to cordon off
the area
against any possible interference with the scene. No explanation has been
offered for this inordinate and inexcusable
delay.
3. The plaintiff and his
driver (PW2) stated, and I have already accepted that evidence that on the very
day of the accident they
went to Mbarara and reported the matter to the
defendant’s branch office there. Their evidence is further that they
went
back to the scene of the accident with someone from that office. There
was no attempt on the part of the defendant to disprove
that fact. Now if any
one went to the scene of the accident soon after its occurrence, that’s
the person who should assert
most positively that there were no goods in the
vehicle. His evidence would be based on what he/she saw soon after the event.
In the instant case, no such evidence has been led by the defence. Court does
not know what the findings of that would be witness
were. There is a
possibility that if he came to Court, he would say that he saw what the
plaintiff is alleging in this case.
I make that inference.
4. The
defendant’s own witness, DW1 Mukwana, stated that if they had collected
ash from the scene of the accident and had sent
it to some experts in Nairobi
or South Africa they would perhaps have ascertained the components of the ash.
DW1’s evidence
is that ash was actually collected by one Bhattacharya.
He (DW1) says:
“He stayed with it and has it to-date. He consulted us and wanted to know whether to send it to South Africa or Nairobi. The committee disregarded the idea of its examination because its source could perhaps be disputed.”
In short, the defence evidence is that
the defendant got the ash alright but did not consider it necessary to subject
it to some forensic
tests. In fact, according to Bhattacharya, DW4, he
collected a small amount of black powder. He was to get it tested to find out
whether it was connected to textiles, rubber, etc. While Mukwana says that the
committee disregarded the idea because perhaps the
plaintiff would dispute the
findings, Bhattacharya claims that he failed to have the tests done because of
lack of testing facilities.
He does not say why the idea of sending samples to
Nairobi or South Africa, which in my view was a noble one, was abandoned. This
apparent contradiction in the defence case has caused me considerable
discomfort. When all the evidence is considered together,
one gets the
impression that the claim was for unknown reasons casually and negligently
investigated by the defendant. Accordingly,
the plaintiff’s evidence that
he purchased goods on 29/6/2004; that he loaded them into motor vehicle No. UAA
463W; and that
the following day the goods were lost in an inferno of fire at a
place after Lyantonde Town, has not been controverted. I accept
that evidence
and answer the 2nd issue in the affirmative.
Third, whether
the Defendant is liable for the loss and damage that was occasioned. The answer
in my view lies in the two policies
themselves. From the evidence, the parties
agreed that the defendant would indemnify the plaintiff against loss or damage
to the
motor vehicle and its accessories and spare parts whilst thereon. The
defendant also agreed to indemnify the plaintiff against loss
of property that
would be destroyed by fire while that property was in transit in the insured
vehicle. In other words, transportation
of such goods as were destroyed in this
case was the insured risk.
For the defendant to be liable, the plaintiff
has to prove that the insured property was burnt by fire and that as a result
the plaintiff
has suffered loss or damage covered under the 2 policies. In my
view, the plaintiff has discharged that burden. There is no evidence
that he
willfully caused that fire. The defence witnesses were of the view that the
cause of fire could not be attributed to any
particular person. I
agree.
On the whole, Court is satisfied that the fire was accidental
rather than intended. The careless manner in which the defendant handled
the
investigations should not be a ground to deny the plaintiff the benefits
accruing to him under the two policies. I accordingly
hold as I must that the
defendant is liable for the loss and damage occasioned to the
plaintiff.
Fourth, whether the plaintiff is entitled to the reliefs
claimed.
He has prayed for:
i. a declaration that the defendant is
liable to indemnify the plaintiff. I have already said so. For the avoidance
of the doubts,
it is so declared.
ii. indemnity in the sum of Shs.15,000,000-
accruing from the motor vehicle policy. His action is based on the
information that
he paid Shs.15m for the vehicle. He had spent a year with it
when the accident occurred. The defendant disputes the value. It
argues that
the plaintiff misstated its value at the time of entering into the insurance
agreement. I have been baffled by this
argument. There is no evidence that he
was asked to verify the purchase price before the deal was concluded and that
he failed
to do so.
A similar argument arose in SPAN INTERNATIONAL
LTD –VS- NATIONAL INSURANCE CORPORATION HCCS NO. 29 OF 1999.
The case is reported in [1997 – 2000] UCLR 404.
Like
in the instant case, the parties had entered into a contract of insurance. The
insurable property was some printing machinery.
The same was insured against
fire for Shs.95m. The plaintiff paid a premium of Shs.191.000- and shortly
thereafter the machines
burnt down. The plaintiff lodged an indemnity claim
which the defendant rejected.
The Court found that the plaintiff had not
withheld any information from the defendant which was required before the
issuance of
the policy and awarded him the amount claimed. The matter went on
appeal vide NATIONAL INSURANCE CORP. –VS- SPAN INTERNATIONAL
LTD CACA NO. 13 OF 2002 (also reported [1997-2001] UCLR
100)
The appellate Court, while upholding the decision of the lower
Court, held that as the plaintiff/respondent had given the information
as he
knew it and the defendant had not inquired from him as to details of purchase
price, model, the vendor, customs papers, etc
before issuing the policy, the
presumption was that the appellant/defendant was satisfied with the machines
and the values being
insured before it issued the policy. The appeal was
therefore dismissed save for the adjustments the appellate Court made on some
awards.
What the learned trial judge had said about NIC is relevant to
the instant case. He said:
“It is my view that the careless manner in which the defendant handled the sale of the policy and investigations of the fire should not be blamed on the plaintiff, who insured a value, claimed a value and did so after doing what was in his ability without any suggestion of fraud. I have not seen any material concealment or non-disclosure at the time that was material to the issuance of the policy.”
I find the facts, the
circumstances and the findings of the Court in that case similar to the instant
one. I have therefore seen
no reason to depart from the principle
therein.
In the instant case, the plaintiff says he paid Shs.15,000,000-
for the vehicle in 2003. He has produced a sale agreement to that
effect, P.
Exh. V. He bought it as a used vehicle.
DW2 Lubowa, a valuer of sorts,
estimated its value at Shs.4,650,000- at the time of the accident. It is
significant to note that
the plaintiff was never asked to have it valued before
the deal was concluded. DW2 says he carried out a market survey of similar
vehicles in bonded warehouses and took into account the fact that the vehicle
had been on the road for seven (7) years.
DW4 Bhattacharya puts its
value at a miserable Shs.2.5m. As between DW2 and DW4, I think the former did
a better job. His report
appears to be more researched. Even then it is an
estimate, a rough estimate so to say.
In Tumushime Benon –Vs-
Kiwanuka Robert HCCS No. 494/2001 (unreported), the plaintiff had paid
Shs.8,700,000- for a similar mini-bus. He had used it for 4 months when it got
involved in
an accident. Court accepted that figure of Shs.8,700,000- for a
vehicle that was 14 years old, twice as old as the instant one.
After
assessing the scrap value and the attendant depreciation, Court awarded the
plaintiff a sum of Shs.5,440,000-.
In the instant case, Court is
satisfied that the plaintiff paid Shs.15m to PW4 Yusuf Mawanda. Considering
its year of manufacture,
1991, I would apply a factor of 45% to the purchase
price. This makes it Shs.8,250,000- (that is, Shs.15,000,000- 6,750,000-).
I
would subject the figure to another 10% policy excess in accordance with the
policy agreement and come up with a figure of Shs.7,425,000-
(that is,
Shs.8,250,000 – 825,000). I would award that much, that is,
Shs.7,425,000- to the plaintiff as the value of the
vehicle. I do
so.
iii. indemnity in the sum of Shs.39,500,000- accruing from the goods in
transit
policy.
He has proved that his goods were worth
Shs.39,500,000-. Unlike the vehicle which he had used for over a year, he had
just bought
those goods. The parties had agreed that the insured shall bear
the first 10% of all claims lodged against the defendant resulting
from
accidental damage. The 10% policy excess reduces the amount claimable under
this head to Shs.35,550,000-. I have seen no
reason to deny him this amount.
It is contractual. I accordingly decree it to him.
iv. refund of
Shs.50,000- being the cost of police accident report and the scene of accident
sketch plan.
Court is satisfied that he paid it. However, he was obliged to
obtain it at his own cost whether the case ended up in Court or
not. In other
words, it is the basis for his claim against the defendant for which he has
been decreed damages. Court is inclined
to make no order as to its refund
given the compensation he will get for the claim under the policies. I order
so.
v. interest at 20% p.a on (ii) and (iii) above from the date of filing
the suit till payment in full. The usual practice is that
interest, if it is
not part of the contract terms, is a discretionary remedy. The general rule is
that interest can only be claimed
if the claim is based on an agreement for it
in the document sued on or by statute. The basis of an award of interest is
that the
defendant has kept the plaintiff out of his money; and the defendant
has had the use of it himself; so he ought to compensate him
accordingly.
In the instant case the plaintiff appears to have just paid
the initial instalment of the premium when the accident occurred. He
knew or
ought to have known that both claims were reduceable by a factor of 10% in
accordance with the policy agreement but he
has insisted on being paid
Shs.15,000,000- and Shs.39,500,000- respectively. His suit includes a prayer
for general damages.
The principle descernable from available authorities on
this point shows that where a person is entitled to a liquidated amount
and has
been deprived of it through the wrongful act of another person, he should be
awarded interest from the date of filing the
suit. Where, however, damages
have to be assessed by Court, the right to them does not arise until they are
assessed. In such
event, interest is only given from the date of judgment. In
the instant suit, the compensation claimed by the plaintiff is contractual.
It
arose out of the policies he had with the defendant. However, there are
damages which have been claimed and had to be assessed.
From the evidence,
I’m unable to hold that the benefits were unjustifiably withheld from
the date of the accident. The
defendant had to satisfy itself that any payment
would be in accordance with the contract terms. The claims were not in
consonance
with the policy terms. I would award interest on the special
damages to the plaintiff at the rate of 20% per annum but from the
date of
judgment till payment in full.
vi. General damages.
These are not easily
quantifiable in money terms. They are never specified in the claim; instead
Court decides how much the injured
person deserves in compensation for his pain
and suffering, which the Court assumes the plaintiff did sustain.
In
the instant case, the plaintiff suffered no physical injury in the accident. He
was not in the ill-fated vehicle. In any case,
the defendant was not in any
way responsible for the misfortune that befell him. He has been compensated
for the loss he suffered
in accordance with the insurance policies. Whatever
else he has suffered is atonable by an award of costs. The reluctance to
process
payment resulted from the plaintiff’s own exaggerated claims. I
have therefore not found the case to be a proper one for
an award of general
damages. I award none.
vii. Costs of the suit.
The plaintiff has no
doubt incurred costs in espousing his claim against the defendant, whether the
defendant had a reason to reject
the claims or not. I therefore see no good
reason to deny him the costs of the suit. However, the assessment of the
claims has
achieved partial success for the defendant on the issue of damages.
I assess the success at 30%. I would therefore award 70%
of the costs of the
suit to the plaintiff and I do so.
The same shall attract interest at
Court rate per annum from the date of taxation till payment in
full.
Before I take final leave of this case, I consider it necessary to
comment on the defendant’s apparent expeditions to other
insurance
companies in a bid to justify its argument that the plaintiff could be a
fraudster. Defendant was entitled to its opinion.
However, one such company,
Jubilee Insurance, has confirmed that another of the plaintiff’s vehicles
got burnt almost in similar
circumstances. So what? This issue of similar fact
evidence was never pleaded by the defendant in its WSD to raise inference that
it may have been the reason to reject the plaintiff’s claims. Even then,
Jubilee Insurance has confirmed to Court that the
plaintiff’s claim to
them was genuine. The plaintiff is a transporter. The business of
transportation involves accident risks.
Insurance Companies exist basically for
such business risks. In these circumstances, I did not consider it strange that
he had
moved from Jubilee Insurance to the defendant. The accident happened in
the morning. Many people witnessed it. If the defendant
had exercised due
diligence in its investigations, it would not have been difficult to verify the
plaintiff’s claims in time.
In view of all this, I did not consider the
defendant’s search for similar fact evidence principled or justifiable.
It was
in my view an afterthought and a disguised cover up of the
defendant’s officials’ negligence in investigating the claim.
For
this reason, I decided to treat this point as a peripheral one, only fit for an
obiter dictum.
For reasons stated above, Judgment is entered for the
plaintiff. In addition to the declaration that the defendant is liable to
indemnify
the plaintiff, I make the following orders:
i. Special damages in
respect of the destroyed motor vehicle: Shs.7,425,000- (seven million four
hundred twenty five thousand only).
ii. Special damages in respect of the
goods destroyed in transit: Shs.35,550,000- (thirty five million five hundred
fifty thousand
only).
iii. Interest on (i) and (ii) put together at the rate
of 20% per annum from the date of judgment till payment in full.
iv. 70% of
the plaintiff’s taxed costs.
v. Interest on (iv) above at Court rate
per annum from the date of taxation till payment in full.
It is ordered
accordingly.
Yorokamu Bamwine
J U D G
E
10/05/2006
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