Fidelity Shield Insurance Company Ltd v Mololo (Civil Appeal E253 of 2025) [2026] KEHC 11906 (KLR) (27 July 2026) (Judgment)

REPUBLIC OF KENY4 # IN THE HIGH COURT OF KENYA AT MACHAROS # CIVIL APPEAL NO. E253 OF 2025 FIDELITY SHIELD INSURANCE COMPANY LIMITED ................APPELLANT ## -VERSUS- JONATHAN MULI MOLOLO ..................................................RESPONDENT JUDGEMENT 1. The Respondent herein had filed a declaratory suit against the Appellant vide a Plaint dated 27th February 2025 in MAVOKO CIVIL CASE No.163 OF 2025-JONATHAN MULI MOLOLO -VS-FIDELITY SHIELD INSURANCE COMPANY LIMITED. The suit proceeded to full trial and a judgement was delivered on the 25th September 2025 in which the trial court held that the Appellant was bound to satisfy a judgment which had been delivered in the primary suit being MAVOKO CMCC NO. 924 OF 2016 under the provision of section 10 of the Insurance (Motor Vehicle Third Party Risks) Act Cap 405 Laws of Kenya. 2. Being aggrieved by the said judgment, the Appellant filed this appeal raising eight (8) grounds of appeal as follows: 3. ***THAT the Learned Magistrate erred in law and fact in holding the Appellant, the Defendant in the suit before the trial court, liable to satisfy the judgment in Mavoko MCCC No. 974 of 2016; Jonathan Muli Mololo –vs-Kanos Kwa Waiaia Limited in the sum of Kshs.3,336,019.04.*** 4. ***THAT the Learned Magistrate erred in fact and in law when she sidestepped the provisions of Section 10 of the Insurance (Motor Vehicle Third Party Risks) Cap 405 Laws of Kenya by holding that the Appellant was liable to satisfy a judgment brought against a party that the Appellant had not insured.*** 5. ***THAT the Learned Magistrate erred in fact and in law and misdirected himself by issuing a judgment that was declaratory nature given that the Appellant had not provided insurance coverage to the Defendant in the primary suit, and as such, no insurance contract existed, thereby unjustly compelling the Appellant to cover a party they had not insured.*** 6. ***THAT the Learned Magistrate erred in fact and in law by erroneously holding that the Respondent had met the conditions set under Section 10 Cap 405 Laws of Kenya which was the substratum provision of the suit in the trial court yet some of the conditions had not been fulfilled.*** 7. ***THAT the Learned Magistrate erred in law and in fact by failing to consider the Appellant’s submissions and judicial authorities on liability thereby arriving at an erroneous decision.*** 8. ***THAT the Learned trial Magistrate erred in law and in fact by ignoring/disregarding binding precedents and decisions of superior courts (High Court and Court of Appeal) submitted by the Appellant on the question of liability under Section 10 of Cap 405 Laws of Kenya.*** 9. ***THAT the learned magistrate misdirected himself on the provisions of the Evidence Act by conclusively relying on the information in the police abstract as proof of insurance.*** 10. ***THAT the Learned Magistrate erred in law and fact by applying the wrong and or did not apply the correct law, tests, doctrines and principles relating to evidence tendered by the Appellant thereby arriving at an erroneous decision.*** 11. It is proposed to ask the court for orders that: - 12. *This appeal be allowed.* *2. The judgment delivered by Honourable S. K. Kemei-SPM on 29th September 2025 be reversed and set aside.* *3. The Appellant be awarded costs of this appeal* 1. The appeal was canvassed through written submissions. In this regard, I have perused the trial court’s record and considered the grounds of appeal and the submissions filed by Mugambi Mungania & Company Advocates for the Appellant, as well as the submissions filed by Kitindio Musembi & Company advocates for the Respondent. **Analysis and Determination** 1. This being a first appeal, this court is under a duty to reconsider the evidence adduced and analyse it so as to be able to reach its own independent conclusions and thus determine whether the conclusions reached by the trial court are consistent with the evidence and the applicable law. In **Gitobu Imanyara & 2 Others vs Attorney General [2016] eKLR** the Court held that: *"This being a first appeal, it is trite law that this court is not bound necessarily to accept the findings of fact by the court below and that an appeal to this court from a trial by the High Court is by way of a retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect”* 1. I have carefully considered the trial court’s record, the grounds of appeal and the respective submissions filed by the parties’ counsel. 2. In accordance with the provisions of Section 107 of the [Evidence Act](https://kenyalaw.org/akn/ke/act/1963/46) (Cap.80), the burden was on the Plaintiff now Respondent to prove his claim against the Defendant now the Appellant. It being a civil case, the standard of proof was on the balance of probabilities. 3. I note that each side called only one witness at the trial. The Plaintiff/Respondent adopted his statement dated the 27th February 2025 and filed in court on the same date. He also produced the documents as per the list of documents filed also on 27th February 2025. 4. The Plaintiff had also filed further plaintiff's list of documents dated 4th July 2025 and also further plaintiff's statement dated 4th July 2025 to which he adopted the same. On cross-examination the Plaintiff confirmed that he got the details of the Defendant, (KWA WAIAIA LIMITED) in the primary suit being MAVOKO PMCC NO. 974 OF 2016 from the search of the copy of records from KRA records and this position of ownership was supported by DW-I Sammy Kamau on cross-examination when he stated that the only person who has insurable interest of motor vehicle is the owner of vehicle and agreed that one way to establish ownership is getting details of the registered owner as per the copy of records. The Plaintiff case was therefore closed. 5. The copy of records of suit motor vehicle registration No. KBJ 754A filed in the list of documents in primary suit MAVOKO PMCC NO. 974 OF 2016 confirmed that KWA WAIAIA LIMITED was the registered owner of Suit Motor Vehicle Registration No. KBJ 764A at the time of accident which occurred on 21st March 2014 and therefore as per the evidence of DW-I that the registered owner is the party who has insurable interest. Therefore, the defendant in primary suit was the party with insurable interest and therefore in the circumstances the Appellant’s insured thereof. 6. The Defendant (Appellant herein) called one witness SAMMY KAMAU who testified as DWI and adopted his statement dated 20th June 2025 and produced a copy of policy schedule issued in respect of the suit motor vehicle registration No. KBJ 764A which document was contained in the Defendant's list of documents dated 20th June 2025. On cross-examination DWI admitted that Defendant herein FIDELITY SHIELD ASSURANCE COMPANY LIMITED had insured the subject motor vehicle Registration No. KBJ 764A albeit under a person known as **Ajaa Olubayi** but failed to produce any document to prove that the said Ajaa Olubayi was the registered owner of the suit Motor vehicle herein as at the time of the accident and therefore as per the evidence of DWI the only person who has insurable interest is ordinarily the registered owner and therefore the registered owner who was sued in primary suit MAVOKO PMCC NO. 974 OF 2016, was the said **KWA WAIAIA LIMITED** which had insurable interest over suit motor vehicle Registration No. KBJ 764A and in absence of any other evidence to the contrary, in this court’s view that the Defendant herein having admitted to have insured the suit motor vehicle at the time of accident, they are bound to settle the decretal sum in the primary suit subject of the declaratory suit. 7. The Plaintiff's further list of documents dated 4/7/2025 and further Plaintiff statement dated 4/7/2025 clearly confirms that the said Ajaa Olubayi was the advocate who represented the Appellant herein (Defendant) in primary suit MAVOKO PMCC NO. 974 OF 2016, in court practicing in the name and style of Ajaa Olubayi & Co. Advocates and since at all the material period when the accident occurred on 21/3/2014 the suit motor vehicle Registration No. KBJ 784A was insured by the Appellant herein, this court finds that the Appellant was therefore aware of the existence and proceedings of the primary suit. 8. It is not in dispute that the Appellant was the insurer of the suit motor vehicle of registration number KBJ 764A under policy number **4011072698** as at the time of the accident on 21st March 2014. The Appellant in the trial court attached policy schedule as exhibit No. I for the period between 17.09.2013 and 16.09.2014 indicating the same and further the police abstract produced as Respondent’s exhibit No.2 as it appears in the list of documents dated 27th February 2025 and filed on the even date also confirm that the Appellant was the insurer of the suit motor vehicle as at the time of the accident which facts have not been disputed by either party.  9. In the instant case, this court has established that the Respondent adduced sufficient evidence before the trial court to prove the registered ownership of the suit motor vehicle and the existence of the policy of insurance issued by the Appellant. The Appellant did not dispute the authenticity of that evidence, nor did it produce any contrary evidence to suggest that the subject motor vehicle was registered or owned by **Ajaa Olubayi** and not **Kwa Wiaiaia Limited** or that the policy was invalid, cancelled, avoided, or otherwise unenforceable. To the contrary, the Appellant's own submissions before this Court unequivocally acknowledges that the vehicle was insured by it. This court finds that the Appellant’s admission conclusively settles the issue and removes it from controversy. 10. The Appellant contends that the Defendant in the primary suit, Kwa Waiaia Limited, was not its insured and that the actual insured was one Mr. Ajaa Olubayi. Even assuming, without admitting, that Mr. Ajaa Olubayi was indeed the named insured under the policy, this court’s position is that this fact does not absolve the Appellant from liability. 11. The burden of proving a particular fact to be true lies on the person who alleges the same this is as provided for under Sections 109 and 112 of the Evidence Act, Cap. 80 Laws of Kenya. Section 109 provides that: *"The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person”* 1. The Appellant's attempt to distinguish between the insured motor vehicle and the person sued in the primary suit does not negate the existence of the insurance policy. At the very least, the undisputed fact remains that the Appellant undertook, for valuable consideration, to provide third-party insurance cover in respect of motor vehicle registration number KBJ 764A. Having accepted premiums and issued the policy, the Appellant cannot deny that the first statutory threshold under Section 10 of Insurance (Motor Vehicle Third Party Risks) Act Cap 405 was fully satisfied. 2. This court has also established that prior to instituting the primary suit, the Respondent duly served the Appellant with the statutory notice contemplated under Section 10(2) of the Insurance (Motor Vehicle Third Party Risks) Act, Cap 405 Laws of Kenya. The notice informed the Appellant of the intended proceedings and afforded it an opportunity to investigate the claim and, if the Appellant believed that the policy did not extend to the intended Defendant, to institute a disclaimer suit seeking a determination that it was not liable to satisfy any decree that might be entered. Despite having received the notice, the Appellant took no such action. It neither repudiated the policy nor sought any judicial declaration limiting or avoiding its liability. Having failed to file a disclaimer suit at the earliest opportunity, the Appellant cannot now, after judgment has been entered, seek to avoid its statutory obligation by raising objections that were well within its knowledge from the outset. 3. Under the provisions of Section 10 of Insurance (Third Party Motor Vehicle Risk Act) Cap 405 laws of Kenya, the only obligation of the Respondent to satisfy is only to establish: service of statutory notice upon the Appellant and in this case, there is no dispute that a statutory notice was issued to the Appellant herein in accordance with the law. 4. The Respondent herein illustrated that he complied with all legal requirements as provided by the law. Section 10(1) and (2) of the Insurance (Motor Vehicles Third Party Risks Act) Cap 405 which provides: - *"10(1) 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 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall subject to the provisions of this section, pay to the person entitled to the benefit of the judgment any sum payable thereunder in respect of the liability, including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments”.* 1. Going by the above section the following things are clear which are that for the insurer to be liable; 2. *There must be a policy of insurance in force.* 3. *There has to be judgment in respect of any such liability as is required to be covered by the policy.* 4. The Appellant/insurer's liability and obligation to pay the judgment entered against the insured is not in dispute. Whereas, a contract of insurance is one of indemnity, in so far as claims by third parties are concerned, the insurance has a statutory obligation to pay the judgment of the third parties unless the liability thereof has been avoided in accordance with the law and specifically section 10 of Cap 405. 5. The courts have consistently held that once an insurer is served with the requisite statutory notice and fails to take steps to avoid the policy or challenge liability, it cannot later evade its statutory obligation to satisfy the decree. The statutory notice requirement is procedural in nature, and its purpose is fulfilled once the insurer is given timely notice of the intended proceedings. In the case of MOHAMED ATI-IMIN MJAHID VERSUS GATEWAY INSURANCE CO.LTD Justice J.W Mwera augmented that:- “*The obligation of the defendant insurer under the Act: This court's interpretation of Section 10(1) is that the insurer has a duty under the law to pay the judgment sums on being informed. Section 10 mandates that:* *“.....the insurer shall subject to the provisions of this section pay to the persons entitled to the benefit of the judgment any sum payable. So, when the insured informs the insurer of the judgment and what it contains to be paid, the insurer has a statutory duty to pay the judgement holders. By operation of the law the judgement holders (in SRMCC 2034/95) need not be privy to the insurance contract between the insured (the plaintiff) and the insurer (the defenda*nt). 1. In view of the foregoing, it is my finding that the Respondent fully complied with the provisions of Section 10 of the Insurance (Motor Vehicle Third Party Risks) Act, Cap 405 Laws of Kenya, and that the Appellant was duly notified of the institution of the primary suit in accordance with the law. Consequently, the Appellant became statutorily bound to satisfy the judgment entered in favour of the Respondent. The Appellant was fully aware of the claim and had ample opportunity to contest liability if it so wished. Having failed to do so, the Appellant is estopped from denying its obligation to satisfy the judgment. 2. Therefore, compliance with Section 10 of the Insurance (Motor Vehicle Third Party Risks) Act was conclusively established before the trial court. The Learned Magistrate was therefore correct in finding that the Appellant had been properly notified and was under a statutory duty to satisfy the decree arising from the primary suit. 3. The legal position under Section 10 of the Insurance (Motor Vehicle Third Party Risks) Act, Cap 405 Laws of Kenya is clear and mandatory. Once it is established that a valid policy of insurance existed in respect of the motor vehicle involved in the accident, that the insurer was served with the statutory notice required under Section 10(2), and that a judgment was subsequently obtained, the insurer becomes under a statutory duty to satisfy the decree. 4. As earlier observed herein, the Appellant and the person it alleges to be the actual insured, Mr. Ajaa Olubayi, had full knowledge of and actively participated in the primary suit. In fact, Mr. Olubayi Advocate, had conduct of the primary suit on instructions of the Appellant and even engaged in settlement negotiations, and even executed a consent to compromise the suit although the same was not adopted by the trial court. Having participated in the proceedings without objecting to the identity of the Defendant, and having failed to institute a disclaimer suit upon receipt of the statutory notice, the Appellant is estopped from asserting that it is not liable under the policy. 5. An appellate court will not interfere with the decision of a trial court unless it is shown that the court misapprehended the evidence, applied the wrong legal principles, or reached a plainly erroneous conclusion. 6. Following my re-analysis hereinabove, this court finds that the Respondent conclusively proved before the trial court that motor vehicle registration number KBJ 764A which was registered in the name of KWA WAIAIA LIMITED was insured by the Appellant under Policy Number 4011072698 at the time of the accident. Although, the learned trial Magistrate was perfectly correct to make a declaration that the Appellant is statutorily bound to satisfy the judgement in Mavoko MCCC No. 974 of 2016, this court finds that the trial court was somehow wrong to order the Appellant to pay the entire decretal amount of Kshs.3,336,019.04/= which is against the provisions of Section 5 (b) (iv) of the Insurance (Motor Vehicle Third Party Risks) Act Cap 405 which clearly stipulates that insurance companies shall not be required to cover liability of any sum in excess of **Three** **Million** **Shillings,** arising out of a claim by one person. 7. It is abundantly clear that the maximum amount that an insurer can pay in respect of a claim by one person is capped at Kshs.3,000,000.00 and therefore, the Appellant cannot be ordered to pay more than the maximum amount. 8. The upshot is that the appeal partly succeeds to the extend that the Appellant shall only satisfy the statutory maximum decretal amount of Kshs.3,000,000/=. 9. There shall be no order as to costs. It is so ordered. JUDGMENT DATED & SIGNED AT MACHAKOS THIS 27TH JULY 2026 **NOEL. I. ADAGI** **JUDGE** DELIVERED VIRTUALLY ON TEAMS AT MACHAKOS THIS 27TH JULY 2026