https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9068

Delmonte Kenya Ltd v Kenya Railways Corporation (Commercial Case E605 of 2021) [2026] KEHC 9068 (KLR) (Commercial and Tax) (26 June 2026) (Judgment) Neutral citation: [2026] KEHC 9068 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Commercial Case E605 of 2021 FG Mugambi, J June 26, 2026 Between Delmonte Kenya Limited Plaintiff and Kenya Railways Corporation Defendant Judgment Introduction and Background 1.By a Plaint dated 2nd June 2021, the Plaintiff instituted the present suit. It avers that in January 2020, it engaged the Defendant to provide rail transportation services for its pineapple products from Thika to Mombasa. Pursuant to that engagement, the parties executed an agreement on 1st February 2020, under which the Plaintiff made full payment of the agreed charges. The consignment, which comprised goods packed in cans, cartons, and steel drums, was thereafter loaded onto multiple wagons for onward delivery to Mombasa. 2.The Plaintiff further avers that on or about 3rd June 2020, the train transporting its consignment was involved in an accident at Dandora Railway Station in Nairobi, causing damage to the cargo. That the Plaintiff addressed a protest letter to the Defendant on 30th June 2020, placing it on notice of a claim for loss and damage estimated at USD 338,915. 3.The Plaintiff attributes liability to the Defendant on two grounds: first, negligence in the operation of the train in a manner likely to occasion an accident and second, breach of contract, arising from the Defendant's failure to exercise reasonable care in the handling and safe delivery of the consignment. The Plaintiff accordingly seeks judgment against the Defendant for specific damages in the sum of USD 338,915, general damages, interest on the sums awarded, and the costs of the suit. 4.The Defendant filed its Statement of Defence on 18th July 2024. It does not dispute that the parties entered into a Transport and Logistics Services Agreement on 1st February 2020 for the rail haulage of the Plaintiff's containers from Thika to Mombasa. It further concedes that on 3rd June 2020, at approximately 2:45 AM, one of its trains derailed in the vicinity of Dandora Railway Station, resulting in the capsizing of nine wagons, among them wagons carrying the Plaintiff's containers. The Defendant confirms that upon receipt of the accident report, it mobilized emergency response teams to undertake cargo recovery and effect repairs to the affected section of the track. 5.The Defendant, however, denies liability. It contends that investigations conducted by its Safety Department established that the derailment was attributable to track faults caused by interference from illegal quarrying activities in the area surrounding Dandora Station. It avers that, in response to this threat, its Security Division, working in collaboration with the local administration and the Railway Police, instituted daily patrols to prevent recurrence of such illegal activities, and that comprehensive track repairs were subsequently carried out. It further states that a report was made to the Police and that an abstract was duly obtained. 6.On the basis of the foregoing, the Defendant maintains that the derailment was occasioned by circumstances entirely beyond its control and that it was therefore not negligent. It additionally contests the quantum of loss and damage pleaded by the Plaintiff and prays that the suit be dismissed with costs. 7.At the hearing, the Plaintiff called one witness, its Finance and Insurance Officer, Samuel Ngige Kamau (PW1), who adopted his witness statement dated 2nd June 2021 and produced the Plaintiff's Bundle of Documents dated 13th August 2024, which were admitted as PExhibits 1 to 7. The Defendant likewise called one witness, its Sales and Marketing Officer, Teressa Mathenge (DW1), who adopted her witness statement dated 18th July 2024 and produced the Defendant's Bundle of Documents of the same date, which were admitted as DExhibits 1 to 3. Analysis and Determination 8.After the hearing, the parties were directed to file written submissions which are on record and since they reflect the parties’ positions I have summarized above, I will not rehash the same but I will make relevant references in my analysis and determination. From the pleadings and written submissions, I find that these are the abridged issues for determination:i.Whether the Plaintiff has the locus standi to institute and maintain this suit in its own name or whether any right of action vested solely in the insurer under the doctrine of subrogation or assignment;ii.Whether the Defendant breached its contractual duty of care;iii.Whether the Defendant was negligent; andiv.Whether the Plaintiff is entitled to the reliefs sought. 9.The existence and validity of the transport agreement between the parties is not disputed. One of the issues that the Defendant raised, and which I need to address in priority, is the legal standing of the Plaintiff to bring the present claim before this Court. 10.The Defendant submits that the Plaintiff’s case is framed as if it suffered the loss itself and remains directly entitled to recover USD 338,915 and that there is no pleading of subrogation or assignment. That the Plaintiff’s email dated 2nd October 2023 from its Managing Director and Legal Officer, reveals the Plaintiff had already been fully indemnified by its insurer albeit without the insurer being expressly named in the email. That this material fact was conspicuously absent from the Plaint and not disclosed in the witness statement and that the Plaintiff presented the claim as one by an uninsured party still bearing the loss. 11.The jurisprudence in this regard is settled. There is no doubt that the Plaintiff was entitled to file suit against the Defendant under the doctrine of subrogation. The Court of Appeal, in Michael Hubert Kloss & Another V David Seroney & 5 Others, [2009] KECA 146 (KLR) confirmed this position and stated:“The insurance contract was between the 2nd respondent and his insurance company and there is no privity of contract between the two and any of the respondents, save for application of the doctrine of subrogation. The insurer is entitled to recoup its loss from the tortfeasor and can only do so through its insured, in this case the 2nd appellant.” 12.The question in this case is whether the Plaintiff ought to have pleaded subrogation. This question is not novel. It was directly addressed by the KwaZulu-Natal High Court of South Africa in Nkosi V Mbatha, (AR 20/10) [2010] ZAKZPHC 38, a decision cited with approval by this Court, in Joseph Obiero V Stephen Kosgei Kwanbai & 4 Others, [2019] KEHC 9584 (KLR). In Nkosi v Mbatha, supra, the court expressed itself as follows:“However, the plaintiff said it for the first time under cross examination that she was proceeding against the defendant on behalf of the insurer for the recovery of the costs of repairs the insurer paid to her. It does not appear from the plaintiff’s pleadings that she was so suing. I am of the view that a subrogation claim is something which must clearly be proved and specifically pleaded. Nor had any mention been made in the plaintiff’s pleadings that her motor vehicle was insured and that after collision the insurer fully indemnified the plaintiff for the loss she had suffered. Nor did the plaintiff plead that the amount to be recovered from the defendant would be paid over to the insurer.The object of pleadings is to define the issues between the parties and the parties must be kept strictly to their pleas where any departure could cause prejudice. See Robinson V Randfontein Estates G M Co. Ltd 1925 AD 173 at 178 as per Rose-Innes CJ. The party is therefore not allowed to direct the attention of the other party to one issue and at the trial attempt to canvass another Nyandeni V Natal Motor Industries Ltd 1974 (2) SA 274 (D). In the request for further particulars the plaintiff was specifically asked whether the motor vehicle was at the time of the collision insured, and whether she had personally paid for the repairs. The plaintiff refused to answer the questions posed to her on grounds that the information requested was not required for Pleading. In my view, the plaintiff had thereby misled the defendant as to the time and correct state of events and as to the nature of her claim.” 13.This decision is directly applicable to the circumstances of the present case. It was not until cross-examination that PW1 disclosed, for the first time, that the Plaintiff had already been fully indemnified by its insurer in respect of the cargo loss the subject of this suit. This revelation did not emerge from the Plaint or any of the Plaintiff's pleadings. More tellingly, an email communication from the Plaintiff's own agent, found at page 37 of DExhibit 3, candidly acknowledged that by reason of having been compensated by the insurer, the agent's hands were tied and that it was the insurer, and not the Plaintiff, that ought to be pursuing the claim. The email reads in part that their “… hands are tied once we were compensated by insurance”. 14.Notwithstanding this position, the Plaint is entirely silent on the matter of insurance, subrogation, or any assignment of the right of action. There is no averment that the Plaintiff had been indemnified, no pleading that it was suing on behalf of or for the benefit of the insurer, and no disclosure that any recovery would be held in trust for or paid over to the insurer. 15.I do agree with the Defendant that having been fully indemnified by its insurer, the Plaintiff ceased to have any subsisting financial interest in the cause of action. This state of affairs strikes at the heart of the doctrine of indemnity, which is one of the most fundamental principles underpinning insurance law. The doctrine holds that insurance is intended to place the insured in the same financial position as they were before the loss occurred; no better and no worse. It is not an instrument of profit. Once an insured has been fully indemnified for a loss, the insured is made whole, and the right to pursue the wrongdoer for that loss passes to the insurer by operation of the doctrine of subrogation as reaffirmed by the Court of Appeal in Africa Merchant Assurance Company V Kenya Power & Lighting Company Limited, [2018] KECA 112 (KLR). 16.The two doctrines are inextricably intertwined. Subrogation exists precisely to give effect to and to preserve the principle of indemnity by ensuring that the insured does not recover twice for the same loss; once from the insurer and again from the third party. To permit such a dual recovery would be to convert an indemnity policy into a windfall, a result that equity will not countenance. 17.In order to properly maintain this suit, the Plaintiff was required to pursue one of two courses: either to sue expressly under the doctrine of subrogation on behalf of the insurer, with that fact specifically pleaded, or to obtain a formal assignment of the right of action from the insurer and plead that assignment accordingly. The Plaintiff did neither. It filed suit as though it had suffered an uncompensated loss, concealed from the court and from the Defendant the fact of its prior indemnification, and sought to recover the full measure of a loss for which it had already been made whole. This conduct is irreconcilable with the doctrine of indemnity and is fundamentally incompatible with the equitable foundations upon which the law of subrogation rests. 18.As such, the damages sought by the Plaintiff in the sum of USD 338,915, whether by way of specific damages, general damages, or otherwise, cannot be sustained. The Plaintiff, having already received full indemnification from its insurer, has suffered no subsisting loss that is recoverable at law. To award the Plaintiff the damages claimed would be to sanction a prohibited double recovery, unjustly enrich the Plaintiff at the expense of the Defendant, and render the doctrine of indemnity a dead letter. This court declines to do so. 19.Having so found, and considering that the suit before me is fatally defective for the reasons stated, the question as to the negligence or contractual liability of the Plaintiff is inconsequential and so are the other issues that arise for determination. Disposition 20.In the premises, the Plaintiff's suit is hereby dismissed in its entirety. The Defendant is awarded the costs of this suit. DATED, SIGNED AND DELIVERED AT NAIROBI THIS 26TH DAY OF JUNE 2026.F. MUGAMBIJUDGEDelivered in presence of:Kawamara for the plaintiffMuchiri for the defendantCourt Assistants: Lillian & Gloria