https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7238

Jubba Airways Limited v Fred Black Insurance Brokers Limited (Insolvency Cause E101 of 2023) [2026] KEHC 7238 (KLR) (Commercial and Tax) (21 May 2026) (Ruling) Neutral citation: [2026] KEHC 7238 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Insolvency Cause E101 of 2023 BK Njoroge, J May 21, 2026 IN THE MATTER OF THE INSOLVENCY ACT NO. 17 OF 2018 AND IN THE MATTER OF AN APPLICATION TO SET ASIDE STATUTORY DEMAND OF FRED BLACK INSURANCE Between Jubba Airways Limited Applicant and Fred Black Insurance Brokers Limited Respondent Ruling 1.This is a ruling arising out of an application by the Applicant Jubba Airways Limited. It seeks to set aside the Statutory Demand dated 15th August, 2023; issued by Petitioner/Respondent. Background Facts 2.The application before the Court is by way of a Notice of Motion dated 25.8.2023. it seeks the following orders:1.Spent.2.That the Respondent’s statutory demand dated 15th August, 2023 be set aside.3.That there be a stay of the Statutory Demand and further insolvency proceedings herein pending the hearing and determination of this application.4.That costs of this application be borne by the Respondent. 3.The application is supported by the Affidavit of Kennedy Khakame Malova sworn on 25.8.2023. He depones that a statutory notice was served upon the Applicant Jubba Airways Limited on 15.8.2023. That statutory demand is dated 10.8.2023. It demands a sum of USD 168,219,25 being an amount due for non-payment for insurance premiums in relation to Air-Craft Registration No. SX-ABQ and Air Craft Registration No. 5Y-JAF. 4.It is submitted that the statutory demand is defective as it was not endorsed by the Deputy Registrar of the High Court. Thus, it is said to contravene Regulations 77B of the Regulations, 2016. 5.It is also stated that the debt in issue is substantially disputed. 6.The application is opposed through the Ground of opposition dated 22.9.2023. The Petitioner/Respondent states as follows:1.That the Application is fatally and irredeemably defective as Kennedy Khakame Malova has no authority to act or plead on behalf of Jubba Airways Limited as KKM-1 (being the authority to plead) offends the provisions of Section 37(2), Companies Act 2015.2.That the application fails to meet the threshold set in Regulation 17, Insolvency Regulations 2016 to necessitate the setting aside of the statutory demand and ought to be struck out with costs. 7.The Petitioner/Respondent also relies upon the Replying Affidavit of James Boorman a Director of the Respondent sworn on 22.9.2023. He depones that the Petitioner/Respondent is an Insurance Broker. It enjoys a special expertise and specialization in Aviation Insurance. 8.It maintains that the Respondent brokered the placement by several insurance policies. The premiums thereof were payable by instalments. The insurance policies were issued, but no payment was forthcoming. This led to the termination of the insurance policies. This left a claim of USD 168,219.25 as being due and arising from the Respondent. 9.The Applicant Jubba Airways Limited has filed a Supplementary Affidavit sworn on 20.9.2023. Issues for determination 10.The Court has considered the application, the responses, the written submissions and the oral highlights by Counsel for the parties. The Court frames a single issue for determination as follows:a)Whether the statutory notice dated 15th August, 2023 ought to be set aside. Analysis 11.The provisions relating to the setting aside of a statutory demand are set out in Regulation 16 and 17 of the Insolvency Regulations. They state as follows:16.Application to set aside statutory demand(1)The debtor may, apply to the Court for an order to set aside the statutory demand—(a)within twenty-one days from the date of the service on the debtor of the statutory demand; or(b)if the demand has been advertised in a newspaper, from the date of the advertisement's appearance or its first appearance, whichever is the earlier.(2)Subject to any order of the Court under regulation 17 (7), time limited for compliance with the statutory demand shall cease to run from the date on which the application is lodged with the Court.(3)The debtor's application shall be in Form 7 set out in the First Schedule and shall be supported by an affidavit, which shall be in Form 8 set out in the First Schedule.(4)The affidavit referred to under paragraph (3) shall—(a)specify the date on which the statutory demand came into the debtor's possession;(b)state the grounds on which the debtor claims that it should be set aside; and(c)annex a copy of the statutory demand.17.Hearing of application to set aside statutory demand(1)On receipt of an application under regulation 16, the Court may, if satisfied that no sufficient cause is shown for granting the statutory demand, dismiss the application without giving notice to the creditor.(2)The time limited for compliance with the statutory demand shall commence from the date on which the application is dismissed.(3)If the application is not dismissed under paragraph (1), the Court shall fix a date and venue for it to be heard, and shall give at least seven days’ notice to—(a)the debtor or, if the debtor’s application was made by an advocate acting for him, to the advocate,(b)the creditor; and(c)any other person who is named in the statutory demand as the person whom the debtor may enter into communication with in reference to the statutory demand or, if more than one person is named, the first person to be named.(4)Where the creditor responds to the application, the creditor shall serve the response upon the debtor and the Court at least three days before the date of hearing of the application.(5)On the hearing of the application, the Court shall consider the evidence before it, and may either summarily determine the application or adjourn it, and shall give such directions as it considers appropriate.(6)The Court may grant the application if—(a)the debtor appears to have a counterclaim, set-off or cross-demand which equals or exceeds the amount of the debt or debts specified in the statutory demand;(b)the debt is disputed on grounds which appear to the Court to be substantial;(c)it appears that the creditor holds some security in respect of the debt claimed by the demand, and either paragraph (6) is not complied with in respect of the demand, or the Court is satisfied that the value of the security equals or exceeds the full amount of the debt; or(d)the Court is satisfied, on other grounds, that the demand ought to be set aside.(7)If the creditor holds some security in respect of his debt and has complied with paragraph (6) in respect of it, and the Court is satisfied that the security is under-valued in the statutory demand, the Court may require the creditor to amend the demand accordingly, without affecting the creditor’s right to present a bankruptcy application in respect of the original statutory demand.(8)If the creditor holds a security in respect of the debt, the provisions of this regulation shall be deemed to be complied with if the creditor has specified the full amount of the debt, and has specified—(a)in the demand the nature of the security and the value that the creditor puts on it as at the date of the demand; and(b)the amount of which payment is claimed by the demand, which is required to be the full amount of the debt, less the amount specified as the value of the security.(9)If the Court dismisses the application, it shall make an Order authorising the creditor to present a bankruptcy application either immediately or on or after a date specified in the Order.(10)The Registrar of the Court shall, after the Court has made an order under paragraph (8), send a copy of the Order to the creditor. 12.The grounds upon which the Respondent/Debtor can challenge a stay of statutory notice are therefore clearly defined. 13.As to what would trigger the issuance of a statutory notice, it is the inability of a company to pay its debts. 14.As per Section 384 of the Insolvency Act a company is said to be liable to pay its debts.384.The circumstances in which a company is unable to pay its debts(1)For the purposes of this Part, a company is unable to pay its debts—(a)if a creditor (by assignment or otherwise) to whom the company is indebted for hundred thousand shillings or more has served on the company, by leaving it at the company's registered office, a written demand requiring the company to pay the debt and the company has for twenty—one days afterwards failed to pay the debt or to secure or compound for it to the reasonable satisfaction of the creditor;(b)if execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or(c)if it is proved to the satisfaction of the Court that the company is unable to pay its debts as they fall due.(2)A company is also unable to pay its debts for the purposes of this Part if it is proved to the satisfaction of the Court that the value of the company's assets is less than the amount of its liabilities (including its contingent and prospective liabilities).(3)The insolvency regulations may increase or reduce the amount specified in subsection (1)(a). 15.The debt in this claim is said to be USD 168,219.25, hence well above the statutory threshold of Ksh.100,000/. There is no evidence that there is a decree issued by any Court in respect to the aforesaid amounts. No evidence has been placed before the Court to show that the debts for the company have outstripped the value of its assets. 16.What emerges from the response filed by the Respondent/Creditor is several aviation insurances were issued to the Applicant/Debtor. 17.As a result of non-payment, the insurances were terminated. The Respondent/Creditor claims on account of monies for services received that remain unpaid. 18.This claim is disputed by the Applicant/Debtor. 19.It is not lost to the Court that it had to determine an application by way of a Notice of Motion dated 13th September 2024. This application was in the nature of discovery. The Court by a Ruling delivered on 15th May 2025, made the following orders:“17.That the Application by way of a Notice of Motion dated 13th September, 2024 is allowed in the following terms;1.That an order be issued directing the Respondent/ Petitioner herein to produce, make discovery on oath and deliver and/or avail copies of the following documents in regard to the matter in question in the suit;i.)Copy of slip and/or Insurance Policy for aircrafts such as Fokker 50:5Y JAF, Fokker 50:5Y-JXN, Airbus A320-231 Registration No. Zs-GAS and Airbus A320-231 SX, being the basis of the alleged unpaid insurance premium.ii.)Proof of authorization from the Insurance Regulatory Authority to carry out Reinsurance/Insurance business outside Kenya.iii.)The name of the London broker and proof of its registration and certification to place risk on behalf of, or under the instruction of, the Petitioner/Respondent with the underwriters in the London Market, as a requirement to trade in that market.iv.)Debit Notes from the Insurer as proof of unpaid premiums remitted to the Insurer on behalf Respondent/Applicant by the Petitioner as basis of this alleged non-payment of Insurance premium in relation Insurance Policy for aircrafts such as Fokker 50:5Y JAF, Fokker 50:5Y-JXN, Airbus A320-231 Registration No. Zs-GAS and Airbus A320-231 SX.iv.)The cancellation notice dated 14th June, 2024 from the insurer in relation to aircraft registration to Fokker 50;5Y JAF on alleged account of non-payments of Premium.v.)Proof of authorizations from the insurer/ underwriters to initiate/institute this instant claim for unpaid premiums by the Petitioner/Respondent against the Applicant.vii.)Terms of Business Agreement or Letters of Support or clearance to conduct business directly with Lloyd's underwriters being the basis of the alleged business relationship between Lloyd's of London Market and the Respondent.” 20.The averments set out on the Replying Affidavit of James Boorman sworn on 22.9.20023 are detailed analysis of how the debts arose. It is averred that at one time the Creditor sought to have the Debtor listed in the Creditor Reference Bureau. 21.The Debtor does not admit the debt. In the supporting affidavit of Kennedy Khakame Malova sworn on 29.9.2023, it claims that it was indeed listed as a defaulter. This was at the instigation of the Creditor. However, it disputed the listing vide a notice of dispute to Metropol Credit Bureau. That the Creditor did not substantiate its claim. This led to the delisting of the Debtor. The Application relies on this delisting as proof that there exist genuine and substantial grounds for disputing this debt. The delisting is by way of a letter dated 28.4.2022 by Metropol Credit Bureau. 22.Looking at the trajectory that this matter has now taken, the debt alleged is now being sought to be proved by way of these Insolvency proceedings. The Creditor has placed materials in support and in proof of its claim. The Debtor denies the same vehemently. 23.To this Court, the only logical inference that it can make is that this debt is disputed. That there exist reasonable, substantial and genuine grounds for determination as to whether the debt exists or not. That those grounds cannot be advanced in these proceedings. This Court sitting as an Insolvency Court is not best suited to interrogate and arrive at a decision that this debt is lawfully due and payable. That is the provisions of this court differently constituted as a Commercial Court. 24.Some of the arguments raised by the Debtor is that it was issued with comprehensive insurance for its aircrafts which were grounded. That no policy documents were provided for the periods during which some of the aircrafts were said to have been on cover. These are glaring issues that the Court cannot ignore or gloss over. The Court is therefore satisfied that the debt is disputed on genuine and substantial grounds. 25.Had the Creditor obtained a judgment of the Court, a Decree or commenced execution proceedings of a judgment, the Debtor’s pleas that the debt is disputed would have stood on a very lean footing. 26.As matters stand, no admission as to indebtedness has been made by the Debtor at this stage. 27.The Court refers to the decisions in BN Kotecha & Sons Limited v Shah [2024] KEHC 8601 (KLR) and Flower City Limited v Polytanks & Containers Kenya Limited [2021] KEHC 34 (KLR) andMunge v Invesco Company Limited [2022] KEHC 15982 (KLR). The Court finds favour in the reasoning and holding of its brother Judges. 28.The application therefore succeeds. 29.As to costs the same follows the event and lie at the discretion of the Court. No reasons have been advanced as to why the same should not be awarded to the successful Applicant Jubba Airways Limited. Determination 30.The Applicant’s application by way of a Notice of Motion dated 25.8.2023 is allowed in the following terms;a)That the Respondents’ statutory demand dated 15th August, 2023 be and is hereby set aside.b)The costs of the application are awarded to the Applicant Jubba Airways Limited. 31.It is so ordered. DATED, SIGNED AND DELIVERED AT MILIMANI THIS 21ST DAY OF MAY, 2026.NJOROGE BENJAMIN K.JUDGEIn the presence of;Miss Mbithe holding brief for Mr. Mohamed Garat for the Applicant.Mr. Gisemba holding brief for Mr. Miano for the Petitioner/Respondent.Ms. Susan Nzioka - Court Assistant.