Kelvin Njenga Njoki v Skyland Contractors Limited

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT MACHAKOS** **CIVIL DIVISION (APPELLATE SIDE)** **CIVIL APPEAL NO. E150 OF 2025** **BETWEEN** **KELVIN NJENGA NJOKI….……….......................................................APPELLANT** **AND** **SKYLAND CONTRACTORS LIMITED………………………………..RESPONDENT** **(*Being an appeal from the Judgement and Decree of Hon. B.A Luova, RM/Adjudicator dated 5th June 2025 at the Small Claims Court at Machakos in SCCC No. E1395 of 2024*)** **JUDGMENT** **Introduction and Background** 1. Through his Amended Statement of Claim dated 5th December 2024, the Appellant filed suit against the Respondent stating that he suing under the instructions of his insurer, *MUA Insurance Company Limited*, under the doctrine of subrogation) and he was seeking compensation for damage to his motor vehicle. He averred that the claim arose from a road traffic accident that occurred on or about 9th November 2021 where his motor vehicle KCP \*\*\*C was stationary in a traffic jam along the Syokimau-Mlolongo Service Lane when it was hit from behind by the Respondent’s motor vehicle KCD \*\*\*Q. 2. The Appellant alleged the accident was caused solely by the negligence of the Respondent’s authorized driver including driving carelessly, at excessive speed, failing to keep a proper lookout and failing to brake or control the vehicle to avoid a collision. That as a result, the Appellant’s vehicle was extensively damaged and his insurer incurred a total cost of Kshs.213,187.00 in indemnifying the Appellant and he thus seeks this sum from the Respondent. 3. The Respondent, filed a Statement of Defence denying liability for the accident and the allegations of negligence. The Respondent’s driver claimed he was directed by traffic police to join the service lane from a side road and did not see the Appellant’s vehicle until after the impact and he alleged the Respondent’s vehicle was stalled or faulty and had no hazard lights on. As such, the Respondent urged the trial court to dismiss the claim. At the hearing, the Appellant presented three witnesses; PC Damaris Mutunga, a police officer based at Athi River Police Station (CW 1), George Karetu, a Legal Claims Officer at the Appellant’s insurer (CW 2) and Dilkush Harishkumar, the driver of the Appellant’s motor vehicle (CW 3). On its part, the Respondent called the driver of its motor vehicle, Anthony Muthui Kithinji (RW 1). 4. The parties then filed written submissions in support of their respective positions and the Adjudicator rendered the judgment on 5th June 2025 finding in favor of the Respondent and dismissing the Appellant’s case. The court found that the Respondent's driver was 100% vicariously liable for the accident. The trial court reasoned that the accident occurred in broad daylight and the Respondent’s driver admitted he did not see the Appellant’s vehicle, indicating he was not keeping a proper lookout. However, despite finding the Respondent liable, the court dismissed the claim for reasons that the Appellant did not testify in court, the insurance policy document itself was not produced as evidence and there was no proof that the driver, CW 3 was an authorized driver under the policy, as he had no receipt, text message, or other proof that he was running an errand for the owner. 5. The learned Adjudicator held that as the insurer was seeking to recover the outlay through subrogation, it had the burden to prove the existence of the insurance contract and the driver's authority. That its failure to do so meant the claim was unsuccessful and the trial court awarded costs to the Respondent, assessed at Kshs.30,000.00. The Appellant is aggrieved with these findings and appeals to the court through his Memorandum of Appeal dated 2nd July 2025. He faults the findings that the Appellant's driver was not covered by the insurance policy and that there existed no insurance contract between the Appellant and his insurer. That the learned Adjudicator erred by failing to properly evaluate the entire evidence on record, by finding that the Appellant had not discharged their burden of proof and that she did not evaluate the evidence nor apply the required standard of proof. Lastly, the Appellant faults the Learned Adjudicator for failing to exercise her discretion properly, leading to an injustice and he urges the court to allow the appeal, set aside the judgment of the trial court and allow the Amended Statement of Claim as prayed. He also seeks costs for both the appeal and the proceedings in the trial court. 6. The court directed that the appeal be canvassed by way of written submissions but only those of the Appellant are on record. I have considered the same together with the record and I will make relevant references to them in my analysis and determination below. **Analysis and Determination** 1. In determining this appeal, I am aware that the court’s jurisdiction is limited by **section 38(1)** of the ***Small Claims Court Act*** which provides that ‘*A person aggrieved by the decision or an order of the Court may appeal against that decision or order to the High Court on matters of law.’* A court limited to matters of law is not permitted to substitute the Subordinate Court’s decision with its own conclusions based on its own analysis and appreciation of the facts unless the findings are so perverse that no reasonable tribunal would have arrived at them (**Mati v Returning Officer Mwingi North Constituency & 2 others [2018] KECA 700 (KLR)**]. Thus, the duty of this court is to determine whether the subordinate court’s conclusions were supported by the evidence on record and the law. 2. In his submissions, the Appellant has framed two issues for the court’s determination: 3. *Whether the Trial Court erred in holding that no valid insurance contract existed and/or that the claim was not covered under the policy* 4. *Whether the Trial Court misdirected itself on the standard of proof and failed to properly evaluate the evidence.* **Existence of the insurance contract** 1. The Appellant submitted that that pleading the doctrine of subrogation presupposes an insurance contract and prior indemnification and that where subrogation is pleaded and supported by evidence of payment, the existence of the insurance contract can be inferred from documentary evidence and party conduct. That CW 2 testified to Policy No. 246/21/07/HO/N covering the Appellant’s motor vehicle and that this was further supported by documentary evidence such as the Motor Accident Report Form, Police Abstract and payment requisition vouchers. The Appellant submitted that CW 3 testified he was instructed by the owner to collect a parcel and was not test-driving the vehicle and that as a comprehensive cover, the driver acted within the scope of the insured risk. 2. The Appellant stated that he actually paid Kshs. 213,187.00 for the repairs, which constitutes unequivocal evidence of a binding policy and that non-production of the policy document is not fatal as was held in **Gahir Engineering Works Limited v Rapid Kate Services Limited & another [2018] KEHC 5321 (KLR)** and **Richard v Njeru [2022] KEHC 17083 (KLR)** and that requiring the policy document effectively elevates the civil burden of proof to beyond reasonable doubt. The Appellant also noted that the learned Adjudicator acknowledged that non-production of the policy document is not fatal, yet contradicted herself by dismissing the claim on that exact basis. 3. In ***Gahir Engineering Works Limited(supra)*** the court held as follows: *13. Under the doctrine of subrogation, when the insured risk crystalizes and the insurer pays or compensates the insured for financial loss arising from an insurance claim against a 3rd party, the insurer is in law entitled to step into the shoes and enjoy all the rights, privileges and remedies accruing to the insured including the right to seek indemnity from the 3rd party. The only qualification to this general principle is that the indemnity must be sought in the name of the insured.* *14. The principle of subrogation was discussed in Halsbury’s Laws of England, 4th Edition (2003 re-issue) at paragraph 490 where the learned author stated:* ***“..Where the insurer pays for a total loss, either of the whole, or in the case of goods of any apportionable part of the subject matter insured, he thereupon becomes entitled to take over the interest of the assured in whatever may remain of the subject matter so paid for, and he is thereby subrogated to all the rights and remedies of the assured in and in respect of that subject matter as from the time of the casualty causing the loss. …”*** *15. From the foregoing, it is evident that a claim under the doctrine of subrogation will be established if the insurance company on whose behalf suit is instituted proves to the required legal standard that it had paid its insured for the loss or damage occasioned to the subject matter of the insurance contract and was thus entitled to recover its loss from the 3rd party.* *16. It is trite law that in civil cases, the burden of proof is on the plaintiff and the standard of proof is on a balance of probabilities.* *The Court of Appeal in* ***Ignatius Makau Mutisya V Reuben Musyoki Muli, Civil Appeal No. 192 of 2007 [2015] eKLR*** *pronounced itself on the nature of evidence that would be sufficient to discharge the burden of proof on a balance of probabilities. The court borrowed from the wisdom of Denning, J in* ***Miller V Minister of Pensions [1947] 2 ALL ER 372*** *when he stated as follows:* ***“That degree is well settled. It must carry a reasonable degree of probability, but not so high as is required in a criminal case. If the evidence is such that the tribunal can say: ‘we think it more probable than not’, the burden is discharged, but, if the probabilities are equal, it is not. Thus, proof on a balance or preponderance of probabilities means a win, however narrow. A draw is not enough. So, in any case in which the tribunal cannot decide one way or the other which evidence to accept, where both parties’ explanations are equally (un)convincing, the party bearing the burden of proof will lose, because the requisite standard will not have been attained.”*** 1. From the above, to succeed in a subrogation claim, the insurer must prove that it paid its insured for the loss and that it is thus entitled to recover that loss from the third party. More importantly and as noted by the learned Adjudicator, this test does not require the insurer to produce the physical insurance policy document as a mandatory condition for success. As stated, the trial court's entire reasoning for dismissing the claim was that the policy document was absent and the insured did not testify. However, the test above focuses on proof of payment and indemnification, not on the production of the policy itself. 2. In his evidence, CW 2 testified that the Appellant was insured under Policy No. 246/21/07/HO/N and this testimony was corroborated by the Motor Accident Report Form, the Police Abstract and payment requisition vouchers all of which listed and showed *MUA* as the insurer and that the insurer indemnified the Appellant for Kshs. 213,187.00. I agree with the Appellant that this conduct of indemnification is evidence of the existence of a valid and binding insurance contract. The subordinate court found that the Appellant’s failure to testify was fatal, but there was other evidence on this point. CW 3 testified he was authorized by the Appellant to collect a parcel and this was corroborated by CW 2 who stated that this information was in the documents submitted to the insurer. This evidence was not materially challenged by the Respondent in cross-examination and remained uncontroverted meaning that the trial court ought to have accepted this as sufficient evidence of the existence of the policy. It is therefore my finding that the trial court erred in holding that no valid insurance contract existed and/or that the claim was not covered under the policy **Misdirection on the standard of proof** 1. On this issue, the Appellant submitted that the learned Adjudicator correctly stated the standard as "balance of probabilities" at one point, but then improperly applied a "preponderance of probability" standard, describing it as higher than a balance of probabilities. The Appellant contended that introducing a higher standard unknown in civil law constitutes a legal misdirection and that the trial court focused heavily on the missing policy document and the Appellant’s personal failure to testify, while ignoring uncontroverted testimony from the driver CW 2 and CW 3 and documentary evidence of indemnification. 2. In ***Ignatius Makau Mutisya(supra),*** the Court of Appeal clearly reiterated that the standard in civil cases is "on a balance of probabilities” and it even uses the term "preponderance of probabilities" not as a higher standard, but as a synonym for "balance of probabilities."This directly rebuts the learned Adjudicator’s erroneous creation of a new, higher standard and her statement that the burden was on a "preponderance of probability" which was "higher than on a balance of probabilities" is a clear misdirection in law. The excerpt from ***Miller(supra)*** also makes it clear that the test is simply whether the tribunal thinks "it is more probable than not." The evidence presented by the Appellant more than satisfies the test laid out above as he proved payment and indemnification through CW 2 who testified that the insurer paid Kshs. 213,187.00 to repair the Appellant’s vehicle which was corroborated by the payment requisition vouchers and invoices from *Landmark Motors, Safety Surveyors*, and *Inter-county Accident Assessors*. The insurer's conduct of paying for the repairs is itself evidence of indemnification and the existence of the contract. 3. Having proved payment, it follows that the insurer is legally subrogated to the rights of the insured. The accident occurred, the Respondent's driver, RW 1 was found wholly liable by CW 1 and the trial court and the damage was caused by the Respondent and therefore, on a balance of probabilities, the insurer is entitled to recover its outlay. I find that the learned Adjudicator’s judgment essentially imposed an impossible standard by requiring the policy document and the insured's testimony as the doctrine of subrogation is established by proof of indemnification, not the production of the policy and that the standard of proof is simply "more probable than not." 4. The trial court’s application of a higher standard of proof and the failure to give proper weight to the evidence presented by the Appellant fall squarely within the ambit of "matters of law" for which an appeal can be brought. It is clear that the decision was based on a misapprehension of the evidence and wrong principles making it perverse and unjust **Conclusion and Disposition** 1. In the upshot, I find that the appeal has merit and it is allowed with the consequence that the trial court’s judgment of 5th June 2025 is set aside and substituted with a judgment of this court in favour of the Appellant against the Respondent in the sum of Kshs.213,187.00 and this amount shall attract interest at court rates from the date of the judgment of the trial court until full payment. The Appellant is also awarded costs of the subordinate court assessed at Kshs.30,000.00. Since the Respondent did not participate in this proceedings, there are no order as to costs for the appeal. DATED SIGNED AND DELIVERED virtually this 2nd DAY OF SEPTEMBER 2026. ............................................................................ **J W W MONGARE** **JUDGE** **In the presence of;** 1. Ms. Ruto holding brief for Mr. Otieno for the Appellant 2. N/A for the Respondent 3. Abdisalan- Court Assistant