[2023] KECA 1511 (KLR)

Mohamed v Diamond Trust Bank Kenya Limited & another (Civil Application E001 of 2023) [2023] KECA 1511 (KLR) (8 December 2023) (Ruling)

Neutral citation: [2023] KECA 1511 (KLR)

Republic of Kenya

In the Court of Appeal at Malindi

Civil Application E001 of 2023

P Nyamweya, JW Lessit & GV Odunga, JJA

December 8, 2023

Between

Faud Mahamoud Mohamed

Applicant

and

Diamond Trust Bank Kenya Limited

1st Respondent

Diamond Trust Insurance Agency Limited

2nd Respondent

(Being an application for the certification that this matter is of general public importance pursuant to Article 163 (4) (B) of the Constitution, 2010 with respect to proposed appeal against the judgment of this Hon. Court (Gatembu, Nyamweya & Lesiit, JJ.A.) in Civil Appeal No. E074 of 2021. Civil Appeal E074 of 2021,

Civil Case 16 of 2011 )

Ruling

1. By a Notice of Motion dated 19th June 2023 brought under Article 163(4) (b) of the Constitution of Kenya, Section 15(1) and 19 of the Supreme Court Act No. 7 of 2011, Rule 24(1) of the Supreme Court Rules, 2012, Sections 3A and 3B of the Appellate Jurisdiction Act Cap 9 of the Laws of Kenya and all other enabling provisions of the Law, Fuad Mahamed Mohamed, the Applicant herein, seeks certification of this matter as one that raises issues of general public importance and that the Intended Appeal to the Supreme Court against the Judgment delivered on the 14th April 2023 by S. Gatembu Kairu, P. Nyamweya & J. Lesiit, JJ.A., in Civil Appeal No.E074 of 2021, consolidated with Civil Suit No.16 of 2011, Diamond Trust Bank Limited vs. Fuad Mahamed Mohamed & Diamond Trust Insurance Agency Ltd, be certified as fit and proper to be heard by the Supreme Court.

2. The background of the case is that the Applicant obtained three banking and loan facilities from the 1st Respondent, and as security charged to the 1st Respondent a First Charge and Further Legal Charge his suit property known as L.R No.3420 Sec 1 MN in Nyali. The Applicant defaulted in the repayment of the facilities whereupon the 1st Respondent commenced the process of exercising its power of sale to realize its security. The Applicant averred in his plaint that conditional to obtaining the facilities from the 1st Respondent, and upon advice from the 2nd Respondent, an agent of the 1st Respondent, the case was that upon advice by the 2nd Respondent, he insured the property for Kshs.30,000,000 with Jubilee Insurance Company Limited, another of the Bank’s related entities. He averred that on 18th April, 2011 a storey building built on the suit property collapsed resulting to a loss of Kshs.103,000,00. 00. The Applicant sued the Respondents for the loss asserting that the 1st and 2nd Respondents were negligent since the nature of the cover taken was communicated to him after the building had collapsed.

3. The Respondents asserted that it was the Applicant who procured the insurance cover and that the 1st Respondent and the insurance were separate legal entities.

4. In his judgment, Learned Judge of the High Court found that the 1st Respondent owed the Applicant a duty of care, that it was negligent for failing to exercise its reserved discretion to get the appropriate cover, which the Judge identified as the Constructors All Risk Cover.

5. On appeal before this Court, the judgment of the High Court was set aside. This Court found, inter alia that there was no evidence led to show that the 1st Respondent sold the insurance cover to the Applicant, as the Applicant had alleged or that it held itself out as an insurer or skilled in that area. This Court found that the Bank owed the Applicant no duty of care in determining the nature and extent of cover it would demand from the Applicant, as the purpose of the insurance required by the Bank was provided in Clause 7 of the contract, and its purpose was the protection of the Bank should the insured risks attach to its security. That it was not for the protection of the Applicant, but that nothing prevented him from taking such other insurance cover as he would have required.

6. This Court was not convinced that the 1st Respondent in an arrangement modeled as Bankassurance Business sourced for the insurance company and unilaterally settled on the insurance cover which was inappropriate for the Applicant, finding that there was no evidence laid before it in support of that averment.

7. The Applicant aggrieved with the judgment of this Court now seeks to have this Court certify that his intended appeal to the Supreme Court raises an issue of general public importance fit for determination by that Court.

8. The application was heard through this Court’s virtual platform on the 18th July 2023. Present for the Applicant was learned counsel Mr. Gikandi Ngubuini and for the 1st Respondent Mr. Chacha Odera and Mr. Kisinga, learned counsels. The 2nd Respondent was not represented despite service with the hearing notice upon its advocate on record, on the 12th July 2023. Mr. Gikandi relied on the supporting affidavit dated 18th July 2023, and his written submissions and bundle of authorities dated 10th July 2023. He briefly highlighted his submissions before us. Mr. Chacha Odera for the 1st Respondent opposed the application, relying on the replying affidavit dated 7th July 2023, sworn by Faith Donga. He also relied on the written submissions and the list and digest of authorities, which he highlighted before us. His main ground of opposition was that the application has been brought out of time, without leave, having been filed two months after the decision of this Court, as opposed to within 14 days as prescribed by Rule 42(b) of the Court of Appeal Rules

9. The grounds for the application are that the intended appeal meets the threshold envisaged under Article 163(4) of the Constitution for reasons that:a.That appeal seeks a determination of what relief a party has when the Court of Appeal either inadvertedly or otherwise overlooks evidence placed before the High Court in matters initiated in the High Court.b.The appeal seeks the apex Court to resolve the issue whether bankassurance is synonymous with a bank collaborating with an insurance company to sell insurance products to the bank’s customers thereby creating a duty of care on the bank as is contended by the Applicant, or whether the bank and the insurance company are not marketers of insurance products which is a novel issue that has arisen in Kenyan Courts for the first time needing to be resolved by the Supreme Court to avert possibility of divergent decisions of the Court of Appeal in the future.c.The appeal seeks an interpretation of the responsibilities of banks and insurance companies to the bank customers in the scenario of bank assurance transactions becomes an all important question that qualifies to be a matter of general public importance.

10. The Applicant’s application is supported by his affidavit sworn on even date. The Applicant contends that the finding by this Court that there was no evidence that the 1st Respondent sold the insurance cover to the Applicant contravened Insurance (Bankassurance) Regulations, 2020 in which Bankassurance business is interpreted to mean “…an intermediary business that involves collaboration between a bank and insurance company to market and distribute insurance products...” It is the contention of the Applicant that the Intended Appeal to the Supreme raises issues of general public importance as there are hundreds, if not thousands of the members of the public who, like the Applicant have and/or are likely to procure loan facilities where the bank collaborates with an insurance company to market and sell their insurance products, and in the event of a calamity and/or peril, the bank and insurance will leave the customer without a remedy, on the pretext that the customer bought a wrong insurance cover. That it is an emerging trend in banking industry hence the issue relating to the business have not been adequately interpreted by the Courts.

11. In support of the certification, the Applicant places reliance on Article 163(4) of the Constitution, the case of Kenya Plantation and Agricultural Workers Union vs. Kenya Export Floriculture, Horticulture and allied Workers’ Union (Kefhau) represented by its Promoters David Benedict Omulama & 9 Others [2018] eKLR and Hermanus Phillipus Steyn vs. Giovanni Gnecchi-Ruscone [2013] eKLR. Further reliance has been placed on the case of Munguti & 6 Others vs. Zibu & 13 Others (Application No. E009 of 2023 (23/6/23 Ruling) that it is open to the Supreme Court to settle an uncertainty in law. According to the Applicant it is important that the law should be developed in bancassurance business as envisaged under Article 259 of the Constitution, hence a proper opportunity for the Supreme Court to determine the issue in finality.

12. On the 1st Respondent part, it is submitted that the application was not filed within 14 days as required under Rule 42(b) of the Court of Appeal Rules. According to the 1st Respondent, no reasons have been advanced for the said delay. Regarding whether the issues raised are of general public importance, it was submitted that issues raised did not meet the set criteria since what is sought to be placed before the Supreme Court related to interpretation of commercial contracts. Reliance has been placed on Civil Application No. E158 of 2022 National Bank of Kenya & Another vs. Basil Criticos where the court dismissed a similar Application for failure to identify specific elements that were of general public importance. It was submitted that the issue of bancassurance was not raised before the High Court or on appeal before this Court, which is a contention that the Supreme Court in Malcom Bell vs. Hon. Daniel Toroitich Arap Moi held that questions for determination must have arisen before the Courts below and must have been the subject of determination thereof. According to the 1st Respondent, the Insurance (Bancassurance) Regulations, 2020 passed in 2020 cannot apply retrospectively to this dispute, as this case arose in 2010. It is submitted that no evidence of conflicting decisions by the Court of Appeal or of the law on the issue of bancassurance business have been tendered by the Applicant to justify the need for determination by the Supreme Court. The 1st Respondent asserted that the averments in the affidavit in support of the application were issues of fact and not points of law. The1st Respondent urged this court to dismiss the Applicant’s application with costs.

13. We have considered the submissions by both counsel to the parties. It is our view that what falls for our determination is twofold, whether the application is competently filed, and if so, whether it is merited.

14. Article 163(4) of the Constitution succinctly states that appeals shall lie to the Supreme Court from this Court as of right in any case involving the interpretation or application of the Constitution, and in any matter where it is certified that the appeal involves a matter of general public importance. Rule 42 of the Court of Appeal Rules, 2022 further provides as follows:“Where no appeal lies unless the superior court certifies that a point of law of general public importance is involved, an application for such a certificate may be made- informally, at the time when the decision against which it is desired to appeal is given; orby motion or chamber summons according to the practice of the superior court, within fourteen days after that decision”

15. The decision sought to be appealed against was delivered by this Court on 14th April 2023 and the instant application is dated 19th June 2023 and was lodged on the 22nd June 2023. The application is therefore incompetently filed before this Court, having been filed out of time, and the Applicant having failed to seek extension of time.

16. The next issue is whether the application is merited. The principles governing what constitutes matters of ‘general public importance’ were set out by the Supreme Court in Hermanus Phillipus Steyn vs. Giovanni Gnecchi-Ruscone, supra, as follows:i.for a case to be certified as one involving a matter of general public importance, the intending appellant must satisfy the Court that the issue to be canvassed on appeal is one the determination of which transcends the circumstances of the particular case, and has a significant bearing on the public interest;ii.where the matter in respect of which certification is sought raises a point of law, the intending appellant must demonstrate that such a point is a substantial one, the determination of which will have a significant bearing on the public interest;iii.such question or questions of law must have arisen in the Court or Courts below, and must have been the subject of judicial determination;iv.where the application for certification has been occasioned by a state of uncertainty in the law, arising from contradictory precedents, the Supreme Court may either resolve the uncertainty, as it may determine, or refer the matter to the Court of Appeal for its determination;v.mere apprehension of miscarriage of justice, a matter most apt for resolution in the lower superior courts, is not a proper basis for granting certification for an appeal to the Supreme Court; the matter to be certified for a final appeal in the Supreme Court, must still fall within the terms of Article 163 (4)(b) of the Constitution;vi.the intending applicant has an obligation to identify and concisely set out the specific elements of “general public importance” which he or she attributes to the matter for which certification is sought;vii.determinations of fact in contests between parties are not, by themselves, a basis for granting certification for an appeal before the Supreme Court.”

17. One of the challenges to the application raised by counsel for the 1st Respondent is that the issue raised by the Applicant touching on bankassurance was never canvassed before the High Court. Counsel relied on National Bank of Kenya Limited (As the successor in business of Kenya National Corporation Limited) & Another vs. Basil Criticos (Application 14 (E023) of 2022) [2023] KESC 60 (KLR) for the proposition that parties cannot plead new facts. Counsel urged that bankassurance is an argument that was advanced for the first time in the instant application. Mr. Gikandi for the Applicant did not answer the allegation by Mr. Odera. We have examined the proceedings before the High Court and the appeal that was argued before us. We confirm that the gravamen of the Applicant’s case before both Courts had to do with insurance taken to secure the security charged to the 1st Respondent. As identified by the High Court, the issues what were the terms of agreement between the parties regarding the insurance cover, whose duty it was to determine the class or type of insurance to be procured, whether the duty was fulfilled, who was to pay debt due to the 1st Respondent, what damages were payable and to who.

18. In the appeal before this Court, two issues were identified by the Court for determination based on the pleadings, evidence and submissions of the parties. These were whether the Judge erred in holding the bank liable for failing to ensure that the security offered by the Applicant was sufficient to secure the banking facilities was insured under Contractors All Risk cover. Related to that the question whether the Judge erred in awarding the Applicant damages in the amount of Kshs.52,129,96. 00. second issue was whether the Judge erred in absolving the Agency from liability.

19. It is clear from the above issues that the grounds pleaded intended for determination by the Supreme Court were not the issues heard and determined by this Court and the High Court. Do these grounds meet the threshold for certification to the Supreme Court?

20. In the Supreme Court case of Pati Limited vs. Funzi Island Development Limited & 4 Others [2019] eKLR, the Court made it clear that an application for certification of an appeal to the Supreme Court must meet the following criteria:“(34)Further, it is now cardinal law that the issues that come to this Court on appeal are those issue that have risen through the judicial hierarchy. This was aptly stated in Peter Oduour Ngoge v Hon. Francis Ole Kaparo, SC Petition 2 of 2012, [para. 29-30] where this Court rendered itself as follows:‘The Supreme Court, as the ultimate judicial agency, ought in our opinion, to exercise its powers strictly within the jurisdictional limits prescribed; and it ought to safeguard the autonomous exercise of the respective jurisdictions of the other Courts and tribunals. In the instant case, it will be perverse for this Court to assume a jurisdiction which, by law, is reposed in the Court of Appeal, and which that Court has duly exercised and exhausted.’”

21. The Supreme Court has guided that only issues that have gone through the judicial hierarchy of Courts should find their way to the apex Court, and for good reason; it is a jurisdictional issue in compliance to limits set by law. Additionally, it is for preservation of the autonomy of the various courts and tribunals. For the purposes of this application, the issue of bankassurance was not an issue that the High Court and this Court determined in this matter. It does not qualify to be placed before the Supreme Court.

22. We have also considered the grounds for the application as set out in the Motion and the supporting affidavit. The grounds are lengthy, argumentative and wordy. Using these grounds, the Applicant has not succeeded in specifically identifying any matter of general public importance, or points of law that are important and substantial or have a significant bearing on public interest or any question that flows from the judgment that forms issues that transcends the facts of the case. The issues are localized to the contractual relationship between the parties in this case, and do not in any way transcend the parties, are not of any general public importance, nor do they raise important or substantial points of law.

23. An applicant seeking certification to the Supreme Court should out rightly in its application, set out with precision the issues it considers to be of general public importance. We reiterate, as we have severally done, that simplicity and precision in pleadings is golden in advocacy.

24. The result of this application is that we find no merit in it, in addition to finding that it incompetently filed. Accordingly, we dismiss the application and award costs of the application to the 1st Respondent.

DATED AND DELIVERED AT MOMBASA THIS 8TH DAY OF DECEMBER 2023. P. NYAMWEYA.................................JUDGE OF APPEALJ. LESIIT.................................JUDGE OF APPEALG. V. ODUNGA.................................JUDGE OF APPEALI certify that this is the true copy of the originalSignedDEPUTY REGISTRAR