[2022] KEHC 392 (KLR)

Muthui v Directline Insurance Company Ltd & 2 others (Civil Suit 88 of 2019) [2022] KEHC 392 (KLR) (Civ) (6 May 2022) (Judgment)

Neutral citation: [2022] KEHC 392 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Civil Suit 88 of 2019

JK Sergon, J

May 6, 2022

Between

David Musili Muthui

Plaintiff

and

Directline Insurance Company Ltd

1st Defendant

Taabu Vaati Joseph

2nd Defendant

Zainabu Joseph

3rd Defendant

(The plaintiff sought a declaration that the 1st defendant was liable to satisfy the judgment/decree in Milimani Commercial Courts Civil Suit No.2667 of 2014. )

Judgment

1. The plaintiff in the present instance filed the plaint dated 29th April, 2019 and sought for judgment against the defendants in the following manner:a.A declaration that the 1st defendant is liable to satisfy the judgment/decree in Milimani Commercial Courts Civil Suit No.2667 of 2014. b.Costs of the suit & interest thereto.c.Any other relief this Honourable Court deems fit to grant.

2. The plaintiff pleaded in his plaint that the 1st defendant, as an authorized insurer under the Insurance (Motor Vehicle Third Party Risks) Act (cap 405) Laws of Kenya, issued to the plaintiff a policy of insurance in consideration of premiums paid to them for the period ending on July 10, 2011, in respect of motor vehicle registration number KBF 844F, PSV-Matatu, insuring the plaintiff against liability which may be incurred by him in respect of death, material damage, or bodily injury.

3. The plaintiff further pleaded in his plaint that on or about July 10, 2011, while driving the plaintiff's motor vehicle registration number KBF 844F insured by the 1st defendant along Kasarani/Mwiki Road, the deaceased in CMCC no.2667 of 2014 sustained fatal injuries while in the plaintiff's motor vehicle registration number KBF 844F insured by the 1st defendant.

4. It was also pleaded by the plaintiffs in their plaint that on April, 2019, a judgment was entered against the plaintiff for Kshs.615,504/=, being the judgment sum plus interest at court rates from April 1, 2019 until payment in full, and the 1st defendant became liable to pay the 2nd and 3rd defendant the amount of the said judgment, but the 1st defendant failed to pay or settle the claim on behalf of its insured, the plaintiff, as required by law.

5. The 1st ,2nd and 3rd defendants entered appearance upon service of summons and filed its statements of defence dated 15th July 2019 and 13th September 2019 respectively to deny the allegations brought out in the plaint.

6. At the hearing, the plaintiff testified while the 2nd and 3rd defendants testified also to support its case but there was no appearance or representation of the 1st defendant.

7. The plaintiff adopted his executed witness statement as evidence in chief and produced his bundle of documents dated 7th February 2020 as PEXH 1-5.

8. The plaintiff stated that he was not given any notice repudiating the insurance policy and that he was not aware that a declaratory suit was filed and seeking for judgment as per the plaint.

9. In cross-examination, it was the testimony of the plaintiff that the judgment against him was correctly issued in the trial court and that no appeal was filed to overturn the decision, that the 2nd and 3rd defendants are entitled to the benefits of their verdict, and that the 1st defendant should have paid the decretal sum.

10. In re-examination, it was the statement of the plaintiff that the trial court had awarded the 2nd and 3rd defendants compensation and that the 1st defendant should settle the compensation due to the 2nd and 3rd defendants and not by him.

11. The 2nd defendant who was DW1 adopted her signed witness statement as evidence in chief and stated that she lives in Mutitu in Kitui.

12. In cross-examination, the witness testified that she recalls her late husband filing the complaint, that the vehicle he traveled in was covered, and that the insurance company should pay the judgment.

13. The 3rd defendant who was DW2 stated that she was the deceased's firstborn child, and she was aware that the plaintiff had been found guilty in the lawsuit they had filed, and that the court should order the 1st defendant to pay the decretal sum.

14. In cross-examination, the witness stated that she had filed a case with the chief magistrate's court, and they had been granted a judgment, as well as the fact that the vehicle was insured.

15. At the close of the hearing, this court called upon the parties to file and exchange written submissions but at the time of writing this judgment the 1st defendant had not filed their submissions.

16. The plaintiff on his part gave a brief facts of the matter and identified five main issues for determination to be as follows;a.Whether the plaintiff had a valid insurance policy/contract with the 1st defendant when the accident occurred.b.Whether the insurance policy covered the material risk in the primary suit CMCC N0. 2667 OF 2014. c.Whether the issue of the deceased in CMCC No.2667 of 2014 being a passenger or a conductor was settled in the judgment delivered on the 4th of April 2019. d.Who should settle the judgment and decree in CMCC No.2667 of 2014 in favour of the 2nd and 3rd defendant herein?e.Who should the 2nd and 3rd defendant enforce the judgment against in CMCC No.2667 of 2014.

17. On the first issue, the plaintiff submitted that there was a valid insurance policy/contract between the plaintiff and the first defendant when the accident occurred on July 10, 2011 involving the plaintiff's motor vehicle registration number KBF 844H, and that the certificate and policy were produced as the plaintiff's exhibit no.4 and 5 as per the list of documents dated February 7, 2020, and was valid from June 29, 2011 to July 29, 2011.

18. On the second issue, the plaintiff submitted that the policy covered the material risk that occurred on 10th July 2011 which involved passengers on board a public service vehicle and as such third parties in the context of the insurance policy.

19. On the third issue, the plaintiff contends that as to whether the deceased was a passenger or conductor was conclusively settled in the judgment of the trial court and the plaintiff’s in the primary suit did not appeal it in respect to that issue.

20. On the fourth issue, the plaintiff submitted that the 1st defendant is mandated by the law to settle claims that arise from accidents under section 10(1) of the Motor Vehicles Third party Risks )Cap 405 Laws of Kenya clearly stipulates that it’s the duty of insurers to satisfy judgments against persons insured.

21. The plaintiff further submitted that the 1st defendant did not issue notices within 14 days before the commencement of the primary suit notifying them of its intention to avoid the claim through a declaratory suit by specifying the material non0disclosure of false representation made by their insured. On this score the plaintiff relied on the case ofBritam General Insurance Co.(Kenya) Limited v Josephat Ondiek (2018) eKLR“The procedure provided under Section 10(4) of the Act as I understand it presents the following scenarios, first, it creates an obligation on the part of the insurer to avoid the policy in respect of liability and anything arising from the accident which is in breach of the policy agreement. Secondly, it creates a condition precedent to the insurer right of action to the in breach by bringing an action within 3 months of the claim against the insured being instituted. Thirdly, the claim to indemnify the insured or third party insurance which falls within the exceptions provided in the policy of insurance. Fourthly, the proviso that Section 10(4) stipulates that the insurer shall not be liable in respect of the accident, loss or liability unless before or within the days he gives notice to the insurer in the said proceedings.”I am quite clear that this suit is inoperative within the provisions of Section 10(4) of the Act. Further I am of the conceded view that notwithstanding the provisions of Section 10(4) of the Act the plaintiff went ahead to seek a declaration to repudiate the policy. It would be contrary to the letter and spirit of the provisions of cap. 405 to allow the plaintiff to have his way of setting aside the contract without complying with Section 10(4) of the Act.I am therefore satisfied that the plaintiff has not discharged the balance of proof on a balance of probabilities and more specifically the requirements of section 10(4) of the Act to stand on the way of the relief sought against the defendant. It follows therefore that the suit dated 15th August 2017 is fatally defective and non-suited by statute.

Accordingly, it is struck out with costs to the defendant. 22. On the fifth issue, the plaintiff submitted that in the view of the unambiguous provisions of section 10 (1) of the Cap 405 the 2nd and 3rd defendants should enforce the judgment against the 1st defendant and not the plaintiff and the 2nd and 3rd defendants acknowledged as much during cross examination.

23. In reply, the 2nd and 3rd defendants submitted that they were at a loss as to why they had to be dragged into unnecessary proceedings between the plaintiff and the 1st defendant because they had to retain an advocate because they did not understand the nature of the proceedings before them and had to travel from afar to attend the hearing and enquire about the progress of this case

24. They therefore submit that plaintiff’s case against the 2nd and 3rd defendants lacks merit, ill advised, incompetent and an abuse of the court process.

25. As can be seen from the summary of the pleadings and evidence adduced by the parties as stated above, the facts in this case are simple, straightforward and largely undisputed. The 2nd and 3rd defendant stated that at the time of the accident involving the deceased it was insured the 1st defendant in the primary suit against third party risks as required under Section 4 (1) of the Act, I find that the only issue for my determination in this case is whether under Section 10 of the Act, the 1st defendant is liable to satisfy the decretal amount awarded to the 2nd and 3rd defendants in full claimed by the plaintiff.

26. The subject matter of the suit herein is a declaratory suit, brought under the provisions of the Insurance (Motor Vehicles Third Party Risks) Act, seeking to have the 1st defendant, an insurance company settle the decree. The decree was for an award of damages of Kshs. 728,000/= entered against the plaintiff who at the material time was insured by the 1st defendant.

27. The Court considers that Section 10 of the Insurance (Motor Vehicles Third Party Risks) Act provides for the duty of an insurer to settle a decretal amount as follows:-10. Duty of insurer to satisfy judgments against persons insured(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.Provided that the sum payable under a judgment for a liability pursuant to this section shall not exceed the maximum percentage of the sum specified in Section 5 (b) prescribed in respect thereof in the Schedule.

28. In the end we do find that the plaintiff and the first defendant had a valid insurance policy/contract when the accident occurred on July 10, 2011, that the policy covered the material risk that occurred on July 10, 2011 involving passengers on board a public service, and finally that the first defendant is required by law to settle claims arising from accidents under section 10(1) of the Motor Vehicles Third Party Risks)cap 405 Laws of Kenya clearly stipulates .

29. In the case of Kenindia Assurance Co Ltd v James Otiende [1987]2 KAR 162 and Kasereka v Gateway Insurance Co Ltd(2003) 2 EA 502 as well as Philip Kimani Gikonyo v Gateway Insurance Co Ltd HCCA 746/2002 Nairobi where the court alluded to the provisions of Section 10 of Cap 405 Laws of Kenya emphasizing that the Insurance Company can only settle decree against its insured and that the duty of the insurers is to satisfy judgments against persons insured.

30. For the foregoing reasons, I am satisfied that the plaintiff has proved his case to the required standards in this case. Consequently, judgment is entered for the plaintiff and against the 1st defendant. An order of declaration is issued under Section 10 (1) of The Insurance (Motor Vehicle Third Party Risks)Act, that the 1st defendant is liable to pay the plaintiffs a sum of KShs.728,000 being payment of the decree issued in favour of the 2nd and 3rd defendants in CMCC No. 2667 of 2014. The amount shall attract interest at court rates from today’s date until full payment. Costs are awarded to the plaintiff.

DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOFT TEAMS AT NAIROBI THIS 6TH DAY OF MAY, 2022. ...........................J. K. SERGONJUDGEIn the presence of:.........................for the Plaintiff...............for the 1st Defendant..............for the 2nd Defendant..............for the 3rd Defendant