On
26 August 2004, the plaintiff instituted proceedings in the High
Court wherein it sued for $60,000,000= being the sum assured in terms
of a motor vehicle comprehensive policy it held with the second
defendant. The first defendants were the insurance brokers who
facilitated the policy.
On
21 December 2006, and before the pre-trial conference, the plaintiff
amended ...
On
26 August 2004, the plaintiff instituted proceedings in the High
Court wherein it sued for $60,000,000= being the sum assured in terms
of a motor vehicle comprehensive policy it held with the second
defendant. The first defendants were the insurance brokers who
facilitated the policy.
On
21 December 2006, and before the pre-trial conference, the plaintiff
amended its claim by the addition of paragraph 10 which is a claim
for consequential damages in the sum of $100,000,000= being the
replacement value of the vehicle.
The
first defendant pleaded that it first acted as the second defendant's
agent and its obligation ended as soon as the policy was in place and
that the premium had not been paid at the time of the accident hence
the policy was revoked.
The
second defendant, in its plea, pleaded ignorance of the policy and
put the plaintiff to the proof thereof.
At
the commencement of the trial, the second defendant applied for, and
was granted an amendment to its plea. The amendment was a withdrawal
of the initial plea and its substitution with a plea to the effect
that;
1.
The first defendant, as agent of plaintiff, entered into an agreement
with the second defendant that the plaintiff should pay the insurance
policy premium of $3,524=26 in equal installments over a period of 3
months as from 25 February 2004.
2.
That the plaintiff did not comply with this agreement, and, as at the
date of the accident the plaintiff had not performed its obligations
to pay the instalments.
3.
In any event, the plaintiff is covered for a total of $60,000= in
terms of the policy and is contractually precluded from claiming
more.
The
plaintiff gave evidence through its Managing Director, Mr. Zisengwe.
Mr. Gideon Muchakwa gave evidence for the first defendant after which
Mr. Moses T. Chakaringa and Mr. Member Murasiranwa gave evidence for
the second defendant.
From
the evidence adduced in court the following are common cause.
The
plaintiff entered into an insurance contract with the second
defendant. This was done through the first defendant who acted as
broker. The premium was put at $3,524,259=. The insured value was put
at $60,000,000= (old currency). On 10 February 2004, the plaintiff
paid $200= (revalued) towards the premium. The plaintiff was then
issued with a policy document dated 18 February 2004. The period of
insurance was stated as 'From 10/02/ 04 to 31/01/05 (both dates
inclusive)'.
On
23 March 2004 the motor vehicle so insured was involved in an
accident and was declared a write off. As at the time of the
accident, the plaintiff had not paid the balance of the premium. Such
balance was only paid on 7 April 2004 to the first defendant. When
the plaintiff attempted to make a claim on the policy the second
defendant refused to honor the claim on the basis that the plaintiff
had not paid the premium as per policy.
The
testimony by Mr. Zisengwe was to the effect that the plaintiff had
been asked to pay the premium in three months. It was never stated
that the instalments had to be equal. At the time of the accident the
three months period had not lapsed. When the accident occurred the
plaintiff was asked to pay the balance in order that its claim can be
sent to the second defendant - and it did so. In this regard he
tendered two receipts as exhibits 1 and 2 for the payments.
The
first defendant's evidence, on the other hand, was to the effect
that when Mrs. Zisengwe came to insure the plaintiff's motor
vehicle she was told the premium that had to be paid. As she did not
have the full amount she was allowed to pay $200= on her undertaking
to pay the balance in two weeks time. She was warned of the
consequences of not paying the full premium. After failing to pay
within that period the first defendant extended the period to three
(3) months. According to Mr Muchakwa, this extension was at the
plaintiff's risk.
At
the pre-trial conference, the issues were viewed as;
“1.
The interpretation of clause 1 of the contractual document. It being
admitted that plaintiff paid its premium on 25 February 2004; and
2.
The quantum of damages.”
After
hearing evidence from the witnesses, it was apparent that the parties
were not agreed that the premium was paid on 25 February, 2004. The
receipts tendered showed the initial payment was on 10 February 2004
and the second payment was on 7 April 2004.
The
main issues would thus be;
1.
Whether or not the plaintiff had paid the premium in terms of the
policy;
2.
Whether or not the defendants are liable to the plaintiff as per
claim;
3.
Whether or not the plaintiff is entitled to payment of the sum of
$100,000,000= in respect of its claim for the loss of its motor
vehicle in terms of the policy agreement; and
4.
Who between the defendants is liable to pay the plaintiff.
PAYMENT
IN TERMS OF THE POLICY
The
policy document, in its preamble, states that “whereas the insured,
by a proposal and declaration which shall be the basis of this
contract and deemed to be incorporated herein, has applied to the
company for the insurance and has paid the premium as consideration
for such insurance in respect of accident loss or damage occurring
during the period of insurance.”
That
preamble presupposes the applicant has paid the premium.
I
did not hear any party to interpret that paragraph in any way as
pre-supposing that premium would not have been paid. It is in that
light that the issue of payment of the premium is important.
The
plaintiff's case was that in spite of this there was a premium
payment plan in place which was agreed with the first defendant at
the time the policy was agreed in terms of which the premium was
payable over a period of three months. Mr. Zisengwe tendered exhibit
3 as proof of the arrangement.
Paragraph
2 thereof states that;
“We
hasten to add that a premium payment plan had been agreed to spread
payment over three months and initial payment had been effected on
receipt of policy before the accident, which we take cognizance of.”
This
letter is from the first defendant to the plaintiff. The first
paragraph thereof shows clearly that the second defendant was
refusing to pay on the premise that premium payment was done after
the loss which aspect they contended vitiates the terms and
conditions of the policy.
In
his evidence Mr. Muchakwa did not deny this.
The
first defendant having allowed the plaintiff to pay in instalments
found itself in difficulties to persuade the second defendant to pay.
In
both its plea and in evidence the first defendant acknowledged that
it had no authority to allow the plaintiff to pay its premium in
installments. It is because of that lack of authority that it asked
the plaintiff to pay up before they could file their claim. It is
clear beyond doubt that the payment arrangement was initially as
between the plaintiff and the first defendant. That arrangement was
apparently not in terms of the policy document. It was an arrangement
the first defendant agreed to for the convenience of the plaintiff
and not because there was express authority from the second defendant
for the first defendant to grant such payment terms.
The
second defendant's evidence was to the effect that the insurance
policy the plaintiff took out required a one off payment. In the
instance case no such payment was made hence it declined the
plaintiff's claim. However, in its amended plea, the second
defendant stated that “first defendant, acting in its capacity as
agent for plaintiff entered into an agreement with second defendant
that plaintiff should pay the insurance policy premium of $3,524= 26
in equal installments over a period of 3 months as from 25 February
2004.”
There
was thus contradiction between the second defendant's plea and
evidence by its witnesses. The witnesses could not explain away the
contradiction.
Mr
Muchakwa who should have been better placed to testify on this was a
ball of confusion and contradictions. For instance, whilst being
categorical that the policy was of a one off payment at inception he
was, at some stage, heard to say the second defendant should
nevertheless have honored the claim. He found it difficult to admit
the first defendant's negligence in not advising the plaintiff of
the consequences of partial payment and also in not advising the
second defendant about the credit arrangement with the plaintiff.
The
second defendant, through Mr Murasiranwa, indicated that upon receipt
of $200 towards payment of the premium they questioned the first
defendant about it. The first defendant was reminded that a failure
to pay the full premium would lead to the invalidity of the policy
for non-remittance. When asked why the second defendant had not
advised the first defendant of the invalidity of the policy in view
of non payment of the premium Mr Murasiranwa said that events took
over as the accident took place. In terms of clause 8 of the General
Conditions of the policy document the second defendant could have
cancelled the policy.
Despite
not receiving full premium the second defendant issued the policy
document and had not cancelled it by the time of the accident.
The
amended plea acknowledges the arrangement to pay in instalments. If
therefore the second defendant wishes to rely on a breach of contract
the burden of proof is on it. See Brightside
Enterprises (Pvt) Ltd v Zimnat Insurance Co. Ltd
1998 1 ZLR 117.
In
casu,
the second defendant seemed to have condoned the payment in
installments and conceded in its amended plea that; “First
defendant, acting in its capacity as agent for plaintiff entered into
an agreement with second defendant that plaintiff should pay the
insurance policy premium of $3,523=26 in equal installments over a
period of 3 months from 25 February 2004.”…,.
The
second defendant can thus not seek to rely on such mode of payment
not to honor the claim.