TSODZAI v MAGEZA & ANOR 2011 (2) ZLR 160 (H)

Flynote

Insurance “ claim “ subrogation “ right of insured person to bring action against wrongdoer although already compensated by insurer “ duty of insured to become trustee for insurer “ need for insured to make clear that action is for benefit of insurer

Headnote

The plaintiff brought an action against the defendants for damages arising out of a motor vehicle accident. The defendants' liability was not in question, the only issue being the nature and extent of damages to the plaintiff's motor vehicle and the quantum thereof. The quantum was established but, during the course of his evidence, the plaintiff mentioned that he had been paid the same amount he was claiming in this action by his insurers (who were, incidentally, his employers). This admission triggered the issue of the plaintiff's locus standi in judicio in bringing the action and a consideration of the principle of subrogation. The plaintiff argued that he had a recognised right to bring this action against the defendants. The defendant argued that the plaintiff, having been indemnified by his insurer, could not possibly have had a right to initiate action against the defendants to recover the same amount paid to him.

Held, that subrogation means the substitution of one person for another, so that the person substituted or subrogated succeeds to the rights of the person whose place he takes. It expresses the insurer's right to be placed in the insured's position so as to be entitled to the advantage of all the latter's rights and remedies against the third parties. The law of subrogation rests on the principle that no-one should be paid twice in respect of the same loss. The effect is that a person insured against accident has the right to recover damages from a wrongdoer for any wrong done to him, even though he has already been compensated in in respect of such wrong by the insurers. However, under the principle of subrogation, the insured, if fully compensated by the insurer, becomes a trustee for any compensation paid him by the wrongdoer and is bound to hand over to the insurer whatever money he receives from the wrongdoer over and above the actual loss he has sustained, after taking into account the amount he has received under the contract of insurance. Where the insured institutes an action against an offending party, as in casu, the pleadings must leave no doubt that the insured is taking action for the benefit of his insurer. Anything short of that would lead to the inevitable conclusion that he intends to have a double benefit over the same loss. The court must not be left to speculate as to whether the plaintiff may or may not hand over the benefits of his litigation to the insurer.