https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9193

Fidelity Shield Insurance Company Ltd v Mutinda (Civil Appeal E834 of 2024) [2026] KEHC 9193 (KLR) (Civ) (25 June 2026) (Judgment) Neutral citation: [2026] KEHC 9193 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Law Courts) Civil Civil Appeal E834 of 2024 WA Okwany, J June 25, 2026 Between Fidelity Shield Insurance Company Limited Appellant and Daniel Makau Mutinda Respondent (Being an appeal from the judgment of Hon. D.O. Mbeja (PM) delivered on 19th April 2024 in Milimani CMCC No. E10427 of 2021) Judgment Background 1.The Appellant herein issued a Commercial Motor Vehicle Insurance Policy in respect of motor vehicle registration number KAY 354J/ZC 1954, a Mercedes Benz Prime Mover, at the request of one Patrick Ngei Mutyetumo. 2.During the subsistence of the policy, the Respondent sustained bodily injuries in a road traffic accident involving the insured motor vehicle. The Respondent subsequently instituted proceedings in Machakos CMCC No. 860 of 2012 and obtained judgment against the insured. Following an appeal in Machakos HCCA No. 28 of 2018, the decretal amount in favour of the Respondent was enhanced to Kshs. 2,300,000 together with costs and interest. 3.The Appellant however declined to satisfy the decree thereby prompting the Respondent to institute declaratory proceedings in Nairobi CMCC No. E10427 of 2021 seeking orders to compel the Appellant, as the insurer, to satisfy the decree pursuant to the provisions of Section 10 of the Insurance (Motor Vehicle Third Party Risks) Act, Cap 405 Laws of Kenya (the Act). 4.The Appellant opposed the claim, contending that although it had issued the insurance policy, the Respondent was not among the persons covered under the policy and that the claim fell within statutory and contractual exclusions. It further contended that its liability could not exceed the statutory limit prescribed under Section 5(b)(iv) of the Act. The Trial Court's Findings 5.Upon considering the evidence and submissions presented by the parties, the trial court found that:i.A valid policy of insurance had been issued in respect of the subject motor vehicle.ii.A decree had been issued in favour of the Respondent in Machakos CMCC No. 860 of 2012 and remained unsatisfied.iii.Statutory notice under Section 10 of the Insurance (Motor Vehicle Third Party Risks) Act had been issued to the Appellant.iv.The Appellant had been duly notified of the primary suit and the impending proceedings.v.The Respondent had established a prima facie case entitling him to the declaratory reliefs sought. 6.The court consequently entered judgment in favour of the Respondent as sought in the plaint together with costs and interest. Aggrieved by the said decision, the Appellant lodged the present appeal. The Appeal 7.The Appellant challenges the judgment on several grounds, namely that the learned trial magistrate:a.Erred in law and fact in holding that the Appellant was liable to satisfy the decree issued in Machakos CMCC No. 860 of 2012.b.Failed to properly interpret and apply Sections 5(b) and 10(1) of the Insurance (Motor Vehicle Third Party Risks) Act.c.Misapprehended the distinction between persons covered under Sections 5(b)(i) and 5(b)(ii) of the Act.d.Misconstrued the contractual relationship created by the insurance policy and conferred benefits on a person allegedly outside the policy coverage.e.Failed to find that the Respondent's claim fell within the exclusions contemplated under Section 5(b)(iv) of the Act.f.Failed to appreciate the evidence regarding the policy terms and conditions.g.Disregarded the evidence tendered on behalf of the Appellant.h.Reached a decision contrary to the weight of evidence.i.Failed to properly consider the Appellant's submissions and cited authorities. 8.The Appellant seeks orders setting aside the judgment of the trial court, dismissing the Respondent's suit, and awarding costs of both the appeal and the suit below. 9.The appeal was canvassed by way of written submissions which the parties’ advocates highlighted at the hearing of the appeal, The Appellant's Submissions 10.The Appellant submitted that the Respondent was an employee and turn-boy aboard the insured motor vehicle and was therefore not a person whose claim automatically attracted compulsory statutory coverage under the Insurance (Motor Vehicle Third Party Risks) Act. 11.It contended that the policy expressly limited the category of persons entitled to benefit from the insurance cover and that the Respondent's claim fell outside the scope of mandatory indemnity. Reliance was placed on the policy document and authorities interpreting Sections 5 and 10 of the Act. 12.The Appellant further argued that the trial court failed to appreciate that Section 5(b)(iv) of the Act limits liability to Kshs. 3,000,000 in respect of claims by one person and therefore erred in ordering satisfaction of the decree without considering the statutory cap on liability. 13.The Appellant submitted that the central issue before the trial court ought to have been whether a turn-boy injured in the course of employment is covered under Section 5 of the Act. 14.It was argued that the trial court framed the issue narrowly by considering only Section 5(b)(ii) while failing to consider Section 5(b)(i), which excludes liability arising from death or bodily injury sustained by an employee in the course of employment. 15.The Appellant pointed to evidence from the Machakos proceedings showing that the Respondent was employed by Patrick Ngei Mutyetumo as a turn-boy on the insured vehicle and was injured while carrying out his employment duties. Reliance was placed on passages from the judgment in Machakos HCCA No. 28 of 2018, which confirmed the existence of an employment relationship between the Respondent and the insured and that the Respondent worked as a turn-boy on the insured vehicle. The impugned judgment also confirmed that the accident occurred while the Respondent was acting in the course of his employment. 16.The Appellant submitted that these facts place the Respondent squarely within the category of employees contemplated under Section 5(b)(i) of the Act, whose claims are excluded from compulsory third-party cover. 17.According to the Appellant, compulsory third-party insurance does not extend to employees injured in the course of employment and that an insurer cannot be compelled to satisfy liabilities expressly excluded by statute or by the policy contract. For this argument, the Appellant relied on judicial authorities including James Muriithi Mugo vs. Kenya Alliance Insurance Co. Ltd (2016) eKLR; Gateway Insurance Company Ltd vs. Sudan Mathews (2003) eKLR; and UAP Insurance Co. Ltd vs. Patrick Charo Chiro (2021) eKLR. 18.The Appellant also referred to the testimony of its witness, Sammy Kamau Wanjiku, who stated that the policy did not include employers' liability cover and expressly excluded claims by employees arising out of and in the course of employment. 19.The Appellant further submitted that the trial court improperly relied on the absence of evidence that the insured had received a copy of the policy document. It maintained that a certificate of insurance is ordinarily issued following a proposal by the insured and that the policy terms form part of the contractual arrangement between the insurer and the insured. Consequently, the court ought to have interpreted and enforced the policy as written. 20.Regarding Section 10 the Act, the Appellant submitted that a declaratory action can only succeed where the liability is one required to be covered under Section 5 thereof and is in fact covered by the policy. It contended that the Respondent does not satisfy those requirements because he was an employee excluded from cover. 21.The Appellant additionally argued that the decree sought to be enforced exceeded the statutory limit contemplated under Section 5(b)(iv) of the Act, which limits an insurer's liability to Kshs. 3,000,000 in respect of a claim by one person. It contended that the trial court failed to consider that limitation when entering judgment. The Respondent's Submissions 22.The Respondent's position was that a valid insurance policy existed in respect of the subject motor vehicle and that it obtained a lawful decree against the insured arising from injuries sustained in the accident. He added that the insurer was duly notified of the proceedings giving rise to the decree and that having issued the policy and certificate of insurance, the Appellant became obligated to satisfy the judgment obtained against its insured. 23.The Respondent opposed the appeal and raised preliminary objections to its competence on the basis that the Appellant had obtained conditional leave to appeal out of time but failed to comply with all conditions imposed by the court. It was further contended that the Record of Appeal was incomplete as it omitted crucial portions of the Respondent's evidence. 24.The Respondent further contended that the trial court correctly found that the Appellant was bound to satisfy the decree and that the declaratory suit met the requirements of Section 10 of the Act. 25.The Respondent also argued that several issues raised in the appeal, particularly those concerning Section 5(b)(iv) of the Act, had never been pleaded, canvassed or determined before the trial court and could not therefore properly be raised for the first time on appeal. Reliance was placed on Daniel Toroitich Arap Moi & Another vs. Mwangi Stephen Muriithi & Another [2014] eKLR; Republic vs. Tribunal of Inquiry to Investigate the Conduct of Tom Mbaluto & Others Ex Parte Tom Mbaluto [2018] eKLR; Kenya Hotels Ltd vs. Oriental Commercial Bank Ltd [2019] eKLR; Odd Jobs vs. Mubia [1970] EA 476; Nyang'au vs. Nyakwara [1986] KLR 712 and Securicor (Kenya) Ltd vs. E.A. Drapers Ltd [1987] KLR 338. 26.It was submitted that parties are bound by their pleadings and evidence and that submissions cannot substitute evidence. 27.On coverage under Section 5(b)(ii) of the Act, the Respondent argued that it was undisputed that he was an employee of the insured and a turn-boy in the insured commercial vehicle being carried in the said vehicle pursuant to his contract of employment. 28.It was submitted that the Respondent accordingly fell within the class of persons protected under Section 5(b)(ii) of the Act. Heavy reliance was placed on the Court of Appeal decision in James Muriithi Mugo vs. Kenya Alliance Insurance Co. Ltd, Nakuru Civil Appeal No. 203 of 2010 where the Court held that Section 5(b)(ii) creates a category of employees, including drivers and turn-boys, who must be covered by compulsory insurance and are treated as third parties for purposes of the Act. 29.The Respondent submitted that the doctrine of stare decisis obligated this Court to follow that decision. 30.Further reliance was placed on Francis Munyua Wanyoike vs. General Accident Insurance Co. Ltd [2007] eKLR and Corporate Insurance Co. Ltd vs. Julius Mwangi Irungu [2020] eKLR. 31.It was the Respondent’s case that the Appellant's own insurance policy expressly mirrored Section 5(b)(ii) of the Act and excluded from the exemption clause passengers carried pursuant to contracts of employment. 32.It was argued that the policy itself therefore recognized coverage of persons such as the Respondent. 33.The Respondent further submitted that the primary judgment was for Kshs. 2,300,000, which was below the statutory limit of Kshs. 3,000,000 imposed under Section 5(b)(iv) of the Act. 34.According to the Respondent, interest accrued only because the insurer failed to honour its statutory obligation under Section 10 of the Act. It was argued that post-judgment interest falls outside the statutory cap and remains payable by the insurer. 35.Reliance was placed on Kenindia Assurance Co. Ltd vs. IG (Minor suing through next friend PBO) [2024] KEHC 1207 (KLR); Directline Assurance Co. Ltd vs. Mganga (Legal Representative of the Estate of Simon Chilango Kiwila) [2023] KEHC 27005 (KLR); Peter Gichihi Njuguna vs. Jubilee Insurance Co. Ltd [2016] eKLR; Bernard Mutisya Wambua vs. Kenya Orient Insurance Co. Ltd [2020] eKLR and Kiamuko & Another vs. ICEA Lion General Insurance Co. Ltd [2022] eKLR. 36.The Respondent therefore urged the Court to dismiss the appeal. Issues for Determination 37.Having considered the Record of Appeal, the judgment appealed from and the parties' submissions, I find that the following issues arise for my determination:a.Whether the Respondent was a person covered under Section 5(b)(ii) of the Insurance (Motor Vehicles Third Party Risks) Act;b.Whether the Appellant was statutorily bound under Section 10 of the Act to satisfy the judgment obtained against the insured;c.Whether the Appellant can rely on Section 5(b)(iv) of the Act to avoid liability;d.Whether post-judgment interest is recoverable from the insurer;e.Whether the trial court erred in entering judgment in favour of the Respondent. 38.As the first appellate court, this Court is obliged to reconsider, re-evaluate and analyse the evidence and law afresh while bearing in mind that it neither saw nor heard the witnesses testify. (See Selle vs. Associated Motor Boat Co. Ltd [1968] EA 123). Analysis and Determination 39.Section 5(b) of the Insurance (Motor Vehicles Third Party Risks) Act provides that:“In order to comply with the requirements of section 4, the policy of insurance must be a policy which—…..(b)insures such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle on a road:Provided that a policy in terms of this section shall not be required to cover—(i)liability in respect of the death arising out of and in the course of his employment of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment; or(ii)except in the case of a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, liability in respect of the death of or bodily injury to persons being carried in or upon or entering or getting on to or alighting from the vehicle at the time of the occurrence of the event out of which the claims arose." 40.The dispute herein revolves around the the meaning and effect of Section 5(b)(ii) of the Act. 41.Section 10(1) of the Act on the other hand, imposes a statutory obligation upon an insurer to satisfy judgments falling within the risks required to be covered under Section 5 of the said Act. The Section stipulates as follows:“If, after a policy of insurance has been effected, judgment in respect of any such liability as is required to be covered by a policy under paragraph (b) of section 5 is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel the policy, the insurer shall, subject to this section, pay to the persons entitled to the benefit of the judgment any sum payable thereunder in respect of the liability..." 42.On whether a Turn-Boy is Covered under Section 5(b)(ii) of the Act, I find that the starting point is the statutory text. Section 5(b)(ii) expressly recognizes passengers carried “by reason of or in pursuance of a contract of employment.” 43.The evidence on record demonstrates that the Respondent was employed as a turn-boy. His duties naturally related directly to the operation of the commercial motor vehicle and he was therefore travelling in the said vehicle pursuant to his contract of employment. A simple reading of Section 5(b)(ii) of the Act reveals that it expressly requires compulsory insurance cover in respect of passengers carried by reason of or in pursuance of a contract of employment. 44.I note that the issue before this court is precisely the same issue that the Court of Appeal considered in James Muriithi Mugo vs. Kenya Alliance Insurance Co. Ltd (supra). In the said decision, the Court distinguished between employees falling under Section 5(b)(i) and those covered under Section 5(b)(ii). The Court observed, in substance, that Section 5(b) creates two categories of employees and that employees whose duties relate to the vehicle itself, including drivers and turn-boys travelling pursuant to their employment, fall within the category that must be compulsorily covered. 45.The Court further held that such an employee is treated as a third party for purposes of compulsory insurance. 46.I find that the interpretation by the Court of Appeal directly answers the issue before this Court and that the Respondent therefore falls squarely within the category of persons protected by Section 5(b)(ii) of the Act. 47.I find that the facts of the present case are materially indistinguishable from those considered by the Court of Appeal in James Muriithi Mugo case as both cases involved a commercial motor vehicle, an employee carried in the vehicle pursuant to employment, a dispute concerning the applicability of Section 5(b)(ii) and the insurer's obligation under Sections 5 and 10 of the Act. 48.It is my finding that the ratio decidendi in James Muriithi Mugo case is therefore directly applicable and binding to this case and find no basis for departing from it. In Dodhia vs. National & Grindlays Bank Ltd [1970] EA 195, the Court emphasized the importance of judicial precedent in ensuring certainty and consistency in the law. 49.It is a well-hackneyed principle that High Courts are bound by decisions of the Court of Appeal. 50.On the issue of whether the Appellant was obligated to satisfy the judgment, it is my view that having found that the Respondent was a person covered by compulsory insurance, it follows that Section 10 of the Act imposed upon the insurer a statutory obligation to satisfy any judgment obtained against its insured in respect of such liability. 51.I therefore find that the declaratory suit was properly instituted as the Appellant has not demonstrated any statutory exemption relieving it of that obligation. 52.On whether Section 5(b)(iv) of the Act avails the Appellant, the Respondent pointed out that the issue regarding Section 5(b)(iv) was not pleaded or canvassed before the trial court. 53.It is trite that an appellate court generally determines matters that were pleaded, tried and decided by the court below. The authorities cited by the Respondent correctly state the principle that a party may not introduce a completely new case on appeal. 54.In Kenya Hotels Ltd vs. Oriental Commercial Bank Ltd [2019] eKLR, the Court reiterated that appellate courts should not entertain matters not properly raised before lower courts and emphasized adherence to established appellate principles. 55.The law is settled that parties are bound by their pleadings. In Republic vs. Tribunal of Inquiry into the Conduct of Tom Mbaluto & Others Ex Parte Tom Mbaluto [2018] eKLR, the Court emphasized that submissions must be anchored upon pleaded issues and evidence. 56.Similarly, in Daniel Toroitich Arap Moi & Another vs. Mwangi Stephen Muriithi & Another [2014] eKLR, the Court stated that submissions cannot take the place of evidence. 57.The Court of Appeal has consistently held that an appellate court should not determine issues that were neither pleaded nor determined in the court below. 58.The authorities cited by the Respondent, including Nyang'au vs. Nyakwara [1986] KLR 712 and Securicor (Kenya) Ltd vs. E.A. Drapers Ltd [1987] KLR 338, support that proposition. 59.The record before this Court supports the Respondent's contention that the issue under Section 5(b)(iv) emerged principally through submissions rather than pleadings and evidence. 60.Accordingly, I find that since the issue was not properly before the trial court it cannot form a valid basis for upsetting the judgment. 61.My above findings notwithstanding and even assuming, for argument’s sake, that the issue of Section 5(b)(iv) was properly before this Court, I still note that the decretal sum in the substantive suit was Kshs. 2,300,000, which was way below the statutory cap of Kshs. 3,000,000. 62.Section 5(b)(iv) of the Act was introduced through amendments that imposed a statutory limit on an insurer's liability in respect of any one claim. Kenyan courts have repeatedly interpreted the provision as capping the insurer's liability at Kshs. 3,000,000 for any one claim. 63.The provision is commonly cited as providing, in substance, that:“A policy shall not be required to cover liability of any sum in excess of three million shillings arising out of a claim by one person.” 64.The provision means that an insurer's compulsory statutory liability under Cap. 405 is capped at Kshs. 3,000,000 in respect of any one claimant's claim. This connotes that if a court awards a claimant more than Kshs. 3,000,000 as damages, the insurer's liability under the statute is ordinarily limited to Kshs. 3,000,000, while the balance remains recoverable from the insured tortfeasor unless otherwise covered by the insurance contract. 65.Courts have however distinguished between the principal decretal amount, subject to the statutory cap, and post-judgment interest and costs. Recent High Court decisions have held that interest accruing due to an insurer's failure to satisfy a judgment may remain payable notwithstanding the statutory limit. This is the position that was adopted in Directline Assurance Co. Ltd vs. Mganga (Legal Representative of the Estate of Simon Chilango Kiwila) [2023] KEHC 27005 (KLR), where the Court reasoned that an insurer cannot benefit from its own delay and then rely on the statutory cap to avoid payment of the resulting interest. 66.Similarly, in Kenindia Assurance Co. Ltd vs. IG (Minor) [2024] KEHC 1207 (KLR), the Court held that the question is not whether the statutory cap exists, but whether interest accruing because of non-payment should be shifted to the insured despite the insurer's failure to satisfy its statutory obligation. 67.Comparable reasoning appears in other cases such as Peter Gichihi Njuguna vs. Jubilee Insurance Co. Ltd [2016] eKLR, Bernard Mutisya Wambua vs. Kenya Orient Insurance Co. Ltd [2020] eKLR and Kiamuko & Another vs. ICEA Lion General Insurance Co. Ltd [2022] eKLR. 68.I respectfully agree with the holdings in the above cited cases as to hold otherwise would set a dangerous precedent that may permit an insurer to delay settlement indefinitely while shifting the consequences of its own default to the insured or successful litigant. The purpose of Section 10 is to ensure effective satisfaction of judgments and protection of third parties. My take is that the objective of Section 10 would be undermined by such an interpretation. 69.I therefore find that post-judgment interest accruing on the decretal sum remains recoverable from the insurer. It is clear that the judgment in the primary suit was Kshs. 2,300,000, which is below the statutory cap and therefore Section 5(b)(iv) did not limit the insurer's liability to the principal award. Any amount exceeding Kshs. 3,000,000 arose through interest accruing after judgment because of the insurer's refusal or delay in satisfying the decree. Accordingly, Section 5(b)(iv) would not avail the Appellant in relation to the principal judgment sum. 70.Having reconsidered the entire record and the applicable law, I find no error on the part of the learned trial magistrate as he correctly identified the Respondent as a turn-boy carried pursuant to his contract of employment, applied Section 5(b)(ii) of the Act, applied binding Court of Appeal authority and held that the insurer was liable under Section 10. 71.I therefore find that the appeal lacks merit and I hereby dismiss it in its entirety in the following terms:a.The judgment and decree of the subordinate court are hereby affirmed.b.It is hereby declared that the Respondent, being a turn-boy carried in the insured commercial motor vehicle pursuant to his contract of employment, was a person compulsorily covered under Section 5(b)(ii) of the Insurance (Motor Vehicles Third Party Risks) Act, Cap 405.c.The Appellant was and remains statutorily obligated under Section 10 of the Act to satisfy the judgment obtained against its insured.d.The Appellant shall satisfy the decretal amount together with accrued interest and costs in accordance with the decree.e.The Respondent shall have the costs of this appeal.It is so ordered. DATED, SIGNED AND DELIVERED AT NAIROBI THIS 25TH DAY OF JUNE 2026.HON W A OKWANYJUDGEIn the presence ofMuma for AppellantMs Obanga for RespondentAbdirzak – Court Assistant