[2023] KEHC 24563 (KLR)

Karanja v Xplico Insurance Company Limited; Chai & another (Interested Parties) (Civil Suit 89 of 2018) [2023] KEHC 24563 (KLR) (2 November 2023) (Judgment)

Neutral citation: [2023] KEHC 24563 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Suit 89 of 2018

OA Sewe, J

November 2, 2023

Between

Moses Karanja

Plaintiff

and

Xplico Insurance Company Limited

Defendant

and

Bismar Barua Chai

Interested Party

Sinamoyo Oscar Dida

Interested Party

Judgment

1. The plaintiff, Moses Karanja, filed this suit against the defendant, Xplico Insurance Company Limited, praying for the following reliefs:(a)A declaration that the defendant is bound by Policy No. 080/002034/13/17/200 TPO and consequently, it is obliged and or legally bound to settle any claim or to honour any judgment and all consequential orders arising from Kilifi Chief Magistrate’s Civil Case No. 56 of 2015, Kilifi Chief Magistrate’s Civil Case No. 100 of 2015 Kilifi Chief Magistrate’s Civil Case No. 263 of 2015, Kilifi Chief Magistrate’s Civil Case No. 319 of 2015, Kilifi Chief Magistrate’s Civil Case No. 320 of 2015 and Kilifi Chief Magistrate’s Civil Case No. 321 of 2015 or any other claim in respect of Motor Vehicle Registration No. KAP 023Q.(b)A declaration that the plaintiff is not obliged or legally bound to settle any claim or to honour any judgment obtained in respect of Policy No. 080/002034/13/17/200 TPO Certificate No. B7009629 and more specifically any judgment and all consequential orders arising from Kilifi Chief Magistrate’s Civil Case No. 56 of 2015, Kilifi Chief Magistrate’s Civil Case No. 100 of 2015 Kilifi Chief Magistrate’s Civil Case No. 263 of 2015, Kilifi Chief Magistrate’s Civil Case No. 319 of 2015, Kilifi Chief Magistrate’s Civil Case No. 320 of 2015 and Kilifi Chief Magistrate’s Civil Case No. 321 of 2015 or any other claim in respect of Motor Vehicle Registration No. KAP 023Q.(c)Costs and interest of the suit.

2. The plaintiff’s cause of action was that, on or about the 2nd October 2014, the defendant issued him with a policy of insurance in respect of his Motor Vehicle Registration No. KAP 023Q vide insurance Policy No. 080/002034/13/17/200 TPO and Certificate No. B7009629. The plaintiff further averred that the policy was valid from the 2nd October 2014 to 1st November 2014; and that he dutifully paid the requisite premium as agreed. The plaintiff also pointed out that it was an express and very strict term and condition of the contract that the defendant would at all times indemnify the plaintiff against any loss or injury occasioned to any 3rd party in respect of the use of the plaintiff’s said motor vehicle.

3. The plaintiff further stated that, during the currency of the said policy, on the 18th October 2014, he was driving Motor Vehicle Registration No. KAP 023Q along Mombasa-Malindi Road when it collided with Motor Vehicle Registration No. KBB 900F at Oasis Medical Centre, thereby occasioning fatal and personal injuries to several third parties. He added that, as a result, the estates of Dorris Chihunga Murihe, Constance Mbuche Oscar, Lee Charo Kalama, Peter Kahiga Ndirangu, Charles Maina Gaciu and Daniel Abala Ayambo instituted civil proceedings against him in Kilifi Chief Magistrate’s Civil Case No. 56 of 2015, Kilifi Chief Magistrate’s Civil Case No. 100 of 2015 Kilifi Chief Magistrate’s Civil Case No. 263 of 2015, Kilifi Chief Magistrate’s Civil Case No. 319 of 2015, Kilifi Chief Magistrate’s Civil Case No. 320 of 2015 and Kilifi Chief Magistrate’s Civil Case No. 321 of 2015, respectively, which suits (hereinafter, “the Kilifi suits”) are pending judgment.

4. At paragraphs 9, 10 and 11, the plaintiff pointed out that, upon being sued by the third parties as abovementioned, he brought the suits and summons to the knowledge of the defendant who thereupon appointed the firm of Mogaka Omwenga & Mabeya Advocates to defend him. He also stated that he paid the requisite excess fees prior to the appointment by the defendant of the said firm of Advocates to defend him in the Kilifi suits. He also mentioned that, contrary to his legitimate expectations, the said Advocates have since ceased to defend him in the primary suits, thereby exposing him to liability, loss and damage; hence this declaratory suit.

5. One year after the filing of the suit, an application was filed by the law firm of Sherman Nyongesa & Mutubia for the joinder of the two proposed interested parties, Bismark Barua Chai and Sinamoyo Oscar Dida. The application was duly heard and allowed by the Court (Hon. Chepkwony, J.) on 2nd June 2021. The court record further shows that the defendant was duly served with the Plaint and Summons to Enter Appearance, and that it filed a Memorandum of Appearance through the law firm of Ahmednasir, Abdikadir & Company Advocates. It, however, failed to file a Defence within the prescribed period or at all. Consequently, on the 14th February 2022, interlocutory judgment was entered herein against it in favour of the plaintiff. The matter was thereafter fixed for formal proof on 9th June 2022 in accordance with, Order 10 Rule 6 of the Civil Procedure Rules, which provides that:“Where the plaint is drawn with a claim for pecuniary damages only or for detention of goods with or without a claim for pecuniary damages, and any defendant fails to appear, the court shall, on request in Form No. 13 of Appendix A, enter interlocutory judgment against such defendant, and the plaintiff shall set down the suit for assessment by the court of the damages or the value of the goods and damages as the case may be.”

6. Rule 10 of Order 10, Civil Procedure Rules, makes it clear that the provisions of Rules 4 to 9 are applicable, with any necessary modification, where any defendant has failed to file a Defence. Hence, in the case of Josphat Muthuri Kinyua & 5 others v Fabiano Kamanga M’etirikia [2021] eKLR it was held: -“…When there is some other aspect of the claim besides the claim for pecuniary damages, as a claim for negligence, the Court will have to consider such a claim on the merit and satisfy itself that the same has been proven through ‘formal proof’ proceedings before proceeding to assess damages. This is the course adopted in Mwatsahu v Maro, Civil Case No. 74 of 1996 [1967] EA 42, a case of pecuniary damages for breach of warranty of title which the Court (Harris J) found the registrar could not enter judgment in default of the defence.20. The Court does not therefore find that the entry of interlocutory judgement absolved the Appellants from proving liability by way of hearing in Court. This Court thus finds that despite omission by the Respondent to file a defence in the matter, the Court was still required to have the matter heard with respect to liability, in addition to the question of assessment of damages…”

7. Similarly, in Samson S. Maitai & Another v African Safari Club Ltd & Another [2010] eKLR, Emukule J observed: -“…I have not seen a judicial definition of the phrase "Formal Proof". "Formal" in its ordinary Dictionary meaning - refers to being "methodical" according to rules (of evidence). On the other hand, according to Halsbury's Laws of England, Vol. 15, para, 260, "proof" is that which leads to a conviction as to the truth or falsity of alleged facts which are the subject of inquiry. Proof refers to evidence which satisfies the court as to the truth or falsity of a fact. Generally, as we well know, the burden of proof lies on the party who asserts the truth of the issue in dispute. If that party adduces sufficient evidence to raise a presumption that what is claimed is true, the burden passes to the other party who will fail unless sufficient evidence is adduced to rebut the presumption.”

8. The Court of Appeal took the same posturing in Gitobu Imanyara & 2 others v Attorney General [2016] eKLR thus:“…It is a firmly settled procedure that even where a defendant has not denied the claim by filing of defence or an affidavit or even where the defendant did not appear, formal proof proceedings are conducted. The claimant lays on the table evidence of facts contended against the defendant. And the trial court has a duty to examine that evidence to satisfy itself that indeed the claim has been proved. If the evidence falls short of the required standard of proof, the claim is and must be dismissed. The standard of proof in a civil case, on a balance of probabilities, does not change even in the absence of a rebuttal by the other side. see Mwangi Muriithi (supra) and Mumbi M'Nabea v David Wachira Civil Appeal No. 299 of 2012.

9. Thus, at the formal proof hearing, the plaintiff adopted his witness statement filed alongside the Plaint dated 1st November 2018. He therefore testified that, at all material times to this suit, he was the registered and beneficial owner of Motor Vehicle KAP 023Q; and that the said motor vehicle was involved in a road traffic accident on 18th October 2014. The plaintiff explained that he was driving the subject motor vehicle along Kilifi-Malindi Road when it collided with Motor Vehicle Registration No. KBB 900F at Oasis Medical Centre. He further testified that the accident involved third parties, some of whom sustained fatal injuries. As a result he was sued by the legal representatives of the estates of the victims in Kilifi Chief Magistrate’s Civil Case No. 56 of 2015, Kilifi Chief Magistrate’s Civil Case No. 100 of 2015 Kilifi Chief Magistrate’s Civil Case No. 263 of 2015, Kilifi Chief Magistrate’s Civil Case No. 319 of 2015, Kilifi Chief Magistrate’s Civil Case No. 320 of 2015 and Kilifi Chief Magistrate’s Civil Case No. 321 of 2015.

10. It was further the evidence of the plaintiff that, having dutifully paid the premium due for the insurance cover, he had the legitimate expectation that the defendant would defend his interests in the primary suits, which was not the case; yet the accident occurred during the validity period of the insurance policy. He explained that, although the defendant instructed the firm of Mogaka Omwenga & Mabeya Advocates to defend him, the said firm thereafter ceased acting in all the matters, thereby exposing him to the possibility of having to personally satisfy any ensuing judgments and decrees in the suits.

11. In support of his evidence, the plaintiff produced several documents as exhibits, including copies of the subject insurance policy, the claim form and a cheque in proof of payment of the requisite excess charge. He consequently prayed for judgment in his favour as set out in the Plaint.

12. The parties were thereafter given an opportunity to file written submissions in the matter. Accordingly, counsel for the plaintiff, Mr. Chamwada, relied on his written submissions dated 22nd June 2022, in which he proposed the following two issues for determination:(a)Whether there was a valid insurance contract between the plaintiff and the defendant.(b)Whether the defendant should be compelled by way of a declaration to honour the contract of insurance.

13. In respect of the first issue, counsel urged the Court to rely on the Certificate of Insurance No. B7009629 exhibited herein as the foundational document conferring contractual obligations on the parties during the period between 2nd October 2014 and 1st November 2014. He added that the insurance policy was meant to indemnify the plaintiff against any third party risks; and therefore that the defendant contractually agreed to bear the liability for any loss or damage that the plaintiff would encounter during the validity period of the insurance cover. Counsel made reference to Section 10(1) of the Insurance (Motor Vehicles Third Party Risks) Act, Chapter 405 of the Laws of Kenya and the case of Kenya Alliance Insurance Co. Ltd v Thomas Ochieng Apopa (suing as administrator of the Estate of Pamela Agola Apopa, deceased) [2020] eKLR in urging the Court to grant the declaratory orders sought against the defendant. He pointed out that the plaintiff’s apprehension stems from the fact that the firm of Advocates retained by the defendant to represent him in the primary suits has since ceased acting in those suits; thereby exposing his property to the possibility of attachment and sale.

14. On behalf of the interested parties, written submissions were filed herein on 17th October 2022 by Sherman Nyongesa & Mutubia Advocates. The posturing adopted by the interested parties was essentially that the Court lacks the jurisdiction to issue a declaration that the plaintiff is not obliged and/or legally bound to settle any claim or honour any judgment in Kilifi CMCC No. 263 of 2015: Oscar Dida Nassoro & Another v Moses Karanja & Others as sought in Prayer [b] of the Plaint dated 1st November 2018 for reasons that the judgment in the primary suit is valid as against the plaintiff. They further pointed out that no appeal has been preferred against the said judgment to warrant the issuance of any such orders; and that in any case, this is not such an appeal.

15. It was also the submission of the interested parties that they are not privy to the Policy of Insurance between the plaintiff and the defendant; and therefore issuing a declaration in terms of Prayer [b] would be prejudicial to them; especially in this instance where the defendant is not liable to settle the whole amount of the decretal sum in the primary suits. They therefore urged the Court to find that the plaintiff is simply seeking to evade their legal and statutory obligation to settle lawful and valid judgments passed by competent courts of law. They accordingly prayed that the Court declines to issue Prayer No. [b] as sought by the plaintiff in the Plaint dated 1st November 2018.

16. I have given careful thought to the averments set out by the plaintiff in his Plaint as well as the evidence adduced herein in support and the written submissions filed by learned counsel and the key issue for consideration is whether there was a valid insurance contract between the plaintiff and the defendant as at the time of the subject accident; and if so, whether the plaintiff is entitled to the reliefs sought.

A. On whether there was a valid contract of insurance: 17. The plaintiff adduced credible proof that, at all times material to this suit, it was the registered and beneficial owner of Motor Vehicle Registration No. KAP 023Q and that the said motor vehicle was involved in a road traffic accident on 18th October 2014 at Oasis Medical Centre along the Kilifi-Malindi Road. There is further uncontroverted proof that at the time of the accident, the motor vehicle was insured by the defendant vide Insurance Policy No. 080/002034/13/07/200 TPO. The Certificate of Insurance to that effect was produced by the plaintiff as Annexure G to his affidavit sworn on 1st November 2018.

18. In the premises, it is plain that the defendant is under obligation to indemnify the plaintiff in so far as there is no dispute that the accident occurred within the validity period of the insurance policy. In this regard, Section 10(1) of the Insurance (Motor Vehicles Third Party Risks) Act, Chapter 405 of the Laws of Kenya is explicit that:“If, after a policy of insurance has been effected, judgment in respect of any such liability as is required to be covered by a policy under paragraph (b) of section 5 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled, the policy, the insurer shall, subject to the provisions of this section, pay to the persons entitled to the benefit of the judgment any sum payable thereunder in respect of the liability, including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.”

19. The essence of Section 10(1) of the Act was aptly captured by Hon. Gikonyo, J. in the case of Joseph Mwangi Gitundu v Gateway Insurance Co Ltd [2015] eKLR, thus:“…under section 10(1) of Cap 405 Laws of Kenya, the insurer has a statutory obligation to pay to the persons entitled to the benefit of the judgment any sum payable thereunder in respect of the liability, including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.The obligation is statutory and a strict one; it cannot be shifted or abrogated by a term in the contract of insurance or in the manner proposed by the Defendant, lest the noble intention of the Act to guarantee compensation of third parties who suffer injuries arising from the use of the insured motor vehicle on the road should be lost. Similarly, if the statutory obligation placed by law on the insurer was to be shifted to the insured as proposed by the Defendant, the purpose for taking out an insurance policy and the compulsion by the Act for such insurance cover to be taken out on vehicles to be used on the roads to cover third party risks under Cap 405 Laws of Kenya will also be defeated.The only legal way liability and obligation to pay third party claims may be avoided, is by strictly following the prescriptions provided for under section 10 of Cap 405. ”

20. I am therefore satisfied that the plaintiff has proved that there was a valid contract of insurance between him and the defendant as at 18th October 2014 when his Motor Vehicle Registration No. KAP 023Q was involved in a road traffic accident on the Kilifi-Malindi Road.

B. On whether the plaintiff is entitled to the reliefs sought: 21. Ordinarily, a declaratory suit by an insured is brought after judgment has been passed in the primary suits. In this case, the plaintiff appears to have been prompted to action by the fact that the firm of advocates retained on his behalf by the defendant ceased acting in the primary suits. There is therefore no indication herein as to what stages the primary suits are at, save for the case involving the interested parties. In their application for joinder dated 12th November 2019, the interested parties indicated that they had already obtained a valid judgment and decree against the plaintiff in Kilifi SPMCC No. 263 of 2015; and that no appeal had been filed in respect thereof.

22. Additionally, at paragraph 6 of their Supporting Affidavit, the interested parties deposed that the plaintiff was duly served with a Notice of Entry of Judgment in the matter. It would have been helpful for the plaintiff to present similar evidence to enable the Court ascertain the extent of his liability in the primary suits. That omission notwithstanding, I am satisfied that the plaintiff, having proved that there was a valid contract of insurance in force as at 18th October 2014 when the subject accident occurred, is entitled to a declaratory order against the defendant as prayed for in Prayer [a] of the Plaint.

23. As for Prayer [b] in which the plaintiff asked for a declaration that he is not obliged or legally bound to settle any claim or to honour any judgment obtained in respect of Policy No. 080/002034/13/17/200 TPO Certificate No. B7009629 and more specifically the judgments and all consequential orders arising from Kilifi Chief Magistrate’s Civil Case No. 56 of 2015, Kilifi Chief Magistrate’s Civil Case No. 100 of 2015 Kilifi Chief Magistrate’s Civil Case No. 263 of 2015, Kilifi Chief Magistrate’s Civil Case No. 319 of 2015, Kilifi Chief Magistrate’s Civil Case No. 320 of 2015 and Kilifi Chief Magistrate’s Civil Case No. 321 of 2015 or any other claim in respect of Motor Vehicle Registration No. KAP 023Q, I have no hesitation in dismissing the same. First and foremost, such an order would, in effect, nullify the perfectly lawful decisions that may have been reached by the lower court in the primary suits against the plaintiff, as if by way of appeal, without giving the parties a hearing.

24. Secondly, and more importantly, no evidence was presented by the plaintiff as to the nature of the awards, if any, and the quantum thereof. This is pertinent, because Section 5(b)(iv) of the Insurance (Motor Vehicles Third Party Risks) Act caps compensation by insurers at Kshs. 3,000,000/=. That provision states as follows:“In order to comply with the requirements of section 4, the policy of insurance must be a policy which-(b)insures such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of, or bodily harm to, any person caused by or arising out of the use of the vehicle on a road;Provided that a policy in terms of this section shall not be required to cover—...(iv)liability of any sum in excess of three million shilling arising out of a claim by one person...”

25. Hence, to make a declaratory order in the nature and manner sought by the plaintiff in the absence of proof as to the exact amount awarded against him would be in disregard of the clear provisions of the law that repose the ultimate liability on the plaintiff to pay the decretal sums adjudged as due against over and above what the insurance company may be liable to pay. Hence, in Law Society of Kenya v Attorney General & 3 others [2016] eKLR it was emphasized that:“What the Principal Act has done is cap the amount of money that the insurer pays to the injured person. Nothing in the Principal Act stops a litigant or the injured person from pursuing a claim against the insured individual where an award in excess of the amount recoverable from the insurer is made...It only limits who pays how much by apportioning a maximum of Kshs. 3,000,000/= to be paid by the insurer and the additional if any by the insured.”(26)In the premises, Prayer [b] is untenable and is therefore hereby dismissed with the result that the orders that commend themselves to the Court, and which I hereby grant are that:(a)A declaration be and is hereby made that the defendant is bound by Policy No. 080/002034/13/07/200 TPO and consequently is obliged and legally bound to settle any claim and to honour any judgment and all consequential orders arising from Kilifi Chief Magistrate’s Civil Case No. 56 of 2015, Kilifi Chief Magistrate’s Civil Case No. 100 of 2015 Kilifi Chief Magistrate’s Civil Case No. 263 of 2015, Kilifi Chief Magistrate’s Civil Case No. 319 of 2015, Kilifi Chief Magistrate’s Civil Case No. 320 of 2015 and Kilifi Chief Magistrate’s Civil Case No. 321 of 2015 or any other claim in respect of Motor Vehicle Registration No. KAP 023Q in connection with the subject accident to the extent permissible by law.(b)Costs of the suit be borne by the defendant.It is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY AT MOMBASA THIS 2ND DAY OF NOVEMBER 2023OLGA SEWEJUDGE