Directline Associaton Co. Ltd v Kabogo (Civil Appeal E594 of 2024) [2026] KEHC 8838 (KLR) (Civ) (20 May 2026) (Judgment)

Directline Associaton Co. Ltd v Kabogo (Civil Appeal E594 of 2024) [2026] KEHC 8838 (KLR) (Civ) (20 May 2026) (Judgment) Neutral citation: [2026] KEHC 8838 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Law Courts) Civil Civil Appeal E594 of 2024 AN Ongeri, J May 20, 2026 Between Directline Associaton Co. Ltd Appellant and Julius Njenga Kabogo Respondent (Being an appeal from judgment of Hon. E. TSIMONJERO (SRM) in Milimani CMCC No. e1760 of 2021 delivered on 13/10/2023) Judgment 1.The appellant in this appeal Directline Assurance Kenya Ltd was sued by the respondent, Julius Kabogo Njenga who was seeking general damages for breach of contract, damages for loss of user and loss of business for detention of motor vehicle registration no. KBN 291V. 2.The respondent’s motor vehicle which was insured by the appellant was detained pursuant to a judgment delivered in Milimani CMCC No. 3158 of Ksh.573,407 which the appellant was supposed to settle but did not. 3.The respondent’s motor vehicle was detained for 41 days before it was released by the auctioneers. 4.The motor vehicle was a commercial vehicle and the respondent filed suit seeking loss of user and damages for breach of contract. 5.The appellant entered appearance and filed a defence dated 10/8/2021 denying the respondent’s claim. 6.The appellants said the respondent failed to comply with the terms of the police by failing to report the accident within the stipulated time. 7.The trial court found that the appellant filed an application on 9/4/2018 seeking stay of execution of the judgment. The respondent’s motor vehicle was attached on 12/4/2018 and therefore was aware of the suit. 8.The court award nominal damages of kshs.100,000 and kshs. 2,00 per day for loss of user (2,000x31 days)-82,000 making a total award of kshs.182,000. 9.The applicant has appealed against the said appeal on the following grounds:i.That the learned magistrate erred in law and in fact by shifting the burden of proof of evidence to the appellant thereby misdirecting himself in law and thus arriving at a completely erroneous decision.ii.That the learned magistrate erred in law and in fact by failing to consider all the material facts that had been placed before the court and thereby failed to take into account relevant matters that he ought to have considered and instead considered irrelevant matters and as a result arrived at a completely erroneous decision.iii.That the learned trial adjudicator erred in law and in fact in holding the appellant liable to pay the sum of kshs.182,000/= when in fact no evidence was placed before the trial court to support such a finding.iv.That the learned magistrate erred in law and in fact by misdirecting himself on the terms and conditions of the contract entered between the claimant and the respondent thereby leading to an erroneous finding when the evidence adduced did not support such a finding.v.That the learned trial adjudicator erred in law and in fact in failing to appreciate or take into consideration the appellant’s submissions or at all.vi.That the learned trial adjudicator grossly misdirected himself in ignoring the principles applicable and relevant authorities cited in the written submissions presented filed by the appellant.vii.That the learned trial magistrate consequently erred in law and in fact in awarding cost and interests thereto. 10.The parties filed written submissions as follows: the appellant submitted that the basis upon which the appellant denied the respondent’s claim is captured in the policy. 11.In particular the appellant pleaded that there was failure on part of the respondent to document the claim or notify the appellant on the occurrence of the accident or the subsequent court summons. 12.On being cross examined, the respondent testified that he had filed the claim supporting documents since according to him the documents were retained by the appellant. 13.On further cross examination he confirmed not having reported to the police or any institution that documents were being withheld from him. 14.The appellant argued that the exact clause is captured under section Four (c) General Conditions, warranties and endorsements at paragraph J of the insurance policy, states;“In the event of any occurrence that may give rise to a claim under this policy, the insured shall notify the company with full particulars immediately but not later than fourteen (14) days after the happening of such event.” 15.The appellant argued that the respondent cannot escape from a bargain that he feely entered into. The respondent breached the contract when they failed to notify the appellant of the occurrence of the accident. 16.The appellant submitted that the respondent claimed loss of user of the vehicle from 12/4/2018 to 22/5/2018. The Appellant argued that this claim is without any merit as the same was not provided for under the policy. 17.In fact, it is express that the Appellant would not be liable for any consequential loss. This is captured under Section Four (B) General Exceptions to the policy at paragraph 6 which states:“The company shall not be liable in respect of any consequential loss” 18.The appellant argued that the respondent claimed for general damages which are not awarded for breach of contract. in support the appellant cited Kenya Tourist Development Corporation v Sundowner Lodge Limited [2018] eKLR held as follows:“Beyond the non-recoverability of general damages for breach of contract, a proper consideration of the nature of the respondent's claim ought to have led to the same conclusion that only such proven loss could be compensated by way of damages.” 19.The respondent alternatively submitted that the Appellant was negligent/in breach of its fiduciary duty of loyalty and honesty to the Respondent by virtue of its status as the Respondent's insurer. 20.The Appellant failed to take up the case filed against the Respondent, failed to inform the Respondent that judgment had been entered against him in Milimani CMCC No. 3158 of 2017 and refused to pay or settle the decretal amount after judgment. 21.The Respondent suffered loss of business and income due to the Appellant's actions. The Appellant in its defense opined that the failure to take up the suit and defend the Respondent was occasioned by the Respondent's laxity in failing to document the accident and reporting it within the stipulated timelines provided in the Insurance policy. 22.However, during the hearing, the Appellant's witness did not avail in court any records in their custody pertaining to the policy in question proving its assertions that the Respondent was indeed at fault and reported the accident outside the stipulated timelines in the Insurance Policy. 23.The Appellant undoubtedly as per the testimonies before the trial court later on took up the case albeit after judgment had been entered, execution commenced and the Respondent's vehicle proclaimed. 24.The Appellant paid the decretal amount and settled the claim against the Respondent in CMCC No. 3158 of 2017 long after the Respondent had lost use and possession of its vehicle for a period of forty-one (41) days from 12th April 2018 to 22nd May 2018. 25.The respondent argued that the appellants actions to eventually honour the claim however proves that the Respondent indeed properly documented the accident and informed the Appellant of the same within the stipulated timelines. 26.It is the Respondent's submission that if indeed it's true the Respondent was at fault the Appellant would have been well within its right under the Insurance Policy to refuse to honour the claim. 27.In this case however the Appellant having eventually settled the claim albeit late the Plaintiffs version of facts is the truth. The Respondent was therefore not in breach of the terms of the Insurance policy as alleged. 28.There was no doubt the Respondent's motor vehicle was involved in an accident, a suit was filed against the Respondent, judgment was entered against him and his vehicle was proclaimed by auctioneers in satisfaction of the decretal sum. 29.The suit was undefended and despite the Appellant asserting that the Respondent did not document the accident and failed to report the accident within the stipulated timelines, the Appellant never adduced in court the claim forms/ documents in their possession proving that indeed it was the Respondent that breached the terms of the Insurance Policy. 30.The respondent submitted that the Respondent's claim for loss of user where he had lost his matatu for a period of forty-one (41) days is merited. 31.The trial court therefore exercised its discretion correctly in the circumstances herein by using estimates of daily earnings in awarding the Respondent damages for loss of user of his vehicle KBN 291 V. 32.The respondent contended that an estimate of net earnings at Kshs. 2,000 a day as assessed by the trial court was appropriate in the case herein. 33.For loss of use the trial court awarded the Respondent a sum of Kshs. 82,000 which award was correct and urge the appellate court herein to sustain the award under this sub head. 34.The issues for determination in this appeal are as follows;i.Whether the respondent breached the insurance contract by failing to report the accident within the stipulated timelines;ii.Whether the insurer waived its right to rely on the exemption clause by eventually settling the third-party claim; andiii.Whether the trial court erred in awarding nominal damages and damages for loss of user. 35.The appellant's contention that the respondent is barred from claiming because he failed to report the accident within fourteen days as required by Section Four (c) of the policy document cannot stand. 36.The burden of proof to demonstrate that the insured breached a specific warranty or condition of the contract rests squarely upon the insurer who asserts it. 37.Where an insurance company relies on a breach of policy terms to escape liability, it must adduce cogent evidence to prove the alleged non-compliance. 38.In this case, the appellant failed to produce the claim forms or internal registry records during the trial to verify the exact date the accident report was filed. 39.Furthermore, by subsequently stepping in to pay the decretal sum in Milimani CMCC No. 3158 of 2017, the appellant's actions constituted an implied waiver of any past timeline breaches, validating the respondent's assertion that the claim was accepted and processed. 40.However, on the issue of quantum and types of damages, the trial court erred fundamentally in law. 41.The contract of insurance explicitly states under Section Four (B) Paragraph 6 that the company shall not be liable in respect of any consequential loss. 42.Standard motor vehicle insurance policies are contracts of indemnity against direct physical loss or third-party liability and they do not encompass business disruption unless specifically endorsed and paid for. 43.Claims for loss of user and business profits constitute consequential losses which are completely irrecoverable if explicitly excluded by the policy wording. 44.The loss of user for 41 days suffered by the respondent due to the auctioneer’s attachment arose out of the insurer's delay in settling the third-party decree, which legally amounts to a consequential loss that the parties explicitly contracted out of. 45.Similarly, the trial court's award of nominal damages for breach of contract lacks a sound legal foundation in this context. 46.While nominal damages are generally available under common law to vindicate a legal right where a breach occurs without proved financial loss, they cannot be used by a court to circumvent the clear, express exclusionary terms of a contract. 47.The parties voluntarily bound themselves to a contract that absolved the insurer from any liability extending beyond the direct indemnity of the vehicle or third-party statutory settlements. 48.A court cannot rewrite a commercial bargain to superimpose nominal or general damages for a breach where the resultant damage falls under an excluded head of consequential loss. 49.Consequently, the High Court allows the appeal, sets aside the judgment of the trial court in Milimani CMCC No. E1760 of 2021 in its entirety. 50.Each party to bear their own costs of this appeal. 51.Orders to issue accordingly. DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOFT TEAMS AT NAIROBI THIS 20TH DAY OF MAY, 2026..........................A. N. ONGERIJUDGEDelivered in the absence of the parties.