[2022] KEHC 1373 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MACHAKOS

(Coram: Odunga, J)

CIVIL SUIT NO. 7 OF 2018

MONARCH INSURANCE COMPANY LTD................................................PLAINTIFF/APPLICANT

VERSUS

STEPHEN M MUSYOKI.....................................................................................................DEFENDANT

AND

CHRLES NZIOKA MBUSYA...............................................................................INTERESTED PARTY

RULING

1. By a Motion on Notice dated 12th January, 2020, the Plaintiff herein seeks orders staying proceedings in Kithimani PMCC No. E21 of 2020 pending the hearing and disposal of this suit.

2. In this suit the Plaintiff contends that it was the insurer of motor vehicle registration no. KCM 523C which as per the Defendant’s declarations and representation was to be used for private purposes. However, contrary to the terms of the said policy, the Defendant herein, the insured, while allegedly carrying fare paying passengers was on 30th November, 2017 involved in a road traffic accident wherein eight passengers were injured. It is the Plaintiff’s case that it is therefore not liable to indemnify the defendant for any loss or damage likely to be claimed by the said 8 injured passengers and seeks a declaration to that effect in these proceedings.

3. The Plaintiff is apprehensive that in the absence of stay orders the matter is likely to proceed to hearing thus prejudicing the Plaintiff.

4. The application was however opposed by the Interested Party, who is the Plaintiff in the primary suit. According to him, he did not file the suit against the Plaintiff herein or the Defendant but filed the same against Canon Motors Limited, the registered owner of the said motor vehicle and obtained judgement against the latter. Resulting from the judgement thereat, he filed Civil Suit No. E21 of 2020 against the Applicant herein by virtue of having been the insurer of the said Canon Company Ltd to which the Plaintiff herein filed a defence. According to the interested party, that mater ought to proceed to trial as he stands to be prejudiced by the order sought herein.

5. In support of its case the Plaintiff relied on Order 34 rule 3 of the Civil Procedure Rules and Global Tours & Travel Limited Winding Up Cause No. 43 of 2000 and submitted tat in the event that the primary suit proceeds to hearing, the Plaintiff will be called upon to settle the said claim and that would be in violation of terms of the policy in question.

6. On his part the interested party relied on the case of Kenya Wildlife Service –vs- James Mutembei [2019] eKLR and submitted that the interested party did not file any suit against the defendant in this matter and therefore the Defendant was neither a party in Civil Case No. 9 of 2018, Kithimani nor was the judgment entered against him. Accordingly, the orders sought herein should not be granted.

7. Furthermore, since the applicant herein already filed a defence in Civil Suit No. E21 of 2020 Kithimani the case should proceed to full trial. In support of the submissions the interested party relied on Article 159(2) (a) and (b) of the Constitution of Kenya, 2010 and submitted that allowing this application will be detrimental and contrary to Section 1A and 1B of theCivil Procedure Act, Cap 21.

8. In this case it was submitted that the proceedings in Kithimani PMCC No. E21 of 2020 are neither frivolous nor groundless and the interested party will be prejudiced if the application is allowed since he had already obtained judgment against Canon Motors Ltd in the initial case Civil Suit No. 9 of 2018 and allowing the application will be tantamount to delaying his chance to enjoy the fruits of his lawfully obtained judgment from the Applicant.

9. It was therefore urged that this application lacks merit and ought to be dismissed with costs.

Determination

10. I have considered the issues raised in this application.

11. It is not in doubt that this Court has powers to stay proceedings under its inherent jurisdiction reserved in section 3A of the Civil Procedure Act. See George Oraro vs. Kenya Television Network Nairobi HCCC No. 151 of 1992.

12. It was therefore held in Jadva Karsan vs. Harnam Singh Bhogal [1953] 20 (1) EACA 74 that:

“It is true that there is a wider power under section 97 [now 3A of the Civil Procedure Act] to stay proceedings where the ends of justice so require or to prevent an abuse of the Court process.”

13. I agree with Gikonyo, J’s opinion in the case of Kenya Wildlife Service –vs- James Mutembei [2019] eKLR where the court (Gikonyo, J) held that: -

“Stay of proceeding should not be confused with stay of execution pending appeal. Stay of proceedings is a grave judicial action which seriously interferes with the right of a litigant to conduct his litigation. It impinges on right of access to justice, right to be heard without delay and overall, right to fair trial. Therefore, the test for stay of proceeding is high and stringent. This is a power which, it has been emphasized, ought to be exercised sparingly, and only in exceptional cases… Stay of proceedings is a grave judicial action which seriously interferes with the right of a litigant to conduct his litigation…It will be exercised where the proceedings are shown to be frivolous, vexatious or harassing or to be manifestly groundless or in which there is clearly no cause of action in law or in equity. The applicant for a stay on this ground must show not merely that the plaintiff might not, or probably would not, succeed but that he could not possibly succeed on the basis of the pleading and the facts of the case.”

14. This jurisdiction is meant to avoid a waste of valuable judicial time; prevent the court from duplication of efforts and prevent multiplicity of suits and applications being filed and where if the stay is not granted and defendant were to succeed it would have rendered the appeal nugatory. In such applications the Court aims at ensuring that the object of the application is not rendered nugatory and that substantial loss and irreparable harm is not suffered by the applicant once the Plaintiff proceeds with the suit and the appeal succeeds. Obviously the decision whether or not to grant stay of proceedings being discretionary, the application must be made without unreasonable delay. Whereas I agree that delay is neither the sole factor nor the predominant factor to be considered, I am convinced that delay is a factor that ought to be taken into account. In Re Global Tours & Travel Ltd HCWC No. 43 of 2000 Ringera, J (as he then was) held that:

“As I understand the law, whether or not to grant a stay of proceedings or further proceedings on a decree or order appealed from is a matter of judicial discretion to be exercised in the interest of justice .... the sole question is whether it is in the interest of justice to order a stay of proceedings and if it is, on what terms it should be granted. In deciding whether to order a stay, the court should essentially weigh the pros and cons of granting or not granting the order. And in considering those matter, it should bear in mind such factors as the need for expeditious disposal of case, the prima facie merits of the intended appeal, in the sense of not whether it will probably succeed or not but whether it is an arguable one, the scarcity and optimum utilization of judicial time and whether the application has been brought expeditiously.”

15. In my view delay in making an application where the Court is expected to exercise discretion must always be a factor for consideration since it is an equitable principle that delay defeats equity as equity aids the vigilant, not the indolent.

16. In David Morton Silverstein vs. Atsango Chesoni Civil Application No. Nai. 189 of 2001 [2002] 1 KLR 867; [2002] 1 EA 296 the Court of Appeal citing Kenya Commercial Bank Ltd vs. Benjoh Amalgamated Ltd & Another Civil Application No NAI 50 of 2001 held that it is not the law that a stay of proceedings cannot be granted but that each case depends on its own facts. In Niazons (Kenya) Ltd. vs. China Road & Bridge Corporation (Kenya) Ltd. Nairobi (Milimani) HCCC No. 126 of 1999Onyango-Otieno, J (as he then was) held that:

“Where the appeal may have very serious effects on the entire case so that if stay of proceedings is not granted the result of the appeal may well render the orders made nugatory and render the exercise futile, stay…should be granted.”

17. Similarly, the Court of Appeal in Wachira Waruru & Another vs. Francis Oyatsi Civil Application No. Nai. 223 of 2000 [2002] 2 EA 664 held that:

“In an application for stay of proceeding pending appeal where the Judgement is entered in an application for striking out a defence, it cannot be gainsaid that unless a stay is granted the appeal will be rendered nugatory since if the process of assessing damages goes on and the appeal is allowed that process would be an exercise in futility.”

18. The present suit is premised on section 10 of the Insurance (Motor Vehicles Third Party Risk) Act Cap 405 which states that:

(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.

(2) No sum shall be payable by an insurer under the foregoing provisions of this section—

(a) in respect of any judgment, unless before or within fourteen days after the commencement of the proceedings in which the judgment was given, the insurer had notice of the bringing of the proceedings; or

(b) in respect of any judgment, so long as execution thereon is stayed pending an appeal; or

(c) in connexion with any liability if, before the happening of the event which was the cause of the death or bodily injury giving rise to the liability, the policy was cancelled by mutual consent or by virtue of any provision contained therein, and either—

(i) before the happening of the event the certificate was surrendered to the insurer, or the person to whom the certificate was issued made a statutory declaration stating that the certificate had been lost or destroyed; or

(ii) after the happening of the event, but before the expiration of a period of fourteen days from the taking effect of the cancellation of the policy, the certificate was surrendered to the insurer, or the person to whom the certificate was issued made such a statutory declaration as aforesaid; or

(iii) either before or after the happening of the event, but within a period of twenty-eight days from the taking effect of the cancellation of the policy, the insurer has notified the Registrar of Motor Vehicles and the Commissioner of Police in writing of the failure to surrender the certificate.

(3) It shall be the duty of a person who makes a statutory declaration, as provided in subparagraphs (i) and (ii) of paragraph (c) of subsection (2), to cause such statutory declaration to be delivered to the insurer.

(4) No sum shall be payable by an insurer under the foregoing provisions of this section if in an action commenced before, or within three months after, the commencement of the proceedings in which the judgment was given, he has obtained a declaration that, apart from any provision contained in the policy he is entitled to avoid it on the ground that it was obtained by the non-disclosure of a material fact, or by a representation of fact which was false in some material particular, or, if he has avoided the policy on that ground, that he was entitled so to do apart from any provision contained in it:

Provided that an insurer who has obtained such a declaration as aforesaid in an action shall not thereby become entitled to the benefit of this subsection as respects any judgment obtained in proceedings commenced before the commencement of that action, unless before or within fourteen days after the commencement of that action he has given notice thereof to the person who is the plaintiff in the said proceedings specifying the non-disclosure or false representation on which he proposes to rely, and any person to whom notice of such action is so given shall be entitled, if he thinks fit, to be made a party thereto.

(5)Deleted by Act No. 8 of 2009, s. 41.

(6) In this section,“material”means of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risk, and, if so, at what premium and on what conditions; and“liability covered by the terms of the policy”means a liability which is covered by the policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel, or has avoided or cancelled, the policy.

(7) In this Act, references to a certificate of insurance in any provision relating to the surrender or the loss or destruction of a certificate of insurance shall, in relation to policies under which more than one certificate is issued, be construed as references to all the certificates, and shall, where any copy has been issued of any certificate, be construed as including a reference to that copy.

19. In The Great Insurance Company of India Ltd vs. Lilian Evelyn Cross and Another [1966] EA 90, the Court expressed itself as hereunder:

“It is a rule of construction that when a law which has received judicial interpretation is enacted without change it will be presumed that the Legislature which enacted it was aware of the construction given to it at the time of the enactment and intended it to bear the construction. Consequently since the Act which was enacted in Kenya in 1945 was taken from British legislation on the subject it may be helpful to ascertain the construction placed on the provisions with which the court is concerned by the courts in Britain. In Britain the courts have consistently held that an insurer was not liable to a third party injured as a result of a motor accident if the use of the car was not covered by the policy at the time e.g. where the driver of the vehicle was unlicensed or disqualified or where the vehicle was used otherwise than for private purposes and the policies excluded such driving or user as the case may be.”

20. In this case however, it is contended by the interested party that he never sued the Defendant herein whom the Plaintiff alleges is its insured. The Plaintiff has not disputed this fact. In my view, the Plaintiff’s statutory liability stems from its contractual relationship with its insured which, according to it, is the Defendant herein. The Plaintiff’s liability however does not crystallise until after judgement has been obtained against its insured. If the judgement debtor in the primary suit is not its insured, then it may well have a formidable defence should the claimant sue it. That is however not the matter before me.

21. In my view, based on the material before me, there is no basis for staying the proceedings in Kithimani PMCC No. E21 of 2020 since it has not been averred that the said suit was commenced against the Plaintiff’s insured.

22. Accordingly, this application fails and is dismissed with costs to the interested party.

23. It is so ordered.

Ruling read, signed and delivered in open court at Machakos this 22nd day of March, 2022.

G V ODUNGA

JUDGE

In the presence of:

Mr Watuka for Mr Omagwa for the Plaintiff/Applicant

Mr Wayua for the Interested Party/Respondent

CA Susan