https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11714

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **CIVIL APPELLATE DIVISION** **CIVIL APPEAL NO. E895 OF 2024** **GEORGINA NDIDA MUTUA......................................APPELLANT** **-VERSUS-** **RIAZ & SONS COMPANY LIMITED.....................1ST RESPONDENT** **GA INSURANCE COMPANY LIMITED................2ND RESPONDENT** *(Being an appeal from the Judgment in Milimani SCCCOM E288 OF 2024 by Hon. G. Simwato (Adjudicator) delivered on 5th July 2024)* **JUGDMENT** 1. This appeal arises from the judgment of the Small Claims Court at **Milimani** delivered on **5th July 2024** in **Milimani Small Claims Court Commercial Claim No. E288 of 2024** by **Hon. G. Simwato, (Adjudicator)**. In that judgment, the learned Adjudicator dismissed both the Appellant's claim and the 1st Respondent's counterclaim and awarded costs of the claim to the 1st Respondent. 2. Being dissatisfied with that decision, the Appellant lodged the present appeal through a Memorandum of Appeal challenging the findings of the learned Adjudicator on both fact and law. The appeal principally contests the findings that the Appellant had breached the sale agreement, had failed to prove payment of the purchase price, and had failed to establish the existence of a valid insurance policy at the time the subject motor vehicle was stolen. **Background** 1. The dispute before the Small Claims Court arose from a hire purchase arrangement relating to motor vehicle registration number **KCX 324S**, a Toyota Sienta. 2. The Appellant pleaded that she entered into a written sale agreement with the 1st Respondent for the purchase of the motor vehicle at an agreed consideration of **Kshs. 1,100,000**, payable through monthly instalments of **Kshs. 50,000**. She further pleaded that she initially paid **Kshs. 220,000** followed by a further **Kshs. 100,000** as the agreed deposit. 3. According to the Appellant, the deposit was intended not only to secure the purchase of the motor vehicle but also to enable the 1st Respondent, as the registered owner, to procure comprehensive insurance cover and install a tracking device over the motor vehicle pending completion of the hire purchase arrangement. The Appellant maintained that both the insurance policy and tracking services were procured by the 1st Respondent for its own protection while ownership remained vested in it. 4. Due to a long-term business relationship between the 1st and 2nd Respondents, working together, the 1st Respondent procured the services of the 2nd Respondent in comprehensively insuring the suit motor vehicle and also installing the motor vehicle tracking system. 5. The Appellant averred that she faithfully continued remitting the agreed instalments and eventually paid a cumulative sum of **Kshs. 1,000,000**, leaving an outstanding balance of **Kshs. 100,000.** 6. Unfortunately, during the night of **13th and 14th May 2022**, the motor vehicle was stolen while parked outside the Appellant's residence. She immediately reported the theft at Embakasi Police Station where an Occurrence Book entry was made before notifying the 1st Respondent of the theft. 7. The Appellant pleaded that despite repeated requests, neither Respondents took meaningful steps to facilitate recovery of the motor vehicle or settlement of the insurance claim notwithstanding that the vehicle had been fitted with a tracking device and was allegedly comprehensively insured. 8. Consequently, the Appellant instituted the suit before the Small Claims Court seeking payment of **Kshs. 1,000,000**, being the alleged market value of the stolen motor vehicle together with costs and interest. 9. The 1st Respondent admitted that it initially entered into a sale agreement with the Appellant on **15th May 2020** for the purchase of **motor vehicle registration number KCX 324S**. However, it pleaded that following the Appellant's default in meeting the agreed instalments, it repossessed the motor vehicle and the parties mutually terminated that agreement. 10. The 1st Respondent further pleaded that following the repossession, the parties entered into a fresh sale agreement dated **12th May 2021** under which the suit motor vehicle was sold to the Appellant at a revised purchase price of **Kshs. 750,000**. According to the 1st Respondent, the Appellant only managed to pay **Kshs. 225,000**, thereby leaving an outstanding balance of **Kshs. 525,000** before the theft of the motor vehicle. 11. The 1st Respondent further pleaded that following the theft of motor vehicle registration number **KCX 324S** and the rejection of the insurance claim by the 2nd Respondent, the parties subsequently entered into a separate sale agreement dated **25th July 2022** in respect of motor vehicle registration number **KCV 565G Subaru Impreza** at a purchase price of **Kshs. 800,000**. 12. The Claimant maintained that the agreement relating to motor vehicle **KCV 565G** constituted a distinct and independent transaction from the agreement concerning **KCX 324S** and did not contain any provision compromising, settling or extinguishing the outstanding balance allegedly due under the agreement dated **12th May 2021** relating to **KCX 324S**. 13. The 1st Respondent further pleaded that after the theft of motor vehicle **KCX 324S**, it made efforts to pursue compensation from the 2nd Respondent under the insurance policy but the claim was rejected. It also averred that it subsequently entered into another hire purchase agreement with the Appellant for motor vehicle registration number **KCV 565G Subaru Impreza**, taking into account payments previously made by the Appellant. It asserted that the Appellant likewise defaulted under that subsequent agreement and that it intended to pursue recovery of the outstanding balance. 14. Consequently, the 1st Respondent lodged a counterclaim against both the Appellant and the 2nd Respondent seeking payment of **Kshs. 1,000,000**, being the value of the stolen motor vehicle. 15. The 2nd Respondent denied liability altogether. It maintained that no valid insurance cover existed at the time the motor vehicle was stolen because the requisite premiums had not been paid. It further asserted that the policy had been cancelled prior to the theft in accordance with the applicable insurance arrangements and therefore no obligation arose to indemnify either the Appellant or the 1st Respondent. 16. Upon considering their documentary evidence and written submissions, the learned Adjudicator concluded that the Appellant had failed to prove, on a balance of probabilities, that she had honoured the payment obligations under the sale agreement. The court found that the Mpesa statements did not satisfactorily demonstrate compliance with the agreed payment terms and consequently held that the Appellant had breached the contract. The learned Adjudicator therefore dismissed the Appellant's claim and equally dismissed the 1st Respondent's counterclaim, with costs of the claim awarded to the 1st Respondent. 17. Aggrieved by that determination, the Appellant lodged the present appeal. **The Appeal** 1. Dissatisfied with the judgment of the Small Claims Court delivered on **5th July 2024**, the Appellant lodged the present appeal vide a Memorandum of Appeal dated **23rd September 2024** setting out several grounds which, when condensed, fault the learned Adjudicator for: 2. ***finding that the Appellant was in breach of the sale agreement despite there being no evidence establishing such breach;*** 3. ***holding that the Appellant had failed to prove her case on a balance of probabilities;*** 4. ***finding that there was no valid insurance policy in force at the time motor vehicle registration number KCX 324S was stolen;*** 5. ***failing to properly consider whether the alleged cancellation notices were ever served upon the Appellant;*** 6. ***disregarding the Appellant's documentary evidence, particularly the Mpesa statements tendered in support of payment of the purchase price;*** 7. ***failing to properly evaluate the entire evidence placed before the court;*** 8. ***failing to consider the Appellant's written submissions; and*** 9. ***arriving at findings which were against both the evidence and the applicable law.*** 10. Consequently, the Appellant prays that the appeal be allowed, the judgment of the Small Claims Court delivered on **5th July 2024** be set aside and judgment be entered in her favour together with costs of the appeal and of the proceedings before the trial court. **The Appellant's Submissions** 1. Learned counsel for the Appellant submitted that the learned Adjudicator fell into error by concluding that the Appellant had defaulted in paying the purchase price of the suit motor vehicle while disregarding the documentary evidence produced before the court. 2. Counsel submitted that although the initial sale agreement required the purchase price to be paid by **30th September 2021**, the parties subsequently varied that agreement and extended the timelines for payment. It was therefore submitted that the learned Adjudicator erred in assessing the Appellant's compliance by reference to the original agreement instead of the varied agreement. 3. According to the Appellant, the Mpesa statements produced before the trial court demonstrated that by **26th April 2022**, she had paid **Kshs.1,000,000**. Counsel argued that the learned Adjudicator failed to reconcile those payments with the varied agreement before reaching the conclusion that the Appellant remained in arrears. 4. It was further submitted that once the Appellant had substantially or fully discharged her obligations under the sale agreement, the 1st Respondent could not lawfully rely on an alleged breach to defeat her claim arising from the theft of the motor vehicle. 5. Counsel further argued that the learned Adjudicator erred in finding that no valid insurance policy existed at the time of the theft. It was submitted that the evidence demonstrated that comprehensive insurance had been procured by the 1st Respondent as contemplated under the parties' agreement and that no sufficient evidence was produced to prove lawful cancellation of that cover before the occurrence of the insured risk. 6. Regarding the alleged cancellation notices, counsel submitted that the 2nd Respondent failed to prove service upon either the Appellant or the 1st Respondent. It was argued that the addresses appearing on the alleged cancellation notices did not correspond with the addresses contained in the sale agreement and that no certificates of postage or other evidence of service were produced before the trial court. 7. Counsel therefore urged this Court to find that the learned Adjudicator misapprehended the evidence, failed to properly evaluate the documentary material before the court and consequently arrived at an erroneous conclusion. The Court was urged to allow the appeal and grant the reliefs sought. ## The 1st Respondent's Submissions 1. The 1st Respondent opposed the appeal and urged this Court to uphold the dismissal of the Appellant's claim. Although it supported the ultimate outcome reached by the learned Adjudicator, it maintained that the trial court ought to have allowed its counterclaim against the 2nd Respondent. 2. Counsel submitted that whereas the parties initially entered into a sale agreement dated **15th May 2020** in respect of motor vehicle registration number **KCX 324S**, the Appellant subsequently defaulted in honouring the agreed instalments. As a consequence of that default, the 1st Respondent repossessed the motor vehicle and the parties mutually terminated the initial agreement. 3. It was submitted that following the repossession, the parties voluntarily entered into a **fresh sale agreement dated 12th May 2021** under which the suit motor vehicle was sold to the Appellant at a revised purchase price of **Kshs. 750,000**. Counsel argued that this was a separate and binding agreement which superseded the earlier agreement and governed the parties' rights and obligations thereafter. According to the 1st Respondent, the Appellant only paid **Kshs. 225,000** under the revised agreement, thereby leaving an outstanding balance of **Kshs. 525,000** before the theft of the motor vehicle. 4. The 1st Respondent further submitted that the Appellant's allegation that she had paid the full purchase price of **Kshs. 1,100,000** was misplaced because it ignored the legal effect of the cancellation of the initial agreement and the execution of the subsequent agreement dated **12th May 2021**. Counsel contended that once the first agreement was terminated and replaced, the parties' relationship fell to be determined exclusively by the latter agreement and not by the terms of the earlier contract. 5. Counsel further submitted that after the theft of motor vehicle registration number **KCX 324S** and the rejection of the insurance claim by the 2nd Respondent, the parties entered into a **separate sale agreement dated 25th July 2022** in respect of motor vehicle registration number **KCV 565G Subaru Impreza** at an agreed purchase price of **Kshs. 800,000**. It was argued that the agreement relating to **KCV 565G** constituted an independent commercial transaction and neither referred to nor compromised the outstanding balance allegedly due under the agreement dated **12th May 2021** relating to motor vehicle **KCX 324S**. According to the 1st Respondent, the Appellant subsequently defaulted under the agreement for sale of Motor vehicle **KCV 565G**, giving rise to a separate debt which the 1st Respondent reserved the right to recover through appropriate legal proceedings. 6. On the issue of insurance, counsel submitted that comprehensive insurance had indeed been procured over the suit motor vehicle through the 2nd Respondent. It was argued, however, that the 2nd Respondent failed to establish that the policy had been lawfully cancelled before the theft. Counsel submitted that the alleged cancellation notices were neither shown to have been served upon the Appellant nor the 1st Respondent, and no certificate of posting or any other evidence of service was produced before the trial court. 7. Counsel further submitted that under the hire-purchase endorsement contained in the insurance policy, any insurance proceeds payable upon loss of the motor vehicle were payable to the 1st Respondent as the owner and financier of the motor vehicle. 8. Consequently, should this Court find that the insurance policy remained valid at the time of the theft, the 1st Respondent urged the Court to invoke **Order 42 Rule 32 of the Civil Procedure Rules** and allow its counterclaim notwithstanding that it had not lodged a cross-appeal. **The 2nd Respondent's Submissions** 1. The 2nd Respondent equally opposed the appeal and urged the Court to uphold the judgment of the Small Claims Court. 2. Counsel submitted, at the outset, that under **Section 38 of the Small Claims Court Act**, the jurisdiction of this Court is limited to appeals on matters of law. Relying on ***Wanjiru v Kiilu (Civil Appeal No. 90 of 2023) [2024] KEHC 8881 (KLR)*,** counsel argued that this Court ought not interfere with findings of fact unless they are so unreasonable that no reasonable tribunal properly directing itself could have reached them. 3. Counsel further submitted that the learned Adjudicator correctly appreciated the evidence and properly concluded that neither the Appellant nor the 1st Respondent proved that the insurance premiums had been paid. It was therefore argued that no valid insurance policy existed at the time of the theft of motor vehicle registration number **KCX 324S**. 4. On the issue of cancellation of the insurance policy, counsel submitted that the 2nd Respondent complied with all its statutory obligations and that the cancellation notices were issued using the details supplied at the inception of the insurance contract. It was argued that the learned Adjudicator properly evaluated that evidence and correctly found that no error had been established. 5. Counsel also submitted that the Appellant had not demonstrated any misdirection in law, any misapprehension of the evidence or any perversity in the findings of the learned Adjudicator. It was contended that the mere fact that another court might have reached a different conclusion does not justify appellate interference. Reliance was placed on ***Idris Abdi Abdullahi v Ahmed Bashane & 2 Others* [2018] KECA 455 (KLR).** 6. Finally, the 2nd Respondent submitted that the 1st Respondent had neither filed an appeal nor a cross-appeal and therefore could not seek affirmative relief before this Court. In any event, counsel maintained that no insurance premiums had been paid and consequently the 1st Respondent was equally not entitled to any compensation under the policy. The Court was urged to dismiss the appeal with costs. **Applicable Principles of Law** **Jurisdiction of this Court** 1. Before delving into the merits of the appeal, it is necessary to determine the scope of this Court's jurisdiction. This appeal arises from a decision of the Small Claims Court and is therefore governed by **Section 38 of the Small Claims Court Act, No. 2 of 2016**, which provides that an appeal shall lie to the High Court on matters of law only, and the decision of the High Court shall be final. 2. The import of **Section 38** has been considered in several decisions of the High Court. While the jurisdiction of this Court is confined to matters of law, that limitation does not completely insulate the factual findings of the Small Claims Court from scrutiny. Where it is demonstrated that the trial court misapprehended the evidence, failed to consider relevant material, considered matters it ought not to have considered, or arrived at findings unsupported by the evidence, such errors amount to errors of law warranting appellate intervention. 3. The Court of Appeal in ***Charles Kipkoech Leting v Express (K) Ltd & Another* [2018] eKLR** held that an appellate court may interfere with findings of fact where the trial court failed to consider relevant matters, considered irrelevant matters or where the decision is plainly wrong. Likewise, in ***Peters v Sunday Post Ltd* [1958] EA 424**, the predecessor of the Court of Appeal observed that although an appellate court should exercise caution before interfering with findings of fact, it is under a duty to do so where the trial court has plainly gone wrong. 4. Similarly, in ***Selle & Another v Associated Motor Boat Co. Ltd & Others* [1968] EA 123**, the former East African Court of Appeal stated that an appellate court is obliged to reconsider the evidence, evaluate it itself and draw its own conclusions while bearing in mind that it neither saw nor heard the witnesses testify. 5. Although the foregoing principles were developed in the context of ordinary first appeals, they remain instructive in determining whether the findings of the Small Claims Court disclose an error of law arising from a misapprehension or failure to properly evaluate the evidence. Consequently, this Court must determine whether the conclusions reached by the learned Adjudicator were supported by the evidence and the applicable law. **Issues for Determination** 1. Having considered the pleadings, the judgment appealed from, the memorandum of appeal and the rival submissions by the parties, the Court is of the respectful view that the appeal raises the following issues for determination: 2. ***Whether the learned Adjudicator properly evaluated the evidence relating to the contractual relationship between the parties and payment of the purchase price*** 3. ***Whether there existed a valid insurance policy at the time the suit motor vehicle was stolen*** 4. ***Whether the 2nd Respondent proved lawful cancellation of the insurance policy*** 5. ***Who was entitled to the benefit of the insurance policy?*** The Court shall address these issues sequentially. **Analysis and Determination** 1. **Whether the learned Adjudicator properly evaluated the evidence relating to the contractual relationship between the parties and payment of the purchase price** 2. The first issue falling for determination is whether the learned Adjudicator properly evaluated the evidence relating to the contractual relationship between the Appellant and the 1st Respondent and consequently arrived at the correct conclusion that the Appellant was in breach of the sale agreement. 3. There is no dispute that the parties initially entered into a written sale agreement dated **15th May 2020** for the purchase of motor vehicle registration number **KCX 324S** at an agreed purchase price of **Kshs. 1,100,000**, payable by monthly instalments. 4. The dispute arises from the parties' divergent positions regarding the legal effect of the subsequent agreement dated **12th May 2021**. Whereas the Appellant contends that the agreement merely extended the payment timelines under the original arrangement, the 1st Respondent maintains that following the Appellant's default, it repossessed the motor vehicle, cancelled the initial agreement and entered into an entirely fresh agreement under which the motor vehicle was sold at a revised purchase price of **Kshs. 750,000**. 5. The 1st Respondent therefore submits that the parties' rights and obligations thereafter fell to be determined solely by the agreement dated **12th May 2021**, under which the Appellant allegedly paid only **Kshs. 225,000**, leaving an outstanding balance of **Kshs. 525,000** before the theft of the motor vehicle. It consequently argues that the learned Adjudicator correctly found that the Appellant remained in breach of her contractual obligations. 6. Conversely, the Appellant maintains that the documentary evidence produced before the trial court, particularly the Mpesa statements, demonstrated that by 26th April 2022, she had paid the entire contractual consideration agreed between the parties and that the learned Adjudicator failed to properly evaluate those payments before concluding that she remained in default. 7. Having carefully examined the Record of Appeal, it is evident that the learned Adjudicator accepted the 1st Respondent's assertion that the Appellant remained in arrears without first determining the legal effect of the agreement dated 12th May 2021. In particular, the judgment does not address whether that agreement constituted a complete rescission of the agreement dated 15th May 2020, whether it merely varied the earlier contractual terms, or whether it represented a continuation of the existing contractual relationship upon revised terms. 8. That omission was significant. Where parties execute successive agreements relating to the same subject matter, a court is required to ascertain, from the language employed by the parties and the surrounding circumstances, whether the later agreement supersedes the earlier agreement or merely amends certain terms thereof. The intention of the parties remains the guiding consideration. 9. The Court of Appeal in ***National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another [2001] eKLR*** reiterated that a court cannot rewrite a contract for parties and must give effect to the bargain voluntarily entered into by them. Equally, where parties subsequently execute another agreement, the court must determine their respective rights from the terms of that subsequent agreement and the intention disclosed therein. 10. In the present case, while the 1st Respondent asserted that the agreement dated 12th May 2021 extinguished the earlier agreement, the learned Adjudicator did not undertake an analysis of the provisions of the two agreements to determine whether they supported that assertion. Nor did the court consider whether the payments reflected in the Appellant's Mpesa statements related to the first agreement, the second agreement, or both. 11. More importantly, the learned Adjudicator did not reconcile the competing documentary evidence. On one hand, the Appellant relied on Mpesa statements to demonstrate that she had paid substantial sums to the 1st Respondent. On the other hand, the 1st Respondent relied on its own statement of account showing that only **Kshs. 225,000** had been paid under the agreement dated 12th May 2021. The trial court was under a duty to evaluate those documents, reconcile the apparent inconsistencies and give reasons for preferring one version over the other. 12. A trial court is not at liberty to simply adopt one party's computation without demonstrating, from the documentary evidence before it, how the figures relied upon were arrived at. Where financial records form the cornerstone of the dispute, a reasoned reconciliation of those records becomes indispensable to the proper determination of the issues before the court. 13. This Court has carefully considered the Appellant's contention that by 26th April 2022 she had remitted the entire contractual consideration through the payments reflected in her Mpesa statements. Equally, the Court has considered the 1st Respondent's position that only **Kshs. 225,000** was paid under the agreement dated 12th May 2021. The correctness or otherwise of either position could only be determined after a comprehensive evaluation of the documentary evidence against the contractual framework governing the parties. That exercise was not undertaken by the learned Adjudicator. 14. The Court of Appeal in ***Abok James Odera t/a A.J. Odera & Associates v John Patrick Machira t/a Machira & Co. Advocates [2013] eKLR*** emphasised that an appellate court is entitled to interfere where the trial court failed to analyse the evidence placed before it or reached conclusions unsupported by the evidence. In the present appeal, the omission to analyse the competing documentary evidence relating to payment of the purchase price rendered the finding that the Appellant was in breach of contract unsafe. 15. Accordingly, this Court finds that the learned Adjudicator did not comprehensively evaluate the contractual documents and payment records before concluding that the Appellant had failed to discharge her obligations under the parties' agreement. The finding that the Appellant was in breach of contract was therefore reached without a complete analysis of the material evidence and cannot be allowed to stand. 16. **Whether there existed a valid insurance policy at the time the suit motor vehicle was stolen** 17. The second issue for determination is whether there existed a valid policy of insurance in respect of motor vehicle registration number **KCX 324S** at the time it was stolen during the night of **13th and 14th May 2022**. 18. The learned Adjudicator answered that question in the negative, holding that there was no valid insurance cover because the premiums had allegedly not been paid and the policy had been cancelled before the occurrence of the loss. 19. The Appellant challenges that finding and submits that the learned Adjudicator failed to properly evaluate the evidence relating to the procurement of the insurance policy and the alleged cancellation thereof. According to the Appellant, no sufficient evidence was tendered to demonstrate that the policy had been lawfully cancelled before the theft of the motor vehicle. 20. The 1st Respondent likewise contends that comprehensive insurance had indeed been procured over the suit motor vehicle through the 2nd Respondent. It submits that despite making follow-up with the insurer after the theft, the insurance claim was rejected. The 1st Respondent further maintains that the alleged cancellation notices were never served upon it and that the insurer failed to establish that the policy had been effectively cancelled before the insured risk materialised. 21. On its part, the 2nd Respondent maintains that although an insurance policy had initially been issued, no liability attached because the requisite premiums were never paid and the policy had been cancelled before the theft. It therefore contends that no contractual obligation to indemnify either the Appellant or the 1st Respondent arose. 22. From the evidence on record, there is no dispute that an insurance policy was issued by the 2nd Respondent in respect of **motor vehicle registration number KCX 324S**. Indeed, the defence advanced by the 2nd Respondent was not that no policy existed, but rather that the policy ceased to be operative following the alleged non-payment of premiums and its subsequent cancellation. 23. In the circumstances, the existence of the insurance policy was not the issue in controversy. The real question was whether the 2nd Respondent proved that the policy had ceased to exist before the theft of the motor vehicle. 24. **Section 156(1) of the Insurance Act** provides that an insurer shall not assume any risk in Kenya unless and until the premium payable has been received by the insurer or is guaranteed in such manner as may be prescribed. 25. However, the application of that provision is not automatic. The Court of Appeal has consistently held that where an insurer issues a policy or otherwise conducts itself in a manner demonstrating acceptance of the risk, the insurer bears the burden of proving the circumstances under which it subsequently became entitled to avoid liability. 26. Consequently, once the Appellant and the 1st Respondent produced evidence demonstrating the existence of the insurance policy, the evidential burden shifted to the 2nd Respondent to establish, on a balance of probabilities, that the policy had been lawfully cancelled before the theft. 27. **Whether the 2nd Respondent proved lawful cancellation of the insurance policy** 28. The 2nd Respondent relied on cancellation notices allegedly issued before the theft of the motor vehicle. The Appellant disputes receipt of those notices and contends that they were never served upon her. Similarly, the 1st Respondent submits that the addresses appearing on the alleged notices differed from the address appearing in the contractual documents and that no certificate of posting or any other proof of service was produced. 29. Having reconsidered the evidence, this Court is unable to agree with the conclusion reached by the learned Adjudicator that cancellation had been established. 30. While copies of cancellation notices were produced before the trial court, there is no analysis in the impugned judgment demonstrating how the learned Adjudicator satisfied herself that those notices were in fact served upon the persons whose contractual rights were likely to be affected. . 1. It is not sufficient for an insurer merely to produce a cancellation notice. Where cancellation is relied upon as a defence to liability, the insurer bears the burden of proving that the notice was communicated in accordance with the terms of the contract or the applicable law. Without proof of communication, cancellation remains incomplete and cannot, without more, defeat an otherwise valid claim. 2. In the present appeal, neither the impugned judgment nor the record demonstrates that the learned Adjudicator considered whether the alleged notices were dispatched to the correct addresses, whether they were received by either the insured or the financier, or whether the contractual requirements governing cancellation had been complied with. 3. With respect, those were material issues requiring determination. Their omission resulted in an incomplete evaluation of the evidence and ultimately affected the finding that there was no insurance cover in force at the time of the theft 4. **Who was entitled to the benefit of the insurance policy?** 5. Having found that the learned Adjudicator did not adequately determine whether the insurance policy had been effectively cancelled, the Court must also consider the parties' competing claims to the benefit of the policy. 6. The Appellant's case is that she was the purchaser in possession of the motor vehicle and had substantially performed her contractual obligations under the sale agreement. She therefore contends that she is entitled to compensation arising from the loss of the motor vehicle. 7. The 1st Respondent, on the other hand, submits that it remained the legal owner of the motor vehicle under the hire-purchase arrangement and that the insurance policy expressly provided that any compensation payable upon loss of the vehicle would be payable to it as the owner and financier. It therefore contends that, if the policy is found to have remained valid, any insurance proceeds would be payable in accordance with the terms of the insurance contract rather than directly to the Appellant. 8. The learned Adjudicator did not reach this question because of the finding that no valid insurance policy existed. However, having found that the issue of cancellation was not properly analysed, this Court considers it necessary to determine, in the final phase, the legal consequences of the parties' respective contractual rights under both the sale agreement and the insurance policy before making the appropriate orders. **Disposition** 1. Having independently reconsidered the pleadings, the Record of Appeal, the documentary evidence produced before the trial court, the judgment appealed from, the rival submissions of the parties and the applicable law, this Court is satisfied that the learned Adjudicator misapprehended material evidence and consequently reached conclusions that are unsupported by the record. 2. In particular, the learned Adjudicator failed to determine the legal effect of the successive agreements executed by the Appellant and the 1st Respondent, failed to reconcile the competing documentary evidence relating to the payments allegedly made by the Appellant, and further failed to adequately interrogate whether the 2nd Respondent had discharged its burden of proving that the insurance policy had been lawfully cancelled before the occurrence of the insured risk. 3. The cumulative effect of those errors was that the learned Adjudicator wrongly concluded that the Appellant had failed to prove her claim on a balance of probabilities. Upon this Court's own evaluation of the evidence, it is satisfied that the Appellant established her claim to the required standard and that the dismissal of her claim was not supported by the evidence on record. 4. In her Statement of Claim before the Small Claims Court, the Appellant sought judgment against the 1st and 2nd Respondents jointly and severally for the sum of **Kshs. 1,000,000**, being the value of **motor vehicle registration number KCX 324S**, together with interest and the costs of the suit. Having found that the learned Adjudicator erred in dismissing that claim, and there being no lawful basis established for declining liability, this Court is satisfied that the Appellant is entitled to the reliefs sought in the Statement of Claim as against the 1st Respondent. 5. As regards the 1st Respondent's counterclaim, this Court reiterates that the same was dismissed by the learned Adjudicator and that no appeal or cross-appeal was lodged challenging that finding. The issues arising from the counterclaim are therefore not properly before this Court for determination, and no affirmative relief can be granted in favour of the 1st Respondent. **Final Orders** 82. Consequently, and for the foregoing reasons, this Court makes the following orders: * 1. ***The appeal is hereby allowed.*** 2. ***The judgment and decree of the Small Claims Court at Milimani in Small Claims Court Case No. E288 of 2024, delivered on 5th July 2024, are hereby set aside.*** 3. ***In substitution thereof, judgment is hereby entered for the Appellant against the 1st Respondents in the sum of Kenya Shillings One Million (Kshs. 1,000,000).*** 4. ***The said sum shall attract interest at court rates from the date of filing of the Statement of Claim before the Small Claims Court until payment in full.*** 5. ***The Appellant shall have the costs of the proceedings before the Small Claims Court.*** 6. ***The Appellant shall also have the costs of this appeal.*** 83. It is so ordered. **DATED, SIGNED AND DELIVERED AT NAIROBI THIS 28TH DAY OF JULY, 2026** **HON. L. P. KASSAN** **JUDGE**