[2022] KEHC 1550 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAKURU

HIGH COURT CIVIL APPEAL NO. 161 OF 2017

GATEWAY INSURANCE CO. LTD..............................................................1ST APPELLANT

-VERSUS-

GEOFFREY KARIUKI GATHINJI....................................................................RESPONDENT

(Being an Appeal for the Judgment/ Decree of Hon. S. Wahome - Chief Magistrate

delivered on 05/12/2017 in Molo CMCC No. 179 of 2016)

JUDGMENT

1. The Respondent filed Molo CMCC No. 2 of 2012 against Alex Langat and another person. The suit sounded in tort arising from a Road Traffic Accident that is said to have occurred on 09/10/2011, involving Motor Vehicle Registration Number KBD 886J owned by Alex Langat. The Respondent was injured in the accident and brought a suit against Alex Langat and the driver of the motor vehicle. The Trial Court entered judgment against Alex Langat and the driver of the motor vehicle jointly and severally.

2. The Respondent demanded that the Appellant satisfies the decree in Molo CMCC No. 2 of 2012 claiming that the Appellant was the insurer of the motor vehicle and was, therefore, obligated to do so by virtue of the Insurance (Motor Vehicles Third Part Risks) Act (Cap 405, Laws of Kenya).

3. The Respondent declined to satisfy the Decree, causing the Respondent to file a declaratory suit, under Section 10(2) of the Insurance (Motor Vehicles Third Part Risks) Act (Cap 405, Laws of Kenya). The suit filed was Molo CMCC No. 179 of 2016. The Appellant filed a Statement of Defence in the said suit. In a Notice of Motion Application dated 06/02/2017, The Respondent applied for the Statement of Defence to be struck out claiming that the Defence did not raise any triable issues to warrant the case to proceed to full trial.

4. In its ruling dated 05/12/2017, the Trial Court struck out the Appellant’s Statement of Defence and entered judgment against the Appellant. The Learned Magistrate reasoned that the Appellant having paid out other sums relating to the same accident could not hide behind not being served with a Statutory Notice and that it would not make any difference if the Appellant was allowed to prosecute its Defence. In pertinent part, the Learned Trial Magistrate reasoned thus:

The Court is at a loss as to what difference it would make even if the defendant is given an opportunity to prosecute its defence. The facts hereinabove cannot be changed even by an advocate of impeccable competence. I do not understand why the defendant is treating similar matters differently. Person[s] who were in the same accident and sustained injuries ought to be treated similarly without discrimination.

The Defendant alleges that its defence raises triable issues but I see none as long as some of the Plaintiffs whose claims arose from the same accident have been compensated even as depicted by a copy of a cheque to Mboga & Company Advocates. The defendant has further averred that Notice of institution of suit was never served which is a condition precedent (sic). The Court wonders why the Plaintiff in the Nakuru Suit was paid. Assuming that the Plaintiff thereof(sic) had served the same, then the defendant had constructive knowledge of other subsequent suits and the Court cannot allow it to hide behind the said Notice of Institution of suit to defeat a judgment of a competent Court.

5. The Appellant is aggrieved by the said ruling and filed the present appeal videits Memorandum of Appeal dated 27/02/2020 seeking the following prayers:

a. This appeal be allowed, and the Order dated 5th December 2017 be set aside, varied and vacated together with the Decree arising therefrom and the Defence filed on the 13th June 2016 be reinstated.

b. That further the Respondent’s application dated 6th February 2017 be dismissed with costs to the Appellant.

c. The costs of this appeal be borne by the Respondent

d. Any other relief that this Honourable Court may deem fit and just to grant.

6. The Appellant has listed 3 Grounds of Appeal as follows:

a. That the Honourable Resident Magistrate erred and misdirected himself in law by holding that the Appellant's Defence raised no triable issues whereas the Defence on record denied that the Defendant had insured motor vehicle KBD 886J at the material time and the Respondent had not provided any evidence of the policy of insurance referred to as No.100/085/20015/16/19 which the Defence indicated was a forgery.

b. That the Honourable Resident Magistrate erred and misdirected himself in law and fact by failing to appreciate that the Defence had raised a triable issue that the plaintiff had failed to comply with the mandatory provisions of Section 10 of the Insurance (Motor Vehicles Third Party Risks) Act, Cap 405 Laws of Kenya, which required a statutory notice to be served within 14 days prior or after filing of the primary suit namely Molo SPMCC No.2 of 2012 which the plaintiff had failed to do.

c. That the Honourable Resident Magistrate erred and misdirected himself in law in failing to address his mind to the provisions of Section 10 (2) (a) of the Insurance (Motor Vehicles Third Party Risks) Act, Cap 405 Laws of Kenya makes it a condition precedent that the statutory notice must be served before any insurer is held liable in a declaratory suit.

7. The Appeal was canvased by way of written submissions. I have looked at the Application that was subject to the ruling as well as the ruling, the record of appeal and the submissions filed by the parties. The Appellant’s submissions are dated 16/08/2021. The Appellant submits that its Defence raised triable issues, specifically, that the Appellant’s Defence denied having insured the suit motor vehicle and stated that the policy number quoted in the Plaint was a forgery. The Appellant cites the case of Cannon Assurance Company Ltd v Peter Mulei Sammy [2016] eKLR.It argues that the Trial Court could not have relied on the documents presented by the Respondent to determine liability against the Appellant as this denied the Court the opportunity to examine the Respondent’s evidence closely vis a vis the Appellant’s Defence, which would be exposed through trial. The Appellant also cites on the case of Kenya Orient Insurance Co. Ltd v Farida Hemed [2015] eKLR.It contends that the Learned Magistrate misdirected himself by failing to note that it was not pleaded in the Plaint that Molo CMCC No. 2 of 2012 was part of a series of suits settled by the Appellant.

8. The Appellant submits that by relying on issues raised in the Affidavit by the Respondent, this amounted to an ambush by the Respondent and denied the Appellant the chance to plead its Defence.

9. The Appellant contends further that in a separate suit Molo CMCC No. 279 of 2017, arising from the same accident, the Trial Court had heard the suit on its merits and reached the conclusion that the Appellant had not insured Motor Vehicle KBD 886J. In the said suit, the Appellant alleges that it emerged that the Police Officer who reported the accident had entered details of an insurance policy despite not having been presented with the same.

10. The Appellant faults reliance on the Police Abstract which it argues contains a notice that the abstract itself does not purport to be an actual copy of a police report and the police cannot accept its accuracy, thereby watering down the abstract’s probative value.

11. The Appellant also submits that the Learned Magistrate also ignored the Appellant’s denial of service of the Statutory Notice required under Section 10(2)(a) of the Insurance (Motor Vehicles Third Part Risks) Act (Cap 405 Laws of Kenya), which the Appellant says was also another triable issue. The Appellant contends that the impugned ruling failed to address this issue, and instead erroneously relied on the existence of other suits. The Appellant cites the case of Kenindia Assurance Co. Ltd v Laban Idiah Nyamache [2011] eKLR,where the Court cautioned against striking out pleadings except in exceptional circumstances. The Appellant then relies on the case of Dorine Akula v APA Insurance Company Ltd [2016] eKLR.BI

12. The Respondent’s submissions are dated 21/10/2021. The Respondent insists that the Suit motor vehicle was insured by the Appellant as evidenced by the details in the Police Abstract.

13. On whether the Defence raised triable issues, the Respondent submits that it did not and relies on the parameters given in Patel v E. A Cargo Handling Services Ltd [1974] EA 75 and Transcend Media Group Limited v Independent Electoral & Boundaries Commission (IEBC) [2015] eKLR. The Respondent argues that the Appellant did not file any evidence to the effect that the policy number was a forgery and non-existent. He refers to the case of Benard Mutisya Wambua v Kenya Orient Insurance Company Limited [2020] eKLRand Section 117 of the Evidence Act. He contends that if the Appellant denied the existence of the Policy, it ought to have produced evidence of the alleged forgery.

14. The Respondent also contends that the appellant has already paid out claims arising out of the same accident. According to the Respondent, the Trial Magistrate considered all material facts in arriving at his decision.

15. On the issue of the Statutory Notice, the Respondent submits that the Appellant was served with the Statutory Notice in the main suit as well as a Demand Notice before filing the present suit.

16. The Respondent also argues that that the Appellant has equally failed to comply with the requirement of Section 405 of the Insurance (Motor Vehicles Third Part Risks) Act (Cap 405, Laws of Kenya) which requires that an insurer obtain a declaration that it is entitled to avoid its obligations under an insurance contract, three months after the commencement of the primary suit. The Respondent relies on the cases of Gateway Insurance Co. Ltd v Thomas Njenga Gitau & Another [2014] eKLR and Pacis Insurance Company Limited v Mohamed F. Hussein [2017] eKLR

17. The Respondent contends that the Appellant should not introduce the case of Molo CMCC No. 279 of 2017 at this stage, since the Appellant did not lay basis for it in its Record of Appeal and that that decision is pending appeal in Nakuru HCA 52 of 2020 and is not binding on this Court.

18. The single issue for determination is whether the Appellant’s Defence in the Trial Court raised any triable issues. I am called to examine whether in the circumstances of the case, the alleged non-existence of an Insurance Policy or forgery thereof and the denial of receipt of the required Statutory Notice were triable issues that ought to have warranted the case to proceed to determination on its merits.

19. The Application in the Court below was brought under the provisions of Order VI Rule 13(1)(d) of the Civil Procedure Rules and Section 3A of the Civil Procedure Act. The powers of the court under that provision are special powers which ought to be exercised only in clear circumstances where the pleading is hopeless. Halsbury’s Laws of England, 3rd Edition Volume 30 at page 38 states that:

The jurisdiction to strike out a pleading should be exercised with extreme caution and only in obvious cases, and where a question of general importance or serious question of law would arise on the pleadings, the court will not strike the pleadings unless it is clear and obvious that the action will not lie.

20. A string of judicial precedents from our courts have equally established that courts should be very cautious before striking out pleadings, and that the measure should only be adopted in the most hopeless of cases. Madan JA stated in the oft quoted case between DT Dobie & Company (Kenya) Ltd vMuchina (1982) KLR 1that

The court ought to act very cautiously and carefully and consider all facts of the case without embarking upon a trial thereof before dismissing a case for not disclosing a reasonable cause of action or being otherwise an abuse of the process of court.

….

No suit ought to be summarily dismissed unless it appears so hopeless that it plainly and obviously discloses no reasonable cause of action and is so weak as to be beyond redemption and incurable by amendment.

21. While applying Justice Madan’s sentiments in DT Dobie, Court of Appeal Judges Omolo, O’Kubasu and Onyango-Otieno added in Coast Projects Ltd vM R Shah Construction (K) Ltd (2004) 2 KLR 119that

Summary procedure is a radical remedy and a court of law should be slow in resorting to this procedure which can only be applicable in plain, clear and obvious cases.

22. The question I must answer then is whether the Appellant’s defence was of such a hopeless kind that it warranted summary striking out. For a Statement of Defence to warrant striking out, a Court must satisfy itself that it raises no genuine issues of material or triable fact. A genuine issue of material or triable fact is one which is supported by evidence such that the Court could reasonably return a verdict for the Respondent. Hence, in applying the standard for summary judgment, the Court is required to review all the evidence in the light most favourable to the Respondent. At this stage, the Court should avoid weighing evidence or resolving the truth or falsity of disputed facts; its inquiry should be limited solely to a determination of whether genuine issues of material or triable fact exist. It is true that the “mere existence of a scintilla of evidence” favoring the Respondent will not prevent the Court from striking out the pleading or entering summary judgment. SeeBekker v. Humana Health Plan, Inc., 229 F.3d 662, 669 (7th Cir.2000).However, once the Respondent has set forth specific facts showing that there is a genuine issue for trial, an Applicant becomes disentitled to the relief of striking out the Statement of Defence. Id. Differently put, an Applicant for summary judgment or striking out of a Statement of Defence must discharge the heavy burden of clearly demonstrating the absence of any genuine issue as to the existence of each material fact which under applicable principles of substantive law would be required to support a judgment in its favour. SeeUnited States v. Dibble, 429 F.2d 598, 601 (9th Cir. 1970).

23. With this legal test in mind, I now turn to the Appeal at hand. The Respondent’s Plaint averred that the Respondent was involved in an accident caused by the negligence of the driver of a vehicle insured by the Appellant. He filed a suit out of the accident. Before filing the suit he says that he issued a statutory notice to the Appellant as required by Section 10 of the Insurance (Motor Vehicles Third Party Risks) Act. The suit was finalized and judgment entered in favour of the Respondent. The Appellant was required to indemnify his insured who was found liable in the suit. The Respondent says that he issued a further notice of intention to file a declaratory suit against the Appellant.

24. The Appellant’s defence, in summary, is two-fold. First, it claims that it was not served with any notice of intention to file declaratory suit as mandatorily required by the Statute. Second, the Appellant denied that it had insured the Motor Vehicle in question. Indeed, it went a step further and claimed that any insurance policy purporting to have been issued by it respecting Motor Vehicle Registration No. KBD 886J was a forgery. Both in the Court below and here, the Appellant insists that these are significant triable issues for determination upon full ventilation of the facts at trial.

25. Against this evidence, the Respondent responded with the Application dated 06/02/2017 praying that the Appellant’s Statement of Defence be struck out for being an abuse of the Court Process. The Court obliged. The Court was persuaded that there was no genuine issue of material fact to warrant a trial on the merits on two grounds:

a.On the question of whether the Subject Motor Vehicle was insured by the Appellant, the Learned Trial Magistrate found the issue beyond peradventure because, he held, the Appellant had settled other claims arising from the same accident.

b.On the issue of statutory notice, the Learned Trial Magistrate concluded that the Appellant had constructive notice of the suit.

26. With respect, I think the Learned Magistrate fell into error on both points. In reaching his conclusions, the Learned Magistrate not only weighed evidence and resolved factual questions but also failed to review the evidence in the light most favourable to the Respondent. Indeed, the Learned Magistrate did the opposite: he viewed the evidence in the light most favourable to the Applicant. In my view, if the Learned Magistrate had applied the correct test, he would have come to the conclusion that the Appellant had placed on record enough material to raise genuine issues of triable fact to warrant a trial.

27. Without falling into the error of resolving disputed issues, I can point to two issues raised by the Statement of Defence which warranted ventilation at trial. First, the factual question whether the Statutory Notice was served or not was hotly contested. The service of such a Statutory Notice is not a mere technical requirement: it is a mandatory requirement; a condition precedent to the successful installation of a suit for declaratory relief under the Insurance (Motor Vehicles Third Party Risks) Act. In other words, it raises a genuine issue as to the existence of a material fact which under the applicable substantive law would be required to support a judgment in the Respondent’s favour. Constructive knowledge of a suit does not rescue a suit that was filed without the service of a statutory notice. This is because the service of a statutory notice is a condition precedent to the crystallization of the obligation of the insurer. That, alone, entitled the Appellant to a full trial.

28. Turning to the issue of whether the fact that the Appellant paid out other claims arising from the same accident, I would simply point out that this is a factual issue to be proved at trial. And neither is it dispositive. As the Appellant has pointed out, there is, also, another decision by a Court in Molo that made a finding that the Appellant was not the insurer of the Subject Motor Vehicle. These are matters best left for full ventilation at trial.

29. The conclusion, then, is inevitable. Looked at in a light most favourable to the Appellant, and applying the correct legal standard for striking out pleadings, the Statement of Defence dated 13/06/2016 and filed in Court on 27/06/2016 should not have been struck out. It contained at least one genuine issue of material fact that should have gone to full trial.

30. In the final analysis, therefore, I hereby reverse the ruling by the Learned Magistrate delivered on 05/12/2017. Instead, I hereby enter an order dismissing the Notice of Motion Application dated 06/02/2017. I remand the case back to the Court below for trial. It should be heard by any magistrate other than the Learned Chief Magistrate S. Wahome who heard it before. Accordingly, the Statement of Defence is reinstated. The Appellant shall have the costs of the Appeal.

31. Orders Accordingly.

Dated and Delivered at Nakuru this 10th Day of March 2022

.........................

JOEL NGUGI

JUDGE

NOTE:This judgment was delivered by video-conference pursuant to various Practice Directives by the Honourable Chief Justice authorizing the appropriate use of technology to conduct proceedings and deliver judgments in response to the COVID-19 Pandemic.