Wakilii

Mau Insurance Uganda Limited v Agri Exim Limited (Application 3 of 2023)

Tribunal · [2023] UGIAT 1 · 2023 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from the decision of the Insurance Regulatory Authority dated 20 December 2022
Decision
The IRA's decision directing the appellant to pay USD 37,810 to the respondent was set aside. The respondent's insurance claim was found not payable under the fidelity guarantee policy.

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Holding

The Tribunal allowed the appeal and set aside the Insurance Regulatory Authority's decision. The Tribunal held that the IRA erred in concluding that the respondent's employee was liable for fraud and dishonesty when the employee was terminated for gross negligence, not fraud. The Tribunal found no evidence that the employee obtained personal financial gain. The IRA failed to properly consider the reports of independent assessors who concluded the claim was not payable. The IRA also failed to distinguish losses between two warehouse locations and relied on reports that did not meet the policy's requirement for professional accountant verification.

Outcome

The IRA's decision directing the appellant to pay USD 37,810 to the respondent was set aside. The respondent's insurance claim was found not payable under the fidelity guarantee policy.

Facts

The respondent took out a fidelity guarantee policy with the appellant for one year. In October 2019, the respondent's warehouse manager, Ms. Caroline Nabufu, reported theft of simsim valued at UGX 415,000,000 from the company premises in Mpererwe. The respondent lodged a claim with the appellant for UGX 365,081,430 for the loss of 75.57 metric tons of simsim. After the appellant rejected the claim, the respondent filed a complaint with the Insurance Regulatory Authority. The IRA directed the appellant to pay USD 37,810 to the respondent. The loss occurred during a period when the respondent was shifting operations from Nakawa to Mpererwe warehouse. The respondent terminated Ms. Nabufu and two other employees for gross negligence related to allowing poor-quality maize to be offloaded and for rebagging goods at less than standard weight. Independent assessors M/s Vericlaims and M/s Claims Care both concluded that the employees were not liable for fraud or dishonesty and recommended the claim was not payable.

Issues

  1. Whether the IRA erred in concluding that Ms. Caroline Nabafu was liable for fraud and dishonesty without subjecting her to trial or fair hearing and in disregard of her termination letter.
  2. Whether the IRA erred in ignoring the reports of assessors M/s Vericlaims and Properties Ltd and M/s Claims Care Uganda Ltd.
  3. Whether the IRA erred in failing to separate the loss allegedly suffered at Mpererwe and Nakawa warehouses.
  4. Whether the IRA erred in concluding that Ms. Caroline Nabafu obtained personal financial gain from the loss without evidence.
  5. Whether the IRA misconstrued the fidelity guarantee policy regarding defined events.
  6. Whether the IRA erred in determining the amount of money payable without basing findings on authentic records.

Orders

  • Appeal allowed.
  • Decision of the Insurance Regulatory Authority revoked.
  • Each party to bear its own costs.

Rules and key headnotes

Insurance — Fidelity Guarantee Policy — Burden of Proof — Fraud and Dishonesty
Under a fidelity guarantee policy covering loss from employee fraud or dishonesty, the insured bears the burden of proving that the loss insured against occurred and that the employee committed fraud or dishonesty to the required standard. Fraud must be distinctly proved and cannot be inferred from facts alone. Where an employer's disciplinary committee found an employee liable for gross negligence but not fraud or dishonesty, and independent assessors reached the same conclusion, it is erroneous for a tribunal to conclude fraud was proved in the absence of clear evidence.
Insurance — Fidelity Guarantee Policy — Personal Financial Gain — Requirement of Evidence
A fidelity guarantee policy that requires proof that an employee obtained personal financial gain from fraudulent or dishonest acts cannot be satisfied by conjecture or speculation. A tribunal must act on credible evidence and not indulge in speculation or fanciful theories. Where there is no documentary or circumstantial evidence showing that an employee directly or indirectly benefitted from an alleged loss, the requirement of personal financial gain is not established.
Evidence — Expert Evidence — Weight and Admissibility — Loss Assessors' Reports
Expert evidence is opinion evidence and cannot take the place of substantive evidence. An expert is not a witness of fact and his or her evidence is only advisory. The decision maker must examine expert evidence in light of surrounding circumstances and is not bound by the expert's findings. Where multiple independent assessors reach the same conclusion that a claim is not payable and that employees were not liable for fraud, a tribunal must carefully analyze and compare these reports rather than disregarding them.
Insurance — Fidelity Guarantee Policy — Policy Compliance — Professional Accountant Requirement
Where a fidelity guarantee policy requires that matters contained in the insured's books of accounts be referred to a professional accountant whose report shall be prima facie evidence, retaining a non-qualified audit firm to ascertain loss violates the policy. A tribunal errs in relying on findings of a report that does not meet the standard set in the policy.
Insurance — Utmost Good Faith — Claims Handling — Insurer's Duty
The insurance contract is a contract of utmost good faith and this duty is reciprocal. An insurer must treat its insured's interests with the same consideration it gives its own interests. A claims adjuster should be looking for reasons to find coverage and pay the claim, not for reasons to deny it. Using a conditional settlement offer as a ploy to solicit business renewal breaches the principle of utmost good faith.
Contract Law — Approbation and Reprobation — Consistency of Position
The common law rule prohibits approbation and reprobation. A party cannot benefit from terminating employees on grounds of gross negligence and then deny the consequences that arise, including the failure to establish fraud and dishonesty, by later claiming the termination was for fraud when seeking insurance indemnity.

Legislation cited (2)

Cases cited (19)

  • Nomchand Premchand Shah & Anor v South British Insurance Company Ltd (1965) EA 679
  • Celtel Uganda Ltd T/A Zain Uganda v Karungi Suzan (Civil Appeal No. 0073 of 2012)
  • Fredrick Zaabwe v Orient Bank & Others (SCCA No. 04 of 2006)
  • Uganda Baati Ltd v Duncan Mugabi (Civil Suit No. 457 of 2019)
  • Kabege v Niko Insurance (Uganda) Ltd (HCT-00-CC-CS 319 of 2012)
  • Curtis & Harvey v North British [1921] AC 303
  • Young v Sun Alliance & London Insurance [1977] 1 WLR 104
  • Re George and Goldsmith and General Burglary Insurance Association Ltd [1899] 1 QB 595
  • Stanley v Western Insurance Co (1886) LR 3 Exch 71
  • Re Etherington & Lancashire & Yorkshire Accident [1909] 1 KB 591
  • Thames & Mersey Marine v Hamilton (1887) 12 AC 484
  • Walker v British Guarantee Association (1852) 21 LJQB 257
  • London Guarantee Co v Fearnley (1880) 5 App Cas 911
  • Asuman Mugenyi v Buwule (Civil Appeal No. 14 of 2016) [2019] UGSC 220
  • Karamira v Kiggundu (Civil Appeal No. 93 of 2018) [2021] UGHCLD 5
  • Iwa Richard Okeny v Obol George Okot (Miscellaneous Application No. 063 of 2012)
  • Tight Securities Limited v Chartis Uganda Insurance Company Limited & Another (CA No. 14 of 2016)
  • Petrocity Enterprises (U) Ltd v Security Group (U) Ltd (HCT-00-CC-CS-869-2004)
  • Makula International Ltd Versus His Eminence Emmanuel Cardinal Nsubuga and Rev. Fr. Dr Kyeyune

Full judgment

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

Mau Insurance Uganda Limited v Agri Exim Limited (Application 3 of 2023) [2023] UGIAT 1 (14 July 2023)
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.