ICEA General Insurance Company Limited & Another v Ultimate Security (Civil Suit 328 of 2019) [2023] UGCommC 281 (1 March 2023)

# d THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA ICOMMERCIAL DIVISION]

#### CIVIL SUIT NO. 328 OF 2019

# I. ICEA GENERAL INSURANCE COMPANY LTD

### 2. MALARIA CONSORTIUM: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : PLAINTIFFS

#### VERSUS

#### ULTIMATE SECURITY: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :DEFENDANT

## BEFORE: HON. LADY JUSTICE ANNA B. MUGENYI JUDGMENT

#### PLAINTIFF'S CASE

,

The 1't plaintiff brought this suit for its benefit and in its name and that of the 2nd plaintiff under the insurance doctrine of subrogation. It is the contention of the 1't Plaintiff that the defendant is vicariously liable for the recovery of UGX 72,,594,7231- being the value of the insurance claim settled by the 1't plaintiff to the 2'd plaintiff.

The facts are that the 2nd plaintiff took out an insurance policy with the 1't plaintiff to insure office equipment. During the subsistence of the policy, the 2"d plaintiff was being guarded by the defendant company.

On the night of 7th' September 201 8 the office premises of the 2'd Plaintiff situate at Plot 25 Upper Naguru East Road, Kampala were violently broken into and office equipment like laptops, camera and money was stolen. The burglary was discovered by the defendant when their offrcers came to handover/exchange the guards for the day. In a letter to the 2"d Plaintiff, the defendant explained that they found the office broken into from the hind door and items stolen. The letter also stated that the

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defendant suspected its own security guard who had worked the night shift and was nowhere to be seen.

The 2nd plaintiff made a claim to the Insurance company (1" plaintiff) and under the insurance policy and the 2"d plaintiff was paid the sum of UGX 72,594,723/= which settled the claim.

The defendant had in the security services contract it signed undertaken to provide two-night guards, but on the fateful night only one security guard was deployed. The defendant acknowledged the burglary was most likely caused by its own employee and compensated the 2nd plaintiff with UGX 5,000,000/- being the ceiling provided in the contract it signed with the defendant.

It is the contention of the l't Plaintiff that there was fundamental breach by the defendant for which arguably, the limited liability under the contract the defendant signed with the 2"d plaintiff should be set aside.

The defendant company received a demand note from the lawyers of the l" Plaintiff to pay to the l't Plaintiff the amount of UGX 72,594,723/: being the amount indemnified, but the demand note was ignored hence this suit.

Summons to file a defence were served on the defendant and the same were ignored, and an affidavit of service to that effect was filed on court record. The defendant did not file a written statement of defence and neither did they appear in court during the hearing.

A default judgment was entered on the 20ih or September 2022 and the suit set down for formal proof.

The plaintiffs presented two witnesses to wit; Harmon Opio (PWl) and Denis Ssewankambo (PW2) and counsel for the plaintiffs agreed to file written submissions which have been considered in this judgment.

#### REPRESENTATION

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The plaintiffs were represented by \zUs Onyango & Co. Advocates while the defendant was unpresented having failed to file its written statement of defence as required by law.

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#### JUDGMENT

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The Issues for determination before this Court are:

- I. Whether the lst plaintiff is entitled to be paid the sum indemnified by it? - 2. Whether the defendant is liable for the loss occasioned to the 2nd plaintifl? - 3, What remedies are available?

Issue l: Whether the I't plaintiff is entitled to be paid the sum indemnified by it?

PWI testified to the effect that the 1'1 plaintiff entered into an insurance contract with the 2"d plaintiff on the 2nd of January 2017 for one year and on the l6th of January they renewed their policy under insurance policy No RI423018 as seen in PEI and PE2 in the plaintifls trial bundle. Further that the I't plaintiff has <sup>a</sup> contingent right to subrogate vesting at the time when the policy was entered into between the l't and 2nd plaintiffand the 2nd plaintiffalso signed a deed ofsubrogation as evidenced by PEl0.

PW1 further testified that on 1Oth September 2018, the 1't plaintiff was informed of the burglary and theft at the premises of the 2"d plaintiff by one Kayima Moses, the ICT/ Asset management officer of the 2nd plaintiff and that the I't plaintiff s premises were being guarded by the defendant's guards. Further that the 2"d plaintiffinformed the 1't plaintiff that on the night of 7th September 2018 or thereabout the security guards of the defendant broke into the office premises and stole cash and office equipment.

Counsel for the plaintiff submitted that after the occurrence of the burglary, the 2nd plaintiff placed its claim to be indemnified before the I't plaintiff who instructed Claim Care Uganda Limited, an independent loss adjuster, to investigate and assess the loss occasioned. The said company assessed and adjusted the loss to UGX 72,594,7231= as seen in its report marked as PEx3. PW2 was presented in Court to testifu in respect of the said report and his witness statement filed on Court record.

Consequently, the I't plaintiff indemnified the 2'd plaintiff UGX 72,594,7231= the amount assessed by Claim Care Uganda Limited and a discharge voucher was

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executed thereby discharging the obligation ofthe I't plaintiffto the 2'd plaintiffas seen in PEx4.

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Counsel for the plaintiff, while defining the doctrine of subrogation, cited Mac Gillivary on Insurance, 10th Edition;2023 on page 578 where it is stated that subrogation is termed as the name given to the right of the insurer who has paid a loss to be put in the place of the assured so that he can take advantage ofany means available to the assured to extinguish or diminish the loss for which the insurer has indemnified the assured. She further cited Hatsbury's law of England Vol 25(4th Ed) para 317 which notes that according to the doctrine of subrogation, the insurer is entitled to those remedies, rights, or other advantages which are available to the insured. I agree with the submissions by counsel for the plaintiff that in this case the doctrine of subrogation placed the l'1 plaintiff in the place of the 2nd plaintiff to be indemnified by the defendant. The defendant did not bother to file its defence in this matter and is deemed to have conceded to the claim of the plaintiffs.

From the fore going and in the absence ofany evidence to rebut the plaintiff s claims, I find that the l't plaintiff is entitled to be paid the sum indemnified by it.

## Issue 2: Whether the defendant is liable for the loss occasioned to the 2nd plaintiff

Counsel for the plaintiff submitted that it is a well-established principle of law that a master is vicariously liable for the acts of his servant/agent, upon proof of the existence of the employmenVagency relationship, that the employees/agents were acting in the course of employment or doing an act which is within the class of the acts authorized by the employer, there was default by the employee/agent which fixes liability to the employer/master. (See: Lakunqu V Lalobo 120031 I E. A. 129).

She further submitted that the 2nd plaintiff executed a contract for Security Services and an addendum with the defendant where the defendant had to provide two security guards daily as evidenced by PE5; that the defendant breached the contract when it deployed one-night guard instead of two as agreed and that copies of the Security Services contract and addendum thereto were among the disclosures made by the 2nd plaintiff to the I't plaintiff when it filed its claim to be indemnified.

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Counsel submitted that on the 7th day of September 201 8, Buke Mosia, an employee of the defendant's company as a single guard was deployed and acting in the course of his employment broke into the premises of the (2nd plaintiff) and stole cash and office equipment. On the lOth of September 2018, the defendant wrote to the 2nd ptaintiff informing them of the break-in that took place on the 7th of September 2018 which the management of the defendant discovered when they went to relieve the night guard and handover the premises of the 2nd plaintiff to the day guards as evidenced in PE6. The police carried out its investigations and, in its report (PE7), pointed out that the security guard was suspected ofhaving connived with the others to break into the office premises of the 2nd plaintiff and steal office equipment and money as stated in the list of lost items (PE 9)

Counsel for the plaintiffpointed out that PE6 is a letter from the defendant to the 2nd plaintiff wherein they do not deny that the most likely suspect, one Mosia Buke, the night guard was their own employee. Further, that in the said letter the defendant states that they suspect their own employee who had been deployed as a night guard at the office premises ofthe 2nd plaintiffto have broken into the office and stolen office equipment and that the said night guard had since disappeared mysteriously thereby placing the default on him as an employee ofthe defendant.

As earlier stated the defendant did not find it necessary to defend itself in this matter and in the absence of any evidence to the contrary, the plaintiffs have demonstrated that the defendant company is liable for the loss occasioned to the 2nd Plaintiff.

This Issue is resolved in the affirmative.

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### Issue 3: What remedies are available?

Counsel for the plaintiff submitted that under the doctrine of subrogation, the insurer is entitled only to those remedies, rights or other advantages which are available to the assured as was held in Castellain v Preston (1883) I IQBD that:

## "That insurer is subrogated to any claim of any character which the assured is enliiled to bring in proceedings against a lhird party to diminish his loss"

She stated that the l't Plaintiffs claim against the defendant is based on the fact that the burglary and theft was occasioned by the defendant's employee. The Loss Adjuster hired by the 1't Plaintiff investigated and assessed the loss occasioned to the 2'd plaintiff. The 2nd Plaintiffwas able to present asset receipts for 33 laptops, a

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Canon video camera amongst others as seen in PE9 and the loss adjuster was also O able to view the cash flow log to assess what was taken from the safe.

I find that the plaintiff has proved its claim and will accordingly award Ugx 12,574,,723t: being the net sum of indemnity paid to the insured by the 1't plaintiff inclusive ofthe loss adjustor fees.

#### lnterest

Counsel for the plaintiff submitted that in awarding interest court will look at the prevailing economic value of money; that the award of interest is discretionary and the basis of such an award is that the respondent has kept the claimant out of his money for a long time and referred to Section 26 of the Civil Procedure Act (Cap 7l). Counsel cited the case of Hope Mukankusi vs Uganda Revenue Authority Civil Appeal No 6 of 2011 to support her prayer for an award 24oZ interest on general damages from the date of judgment and 24Yo of interest from the time the defendant failed indemnify the 1't plaintiff.

I find that the rate of interest prayed for by the plaintiff was not agreed on by the parties and will instead award interest at court rate from the date of judgment until payment in full.

#### General Damages

Counsel for the plaintiff submitted that general damages according to Lord Macnaghten in Stroms vs Hutchison Il905l UKHL 844 42 SLR 844 are such as the law will presume to be the direct natural or probable consequences of the act complained of. She also cited the case of Ajaib Transporters Ltd vs Verma Co. Limited HCCS No. 792 of 2015 page 29 where it was held that general damages are awarded to fulfil the common law remedy of restitution integrum which means that the plaintiffhas to be restored nearly as possible to a position he/she would have been had the injury complained ofnot occurred. This means that the general damages are compensatory in nature.

I agree with the submission of counsel for the plaintiff that the l't plaintiff has been inconvenienced by the unpaid invoice and has been put out of money due to it for a long time yet it could have been invested elsewhere. I find an award of Ugx

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**5,000,000/=** as general damages sufficient compensation to the $1^{st}$ Plaintiff payable by the defendant.

#### **Costs**

Counsel for the plaintiff cited section 27 of the Civil Procedure Act which states that costs are awarded at the discretion of court and follow the event unless for some good reason the court directs otherwise.

She submitted that from the above there is good reason that the claimant should be awarded costs of this suit because if it were not for the conduct of the defendant the plaintiffs would not have instituted this suit.

Costs follow the event and having no good reason to deny the plaintiffs costs of this suit, the same are awarded to the $1^{st}$ plaintiff as prayed.

On By father

HON. LADY JUSTICE ANNA B. MUGENYI **DATED...................................**