Banking, Finance and Insurance Law

Suffish International Food Processors (U) Ltd. and Anor v Egypt Air Corporation t/a Egyptair Uganda (Civil Appeal No. 15 of 2001) [2002] UGSC 6 (19 June 2002);


Search Summary: 

The first appellant entered into a contract with the respondent to airfreight a
consignment of chilled fresh fish. On arrival, the consignment was found to be
unfit, was rejected and destroyed. The second appellant indemnified the first
appellant as its insured for the loss. The first appellant instituted a suit against
the respondent for the benefit of the second appellant under the doctrine of
subrogation to recover the sum. The trial judge found that the goods were
damaged either during the process of loading them into the plane or during
the flight and blamed the respondent for causing the damage. Judgment was
entered for the second appellant. The respondent was dissatisfied with the
decision of the trial court, and appealed to the Court of Appeal, which allowed
the appeal, overturning the trial court's judgment. Hence this appeal.

Headnote and Holding: 

The court stated that the doctrine of subrogation was the centre of the case.
The insurer, who has paid for a loss, may thus exercise the rights of the insured
to recover from the third party, or if the insured has already exercised that
right, the insurer will be entitled to repayment from him. A contract of
insurance by which an insurer agrees to pay a certain sum of money to the
insured on the happening of a certain event regardless of actual loss suffered
by the insured has no basis for the operation of the doctrine of subrogation.
The court observed that for the claimant to succeed under subrogation, he/she
must prove the existence of a separate contract that it applies provided that a
valid and operative contract of indemnity is the basis of the relationship
between the insured and the insurer.
The appeal was thereby dismissed


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