https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10175

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI COMMERCIAL AND TAX DIVISION CORAM: F. MUGAMBI, J COMM CASE NO. E214 OF 2021 BETWEEN THE MONARCH INSURANCE CO LTD ………..……….. PLAINTIFF VERSUS DISNEY INSURANCE BROKERS LTD …….….………. DEFENDANT JUDGMENT Introduction and Background 1. The dispute before the Court arises from a commercial relationship between an insurer and an insurance broker spanning several years. In the Plaint dated 15th April 2021 the Plaintiff describes itself as a licensed insurer carrying out insurance business in Kenya, while the Defendant is described as an insurance brokerage company duly licensed under the Insurance Act, Cap 487 Laws of Kenya. For HCCOMM NO. E214 OF 2021 JUDGMENT Page 1 approximately a decade, the Defendant procured insurance business for the Plaintiff by soliciting clients, facilitating the issuance of insurance policies and, where applicable, collecting premiums on the Plaintiff's behalf before remitting the same after deducting its commission. 2. According to the Plaintiff, between the years 2014 and 2020 the Defendant placed numerous insurance policies with it, and the Plaintiff assumed the attendant insurance risks. The Defendant, however, allegedly failed to remit premiums amounting to Kshs.58,392,647.00 collected on the Plaintiff's behalf, despite repeated demands and what the Plaintiff describes as express acknowledgements of indebtedness. Following negotiations between the parties, a partial judgment for Kshs.9,000,000.00 was entered on 31st August 2021, leaving a balance of Kshs.49,392,647.00, which forms the subject of the present proceedings. The Plaintiff’s case is also reiterated in the Reply to Defense dated 16th June 2021. 3. The Defendant disputes liability through its Statement of Defense dated 11th June 2021. It denies HCCOMM NO. E214 OF 2021 JUDGMENT Page 2 having received the premiums in question, disputes the integrity of the Plaintiff's statement of account, contends that several policies had been cancelled following default by insured persons, and further argues that the Plaintiff unlawfully assumed insurance risks before receipt of premiums. The Defendant maintains that an insurance broker bears no obligation to finance premiums on behalf of defaulting clients, and that the Plaintiff's claim rests entirely upon an internally generated statement of account unsupported by policy documents, invoices or proof that the alleged premiums were ever paid by insured persons to the Defendant. 4. During the hearing, each of the parties called 2 witnesses; PW1 was Ms. Hellen Muchira, the Plaintiff's Credit Controller while PW2 was Mr. Anthony Ngige, a forensic document examiner. On the other hand, DW1 was Mr. Stephen K. Nderitu, the Defendant’s Chief Accountant while DW2 was Mr. Martin Esakina Papa, a forensic document examiner. Their testimonies align with the summary of the case as I have provided and therefore, I will not regurgitate the same save to refer to the testimonies in my analysis. HCCOMM NO. E214 OF 2021 JUDGMENT Page 3 5. From the pleadings, oral and documentary evidence, the expert reports and the rival submissions of counsel, I am of the considered view that the following issues arise for determination: i. Whether the Plaintiff's claim is statute- barred; ii. Whether the Defendant received insurance premiums on behalf of the Plaintiff and failed to remit them; iii. Whether the Defendant established that the disputed policies had been cancelled or that the Plaintiff was duly notified of such cancellations; iv. Whether the Defendant's reliance on Section 156 of the Insurance Act and the doctrine of ex turpi causa non oritur actio affords it a defence; and v. Whether the Plaintiff has proved its claim to the requisite standard. Analysis and Determination (i) Whether the Plaintiff's claim is statute-barred? 6. The applicable statutory framework is the Limitation of Actions Act, Cap 22 Laws of Kenya. Section 4(1) HCCOMM NO. E214 OF 2021 JUDGMENT Page 4 (a) thereof prescribes a limitation period of six (6) years for actions founded on contract, running from the date on which the cause of action accrues. Although the Defendant pleaded and listed statutory limitation as one of the issues for determination, it went no further. Beyond merely raising the issue, the Defendant neither identified the statutory provision under which the claim was said to be time-barred nor advanced any substantive submissions demonstrating how the claim offended the law on limitation of actions. 7. It is a well settled legal position that limitation is both a matter of law and of pleading. Where properly established, it may deprive a court of jurisdiction, but the party relying upon it bears the obligation of specifically pleading the relevant statutory provision and demonstrating its application to the facts of the case. 8. Section 23(3) of the Limitation of Actions Act is relevant in this case. The effect of this provision is that where a debtor acknowledges a debt or makes a part payment towards it, time begins to run a fresh from the date of that acknowledgement or payment, HCCOMM NO. E214 OF 2021 JUDGMENT Page 5 rather than from the date the original cause of action accrued. It provides as follows: “Where a right of action has accrued to recover a debt or other liquidated pecuniary claim, or a claim to movable property of a deceased person, and the person liable or accountable therefor acknowledges the claim or makes any payment in respect of it, the right accrues on and not before the date of the acknowledgement or the last payment: Provided that a payment of a part of the rent or interest due at any time does not extend the period for claiming the remainder then due, but a payment of interest is treated as a payment in respect of the principal debt.” 9. Section 24 of the Act requires that such an acknowledgment ought to be in writing and signed by the person making it. HCCOMM NO. E214 OF 2021 JUDGMENT Page 6 10. The Court of Appeal settled the effect of an acknowledgment made under Section 23(3) in Shire V Thabiti Finance Co Ltd, [2002] eKLR, where upholding the reasoning in the English case of Bush V Stevens, [1963] 1 QB 1, it held that on acknowledgment, the revived right is given a notional birthday and: ‘like the Phoenix of fable, it arises again in renewed youth’ (per Lawson J, adopted by the Court of Appeal). The Court of Appeal's holding in Shire (supra) binds this Court and has been consistently applied, including in Consolidated Bank of Kenya Ltd V Ndung'u & 5 Others, [2024] KEELC 4456 (KLR) , where the Environment and Land Court reiterated that an acknowledgment or part payment not only extends the limitation period but revives an otherwise statute-barred action. 11. This Court, in Telkom Kenya Limited V Kenya Railways Corporation, [2018] eKLR, undertook a detailed exposition of what qualifies as an acknowledgment for the purposes of Section 23(3). The Court, Onguto J, held that an acknowledgment of debt results in a fresh accrual of cause of action and HCCOMM NO. E214 OF 2021 JUDGMENT Page 7 revives an otherwise statutorily barred claim as follows: “60. The court in Shire (supra) was more explicit. The court held that an acknowledgment under s.23 resulted in not only the accrual of a fresh action which meant the revival of an otherwise statutorily barred claim but also the extension of limitation period where the acknowledgment was made prior to expiry of the limitation period. The court in citing, with approval, the English case of Bush v Stevens [1963] 1 Q B 1 quoted Lawson J as follows: It seems to me as a matter of syntax the right which shall be deemed to have accrued is a right of action to recover any debt or any other liquidated pecuniary claim. The subsection does not change the nature of the right; it provides that in specific circumstances of an HCCOMM NO. E214 OF 2021 JUDGMENT Page 8 acknowledgment or payment, the right shall be given a notional birthday and on that day, like the Phoenix of fable, it arises again in renewed youth and also like the Phoenix, it is still itself. 61. The decision in Shire (supra) is binding upon this court. I am also convinced with the reasoning and would agree with it wholly. An acknowledgment in the absence of a contrary provision in the statute gives an already barred action a new birthday. The action is revived de novo. The acknowledgment need not be made when the time is running. It may be made after expiry of time and will still suit the purposes of s.23 of the Limitation of Actions Act.” 12. In the present case, the Plaintiff pleaded that the parties engaged in continuous commercial dealings extending between 2014 and 2020. During this HCCOMM NO. E214 OF 2021 JUDGMENT Page 9 period there were repeated reconciliations of accounts, negotiations, acknowledgements of indebtedness and proposals for settlement, culminating in the institution of the present suit in April 2021. The Defendant did not dispute the exchange of correspondence between the parties during 2019 and 2020. Instead, its position was that the correspondence merely related to reconciliation of accounts rather than admissions of liability. 13. Applying the test articulated in Telkom Kenya (supra), the letter dated 8th September 2020, in which the Defendant acknowledged that its account was in arrears and requested time to settle a substantial amount of the debt, together with the letter dated 16th October 2020 proposing a payment of Kshs.2,000,000.00 to reduce the amount to manageable levels, constitute unequivocal recognitions of liability signed by the Defendant and addressed to the Plaintiff. Read together with Section 24 of the Limitation of Actions Act, both letters satisfy the statutory formalities of an acknowledgment. Their effect, applying Shire (supra), was to give the cause of action a fresh accrual date no earlier than 16th October 2020, well HCCOMM NO. E214 OF 2021 JUDGMENT Page 10 within six years of the institution of this suit on 15th April 2021. The issue founded on limitation accordingly fails and is determined in favour of the Plaintiff. (ii) Whether the Defendant received premiums on behalf of the Plaintiff and failed to remit them? 14. This issue lies at the heart of the dispute. The starting point is Sections 107, 108 and 109 of the Evidence Act, Cap 80 Laws of Kenya. Section 107(1) provides that whoever desires a court to give judgment as to any legal right or liability dependent on the existence of facts must prove that those facts exist. Section 108 places the burden of proof on the person who would fail if no evidence at all were given on either side, while Section 109 places the burden as to any particular fact on the person who wishes the court to believe in its existence. 15. The Court of Appeal restated these principles in Anne Wambui Ndiritu V Joseph Kiprono Ropkoi & Another, [2005] 1 EA 334, holding that the legal burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue, while the evidential burden HCCOMM NO. E214 OF 2021 JUDGMENT Page 11 under Sections 109 and 112 of the Evidence Act may thereafter shift depending on the evidence adduced at trial. The Court stated as follows: “As a general proposition under Section 107 (1) of the Evidence Act, Cap 80, the legal burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue. There is however the evidential burden that is case upon any party the burden of proving any particular fact which he desires the court to believe in its existence which is captured in Sections 109 and 112 of the Act.” 16. This distinction between the legal and evidential burden has since been consistently applied by this Court, including in Evans Nyakwana V Cleophas Bwana Ongaro, [2015] eKLR where Majanja J, held that: “As a general proposition, the legal burden of proof lies upon the party HCCOMM NO. E214 OF 2021 JUDGMENT Page 12 who invokes the aid of the law and substantially asserts the affirmative of the issue. That is the purport of Section 107 (i) of the Evidence Act, Chapter 80 Laws of Kenya. Furthermore, the evidential burden…is cast upon any party, the burden of proving any particular fact which he desires the court to believe in its existence. That is captured in Section 109 and 112 of law that proof of that fact shall lie on any particular person…The appellant did not discharge that burden and as Section 108 of the Evidence Act provides the burden lies in that person who would fail fi no evidence at all were given as either side.” 17. On the applicable standard of proof, the Court of Appeal in Palace Investment Ltd V Geoffrey Kariuki Mwenda & Another, [2015] eKLR approved and applied the classic formulation of HCCOMM NO. E214 OF 2021 JUDGMENT Page 13 Denning J (as he then was) in the English case of Miller V Minister of Pensions, [1947] 2 All ER 372, to the effect that the standard is met where: ‘the Court thinks it more probable than not; the burden is discharged’, but a bare balance of equally weighted probabilities does not suffice, for a draw is not enough. The Court of Appeal (Karanja, Okwengu & Kariuki JJ.A) stated as follows: “Denning J, in Miller -v- Minister of Pensions [1947] 2 All ER 372 discussing the burden of proof had this to say:- “That degree is well settled. It must carry a reasonable degree of probability, but not so high as is required in a criminal case. If the evidence is such that a tribunal can say: we think it more probable than not; the burden is discharged, but, if the probabilities are equal it is not. This burden on a balance or preponderance of probabilities means a win however narrow. A draw is not enough. So, in any case in which the tribunal cannot decide one way or the other HCCOMM NO. E214 OF 2021 JUDGMENT Page 14 which evidence to accept where both parties…are equally (un) convincing, the party bearing the burden of proof will lose because the requisite standard will not have been attained.” 18. It therefore fell upon the Plaintiff to establish, on a balance of probabilities that is more probable than not, that insurance business was placed through the Defendant, that premiums became due under the resulting policies, that the Defendant received or became accountable for those premiums, and that the Defendant failed to remit the same. 19. The existence of the brokerage relationship is beyond controversy. Both parties admit that the Defendant acted as the Plaintiff's insurance broker by procuring insurance business for the Plaintiff in return for commission, and that under appropriate circumstances the Defendant collected premiums and remitted them after deducting its commission. This fact was confirmed by both PW1 and DW1. The real controversy concerns the outstanding premiums. HCCOMM NO. E214 OF 2021 JUDGMENT Page 15 20. The Defendant argues that the Plaintiff's entire case rests upon a statement of account unsupported by invoices, proposal forms, policy documents or receipts issued by insured persons. It contends that a statement of account, standing alone, is incapable of proving receipt of premiums. The same position was reiterated by DW1. That submission would have carried considerable force had the Plaintiff relied solely upon an internally generated statement of account. However, that is not the evidential position obtaining in this case. 21. The Plaintiff's statement of account was sufficiently detailed, and identified the insured persons, policy numbers, commissions, transaction dates and outstanding balances. Secondly, the evidence demonstrates that upon the Defendant's own request, the Plaintiff supplied the statement for reconciliation purposes in June 2020. There is no evidence that, at that stage, the Defendant challenged specific entries by identifying individual policies that did not belong to it or by producing an alternative reconciliation statement demonstrating HCCOMM NO. E214 OF 2021 JUDGMENT Page 16 the correct position despite prompts from the Plaintiff to do so. 22. Fundamentally, the Plaintiff produced a series of contemporaneous communications exchanged over an extended period in which the Defendant repeatedly sought time to reconcile the statements, or indulgence regarding outstanding balances, requested the Plaintiff not to bank issued cheques, proposed structured repayment plans and indicated its intention to reduce the outstanding indebtedness through specified payments. 23. The correspondence and the exchanges between the parties are inconsistent with the conduct of a party who maintains that no indebtedness whatsoever existed. Indeed, if the Defendant genuinely considered the Plaintiff's statement to be entirely fictitious, one would reasonably have expected an immediate rejection of liability coupled with a comprehensive reconciliation identifying the impugned entries. Instead, the correspondence reveals repeated discussions concerning repayment modalities and gradual settlement of outstanding balances. HCCOMM NO. E214 OF 2021 JUDGMENT Page 17 24. The Defendant seeks to explain those communications as negotiations that were undertaken solely for purposes of reconciliation. Taken together with requests for deferment of cheques, proposals for monthly payments and commitments to reduce outstanding balances, the correspondence can only be consistent with the existence of an acknowledged indebtedness. I am therefore satisfied that the documentary correspondence substantially corroborates the Plaintiff's statement of account. 25. Equally significant is that although the Defendant criticized the Plaintiff's statement as inaccurate, overstated and containing duplicate entries, it did not produce its own comprehensive statement identifying the alleged errors and demonstrating the correct balance. DW1’s general assertions of inaccuracy at the hearing cannot without more, displace the detailed documentary evidence that was presented by the Plaintiff without equal cogent evidence to the contrary. HCCOMM NO. E214 OF 2021 JUDGMENT Page 18 26. I am fortified in this approach by the reasoning adopted in Moi Teaching & Referral Hospital V Alexander Forbes Healthcare Ltd, [2025] KEHC 7694 (KLR), where the Court reaffirmed that the civil standard is: ‘proof on a preponderance or balance of probability’. A Defendant who challenges a statement of account without offering evidence to the contrary does not thereby displace the Plaintiff's proof to that standard. On the totality of the evidence, I do find that the Plaintiff has proved that the Defendant was accountable for premiums which remained outstanding. (iii) Whether the Defendant established that the disputed policies had been canceled or that the Plaintiff was duly notified of such cancellations? 27. The Defendant's second principal defence is that many insured persons did not pay the premiums and consequently requested cancellation of their insurance covers. It maintains that cancellation notices were forwarded to the Plaintiff but accuses the Plaintiff of failing to issue corresponding credit HCCOMM NO. E214 OF 2021 JUDGMENT Page 19 notes, which, according to the Defendant, resulted in artificially inflated balances. This defence raises two evidential questions: first, whether cancellation notices were in fact communicated to the Plaintiff; and secondly, if so, what legal effect those notices had on the sums claimed. 28. The Plaintiff called expert evidence challenging the authenticity of the receipt stamps appearing on the alleged cancellation notices. PW2 explained in considerable technical detail, the differences between the questioned stamp impressions and the Plaintiff's authentic office stamps used during the relevant period. He concluded that the disputed stamps were inconsistent with genuine impressions used by the Plaintiff. The Defendant's expert reached a contrary conclusion. 29. The governing principle where expert opinions conflict is well settled. The Court of Appeal in Teresia Kamene King'oo V Harun Edward Mwangi, [2019] KECA 734 (KLR) upheld the reasoning in Stephen Kinini Wang'ondu V The Ark Ltd, [2016] eKLR where it was held that: HCCOMM NO. E214 OF 2021 JUDGMENT Page 20 “Expert evidence does not “trump all other evidence”. A judge is not bound by expert evidence. The weight and probative value to be given to expert opinion is a matter of discretion for the trial court. Where there is conflicting expert opinion, a judge should test it against all other evidence. In this matter, the trial judge evaluated the cogency and probative of the conflicting expert opinions and exercised his discretion to reject in entirety the conflicting expert opinions.” 30. It therefore follows that the weight and probative value to be given to expert opinion is a matter of discretion for the trial court and where the opinions conflict, the Court must test each against the whole of the evidence and if rejecting both, form its own conclusion on the material before it. 31. This approach is consistent with the earlier holding of the Court of Appeal in Elizabeth Kamene Ndolo HCCOMM NO. E214 OF 2021 JUDGMENT Page 21 V George Matata Ndolo, [1996] eKLR, that the evidence of experts though entitled to respect, must be considered along with all other available evidence. The Court rendered itself as follows: “The evidence of P.W. 1 and the report of Munga were, we agree, entitled to proper and careful consideration, the evidence being that of experts but as has been repeatedly held the evidence of experts must be considered along with all other available evidence and it is still the duty of the trial court to decide whether or not it believes the expert and give reasons for its decision. A court cannot simply say Because this is the evidence of an expert, I believe it." [emphasis added] 32. It also accords with Amosam Builders Developers Ltd V Betty Ngendo Gachie & 2 Others, [2009] eKLR, in which the Court of Appeal, faced with conflicting document-examiner evidence, held that: ‘a decision one way or the other depends on the HCCOMM NO. E214 OF 2021 JUDGMENT Page 22 credibility of witnesses’ when assessed against the totality of the evidence. It is therefore my view that where expert opinions conflict, the Court does not mechanically prefer one expert over another. Expert evidence is advisory rather than determinative. The ultimate responsibility of evaluating credibility and assigning evidential weight remains vested in the Court. 33. Having considered both expert opinions alongside the surrounding evidence, and noting that the two examiners arrived at diverging findings, I am inclined to attach greater weight to the Plaintiff's expert evidence. This is mainly because his conclusions were supported by identifiable physical characteristics capable of objective verification, unlike those of DW2. The examination of the impressions is, in any event, only corroborative of the evidence already on record which also weakens the Defendant’s case. 34. Even assuming that the Defendant had established transmission of the cancellation notices, the evidence reveals that many of the policies sought to be cancelled related to risks that the Plaintiff had HCCOMM NO. E214 OF 2021 JUDGMENT Page 23 already assumed several years earlier. That in itself casts doubt on the genuineness of the policies relied upon. Once an insurer has accepted the risk and the period of insurance has substantially run its course, cancellation cannot retrospectively extinguish liabilities that had already attached during the currency of the policy. In those circumstances, the issuance of a cancellation request does not automatically absolve the broker of responsibility for premiums attributable to risks already borne by the insurer. It is therefore my finding that the Defendant has not established a defence founded upon cancellation of the disputed policies. (iv) Whether the Defendant's reliance on Section 156 of the Insurance Act and the doctrine of ex turpi causa affords it a defence? 35. The Defendant's third principal defence invokes Section 156 of the Insurance Act. It contends that the Plaintiff assumed insurance risks before receiving premiums from the insured persons, contrary to that provision, and that the Plaintiff should accordingly not be permitted to found a cause of action upon its own unlawful conduct. This defence rests on the doctrine ex turpi causa non HCCOMM NO. E214 OF 2021 JUDGMENT Page 24 oritur action, that no right of action arises from a base or illegal cause. 36. That doctrine finds expression in Kenyan jurisprudence in Standard Chartered Bank Ltd V Intercom Services Ltd & 4 Others, CA No. 37 of 2003, in which the Court of Appeal adopted the classic statement of Lord Mansfield C.J. in Holman V Johnson, (1775) 1 Cowp 341 , that no court will lend its aid to a person who founds his cause of action on an immoral or illegal act, together with the further elaboration in Scott V Brown, Doering, McNab & Co [1892] 2 QB 724 . The Court in Standard Chartered stated as follows: “No court ought to enforce illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal, if illegality is duly brought to the notice of the court, and if the person invoking the aid of the Court is himself implicated in the illegality. It matters not whether the defendant has pleaded the HCCOMM NO. E214 OF 2021 JUDGMENT Page 25 illegality or whether he has not. If the evidence adduced by the plaintiff proves the illegality, the Court ought not to assist him.” 37. The force of this doctrine, however, depends entirely on whether the conduct complained of was in fact illegal at the material time. This requires closer scrutiny of Section 156 as it stood during the period relevant to this suit, rather than the provision in its present or most recently amended form. 38. I am alive to the fact that the version of Section 156 that was declared unconstitutional by the High Court in Association of Insurance Brokers of Kenya V Cabinet Secretary for National Treasury & Planning & 4 Others, [2021] KEHC 451 (KLR) was Section 156 as amended by the Insurance (Amendment) Act, 2019 and not the earlier iteration of that section applicable to the bulk of the period in issue in this suit, namely 2014 to 2019. The two versions cannot be conflated, and it is the earlier version that must govern the Court's assessment of the Defendant's illegality defence for that period. HCCOMM NO. E214 OF 2021 JUDGMENT Page 26 39. The provision as it stood during the material period (2013 to 2019) read as follows: “Advance Payment of premiums. No insurer shall assume a risk in Kenya in respect of insurance business unless and until the premium payable thereon is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed, or unless and until a deposit of a prescribed amount is made in advance in the prescribed manner.” 40. On a plain reading of that provision, it is evident that the law as it stood during the material period did not impose an absolute requirement of prior receipt of premium before an insurer could assume risk. It expressly contemplated that the premium could either be received or ‘guaranteed to be paid’ in such manner and within such time as prescribed. The brokerage arrangement between the Plaintiff and the Defendant, under which the Defendant collected HCCOMM NO. E214 OF 2021 JUDGMENT Page 27 premiums on the Plaintiff's behalf and remitted them after deduction of commission, falls squarely within the contemplation of this guarantee mechanism. As such, this defense equally fails. 41. It is by now apparent that the Defendant has not mounted a credible defence against the claims advanced by the Plaintiff. It is equally clear that the Plaintiff has discharged its burden of proving its case on a balance of probabilities. Disposition and Final Orders 42. Accordingly, i. Judgment is hereby entered in favour of the Plaintiff against the Defendant in the sum of Kshs.49,392,647.00, being the outstanding balance due after the partial judgment previously entered in these proceedings. ii. The said sum shall attract interest at court rates from the date of filing suit until payment in full. iii. The Plaintiff shall have the costs of the suit. HCCOMM NO. E214 OF 2021 JUDGMENT Page 28 DATED, SIGNED AND DELIVERED AT NAIROBI THIS 10 TH DAY OF JULY 2026. F. MUGAMBI JUDGE Delivered in presence of: Ms Odiero for the plaintiff Khaifa for Githinji for the defendant Court Assistants: Lillian & Gloria HCCOMM NO. E214 OF 2021 JUDGMENT Page 29