SANLAM Life Insurance Tanzania Limited vs Aziz Nassoro Mzee & Others (Civil Appeal No. 91 of 2023) [2025] TZCA 1212 (26 November 2025)

IN THE COURT OF APPEAL OF TANZANIA AT DODOMA ( CORAM: KEREFU. J.A.. MDEMU. J.A. And MANSOOR. J.A.l CIVIL APPEAL NO. 91 OF 2023 SANLAM LIFE INSURANCE TANZANIA LIMITED APPELLANT VERSUS AZIZ NASSORO MZEE .............................. SOPHIA ISSAJUMA................................. THE NATIONAL MICROFINANCE BANK PLC .1 st RESPONDENT ■ 2 nd RESPONDENT 3 rd RESPONDENT (Appeal from the Judgment and Decree of the High Court of Tanzania, at 10th & 26™ November, 2025 KEREFU. 3.A.: In this appeal, Sanlam Life Insurance Tanzania Limited, the appellant, is challenging the decision of the High Court of Tanzania at Mtwara (Dyansobera, J) dated 30th September, 2021, in Land Case No. 02 of 2018. In that case, Aziz Nassoro Mzee and Sophia Issa Juma (the first and second respondents herein), sued the National Microftnance Bank PLC, the third respondent, for a declaration that the first respondent as the beneficiary of the loan facility and the second respondent as the guarantor of the same, are not indebted to the third respondent for the reasons indicated in the Mtwara) ( Dvansobera, J.^ dated the 30th day of September, 2021 in Land Case No. 02 of 2018 JUDGMENT OF THE COURT physiotherapy report. That, the third respondent had no legal power to either, under the law or the loan agreement to sell, lease, appoint a receiver or manager or enter into the possession of the mortgaged properties registered as Plot No. 513, Block 'B' Jida TRM Area, Masasi Township under Certificate of Title No. 5045 MTW, in the name of the second respondent; Plot No. 107, Block 'G' Mkuti Area, Masasi Township under Certificate of Title No. 5981 MTW; Plot No. 109 Block 'Gf Mkuti Area, Masasi Township under Certificate of Title No. 5925 MTW and Plot No. 178 Block 'A' Jida North Area, Masasi Township under Certificate of Title No. 3801 MTW, in the names of the first respondent. They also prayed for orders that, (i) if there is any claim arising out of the Letter of Offer for the term loan facility dated 19th June, 2017, the same should be directed and or recovered from the insurer; (ii) a permanent injunction to be issued on the third respondent and/or her agents; and (iii) payment of general damages, interest and costs of the suit. The brief material facts of the suit leading to this appeal as could be discerned from the record of appeal are not that complex. That, the first respondent was a long-time client of the third respondent operating a Business Class Bank Account No. 70503500254, where he was granted a number of credit facilities that were all successfully repaid. 2 Based on that trust, on 19th June, 2017, the first respondent, vide a Letter of Offer for Term Loan Facility (the loan agreement - exhibit PI) was granted another credit facility of TZS 500,000,000.00 (top up loan) to be used as a working capital for purchase of home consumables and general merchandize stock for resale. The said loan was secured by the landed properties indicated above and guaranteed by the second respondent (the first respondent's wife). Pursuant to paragraph 7 (ii) of the said loan agreement, the third respondent debited from the first respondent's account an amount equal to 0.75% per annum of the approved loan amount as premium insurance cover for death and permanent disability. Under the said paragraph, it was clearly stated that, the said benefit was limited up to the Free Cover Limit (the FCL) of TZS 350,000,000.00 and above that amount, there should be a medical underwriting. That, having been granted the loan, the first respondent proceeded to service the loan until July, 2017 when he was diagnosed to have been attacked by Cerebral Vascular Accident (the CVA) which resulted into paralysis of left side of his body that culminated into a dispute. The first respondent stated further that, having realized that he could no longer be able to repay the loan due to his health condition, he submitted the physiotherapy report (exhibit P2) to the third respondent for information and way forward. It was the first and second respondents' claim that the third respondent did not pay attention to the said report as it continued to demand for the repayment of the loan and could not disclose the name of the insurer where the premium insurance money was credited. Thus, they instituted a suit and claimed for the reliefs indicated above. Upon being served with the plaint, the third respondent filed a written statement of defence vehemently denying all the claims raised by the first and second respondents. It averred that, the first respondent is not covered by the insurance terms as he procured the loan while suffering from stroke as indicated in exhibit P2. As such, the third respondent maintained that, the first and second respondents are indebted to her jointly and severally and the bank has legal powers under the loan agreement to exercise whichever right, at her disposal, including sale, lease and appointment of a receiver or manager over the mortgaged properties for recovery of the defaulted loan. Thus, the third respondent prayed for the suit to be dismissed with costs. The record bears out that after the pleadings were completed and before the hearing of the suit commenced, the third respondent, on 18th September, 2018, informed the learned trial Judge that, they have filed an ex parte application intending to join a third party to the suit to the effect that, if she is made liable, the third respondent is entitled to be indemnified by the third party. It is also on record that the said third party notice was filed by the third respondent on 7th June, 2019. Subsequently, on 8th July, 2019, the written statement of defence by the third party, the appellant herein, was filed. In the said statement, the appellant disputed the respondents' claims by stating that the first respondent is not eligible for the insurance cover as, in terms of exhibit P2, he was attacked by CVA in June, 2016 before he obtained the loan. Therefore, from the pleadings, the learned trial Judge framed the following two issues: 1. Whether the first respondent is entitled to be indemnified by the third party; and 2. To what reliefs are the parties entitled. At the trial, the first and second respondents testified as PW1 and PW2 respectively. In his testimony, PW1 confirmed his long-term customer- banker relationship with the third respondent. That, on 19th June, 2017, he obtained, from the third respondent, an overdraft facility of TZS 500,000,000.00 through exhibit PI. That, the said loan was to be repaid within a year on equal monthly deduction of TZS 25,900,000.00. Since he had a previous debt with the third respondent was given only TZS 240,000,000.00. The said credit facility was secured by a legal mortgage over a mortgaged properties registered in his name and also in the name of his wife (PW2). That, there was also a condition for deduction of insurance premium at the rate of 0.75% to cover incidents of death and or permanent disability. PW1 testified further that, he started to repay the loan in June, 2017 to 13th July, 2017, thereafter, he fell sick and rushed to Ndanda Hospital where Dr. Edgar Boniphace Nanyambe (PW3), diagnosed him of partial paralysis of the left side of his body and advised him not to do heavy work and to avoid long-distance travel. That, through his letters, dated 30th July, 2017 and 9th September, 2017 (exhibit P3), he communicated with the third respondent on his illness and failure to repay the loan but, the third respondent did not pay attention to the same, as it still demanded for the repayment of the loan. Subsequently, the first respondent requested his lawyer to write to the third respondent to reveal the name of the insurance company (exhibit P5). That later, the third respondent informed him that he was not qualified for the insurance cover (exhibit P4) and issued him with a sixty-days' statutory notice requiring him to adhere to the terms of the loan agreement. 6 Upon being served with the said notice, the first and second respondents instituted a suit against the third respondent as indicated above. The evidence of PW1 was supported by PW2, PW3 and Mashaka Clement Msinzo (PW4). PW3 added that, in 2017, when he attended PW1, he discovered that he had a stroke following the CVA which occurred in 2016. PW3 graded PWl's disability capacity or functionality at about 40%. PW4, who used to work at St. Benedict Hospital in Ndanda at physiotherapy section, also added that, PWl's health problems (CVA) started in June, 2016 and re-occurred in July, 2017. The third respondent testified through Joseph Makarius Tegete (DW1) and Mariana Ivo Benangodi (DW2). DW1 narrated the chronological account of the matter and specifically on PWl's relationship with the third respondent and on how he obtained the said overdraft facility. That, initially, in 2016, he obtained a credit facility of TZS 350,000,000.00. That, although, he did not repay the entire loan, being a good customer, they permitted him to top up the same to TZS 500,000,000.00. DW1 stated further that, PW1 succeeded in repaying the said loan only once. That, upon default, they visited him regularly and later, they issued him with the demand notice of default. 7 The appellant testified through Reuben Makenya (TPW1). In his testimony, TPW1 stated that, the first respondent is not eligible for the insurance cover as, in terms of exhibit P2 and TP1, he was attacked by CVA in June, 2016 up to 15th January, 2018. He also admitted that they had a contract with the third respondent to cover loans (Group Credit Life Assurance Policy) against risks, death or permanent disability. That, under the said policy, a loan of up to TZS 350,000,000.00 enjoys the FCL but for any amount in excess, there should be a medical underwriting. That, they declined to insure the first respondent's loan as he was incapacitated even before he obtained the loan from the third respondent. Having heard the parties and analyzed the evidence adduced before him, the learned trial Judge decided the suit in favour of the respondents as he ordered that the outstanding loan amount should be recovered from the appellant. The decision of the High Court prompted the appellant to lodge the current appeal to express her dissatisfaction. In the memorandum of appeal, the appellant raised three (3) grounds: (1) That, the trial Court erred in law and fact by deciding that the whole o f the outstanding loan amount which, as per DWl's testimony reflected on page 13 o f the judgment stood at TZS 8 489,242,080.60, be recovered from the appellant In doing so, it failed to appreciate the fact that at the behest o f the first respondent, the appellant only insured a sum o f TZS 350,000,000.00; (2) The trial Court erred in law and fact by holding that the first respondent was entitled to be indemnified by the appellant and in doing so, it watered down the evidence given in court, especially the first respondent's disability claim form which shows that the first respondent obtained the insurance cover while sick and therefore unfit to be covered; and (3) The trial Court erred in law and fact by holding that there was no prior information about the first respondents health condition before he obtained the loan while exhibit TP1 clearly shows that the first respondent was sick since &h June, 2016 before he obtained the loan o f TZS 500,000,000.00. At the scheduled hearing of the appeal before us, the appellant had the services of Mr. Paschal Kihamba, learned counsel. On the other side, the first and second respondents were represented by Mr. Gide Magila, learned counsel whereas the third respondent was represented by Messrs. Robert M. Chami and Mr. Emmanuel A. Ngongi, both learned counsel. It is on record that, all parties had earlier on lodged their respective written submissions in support of and in opposition to the appeal. Therefore, during their oral 9 submissions, they adopted their written submissions and by way of emphasis, highlighted some of the points which they considered to be of vital importance in support of their positions. We propose to address the parties' submissions in the course of determining the grounds of appeal in the order they have been submitted. However, at this stage, we wish to state that, we are live to the fact that, this being the first appeal, the Court has power to re-appraise the evidence on the record and draw inferences of facts and where applicable come to its own conclusion or otherwise as provided under rule 36 (1) (a) of the Tanzania Court of Appeal Rules, 2009. For this stance, see also the decisions of the Court in Jamal A. Tamim v. Felix Francis Mkosamali & Another, Civil Appeal No. 110 of 2012) [2013] TZCA 342 and Domina Kagaruki v. Farida F. Mbarak & Others, Civil Appeal No. 60 of 2016 [2017] TZCA 160. Submitting in support of the first ground of appeal, Mr. Kihamba faulted the learned High Court Judge for failure to analyze the evidence adduced by the parties and erroneously found that the outstanding loan of TZS 489,242,080.60 should be recovered from the appellant. He contended that, in his testimony TPW1 clearly testified that, the FCL covers only a loan of up to TZS 350,000,000.00 and for any amount in excess, there should be 10 a medical underwriting. To clarify further on this point, Mr. Kihamba referred us to paragraph 7 (ii) of exhibit PI where the said condition was also clearly stated. He then argued that, since there was no dispute that the first appellant was issued with the loan amount of TZS 500,000,000.00 on 19th June, 2017, and there was no any medical underwriting, the first respondent was not entitled for the said insurance cover. In response to the first ground, Mr. Magila and Mr. Chami supported the trial court's findings and conclusion against the appellant. Specifically, Mr. Magila argued that, since para 7 (ii) of exhibit PI stated clearly that the amount to be insured was up to TZS 350,000,000.00 which covered incidents of death and disability and TZS 3,999,999.75 (which was above 0.75%) was debited from the first respondent's bank account as insurance premium to cover the whole sum of TZS 500,000,000.00, the first respondent was entitled to the insurance cover. Mr. Magila contended further that, since the insurance agreement was between the appellant and the third respondent, the first respondent cannot be penalized for the omission and or failure by the said parties to execute their agreement. On his part, Mr. Chami referred us to the testimony of DW2 found at page 207 of the record of appeal and argued that, in his testimony, DW2, ii among other things, admitted that the first respondent's loan was insured against death and permanent disability. In addition, Mr. Chami referred us to exhibit PI and testimonies of DW1 and DW2 and insisted that there was clear evidence that the whole loan amount of TZS 500,000,000.00 was covered by the security provided by PW1 and PW2. He further added that, pursuant to paragraph 7 (ii) of exhibit PI, it was clear that the loan was insured by the appellant. Although, he also admitted that benefits payable under that paragraph is limited up to the free cover limit of TZS 350,000,000.00 and above the free cover limit, only after medical underwriting, he insisted that, the first respondent was entitled to the insurance cover. On that basis, they both urged us to find that the appellant's complaint under the first ground is baseless. Having closely considered the rival arguments by the learned counsel for the parties and revisited the evidence adduced by the parties before the trial court, we find no difficulty to agree with the submission made by Mr. Kihamba that the first respondent was not entitled to the insurance cover. We shall demonstrate. One, pursuant to paragraph 5 of the plaint, exhibit PI and testimonies of PW1, PW2, DW1 and DW2, there is no dispute that, on 19th June, 2017, the first respondent obtained, from the third 12 respondent, an overdraft facility of TZS 500,000,000.00 which was to be repaid within a year on equal monthly of TZS 25,900,000.00. Two, there is also no dispute that, pursuant to paragraph 7 (ii) of the loan agreement (exhibit PI), for the first respondent to be entitled to the insurance cover a premium of 0.75% of an amount not exceeding TZS 350,000,000.00 must be paid to the appellant but, in excess of that amount, there should have been a medical underwriting. For the sake of clarity, paragraph 7 (ii) provides that: "The borrower shall pay to the bank the following fees... (I) NA (ii) A onetime credit fife assurance premium o f 0.75% per annum o f the approved loan amount to cover for death and permanent disability (where applicable). Benefit payable is limited up to the free cover limit currently at TZS 350,000,000.00 and above free cover limit only after medical underwriting. ”[Emphasis added]. In terms of the above clause, it is clear to us that, the parties have made their intentions expressly in writing that, the loan below TZS 350,000,000.00 would automatically enjoy the FCL but where the amount exceed that amount, there should be a medical underwriting. This can be as 13 well evidenced from the testimony of TPW1 found at page 210 of the same record, where he testified that: While the loan exceeds TZS 350,000,000.00 the Bank must communicate with us before Issuing the loan. The amount of TZS 350,000,000.00 is Free Cover Limit (FCL) where the amount is above FCL or above the limit o f TZS 350.000.000.00, we have to be consulted before the loan is issued. We have to be consulted so as to do underwriting. If not consulted, the loan is uninsured." In his own testimony found at pages 175 of the record of appeal, PW1 testified that: "On 19.06.2017 I went to the Bank to secure a loan TZS 500.000.000.00. We entered into a loan agreement. Although I secured TZS 500,000,000.00, but had a debt. I was paid TZS 240.000.000.00 only. There were many conditions and there was deduction for the insurance in case o f death or long illness..." Again, DW1, at pages 197 to 198 of the same record, testified that: "...I granted him a loan o f TZS 350,000,000.00 in 2016. He did not repay the whole loan but we have the bank procedure for a good customer to be permitted to top up and hence the grant o f that TZS 500,000,000.00...The loan o f TZS 14 500,000,000.00 has not been repaid. He succeeded in paying oniy once 'rejesho moja . ' After the default, we made various reminders according to bank procedures-where the payment is due, then after three days we conducted normal visits. After 30 days with letter o f debt collector...At first, he was promising to pay. Then, he, at first refused to sign the debtor collector's notice until he consulted his lawyer on account that he was sick could not repay the loan and instead, the insurance could repay on his behaif." Now, since the first respondent was granted a loan of TZS 500,000,000.00 without complying with the condition stipulated under Paragraph 7 (ii) of the loan agreement, it was erroneous for the learned trial Judge to find that the repayment of the said loan should be recovered from the appellant. With profound respect, we find the submissions made by Mr. Magila and Mr. Chami on this ground to be misconceived. As, having revisited the entire evidence on the record, there is nothing in the testimonies of PW1, PW2, PW3, PW4, DW1, DW2, DW3 and DW4 indicating that, before granting the credit facility of TZS 500,000,000.00 to the first respondent, the appellant was consulted on the issue of medical underwriting. We are increasingly of the view that, failure by the first and third respondents to comply with the said condition, had rendered the said 15 loan granted to the first respondent uninsured. In the event, we find the first ground of appeal with merit. As for the second and third grounds which were argued conjointly, Mr. Kihamba also faulted the learned trial Judge for failure to properly evaluate the evidence adduced by PW3 and PW4 together with the contents of exhibit TP1 which clearly indicated that, the first respondent had a permanent disability from 6th June, 2016 before he obtained the said loan facility of TZS 500,000,000.00 in June, 2017. That, instead, the learned trial Judge relied on the oral testimonies of PW3 and PW4 who were unreliable and incredible witnesses as their evidence was tainted with contradictions on the specific date when the first respondent sustained CVA that led to his permanent disability. That, while PW3 testified that, the first respondent sustained CVA on 13th July, 2017, PW4, stated that, the first time was in July, 2016 and recurred in July, 2017. It was the argument of Mr. Kihamba that, pursuant to section 61 of the Evidence Act, Cap. 6 (the Evidence Act), the contents of a document are proved by the document itself and not otherwise. That, oral evidence by PW3 and PW4 could not have been relied upon by the learned trial Judge where the specific date when the first respondent sustained CVA was clearly stated in exhibit TP1. According to him, the first respondent acted with a malafide and mislead the third respondent. In conclusion and based on his submission, he urged us to find the entire appeal meritorious and allow it with costs. In his response to these grounds, Mr. Magila challenged the submission advanced by his learned friend. He referred us to the evidence of PW3 and PW4 and argued that, the said witnesses correctly testified that the first respondent sustained CVA in 2016 and had suffered a stroke in 2017. He emphasized that stroke do not happen just in one day. According to him, stroke is the effect of something else including CVA. That, one may have CVA and in the end may result into another condition and not necessarily stroke. To clarify on his point, he referred us to exhibits P2, TP1 together with the testimonies of PW3 and DW1 and insisted that, in 2016, the first respondent sustained CVA and not stroke. He also blamed the appellant for failure to tender the insurance policy during the trial to prove that before obtaining the said loan and be entitled to the insurance cover, the first respondent was required to be 100% physically fit. Finally, and on that basis, he urged us to dismiss the appeal, in its entirety, with costs. On his part, Mr. Chami challenged the submission made by Mr. Kihamba by arguing that the first and third respondents from the beginning 17 agreed that the appellant herein would cover the repayment of the loan in cases of death and permanent incapacity. To clarify on this point, he referred us to the evidence of DW2 who testified that the medical report was sent to the appellant and that the first respondent's loan was insured. He insisted that, since the appellant received the premium and agreed to cover the loan, she cannot easily escape her contractual obligation as correctly found by the learned trial Judge. He thus also urged us to find the two grounds devoid of merit and dismiss the entire appeal with costs for lack of merit. In a brief rejoinder, Mr. Kihamba reiterated his earlier submission and insisted for the appeal to be allowed with costs. From the rival arguments by the learned counsel for the parties on this ground, we find it apposite to revisit the relevant evidence of the parties on this aspect. In his evidence found at page 176 of the record of appeal, PW1 testified that: On 13.07.2017,1 fell sick and was rushed to Ndanda Hospital. The Dr. diagnosed me and told me that my left side had paralyzed. The Dr. advised me not to do heavy work and travel for a long distance and had to use much time for resting. 18 Again, at page 181 of the same record, PW1 stated that: I fell sick in June 2016 but I was fairing well. I fell sick while I was in Dar es Salaam , was treated at MuhimbiH and recovered completely. It took me about 12 months to fall sick again." This was corroborated by PW3, who attended PW1 at Ndanda Hospital. At pages 188 and 189 of the record of appeal, PW3 testified that: I was attending PW1 and before attending the patient I have to get his background. Before he came to me, he had the problem. The cause o f the problem can be obtained from the documents and on part o f PW1 it started by 2016,.,At my office he came on his own. It was in July, 2016.1 filled in Third Party's Form when they were brought to me. I assessed the ability o f 40%." Furthermore, PW4, a physiotherapist who used to attend PW1 at St. Benedict Hospital, testified at page 191 of the same record, that: "I inquired into his historical background. He said that at first, he sustained that problem in June, 2016 and for the second time it was in July, 2017 and has been treated at various hospitals in Dar es Salaam and then at St Benedict" Having considered the above excerpts and read the contents of exhibit TP1 where it was clearly indicated that the first respondent had a permanent 19 disability from 6th June, 2016 before he obtained the said loan facility of TZS 500,000,000.00 in June, 2017, we find no difficult to agree with Mr. Kihamba that, the first and third respondents did not act in good faith, as they did not disclose some of the relevant information on the first respondent health condition. On this aspect, we need to emphasize on the duty of the insured to disclose and to act in good faith (uberrimae fidei). The uberrimae fidei is a common law principle underlying insurance contracts which requires the insured to disclose to the insurer all material facts. At this juncture, we wish to subscribe to the decision of the Supreme Court of India in Mahakali Sujatha v. the Branch Manager, Future General India Life Insurance Company Ltd & Another, Civil Appeal No. 3821 of 2024 [2024 INSC 296] where it was stated that: "For a better appreciation o f the controversy, it would be important to analyze the maxim uberrima fides that govern insurance contracts. It may also be observed that insurance contracts are special contracts based on the principle o f full disclosure in as much as a person seeking insurance is bound to disclose all material facts relating to the risk involved...the insured must disclose to the insurer all facts material to an insurer's appraisal o f the risk which are known or deemed to be known by the insured but neither known or deemed to be known by the insurer. Breach o f this duty by the insured 20 entitles the insurer to avoid the contract o f insurance so long as he can show that the non-disclosure induced the making of the contract on the relevant terms ." See also the decision of the Supreme Court of South Africa in Mutual and Federal Insurance Company Ltd v. Municipality of Oudtshoorn [1984] ZASCA 129; [1985] 1 ALLSA 324(A). We also made corresponding remarks in Reinair Limited v. Phonex of Tanzania Assurance Company Ltd [2010] TZCA 171. In the instant appeal, it is our settled view that, since the first and third respondents did not act in good faith, as they did not disclose some of the relevant information on the first respondent's health condition to the appellant, it was improper and erroneous for the learned trial Judge to decide the matter in their favour. In view of what we have demonstrated above, we are satisfied that had the learned trial Judge considered the issues discussed above, he would have come to the inevitable finding that the appellant was not responsible to cover the first respondent's loan of TZS 500,000,000.00 on account of failure by the first and third respondents to comply with the condition stipulated under Paragraph 7 (ii) of the loan agreement. In the event, we find merit in the second and third grounds of appeal. 21 Consequently, we allow the appeal, quash and set aside the judgment and decree of the trial court together with subsequent orders thereto. The third respondent is at liberty to exercise its powers and rights under the law and under the loan agreement to recover the outstanding loan amount. Considering the circumstances of this appeal, we order each party to bear its own costs. DATED at DODOMA this 25 th day of November, 2025. R. J. KEREFU JUSTICE OF APPEAL G. J. MDEMU JUSTICE OF APPEAL L. A. MANSOOR JUSTICE OF APPEAL The Judgment delivered virtually this 26th day of November, 2025 in the presence of Mr. Paschal Kihama, learned counsel for the Appellant, also holding brief for Mr. Gide Magara, learned counsel for the 1s t, 2n d & 3r d Respondents and Leopord Mabugo, Court Clerk, is hereby certified as a true