Zambia State Insurance Corporation Ltd v Kalaba and Ors (SCZ 2 of 2005) [2005] ZMSC 8 (29 April 2005)

(17) IN THE SUPREME COURT OF ZAMBIA SCZ NO. 2 OF 2005 HOLDEN AT KABWE AND LUSAKA APPEAL NO. 146 OF 2001 (Civil Jurisdiction) BETWEEN: ZAMBIA STATE INSURANCE CORPORATION LTD APPELLANT AND 1ST RESPONDENT ZAMBIA CONSOLIDATED COPPER MINES LTD 2nd RESPONDENT RAINFORD KALABA CORAM: SAKALA, CJ„ SILOMBA, JS AND MUSHABATI. Ag. JS 2nd November, 2004 and 29th April, 2005 For the Appellant: Mr. A. Mbambara, Legal Counsel For the 1st Respondent: Mr. F. S. Kongwa of Kongwa and Company For the 2nd Respondent: N/A JUDGMENT Sakala, CJ., delivered the judgment of the Court. Case referred to: 1. Zambia State Insurance Corporation Limited V. Musutu and African National Congress and Msangala [1993/1994] ZR 133 This is an appeal against the judgment of the High Court awarding the 1st Respondent a sum of KI 5 million as damages for the loss of life of (18) Vistone Kalaba under the Fatal Accidents Acts and the Law Reform (Miscellaneous Provisions) Act, arising out of an industrial accident on 10th April, 1999 at Mufulira Division of ZCCM caused by the alleged negligence of the 2nd Respondent and its servants involving a risk insured by the Appellant. The 1st Respondent cross appealed against the quantum of damages For convenience, we will refer to the Appellant as the 2nd Defendant, the 1st Respondent as the Plaintiff and the 2nd Respondent as the 1st Defendant which designations they were in the action at trial. The material facts of the case were not in dispute. The deceased, Vistone Kalaba, was a blasting licence holder, aged 31 years, employed by the 1st defendant. He died on 8th April, 1999. The Plaintiff issued a writ of summons, as the Administrator of the estate of the late Vistone Kalaba, claiming damages for the benefit of the dependants under the Fatal Accidents Acts 1846 to 1908 and for the benefit of the estate under the Law Reform (Miscellaneous Provisions) Act, Cap. 74 of the Laws of Zambia. The case of the plaintiff centered on the evidence of PW1, a Senior Inspector of Mines in the Ministry of Mines Development Department of the Mines Safety. The evidence of this witness was that on 8th April 1999, he went to Mufulira Mine to investigate into the cause or causes of an accident which led to the demise of the deceased. At the Mines, he was taken underground. When he reached the scene of the accident, he observed the derailing and re-railing track marks. He also observed muck in the haulage (19) which had accumulated to the same elevation as the crown of the rails. He explained that underground, there are rail tracks like Zambia Railways tracks where the train moves. According to his observation, these were covered up to the top with the ground. He also observed a damaged four­ way valve on which were blood stains. The witness testified that in the rail-edge, there was refuge crosscut where one would hide if the train was coming. He explained that this refuge crosscut was full of rubbish at that time. He observed a bad rail joint where the train joins. The whistle man at the scene showed him the position where the deceased and himself were at the time of the accident. This witness opined that the accident should be blamed on the state of the haulage because of the muck coverage up to the crown of the rail which offered resistance in guiding the carriages and failure by the operators to follow the code of safe working practice. According to the witness, the management did not enforce the code of safe working practice. In cross examination by the 1st Defendant and questioning by the Court, the witness explained that the deceased could have been sleeping and dozed off. In answer to the question by the Court, the witness again explained that what caused the machine come off the rail was a combination of a bad joint and the muck in the box. PW2, the Plaintiff, testified that the deceased was his young brother; that he had been appointed the Administrator of the estate; that his young brother was 31 years of age at the time he died; that he was not married and had no children but that he was keeping a young brother and a sister aged 23 (20) and 20 years, respectively. The sister was at school doing Grade 8 at the material time. He testified that he had been given a final exit pay of about KI3 million. On behalf of the 2nd Defendant, DW1, an Insurance Claims Manager, testified that the 1st and the 2nd Defendants had an insurance contract which was in the name of the Employers Liability Insurance Policy which sought to indemnity the insured, the 1st Defendant. The witness explained that if any person in the service or employment of the 1st Defendant suffered death or injury in the course of employment, the Insurance Company, the 2nd Defendant, was to indemnify the insured. He explained that the contract was subject to terms and conditions. In the instant case, some terms of the Policy were not complied by the 1st Defendant. Consequently, the 2nd Defendant did not accept liability. The witness also explained the various terms and conditions in the policy which the 1st Defendant breached. The learned trial judge examined the evidence on record. He accepted that the accident happened in an area, which did not comply with mine regulations in that muck in the haulage had accumulated to the same elevation as the crown of the rails. He accepted the evidence of PW1 that he noted bad rail joints where the train derailed. The Court rejected the speculation in cross-examination that the deceased contributed to the accident as he may have either sat down or dozed off. The learned trial judge pointed out that the accident occurred because the area was unsafe contrary to standing mining regulations. The Court accepted that the train derailed resulting into the fatal accident that caused the deceased’s death. According to the Court, the derailment was foreseeable. (21) The Court concluded that the accident was avoidable, especially if the area of the accident did not have “bad rail joints”. The learned judge pointed out that the accident was wholly caused by the train which derailed in an area which had ideal conditions for derailments. The learned trial judge then assessed the damages as follows: K4 million for loss of expectation of life, and K24 million for loss of earnings less KI 3 million already paid to the estate, leaving a balance of Kll million. The Court found that the net due was KI5 million. Judgment was entered in the sum of KI 5 million with costs in favour of the Plaintiff. The 2nd Defendant has appealed against the whole judgment. The appeal was based on two grounds: that the judgment of the court was erroneous in arriving at liability and assessment of damages and that the said judgment was also erroneous to the extent that it did not apportion liability between the defendants. The plaintiff cross-appealed on the grounds that the global award of K24 million (and not K21 million as indicated in heads of arguments) fell far short of the admissible heads of claim; and that the learned judge erred in law in deducting the KI 3 million that was due to the plaintiff as terminal (22) benefits from the global award because these were accrued benefits which the deceased was entitled to in any event. Both learned Counsel relied on written heads of argument augmented by very brief oral submissions. They also referred the Court to some decided cases. The gist of the arguments and submissions on ground one of appeal is that the trial Court erred in arriving at liability by not considering the 2nd defendant’s defence. The arguments on ground one were centred on the evidence of DW1 in cross-examination, which evidence was that the 1st defendant having breached a condition of the insurance policy, the 2nd defendant was not liable. On behalf of the 2nd defendant it was further argued in the written heads of argument that the learned trial judge misdirected himself when assessing damages when he overlooked the fact that the deceased, on whose behalf this action was commenced, had no children and those who purported (23) to depend on him were of majority age. It was also argued that the trial judge ignored the fact that all funeral and other expenses were taken care of by the 1st defendant. It was submitted that the trial judge did not address his mind to the relevant considerations in arriving at the figure of KI 5 million. The arguments on ground two were that the trial judge erred in law when he assumed that the 2nd defendant’s liability on the policy was merely an internal matter and with this assumption awarded indiscriminately the sum of KI5 million against both defendants. Counsel pointed out that the law was clear that where there was more than one defendant, any award made must be apportioned between or among the defendants commensurate with the measure of blame. It was submitted that the trial judge also failed to recognize that liability by the 2nd defendant was dependent on the due observance of the contractual terms by the 1st defendant. In response to the grounds of appeal, Mr. Kongwa on behalf of the plaintiff relied on written heads of argument. In his brief oral submissions, he argued that the 2nd defendant’s arguments were based on a fundamental misapprehension by the Insurer. According to Mr. Kongwa, the tortfeaser is (24) the 1st defendant, the insured. He argued that once the insured was found liable; then the Insurer is liable as well as the insured, as long as the risk is within the insured risk; the remedy for the Insurer being indemnity against the insured. On ground two, Mr. Kongwa submitted that there was no basis for any apportionment. In the written heads of argument, Mr. Kongwa pointed out that the 2nd defendant was joined to the action as the 1st defendant’s insurer as the 1st defendant took out an employer’s liability insurance policy with the 2nd defendant. Mr. Kongwa observed that the 2nd defendant does not complain about the trial judge’s finding of liability against the 1st defendant and that the 1st defendant does not deny that the plaintiffs claim against the 1st defendant, the insured, is an insurable and insured risk under the policy of insurance, which the 1st defendant holds with the 2nd defendant. On the cross-appeal, Mr. Kongwa again relied on written heads of argument. In his brief oral submissions, he argued that the court should not have awarded a global figure of K24 million. In the written heads of arguent, Mr. Kongwa argued that the Court did not take into consideration (25) factors that are relevant in assessment of damages under the Law Reform (Miscellaneous Provisions) Act and the Fatal Accidents Act as per principles and guidelines set out in decided cases on loss of expectation of life where age of the deceased has been held as immaterial and where there is no evidence that beneficiaries under both Acts were the same to justify a deduction. On ground two of the cross-appeal, the argument was that the sum of KI3.5 million plus deducted from the award should not have been deducted because the amount represented the deceased’s service benefits. In his reply to the arguments on the cross-appeal, Mr. Mbambara supported the global award and the deduction. On Mr. Kongwa’s arguments on the appeal, Mr. Mbambara submitted that contracts of insurance are not tainted with any vicarious liability. They are governed by contractual obligations and terms. We have very carefully considered the pleadings, the evidence, the judgment as well as the learned submissions by the parties. We take note that the 1st defendant, ZCCM, did not appeal against the judgment of the trial (26) court. On the facts of this appeal, the 2nd defendant, the Zambia State Insurance Corporation Limited, was sued merely as the Insurer of the 1st defendant, the Zambia Consolidated Copper Mines Limited. The case for the plaintiff as pleaded was that the 2nd defendant is the 1st defendant’s insurer of the risk that caused the fatal accident. Paragraph 3 of the Statement of Claim as pleaded reads:- “3. On that fateful day the deceased whilst at work at Mufulira Mine, due to the negligence of the 1st Defendant’s servants or Agents who so negligently drove and neglected to manage a leading car as to cause the same to come off the rails hitting the deceased who was sitting off the rail causing fatal injuries. PARTICULARS OF NEGLIGENCE (i) Failure by the whistlemen and driver of the train to stop and open the looping box. (ii) Failure by the 1 Defendant to keep the work area in s t safe condition. (iii) • Driving the leading car too far. (iv) Failure by the 1st Defendant to maintain safe working place by providing escape route the only available one of which was blocked by garbage.” (27) The 2nd defendant in their defence admitted being the insurer of the 1st defendant but denied any knowledge of the fatal accident caused by the insured risk. Paragraphs 3 and 4 of the 2nd defendants defence read: “3. With regard to the contents of Paragraph 2 of the Statement of Claim inclusive of the particulars of negligence stated therein, the 2nd Defendant denies any knowledge concerning the same and will leave it up to the 1st Defendant to respond. 4. With respect to Paragraph 4 of the Statement of Claim, the 2nd Defendant denies liability for the compensatory and special damages itemized therein and the 2nd defendant will at trial show that even if the 1st Defendant shall be adjudged liable the 2nd Defendant can not provide indemnity on account of breach of a policy condition by the 1st Defendant relating to notification in reasonable time.” The gist of the grounds of appeal on behalf of the 2nd defendant is that the trial court did not consider the 2nd defendant’s defence but proceeded to assume that the issue of insurance was an internal matter between the 2nd defendant, the insurer and 1st defendant, the insured. The submission by Mr. Mbambara was that contracts of insurance are not tainted by any vicarious liability as they are governed by contractual obligations and terms. (28) The issues raised by the 2nd defendant in their defence at the trial were that the 1st defendant had breached a condition of the insurance policy and therefore not liable, and that there was no privity of contract and therefore no action lies directly against them as the insurers of the 1st defendant. In his judgment the leaned trial judge never alluded or considered these issues as he had brushed them aside much earlier in the proceedings when DW1 was under cross-examination. According to the record, this is what transpired during cross-examination on the issue of the Insurance Policy: “Q: Obliged. As the insurer of the insured, you will agree you are liable to be sued, you are the proper party to sue by the 3rd party as against the 3rd party if the court holds that you insured is liable to the 3rd party, you are then liable because you are the necessary party. A: No, in my opinion I.... Q: Let me put it this way, what I was aiming at is this, if the liability between the 3rd party and your insured, ZCCM is admitted the contract between the insured really is of no concern of the 3rd party? A: It is of no concern. Q: Ok, that is all. Court: Yes, I want to ask you one or two questions. This seems to me to be an internal problem between yourselves and the would be insured. They had a policy, they paid premiums (29) but defaulted in reporting the accident. This is an internal domestic problem between yourselves. What would be wrong for the plaintiff recovering from yourselves and you recovering from ZCCM because they defaulted on that policy? A: My Lord, such a claim, the claim falls outside the policy. Court: How do I know as an outsider that this vehicle which I rented is not assured because the owner of the vehicle has broken the claim between themselves and this has nothing to do with me? A: May be where the insured says no, when he has taken contingent measures. Court: But ZCCM ensured their effectiveness, they failed to report but if they have paid premiums why should they not recover from him and you recover from their insured? On the other hand, why didn’t you put an alternative claim against ZCCM that in the event of this happening you recover from us? A: My lord, before the claimant approaches us, we take it that he should have approached ZCCM first and ZCCM in turn informs us and they defaulted because they thought the action would not go beyond that. Court: Now the matter is before court, why should the third party lose because of your internal squabbles? I think you should recover from him. (30) A: My lord, the only claims which need to be re-imbursed are those that are payable in the claim so any claim that falls under the policy cannot be recovered because we do not have any policy under the policy that will ensure us to get such a recovery. Court: Recommend on the evidence and proceed on the basis that the claim succeeds against the 2nd defendant, so on the liability of contract the second defendant should be held liable.” We have considered this conversation between the trial judge and the witness of the 2nd defendant. We are satisfied that that his approach on the Insurance Policy, the trial judge totally misdirected himself in law. On the facts of this case, there was no direct relationship between the plaintiff and the 2nd defendant. In our view, a breach of a condition of the Insurance Policy by the 1st defendant necessarily entitled the 2nd defendant to repudiate the Policy. In the case of Zambia State Insurance Corporation Limited V. Musutu and African National Congress and Msangala(1) we made the point that in view of the fact that there is no privity of contract, in cases other than those under Section 137 of the Roads and Road Traffic Act, Cap. 766, a claimant can never claim directly against the insurer. In the instant case, although the trial judge did not deal with the issue of the Insurance Policy in his judgment, he brushed it aside in the course of hearing the evidence when he held that it was an internal matter between the 1st and 2nd defendants. This was a serious misdirection. We therefore agree that the learned trial judge erred in law in arriving at the liability of the 2nd defendant without considering the defence raised by the 2nd defendant (31) centred on the issue of the Insurance Policy. In other words, the only claimant who can take an Insurer to court is the insured apart from the exceptions provided for in the Roads and Road Traffic Act, Cap. 766 of the Laws. This conclusion effectively terminates the appeal by the 2nd defendant. It therefore becomes unnecessary to deal with the other arguments raised. The appeal by the 2nd defendant is therefore allowed. The judgment of the trial court on liability and assessment of damages as against the 2nd defendant is set aside. We make no order as to costs. The 1st defendant having not appealed, the judgment on liability and assessment as against them, is confirmed. On the cross-appeal, we note that the trial court awarded K24 million as a global sum and not K21 million as contended on ground one. We uphold the sum of K24 million. Ground two of the cross-appeal also succeeds in that the court should not have deducted the amount of KI3,511,822.00 from the global figure awarded, as this was the amount due (32) to the deceased as terminal benefits. To that extent, the cross-appeal succeeds. But we also make no order as to costs in the cross-appeal. E. L. SAKALA CHIEF JUSTICE SUPREME COURT JUDGE C. S. MUSHABATI ACTING SUPREME COURT JUDGE