[2023] KEHC 27326 (KLR)

Occidental Insurance Company Limited v Ghani & 2 others; Administrator of the Estate of the Late Joel Leipa Ntekese & another (Interested Parties) (Civil Suit E010 of 2023) [2023] KEHC 27326 (KLR) (13 December 2023) (Ruling)

Neutral citation: [2023] KEHC 27326 (KLR)

Republic of Kenya

In the High Court at Kajiado

Civil Suit E010 of 2023

SN Mutuku, J

December 13, 2023

Between

Occidental Insurance Company limited

Plaintiff

and

Waseem Abdul Ghani

1st Defendant

Nahashon Njoroge

2nd Defendant

Robert Shamari

3rd Defendant

and

The Administrator of the Estate of the late Joel Leipa Ntekese

Interested Party

Joseph Makori Aganda

Interested Party

Ruling

The Apllication 1. Under consideration are the Notice of Motion dated 29th May, 2023 and the Preliminary Objection dated 17th July 2023. It was directed that both the Notice of Motion and the PO be canvassed together through written submissions. The Notice of Motion is brought under sections 1A, 1B and 3A and 63 ( e ) of the Civil Procedure Act, Order 51 rule 1 of the Civil Procedure Rules 2010 and all other enabling provisions of the law, seeking the following orders:a.Spent.b.Pending the interparte hearing and determination of the application herein, the Honourable Court be pleased to grant an interim stay of proceedings ini.Kajiado CMCC No. E331 of 2022- Sarah Senkenoi Sayianka and Joseph Litei Ntekese (suing as the administrator of the Estate of the Late Joel Leipa Ntekese) v Occidental Insurance Company Ltd andii.Kajiado CMCC No. E332 of 2022- Joseph Makori Aganda v Occidental Insurance Company Limited.c.Pending the hearing and determination of the Plaintiff’s/Applicant’s suit filed herewith in the High Court of Kenya at Kajiado, the Honourable Court be pleased to stay proceedings in.i.Kajiado CMCC No. E331 of 2022- Sarah Senkenoi Sayianka and Joseph Litei Ntekese (suing as the administrator of the Estate of the Late Joel Leipa Ntekese) v Occidental Insurance Company Ltd; andii.Kajiado CMCC No. E332 of 2022- Joseph Makori Aganda v Occidental Insurance Company Limitedd.This Honourable Court be pleased to grant leave to the Plaintiff to file a declaratory suit against its insured (the 1st Defendant herein) upon lapse of the Statutory timeline of three months (3months) before filing the primary suits or fourteen days after the commencement of the Primary suit.e.The Honourable Court be pleased to compel the 1st, 2nd and 3rd Defendants herein to compensate the Plaintiff/Applicant with the legal fees and costs incurred thus far in Kajiado CMCC No. E268 of 2021 – Joseph Makori Aganda v Robert Shaman & Another and Kajiado CMCC No. E349 of 2021 – Sarah Senkenoi Sayianka and Joseph Litei Ntekese (suing as the Administrator of the Estate of the Late Joel Leipa Ntekese) – versus - Robert Shaman & Another and in Kajiado CMCC No. E331 of 2022- Sarah Senkenoi Sayianka and Joseph Litei Ntekese(suing as the administrator of the Estate of the Late Joel Leipa Ntekese) v Occidental Insurance Company Ltd and Kajiado CMCC No. E332 of 2022- Joseph Makori Aganda v Occidental Insurance Company Limited.f.The costs of this application be provided for.

2. The application is premised on the grounds listed on the face of the application and the annexed affidavit of Rahab Njeri dated 27th May, 2023. She has deposed that the 1st Defendnat had taken out an insurance cover with them being policy of insurance No. TP/07/36397/05 over his motor vehicle KBP 950X (herein referred to as the motor vehicle) which cover was to expire on 21/5/2021. That on 7/5/2021 the motor vehicle was involved in a road accident where Joel Leipa Ntekese suffered fatal injuries and the 2nd interested party sustained injuries. That a compensation claims against the 2nd and 3rd Defendants were initiated in Kajiado CMCC No. E268 of 2021 – Joseph Makori Aganda v Robert Shaman & Another and Kajiado CMCC No. E349 of 2021 – Sarah Senkenoi Sayianka and Joseph Litei Ntekese (suing as the Administrator of the Estate of the Late Joel Leipa Ntekese) – versus - Robert Shaman & Another (herein referred to as the primary suits). That judgement was delivered by the lower court on 6/7/2022 where the 2nd and 3rd Defendants were found 100% liable and ordered to compensate the interested parties.

3. She has deposed that to satisfy the judgement in the primary suits the interested parties filed declaratory suits being Kajiado CMCC No. E331 of 2022- Sarah Senkenoi Sayianka and Joseph Litei Ntekese (suing as the administrator of the Estate of the Late Joel Leipa Ntekese) v Occidental Insurance Company Ltd and Kajiado CMCC No. E332 of 2022- Joseph Makori Aganda v Occidental Insurance Company Limited. That a statement of defence dated 28/11/2022 was filed. That the investigation report by Sunrays investigators dated 20/2/2023 was not in their possession when the defence was filed and that the said investigation report has raised crucial issues as set out on the face of their affidavit under paragraph 8 (i – iv).

4. It is on the basis of the said report that the Applicant contends that the 1st Defendant breached the insurance policy over the motor vehicle. That the motor vehicle was not covered by them at the time of the accident as the contract of insurance between them and the 1st Defendant had been automatically terminated by the 1st Defendant’s act of selling the motor vehicle, during the pendency of the insurance cover and failure to disclose this to them. That as a result of the non-transferable nature of the policy they did not have privity of contract with the current beneficial owner (the 2nd Defendant) and that while defending the primary suit they had no knowledge of the said information as they did not have the investigation report.

5. It is argued that upon acquiring this information, the Applicant sought to file the declaratory suit against the insured. That the proceedings in the subordinate court are at an advanced stage and on 26/6/2023 the suit will be mentioned for pre-trial conference which suit would likely be certified ready for hearing That the determination of this suit will have direct consequence to the proceedings before the subordinate court. That the orders for stay of proceedings should be granted on this basis and that the application has been made expeditiously without any delay.

2nd and 3rd Defendants Response 6. The 2nd and 3rd Defendants responded to this application through their Replying Affidavit dated 4th July, 2023 in which they have deposed that the Applicant’s prayers for stay pending the hearing and determination of the suit is incurably defective as the Plaintiff has not filed and served the Plaint and therefore the Application has no foundation and should be struck out. That the application is an abuse of court process and that the Applicant has not demonstrated sufficient grounds for filing of the declaratory suit against them out of statutory time.

7. They argued that the purported delay of an investigation report is an afterthought upon which they intend to avoid liability. That the 2nd Defendant did not collude with the 1st Defendant to mislead the Applicant and that information on the registered owner of the motor vehicle is public knowledge accessible in public records. They contended that the Applicants defended them in the primary suits on the strength of the insurance policy TP/07/36397/05 and cannot now avoid paying damages. The 2nd Defendant denied the allegations that he was involved in car hire business. That the application has been brought one year after judgement and the same defeats justice and end to litigation and that it is in the interest of justice that the application be dismissed with costs to them.

1st Defendant’s Response 8. Through a Replying Affidavit dated 18th July, 2023 the 1st Defendant stated that the application is an abuse of court process. That he has never been privy to the circumstances of this case and was never a party in the primary suit and the declaratory suit yet the Applicant has erroneously listed his name. That the Applicant has failed to use the laid out procedures of enjoning a party in proceedings before court. That the judgement in the primary suits held that liability and settlement of the award fell entirely upon 2nd and 3rd Defendants. That the log book clearly reveals that the 2nd Defendant is the registered owner of the motor vehicle and that in the primary suit the interested parties knew the claim did not involve him as it was clear to them that the insurance cover bore his name but that he had already transferred ownership.

9. It is his case that the Applicants defended the primary suits and engaged a qualified legal representative who ought to have established his client’s position well in time. That the Law under Cap 405 is clear that upon purchase of motor vehicle; the purchaser carries a legal obligation to take an insurance policy in his name. It was his case that the 2nd Defendants failure to take up an insurance cover is his responsibility. That the 2nd and 3rd Defendants ought to meet the court’s award and should stop relying on a policy which they were not privy to and did not pay any premiums for its existence.

1st and 2nd Interested Party Response 10. The 1st and 2nd interested party responded through filing a Replying Affidavit dated 17th July, 2023 sworn by the 1st Interested Party and a Preliminary objection on the same date. The 1st Interested Party has deposed that she is the widow to the deceased Joel Leipa Ntekese. That she has the authority to swear the affidavit on behalf of the 2nd interested party. That the suit herein is highly irregular as the Applicant should have sought leave to file the suit out of time in a Miscellaneous OS as per the procedure rules. That the application should therefore be dismissed for non- compliance and that the Applicant is represented by the same counsel in both the primary and declaratory suits and hence have a chance to raise their issues at the hearing.

11. They argued that the orders by the Applicant seeking stay of proceedings is meant to cause unnecessary delay and prevent them from enjoying the fruits of their judgement. That this court has no jurisdiction to extend time to file a declaratory suit. That no sufficient reason has been given for the delay and hence the delay is inordinate and inexcusable. That the Applicant participated in the Primary suit until judgment was delivered and no investigation was carried out then. They contend that the Applicant has approached this Court with unclean hands and the said application should be dismissed.

The Preliminary Objection 12. The Interested Parties PO has raised the following ground:That this Honourable Court lacks jurisdiction to hear the Application dated 29th May, 2023 and the intended suit by dint of Section 27 of the Limitation of Actions Act Cap 21 of 1968 read together with Section 10(4) of the Insurance (Motor Vehicles Third Party Risk) Act Cap 405.

Submissions 13. Parties have filed written submissions as directed by the court. They have argued their cases in line with their pleadings. I have read all the submissions and the authorities cited and I need not replicate them here.

14. The Applicant’s submissions are dated 21st July, 2023 and have raised two issues for determination as follows:a.Whether the Honourable Court has the power to extend the statutory timelines set in section 10(4) of Cap 405 to allow the insurer file a declaratory suit against its insured.b.Whether the Honourable Court can stay proceedings in Kajiado CMCC No. E331 of 2022 and Kajiado CMCC No. E332 of 2022.

15. The Applicant argued in support of the two identified issues and asked the court to grant the prayers sought in the application.

16. The 1st Defendant filed their undated and unsigned submissions on 3rd October, 2023 in which the following issues have been raised:a.Whether the Honourable Court using its judicious discretion ought to grant a stay of proceedings in case no Kajiado CMCC E331 and CMCC E332 both of 2022 pending the hearing and determination of the applicant’s suit in the High Court.b.Whether the applicant has met the requirements for grant of stay of execution pending their intended declaratory suit.

17. It is submitted that the court has discretion to grant stay upon the applicant satisfying the court that there is a sufficient cause; that substantial loss may occur if stay is not granted; that security is furnished; that the application has been made without unreasonable delay and that the intended suit will be rendered nugatory is stay is not granted.

18. The 2nd and 3rd Defendants filed their submissions dated 27th July, 2023 and raised 3 issues for determination as follows:a.Whether the Honourable Court can stay the proceedings in Kajiado CMCC No E331 of 2022 and Kajiado CMCC No. E332 of 2022?b.Whether the Honourable Court can extend the statutory timelines set in Section 10(4) of Cap 405 to allow the insurer file a declaratory suit against its Insured?c.Costs?

19. They submitted in support of the issues they have identified and asked the court to dismiss the application with costs to them.

20. On the first issue they submitted that according to Halsbury’s Law of England, 4thEdition, Vol 37 page 3000 and 332,“The stay of proceedings is a serious, grave and fundamental interruption in the right that a party has to conduct his litigation towards the trial on the basis of the substantive merits of its case and therefore the court’s general practice is that a stay of proceedings should not be imposed unless the proceeding beyond all reasonable doubt ought not to be allowed to continue.”

21. They relied on the case of Kenya Power and lighting Company Limited v Esther Wanjiru Wokabi [2014] eKLR where the court stated that“……. the courts discretion in deciding whether or not to grant stay of proceedings as sought in this application must be guided by any of the following three main principles;a)Whether the applicant has established that he/she has a prima facie arguable case.b)Whether the application was filed expeditiously andc)Whether the applicant has established sufficient cause to the satisfaction of the court that it is in the interest of justice to grant the orders sought.”

22. It was their submissions that the Applicant has not met the threshold for stay of proceedings as established by the above authority. That the Applicants have not established an arguable prima facie case to warrant this Honourable Court to form an opinion beyond reasonable doubt that stay is merited; that the application was filed 3 years after the cause of action arose and that costs follow event as provided under section 27(1) of the Civil Procedure Act.

23. The interested parties filed their submissions dated 17th July, 2023. They submitted on Preliminary objection on the jurisdiction of this Court to extend time to file a declaratory suit. They relied on the case of Jack J Khanjira & Another v Safaricom PLC [2020] eKLR where the Court held that:“It is trite law that jurisdiction is everything. Without it the court has no power to make one more step, as held in the case of Owners of Motor vehicle Lillian ( “S”) v Caltex Oli (K) Limited ( 1989) 1 KLR. Indeed where a court has no jurisdiction, any proceedings taken would be null and void. Therefore, the court must determine the issue of jurisdiction at the outset.For a Preliminary Objection to succeed, the following tests ought to be satisfied: Firstly, it should raise a pure point of law; secondly, it is argued on the assumption that all the facts pleaded by the other side are correct; and finally, it cannot be raised if any fact has to be ascertained or if what is sought is the excercise of judicial discretion.”

24. It was their case that the required notice was issued to the Applicant on 8th October, 2021, a total of one year and 8 months before the Application herein was filed; that the Applicant proceeded to defend the primary suits, refused to settle the judgements and that the applicant is still defending the declaratory suits in the Chief Magistrate Court.

25. They urged that the Applicant’s suit infringes on their right to access justice, their right to be heard without delay and their right to fair trial. They asked the court to dismiss the application with costs to them.

Analysis and Determination 26. It is prudent to start this determination by first considering the PO because it questions the jurisdiction of this court. If I find that the PO has no merit then I will proceed to determine the application on merit.

27. In Oraro v Mbaja (2005) eKLR, the court had this to say of the issue of a PO:“I think the principle is abundantly clear. A “preliminary objection”, correctly understood, is now well identified as, and declared to be, a point of law which must not be blurred with factual details liable to be contested and in any event, to be proved through the processes of evidence. Any assertion which claims to be a preliminary objection and yet it bears factual aspects calling for proof, or seeks to adduce evidence for its authentication, is not as a matter of legal principle, a true preliminary objection which the court should allow to proceed. I am in agreement with learned counsel, Mr Ougo, that “where a court needs to investigate facts, a matter cannot be raised as a preliminary point”.

28. Jurisdiction is at the centre of every litigation. A court sitting to resolve a dispute must be properly empowered to handle that dispute for otherwise, this would amount to miscarriage of justice. In Samuel Kamau Macharia v Kenya Commercial Bank & 2 Others, Civil Appl. No. 2 of 2011, the Supreme Court observed that:“A Court’s jurisdiction flows from either the Constitution or legislation or both. Thus, a Court of law can only exercise jurisdiction as conferred by the Constitution or other written law. It cannot arrogate to itself jurisdiction exceeding that which is conferred upon it by law. We agree with counsel for the first and second respondents in his submission that the issue as to whether a Court of law has jurisdiction to entertain a matter before it, is not one of mere procedural technicality; it goes to the very heart of the matter, for without jurisdiction, the Court cannot entertain any proceedings… Where the Constitution exhaustively provides for the jurisdiction of a Court of law, the Court must operate within the constitutional limits. It cannot expand its jurisdiction through judicial craft or innovation.”

29. The arguments of the Interested Parties is that that this court lacks jurisdiction to hear this matter by dint of Section 27 of the Limitations of Actions Act Cap 21 of 1968 and section 10(4) of the Insurance (Motor Vehicle Third Party Risks ) Act Cap 405.

30. Section 10(4) of the Insurance (Motor Vehicle Third Party Risks) Act provides that: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.

31. In APA Insurance Company v Vincent Nthuka [2018] eKLR, the court held that:“An issue that goes to jurisdiction cannot, in my view be termed a mere technicality. To the contrary the issue goes to the root of the matter since without jurisdiction the Court has no option but to down its tools…….. It follows that this Court has no jurisdiction to extend the period prescribed under section 10(4) of the Insurance (Motor Vehicle Third Party Risks) Act.”

32. I have considered the arguments by the Interested Parties that the intended suit by the Applicant seeks to repudiate the contract between itself and the Respondents on account of an alleged violation of the said contract, the insurance policy and that the Applicant alleges violation of the insurance policy by the Respondents. I have considered the authorities cited by the Interested Parties to support the PO including Mary Osundwa v. Sugar Company Limited [2002] eKLR where it was held, in reference to section 27 of the Limitation of Actions Act, that:“This section clearly lays down the circumstances in which the court would have jurisdiction to extend time. The action must be founded on tort and must relate to the torts of negligence, nuisance or breach of duty and the damages claimed are in respect of personal injuries to the plaintiff as a result of the tort. The section does not give jurisdiction to the court to extend time for filing suit in cases involving contract or any other causes of action other than those in tort…”

33. I have considered the PO and the submissions by the Interested Parties and the Respondents. They are all in agreement that section 10(4) of the Insurance (Motor Vehicles Third Party Risks) Act does not provide for extension of time in declaratory matters as shown in APA Insurance Company Limited case, cited above, where the court declined to extent timelines on the basis of this section and noted that’ “it is clear that this section does not provide for extension of the said period for commencing proceedings seeking declaratory orders…”.

34. It is my finding, and I so hold, that I am persuaded that this court lacks jurisdiction to extend time by dint of section 10(4) of the Insurance (Motor Vehicles Third Party Risks) Act and section 27 of the Limitation of Actions Act. The Preliminary Objection is merited and the same is allowed. The next action for this court to do once it has pronounced that it lacks jurisdiction to entertain this matter, is to down its tools. It cannot proceed to determine the application before it.

35. Consequently, I allow the PO dated 7th July 2023 with the consequence with costs to the Interested Parties and the Respondents, payable by the Applicant.

36. Orders shall issue accordingly.

DATED, SIGNED AND DELIVERED THIS 13TH DECEMBER 2023. S. N. MUTUKUJUDGE