Kenya Orient Insurance Company Ltd v Mudegu (Civil Appeal E153 of 2025) [2026] KEHC 8379 (KLR) (12 June 2026) (Judgment)

Kenya Orient Insurance Company Ltd v Mudegu (Civil Appeal E153 of 2025) [2026] KEHC 8379 (KLR) (12 June 2026) (Judgment) Neutral citation: [2026] KEHC 8379 (KLR) Republic of Kenya In the High Court at Kisumu Civil Appeal E153 of 2025 A Mabeya, J June 12, 2026 Between Kenya Orient Insurance Company Limited Appellant and Moab Savala Mudegu Respondent Judgment 1.By a Plaint dated 23/6/2017, the appellant sued the respondent praying for declarations to avoid the policy of insurance No. KSM/102/038632/2013 (‘the said policy’) amongst other declarations. The respondent appeared and filed a defence denying the appellant’s claim in toto. The matter proceeded to trial. 2.By a judgment made on 11/6/2025, the trial court dismissed the appellants suit with costs. 3.Aggrieved by that decision, the appellant lodged an appeal in this Court vide its Memorandum of Appeal dated 10/7/2025 setting out 5 grounds of appeal summarized as follows: -a.That the trial court erred in dismissing the appellant’s suit even after finding that the respondent had violated the insurance policy.b.That the trial court erred in holding that the respondent had relied on representation to him that the Motor vehicle was insured for transport business while there was no such evidence.c.That the trial court erred in holding that the appellant was estopped from avoiding the insurance policy while there was no evidence for such estopped.d.That the trial court misapprehended the evidence and failed to consider the appellant’s submissions. 4.This being a first appeal, this Court is enjoined to re-evaluate the evidence afresh and come to its own independent conclusions and findings but at all times having in mind that it did not have the opportunity of seeing the witnesses testify. (See Selles & Another vs Associated Motor Boat Company & Others (1968) EA 123). 5.At the trial, the parties paraded 1 witness each. Caren Awuor Onyango (Pw1) testified on behalf of the appellant. She adopted her witness statement dated 4/8/2021 and told the Court that according to a proposal dated 19/6/2013, the respondent requested the appellant to issue him with a Motor vehicle commercial vehicle policy in respect of his Motor vehicle No. KZP 489 (‘the said vehicle’). He stated in the proposal that the vehicle would be used exclusively for social, domestic and pleasure purposes and for his business and profession. That he did not require cover for carriage of goods for hire or reward. 6.That on the basis of the said proposal, the appellant issued the said policy for a period of 12 months covering 4/10/2016 and 3/10/2017. That an accident occurred on 28/12/2016 involving the said vehicle and a 3rd party vehicle resulting in 2 deaths and one serious body injuries. 7.That investigations revealed that the said vehicle was transporting goods for hire and reward which was in contravention of the terms of the cover. That the appellant was therefore entitled to avoid the policy. She produced a copy of the proposal and the policy document as PExh1, 2 and identified Investigation Report as PMFI 3, respectively. 8.In cross-examination, she told the Court that the Proposal form contained all the information required. That the nature of the goods was not described and that the proposal was not signed by both parties, though the policy itself was signed. 9.Moab Savala Mudegu (Dw1) testified on his own behalf. He adopted his witness statement dated 28/7/2017 and told the Court that sometimes in 2015, he was approached by an agent from Ocean Breeze Insurance Agency to insure the said vehicle. He paid Kshs.7,500/- as the premium for the whole year. The sticker (certificate) belonged to the appellant. According to him, he had complied with all that was required of him by the policy and it was for the appellants to indemnify him for the accident of 26/12/2016 (sic). 10.In cross-examination, he told the Court that he was not given the Proposal. The agent came to his Juakali yard and later brought him insurance. The vehicle was for transport and he could carry luggage for others. That the vehicle was involved in an accident while carrying a customer’s luggage for reward. He was not given the policy to read. 11.The parties filed their respective submissions which the Court has considered. It was submitted for the appellant that the trial court having found that the respondent was in breach of the policy, it should have found that the appellant was entitled to avoid the policy. That there was sufficient evidence in the Proposal form where the respondent had given answers on the basis of which the policy was issued. That the vehicle was being used for hire at the time of the accident. 12.That the trial court erred in absorbing the respondent on the basis that he relied on representation that the vehicle was insured to transport goods for 3rd parties. That this had not been pleaded as required under Order 2 Rule 10 of the Civil Procedure Rules. The case of Galaxy Paints Co. Ltd vs Facon Guards Ltd (2000) KECA 215 (KLR) was cited in support of the proposition that parties are bound by their pleadings. The case of North Kisii Central Farmers Ltd vs Jeremiah Mayaka Ombui & 4 Others (2014) eKLR was also cited in support of the proposition that a court cannot determine an issue that is not in the pleadings. 13.That in any event, there was no evidence of misrepresentation. Margaret Wanjiru Ndirangu & 4 Others vs Attorney General (2020) eKLR was cited in support of that contention. 14.On ground 3, it was submitted that no estoppel was pleaded. The case of Joram Achuku Oyoo vs Kenya Fisheries and Research Institute Board of Trustees (2013) KECA 18 (KLR) was relied on for that proposition. That the Court did not show what the estoppel was and the evidence relied upon. 15.That on grounds 4 and 5, the trial court failed to properly analyse the evidence and or consider the appellant’s submissions. 16.Finally, that the contract of insurance being one of utmost good faith, the concealment of a material fact known to the insured avoids the policy. The cases of Cooperative Insurance Co. Ltd vs David Wachire Wambugu (2010) eKLR and Charles Momanyi Mageto vs Cooperative Insurance Company of Kenya Ltd (2016) eKLR were relied on for this proposition. 17.On behalf of the respondent, it was submitted that this Court being appellate it must respect the findings on credibility by the trial court unless made without evidence. That the appellant’s case that the respondent was carrying goods for hire and reward was based on an investigation report that was never produced in evidence. 18.That the appellant’s case was based on the Proposal form produced as PExh1. That at page 45 – line 7 of the record, the nature of the goods described was left blank. That the nature of the goods was therefore not material. That on the authority of Odd Jobs vs Mubia (1970) EA 476, a court may determine an issue not pleaded if it arises out of evidence and canvassed by the parties. That since the essential part of the Proposal form was left blank, and the appellant is raising it after the accident, estoppel applies. 19.I have considered the submissions and the record. The first ground was that the trial court erred in dismissing the appellant’s suit despite having found as a fact that the respondent had violated the insurance policy. The appellant’s suit was basically that since the respondent had breached the terms and conditions of the contract of insurance between it and the respondent, the appellant was entitled to avoid the policy of insurance issued in respect thereof. 20.The appellant contended that the respondent’s subject Motor vehicle was insured for social, domestic and pleasure purposes. That it never covered carriage of goods for hire or reward. The respondent denied that claim. He admitted having taken an insurance cover from the appellant and testified that he had complied with all that was required by the policy. That he did not sign any insurance policy and neither did he read any policy. 21.In Court, the appellant relied on both the Proposal form as well as the policy of insurance. It should be recalled that the respondent having denied in to have requested for insurance vide the Proposal form dated 19/6/2013 in paragraph 4 of defence, the issue for determination arise as to whether the insurance was entered into pursuant to the said Proposal form or not. In her evidence in chief, Pw1 stated that the Insurance Policy was issued pursuant to the said proposal dated 19/6/2013. However, in cross-examination, she stated as follows: -“The proposal is supposed to be signed by both parties. This one is not signed. It is the bedrock of the insurance contract.” 22.In his testimony, the respondent stated that he was intending to insure the subject vehicle. He paid the premium of Kshs.7,500/- and was issued with the sticker of the appellant. That he duly complied with what was required of him with regard to the policy. In cross-examination, he stated that he never saw the insurance documents neither did he get the policy to read. He admitted that as at the time of the accident, the vehicle was carrying luggage for reward. 23.The question that arises is, would the terms of the proposal apply? It is this Court’s view that it was the appellant’s case, through Pw1, that the Proposal Form has to be signed by both parties. The subject proposal relied on was not signed by either party as admitted by Pw1. Could therefore its terms or the information contained therein bind the respondent? This Court does not think so. 24.The position the Court takes is that, if it was the intention of the appellant that the contents of the Proposal dated 19/6/2016 was to be part of the terms of the cover, nothing was difficult than to so indicate in the policy that was issued on 4/10/2016. The terms would have been incorporated by reference. 25.In any event, there is nothing in the Policy No. KSM/102/038632/2013 to show that the same was being issued on 4/10/2016 pursuant to the Proposal dated 19/6/2016. He who alleges must prove. (See sections 107 and 108 of the Evidence Act). The appellant having alleged that the insurance was issued pursuant to the alleged Proposal, it should have proved that fact. The testimony of the respondent that he never signed nor read any Proposal was never challenged nor displaced. 26.On the other hand, the Policy was properly executed by the appellant so as to cover the subject vehicle. What were its terms and conditions as relating the subject of the suit? The same provided as follows –“Limitations as to use. 1.Use of social, domestic and pleasure purposes and your business or profession; or 2.Use for the carriage of passengers in the cabin as per vehicles specifications in connection with your business. This policy does not cover use for racing, competition, rallies or trials (or use for practice for any of them).” 27.Nowhere in the Policy document itself is the business or profession of the respondent defined. It is only in his testimony that the respondent stated that he is a businessman primarily dealing in the sale of green/fresh maize at Kibuye market. 28.The question therefore is, was the carriage of luggage for hire or reward excepted in the Policy. Clause MOT 002A of the Policy is instructive. It provided: -“Limitations As To Use – Tpo CommercialIt is hereby specifically declared and agreed that this Policy does not cover the insured vehicles while being used for any of the following purposes: - 1.For regular use on Airport Premises. 2.For use in the transportation of high explosive such as Nitro-glycerine, Dynamite or any similar explosives. 3.For use in transportation of manufacture’s stock at Automobile Factories. 4.For use of transporting timber logs (Timber logging vehicles). Subject otherwise to the terms, conditions and exceptions of this policy.” 29.The question that arises is whether the foregoing two provisions did bar the respondent from using the subject vehicle for carriage of luggage for hire or reward. The Court finds that there was nowhere such exclusion was made. 30.Parties are bound by their contracts. Courts cannot interfere or redraw contracts entered into by parties. In Langat vs Co-operative Bank of Kenya Ltd (2017) KECA 152 (KLR), the Court of Appeal held: -“We are alive to the hallowed legal maxim that it is not the business of the Court to rewrite contracts between parties. They are bound by the terms of their contracts; unless coercion, fraud or undue influence are pleaded and proved. See National Bank of Kenya Ltd vs Pipeplastic Samkolit (K) Ltd (2002) 2EA 503. The primary task of the Court is to construe the contract and any terms implied in it. Meggary J in the case of Coco vs A. N Clark (Engineers) Ltd (1969 RPC 41.” 31.The contract between the parties in this case was expressed in the policy document dated 4/10/2016. The terms were plain and express. The language is clear and unambiguous. The contract expressly excluded that which was not covered. Nowhere did it expressly state that carriage of luggage for hire or reward was excluded. The view the Court takes is that, that which was not expressly excluded cannot be excluded by inference. 32.In this regard, the trial court erred in holding that the respondent was in breach of the policy. There was no such breach as the insured’s vehicle was not barred from undertaking the carriage of luggage for reward. In this regard, the trial court was not in error in holding that the appellant had not proved its case to the required standard. Ground 1 fails. 33.The second ground was that the trial court erred in absorbing the respondent from the contract on the basis that he relied on representation. The submissions of this ground by the appellant was correct. No misrepresentation had been pleaded. Order 2 Rule 10 of the Civil Procedure Rules requires such to be specifically pleaded and evidence of the same to be led. Further, the case of Galaxy Paints Co. Ltd vs Falcon Guards Ltd (2000) (Supra) relied on by the appellant is the correct proposition of the law. To the extent that the trial court held that the respondent was entitled to rely on a representation was in error. That ground succeeds. 34.The other ground on estoppel was also soundly taken by the appellant. The respondent needed to plead the facts that established estoppel and lead evidence to that fact. That ground also succeeds. 35.Grounds 4 and 5 were to the effect that the trial court did not properly analyse the evidence and disregarded the appellant’s submissions. That is not correct. The trial court correctly captured the appellant’s case to be that vide a Proposal Form dated 19/6/2016 the respondent is alleged to have made certain representations to the appellant. That it is on the said representations the insurance policy was issued. 36.This Court has already made a finding that the appellant failed to prove that; firstly, the respondent filled a Proposal dated 19/6/2016 and make the alleged representations; that secondly, the alleged Proposal Form dated 19/6/2016 was the basis of the Policy issued on 4/10/2016, 4 months later, or that the contents of the said Proposal were or formed part of or were read into the Policy document. 37.In any event, the Proposal not having been signed and the same having been denied by the respondent, the same cannot be enforced against him. The Policy document not having excepted the purpose for which the Motor vehicle was being used for on 28/12/2016, the suit could not succeed., 38.Accordingly, the appeal is found to be without merit and is dismissed with costs.It is so decreed. DATED AND DELIVERED AT KISUMU THIS 12TH DAY OF JUNE, 2026.A. MABEYA, FCI ArbJUDGE