[2022] KEHC 11682 (KLR)

Kiamuko & another (Suing as Administrators of the Estate of the Late Evans Kyalo Maundu - Deceased) v ICEA Lion General Insurance Co. Limited (Civil Suit 26 of 2018) [2022] KEHC 11682 (KLR) (1 July 2022) (Judgment)

Neutral citation: [2022] KEHC 11682 (KLR)

Republic of Kenya

In the High Court at Machakos

Civil Suit 26 of 2018

GV Odunga, J

July 1, 2022

Between

Winfred Mutheu Kiamuko

1st Plaintiff

Titus Maundu Nzambu

2nd Plaintiff

Suing as Administrators of the Estate of the Late Evans Kyalo Maundu - Deceased

and

ICEA Lion General Insurance Co. Limited

Defendant

Judgment

1. This suit arises out of a judgment delivered on 7th June 2012 in Machakos High Court Civil Case No. 130 of 2009 - Winfred Mutheu Kiamuko vs Titus Maundu Nzambu (Suing as the Legal representatives of the estate of Evans Kyalo Maundu) vs Swale Breki Islam and Mash Bus Services Limited (hereinafter referred to as “the primary suit”) apportioning liability at 20:80, the damages were assessed as hereunder;a.Special damages Kshs 123,386b.Pain and Suffering Kshs 20,000c.Loss of Expectation of life Kshs 80,000d.Loss of Dependency Kshs 7,239,900e.Costs and interest

2. The amount was later negotiated and reduced to Kshs five Million Five Hundred Thousand (Kshs. 5,500,000) by the parties.

3. By a plaint dated 3rd February, 2017, the Plaintiffs herein, in their capacity as the administrators of the estate of Eva Kyalo Maundu, sued the Defendant claiming a declaration that the Defendant, as the insurer of the Defendants in Machakos High Court Civil Case No. 130 of 2009, was obliged to honour and satisfy the decree delivered on 7th June, 2012 in favor of the Plaintiffs.

4. It was pleaded that at the time of the accident in which the deceased, a fare paying passenger, passed away, the motor vehicle that was involved in the accident was insured by the Defendant herein. It was pleaded that as a result of the said accident, the Defendant’s insured was sued in the above mentioned suit and judgement was entered in favour of the Plaintiffs in the sum of Kshs 5,890,628. 80. Following the execution process, a sum of Kshs 2,500,000. 00 was recovered leaving the balance thereof unsettled. It was this unsettled balance that led to the filing of the present suit.

5. In its statement of defence, the Defendant pleaded that the said judgement was the subject of an appeal that is pending before the Court of Appeal. The Defendant further denied that it was the insurer of the vehicle in question and further that the insurance policy in question was issued by it at the material time.

6. The Defendant further pleaded that there was no contractual relationship between the Defendant herein and the Defendant in the primary suit hence was under no obligation to settle the said judgement. In the alternative it was pleaded that the said policy was cancelled and/or waived by the insured due to breach of both the terms and conditions of the said policy. It was further pleaded that if there was any such policy, it was not a third party policy and hence no cause of action lies under Cap405 Laws of Kenya. It denied that it was served with a valid statutory notice in respect of the primary suit within the prescribed time or at all as well as any notification of the judgement against the alleged insured.

7. According to the Defendant, it has always discharged its statutory duty and protected the interests of all its policy holders and third party insurance beneficiaries where there is a valid insurance contract. It was further contended that there is no privity of contract between the Plaintiffs herein and the Defendant.

8. It was further pleaded that upon being notified of the judgement in the primary suit, the Defendant offered to pay to the Plaintiffs Kshs 3,000,000/- being the statutory limit under Cap 405 but the offer was rejected by the Plaintiffs, an offer which according to the Defendant was still on the table. According to the Defendant, it is under no obligation to pay more than the statutory limit unless there is an agreement with the insured to the contrary. In its view any award over and above the said statutory limit ought to be paid by the insured. The Defendant therefore prayed that the suit be dismissed with costs.

9. The Plaintiffs were however not amused by the turn of events. By a Motion on Notice dated 16th June 2017 filed on 29th June 2017 the Plaintiffs sought the following orders;a.That the Defendant’s/ Respondent’s written statement of defence filed herein be struck out and in the result herein above, judgement be entered in favour of the Plaintiffs/ Applicants as against the Defendant to the extent of the Statutory Policy limit in the sum of Kshs 3,000,000/- plus interest at court rate from 7th June 2012 till payment in full.b.That costs of this suit and of the application herein be awarded to the Plaintiffs/Applicant.

10. The Defendant filed a Replying affidavit sworn by Lucy Muriithi, the Deputy Manager Claims Department of the defendant dated 23rd August 2017 in which it was stated that they were the insurer of Motor Vehicle Registration number KAX 027Y and had through its lawyers held a meeting on 6th of July 2012 to negotiate the claim with the Plaintiff Advocate. They informed the Plaintiff’s advocate that the limit was Kshs 3,000,000 and after protracted negotiations they settled on Kshs 3,000,000 all inclusive. On 13th November 2013, she contended that they sent a discharge indemnity voucher of Kshs 3,000,000. She deposed that the Plaintiffs declined to execute the discharge voucher on 14th November 2013 but on 18th July 2017, they accepted the payment. The monies were transferred to the Plaintiff on 12th July 2017 which was acknowledged.

11. The Plaintiff/Applicant filed a further Affidavit dated 5th September 2017 sworn by Winfred Mutheu Kiamuko in which she stated that they rejected the amount for reason that they were entitled to much more than the offer under the Fatal Accidents Act and Law Reform Act and that the limitation only applied to a suit as against the insurer for enforcement of a judgement, however the suit was against the insured of the Defendant in the present suit. Further that the voucher was sent ten months after the negotiation despite an agreement that the matter would be settled for five Million Five Hundred Thousand Kenyan Shillings (Kshs. 5,500,000) within 30 days. She stated that the court can issue an order of costs and interest in the circumstances.

12. These proceedings were initially filed before the Chief Magistrate’s Court Machakos in Civil Suit No. 96 of 2017. Later the said matter was transferred to this Court. During the pendency of the suit when the matter came for directions on 10th of November 2021, the Defendant’s Learned Counsel Mr. Makau indicated that the Defendant had paid the principal sum of Kshs 3,000,000/- leaving only interest and costs. Directions were taken and parties were to file submissions on the issue of interest and costs.

Plaintiffs’ Submissions 13. The Plaintiffs filed submissions dated 1st of February 2022 in which they contend that the Defendant herein is the insurer of the Defendants in the primary suit and as such are liable to satisfy the decree. Kshs 2,500,000 has been recovered from the Defendants through an auction held on 10th December 2016.

14. The Plaintiffs opines that during the pendency of the present suit and application, the Defendant made a payment of Kshs 3,000,000 on 29th June 2017, five years after the judgement was entered and despite demand being made on 12th of June 2015. The Plaintiffs contends that this amount did not settle the interest accrued since the date of judgment and decree.

15. While relying on section 10(1) of the Insurance (Motor Vehicles Third Party Risks) Act (hereinafter referred to as the Act), Counsel submitted that the Plaintiffs are entitled to the accrued interest and costs of the suit due to delay in execution of the primary suit. It was contended that the Defendant had demonstrated that he was aware of his statutory obligation and had the ability to do so but opted to obstruct or delay execution of the decree hence subjecting the Plaintiff to injustice. To the Plaintiff, he ought to be awarded interest at court rates from the date of the judgement until payment in full. Reliance was placed on the case of Patricia Mona Anthony & Another vs Africa Merchant Assurance Company Limited [2019] eKLR where the court gave a declaration that the defendants were liable to pay the Defendant Kshs 3,000,000 as part payment of the decree in favour of the Plaintiffs and the amount was to attract interest at court rates from the date of the judgment until payment in full. The Plaintiffs also relied on the case of Juliet Waringa Wanyondu (deceased) vs Lion of Kenya Insurance Company [2017] eKLR, Joseph Mwangi Gitundu vs Gateway Insurance limited [2015] eKLR and Peter Gichihi Njuguna vs. Jubilee Insurance Company Limited [2016] eKLR.

16. The Plaintiffs submitted that Kshs 1,863,286. 00 is the balance of the decretal sum yet to be satisfied and despite the limit being Kshs 3,000,000, they contended that the court has discretion to make and award above this amount. To buttress this point, he relied on the case of APA Insurance Company Limited vs Esther Kavindu Mwongo & Anotehr (Sued as the legal representative of the estete of Isaac Wamba Mutisya) [2019] eKLR and the case of Peter Gichihi Njuguna vs Jubilee Insurance Co. Limited [2016] eKLR.

Defendant’s Submissions 17. The Defendant, in their submissions dated 4th March 2022 submitted that it had already paid the statutory limit of Kshs 3,000,000 which includes costs and interest as per Section 5 (b) (iv) and Section 10 of the Act. He contended that the court in High Court Constitutional Petition No 148 of 2014 - The Law Society of Kenya vs The Attorney General upheld the relevant amendments to the Act when it held that the money an insurance pays to the insured person was apportioned a maximum of Kshs 3,000,000 to be paid by the insurer and the addition if any by insured.

18. He therefore contended that the Finance Act 2006 had a cap limit of Kshs 3,000,000 that an insurer would pay. He submitted that as a result, the Plaintiffs were not entitled to cost and interest. He submitted that on 14th November 2013, four years before the filing of this suit, it had forwarded a discharge voucher to the Plaintiff who declined to execute it and as such due to its conduct is not entitled to costs.

Determination 19. I have considered the Application, the Replying affidavit and the submissions of the parties and find that the issue for determination is whether the Plaintiffs are entitled to costs and interest from the Defendant.

20. The principles guiding the striking out of pleadings and cases is now well settled. These principles, as set out in DT Dobie & Company (K) Ltd vs. Muchina [1982] KLR 1, are that no suit ought to be summarily dismissed unless it appears so hopeless that it plainly and obviously discloses no reasonable cause of action and is so weak as to be beyond redemption and incurable by amendment. If a suit shows a mere semblance of a cause of action, provided it can be injected with real life by amendment it ought to be allowed to go forward for a court of justice ought not to act in darkness without the full facts of a case before it. The rationale for this is due to a realisation that the exercise of the powers for summary procedure are draconian, coercive and drastic. And because a party may thereby be deprived of his right to a plenary trial, the court exercises those powers with the greatest care and circumspection and only in the clearest of cases as regards the facts and the law. The summary procedure should therefore only be adopted when it can be clearly seen that a claim or case is clear and beyond doubt unarguable and the judicial system would never permit a party to be driven from the judgement seat without any court having considered his right to be heard, except in cases where the cause of action was obviously and almost incontestably bad.

21. The application was hinged was brought under Order 2 rule 15(1)(b), (c) and (d) of the Civil Procedure Rules. And sections 1A, 1B and 3A of the Civil Procedure Act. Subrule (1) of the said provision provides as follows:At any stage of the proceedings the court may order to be struck out or amended any pleading on the ground that—(a)it discloses no reasonable cause of action or defence in law; or(b)it is scandalous, frivolous or vexatious; or(c)it may prejudice, embarrass or delay the fair trial of the action; or(d)it is otherwise an abuse of the process of the court, and may order the suit to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

22. In the exercise of its powers under the said provision there are certain well established principles that a court of law is to adhere to. Whereas the essence of the said provisions is the striking out of an action or defence, that is a jurisdiction that must be exercised sparingly and in clear and obvious cases and unless the matter is plain and obvious, a party to civil litigation is not to be deprived of his right to have his suit tried by a proper trial. The court ought to act very cautiously and carefully and consider all facts of the case without embarking upon a trial thereof before dismissing a case or striking out a defence for not disclosing a reasonable cause of action defence for being otherwise an abuse of the process of the court.

23. The power to strike out pleadings must be sparingly exercised and it can only be exercised in clearest of cases. If a pleading raises a triable issue even if at the end of the day, it may not succeed then the suit ought to go to trial. However, where the suit is without substance or groundless of fanciful and or is brought is instituted with some ulterior motive or for some collateral one or to gain some collateral advantage, which the law does not recognise as a legitimate use of the process, the court will not allow its process to be a forum for such ventures. To do this would amount to opening a front for parties to ventilate vexatious litigation which lack bona fides with the sole intention of causing the opposite party unnecessary anxiety, trouble and expense at the expense of deserving cases contrary to the spirit of the overriding objective which requires the court to allot appropriate share of the court’s resources, while taking into account the need to allot resources to other cases.

24. A matter is frivolous if(i)it has no substance; or(ii)it is fanciful; or(iii)where a party is trifling with the Court; or(iv)when to put up a defence would be wasting Court’s time; or(v)when it is not capable of reasoned argument. See Dawkins vs. Prince Edward of Save Weimber (1976) 1 QBD 499; Chaffers vs. Golds Mid (1894) 1 QBD 186.

25. Again a pleading or an action is frivolous when it is without substance or groundless or fanciful and is vexatious when it lacks bona fides and is hopeless or offensive and tends to cause the opposite party unnecessary anxiety, trouble and expense. See Bullen & Leake and Jacobs Precedents of Pleading (12th Edn.) at 145.

26. A matter is said to be vexatious when(i)it has no foundation; or(ii)it has no chance of succeeding; or(iii)the defence (pleading) is brought merely for purposes of annoyance; or(iv)it is brought so that the party’s pleading should have some fanciful advantage; or(v).where it can really lead to no possible good. See Willis Vs. Earl Beauchamp (1886) 11 PD 59.

27. Pleading tend to prejudice, embarrass or delay fair trial when(i)it is evasive; or(ii)obscuring or concealing the real question in issue between the parties in the case. It is embarrassing if(i)It is ambiguous and unintelligible; or(ii)it raises immaterial matter thereby enlarging issues, creating more trouble, delay and expense; or(iii)it is a pleading the party is not entitled to make use of; or(iv)where the defendant does not say how much of the claim he admits and how much he denies. See Strokes vs. Grant (1878) AC 345; Hardnbord vs. Monk (1876) 1 Ex. D. 367; Preston vs. Lamont (1876).

28. A pleading which tends to embarrass or delay fair trial is described as a pleading which is ambiguous or unintelligible or which states immaterial matters and raises irrelevant issues which may involve expenses, trouble and delay and that which contains unnecessary or irrelevant allegations which will prejudice the fair trial of the action and lastly a pleading which is abuse of the process of the court really means in brief a pleading which is a misuse of the Court machinery or process. See Trust Bank Limited vs. Hemanshu Siryakat Amin & Company Limited & Another Nairobi HCCC No. 984 of 1999.

29. A pleading is an abuse of the process where it is frivolous or vexatious or both. Where the pleading as it stands is not really and seriously embarrassing it is wiser to leave it un-amended or to apply for further particulars. See Kemsley vs. Foot (1952) AC 325.

30. In the Raghbir Singh Chatte v National Bank of Kenya Limited Civil Appeal No. 50 of 1996, the Court of Appeal held:“If a general traverse…were held to be sufficient and effectual, that would render meaningless provisions such as Order VI Rule 9(3) of the Civil Procedure Rules and even the decisions of this Court such as Magunga General Stores vs. Pepco Distributors Limited [1988-92] 2 KAR 89. The position of the law…is that a mere denial or general traverse in defence is not sufficient and a defendant who does not specifically plead to all the issues raised in a plaint risks the probability of his defence being struck out or being held to Constitute an admission of the issues raised in the Plaint.”

31. In Magunga General Stores v Pepco Distributors Ltd. [1987] KLR 150; [1988-92] 2 KAR 89 [1986-1989] EA 334 the same Court held:“Mere denial is not a sufficient defence in a claim for breach of contract for goods sold and delivered and cheques issued in settlement thereof. There must be a reason why the defendant does not owe the money. Either there was no contract or it was not carried out or failed. It could also be that payment had been made and could be proved. It is not sufficient therefore to simply deny liability without some reason given.”

32. However, in The Co-Operative Merchant Bank Ltd. vs. George Fredrick Wekesa Civil Appeal No. 54 of 1999 the Court of Appeal stated as follows:“The power of the Court to strike out a pleading under Order 6 rule 13(1)(b)(c) and (d) is discretionary and an appellate Court will not interfere with the exercise of the power unless it is clear that there was either an error on principle or that the trial Judge was plainly wrong...Striking out a pleading is a draconian act, which may only be resorted to, in plain cases...Whether or not a case is plain is a matter of fact...Since oral evidence would be necessary to disprove what either of the parties says, the appellant’s defence cannot be said to present a plain case of a frivolous, scandalous, vexatious defence, or one likely to prejudice, embarrass or delay the expeditious disposal of the respondent’s action or which is otherwise an abuse of the process of the court. The defence raises a fundamental issue, namely, whether there was any misrepresentation as alleged by the respondent, a question which, cannot possibly be answered at the stage of an application for striking out; nor will it be competent for the court of appeal to try to answer it as its jurisdiction only extends to identifying whether, if any, there are issues which are fit to go for trial. The court has no doubt whatsoever, that the above is a fundamental triable issue...A Court may only strike out pleadings where they disclose no semblance of a cause of action or defence and are incurable by amendment. The appellant’s defence cannot be said to fall into that category and had the trial Judge considered fully all the matters alluded to, he would not have come to the same conclusion as he did.”

33. In Yaya Towers Limited vs. Trade Bank Limited (In Liquidation) Civil Appeal No. 35 of 2000 the same court expressed itself thus:“A plaintiff is entitled to pursue a claim in our courts however implausible and however improbable his chances of success. Unless the defendant can demonstrate shortly and conclusively that the plaintiff’s claim is bound to fail or is otherwise objectionable as an abuse of the process of the Court, it must be allowed to proceed to trial...It cannot be doubted that the Court has inherent jurisdiction to dismiss that, which is an abuse of the process of the Court. It is a jurisdiction, which ought to be sparingly exercised and only in exceptional cases, and its exercise would not be justified merely because the story told in the pleadings was highly improbable, and one, which was difficult to believe, could be proved...If the defendant assumes the heavy burden of demonstrating the claim is bound to fail, he will not be allowed to conduct a mini trial upon affidavits...It is not the length of arguments in the case but the inherent difficulty of the issues, which they have to address that, is decisive... The issue has nothing to do with the complexity or difficulty of the case or that it requires a minute or protracted examination of the documents and facts of the case but whether the action is one which cannot succeed or is in some ways an abuse of the process of the Court or is unarguable...Where the plaintiff brings an action where the cause of action is based on a request made by the defendant he must allege and prove inter alia, both the act done and the request made for doing such an act. In the absence of any request shown to have been made by the defendant in the particulars delivered of such allegation, it would not be possible for the plaintiff to prove any request made by the defendant and without this the essential ingredient of the cause of action cannot be proved and the plaintiff is bound to fail...No suit should be summarily dismissed unless it appears so hopeless that it is plainly and obviously discloses no reasonable cause of action and is so weak as to be beyond redemption and incurable by amendment.”

34. It is not in dispute that judgement was entered in favour of the Plaintiffs in Machakos CMCC No.96 of 217 - Winfred Mutheu Kiamuko vs Titus Maundu Nzambu (Suing as the Legal representatives of the estate of Evans Kyalo Maundu) vs Swale Breki Islam and Mash Bus Services Limited. It is also not in dispute that the Defendant is the insurer and has paid the Plaintiffs Kshs 3,000,000 to the Plaintiff on 29th June 2017.

35. The issue before me is the issue of costs and interest and particularly whether the monies paid was inclusive or exclusive of costs and interest. Section 5(b) of the Insurance (Motor Vehicles Third Party Risks) Act, Cap 405 Laws of Kenya provides that;In order to comply with the requirements of section 4, the policy of insurance must be a policy which—a.…………………………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 injury 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—i.liability in respect of the death arising out of and in the course of his employment of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment; orii.except in the case of a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, liability in respect of the death of or bodily injury to persons being carried in or upon or entering or getting on to or alighting from the vehicle at the time of the occurrence of the event out of which the claims arose; oriii.any contractual liability;iv.liability of any sum in excess of three million shillings, arising out of a claim by one person.

36. Section 10(1) of the said Act provides as hereunder:(1)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.

37. The side note to that section is “Duty of insurer to satisfy judgments against persons insured”. In Bushell vs. Hammond [1904] 2 KB 563, it was held that though it is true that the marginal notes do not form part of a statute, yet some help can be derived from the side note to show what the section is dealing with. From the side note it is clear that the section deals with the obligation by the insurer to satisfy judgements obtained against persons insured. What clearly comes out from the said provision it is clear that for an insurance company to be under a statutory obligation to satisfy a decree certain condition precedent must be satisfied. Firstly, before a judgement is obtained, there must have been a policy of insurance in effect. Secondly, the judgement must have been in respect of a liability required to be covered by a policy under paragraph (b) of section 5 (being a liability covered by the terms of the policy). Thirdly, the judgement must have been obtained against a person insured by the policy.

38. The Court of Appeal in the case of Justus Mutiga & 2 Others vs. Law Society of Kenya & Another [2018] eKLR noted as follows;“Unfortunately, under the current system, the third party has been left at the mercy of not just the percentages imposed under the schedule, but should there be any excess recoverable, he must contend with pursuing the insured personally. For example, in the case of Georgina Wangari Mwangi v. David Mwangi Muteti, High Court of Kenya Civil Case No 40 of 2013; it was held that the insurance company is to pay a maximum of Ksh.3, 000, 000 with any excess being payable by the insured party. The plaintiff in that case was awarded damages of Kshs. 14,612,540. 20 out of which only Kshs. 3,000,000 was payable by the insurer, with the rest being recoverable from the insured.”

39. In Law Society of Kenya vs. Attorney General & 3 others [2016] eKLR the Court observed as follows;“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. I hasten to add that the provision as to the mandatory insurance cover of the amount of Kshs. 3,000,000/= does not in any way prohibit any insured who may be minded to source and seek a higher cover from agreeing with the insurer on such cover, subject of course to a higher premium and other agreement on the terms of the policy…In the end, I hold the view that the Principal Act does not exclude compensation to affect proprietary rights. 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.”

40. According to section 10 of the Act, after a policy of insurance has been effected the Insurer is liable to pay to the persons entitled to the benefit of a judgment any sum payable, 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. The section expressly states that the insurer is under an obligation to pay the sum under paragraph (b) of section 5 of the Act 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. In our case the enactment relating to interest on judgements is section 27 of the Civil Procedure Act.

41. The Respondent seems to be of the view that the statutory limit of Kshs 3,000,000. 00 includes costs and interests and that where the award exceeds that amount then the insurer is not obligated to settle any amount over and above the same including costs and interests. With due respect, I beg to differ. Section 5 aforesaid only deals with liability in respect of the principal award. It does not contemplate interest or costs which follow the event. Accordingly, where the insurer, knowing well that it is liable to pay the said sum fails to do so and proposes to do so in a manner that does not satisfy the decree in question, as a result of which the offer is rejected, then he cannot escape payment of costs and interests. I therefore associate myself with Mulwa, J in Peter Gichihi Njuguna vs. Jubilee Insurance Co. Ltd [2016] eKLR where the learned judge expressed herself as hereunder:“The defendant submits that under the proviso(iv) of Section 5(b), the total amount that the defendant ought to pay in an all inclusive sum should not exceed Kshs. 3,000,000/= including costs and interest. This court begs to differ with the above submission. The Defendant had failed to honour its obligations placed on it by the above section. The plaintiff has spent money and time to pursue the payment by filing of this declaratory suit the defendant at all times knew or ought to have known that it was its obligation to settle the judgment of the primary suit – even the capped limit. Indeed it made an offer to pay which offer was accepted but did not pay and no explanation was tendered for the failure to pay. The suit had to proceed to full hearing. I have carefully read the section under review. The drafters of the said Act No. 10 of 2006 in my considered view, did not envisage a situation, where the Insurance Company would fail to pay the claim if all conditions are met as is the case in this present case. To that extent, if by its failure, costs are incurred in pursuance of payment, the defendant ought to be penalised and condemned to pay costs to the plaintiff. Costs ordered by the court in its discretion cannot be construed to include the principle sum, in this case the capped sum of Kshs.3,000,000/=. It is trite that costs follow the event, unless otherwise ordered by the court. Section 27 of the Civil Procedure Act states:“--- the costs of and incidental to all suits shall be in the discretion of the court or Judge, and the court shall have full power to determine by whom--– such costs shall be paid ---- provided that the costs of any action, cause or other matter or issue shall follow the event unless the court or judge shall for good reason otherwise order.”In High Court Election Petition No. 6 of 2013 – party of Independent Candidate of Kenya and Another -vs- Mutula Kilonzo & Others.It was stated that the Principle underlying the award of costs is two fold-1. The award of costs is a matter of discretion of the court that ought to be exercised upon grounds on which a reasonable man could have come to the conclusion arrived at.2. The general rule that costs should be awarded to the successful party, a rule which should not be departed from without the exercise of good grounds for doing so.The defendant had not shown good reasons or at all why the court should depart from the above principles – and deny the plaintiff costs incurred in the prosecution of the case. Had the Defendant paid, the Kshs.3,000,000/= may be, the court would have had no reason to offer and or penalise it for the expenses, inconvenience, costs and interest occasioned by the filing and prosecution of this court.”

42. In this case, the Respondent contends that since it made an offer of payment which was not accepted by the Plaintiff, the Defendant should not be penalized in costs. As I have stated above the insurer may only be exempted from paying costs where the offer is made in respect of its full liability. In this case, the offer to pay did not mention any costs or interests since the Defendant has always maintained that it is not liable to pay costs and interests. In my view, that offer was not for full payment. However, the Defendant expected the Plaintiff to accept the same in full payment. In those circumstances, the Plaintiff was entitled to reject the offer as it did.

43. It follows that the Defendant is liable to pay the costs and interests.

44. Since that is the only matter in dispute, I find that the defence filed herein is frivolous and vexatious and may only delay the fair trial of the action. To that extent it is otherwise an abuse of the process of the court. To the extent that it denies payment of the costs and interests on the statutory limit of Kshs 3,000,000. 00 the same is struck out and judgment is hereby entered on the costs of the primary suit and interest on the principal sum as decreed.

45. The Respondent will also pay the costs of this suit to the Plaintiff.

46. It is so ordered.

JUDGEMENT READ, SIGNED AND DELIVERED IN OPEN COURT AT MACHAKOS THIS 1ST DAY OF JULY, 2022. G V ODUNGAJUDGEDelivered in the presence of:Mr Makau for the PlaintiffCA Susan