Application
for Joinder
TAKUVA
J:
This
is an application for joinder of parties in terms of Order 13 Rules
87(2)(b) of the High Court Rules, 1971.
The
facts are simple and largely undisputed. They are:
Applicant
is involved in the business of buying and selling cell phones and
cell phone accessories which it normally imports from Dubai. Sometime
in 2012 applicant approached 1st
respondent who are 2nd
respondent's insurance brokers and requested insurance cover for
possible losses that could arise during importation of cell phones
from Dubai.
The
2nd
respondent then undertook to indemnify the applicant.
In
September 2012 applicant lost a consignment of cell phones valued at
US$57,285,00 (fifty seven thousand two hundred and eighty-nine United
State dollars) whilst being transported from Dubai to Bulawayo.
Applicant then duly completed claim forms and submitted them to the
2nd
respondent.
Subsequently
applicant's lawyers wrote to the 1st
respondent pointing out that applicant did not at any time sign any
policy document and that none was ever availed to applicant by 1st
respondent.
This
letter was written after 1st
respondent submitted a report from New Generation Loss Assurers which
indicated that applicant was not entitled to be indemnified because
it allegedly breached some conditions relating to the declaration
conditions, terms and conditions relating to packaging and
warranties, and clauses therein.
After
2nd
respondent refused to compensate applicant the latter issued summons
under case number HC364/13 claiming payment of US$57,285,00 being the
value of the cell phones.
The
parties have closed pleadings and a round table conference was held
wherein it emerged that most of the triable issues centre around the
role played by the 1st
respondent as an insurance broker in the contract.
The
applicant then applied for joinder of 1st
respondent as a 2nd
defendant under case number HC364/13.
The
1st
respondent has opposed the application.
Consequently,
the broad issue is whether or not 1st
respondent should be joined as a defendant under case number
HC364/13.
Applicant
relies on R87(2)(b) of the High Court Rules, 1971 which provides as
follows:
“(2)
At any stage of the proceedings in any cause or matter the court may
on such terms as it thinks just and either of its own motion or on
application –
(a)…
(b)
order any person who ought to have been joined as a party or whose
presence before the court is necessary to ensure that all matters in
dispute in the cause or mater may be effectually and completely
determined and adjudicated upon, to be added as a party; but no
person shall be added as a plaintiff without his consent signified in
writing or in such other manner as maybe authorized.
(3)
A court application by any person for an order under sub-rule (2)
adding him as a defendant shall, except with the leave of the court,
be supported by an affidavit showing his interest in the matters in
dispute in the cause or matter.”
Applicant
also relied on the following cases:
(i)
Henri Viljoen (Pvt) Ltd
v Awerbuch
Bros
1953 (2) SA 151; and
(ii)
Anabas Services (Pvt) Ltd
v Ministry
of Health and 2 Ors
HB21-03.
The
principle in these cases is that a party who has a direct or
substantial interest in the result of any litigation and whose
interests might be prejudicially affected thereby must be afforded an
opportunity to be joined as a party thereto.
It
was also submitted by applicant quoting MFB Reinecre and SWJ Van Der
Merwe General
Principles of Insurance
at 135 that:
“An
agent who is guilty of a misrepresentation is personally liable for
the damage caused by him.”
On
the facts applicant submitted that the fact that 2nd
respondent denies in case number HC364/13 that 1st
respondent was its agent in the insurance contract means that there
is a real chance that a decision prejudicial to 1st
respondent might be made especially if a finding of misrepresentation
on its part is made.
Also,
it was submitted that the fact that the principal is known is not a
bar to joining an agent to proceedings in that what should be
considered is whether the party which is sought to be joined has a
direct or substantial interest.
Finally,
it was submitted that the presence of 1st
respondent before the court is necessary to ensure that all matters
in dispute in the cause may be effectively an completely determined
and adjudicated upon.
The
first respondent opposed the application on the following grounds:
(a)
the 1st
respondent has no interest in the matter under case number HC364/13
because the cause of action arises from a contract to which it is not
a party.
(b)
the 1st
respondent being an agent cannot be liable based on the insurance
contract per
se
where
no relief is sought against it.
In
its heads of argument, 1st
respondent insisted that an agent cannot be sued and submitted that
the 1st
respondent is 2nd
respondent's agent and not applicant's agent. Therefore,
applicant cannot sue 1st
respondent in line with the decision in Smith
v
Len's
Agencies (Pvt) Ltd
S-117-92 and Fowler
v Hollings
(1872) LR 7 & B 6.6 at 623 where a broker was defined as “an
agent employed to make bargains and contracts between persons in
matters of trade, commerce and navigation. Properly speaking, a
broker is a mere negotiator between other parties …”
Finally,
1st
respondent submitted that the Anabas case is distinguishable from the
one in
casu
in that the 1st
respondent will not be affected by the order that the court will make
as it has no direct and substantial interest in that order.
In
order to resolve the above issue it is necessary to examine the
status and role of a broker in an insurance contract.
R.
H. Christie Business
Law in Zimbabwe
at page 33 defines a broker as “a middle man or intermediary whose
office it is to negotiate between two parties until they are ad
idem
as regards the terms upon which they are prepared to buy and sell.”
In
Glass
v Hendrie
& Co (Pvt) Ltd
1957 R & N 44 48 it was held that “a person described in a
contract as a broker will
normally be taken to be the agent of both parties,
… But his capacity as agent of both parties must not be pushed
to extremes, as it cannot be presumed that he had the power to bind
both parties to the contract. He is in fact, an intermediary rather
than a business plenipotentiary.” (my emphasis)
At
pages 232–233 the same author in the same work states:
“The
business of an insurance
broker
(who must be registered under the Insurance Act [Chapter 196] s27) is
to familiarize himself with the details of the policies offered and
premiums charged by different insurers and obtain appropriate
insurance
cover
for his clients at competitive rates. It must not be assumed that
because
he is described as a broker he is the agent of both parties and in
fact he commits a breach of his duty to his principal, the insured,
if without his consent he acts on instructions from the insurer. He
owes a duty to his principal to obtain a policy in accordance with
his instructions, and if he obtains
one that is not in accordance with
his instructions he will be liable for
a breach of his contract of agency,
even if he has sent
the policy to the insured and the insured has not complained about
its terms.
The
insured is under no obligation to read the policy, but is entitled to
rely on the skill and efficiency of the broker. The broker must make
the necessary inquiries of the insured to ascertain all material
facts and must disclose them to the insurer. Failure
to discharge this duty renders him liable
to the insured
or the insurer, which ever has suffered loss through his failure.”
(my emphasis).
In
Syfin
Holdings Ld
v Pickering
1982 (1) ZLR 10 (S), 1982 SA 255, it was held that “the insured's
cause of action in such a case does not arise until he suffers damage
…”
Applying
these principles to the case in
casu,
I find that it is outright mischievous for the 1st
respondent to claim that it has not interest in the matter.
The
notice of opposition constitutes a devious act in my view.
Contracts
of insurance from their very nature require utmost good faith
(uberrima
fides)
on each side. Failure to disclose material facts entitles a party to
avoid the policy. It is for this reason that 1st
respondent's role in the formation of the contract must be exposed
fully.
On
the facts of this matter, it is accepted by 1st
respondent that it negotiated the terms and conditions of the policy
in its capacity as an insurance broker. It is this insurance contract
which contains the rights and obligations of the parties. It is the
same contract whose interpretation and formation are now in dispute.
Further,
there is a serious allegation that 1st
respondent breached its duty to the applicant (the insured) by
failing to disclose material facts relating to the applicant's
rights and obligations under the contract.
Also,
it appears from the papers that while 1st
respondent admits that it acted as agent of the 2nd
respondent, the latter denies this fact casting doubt on whose
mandate 1st
respondent was fulfilling.
It
is surprising that 1st
respondent has chosen not to deal with this aspect in its opposition,
choosing instead to just generalize its role as an agent, without
specifically indicating whose agent it is.
It
is baffling to note that the written contract the 1st
respondent harps on is not even attached to its opposing papers.
All
that the 1st
respondent did was to give a broad and unsubstantiated averment in
para 7.2 of its opposing affidavit to the effect that the policy was
reduced into writing and forwarded to the applicant who then paid
premiums.
It
does not say how this was done or why the contract was not signed by
the parties.
For
these reasons, I am of the view that the presence of 1st
respondent in proceedings under case number HC364/13 is necessary to
ensure that all matters in dispute in the cause may be effectually
and completely determined and adjudicated upon.
Accordingly,
it is ordered that:
1.
the 1st
respondent be and is hereby joined as 2nd
defendant in the proceedings under case number HC364/13.
2.
the 1st
respondent be and is hereby ordered to file its defence to the claim
under case number HC364/13 in terms of the Rules of this court with
the claim calculated from the date of granting of this order.
3.
costs shall be in the cause.
R.
Ndlovu & Company,
for
applicant
Calderwood,
Bryce Hendries & Partners,
respondents' legal practitioners
