[2005] KEHC 873 (KLR)
The court found that the insurance policy was valid at the time the insured risk occurred because the appellant had continued to accept premium payments, including those made after the due date. The acceptance of late payments by the insurer led the respondents to believe that the policy remained in force, and the...
Source-derived case information.
- Citation
- [2005] KEHC 873 (KLR)
- Parties
- Appellant: British American Insurance Co. Ltd.; Respondent: Grace M. Muema; Respondent: Lawrence Kisilu
- Court
- High Court
- Court Station
- High Court at Mombasa
- Jurisdiction
- Kenya
- Case Number
- Civil Appeal 189 of 2002
- Procedural Posture
- Civil Appeal / Judgment
- Outcome
- appeal dismissed with costs; lower court judgment upheld subject to deduction of KES 5,000 for NSSF payment
- Legal Topics
- Insurance Contracts, Policy Lapse, Premium Payment, Grace Period, Estoppel, Privity of Contract
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
British American Insurance Co. Ltd.
Appellant
Grace M. Muema
Respondent
Lawrence Kisilu
Respondent
Procedural Posture
Civil Appeal / Judgment
Legal Issues
- 1 Whether the insurance policy was valid at the time the insured risk occurred.
- 2 Whether the appellant was liable to reimburse the respondents for medical expenses under the policy.
- 3 Whether late payment of premiums and acceptance thereof by the insurer estopped the insurer from denying liability.
Ratio Decidendi
The court found that the insurance policy was valid at the time the insured risk occurred because the appellant had continued to accept premium payments, including those made after the due date. The acceptance of late payments by the insurer led the respondents to believe that the policy remained in force, and the insurer was therefore estopped from denying liability on the basis of late payment. The court held that the trial magistrate was correct in finding the appellant liable to reimburse the respondents for medical expenses incurred under the policy, except for amounts paid by NSSF, which should not be reimbursed. The appeal was dismissed, and the judgment of the lower court was...
Court Disposition
appeal dismissed with costs; lower court judgment upheld subject to deduction of KES 5,000 for NSSF payment
Orders
- The appeal is dismissed with costs to the respondents in this court and the lower court.
- The judgment amount in the lower court shall be paid less KES 5,000.
Full Case Text
Judgment text and source record
37 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
AT MOMBASA
CIVIL APPEAL 189 OF 2002
BRITISH AMERICAN INSURANCE CO. LTD. ……….......……………APPELLANT
VERSUS
GRACE M. MUEMA
LAWRENCE KISILU ……………………………………………….RESPONDENTS
J U D G M E N T
The facts in the suit out of which this appeal arises are that the two Respondents in this appeal were entitled to reimbursement of medical expenses under a contract of insurance entered into between the appellant and Respondents.
The contract of insurance and the entitlement are not denied. The appellant contended that the policy had lapsed and that the Respondents had failed to reinstate the policy by payment of arrears in premiums and at the time the first Respondent entered the hospital for treatment was in arrears of premiums and grace period had lapsed and therefore the plaint does not show any reasonable cause of action against the Appellant. At the hearing the policy document “Mediflex” was exhibited.
It was dated 1. 6.2000 and monthly premium was Shs.1515/- per month receipts were exhibited. Premium payment for June 2001 was made on 26. 7.2001. On 14. 6.2001 the first plaintiff entered into hospital to deliver a baby, was admitted for 4 days and the husband 2nd Respondent paid the bill for the services being Shs.101905/-. This payment was in respect of risk covered by the policy. The Appellant failed to pay the reimbursement according to the policy.
Grace period was provided under Clause 5 of the policy as 1 month after payment. The respondent’s said at the time she went into hospital the policy was valid. The issue the trial magistrate was to determine whether the Appellant was bond to pay the respondents claim under the policy. The breach of the policy was that there was arrears of premiums unpaid when the Respondent incurred the risk. When the wife entered hospital. There was evidence before the trial magistrate that since the month of July 2000 the premiums were paid on 2/8/00 July
4/12/00 August
13/2/01 Sept. & October
4. 4.01 November & December
7. 5.01 January and February
11. 6.01 March, May and April
26. 7.01 June 2001
All the receipts were issued by Appellant.
There was also evidence that the grace period was 31 days. Therefore by the time of entering hospital on 14/6/05 the policy was still in force. The acceptance of insurance premium on 26/7/01 indicates that as far as the Appellant was concerned, the policy was still in force. The important clause here is No. 5. Regarding exception (2) (7) The effective date of insurance is 1/6/2000 the policy continued in effect so long as the Appellant continued to accept premiums. This is over a period of over 12 months duration contained in the policy As stated above the Appellant continued to accept payments of premiums from the beginning. The appellants could not have been collecting premium paid late when the policy was void. The appellant led the respondent to believe that premiums could be paid any time and so long the premium was paid and accepted the Appellant was estopped from saying that the policy was void or for what were they accepting the payments?
On the issue of privity of contract the law is clear the beneficiary named in the policy as beneficiary has a beneficial interest. In any case I do not see this as an issue at this stage. It was not taken up at the trial and it was argued in this appeal.
The provisions of grace period clause is clear after the first premium there is a grace of 31 days allowed for the payment of any premium due. The policy continues in force for the 31 days grace period. However, this case turns on the fact that the Appellant had led the Respondents to believe and act as they did in making payments. It was agreed both in the lower court and in this court that the dispute hinged on validity of the policy.
On the whole I find the trial magistrate was correct in finding that the policy was valid and the Appellant’s were liable to pay. In the policy there was no prohibition or limitation of the amount to be paid. Nevertheless the contributors of NSSF are assisted to a certain extent by the find towards hospital expenses. This is not a loss by the contributor and should not be reimbursed.
I therefore find no fault in the judgment made by the Trial Magistrate except in awarding reimbursement of funds paid by NSSF. The Amount of judgement in lower court shall be paid less Shs.5,000/-. Otherwise the appeal is dismissed with costs in this court and in lower court.
Delivered and dated at Mombasa this 12th Day of October 2005.
J. KHAMINWA
J U D G E
12/10/05:
Khaminwa, J
Jason – Court Clerk
Mr. Jengo
Mr. Munyao present in court
KHAMINWA, J
MR. MUNYAO:
I apply that the money held in joint account be released to the Respondent.
KHAMINWA, J