Wakilii

Insurance Company of East Africa v Kitagenda (Civil Suit No. 301 of 2012)

High Court · [2016] UGCOMMC 212 · 2016 Judgment for Defendant AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for refund of commission and declaratory relief
Decision
Plaintiff's suit dismissed with no order as to costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court dismissed the plaintiff insurer's suit for refund of commission paid to an unlicensed agent. Both parties contravened the Insurance Act — the defendant by acting as an agent without a licence (section 72) and the plaintiff by paying commission to an unlicensed intermediary (section 37). The plaintiff cannot found its cause of action on its own illegality under the principle ex turpi causa non oritur actio.

Outcome

Plaintiff's suit dismissed with no order as to costs

Facts

The plaintiff insurance company engaged the defendant as an insurance agent from 2004 under a tied agent agreement. In January 2012, the defendant claimed commission of US$61,077 for business with Kolin Insaat Turizim. The plaintiff paid the commission but later discovered that the defendant was not a licensed insurance agent for 2011 and 2012, and that the client had placed business directly with the plaintiff. The plaintiff sued for refund of commission, a declaration that the defendant was not entitled to act as an agent, general damages for misrepresentation, and interest. The defendant admitted receiving part of the commission (US$22,077, later corrected to US$32,077) but claimed he had solicited the business and that the plaintiff had a duty to renew his licence. The parties agreed in a joint scheduling memorandum that the defendant was not licensed for 2011 and 2012.

Issues

  1. Whether the defendant was paid a commission of US$61,077 in respect of business concluded between the plaintiff and Kolin Insaat Turizim.
  2. Whether there was any misrepresentation on the part of the defendant to the plaintiff.
  3. Whether the plaintiff can maintain an action for refund of commission paid to an unlicensed agent when the plaintiff itself contravened statutory prohibition on paying commission to unlicensed intermediaries.

Orders

  • Suit dismissed.
  • No order as to costs.

Rules and key headnotes

Insurance — Intermediaries — Prohibition on Payment of Commission to Unlicensed Agents
Section 37 of the Insurance Act prohibits an insurer from paying commission or remuneration to any intermediary who is not licensed under the Act. An insurer who pays commission to an unlicensed agent acts contrary to statute.
Insurance — Insurance Agents — Statutory Requirement for Licensing
Section 72 of the Insurance Act prohibits any person from carrying on the business of an insurance agent unless licensed by the Insurance Commission. The duty to obtain and maintain a valid licence rests on the agent.
Contract Law — Illegality — Contracts Contravening Statute
Where a statute prohibits both parties from concluding or performing a contract, the contract is impliedly prohibited and unenforceable. Work done under such a contract in contravention of statutory provisions cannot be made the subject matter of an action.
Contract Law — Illegality — Ex Turpi Causa Non Oritur Actio
A plaintiff cannot found a cause of action on his own illegality. Where a plaintiff relies on a transaction that contravenes statute to ground his claim, the court will not assist him. No court will enforce an illegal contract or allow itself to be made the instrument of enforcing obligations arising from an illegal transaction.
Insurance — Commission Claims — Duty of Insurer to Verify Licensing Status
An insurer cannot maintain a cause of action in misrepresentation against an agent for falsely representing that he was licensed, where the insurer has a statutory duty under section 37 of the Insurance Act to ensure it only pays commission to licensed intermediaries. The duty is on the insurer to establish whether the agent is licensed, not to rely on the agent's representation.

Legislation cited (7)

Cases cited (9)

  • Bostel Brothers, Ltd v Hurlock [1948] 2 All ER 312
  • Phoenix General Insurance Co of Greece SA v Administratia Asigurarilor de Stat [1987] 2 All ER 152
  • Mistry Amar Singh v Kulubya [1963] 3 All ER 499
  • Scott v Brown, Doering, McNab & Co [1892] 2 QB 728
  • Taylor v Chester (1869) LR 4 QB 314
  • Langton v Hughes (1 M & S 593, 596)
  • Brightman & Co v Tate
  • Mahmoud and Ispahani [1921] 2 KB 716
  • Archbolds case [1961] 1 All ER 417, [1961] 1 QB 374

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Insurance Company of East Africa v Kitagenda (Civil Suit No. 301 of 2012) [2016] UGCommC 212 (16 December 2016)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.