[2023] KEHC 26009 (KLR)

Intra Africa Assurance Co Ltd v China Railway No. 5 Engineering Group Co. Ltd (Civil Case E005 of 2022) [2023] KEHC 26009 (KLR) (16 November 2023) (Judgment)

Neutral citation: [2023] KEHC 26009 (KLR)

Republic of Kenya

In the High Court at Lodwar

Civil Case E005 of 2022

RN Nyakundi, J

November 16, 2023

Between

Intra Africa Assurance Co Ltd

Appellant

and

China Railway No. 5 Engineering Group Co. Ltd

Respondent

Judgment

1. The Appeal herein arises from the Senior Principal Magistrate’s Court Lodwar judgment in Civil suit No. E003 of 2022 delivered on 20th July 2022. The respondent instituted a suit in the trial court vide a plaint dated 28/10/2021 seeking reliefs for compensation for the loss of a motor vehicle that had been stolen while it was allegedly Insured in a Comprehensive motor insurance policy covered by the Appellant herein. The trial considered the pleadings and evidence and delivered judgement in favour of the respondent. Being aggrieved with the decision of the trial court, the Appellant instituted the present Appeal vide a Memorandum of Appeal dated 15th August 2022 premised on the following grounds;The Learned Magistrate erred in fact and in law in finding the Respondent wholly liable for breach of contract despite the Appellant producing evidence in support of the breach.1. The Learned Magistrate’s finding on liability was erroneous in law and fact.2. The Learned Magistrate erred in fact and in law in finding that there was no breach of contract as between the Appellant and the respondent despite evidence not being adduced by the respondent to this fact.3. The Learned Magistrate erred in fact and in law in finding that there was evidence adduced by the respondent of the existence of movement of vehicle in and out of the yard despite no such evidence being tabled and failed to consider evidence to the contrary tabled by the Appellant.4. The Learned Magistrate erred in fact and law in holding that one Danson Maina suspected of having stolen the said vehicle in question was an employee of the respondent despite evidence indicating as much having been produced in Court.

Appellant’s submissions 2. The Appellant filed submissions vide the firm of L.W. Wang’ombe & Company advocates. It is the Appellant’s case that the Learned Magistrate erred in fact and in law in finding the Appellant wholly liable for breach of contract despite evidence to the contrary being proved in Court. Counsel urged that it is not in contention that a contract of insurance existed between the Appellant and the Respondent. Further, that the Appellant contended that reasonable care had not been taken by the respondent to secure the said vehicle and thus loss of the same had been mainly occasioned by gross negligence. Counsel stated that it was submitted that Clause 2 (b) of the insurance contract required the Respondent to take all reasonable care to prevent any loss or damage. The evidence adduced by the respondent in response to this particular defence had been that sufficient steps had been taken to safeguard the vehicle.Learned counsel submitted that during the hearing, an investigator commissioned by the insurance gave his evidence and produced his report in court. It was this witness’ evidence that a lot of negligence was involved in handling the vehicle from when the same arrived at the work cite to when the same was stolen. This witness, in summary, informed the Court that the respondent had not taken adequate steps to secure the vehicle from any possible theft. It was his evidence that the vehicle in question was stolen by an employee of the respondent due to the negligence of the said respondent.

3. Counsel urged that the Appellant was not in breach of contract, but the contract was rendered void due to negligence on the part of the Respondent. Further, that the Appellant noted that the magistrate, in his judgment, noted that there were conditions to the policy which according to him had been fully met by the respondent herein. The key condition in the policy that the Appellant contended had not been met was that requiring respondent to take care to safeguard the insured vehicle. The court was informed that the stolen vehicle had no alarm or anti-theft device. The Court was further informed that the keys to the vehicle prior to the theft had not been secured safely. The Court was further informed that the loss of the vehicle was as a result of an employee of the respondent ‘driving’ off and disappearing with the said vehicle on the respondent’s watch. Evidence to show these facts was adduced in Court being a report to the police and a report made by the respondent acknowledging that the individual suspected of the theft was in fact an employee. Despite this fact having vehemently been brought to the Court’s attention, the Court in its Judgment indicated that the individual suspected of said theft was not an employee of the respondent company. Counsel submitted that the Court totally disregarded this fact in delivering its Judgment. The said document, despite having been produced by the Appellant’s witness in Court, was Authored by the respondent. The said document addressed to the Kenya Roads Authority and submitted on 3/9/2019, accurately describes the said theft and the title of the project staff involved. The same was submitted as one Danston Kamau whose occupation was that of a mechanic. It was submitted that the duty of care was a core condition to the insurance contract, which breach of the same would immediately vitiate the said contract. In his judgment, the Learned Magistrate failed to highlight these facts but indicated that negligence had not been proved.Our Counterparts in their submissions before this honourable Court have submitted that this Duty of It is the Appellant’s submission that the particular clause on duty of care need not be elaborated as the same is self-explanatory. The respondent cannot claim to have neglected to put sufficient measures in place to ensure security of its asset simply because the same was insured against loss.

4. It is the Appellant’s case that the Learned Magistrate erred in fact and in law in failing to consider the facts surrounding an individual suspected to have stolen the vehicle having been engaged by the respondent as a worker. On the first issue, counsel urged that the Magistrate erred in finding no negligence on the part of the respondent in taking steps to ensure the security of the motor vehicle prior to its theft. It was the Respondent’s case that they took reasonable security measures to prevent the loss of the subject matter, which included a fence around the property and having officers who guarded the gate day and night. However, it is the Appellant’s submission that these measures are not reasonable and sufficient considering the value of the subject matter in question. For instance, no records were kept to show who manned a particular vehicle at what time. The vehicle had also not been fitted with tracking devices, nor was it registered in Kenya, which made tracking it difficult. This confirms negligence on the part of the Respondent. The insurance contract, particularly clause 2 (b) required the Respondent to take all reasonable steps to prevent any form of loss or damage to the subject matter. Counsel urged that the security measures taken by the Respondents simply do not measure up to the value of the subject matter and are thus negligent in failing to take reasonable care to prevent any loss or damage.It was the evidence of DW2, an investigator from Milson Quest, during the hearing that there was negligence on the part of the Respondent. It was his evidence that during his investigation, he observed that the vehicle was likely to have been stolen by one Danson Maina, who worked as a mechanic of the Respondent and likely drove off with the vehicle. The Appellant submitted that the Learned Magistrate erred in fact and in law by finding that Danson Maina was not an employee of the Respondent. The investigator also confirmed that registration of the vehicle was vital to reporting and tracking the stolen vehicle. The principle of utmost good faith demands that parties in contracts of insurance should act in good faith with regard to insurable interests. The Courts underpinned this principle in Co-operative Insurance Company Ltd v David Wachira Wambugu [2010] 1 KLR 254 as cited in British American Insurance Co. Limited & Another V Isaac Njenga Ngugi [2019] EKLR. There was a responsibility on the part of the Respondent to register the vehicle 3 months after the issuance of the chassis number. The lack of such registration confirms negligence on the part of Respondent. Counsel maintained that the magistrate erred in fact and in law in finding that the Respondent did take reasonable care to protect the subject matter from loss or damage.

5. It is the Appellant’s case that the Appellant was not in breach of the contract but was justified in law by repudiating any liability occasioned due to negligence of the Respondent. In light of the above, counsel urged the court to set aside the judgement and that the court find that the Appellant is not in breach of the contract and thus not liable. In the alternative, he prayed that this Court finds that the Respondent, having breached the Contract is largely liable for the loss and apportions liability at 90% against the Respondent and 10% against the Appellant in which event the sum payable to the Respondent will be Kshs 1,050,000 only if at all.

Respondent’s case 6. The respondent opposed the Appeal and filed submissions on 6th April 2023. It is the respondent’s submission that the grounds of Appeal herein can be collapsed to one main issue, which is whether there was a breach of the Motor Vehicle Insurance Policy (herein referred to as “the Insurance contract”) between the Appellant and the Respondent.The respondent submitted that while declining the Respondent’s claim for compensation vide its letter dated 7th July 2020, the Appellant laid down what according to them would amount to reasonable security measures. It is however worthy to note that these standards were not stated in the Insurance contract and the Appellant confirmed as much. It was DW 1s testimony that the conditions at clause 2 (b) were general and not specific hence the Respondent only came to know about the specifics after the loss occurred. DW 1 admitted that what they stated as reasonable security measures had not been specified as requirements under the insurance contract in question. On the Respondent’s part, they presented evidence of security measures at the Yard where the vehicles operated from. The Respondent/Plaintiffs witness (PW 1), Maxwell Odoyo, told the Court that the Plaintiff/Respondent had taken reasonable steps to ensure safety of their property and staff while on site. It was his testimony that the Respondent had a fence around the property as well as officers who guarded the gate day and night. The Appellant acknowledged this fact in its submissions and testimony at the trial Court, and hence they do not dispute that there were security measures taken by the Respondent as regards the motor vehicle in question.

7. It is the respondent’s case that the security measures taken by the Respondent to prevent loss of the subject matter were reasonable in their circumstances. The failure by the Appellant to specify what would amount to reasonable security measures should not be used against the Respondent. On that note, the respondent called upon the Court to find that clause 2 (b) of the Insurance contract can only be interpreted in favour of the Respondent. The respondent referred the court to Sze Hai Tong Bank Company Ltd Vs Rambler Cycle Company Ltd [1959] AC 576 at 588 and Consolidated Bank of Kenya Limited v Securicor Security Services Kenya Ltd [2013] eKLR. Such exemption clauses, if ambiguous, will also be interpreted contra proferetem. The respondent also referred the court to the case of Direct Line Assurance Co. Ltd Vs Peter Micheni Muguo [2018] eKLR and the case of National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another [2001] eKLR.The respondent urged that it was not in dispute that there was a valid insurance contract between the parties. The Respondent had paid all the requisite premiums. It was also not in dispute that the motor vehicle insured under the said insurance contract was stolen and that the theft was reported to the Police and to the Appellant. The Respondent lodged a claim with the Appellant which was declined leading to the suit at the trial Court. The Appellant has not led evidence to prove that the Respondent is in breach of any conditions of the Insurance Contract.The Respondent maintained that it proved their case on a balance of probabilities to warrant the judgment entered in its favour. Counsel urged that the same be upheld and the present Appeal be dismissed with costs.

Analysis & Determination 8. The duty of an appellate court was laid out in Abok James Odera T/A A.J Odera & Associates v John Patrick Machira T/A Machira & Co. Advocates [2013] eKLR, the court stated as follows-“This being a first Appeal, we are reminded of our primary role as a first appellate court namely, to re-evaluate, re-assess and re-analyze the extracts on the record and then determine whether the conclusions reached by the learned trial Judge are to stand or not and give reasons either way.”

9. Upon considering the Memorandum of Appeal, the record of Appeal and submissions on record, the following issues arise for determination;1. Whether the trial court erred in its finding on liability2. Whether the trial court erred in its award of damages

Whether the trial court erred in its finding on liability 10. An appellate court will only interfere with the judgment of the lower court, if the said decision is founded on wrong legal principles. That was the holding of the Court of Appeal in Mkube v Nyamuro [1983] LLR at 403, where Kneller JA & Hancox Ag JJA held that-A Court on Appeal will not normally interfere with the finding of fact by a trial court unless it is based on no evidence, or on a misapprehension of the evidence, or the judge is shown demonstrably to have acted on wrong principles in reaching his conclusion.

11. PW1, Maxwell Ouma Odoyo, a safety and health specialist working for the respondent, testified that the plaintiff had taken comprehensive insurance cover with the defendant against loss and theft. Further, on 3rd December 2019, the respondent lost one of its vehicles , a report was made to the police and the defendant. He stated that they lodged a claim for compensation but the defendant declined to do so without any justification despite the existence of a valid insurance cover at the time of the theft. It was his evidence that the vehicle got lost outside the yard and Danson Maina was the main suspect.The defendant’s witness, DW1, John Lee Wainaina testified that the plaintiff reported the claim, and upon some scrutiny they realised that the plaintiff was negligent in securing the safety of the motor vehicle prior to the theft. They hired an investigator who compiled a report showing that the plaintiff was negligent. In cross examination, he confirmed that there was a valid insurance contract and that they were aware the vehicle didn’t have a number plate. Further, that the cover was taken on the basis of the chassis number and that they declined to compensate the plaintiff though no reason was given.DW2 was Michael Otieno Ombinjo and it was his testimony that he was appointed by the defendant to carry out an investigation on their client, the plaintiff. His role was to establish the circumstances of the loss. He compiled the report and among his findings was that the vehicle was stolen by an employee of the plaintiff.

12. It was not in dispute that there existed a valid insurance contract between the parties. The defendant failed to prove that the policy was invalid, not in force at the time of the loss of the vehicle, or that it had an exclusion clause. There was no evidence that the plaintiff had failed to pay any of the instalments of the premium or that there was any failure to properly follow the claims process. The evidence on record that the subject motor vehicle was insured at a value of Kshs. 10,500,000/- and this was uncontroverted.The Appellant imputed negligence on the part of the respondent, attributed to the failure to register the number plate of the vehicle three months into the insurance contract. However, the Appellant did not prove to the court that this was a term of the contract and whether it affected the claim. At the time of taking out the cover, the Appellant did not seem to have an issue with the use of the chassis number for registration. Further, there is no nexus between the absence of a number plate and the theft.It is therefore my considered view that the trial court was correct in finding that the Appellant was liable for breach of contract.

Whether the trial court erred in its award of damages 13. The principles guiding an appellate court in determining whether to interfere with an award for damages were set out in the celebrated case of Butt v Khan {1981} KLR 470 where the court pronounced itself as follows;An appellate court will not disturb an award for damages unless it is inordinately high or low as to represent an entirely erroneous estimate. It must be shown that the judge proceeded on wrong principles, or that he misapprehended the evidence in some material respect, and so arrived at a figure which was either inordinately high or low”.

14. It is trite law that when awarding damages, courts should be guided by comparable awards for similar injuries. In Shabani vs City Council of Nairobi (1985) KLR 516 the Court of Appeal had the following to say regarding the paramount need for Courts to attempt to give comparable awards in like cases:There is no doubt that, some degree of uniformity must be sought in the award of damages and the best guide in this respect is…to have regard to recent award in comparable cases in the local courts.

15. There was uncontroverted evidence that the insurance policy was for the sum of Kshs. 10,500,000/-. The Appellant’s witness, DW2, confirmed this as well. The damages that the trial court awarded were special damages which must be proved. The Appellant was unable to prove that the figures of the premium were exaggerated whereas the reports from the investigators confirmed the sum assured as Kshs. 10,500,000/-. The upshot of the foregoing is that the trial court was correct in its finding on damages.In the premises, the Appeal is dismissed for lack of merit with costs to the respondent.It is so ordered.

DELIVERED, DATED AND SIGNED AT ELDORET ON THIS 16TH DAY OF NOVEMBER 2023In the Presence of…………………………………….R.NYAKUNDIJUDGE