IN THE HIGH COURT OF TANZANIA

(DAR ES SALAAM DISTRICT REGISTRY)

AT DAR ES SALAAM

CIVIL APPEAL NO. 290 OF 2020

(Appeal from the Judgment and Decree of the District Court of Ilala at
Kinyerezi in Civil Case No. 12 of 2018 before Hon. M. Mpaze, SRM dated
21/09/2020)

ALLIANCE INSURANCE CORPORATION LIMITED....!57 APPELLANT

AFRICAN RISK & INSURANCE SERVICES LIMITED...2ndAPPELLANT

VERSUS

TIRIMA ENTERPRISES LIMITED......................... RESPONDENT

JUDGMENT

17th Aug, 2021 & 10th Sept, 2021.

E, E. KAKOLAKI J

Before this court the appellants have raised five (5) grounds of appeal as
will be disclosed soon hereunder challenging both judgment and decree of
the District Court of Ilala at Kinyerezi in Civil Case No. 12 of 2018 dated
21/09/2020. Earlier on before the trial court, the respondent successfully
sued the appellants jointly and severally for breach of one year insurance
contract she had entered into with them covering the assured property, a

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motor vehicle with Reg. T 677 DGN make FAW from 4th of March, 2016 to
3rd of March, 2017.

It was respondent/plaintiffs case before the trial court that she bought five
(5) motor vehicles including the one subject of this appeal from Jiefang
Motors after payment of 50% of purchase price and insured them with the
appellants as per the cover note and insurance policy of the said motor
vehicle which were both tendered and admitted as exhibit Pl collectively.
However due to unpleasant business environment the respondent could
not timely settle the remaining 50% of purchase price, as a result she
asked her sister company Green Waste Pro Limited to clear the outstanding
amount and had the registration of the said motor vehicle transferred to its
name. The said transfer arrangement was communicated to the 2nd
appellant informing her as per exhibit P2, that it is the sister company
which settled the due amount to the seller. On 01/03/2017 before expiry of
the insurance cover the said motor vehicle was stolen and a report made to
the police who happened to issue her with preliminary and final Police
investigation report which were tendered and admitted as exhibits P3 and
P4 respectively. It was the respondent's contention that when theft
occurred she still had insurable interest in the said motor vehicle. Since the
appellants refused to indemnify her, she maintained their act amounted to
breach of contract and therefore she was entitled to the claimed insurable
amount of Tshs. 157,150,000/= for the insured vehicle, Tshs.
135,000,000/= for loss of business, damages of Tshs. 300,000,000/= for
breach of insurance contract and costs of the suit.

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On their part the appellants relying on exhibits DI independent insurance
investigator's report, exh. D2 extract from TRA Central Motor Vehicle
Registration System and exh. D3 a letter from Police as an investigation
progressive report on the alleged theft of motor vehicle denied any liability
on the claims levelled against them on the ground that by the time when
theft occurred ownership of the motor vehicle in dispute was already
transferred from the respondent to Green Waste Pro Limited, a third party.
Thus the respondent had no insurable interest over the insured property.
The trial court discounted the appellants' defence in return adjudged the
respondent's claims were proved to the required standard and proceeded
to award her Tshs. 157,150,000/= as insured amount over the stolen
motor vehicle, general damages of Tshs. 25,000,000/= and costs of the
suit. Aggrieved with the decision the appellants appealed to this court
equipped with five grounds of appeal going thus:

1. That the Honourable Trial Court erred in law and fact in failing to
consider the contents of Exhibit P2, Exhibit DI and Exhibit D2
regarding the ownership of the alleged stolen vehicle, the subject of
the Civil Case No. 12 of 2018.
2. That, the trial Court erred in law and/or facts by awarding the
Respondent compensation to the tune of Tshs. 157,500,000/= being
the total amount of the alleged stolen vehicle contrary to the
evidence on record to the effect that the respondent was not the
owner of the vehicle at the time it was stolen.
3. That the Honourable Trial Court erred in law and/or facts by
awarding the Respondent general damages to the tune of Tshs.

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 25,000,000/= for breach of contract by the Appellants a breach
which the respondent foiled to prove against the Appellants.
4. That the Honourable Trial Court erred in law and fact in failing to
hold that the Respondent had no insurable interest in the vehicle as
at the date of the loss.
5. That the Honourable Trial Court erred in law and fact in failing to
properly evaluate the evidence.

During hearing of the appeal both parties appeared represented and opted
to dispose of their matter by way of written submissions in which the court
condoned their will by issuing the filling schedule orders which they
complied with. The appellants hired the services of Ms. Jacquline Kapinga
learned counsel whereas the respondent enjoyed the services of Mr.
Ramadhani Karume learned advocate. In her submission in-chief in support
of the appeal Ms. Kapinga chose to combine and argued jointly and
together the 1st and 5th grounds as well as the 2nd and 4th grounds while
the 3rd ground was argued separately.

To start with the 1st and 5th grounds of appeal, Ms Kapinga faulted the trial
court for its failure to analyse the contents of exhibits P2 a letter tendered
by PW1 addressed to 2nd appellant, DI an investigation report made by
independent investigator and D2 a motor vehicle registration history from
TRA, all proving ownership of the motor vehicle with Reg. No. T 677 DGN,
without assigning reasons as per the requirement of the law. He relied on
the case of Tanzania Breweries Limited Vs. Anthoni Nyingi [2016]
ILS 99 (CA) at page 100. As the centre of controversy before the trial court
was on ownership of the motor vehicle in dispute, the court was duty
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bound by the law to determine the case basing on the evidence of
ownership but failed to do so, Ms. Kapinga submitted.

In rebuttal to the appellant's submission with regard to the 1st and 5th
grounds of appeal Mr. Karume said, the dispute at the trial court was not
about ownership, theft or transfer of the insured vehicle but rather on
breach of insurance contract that existed between the respondent and
appellants. He said, the trial court did consider and determine the contents
of exhibits P2, DI and D2 during hearing of the suit as reflected at pages
12,14 and 15 of the typed judgment contrary to what is stated by the
appellants. I disagree with Mr. Karume's contention that, parties' dispute
during the trial was not about ownership, theft or transfer of the insured
vehicle as those were among the pertinent issues for determination by the
trial court in resolving the respondent claims of breach of insurance
contract by the appellants. My perusal of the trial court proceedings and
typed judgment has unearthed the fact that those three issues were
among the six contentious issues for determination before the trial court as
issues No. 3, 4 and 5. The six issues framed by the court were:

1. Whether there was a contract between the plaintiff and the

defendants.
2. Whether there was a breach of contract.
3. Whether the plaintiff was the owner of the insured vehicle.
4. Whether the plaintiff's motor vehicle was stolen.
5. Whether by the time of theft the plaintiff was the owner of the motor
vehicle.
6. What relief do parties entitle to?
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It is Ms. Kapinga's complaint that the three exhibits P2, DI and D2 were
not properly evaluated regarding to the issue of ownership, and that the
trial magistrate failed to assign reasons for that failure. From my reading of
the judgment it is evident to me that the same were considered and
conclusion reached with reasons. The only issue before me for
determination probably is whether the issue of ownership of the motor
vehicle subject of insurance contract in dispute was considered taking into
consideration the evidence in the said exhibits P2, DI and D2. Since this is
the first appellate court with mandate to re-evaluate the evidence I find it
apposite to so do as I hereby do, so as to establish whether there was
breach of contract by the appellant. In considering exhibit P2 the trial court
at page 15 of the typed judgment arrived at the conclusion that since the
said letter by the respondent to the 2nd appellant exhibited the respondent
had paid 50% of the purchase price of the disputed motor vehicle then the
change of its registration to Green WastePro Ltd did not automatically
suspend the insurance contract between the two parties. With due respect
to the learned trial magistrate I think that was a wrongly premised
conclusion for two reasons. One, by changing its registration from the
respondent to Green WastePro Ltd ownership of the disputed motor vehicle
absolutely changed from the respondent to the third party. Second, it is a
principle of law that insurance contract is non-transferable unless there is
specific agreement to so do between the assured and insurer. In this case
there is no adduced evidence by the respondent to prove that such
agreement existed between parties. Had the trial magistrate considered
those two facts I have no doubt she would have arrived to the conclusion

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that due to change of ownership the insurance contract automatically
ceased to exist.

As regard to exhibit DI the trial court the same was considered at page 12
of the typed judgment but disregarded for being a report from the private
investigator not recognised under criminal legal regime in Tanzania, as the
powers to conduct criminal investigation is vested on police force and other
organs recognised under the law and not to that private investigator. I
distance myself from embracing the adopted reasons by the learned trial
magistrate in disregarding the said exhibit DI, a private investigation
report from Trans-Europa Tanzania Ltd (Insurance surveyors & Loss
adjusters). The reason for so doing is not far-fetched. She forgot the fact
that investigation was conducted and report prepared only for the purposes
of resolving insurance claims between the parties and not otherwise. The
law of insurance in Tanzania under section 61(1) of the Insurance Act No.
10 of 2009 allows a person or company to act as a private investigator for
the purposes of dissolving insurance dispute or claims subject to the
condition of registration under the said Act. Section 61(1) of the Act
provides thus:

61. -(1) A person shall not act in Tanzania as an insurance

broker, insurance agent or agent for an insurance broker, loss
adjuster, loss assessor, surveyor, risk manager, claims
settlement agent or private investigator unless he is
registered as such in accordance with the provisions of
this Part.

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In this case the company which prepared the report in exhibit DI is an
Insurance Surveyor & Loss Adjuster Company allowed to operate under the
above cited provision of the law upon being registered under the Act. And
since there is no evidence to disprove its competence by operation of the
law on account of its non-registration, I have no doubt in making a finding
that it had mandate to investigate and prepare a report for the purposes of
insurance claims. Therefore its report ought to have been considered by
the trial court and accorded with necessary weight attached to it. Having
so found, an eye to the said exhibit DI has also disclosed to me the fact
that, at the time of loss (theft) the disputed motor vehicle's ownership had
changed from the respondent to Green WastePro Ltd. It is from that fact I
hold the trial magistrate should have found among other contents and
findings of the report that the same proved ownership of the said motor
vehicle as submitted by Ms. Kapinga. And lastly is exhibit D2 where the
trial court at page 14 of the typed judgment upon its consideration came
out with the finding that, change of ownership of the motor vehicle as
exhibited by exhibit D2 did not automatically end the contractual
relationship between the parties as it did not change the status of the
insurance contract. As alluded to above insurance contract is not
transferable, therefore any change of ownership of the insured property
automatically ceases operation of the insurance contract covering it unless
contrary agreement is made between parties. Therefore the trial
magistrate's conclusion was erroneously arrived at. In view of the above
deliberation I find the 1st and 5th grounds of appeal have merits and uphold
them.

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Next for consideration is the 2nd and 4th grounds where Ms. Kapinga
argued, the trial court erred to award the respondent the said Tshs.
157,500,000= as at the time of loss 02/03/2017 the insured motor vehicle
was already transferred to Green WastePro Limited since 18/01/2017 and
therefore the respondent had no insurable interest over the insured
property. She contended, the respondent ought to have pleaded and
proved her insurable interest if she wanted to rely on the said insurance
contract something which she failed to do, thus was not entitled to the
award provided to her by the trial court. To reinforce his argument she
cited to this court the case of Macaura Vs. Northen Assurance
Company (1925) A.C 619 and urged the court to find the award of Tshs.
157,500,000/= was wrongly made to the respondent.

Retorting Ms. Kapinga's submission on the 2nd and 4th grounds of appeal
Mr. Karume for the respondent submitted that, as per the two tests of
insurable interest namely "Factual expectancy test and Legal interest
test" as enunciated in the American case of Prewit Vs. Continental Ins.
Co, 538 S.W. 2d 902 (Mo. Ct. App, 1976) which adopted the principles in
Lucena Vs. Craufurd (1806) 2 Bos 8i PNR 296, the respondent had an
insurable interest on the insured vehicle as he remained with 50%
ownership of the stolen vehicle and that the theft (loss) occurred while
performing the respondent's activities, thus proof by factual expectancy
test. To him the award of Tshs. 157,500,000/= was correctly arrived by the
trial court the regard being to the agreed indemnity amount under
comprehensive insurance policy. The two grounds he submitted lacked
merits as well and deserve to the dismissed.

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I have considered the rival arguments from both parties on these two
grounds. However, before venturing into determination of their merits it is
instructive that I revisit what the law says concerning the term "insurable
interest". My research of the law relating to insurance in Tanzania has
provided me with no assistance on the definition of the term. Instead I
have been forced to find it from other sources of law. Insurable interest is
defined as "a right, benefit or advantage arising out of property that is of
such nature that it may be indemnified." See https ://legal-
dictionarv.thefreedictionarv.com. Prof. Ozlem Gurses in his book Marine
Insurance Law, 2nd Ed, (2017) London and New York at page 36 when
defining "insurable interest" adopted the definition by Lord Eldon in the
Lucena's case (supra) when described it as:

"a right in the property or a right derivable out of some

contract about property, which in either case may be lost upon
some contingency affecting the possession or enjoyment of the
party."

From above definitions it is evident to me and I would say now that it is

the principle of law that for the person or party to be entitled to indemnity
under the contract of insurance must prove to the court's satisfaction that,
he has an insurable interest over the assured (property or interest) right
from the inception of the risk which existed up to the time of loss, failure of
which renders the said contract a wager and therefore unenforceable. This
principle is reflected in our Insurance law under section 130(1) of the
Insurance Act, for instance, that requires the person entering into contract
of life insurance to have insurance interest in the life of assured or insured
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life event, the contrary of which is to render the said contract null and void.
The section 130(1) provision reads:

13O.-(l) Notwithstanding die provisions of section 86, from the

effective date of this Act, no contract ofinsurance shall be made
by any person on the life or lives of any person or persons, or
on any other event or events in which the person for whose
use, benefit or on whose account the insurance made shall
have no insurance interest; and the insurance so made shall
be null and void ab initio. (Emphasis supplied).

My search of judicial decision on the above principle has landed me to the

American decision from Missouri Court of Appeal, St. Louis District, Division
Three, which though not binding to this court in my considered opinion is
of highly persuasive value and worth adopting to form part of our law of
the land. This is none but the case of Prewitt Vs. Continental Ins. Co.
(Supra) which made reference to another American case of Moore Vs.
State Farm Mutual Automobile Insurance Co., 381 S.W.2d 161
(Mo.App. 1964) on the principle of existence insurable interest to the
insured at the time of loss, and stated:

"Where the subject matter of the insurance is property, the

insurable interest must exist at the inception of the risk as well
as at the time of loss"

It went further to state thus:

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 'The absence of an insurable interest at either point in time
converts the contract into a wager and Is void as against public
policy."

I subscribe to the principles enunciated in the above cited case, and

therefore proceed to adopt and apply the same in this case. The above
stated principle notwithstanding it is also important to note that there are
two tests under which insurable interest can be proved. These are
"Factual expectancy test and Legal Interest test". The first test of
Factual expectancy requires an insured to be in a position to demonstrate
some relation to or concern (insurable interest) in the subject of insurance,
and that such insurable interest may be affected financially, physically or
psychologically once loss of insured property is suffered. Secondly, the
test requires the assured to demonstrate his legal relationship to the
subject of insurance.

From the above cited law and authorities on the definition of the term
insurable interest and its applicability under the law it is clear to me now
that for the party to be indemnified under contract of insurance he has to
prove that, at the time of occurrence of loss to the insured property or
interest he had an insurable interest over it. Therefore absence of insurable
interest by the party at any point of time before loss of the assured
property is suffered renders the insurance contract relied on a wager which
under the law is not enforceable. Now back to the case at hand the issue
for determination by this court is whether the respondent had insurable
interest of the disputed motor vehicle at the time of loss. Mr. Karume's
submission on this issue that the respondent's insurable interest over the
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stolen motor vehicle at the time of theft existed on account of being bearer
of insurance policy and owner of the insured motor vehicle by 50% as per
the findings of the trial court in my firm view lacks legal justification. As per
exhibits P2, DI and D2 there is no dispute that ownership of the motor
vehicle with Reg, No. T677 DGN make FAW changed from the respondent
to Green WastePro Ltd since 18/01/2017, There is also no dispute also
that, no evidence was adduced in court by the respondent to prove that
there was an agreement between her and the appellants for
indemnification of any loss suffered under their contract upon the insured
property being transferred to the third party. In absence of such
agreement the mere argument that at the time of loss the said motor
vehicle was under possession of the respondent, I hold does not suffice to
prove respondent's insurable interest under both factual and legal tests.
Apart from the proof of insurable interest, it is the requirement of the law
that, a party striving to prove insurable interest in the insured property in
any case before the court of law under contract of insurance must have
first pleaded those facts in his/her plaint. On that requirement I draw and
adopt the wisdom of Lord Summer in the case of Macaura Vs. Northen
Assurance Company (1925) A.C 619 which I find to be highly persuasive
when considering and determining fire insurance contract against Macaura
who claimed to be the shareholder of the company with which he had sold
the insured timber to before the occurrence of loss (fire) in that company's
possession. On whether he had insurable interest on the goods in that
contract Lord Summer said:

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 "....it was a contract under which assured must aver and prove
interest at the time of loss."

Applying the principle in the above cited case, I have noted the respondent
failed to meet that requirement of the law of pleading facts concerning her
insurable interest over the stolen motor vehicle having in mind the fact that
the same was already transferred to the third party. Since the respondent
failed to plead and prove existence of insurable interest at the time of loss
(theft of the motor vehicle), I hold there was no breach of insurance
contract exhibit Pl which entitled the respondent to award of Tshs.
157,500,000/= as awarded by the trial court, since the appellants were not
obliged to indemnify her (respondent). It is trite law under insurance
contract that, the insurer is not obliged to pay under such policy if the
assured fails to prove to its satisfaction that at the time of loss he had an
insurable interest on insured good or property. This principle is also
articulated by the prominent author in law of Insurance Raoul Colinvaux
in his book The Law of Insurance, 3rd Ed, (1970) Sweet & Maxwell
Limited, at page 33 when commenting on the issue of refusal of insurer to
pay for want of proof of insurable interest on the insured good or property,
where he stated that:

"A contract of insurance on goods, for instance is construed as

a contract of indemnity if there is nothing in the policy to
indicate a contrary intention: the insurer is not obliged to
pay under such policy if the assured has no interest at
the time of the loss. "[Emphasis supplied].

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All that said I am of the finding that the issue raised above is answered in
negative that the respondent had no insurable interest over motor vehicle
with Reg. No. T 677 DGN make FAW at the time of loss. The 2nd and 4th
grounds of appeal are therefore upheld for being meritorious.

And lastly is the 3rd ground of appeal where the complaint is on the award
of general damages of Tshs. 25,000,000/= to the respondent by the trial
court for breach of contract claiming was entered without justification. Ms.
Kapinga argued on this ground that, the award was against the provision
of section 73 of the Law of Contract, [Cap. 345 R.E 2019] and principle of
restitution in integrum meant to restore the party to the position he
was before the loss. It was therefore her submission as per the case of
CMC Vs. Arusha Occupational Health Services (1990) TLR 96 and
Gulbanu Tasabli Kassam Vs. Kamapala Aerated Water Co. Ltd
(1965) E.A 587 this court has powers to set aside that damages and
prayed it to so do. Conversely, Mr. Karume submitted it was in tandem
with the cardinal principle of restitution in integrum that intended to
restore her to the previous condition after exercising its discretion
judiciously. He therefore invited this court to dismiss the ground as well as
the entire appeal with costs.

The principle of restitution in integrum simply means "Restoration to

the previous condition or the status quo." This principle is applied to
make sure that the party suffering damages out of breached contract by
the other party is restored to his former or the would be position had the
other party not breached the contract. This principle is also reflected in our

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Law of Contract Act, [Cap. 345 R.E 2019] under section 73(1) and (2)
which provides thus:

73.-(l) Where a contract has been broken, the party who

suffers by such breach is entitled to receive, from the party
who has broken the contract, compensation for any loss or
damage caused to him thereby, which naturally arose in the
usual course of things from such breach, or which the parties
knew, when they made the contract, to be likely to result from
the breach of it.

(2) The compensation is not to be given for any remote

and indirect loss or damage sustained by reason of the
breach. (Emphasis supplied)

In this case the respondent was awarded Tshs. 25,000,000/= as general

damages on the basis that the appellant failed to compensate him as a
result of breach of insurance contract. Under section 73(1) of the Law of
Contract Act, the major condition precedent for payment of compensation
or damage to any party affected is breach of contract. As in this case there
was no breach of insurance contract as held when determining the 2nd and
4th grounds of appeal coupled with the fact that the respondent lacked
insurable interest in the insured property (stolen motor vehicle) which
would have rendered her suffer damages under the law, I hold there was
no justifiable ground for the trial court to award her (respondent) general
damages. It is from that stance I am of the finding that the 3rd ground has
merit too and proceed to uphold it.

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All that said and done I am satisfied that, this appeal has merit and is hereby
allowed. The judgment of the trial court and its orders are hereby set aside.

I order each party to bear its own costs.

It is so ordered.

DATED at DAR ES SALAAM this 10th day of September, 2021.

E.

JUDGE

10/09/2021

The Judgment has been delivered at Dar es Salaam today on 10th day
of September, 2021 in the presence of the Mr. Steven Luko advocate
holding brief for Mr. Ramadhani Karume advocate for the respondent and
Ms. Asha Livanga, Court clerk and in the absence of the Appellants.
A - I

JUDGE I

10/09/2021

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