The High Court in Kampala ordered Aya Investment (U) Ltd (Defendant) to pay Sanlam General Insurance (U) Ltd (Plaintiff) US$ 38,773.17 and UGX 33,655,264/= as the sums outstanding for breach of insurance contracts.
The embattled company has also been ordered to pay the Plaintiff general damages of UGX. 5,000,000/ =
Giving her judgement on April 12, 2022, Justice Jeanne Rwakakooko also granted Sanlam General Insurance an interest of 10% per annum from date of default until payment in full.
The court heard that the Defendant took out various insurance policies with the Plaintiff in the years 2018-2019 including Assets All Risks, Workers Compensation, and Fidelity Guarantee policies. The Defendant is said to have defaulted on the premiums on these different policies. As at 3rd July 2019, the Defendant is said to have been indebted to the Plaintiff to a tune of US$ 38,773.17 and UGX 33,655,264/=.
It was also revealed that Aya Investment presented post-dated cheques in settlement of the sums owing but the cheques were dishonored because of insufficient amounts of the accounts. Due to the Defendant’s non-payment of the premiums, the Plaintiff cancelled the insurance policies and has since demanded for the sums owing to it to no avail. The Plaintiff has written numerous emails and letters to the Defendant reminding it of its indebtedness in vain.
Court says Aya Investment’s Managing Director was summoned to file to defense on 17th August, 2020 but he did not sign acknowledgment of receipt of the summons.
“A second set of summons was issued as per this court’s directions on 30th October, 2020 and served on the Defendant company on 2nd November, 2020 together with the plaint. The Defendant acknowledged receipt of the summons and plaint but did not file a defense within the prescribed 15 days from date of service.”
At the hearing on April 28, 2021, only Sanlam General Insurance entered appearance represented by its Credit Manager Robert Irumba.
“Following the Defendant’s failure to file a defense, an application was made by the Plaintiff for the matter to be heard ex parte and the same was granted. The Plaintiff presented one witness, PW 1: Mazima Robert, the Plaintiff’s Credit Manager,” court said in the ruling.
The court found out that the parties agreed to three different covers:
1. Insurance cover for Assets All Risks Insurance cover to the Defend ant by the Plaintiff at a premium of USD 58,161 for the period of 26/07/2018 to 25/07/2019 under Policy Number P/ 100/2011/2018/00060. See page 7 of Plaintiff’s trial bundle;
2. Insurance cover for Fidelity Guarantee Insurance by the Plaintiff to the Defendant at a premium of UGX. 28,140,830 / = for the period of 26/07/2018 to 25/07/2019 under Policy Number P/ 100/5012/2018/00058 (See page 9 of the Plaintiff’s trial bundle); and
Ugandan enterprises urged to explore regional oil and gas opportunities3. Workmen’s Compensation Insurance provided by the Plaintiff to the Defendant under Policy Number P/ 100/5018/2018/00083 at a premium of UGX. 39,169,700/= for the period of 26/07/2018 to 25/07/2019 (See page 10 of the Plaintiff’s trial bundle).
“The next question is whether the Defendant is in breach of contract. A breach of contract as was stated in Ewadra Emmanuel -v- Spencon Services Ltd, Civil Suit No. 22 of 2015 occurs when a party neglects, refuses or fails to perform any part of its bargain or any term of the contract, written or oral, without a legitimate legal excuse.”
“PW 1 testified in paragraph 3 of her witness statement that the Defendant has defaulted on the premiums of the different insurance covers to a tune of US$ 38,773.17 and UGX. 33,655,264 / =. This evidence was undisputed. The Plaintiff also evidenced this based on the statement of account marked Exhibit P3,” court said.
Court says the Plaintiff has through its uncontroverted evidence proved that the Defendant did not honor its contractual obligation to pay the premium for the different insurance covers.
“Therefore, the Defendant is in breach of contract,” court ruled.
The Plaintiff sought a recovery of US$ 38,773.17 and UGX 33,655,264/=, general damages and costs of the suit.
It also sought an interest rate of 30% per annum from the time the cause of action arose till payment in full.
“I shall consider each of the individual remedies sought. The first remedy sought has been covered in resolution of issue one above,” Justice Rwakakooko said.
However, on interest, the Justice said that whereas interest is granted at the court’s discretion, it is important that interest is not harsh or excessive.
“There is no set standard as to what amounts to fair or reasonable interest charged on monetary awards. It is to be decided on a case by case basis.”
“I however find that an award of 10% interest per annum on sums recovered and general damages sufficient,” said Justice.
