https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10792

Monarch Insurance Company Ltd v Insurance Regulatory Authority & another (Civil Appeal E026 of 2026) [2026] KEHC 10792 (KLR) (16 July 2026) (Judgment) Neutral citation: [2026] KEHC 10792 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Civil Appeal E026 of 2026 BW Murunga, J July 16, 2026 (Formerly Commercial Appeal No. HCCTA/E221/2026) Between The Monarch Insurance Company Limited Appellant and Insurance Regulatory Authority 1st Respondent Milka Mukolwe Osimbo 2nd Respondent (Being an appeal from the Judgment of the Insurance Appeals Tribunal delivered on 24th March 2025 in Insurance Appeal Number 001 of 2024) Judgment 1.This appeal arises from the Judgment of the Insurance Appeals Tribunal (hereinafter referred to as "the Tribunal") delivered on 24th March 2025. 2.In the impugned decision, the Tribunal dismissed the Appellant’s appeal and upheld a directive by the 1st Respondent, who is the Insurance Regulatory Authority dated 6th October 2023, which ordered the Appellant to settle a motor vehicle accident claim lodged by the 2nd Respondent, Milka Mukolwe Osimbo. 3.The Appellant, aggrieved by the entirety of the Tribunal's decision, moved this Court via a Memorandum of Appeal dated 7th April 2025, raising several grounds that fundamentally challenge the Tribunal's evaluation of the evidence, its application of the law regarding insurance fraud and its interpretation of the principle of utmost good faith (uberrimae fidei). Background Facts 4.The 2nd Respondent was the registered owner of a Toyota Prado, registration number KDH 868H, which was comprehensively insured by the Appellant under Policy Number MSA/0700/ 013226/2022. 5.It is averred that on 27th October 2022, the insured vehicle was involved in a road traffic accident along the Ekero-Sabatia road. The 2nd Respondent’s husband, Mr. Leonard Chirchir Kirwa, who was driving the vehicle at the material time, reported that the vehicle rammed into a stalled Isuzu Canter lorry, registration number KBJ 398Y, resulting in extensive frontal damage to the insured vehicle. 6.Following the accident, the 2nd Respondent lodged a claim for compensation. In processing the claim, the Appellant commissioned several independent assessors. Paramount Auto Assessors issued a report on 14th November 2022 confirming the extensive damage and declaring the vehicle a write-off. 7.Subsequently, the Appellant instructed Elite Lodgit Limited, whose investigation report concluded that the physical damage to the insured vehicle was inconsistent with the narrated circumstances of the accident, raising red flags of possible fraud. 8.Seeking further clarity, the Appellant appointed Oriswatch Auto Assessors. Oriswatch issued an initial report on 30th June 2023, concluding that the damage was consistent with the accident. 9.Curiously, Oriswatch later issued a second report on 6th July 2023 and a subsequent iteration in August 2023, reversing its initial findings and concluding that the damage was indeed inconsistent with the alleged impact angle and height of the third-party lorry. 10.Relying on the reports from Elite Lodgit and the second report from Oriswatch, the Appellant repudiated the claim on 25th May 2023, citing the Conditions of the Policy specifically contained in Clause 7 which entitles the insurer to avoid the policy in the event of a fraudulent claim. 11.The 2nd Respondent escalated the matter to the 1st Respondent, who, after reviewing the competing reports and hearing the parties, directed the Appellant to settle the claim. 12.The Appellant appealed this directive to the Tribunal, which ultimately found that the Appellant had failed to discharge the heavy burden of proving fraud, noting that the reversal of opinion by Oriswatch lacked new, compelling, or substantive evidence. 13.This precipitated the instant appeal. 14.It is instructive to note the procedural trajectory of this matter before this Court. The appeal was initially lodged as Commercial Appeal No. HCCTA/E221/2026 before being formally transferred and designated as Civil Appeal No. HCCTA/E026/2026. 15.Furthermore, the Appellant filed an application by way of a Notice of Motion dated 7th April 2025 seeking a stay of execution of the Tribunal's Judgment pending this appeal. That application was allowed unopposed by this Court, preserving the substratum of the appeal pending this final determination. Submissions of the Parties 16.The Appellant, through its advocates Jared Kangwana & Co. Advocates LLP contends that the Tribunal committed a grave error of law by failing to properly evaluate the material evidence before it. 17.It is argued that the Elite Lodgit report and the Second Oriswatch report scientifically demonstrated that the frontal damage to the Prado could not have been caused by a rear-end collision with the specific Isuzu Canter, given the discrepancies in ground clearance and paint transfer. 18.The Appellant submits that the 2nd Respondent concealed material facts, breaching the principle of utmost good faith and that the Tribunal's failure to recognize this warranted appellate intervention. 19.Conversely, the 1st Respondent, represented by Ms. Lydiah Ndirangu, submits that under Section 173 of the Insurance Act, appeals to the High Court are strictly limited to questions of law. The 1st Respondent argues that the Appellant is attempting to re-litigate factual issues disguised as legal questions. 20.Further, it asserts that fraud requires a standard of proof higher than a mere balance of probabilities. Given the conflicting assessor reports, specifically Oriswatch's unexplained 'flip-flop', the Tribunal correctly applied the benefit of the doubt in favor of the insured. 21.The 2nd Respondent, represented by Kibet Rop & Co. Advocates, mirrors the 1st Respondent's position, insisting that the occurrence of the accident was corroborated by a valid Police Abstract and the initial Paramount assessment. 22.The 2nd Respondent argues that the Appellant's allegations of fraud are based on mere suspicion and conjecture, which cannot substitute the strict proof required in law. Issues for Determination 23.Having carefully perused the Record of Appeal, the Memorandum of Appeal and the rival written submissions, this Court condenses the dispute into two main issues for determination:a.Whether this Court has jurisdiction to entertain the appeal in light of Section 173(3) and (4) of the Insurance Act;b.Whether the Tribunal erred in law and fact in its evaluation of the evidence, thereby wrongfully dismissing the Appellant's repudiation of the claim on the grounds of fraud.I do this having taken cognizance of the Submissions by the 1st Respondent for the issues to be expanded into four. The same have been condensed into the two issues above noting their inter relation. Analysis And Determination Issue 1 : Jurisdiction and the Nature of the Appeal 24.The 1st Respondent raised a preliminary point that this Appeal offends Section 173(3) and (4) of the Insurance Act, which stipulates that:(3)A person aggrieved by a decision of the Tribunal made under subsection (1) may, if it involves a question of law, within one month from the date on which the decision is intimated to him, appeal therefrom to the court.(4)A reference in this section to a question of law does not include a reference to a question whether there is sufficient evidence to justify a finding. 25.While the statute is clear that this Court should not act as a mere fact-finding appellate body, it is a well-established jurisprudential tenet that a failure to properly evaluate evidence, or drawing a conclusion that is entirely unsupported by the evidence on record, elevates a factual inquiry into a question of law. 26.As was held by the Court of Appeal in Mwanasokoni v Kenya Bus Services Ltd [1985] eKLR, an appellate court will interfere with a finding of fact where the finding is based on no evidence, or on a misapprehension of the evidence, or where the lower court is shown demonstrably to have acted on wrong principles. 27.Hancox JA stated in the Mwanasokoni case that:Again, in Peters v Sunday Post Ltd (1958) EA 424, as decision of the Court of Appeal for Eastern Africa, Sir Kenneth O’Connor, P said at p 429:-“It is a strong thing for an appellate Court to differ from the finding, on a question of fact, of the judge who tried the case, and who has had the advantage of seeing and hearing the witness.But the jurisdiction “(to review the evidence) should be exercised with caution: It is not enough that the appellate Court might itself have come to a different conclusion.”Accordingly only when the finding of fact that is challenged on appeal is based on no evidence, or on a misapprehension of the evidence, or the judge is shown demonstrably to have acted on wrong principles in reaching the finding he did, will this Court interfere with it – see–Ephantus Mwangi & Another v Wambugu, (1983/84) 2 KCA 100 at page 118 28.There exists a very thin line between the questions of law and questions of fact and in some instances, the two cross over. It is for the court to look at the issue in totality and deduce whether the cross over happens. 29.I therefore find that the preliminary objection to the competence of this appeal holds no water. Therefore, this Court is clothed with the requisite jurisdiction to examine whether the Tribunal's evaluation of the expert reports was so perverse as to amount to an error of law. 30.The Appeal is properly before this Court. Issue 2 : Evaluation of Evidence and the Allegation of Fraud 31.There is an old English saying that "you cannot make bricks without straw." In the realm of legal pleadings, this translates to the fundamental principle that he who alleges must prove. When an insurer seeks to repudiate a claim on the severe ground of fraud, it cannot rely on mere conjecture or the shifting sands of conflicting expert opinions, it must provide the substantive 'straw' of cogent and compelling proof. 32.The Appellant's entire edifice rests on the argument that the physical damage to the 2nd Respondent's vehicle scientifically contradicts her narrative of a rear-end collision with a specific lorry, amounting to a fraudulent claim that breaches the principle of utmost good faith. 33.In insurance law, the duty of utmost good faith requires honest disclosure. 34.However, when an insurer seeks to repudiate a claim on the severe ground of fraud, the burden of proof shifts squarely to the insurer and the standard of proof is elevated. 35.In the persuasive authority of Virani t/a Kisumu Beach Resort v Phoenix of East Africa Assurance Company Limited [2004] KECA 145 (KLR) the Court underscored that :“Fraud is a serious quasi – criminal imputation and ir requires more than proof on a balance of probability though not beyond reasonable doubt.” 36.Similarly, in Britam General Insurance (K) Limited v Odinga & another [2024] KEHC 8253 (KLR), the Court reiterated that the burden of proving fraud lies strictly with the insurer asserting it. The Court held that mere suspicions, exaggerations, or conflicting assessor reports, absent conclusive evidence or criminal convictions, do not meet the strict evidentiary threshold required to vitiate an insurance contract. 37.Applying these principles to the present case, the Appellant relied heavily on the Elite Lodgit report and the second Oriswatch report. However, the Appellant's own appointed experts were hopelessly divided. Paramount Auto Assessors and the first Oriswatch report found no fatal inconsistencies. 38.The Tribunal, in its judgment, noted this blatant contradiction. A tribunal of fact is not bound to swallow hook, line and sinker the opinion of an expert, especially when the expert oscillates on their findings without the introduction of new unassailable physical evidence. A chain is only as strong as its weakest link. The Appellant's chain of evidence was critically weakened by the internal contradictions of its own investigators. 39.In Magnate Ventures Limited v Alliance Media (K) Limited & others [2015] KECA 719 (KLR), the Court of Appeal emphasized that a court must state its findings and the reasons therefore upon each separate issue. The Court stated:“Indeed Order 21 rules 4 and 5 of the Civil Procedure Rules require the judgment to contain a concise statement of the case, the points for determination, the decision thereon, and the reasons for such decision. Where issues have been framed, the court is obliged to state its finding or decision, with the reasons therefor, upon each separate issue.” 40.The Tribunal did exactly this. It meticulously evaluated the timeline, the Police Abstract confirming the accident and the conflicting assessor reports. The Tribunal did not turn a blind eye to the Appellant's evidence, rather, it weighed it and found it wanting against the strict standard required to prove fraud. 41.Furthermore, it is trite principle that an appellate Court should not interfere with a trial court’s findings of fact simply because it might have reached a different conclusion, provided the evidence as a whole can reasonably justify the conclusion arrived at. 42.The Tribunal had the benefit of reviewing the primary documents and the conduct of the investigations. Its conclusion that the Appellant failed to discharge the burden of proving fraud was not perverse, it was a reasonable deduction from a deeply conflicted evidentiary record. 43.The Appellant asserts that the 2nd Respondent breached the duty of utmost good faith by providing inconsistent accounts. While it is true that insurance is a contract of utmost good faith, the penalty of avoiding a policy requires clear proof of willful misrepresentation or fraud. Discrepancies in the exact angle of impact or the height of the paint transfer, while excellent fodder for cross-examination, do not automatically crystallize into fraud, particularly when the occurrence of the accident itself is corroborated by statutory authorities such as the Police. 44.The Appellant cannot approbate and reprobate, it cannot rely on the rigidities of one expert report while simultaneously ignoring the exculpatory findings of its other appointed assessors. 45.Finally, I reaffirm the enduring principle that justice must not only be done, but must also be seen to be done. To allow the Appellant to repudiate a legitimate policyholders' claim based on an expert's subsequent change of heart, without rigorous, independent corroboration of fraud, would set a dangerous precedent detrimental to the insuring public. 46.The Tribunal's application of the benefit of the doubt in favor of the insured was, in these specific circumstances, both legally sound and equitable. 47.I find no reason to disturb the Tribunal's finding. The Appellant failed to prove fraud on the part of the 2nd Respondent or any vitiating factor to avoid the contract. The Tribunal's finding compelling the Appellant to settle the claim was therefore legally sound. Determination 48.In the final analysis, the Appellant has failed to demonstrate that the Insurance Appeals Tribunal misapprehended the evidence or applied wrong principles of law. The findings of the Tribunal were grounded on a balanced evaluation of the evidence tendered before it. The allegation of fraud remained an unproven assertion, falling short of the stringent standard of proof required. 49.Accordingly, I find no merit in this appeal. 50.The Court hereby makes the following final orders:a.The Appellant's Appeal dated 7th April 2025 is hereby dismissed in its entirety.b.The Judgment and Orders of the Insurance Appeals Tribunal delivered on 24th March 2025 are upheld and affirmed.c.Consequently, the interim stay of execution previously granted by this Court upon the unopposed application dated 7th April 2025 automatically lapses.d.The costs of this Appeal are awarded to the 1st and 2nd Respondents, to be borne by the Appellant. It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 16TH DAY OF JULY, 2026.BENARD WAFULA MURUNGAJUDGEDelivered on virtual platform in the presence of:Owiti h/b for Ms Odiero for the Appellant instructed by Jared KangwanaMueke for the 1stRespondent instructed by Lydia NdiranguKibet for 2nd Respondent instructed by Kibet Rop & Co.Kevin Babu - Court Assistant