Court name
Supreme Court of Zimbabwe
Case number
SC 29 of 2004
Civil Application 155 of 2002

UDC Ltd. v Zimbabwe Insurance Brokers (55/02) (SC 29 of 2004, Civil Application 155 of 2002) [2004] ZWSC 29 (04 January 2004);

Law report citations
Media neutral citation
[2004] ZWSC 29


Judgment No. SC 29/04

Application No. 155/02




JANUARY 22 & 24, MAY 2004

, for the appellant

, for the respondent

GWAUNZA JA: The appellant appeals against a judgment of the High
Court, in terms of which it was ordered to pay to the respondent

$406 906, interest at the prescribed rate from 31 March 1999 until
the date of payment, and costs of suit.

following facts are common cause:-

The appellant is a financial
institution while the respondent is an insurance broker. As part of
its business, the appellant provides
premium finance to companies
needing insurance, including insurance for vehicles whose purchase
the appellant would have financed.
As an insurance broker, the
respondent introduced certain such companies to the appellant. The
appellant would then enter into
contracts with these companies, for
the provision of the premium finance required. Thereafter the
appellant would pay the premiums
due by its clients to the insurance
companies concerned. The premiums were paid to the respondent, as
the broker, for onward
transmission to the relevant insurance
companies. It would appear that the arrangement between the
appellant and its clients was
that the former would pay the insurance
premiums for the latter, as a lump sum. The client would then pay
back the premiums according
to agreed terms.

Two such
clients of the appellant, who were introduced to it by the respondent
were a company called Sato Car Hire, and another
one called Zimchem.
The money claimed by the respondent from the appellant constitutes
premiums due by Zimchem to a company called
National Insurance
Company of Zimbabwe (NICOZ). The evidence before the Court
suggests that the insurance agreement between Sato
Car Hire and Solid
Insurance was cancelled, a circumstance that led to the amount of
$406 906 in-prepaid premiums being due and refundable
to the
appellant. In a letter to the respondent, dated 17 February 1999,
the appellant made it clear that it expected the money
to be repaid
through the same medium it had used to pay it, that is the
respondent. The latter was then to recover the money from
Insurance Company. When the appellant did not receive the payment
by the deadline given, it addressed a letter to the respondent
on 26
March 1999, which read as follows:

“Dear Douglas,


We refer to previous correspondence in the above regard and regret to
advise that to date no payment has been forthcoming. As
Insurance Company have not submitted the cancellation fund, as well
as payment of outstanding claims as stated in our cancellation
of 5 January 1999 (copies attached), we have effectively adjusted
bordereaux payments due to yourselves. We confirm that
we have
deducted an amount of $406 906,40 which your offices are to recover
from Solid Insurance Company’s bordereaux.

We do
regret having to resort to this action, but as you will appreciate,
we are left with no alternative.




The amount
of $406 906,40 was duly deducted from premiums that the appellant was
to pay to NICOZ on behalf of Zimchem, through the
respondent as the
broker. The respondent took exception to the action taken by the
appellant, and launched these proceedings in
the court a quo.

appellant’s defence to the claim was two-pronged, firstly, that the
respondent had no locus standi to bring the action against it
when its role had in effect been that of an agent and secondly that
in any case the respondent had
not established a cause of action in
respect of the claim. In particular, it is submitted that the
learned judge erred in finding
that there was an agreement between
the appellant and the respondent, which obliged the former to make,
and the latter to receive,
payment for the premiums in question.

respondent’s rebuttal of this contention is set out in paragraph 12
and 13 of its heads of argument:

“12. However, it is respectfully submitted that the relationship
between Appellant and Respondent, though not specifically governed
a written contract, had the following terms:

    1. Respondent
      would direct clients to Appellant for Insurance Finance;

    1. Appellant
      was obliged to pay the premiums for these clients over to the
      Respondent; [Record 75].

    1. Respondent
      would, where a policy is cancelled, receive the unabsorbed portion
      of the premiums from the Insurance Company and pay
      these amounts
      over to Appellant; [Record 71 – 2]

    1. This
      relationship required the parties to act in utmost good faith
      [Record 75].

13. It is submitted that it is clear from the evidence of both
parties, (that) these terms are implied by trade usage as well as
agreed by the parties to be the framework of their business
relationship. Appellant, in its evidence referred to an
and “standard practice”. It is respectfully
submitted that this is in essence an agreement. Further, it is out
of this agreement
that Appellant’s liability arises. It is
submitted that the court a quo rightly decided this to be the

The learned trial judge was persuaded by these submissions and was
satisfied, having determined that it was not open to the appellant
unilaterally deduct $406 960 from Zimchem’s premiums, that the
respondent had the requisite locus standi. He also
determined that through its particulars of claim, as amplified by the
further and better particulars requested by the
appellant, a cause of
action had been properly established. As already indicated, he
found that there was in existence an agreement,
unwritten, between the appellant and the respondent, which obliged
the former to remit to the latter, premiums on behalf of the clients
introduced to the appellant by the respondent. The respondent would
then deduct from such premiums what was due to it in terms
of its fee
or commission as a broker and then transmit the rest to the insurance
company concerned. The learned judge also accepted
that the
respondent was an agent for both the appellant’s clients and their

I do not
find any fault in the learned trial judge’s reasoning and

The appellant not only paid premiums on behalf of its clients, to the
respondent, it expected, where a policy was cancelled, that
respondent would prevail upon both such client and its insurer, to
refund to it, any outstanding or “unused”, prepaid premiums.

The relationship between the parties that is suggested by this
arrangement to my mind translates to something stronger than just

An appreciation of this fact by the appellant, must have provided the
necessary motivation for it to deduct, albeit wrongly, the
amount in question from what it was supposed to pay to the
respondent. Against this background, it appears to me to
contrary for the appellant to acknowledge the existence of an
agreement only when to do so serves its purposes, yet dispute its
existence where it would suit the respondent’s purposes.

The premiums that were to be paid on behalf of Zimchem had no
relationship to those already paid on behalf of Sato Car Hire nor
the premiums bound for the same insurance company. As the
learned trial judge correctly found, it was not open to the appellant
to “unilaterally” deduct $406,960 from premiums they would have
then charged Zimchem as part of the financing they had undertaken
provide. By doing so, the appellant interfered with the
performance not only of its agreement with Zimchem, but also that
Zimchem and NICOZ. This was in addition to its breach of
the agreement between it and the respondent. It is in my view
that Zimchem, in its agreement with the appellant,
would have agreed that some of the premiums due to be paid on its
behalf, through
the respondent, could be diverted and applied towards
settling premium refunds outstanding from another client’s

Both Zimchem and the respondent, in my view were equally entitled to
claim the amount in question, from the respondent, either separately
or jointly. The respondent chose to do so on its own. I am
satisfied the court a quo correctly found that the appellant
had wrongfully deducted the amount in question and must pay it back.
The appeal must therefore
fail. It is in the premises ordered as

“The appeal is dismissed with costs.”


CHEDA JA: I agree.

Sawyer & Mkushi, appellant’s legal practitioners

Dube, Manikai & Hwacha, respondent’s legal