[2024] KEHC 15724 (KLR)

Hindsight Ventures Limited v Fidelity Shield Insurance Company Limited (Commercial Appeal E061 of 2022) [2024] KEHC 15724 (KLR) (Commercial and Tax) (13 December 2024) (Judgment)

Neutral citation: [2024] KEHC 15724 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Commercial Appeal E061 of 2022

BM Musyoki, J

December 13, 2024

Between

Hindsight Ventures Limited

Appellant

and

Fidelity Shield Insurance Company Limited

Respondent

(Being an appeal against the Judgment of Hon. Keyne G. Odhiambo, Adjudicator dated 27-04-2022 in Milimani Small Claims Court case number E385 of 2022)

Judgment

1. In its claim before the trial court, the appellant asked the court to enter judgment in its favour against the respondent for a sum of Kshs 741,000. 00. The appellant broke down the amount to Kshs 620,200. 00 being cost of replacement of stolen motor vehicle parts, Kshs 100,000. 00 being loss as a result of disruption of business and inconvenience and Kshs 21,000 as legal fees incurred. The genesis of the claim was that the appellant’s motor vehicle registration number KCV 126S which it had comprehensively insured with the respondent was vandalised on 13-01-2022 but the respondent failed to pay citing non-disclosure of material facts and breach of policy terms.

2. The respondent filed response to the claim in which it admitted having comprehensively insured the respondent’s motor vehicle. It however pleaded that it was entitled to avoid the policy because the motor vehicle was at the material time being used for commercial purposes while the policy was for private use. The respondent also denied that the claimants had incurred loses as claimed.

3. After hearing the parties, the court found that the appellant had failed to prove the special damages as pleaded as the only receipts produced for the same were for Kshs 270,200. 00 and the appellant had not produced an assessment report to prove which parts of the vehicle were vandalised and the receipts did not show which parts were replaced as a result of the vandalism. The court also found that the appellant had failed to disclose material facts as the vehicle was being used for commercial purposes instead of private purposes. It is against this decision that this appeal has been brought citing the following grounds;1. The learned magistrate erred in law by making a finding that the plaintiff had not proved its case on a balance of probabilities despite evidence on record in sufficient proof of the same.2. The learned magistrate misdirected himself in law and in fact by finding that the appellant had not proved on a balance of probabilities that the parts purchased were fixed on the motor vehicle KCV 126S despite the evidence on record adduced by production of receipts by the appellant.3. The learned magistrate erred in law by making finding that, the appellant had not proved its case on a balance of probabilities for the claimed costs for replaced personal items, loss of business and legal costs despite the production of evidence in the plaintiff’s bundle of documents on record.4. The learned magistrate erred in law by ruling that there was material non-disclosure of facts by the appellant, thereby allowing the defendant to rely on an exclusionary clause, this is despite evidence and a finding on record by the same court that the defendant did not provide the appellant with a policy document.5. In the circumstances, the learned magistrate failed to do justice.

4. This appeal was heard by way of written submissions. Both parties have filed submissions which I have gone through. This is an appeal from a small claims court and as such it must be restricted to matters of law only. This is by virtue of section 38(1) of the Small Claims Courts Act. I have gone through the record of appeal and submissions of the parties and I have come to a conclusion that the above grounds of appeal raise only two issues of law. That is whether the appellant breached terms of the policy by failing to disclose material facts and whether the appellant was entitled to compensation. These are enough to dispose this appeal. The other issues raised by the appellant revolve around whether the evidence produced by the appellant was enough to prove damages which are matters of fact on which I have no jurisdiction.

5. It is not disputed that the appellant had insured its motor vehicle with the respondent. The appellant admitted that fact but stated that the insurance cover was for private use a fact not denied by the appellant. The question is, what was the motor vehicle being used for at the alleged time of vandalism?

6. The only witness for the appellant was one Wycliffe Obutu Zedekiah. The witness told the court that the vehicle was vandalised while in the hands of one Timothy Simiyu. He produced the said Simiyu’s statement and an extract of the report made to the police. The statement stated that Timothy Simiyu had lent the vehicle to a friend who parked it outside Loreto School where it was vandalised overnight. The report to the police was shown to have been made by Timothy Simiyu. The witness had told the court that the vehicle was being used by the appellant’s directors. He did not tell the court what position Timothy Simiyu held in the company but it is instructive to state that the witness said that Timothy Simiyu could not be called as a witness because he was no longer available which to me makes it likely that he was not a director of the company. At the time of the vandalism, the vehicle was not in use by Timothy Simiyu. He claimed to have given it to a friend. It is unlikely that a driver or an employee of a company could lend the car to a third party without facing any consequences.

7. The respondent called one C.J.P John Misoi a police officer attached to Tigoni police station where the vandalism report was made. The witness told the court that the report was made under OB number 9/14/1/22 which was made by Geoffrey Kiiru accompanied by Nerbert Mwugezi. He even gave the telephone contacts of the reportee and not Timothy Simiyu. The report in the OB added that the vehicle had been hired by the reportee from the appellant and that it was vandalised at the parking lot of Loreto Girls Secondary School. The respondent also produced an investigation report which showed that the vehicle had been hired out. With this evidence which was the only evidence before the trial court, one cannot be faulted for finding in favour of the respondent that the vehicle was not in private use.

8. With the above evidence, the respondent maintains that it was entitled to avoid the policy. In my view, the appellant committed two acts which entitled the respondent to avoid the policy. First, the car was being used for purposes for which it had not been insured. Secondly, the appellant failed to disclose the correct use of the vehicle at the time of the incident which is also in breach of the principle of utmost good faith. In such circumstances, I hold the position that the respondent was not under contractual or legal duty to compensate the appellant. When an insured uses the motor vehicle for purposes other than those it disclosed at the time of taking up the insurance policy, it would amount to a breach of the insurance principle of uberimae fidei and the insurer is in the circumstances entitled to avoid compensation.

9. On the basis of the above, I find the that this appeal lacks merits and I hereby dismiss it with costs to the respondent.

DATED SIGNED AND DELIVERED AT NAIROBI THIS 13TH DAY OF DECEMBER 2024. B.M. MUSYOKIJUDGE OF THE HIGH COURT.Judgment delivered in presence of Miss Ndinda holding brief Mr. Etole for the applicant.