[2023] KEHC 25737 (KLR)

SOO (Suing as the Next Friend and Father of the Late BOO) v Kenya Orient Assurance Company Limited (Civil Appeal E101 of 2022) [2023] KEHC 25737 (KLR) (21 November 2023) (Judgment)

Neutral citation: [2023] KEHC 25737 (KLR)

Republic of Kenya

In the High Court at Kisumu

Civil Appeal E101 of 2022

RE Aburili, J

November 21, 2023

Between

SOO (Suing as the Next Friend and Father of the Late BOO)

Appellant

and

Kenya Orient Assurance Company Limited

Respondent

(An appeal arising out of the Judgement of the Honourable M. Agutu in the Chief Magistrate’s Court at Kisumu delivered on the 7th October 2022 in Kisumu CMCC No. 352 of 2020)

Judgment

Introduction 1. The appellant herein filed suit against the respondent insurance Company seeking a declaratory order directing the respondent to settle the decree in Kisumu CMCC No. 392 of 2016 and also for costs incidental to the suit.

2. The appellant’s claim against the respondent was that the respondent was the insurer of motor vehicle registration no. KAQ 148S Toyota Matatu vide its policy number KS1/08001091693/16, that was involved in an accident that led to injuries sustained by the appellant’s minor child BO. The owner of the motor vehicle and hence the insured was initially stated to be Josephine Owange but an amendment to the plaint was effected enjoining one, Silas Agaki as the insured.

3. The respondent filed a statement of defence in which it denied the averments raised by the appellant but no evidence was led in support of the defence.

4. In her ruling, the trial magistrate found that despite the fact that the respondent had insured the motor vehicle registration no. KAQ 148S Toyota Matatu, the statutory notice was never served upon the respondent. She therefore dismissed the appellant’s suit against the respondent with costs.

5. Aggrieved by the trial court’s ruling, the appellant filed the instant appeal vide a Memorandum of appeal dated 4th November 2022 and filed on the 7th November 2022. The appellant raised the following grounds of appeal:a.The learned trial magistrate erred in law and fact in finding that the respondent was not liable to the appellant as sought in the plaint.b.The learned trial magistrate erred in law and in fact in failing to find that the respondents were the insurers of the suit motor vehicle.c.The learned trial magistrate erred in law and in fact in failing to find that the respondent was insurer of the suit motor vehicle in terms of section 10 (1) of the Insurance (Motor Vehicle Third Party Risk) Act Cap 40. d.The learned trial magistrate erred in law and fact in failing to find that the respondent was indeed served and that they had sufficient notice of the case against them within the requisite time.e.The learned trial magistrate erred in fact and in law by totally disregarding the submission made on behalf of the appellant especially regarding sufficient notice to the respondent.f.The decision by the trial magistrate amounted to serious miscarriage of justice.

6. The parties filed written submissions to canvass the appeal.

The Appellants’ Submissions 7. The appellant submitted that he produced an insurance sticker which clearly showed the Respondent as the insurer of the suit motor vehicle and therefore the respondent was obliged to satisfy the judgment.

8. It was further submitted that in the primary suit, the Appellant duly served a notice dated 23th May 2016 together with a Demand letter copied to the Claims Manager of the respondent, dated 23rd May 2016 addressed to Josephine Owange who at that material time was the defendant before the appellant later amended his plaint to add one Silas Agaki the insured herein.

9. The appellant further submitted that the pleadings and documents which included notice to the insurance as filed in the declaratory suit case were well received and acted upon by the Respondent and that therefore, the notice was well within 30 days of filing of the suit against the respondent as the respondent upon receipt, came to the knowledge of the said suit against it and acted upon the same by instructing an advocate to enter appearance and defend its interests.

10. It was submitted that the trial magistrate erred in law and fact in dismissing the plaintiffs case without addressing her mind to the documents placed before her and in finding that Notice to the Insurance Company was not issued yet the insurance was duly notified of the pending cases against it.

The Respondent ‘s Submissions 11. In the Submissions filed by the respondent’s counsel, it was submitted that the issue was not whether or not the respondent was the insurer of the accident motor vehicle but whether the statutory notice as stipulated in section 10(2) of the Insurance (Motor Vehicle Third Party Risks) Cap 405 was served upon the respondent by the appellant and within the stipulated timeline of 14 days in whether the trial court erred in law in finding that no statutory notice was given to the respondent.

12. According to the respondent, for the Appellant to succeed against the Respondent, he was required to show that he gave notice of institution of the suit either before it was filed or within 14 days of its filing. Counsel for the respondent cited Section 10(2) of the Insurance (Motor Vehicle Third Party Risks) Cap 405 which provides that:“10(2) No sum shall be payable by an insurer under the foregoing provisions of this section- 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…”

13. It was submitted that the evidence on record shows that the Appellant filed Kisumu CMCC No. 392 of 2016, on 19. 7.2016. That the law required the Appellant to have served a notice, either before the filing of that suit, or within 14 days of it being filed upon the Respondent.

14. It was submitted that the notice to the insurer that the Plaintiff produced at the trial (Exhibit 2) was dated 30. 8.2017 (see at page 10 of the record), which notice was more than a year after the filing of the suit. Further, that the notice, on the face of it, did not fulfill the requirement of Section 10(1), that such a notice must be given 15 days after the filing of the suit for damages. It was alleged that the statutory notice (Exhibit 2) was given on 30. 8.2017. That even though, there was no proof of the giving of such notice to the Respondent and that even assuming that it was given on 30. 8.2017 as alleged, that was certainly more than 14 days after the filing of the suit on 19. 7.2016 and did not thus assist the Appellant.

15. On service of the said notice as alleged, the respondent’s counsel reiterated that the appellant herein under cross-examination said that he did not know by what mode the statutory notice dated 30. 8.2017 was sent. He said verbally at page 56 of the record:“I issued a statutory notice to the insurance company. It is dated 30. 8.2017. My Advocate sent the notice. I don’t know the mode used to send the statutory notice. There is no stamp on the statutory notice. I cannot state whether the statutory notice was ever received”

16. It was submitted that the Respondent denied such service (see paragraph 4(d) and 8 of the Defence at pages 22 and 23 of the record) hence the onus was on the Plaintiff to prove that he indeed served the statutory notice, which he did not.

17. Counsel submitted that there was no evidence that any notice was given before the filing of the suit or was given within 14 days of the institution of the suit. It was therefore submitted that the trial Magistrate was correct and properly dismissed the Appellant’s suit. The following cases were cited in support of that proposition Mvuria Magwabi Chandago v African Merchant Assurance Co. Ltd [2017] eKLR MOMBASA HCC APPEAL NO. 60 OF 2014, where the High Court held that failure to show service of a statutory notice is fatal to a Plaintiff’s case. The court stated as follows:“To this court, the provisions of section 10(2) are substantive legal provisions and not procedural requirements. I regard the provision to stand at a pedestal above the rules of procedure as the same to this court vest upon the insurer a complete defence and the right to decline to meet a decree given prior in a suit in which notice given before or within 14 days after the commencement of a suit later sought to be enforced by a subsequent declaratory suit. That provision of section 10(2) Cap 405 is clear, simple and unambiguous. It’s true and only meaning is that a victim of a road traffic accident who wishes to enforce a resultant decree against the insurer must serve on such insurer a notice of the primary suit not later than 14 days after the suit is filed. Where the notice is not served, the insurer is by statute absolved from any liability.”

18. In Occidental Insurance Limited v Joel Masita Ogetonto [2019] eKLR Kisii HCCA NO. 50 of 2015 where the appellant denied being given a statutory notice. The High Court on appeal held that whether the appellant was served with an appropriate statutory notice in accordance to section 10 (2) of the Act was important as non-compliance with section 10 (2) of the Act had adverse implications in the case. The High Court held that on the evidence, no notice had been given to the insurer in accordance with Section 10 (2) and therefore the Respondent’s suit was dismissed. The Court said:9. In Thomas Muoka Muthoka & Another v Ernest Jacob Kisaka [2007] eKLR the court observed as follows:“7. The Hon. Chief Justice Apaloo (as he then was) through his practice notice has clarified the position of insurance company. A notice is issued to the insurance company prior to the suit being filed to notify them of the dispute involving the insured. The insurance company is not made a party to the claim in the suit.”10. The appellant filed its statement of defence dated 4th July 2012. The appellant in paragraph 6 of its statement of defence denied having been served with a statutory notice. The record before the Principal Magistrate’s Court at Ogembo No. 168 of 2010 shows that the Respondent filed its plaint together with a verifying affidavit and the two documents were also accompanied by a notice of institution of suit. The notice of institution of suit on the face of it reads that it is given pursuant to the provisions of section 10 (2) (a) of the Act. The Notice of institution of suit bears the courts stamp but there is no indication that the said notice was served on the appellant. The Affidavit of service on record shows that the plaint and verifying affidavit were served on Peter Ontoche Nyangwono and W.S Bharms and no mention of the statutory notice.11. In the case of Directline Assurance Company Limited v Anderson Muindi & Peter Mbae Sebastian (Suing as the Legal Representatives of Joy Gitugi (Deceased) [2016] eKLR the court stated that:“To the contrary, the Thomas Muoka Case (supra) reiterated what the law under section 10 of the Act was decreed to be by the Court of Appeal in New Great Insurance Company of India Ltd .v. Lilian Evelyn Cross and Another [1966] EA 90 and by Warsame J (as he then was) in Edwin Ogada Odongo .v. Phoenix of E.A Assurance Company Ltd KSM HCCC NO. 132 of 2003 (UR). In the latter case, Warsame J set out the only four (4) defences open to an insurer under section 10 of the Act. These are:- a. that no notice has been served upon the insurer before or within (14) days after commencement of the primary suit; b. that there is a stay of execution; c. that the policy was cancelled by mutual consent or by virtue of a condition precedent; or d. that the insurer has obtained a declaration that he is entitled to avoid the policy within three (3) months after or before commencement of the primary suit.”12. I find that the appellant was not put on notice of the suit and it is therefore entitled to the defence under section 10 (2) of the Act. I therefore find that the appeal to have merit and set aside the trial court’s decision dated the 13/3/2015. The Respondent suit is dismissed. The appellant shall have the costs of the appeal.’’

19. In Apa Insurance Company Ltd v Patrick Musee Masila [2016] eKLR Machakos HCCA No. 203 of 2009, where the appellant denied being given a statutory notice. There was no evidence of service of such notice. The High Court on appeal held that without such notice, the suit should be dismissed and stated as follows:“14. The primary suit was commenced on 11th May, 2005. The existence of the matter should have been brought to the attention of the Appellant within fourteen days thereof. There is indeed evidence of correspondence having been exchanged between the Appellant and Respondent’s Counsel. A letter dated 9th February 2006 was in reference to a letter dated 23rd January, 2006 written by the Respondent’s Counsel in respect of the matter. In the letter the Appellant denied having received any notice. 23rd January, 2006 was approximately Seven (7) months after the suit was instituted.15. From the foregoing it is apparent that the Appellant did not receive notice of proceedings within the stipulated time. Therefore the Appellant having not been a party in the declaratory suit could not have raised any preliminary objection at that point in time. 16. For reasons given the appeal has merit and is allowed. The judgment of the Lower Court is set aside with costs to the Appellant.”

20. In Blue Shield Insurance Co v Mercy Kawira [2007] eKLR Meru HC Civil Appeal 47 of 2006, where there was no evidence of service of a statutory notice produced. The High Court observed that an alleged certificate of postage was mentioned by the Plaintiff, which bore the address of the appellant. There were, however, no details of this certificate of postage, yet this was a critical piece of evidence as the respondent maintained that the appellant was duly served. The Court held that service of the statutory notice had to be proved on a balance of probabilities and as there was no such proof, it dismissed the Respondent’s case. The Court said:“From all the reasons stated I come to the conclusion that the respondent failed to demonstrate that the statutory notice was served upon the appellant and to establish a nexus between the certificate of insurance in question, the defendant in the primary suit and the appellant. Consequently, I find that the learned trial magistrate misdirected himself in these matters and in the result, this appeal is allowed with costs to the appellant.”

21. In Trident Insurance Co. Ltd v Philip Etyanga [2016] eKLR Embu HCCC NO. 1 of 2016 where the High Court was considering a notice under Section 10(1) of the Insurance (Motor Vehicle Third Party Risks) Act Cap 405 and held that failure to serve the same absolves the insurer from satisfying a subsequent decree and stated as follows:“7. It is clear from the foregoing provisions that an intending plaintiff or claimant is required to serve notice of his intention to file proceedings upon the insurance company. The requirement is mandatory and that explains why the provisions are coached in mandatory language. It is my considered opinion that failure to serve such a notice absolves the insurance company from satisfying any decree or order that the intending plaintiff or claimant may recover in the proceedings.”

22. In Stephen Mwangi Mutuku v Invesco Assurance Co Ltd [2019] eKLR at Mombasa HCCA NO. 136 OF 2016 where the High Court was considering Section 10(2) of the Insurance (Motor Vehicle Third Party Risks) Act in an appeal where there was no evidence of service of a notice under that section. The Court reiterated the purpose of such notice as set out in Philip Kimani Gikonyo –versus- Gateway Insurance Co. Ltd (2007) eKLR where the court stated that its purpose is to alert the insurer of the potential claim and liability, and held that failure to so give the notice makes a declaratory suit as the present one fatal. The High Court stated:“13. The fatality of a suit on account of non-issuance of the requisite notice has been reiterated by courts from time to time. In the case of Directline Assurance Company Limited –versus- Wilkinsun Mwenda Erastus & 7 others (2016) eKLR, Mabeya J. observed:“Whilst it may look as being a mere technical objection curable under Article 159 of the Constitution as the trial court found out, it is not. It makes the whole difference. It goes to the very heart of the entire case of the Respondent, as to whether notice was served in terms of Section 10(1) of the Insurance (Motor Vehicle Third Party Risks) Act, and therefore substantive justice.”23. And in Mvuria Magwabi Chandago –versus- African Merchant Assurance Company Ltd (2017) eKLR, Justice P.J Otieno held that:“To this court, the provisions of Section 10(2) (c) are substantive legal provisions and not procedural requirements. I regard the provisions to stand at a pedestal above the rules of procedure as the same to this court vast upon the insurer a complete defence and the right to decline to meet a decree given prior in a suit in which notice given before or within 14 days after the commencement of a suit later sought to be enforced by a subsequent declaratory suit. That provision of Section 10(2) Cap 405 is clear, simple and unambiguous. It’s true and only meaning is that a victim of a road traffic accident who wishes to enforce a resultant decree against the insurer must serve on such insurer a notice of the primary suit not later than 14 days after the suit is filed. Where the notice is not served, the insurer is by statute absolved from any liability. It matters out tht the insurer came to learn about the suit on its own, the law mandates that it shall be served with a notice……..”14. The conclusion that flows from the foregoing is that the trial court correctly interpreted the provisions of Section 10(2) (c) of the Insurance (Motor Vehicle Third Party Risks) Act, Cap 405 that the Respondent is absolved from liability since the mandatory notice was not served as required by law. The said decision is therefore upheld and the appeal dismissed.”

24. The respondent’s counsel maintained that no notice was ever served upon the Defendant as required by the Section. That Service of a Statutory Notice is not a mere formality as submitted by the Plaintiff.

25. On the case of Kenya Alliance vs Thomas Ochieng, cited by the Plaintiff, it was submitted that this was the case only decided that a notice did not require any particular format, and that it was sufficient if the notice was in the form of a demand letter.

26. Counsel submitted that in Stephen Mwangi Mutuku v Invesco Assurance Co Ltd, the court was clear that a notice under Section 10(2) is not a mere formality: it goes to the very heart of the entire case of the Plaintiff, and failure to serve such notice in terms of Section 10(2) of the Insurance (Motor Vehicle Third Party Risks) Act, is decided as a matter of substantive justice. Failure to serve such a notice had the effect that the Respondent was absolved from liability since the mandatory notice was not served as required by law.

27. It was maintained that as the Appellant did not prove that he served the mandatory notice as required under Section 10 (2) of the Insurance (Motor Vehicle Third Party Risks) Act, Cap 405, the Respondent is absolved from liability since it was not served as required by law.

28. He prayed that this appeal be dismissed with costs to the respondent.

Analysis and Determination 29. I have considered the record of appeal, the grounds of appeal, submissions filed and authorities cited. The only issue for consideration upon which this appeal is based is whether the statutory notice was served on the respondent.

30. In Philip Kimani Gikonyo v Gateway Insurance Company Limited [2007] eKLR, the lower court had rejected the demand letter because it was not actual Notice contemplated in Section 10(2) of the Act. On appeal, the High court found this holding by the trial magistrate to be clearly wrong. The court observed and I concur that it does not matter what form a statutory Notice should take since the main purpose of a Notice is to alert the insurer of a potential claim.

31. The court stated:“So, what form should a notice take? It simply does not matter. A notice is a notice. The main purpose of a notice is to alert the insurer of a potential claim, a potential liability, so that the insurer can take steps to protect its interest by defending the action, investigating the same, attempting to settle the same and doing anything it wants to in order to protect its rights and interests. The notice need not be in any particular format, and with due respect to the Lower Court, there is nothing like an “actual” notice, or a “not-so-actual” notice. Any notice, howsoever given, as long as it sufficiently outlines the happening of an event giving rise to a claim under the insurance policy, is good notice under the Act. So, here in this case, was such a notice given? In my view, most definitely it was. It is not in dispute that the insurer was served with a copy of the demand letter dated 25th March, 1985. ..”

32. In this instant case, there is overwhelming evidence that the demand Notice, whatever its form, was issued to the initial defendant Josephine Owange and copied to the respondent herein via postal address No 3453-00100 Nairobi with the policy number being quoted as KSM/08001091693/16. The demand letter was dated 23rd May, 2016. This was before suit was filed on 19/7/2016 against the owner of the accident motor vehicle registration umber KAQ 148S Toyota Matatu. Later, an amended plaint was filed on 21/9/2017 in Kisumu CMCC 392 of 2016 adding Silas Agaki as a defendant.

33. Albeit the defendants who were being defended by the advocate for the insurance denied in their defence being served with a demand notice, I observe that the respondent listed Silas Agaki as one of its witnesses and parties in the initial suit agreed and entered into a consent on liability where the plaintiff was to shoulder 30% while the defendants were to shoulder 70% liability. the court then proceeded to determine quantum of damages only.

34. In addition, the parties’ advocates who are the same advocates still on record and battling it out in this appeal also entered into a consent on costs of that suit by signing a written consent dated 25th October, 2019 and filed in court 31st January, 2020 for a sum of kshs 88, 38 and further consenting to a stay of execution for 30 days.

35. The question is, if the insurance company was never notified of the institution of suit being Kisumu CMCC 392 of 2016 why did they instruct the advocate to concede to liability for which they knew that they would not be liable, eventually, to be bound by? Why did they enter into a consent on costs and stay of execution of 30 days?

36. The declaratory suit was instituted on 19/8/2020 after the appellant waited for settlement of the decree in CMCC 392 of 2016 in vain, following the judgment delivered on 4th September 2019.

37. On 1/10/2019, which was long before institution of the declaratory suit, the appellant’s counsel served the respondent’s counsel with notice of judgment of 4/9/2019 in CMCC 392 of 2016, giving all the particulars of the judgment in a case which was nonetheless defended by the insurance company through Mr Peter Karanja &Co. Advocates and therefore this notification was not even necessary. The Notice which also meets the threshold of a notice contemplated under section 10(2) of the Act as cited herein was dated 9/9/2019.

38. The Notice of 9/9/2019 duly received by the respondent’s advocate by stamping at the right hand side bottom and with a date stamp sufficiently made the respondent aware that the appellant had the intention of instituting a court proceedings against it if the decree in CMCC 392 of 2016 was not settled.

39. The respondent was therefore sufficiently informed of the accident’s occurrence involving a motor vehicle that they had insured and even if they claim that the legal owner and defendant judgment debtor in the primary suit was not their insured, as earlier stated, the respondent having instructed the firm of Peter Karanja & Co Advocates to represent their interests in the suit was estopped from denying that it was made aware of the suit that led to the declaratory suit as they willingly consented to liability being shared as adopted by the court on 12/6/2019 at 70:30 in favour of the appellant herein.

40. If the respondent was not made aware of the filing of the suit or the judgment debtor was not their insured, why did the respondent concede on liability through its counsel on record?

41. Way before 2010, in Shah v Mbogo [ 1967] EA 116 where the Insurance Company sought to set aside judgment on the ground that no adequate Notice of the proceedings in which the judgment was obtained had been given to the company, albeit in that case there had been correspondence between the Plaintiff’s advocate and the company’s office, Harris J held that the company was well aware of the Plaintiff’s claim, that the Notice was adequate to meet the requirements of Section 10(2)(a) of the Insurance (Motor Vehicles Third Party Risk) Act and that it had been effectively served. On appeal, the decision of the trial judge, was upheld.

42. I am persuaded that the demand Notice dated 9th September 2019 had sufficient particulars to give Notice to the respondent of what the appellant intended to claim from it.

43. In Ogada Odongo v Phoenix of E.A. Insurance Co. Ltd Kisumu HCC 132/2003, it was held that:(1)“By an insurer issuing a policy of insurance, it automatically assures the rights of third parties. It simply means, the rights/obligation of the insured automatically transferred to the insured unless it is proved otherwise.(2)By covering third parties, rights, the insurance was in essence performing a statutory duty imposed by an Act of Parliament.”

44. The Respondent cannot be left to hold a barren decree from a lawful judgment. Therefore, based on my above analysis, I am satisfied that the respondent had sufficient Notice of institution of not only the declaratory suit but the original suit following which it instructed an advocate to represent its insured and that the respondent had sufficient notice and time to investigate claims by the appellant that the judgment debtor was the then insured at the time of the accident and even intervene in the suit or seek to have the consent judgment on liability vacated or policy avoided, if that consent was not entered into with their authority. Having failed to do any of the above, I find the allegation of failure to serve a statutory Notice as stipulated in Section 10(2) of the Act to be devoid of any merit and the same is hereby dismissed.

45. The upshot of the above is that this appeal is found to be meritorious, I allow it and order that the judgement delivered on the 7th October 2022 in Kisumu CMCC No. 352 of 2020 dismissing the appellant’s declaratory suit against the respondent for want of a statutory notice is hereby set aside and the same is substituted with an order that the respondent was duly served with statutory notice of institution of suit against it.

46. The suit herein is remitted back to the lower court for a rehearing as contemplated in section 78 of the Civil Procedure Act.

47. As the suit is to be reheard, I order that each party bear their own costs of this appeal.

48. The lower court file to be remitted back expeditiously with a copy of this judgment and decree.

49. This file is closed.

50. I so order.

DATED, SIGNED AND DELIVERED AT KISUMU THIS 21STDAY OF NOVEMBER, 2023R.E.ABURILIJUDGE