First Assurance Company Limited vs Heritage Insurance Company Tanzania Limited (Consolidated Civil Applications Nos. 317/16 & 432/01 of 2023) [2025] TZCA 967 (12 September 2025)

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM (CORAM: MWANDAMBO. 3.A. KHAMIS. J.A. And MLACHA, J J U CONSOLIDATED CIVIL APPLICATIONS NOS. 317/16 & 432/01 OF 2023 FIRST ASSURANCE COMPANY LIMITED ............................. .......APPLICANT VERSUS HERITAGE INSURANCE COMPANY TANZANIA LIMITED .......... RESPONDENT (Application for review of the Judgment and Order of the Court at Dar es Salaam) fLila, Mwandambo and Fikirini. JJA.^ Dated the 5th day of April, 2023 in Civil Appeal No. 165 of 2020 RULING OF THE COURT 30th June & 12th September, 2025 KHAMIS. J.A.: These two applications for review arise from the judgment and order of the Court in Civil Appeal No. 165 of 2020 delivered on 5th day of April, 2023. In that decision, the Court allowed the appeal, quashed the decision of the High Court, which dismissed the suit by Heritage Insurance Company Tanzania Limited (Heritage) and entered judgment on the counter claim in favour of First Assurance Company Limited (First Assurance). i

Aggrieved by the decision of the Court, both parties preferred separate applications for review. Through a notice of motion dated 17th May, 2023, brought under section 4(4) of the Appellate Jurisdiction Act (the AJA), rules 48 (1), (2), 66 (1) (a), (b), (c) and 66 (6) of the Tanzania Court of Appeal Rules, 2009 (the Rules), through Civil Application No. 317/16 of 2023, First Assurance sought an order of review on the grounds that: one, the Court having relied on recission of contract by virtue of section 19 (1) of the Law of Contract Act which was neither pleaded nor raised in the appeal with leave of the Court, denied the applicant the right to be heard on the reasons for rescission of the contract; two, the dispute on a contract of insurance is governed by a specific law but the applicant was denied the right to be heard as its defence founded on insurance law was not considered; three, the decision created confusion resulting into a miscarriage of justice as the Court ruled that there was no automatic renewal of the parties' contract but went ahead to find that the renewal started on 1s t April, 2015; four, there is a manifest error on the face of the record as the Court entertained the facts constituting a counter claim without ascertaining jurisdiction of the trial court, hence proceeded on a nullity; five, the Court subscribed to the principle against departure from pleadings but allowed

the respondent to introduce unpleaded facts without an amended plaint hence denied the applicant the right to be heard; six, the judgment is a nullity for validating a non-existent contract into a valid contract; and seven, the Court has powers to review its decisions beyond the restrictions contained in rule 66 of the Rules. The application was supported by an affidavit sworn by Saumu Abdi Sekulu, a Legal Officer with First Assurance. She deposed that, the impugned decision of the Court did not consider the law of insurance which does not recognize automatic renewal of insurance contracts but provides a grace period of fifteen days for the existing contract within which a renewal must be initiated and concluded. She averred that, the Court found acceptance of the premium by First Assurance on 30th June, 2015 as constituting a renewal of the insurance cover from 1s t April, 2015 thereby negated the provisions of the Insurance Act which provides that, premium must be paid within seven days of the insurance contract. She added that, a retrospective treatment of premium resulted to a miscarriage of justice on the part of First Assurance. Through Civil Application No. 432/01 of 2023, Heritage filed a notice of motion under similar provisions of the AJA and the Rules for an order of review moving the Court to: one, vacate its order dismissing the prayer 3

for 20% interest on the principal sum (USD 533, 520.25) from 4th November, 2015 to the date of judgment: and, two, vacate its holding in rejecting the applicant's contention that the reinsurance contract was renewed automatically upon its expiry on 31s t January, 2015. The grounds of review advanced by Heritage were threefold: one, the Court did not pay attention to paragraph 28 of the plaint, paragraph 31 of PWl's witness statement, section 29 of the Civil Procedure Code (the CPC) and the holding in Prem Lata v. Peter Musa Mbuju [1965] E.A 592 relied upon in Saidi Kibwana and General Tyre E.A Ltd v. Rose Jumbe [1993] T.LR 175 and Yara Tanzania Limited v. Ikuwo General Enterprises Ltd, [2022] TZCA 604 to the effect that, interest is awarded on the basis that, a successful party was deprived of the use of goods or money by a wrongful act on the part of the losing party and such interest is awarded at the rate that may appear reasonable to the court; two, the Court overlooked the fact that by faulting and rejecting the argument of automatic renewal of the reinsurance contract, it left the contract with a further farfetched explanation of the way the contract came into existence; three, the Court did not pay attention to the evidence of PW1, PW2, PW3, and exhibits P21, P22 and P23 which proved

prevalence of automatic renewal of contracts which became a custom in the insurance industry. The application was supported by an affidavit of Audax Kahendaguza Vedasto, learned counsel for Heritage. His averments basically reproduced the grounds of review as shown in the notice of motion. He maintained that, the Court did not pay attention to various pieces of evidence on record and thereby wrongly failed to find presence of prevalence usage, practice and custom on automatic renewal of reinsurance contracts. He averred that, had the Court considered the relevant case laws on the subject, it would have found that Heritage was entitled to interest on the decretal amount. Whereas Heritage did not file an affidavit in reply against the application by First Assurance, the latter filed an affidavit in reply challenging Heritage's application. The affidavit in reply was sworn by Richard Karumuna Rweyongeza, learned advocate, in terms of rule 56 (1) of the Rules. The deponent stated that, the claim of interest though pleaded was not within the confines of the principles regulating the grant of interests by the courts and that no evidence was adduced to support

Further, he averred that, the decision of the Court on the claim of interest was express and a different view would not constitute a ground of review in addition to the fact that, there was no evidence to establish why Heritage claimed 20% interest for the period from 4th November, 2015 to the date of judgment. He added that, the parties' business was governed by specific law of insurance that was to be strictly applied to the circumstances of the case and not the general law of contract. In the further reply, the deponent averred that, the case of Yara Tanzania Limited v. Ikuwo General Enterprises Ltd (supra) was distinguishable as Heritage failed to prove the alleged trade usage. He further deposed that, practice, usage and good customs cannot take away the established law in place. Regarding renewal of the contract, he stated that, the Court did not find for automatic renewal rightly in his view but questioned the conclusion that the parties had a valid contract at the time fire gutted down the insured property. Brief facts which are necessary for disposal of these applications, are as follows: First Assurance and Heritage are insurance companies operating their business in Tanzania. In the course of their business, they executed a facultative re-insurance contract to cover M/S Samosa Hotels

for the period between 1s t April, 2014 to 31s t March, 2015. Under the arrangement, First Assurance agreed to cover the insured at 25% of the risks. The parties had yet to renew their contract for another period from 1s t April, 2015 to 31s t March, 2016 when fire gutted down premises of the insured, M/S Samosa Hotels Limited t/a Karafuu Hotel Beach Resort on 16th April, 2015. However, on 17th April, 2015 Heritage sent an email to First Assurance requesting for renewal of the facultative reinsurance contract. The assessors engaged by Heritage assessed the loss at USD 2,534,121 and apportioned the 25% share of First Assurance to USD 633,530.25. On account of the claim by the insured, Heritage pressed First Assurance to pay its share of the loss but the latter did not heed to the claim. After a series of correspondences, First Assurance paid a total sum of USD 25,000 and USD 75,000 was offset from the parties' other dealings, leaving an outstanding sum of USD 533,530.25. Following refusal of First Assurance to settle the sum claimed, Heritage instituted a suit in the High Court for payment of USD 533,530.25 being the principal sum as on 3r d November, 2015; interest thereon at the rate of 20% per annum from 4th November, 2015 when the final report of

the loss was released to the date of full and final payment; interest at the court's rate of 7% per annum from the date of judgment to a date of full satisfaction; general damages; and, costs of the suit. First Assurance disputed the claim and avoided the facultative re insurance contract on the ground that, at the time of a purported renewal on 17thApril, 2015, the risk intended to be re-insured had already occurred a day before (16thApril, 2015). It maintained that, Heritage had concealed and misrepresented such material facts relevant to the risk intended to be covered. It maintained that, had the information been disclosed, it would not have renewed the contract. Further, First Assurance filed a counter claim for declaration that, the facultative re-insurance contract was based on non-disclosure and misrepresentation of material facts by Heritage hence unenforceable; declaration that the risk putatively ceded under the facultative re insurance cover was a known certainty and not a re-insurable fortuitous risk and therefore against public policy; an order for refund of USD 25,000 paid to Heritage as part of the voided facultative re-insurance policy; payment of interest on USD 25,000 at the rate of 20% per annum; general damages; and, interest on USD 25,000 at the court's rate of 7% per 8

annum from the date of judgment to the date of full satisfaction of the decree. Upon trial, the High Court found that there was no valid facultative re-insurance coverage and dismissed the suit by Heritage. Meanwhile, the counter claim was allowed with a finding that, First Assurance had erroneously paid USD 25,000 under a void facultative reinsurance contract. It thus ordered Heritage to refund USD 25,000 and interest thereon at the rate of 7% per annum from the date of judgment to a date of full and final payment. Disgruntled by the findings, Heritage marched to this Court seeking to overturn the High Court decision on fifteen grounds which centred on whether there was a valid facultative re-insurance contract between the parties. Upon analysis of the grounds of appeal, the Court addressed itself on three issues: one, whether the High Court was correct in holding that Heritage failed to discharge its burden of proof on the existence of a facultative re-insurance cover from 1s t April, 2015 to 31s t March, 2016; two, whether First Assurance was in breach of the facultative re insurance contract; and, lastly, whether the High Court had jurisdiction to enter judgment on the counter claim in favour of First Assurance. 9

In its decision, the Court found the act of First Assurance to agree on a retrospective renewal of the facultative re-insurance coverage from 1s t April, 2015 to 31s t March, 2016 was a bar to its subsequent denial. It faulted the High Court for holding that the cover ran from 17thApril, 2015 while disregarding the tenor of Heritage's email of even date which had sought to renew the contract. Further, the Court rejected the claim on rescission of a contract on the ground that the First Assurance's conduct was inconsistent with section 19 (1) of the Law of Contract Act (the LCA). The Court further held that, refusal by First Assurance to settle the claim was a breach of a facultative re-insurance contract. On those premises, it set aside the High Court judgment and an order for payment of USD 25,000. In the same vein, First Assurance was ordered to pay USD 533,530.25 on account of the insurance claim and TZS 50,000,000.00 as general damages. Heritage was also awarded costs on the appeal and before the High Court. Both parties have challenged that outcome before this Court and have taken out separate applications for review as mentioned above. Whereas First Assurance has moved the Court to review, reverse or modify its decision with a view to correct some confusions on the law of insurance, Heritage implored the Court to vacate its order dismissing the 10

prayer for 20% interest on the principal sum of USD 533,530.25 and find that, the parties' contract was renewed automatically upon its expiry on 31s t March, 2016. At the hearing of the applications, Messrs. Robert Rutaihwa and Audax Kahendaguza Vedasto, learned advocates, appeared for First Assurance and Heritage, respectively. The learned counsel sought leave to argue the two applications simultaneously. At the outset, Mr. Rutaihwa abandoned the sixth and seventh ground of review and consequently, the akin third and fifth grounds crumbled. The two grounds were premised on the assumption that the Court could review its decisions beyond the restrictions stated in rule 66 of the Rules. As a result, First Assurance remained with the first, second, and fourth grounds of review. Having examined the record and upon consideration of the counsel rival submissions, we are of the view that, ahead of addressing the Heritage's application, the application preferred by the First Assurance can be disposed of on the second ground of review. Therefore, we shall buckle down to that issue before confronting the other grounds.

On that second ground, the learned counsel contended that, the parties' relationship was based on the specific law of insurance which was not considered in the impugned decision. He argued that, the judgment did not align with the insurance jurisprudence as foundational issues of renewal of a contract of insurance, uberima fides (utmost good faith) and payment of premium were not tackled based on the applicable law of insurance. He asserted that, the central themes of the appeal ought to have been covered in the context of section 138 (2) and other provisions of the Insurance Act (the Insurance Act) and that, had the decision considered the insurance principles, the outcome of the appeal would have been different. In winding up, the learned counsel urged us to rectify the error shown and afford parties the right to be heard on the crucial matters pointed out allegedly because this is a fit case for the Court to review its decision. In opposing Civil Application No. 317/16 of 2023, Mr. Vedasto adopted the written submissions earlier on filed by Heritage whose combined effect was that, First Assurance was barred from challenging the impugned decision as the Court sufficiently covered all areas that formed its complaints. 12

On the second ground of review, the learned counsel contended that, the First Assurance's contention was misconceived. He argued that, the counsel for First Assurance was reading the Insurance Act in pieces and thereby misleading the Court. He explained that, section 138 (1) of the Insurance Act was a continuation of the theme from section 137 of the Act and therefore, the provisions should not be read in isolation from other successive sections of the statute. He referred us to page 565 of the book, Bindra's Interpretation of Statutes, 7th Edition, the Law Book Company (P) Ltd, Allahabad, 1984, where the learned author, Mahmoud, T. N. S. Bindra, underscores the legal principle, thus: "AH parts o f a statute should, if possible, be construed so as to be consistent with the other. The true meaning o f any part o f a statute is that which best harmonizes with every other part o f it and a construction which will leave without effect any part o f a statute must be rejected. It is a well- known principle o f construction that every attempt should be made to harmonize the different parts o f the statute and each part should be construed so as to expound every other part o f the statute. A statute must be so interpreted as to defeat all attempts to nullify it in a circuitous manner" 13

The learned counsel cited the Indian case of Shazada Nanda v. Central Board of Revenue, AIR 1962 Punj 74 (fb) for the proposition that, a section in an Act should not be considered in isolation and the construction should harmonise it with the subject matter and other sections of the statute. He asserted that, by reading sections 137 (1) and 138 (1) of the Insurance Act, the Commissioner for Insurance was required to state by a written notice published in the Gazette the duration from which the insurance contract commences within which a premium for an insurance cover is to be paid; the powers of the Commissioner is subject to the limitations stated in section 138 (1) that, he cannot set a period that would allow the insured to stand benefitting from the cover for a period of more than 15 days from the date the contract started or the previous cover ended before paying the premium. Further, Mr. Vedasto submitted that, First Assurance's contention that the parties' contract was invalid because the renewal started to run from 1s t April, 2015 while the premium was indisputably paid on 1s t July, 2015, four months later and beyond the 15 days' grace period envisaged under section 138 (1) of the Insurance Act, was true and convincing but could not be valid because it was not founded on a sound ground of review. 14

On those premises, the learned counsel for Heritage invited the Court to dismiss the application with costs. In rejoinder Mr. Rutaihwa reiterated his earlier submissions. Having considered the second ground of review in the application by First Assurance, the relevant law and the authorities cited, we find the relevant issue for our determination is whether the application is merited to warrant grant of an order for review. According to section 4 (4) of the AJA, the Court has the power to review its own decisions. Rule 66 (1) of the Rules regulates the manner in which the Court can exercise its power of review thus: "The Court may review its judgment or order, but no application for review shall be entertained except on the following grounds: a) The decision was based on a manifest error on the face o f the record resulting in the miscarriage o fjustice; or b) A party was wrongly deprived o f an opportunity to be heard; c) The court's decision is a nullity; or d) The court had no jurisdiction to entertain the case; or 15

e) Thejudgment was procured illegally, or by fraud or perjury." In the case of Wambura Evarist & Others v. Sadock Dotto Magai & Another [2015] TZCA 4 (TANZLII) we recounted the progression of jurisprudence on the power of review from the earlier cases of Felix Bwogi v. Registrar of Buildings, Civil Application No. 20 of 1988 (unreported); Tanzania Transcontinental Co. Ltd v. Design Partnership Ltd [1998] TZCA 80; Chandrakant Joshubhai Patel v. Republic [2004] T.L.R 218; Blueline Enterprises Limited v. East Africa Development Bank, Civil Application No. 21 of 2012 (unreported); Patrick Sanga v. Republic, [2013] TZCA 2414; OTTU on behalf of P.L. Asenga & Others v. AMI (Tanzania) Limited, Civil Application No. 4 of 2012 (unreported); Richard Mgaya @ Sikubali Mgaya v. Republic, Criminal Application No. 1 of 2010 (unreported) to Jibu Aman @ Mussa and Another v. Republic, Criminal Application No. 7 of 2011 (unreported), amongst others, and observed that, the objective of review is not to provide a mechanism of filing an appeal against a final decision of the Court but such an avenue should be resorted to only in exceptional circumstances. 16

In Rizali Rajabu v. Republic, Criminal Application No. 4 of 2011(unreported) we expressed our stance that, a recourse for review is basically intended to amend or correct an inadvertent error committed by the Court and one which, if left unattended, will result into miscarriage of justice. Our stance in OTTU on behalf of P. L Asenga & Others v. AMI (Tanzania) Limited, Civil Application No. 20 of 2014 [2019] TZCA 138 (18 April 2019 TANZLII) was not different. We maintained that, the power of review is necessary for the proper and effective administration of justice and is essential for the existence of all courts of superior jurisdiction. Likewise, we pointed out that, review ought to be exercised in fitting situations whenever circumstances of a compelling character demand its invocation in order to correct a manifest error and ordain full and effective justice in a given situation. In Peter Kidole v. Republic, Criminal Application No. 3 of 2011 (unreported), we adopted the principles stated in the Australian case of Autodesk Inc. v. Dyson (No. 2) - 1993 HCA; 1993 176 LR 300, thus: "the public interest in the finality o f litigation will not preclude the exceptional step o f reviewing or rehearing an issue when a court has good reason 17

to consider that, in its earlier judgment it has proceeded on a misapprehension as to the facts or the law." Before us, the parties are insurance companies and their contractual relationship was governed by the Insurance Act, They exchanged pleadings which articulated technical issues like uberima fides, insurable interests, and occurrence of risk which triggered an insurance payout. Whether those issues were decisive or not is a different matter. What is clear is that, the Court should effectually resolve them using the relevant law to ensure fairness, consistency, and predictability in court's decisions. That would ensure disputes are resolved based on established legal principles and precedents fortify just outcomes and reinforce the rule of law. In this matter, we noted that, the attention of the Court was eluded by the material placed before it by the parties which focused on sections 19 (1), (2) and (3) of the LCA suggesting that, the dispute was based on the general principles of contract, particularly, rescission of a contract instead of unearthing the real issues based on the law of insurance. In the circumstances, the omission to consider the relevant provisions of the Insurance Act was an error apparent on the face of the 18

record. This does not require a long drawn process of reasoning to be detected as it is evident across the judgement. At page 7 of the typed decision, the Court highlighted that: "Even though the appellant's advocate contended that the contract couid be voidable for misrepresentation , the learned trial Judge took a different view reasoning that, contracts o f insurance are special contracts distinct from ordinary contracts which are rendered void for misrepresentation notwithstanding the dictates o f section 19 (1) o f the Law o f Contract act (the Act) to the contrary... Similarly, at page 29 of the impugned judgment, the Court held that: "We have equally held that it was an error for the trial court to hold as it did that the cover was void in the absence o f evidence o f misrepresentation according to the dictates o f section 19 (1) o f the Act. As to whether the appellant rescinded the contract, we endorse Mr. Kahendaguza's submission that the respondent's conduct and acts were inconsistent and incompatible with a party rescinding the contract on the alleged misrepresentation. We say so mindful o f the provisions o f section 19 o f the Act which provides that..." 19

In this situation, we are compelled to agree with Mr. Rutaihwa that, as the contract between the parties was purely premised on insurance law, the Insurance Act was the relevant law as it provides a framework for resolving such disputes and allow stakeholders to understand their rights and obligations. Among others, the law regulates reinsurance practices including the process for insurers to seek reinsurance from the Tanzania Reinsurance Company (TCR) and encompasses provisions for time limits to claim payments and the right to inspect insurer's documents. The Insurance Act outlines key provisions regarding premium payments and insurance contracts renewals. It also prescribes grace periods for premium payments, the duty to disclose information (uberima fides) and the consequences of non-disclosure. Insured individuals have a duty to disclose all material circumstances that they know or ought to know during the application process and the failure to do so entitles the insurer to avoid the contract. We have the view that, the impugned decision was not aligned with the principles of insurance as stipulated in the law. From the nature of the appeal, the principle of uberima fides was apposite. As to its application, we wish to subscribe to the position of the law as stated by the Supreme Court of India in Mahakali Sujatha v, the 20

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 uberima fidei 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 entitles the insurer to avoid the contract o f insurance so long as he can show that the non disclosure induced the making o f 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) and a decision of this Court in Reinair Limited v. Phonex of Tanzania Assurance Company Ltd [2010] TZCA 171. 21

Having addressed ourselves to the relevant insurance principles and the provisions of section 137, 138 (1) and (2) of the Insurance Act which deal with payment of premiums and days of grace, we are satisfied that, the same were applicable to the parties' dispute and ought to have been considered. Applying them to the facts of this matter, we are certain that Heritage did not pay premium to First Assurance within the time stipulated under the iaw and therefore, the parties' facultative re-insurance contract had expired when the property of the insured, M/S Samosa Hotels Ltd was gutted down by fire on 16th April, 2015. We are therefore, satisfied that the High Court applied the law correctly and had the Court followed suit it could have resulted in dismissing Civil Appeal No. 165 of 2020. Consequently, we grant Civil Application No. 317/16 of 2023 on account of manifest error on the face of the record. Having so held, the determination of Civil Application No. 432/01 of 2023 preferred by Heritage has become superfluous because it was dependent on the decision which we have already found to have been reached with manifest error. We accordingly strike it out. In the event, in pursuance of rule 66 (6) of the Rules, we hereby reverse our decision in Civil Appeal No. 165 of 2023 by substituting an order allowing the appeal with an order dismissing it with costs on account 22

of manifest error on the face of the record. First Assurance is awarded the costs of its application. DATED at DODOMA this 4th day of September, 2025. L. J. S. MWANDAMBO JUSTICE OF APPEAL A. S. KHAMIS JUSTICE OF APPEAL L. M. MLACHA JUSTICE OF APPEAL Ruling delivered this 12thday of September, 2025 in the presence of Ms. Saumu Sekulu, learned counsel for the Applicant, Mr. Joseph Rugambwa, learned counsel for the Respondent via virtual Court and Mr. Oscar, Court Clerk; is hereby certified as a true copy of the original. C. M. MAGESA DEPUTY REGISTRAR COURT OF APPEAL 23