https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9744

Rafiki Microfinance Insurance Agencies v Ngui & another (Civil Appeal E120 of 2025) [2026] KEHC 9744 (KLR) (18 June 2026) (Judgment) Neutral citation: [2026] KEHC 9744 (KLR) Republic of Kenya In the High Court at Machakos Civil Appeal E120 of 2025 AN Ongeri, J June 18, 2026 Between Rafiki Microfinance Insurance Agencies Appellant and Gladys Syombua Ngui 1st Respondent Monarch Insurance Company Ltd 2nd Respondent (Being an appeal from the judgment of HON.C.C Oluoch (CM) in Machakos CMCC No. E271 of 2022 delivered on 25/4/2025) Judgment 1.The cause of action in this case arose from a road traffic accident on 11th August 2020, in which the Respondent was a passenger in motor vehicle registration number KTWB 874Y. 2.The Respondent later obtained judgment in Machakos CMCC No. E504 of 2021 against the vehicle’s owner for Kshs. 222,479, and subsequently filed MACHAKOS CMCC No. E271 OF 2022 seeking a declaration that the Appellant, Rafiki Microfinance Insurance Agencies, was liable to satisfy that decree. 3.The Respondent argued that the vehicle had been insured by the Appellant under policy number D3684305 and that the requisite statutory notice had been duly issued. 4.During cross-examination, the Respondent confirmed that the statutory notice was received and stamped by Rafiki Microfinance Bank, though she acknowledged that the bank and the Appellant were different entities. 5.The Appellant’s witness, a senior underwriting officer, testified that the Appellant acted as an agent of Monarch Insurance Company, the Third Party, and that the certificate of insurance bore the Third Party’s name. 6.He noted discrepancies in the policy dates and claimed that the statutory notice and summons stamps were not genuine. 7.He also stated that the Appellant only became aware of the suit through their advocate. 8.The Trial Court found that the statutory notice, though stamped by Rafiki Microfinance Bank’s legal department, was properly served because the bank and the Appellant shared the same postal address and telephone numbers, indicating shared services or staff, and it was the Appellant’s responsibility to forward the notice if they were not the actual insurer. 9.Regarding the existence of a valid insurance cover, the Trial Court observed that while the ideal proof would be a certificate of insurance, the Respondent as a passenger could not possess such a document. 10.The police abstract naming the Appellant as the insurer was produced, and although the Appellant objected to its probative value for lack of cross-examination of the police officer, the Appellant’s witness nevertheless referred to and relied on its contents during his evidence in chief, thereby inviting the court to consider it. 11.The witness also confirmed that the certificate number D3684305 was genuine, and the Appellant failed to produce a duplicate certificate covering the accident period. 12.The Trial Court noted anomalies in the Appellant’s defence, including the claim that the certificate had been re-issued with corrected dates and later declared lost or destroyed, leading the court to conclude that the Appellant’s documents were fabricated. 13.Further, the loan facility required the borrower to maintain valid insurance, with the lender automatically financing the premium if necessary; documents showed the borrower had signed an insurance financing agreement just days before the accident, though key details were concealed. 14.The Trial Court therefore held that a valid insurance cover existed under the Appellant at the time of the accident. 15.The Appellant’s claim against the Third Party was dismissed with no orders as to costs, and entered judgment for the Respondent, declaring that the Appellant is bound to satisfy the decree in Machakos CMCC No. E504 of 2021 in the sum of Kshs. 222,479, with the Appellant also bearing the Respondent’s costs of the suit. 16.The appellant appealed against the said judgment on the following grounds;i.That the learned trial magistrate erred in law and in fact in finding that there was proper service of the statutory notice despite the notice having been addressed and served on a different legal entity (Rafiki Microfinance Bank) and not the Appellant.ii.That the trial court erred in drawing inferences adverse to the Appellant's case based on speculation and assumptions, particularly in regard to shared office addresses and telephone numbers, which are not determinative of legal identity or liability.iii.That the learned trial magistrate erred in law and in fact by relying on a police abstract to establish the existence of a valid insurance policy, despite the fact that the police officer who prepared the document was not called to produce it and was not subjected to cross-examination, thereby contravening principles of admissibility and probative value of evidence.iv.That the learned magistrate failed to properly evaluate and analyze the evidence presented before the court and consequently arrived at an erroneous decision.v.That the trial court erred in failing to make a determination on the Appellant's claim for indemnity against the Third Party, despite finding the Appellant liable, thereby leaving the issue of indemnity unresolved.vi.That the learned magistrate erred in law and in fact by holding that there was no basis to find the Third Party liable notwithstanding the uncontroverted evidence that the Appellant was acting as an agent of the Third Party. 17.The parties filed written submissions as follows; 18.The appellant, Rafiki Microfinance Insurance Agencies, submitted that it appeals the entire judgment delivered on 25th April 2025 in Machakos CMCC/E271/2022. 19.The appellant argues that the trial magistrate erred in law and fact by finding proper service of a statutory notice under Section 10(2) of the Insurance (Motor Vehicle Third Party Risks) Act when the notice was addressed to a different legal entity, Rafiki Microfinance Bank, not the appellant. 20.No affidavit of service was tendered, and no direct evidence demonstrated actual receipt by the appellant. 21.The court improperly inferred service based on shared office addresses and telephone numbers without evidence that the address or contacts belonged to the appellant. 22.The appellant contends that service on a separate legal entity cannot, in law, amount to service on the insurer, and that this contravenes settled principles of corporate personality. 23.Without proper notice, the respondent cannot enforce liability against the insurer under Section 10(2) of Cap 405. 24.The appellant also challenges the trial court’s reliance on a police abstract to establish a valid insurance policy. 25.The investigating officer who prepared the police abstract was not called to produce the document or be subjected to cross-examination. 26.The appellant was denied the opportunity to challenge inconsistencies in the abstract, including the fact that the abstract indicated a policy duration of more than one year, which is impossible. 27.The appellant’s uncontroverted evidence showed its insurance policy covered 28th August 2020 to 27th August 2021, while the accident occurred on 11th August 2020—before the cover began. 28.The appellant submits that evidence not tested by cross-examination lacks probative value, is inconsequential, and violates the right to a fair hearing under Article 50(2)(k) of the Constitution. 29.The appellant further argues that the trial court failed to make a determination on its claim for indemnity against the third party, Monarch Insurance Company Limited, despite finding the appellant liable. 30.The appellant adduced uncontroverted evidence that it acted solely as an agent of a disclosed principal, Monarch Insurance. 31.Under the law of agency, an agent acting within the scope of its authority is entitled to be indemnified by the principal for obligations and liabilities incurred in the course of such agency. 32.By failing to pronounce itself on the indemnity issue, the trial court abdicated its duty to resolve all issues properly pleaded and submitted for determination. 33.The appellant urges the High Court to allow the appeal, set aside the judgment of the lower court, and enter judgment in favour of the appellant with costs. 34.In the alternative, the appellant seeks a declaration that the third party, Monarch Insurance Company Limited, is bound to indemnify the appellant against the judgment and decree arising out of Machakos CMCC No. E504 of 2022. 35.The 1st Respondent submitted that the appeal arises from a judgment delivered on 25th April 2025 in Mackahos CMCC No. 271 of 2022. 36.That judgment declared that the Appellant (defendant in the lower court) was obligated to satisfy a decree from an earlier traffic accident case, Machakos CMCC No. E504 of 2021, amounting to Kshs. 222,479 plus costs. 37.The dispute originated from a road traffic accident on 11th August 2020 involving a tuktuk insured by the Appellant. 38.The 1st Respondent contends that the trial magistrate correctly summarized and addressed the issues, particularly regarding the statutory notice under Section 10 of the Insurance (Third Party Risks) Act. 39.The notice was served on and stamped by Rafiki Microfinance Bank’s legal department, and the court rightly noted that the legal department had no proper basis to receive such a document, yet the receipt indicated proper service. 40.Regarding the validity of insurance cover, the trial court relied on the police abstract in the absence of an insurance certificate, correctly citing the case of Ngiri vs Africa Merchant Assurance Co. Limited. 41.The 1st Respondent submits that if the Appellant disputed the police abstract, it could have called a witness or produced contrary documents but failed to do so. 42.The 1st Respondent asserts that an insurer cannot issue a cover and then evade liability through technicalities, as that would amount to cheating justice and expose the public to insurers’ cunning practices. 43.On the issue of third-party nexus, the 1st Respondent argues that the Appellant did not prove any liability that should be borne by a third party, and the trial court could not address an unestablished issue. 44.The 1st Respondent therefore prays that the court dismisses the appeal with costs. 45.The 2nd Respondent ton its part submitted that the trial magistrate did not err by failing to determine the issue of indemnity because indemnity was neither pleaded nor proved by the Appellant. 46.A party cannot introduce an issue such as indemnity for the first time on appeal and then fault the trial court for not determining what was never properly placed before it. 47.Indemnity must be specifically pleaded, supported by evidence, and properly canvassed during trial, which the Appellant failed or neglected to do. 48.The joinder of the 2nd Respondent as a third party did not, by itself, shift the burden of proof or create liability upon the 2nd Respondent; the Appellant remained under a duty to strictly prove any claim for indemnity. 49.An agent acts for the insured, not the insurer, and therefore an agent cannot claim indemnification from the insurer. 50.The Appellant failed to adduce any evidence to support its claim of indemnification against the 2nd Respondent and cannot blame the trial magistrate for that failure. 51.The Appellant has not demonstrated any misdirection in law, any failure by the trial court to consider relevant evidence, or any consideration of irrelevant matters. 52.Regarding costs, the 2nd Respondent submits that costs should follow the event, meaning the unsuccessful party bears the costs. 53.The 2nd Respondent urges the court to order the Appellant to bear the costs of the appeal because the Appellant unnecessarily caused the 2nd Respondent to expend public funds. 54.From the evidence on record, the Appellant failed to discharge the burden of proof required to establish any legal or factual basis for imposing liability or indemnity upon the 2nd Respondent. 55.The learned trial magistrate correctly appreciated the law and evidence and properly declined to impose liability in the absence of proof. 56.Grounds 5 and 6 of the Memorandum of Appeal disclose no misdirection in law or fact but merely invite the court to substitute conjecture for evidence. 57.In the absence of any demonstrated error warranting appellate interference, the court is urged to dismiss the appeal as against the 2nd Respondent with costs. 58.The issues for determination in this appeal are as follows;i.Whether there was proper service of the statutory notice on the Appellant under Section 10(2) of the Insurance (Motor Vehicle Third Party Risks) Act (Cap 405);ii.Whether the Respondent proved the existence of a valid insurance cover at the time of the accident; andiii.Whether the trial court erred in failing to grant the Appellant indemnity against the Second Respondent (the Third Party). 59.On the first issue of statutory notice, it is a well-settled principle of corporate law that a company has a distinct legal personality from its affiliates, as established in the foundational case of Salomon v Salomon & Co Ltd. 60.However, the strict application of this doctrine cannot be used as an instrument to evade statutory obligations where clear evidence of interlocking operations exists. 61.Section 10(2) of Cap 405 requires notice to be given to the insurer before or within fourteen days after the commencement of the proceedings. 62.The trial court found as a fact that the statutory notice was received and stamped by the legal department of Rafiki Microfinance Bank, an entity that shared identical postal addresses, telephone numbers, and corporate branding with the Appellant, Rafiki Microfinance Insurance Agencies. 63.Where corporate entities operate as a single economic unit with shared services, service upon one arm that handles legal compliance for the group constitutes effective service. 64.The Appellant cannot hide behind the veil of separate corporate identity to claim ignorance of a notice received by its own shared legal department, especially when its witness admitted they became aware of the suit. Service was therefore proper. 65.Regarding the existence of a valid insurance cover, the Appellant’s challenge to the admissibility and probative value of the police abstract is unsustainable. While it is true that a police abstract is generally hearsay unless produced by the authoring officer, Kenyan courts have carved out a realistic exception for third-party passengers. 66.As held in Ngiri v Africa Merchant Assurance Co. Limited(supra), a passenger cannot be expected to possess the actual certificate of insurance, and a police abstract naming the insurer shifts the evidentiary burden to the insurance company to prove the non-existence of the cover. 67.The Appellant failed to discharge this burden. The Appellant's own underwriting witness confirmed that the certificate number on the abstract was genuine and from their booking system, yet failed to produce the duplicate certificate or the unredacted premium financing agreements signed by the borrower days before the accident. 68.By failing to produce documents within its exclusive possession, the court was entitled to draw an adverse inference under Section 112 of the Evidence Act (Cap 80) that the corporate records were being manipulated. 69.The trial court's finding of a valid, active policy at the time of the accident on 11th August 2020 was grounded in solid evidence, not speculation. 70.Finally, on the issue of indemnity against the Second Respondent (Monarch Insurance Company Limited), the Appellant contends that as an agent of a disclosed principal, it is entitled to be indemnified for liabilities incurred. 71.However, a party must specifically plead and strictly prove its case. The Second Respondent correctly points out that the Appellant did not properly plead or prove the operational terms of the agency agreement establishing a right to indemnity for claims of this nature at the trial stage. 72.Furthermore, an insurance agency or intermediary often acts in a dual capacity or may bind itself personally depending on how the policy and premium financing are structured. 73.In the absence of a clear, proved nexus of indemnity on the record, the trial court cannot be faulted for refusing to grant an unestablished remedy. 74.Upon an exhaustive re-evaluation of the record, this Court finds that the appeal lacks merit and must be dismissed. 75.Consequently, the Appellant has failed to demonstrate any misdirection of law or fact by the trial magistrate that would warrant appellate interference. 76.The final decision of this Court is that the appeal is hereby dismissed in its entirety, and the judgment and decree of the trial court delivered on 25th April 2025 are affirmed. 77.The Appellant shall bear the costs of this appeal to both the First and Second Respondents. 78.Orders to issue accordingly. DATED, SIGNED AND DELIVERED AT NAIROBI THIS 18TH DAY OF JUNE 2026ASENATH N. ONGERIJUDGEIn the presence ofMr Ondiek for the AppellantMr Loki for 1st RespondentChrispine - Court Assistant