Dhanjal Investments Limited t/a Travellers Mwaluganje v Fidelity Shield Insurance Company Ltd [2021] KEHC 5756 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MOMBASA

CIVIL SUIT NO.39 OF 2016

DHANJAL INVESTMENTS LIMITED T/A TRAVELLERS MWALUGANJE..........PLAINTIFF

-VERSUS-

FIDELITY SHIELD INSURANCE COMPANY LTD...........................................1ST DEFENDANT

JUDGMENT

1. The suit was commenced by way of Plaint dated 27th April, 2016 in which DHANJAL INVESTMENTS LIMITED T/A TRAVELLERS MWALUGANJE prayed for Judgment against the Defendant, FIDELITY SHIELD INSURANCE CO. LTD, to be granted the following remedies:-

a)  The sum of Kshs.78,000,000/=.

b)  Costs of this suit.

c)  Interest on (a) and (b) above at the rate of 14% per annum from the date of filing the suit until payment thereof in full.

2.  The suit is contested by the Defendant through its defence dated 13th June, 2016.

3.  The parties filed their respective documents and witnesses statements upon which they relied in arguing their respective position.

4.  Hearing in this matter commenced on 7th May, 2019, whereby the Plaintiff called a total of four (4) witnesses while the Defence on its part called two (2) witnesses.  The hearing of the case was closed on 25th September, 2019.

5.  PW1, NIRMAL SINGH DHANJAL, is the Director of the Plaintiff Company.  He told court that he maintained a Policy Cover for the property amounting to Kshs.80,000,000/= and at the time the fire occurred, it was still in force.  The Defendant had declined to pay the claim signified to him vide a letter dated 11th August, 2015.  He further told court that he was not given the Policy document until after the fire accident.  He demonstrated this vide an email dated 22nd July, 2013 authored by REGINA MBUGUA, an employee of the Defendant Company, dated 22nd July 2013 which confirms the allegation.  In cross-examination and re-examination by both Counsel, PW1 told court that he had been exonerated for being the arsonist.

6.  PW2, JAGDEEP SINGH NAUL, is the Agent who brokered the Policy for the Plaintiff.  His evidence was that he advised the Plaintiff to increase the assured sum to Kshs.8,000,000/= , which was the value as at the time of the fire outbreak.  He told court that he was given the Policy document five (5) months after the fire incident.  He said that policies are not similar but are usually client tailored.  When cross-examined, he confirmed to court that he was the agent for the Plaintiff.  Further, he stated that he was not privy to the assessors report which was relied upon by the Defendant. He stated that a Valuer is only needed on the request of the Insurer.  On re-examination, PW2 told court that an agent does not give a client a copy of the Standard Form Policy without the schedule and special conditions.  Finally, he informed court that the Insurer under policy had no legal basis to assess the value.

7.  PW3, ANDREW GEOFFREY NYAKUTA, was the Security Manager who told court that he and another person went to the camp after the fire had already consumed everything.  He said  that they arrived at the scene at 11. 00pm where they found the care-taker and policemen already there.  He further told court on cross-examination that what was saved from the fire was the generator.

8.  PW4, ELIUD LAINI NDORO, was the caretaker who testified that the fire broke out while he had gone to purchase food.  That on return, he found the camp on fire and he panicked.  He then saw some people vanish into the thicket in darkness.  He reported the matter to Kinango Police Station from where Police Officers who accompanied him.  PW3 found him on the scene with policemen who had accompanied him were dispatched.  In the long cross-examination and re-examination, PW4 confirmed that he saw people run into the bush.

9.  The Defendant, through DW1 - NTAAMAN SHARIFF ABOUR, who is the Branch Manager informed court that there was a waiver on the proposal form whereof other documents sufficed to validate a Policy.  Further, he told court that they had carried out an assessment of the risk from an expert’s opinion to guide them on payment and this is the reason they engaged Mr. Kigo Kariuki who rendered his opinion which they relied upon to disclaim the accident.  During cross-examination,  DW1 told court that the Defendant forwarded a Policy document to the agent for onward delivery to the Plaintiff.  His evidence on cross-examination confirmed that indeed there was a fire policy in respect of the Plaintiff’s Camp.  He also admitted that Insurance is a special contract.

10.  DW2, KIGO KARIUKI, is the expert who was hired by the Defendant to adjust the loss.  He told court that he visited the scene on 6th May, 2015 and prepared the initial report dated 20th May, 2015.  In his final report which is dated 13th August, 2015, he alleged that the manner in which the fire behaved was suspicious and unusual.  He informed court that the policy is one called an Indemnity Policy whose aim is to restore the insured in the  financial position they were in before the misfortune.  In cross-examination, he confirmed that the cost of restoring the property would be Kshs.65,404,313/=.

11.  Both parties closed their respective cases and they summed up the same with each party filing written submissions.  The Plaintiff filed their written submissions on 20th October, 2019, while the Defendant filed theirs on13th February, 2020.

SUBMISSIONS BY THE PLAINTIFF

12.  The Plaintiff’s case is that on 3rd May, 2015, a fire broke out and damaged its property which it holds the Defendant liable under a policy of insurance executed between them on the 1st July, 2012, renewable annually.   It was stated that when the event happened the certificate of renewal for 1st July, 2014 to 1st July, 2015 was in force.

13. It was also stated that the Debit Note Number NBD 12121-3554 dated 20th September, 2012 contained the following details which were renewed from time to time until the occurrence of the event;

Policy Number:        FD102 1069066

Regarding:                FIRST PREMIUM

Class of Business:    FIRE MATERIAL DAMAGE

First Premium:        KSHS.204,518/=

14.  The Complaint is that the policy document was not handed over to the Plaintiff, and neither were they given any proposal from on the property.  However, an assessment of the risk was carried out by the Defendant to determine the quantum of premium to be paid.

15.   Further, the Plaintiff alleges that when the event occurred, the certificate of renewal contained the following details;

Renewal Premium:      Kshs.241,120. 00

ITEM NO.            INTEREST/DESCRIPTION           LIMIT OF LIABILITY/

OF RISK                                           SUM INSURED

1.  ON BUILDING                                KSHS.68,000,000

2.  ON CONTENTS                              KSHS.10,000,000

3.  ON STOCK                                       KSHS.2,000,000

TOTAL SUM INSURED                       KSHS.80,000,000

16. The Plaintiff asserts that the circumstances under which the fire broke out are those covered under the policy and holds the Defendant liable, although by a letter dated 11th August, 2015, the Defendant disclaimed liability in the following words;

“Please note that it has been established that the fire outbreak was not fortuitous in nature.

For the police to respond, it has to be proven beyond any reasonable doubt that the fire was accidental.  Kindly advise the insured of our inability to deal with the claim.”

Janette Anidhi

Claims Manager

17.  The Plaintiff concludes that the Defendant is liable under the Clause of the policy on fire risks and claim for payment of the sub set out of Kshs.78,000,000/=.

18.  On the other hand, the Defendant’s case is that the Plaintiff had possession of the policy document which it passed through M/S Orient Insurance Agencies Ltd on 25th September, 2012 on inception of the contract.  It stated that the same is a standard document which the Plaintiff’s agent had in their possession.  The Defendant also states that the proposal form was not a mandatory requirement, but it sufficed to act on a risk note, letter, or placing slip.

19.  The Defendant insists that it did supply a certified copy of the original policy document and that the policy schedule attached to policy document was neither issued on 15th September, 2015 nor did it have timelines.

20.  The Defendant alleges that the cause of fire was due to a deliberate act of the Plaintiff hence caught up by strictures of clauses on fire risks.

21. In its conclusion, the Defendant asserts that the loss was estimated at Kshs.20,895,350. 00 and prays that the suit be dismissed with costs.

22.  From an overview of the Plaintiff’s case and submissions, the issues that arise are that:

a)  They are entitled to compensation to the tune of the amount reflected in the policy document being Kshs.8,000,000. 00, less Kshs.2,000,000. 00 that it has  not claimed.

b)  That liability in that once  the listed cause of an event is shown to have happened.

23.  On the other hand, the Defendant in its case and submissions has disputed the cause of the fire and submits that the same ought to have been proved.  It also submits that the amount claimed is exaggerated.

ANALYSIS AND DETERMINATION

24.  From the above observations, having gleaned through the evidence and documents that were presented by both sides, the issues for determination are narrowed down to:-

a)  Whether the Plaintiffs camp and property were damaged through a fire and whether the Plaintiff was linked to the cause of the said fire.

b)  Whether the Defendant is liable under the policy to the Plaintiff to pay Kshs.78,000,000. 00.

c)  Who is to bear costs of the suit and how much?

25.  With regard to whether the Plaintiff’s camp and property was damaged by a fire, it is agreed from the evidence by both sides that indeed a fire broke out and razed down the Plaintiff’s camp and property except for a generator as evidenced by PW3.

26.  As for whether the Plaintiff was linked to the cause of the said fire, the evidence of PW1, PW2, PW3 and PW4 shows that there is no link to the employee or any of the Directors of the Plaintiff to the cause of the said fire that razed down the Plaintiff’s camp and property.  Similarly, DW1 and DW2 in their evidence did not link the said incident to either the Plaintiff and or its workers.  And from the Defendant’s own investigations, it clearly came out that the arsonists were persons not linked to the Plaintiff.

27.  The law is that whoever desires a court to believe  a fact has the onus to prove its existence (See Section 107 of the  Evidence Act).

28.  The next issue is whether the Defendant is liable under the policy to pay to the Plaintiff Kshs.78,000,000/=.  In Kenya, the law on insurance with regard to payment is stated under Section 76 of the Insurance Act Cap 487, which provides as follows:-

“The holder of a policy of insurance issued by an insurer in respect of insurance business carried on by him in Kenya on or after the appointed date shall have the right, notwithstanding any agreement to the contrary contained in the policy of insurance or in any agreement relating thereto, to receive payment of any sum secured thereby in Kenya and to sue for any relief in respect of the policy in Kenya; and if action on the policy is instituted in Kenya, any question of law in connection with the policy or proceedings shall be heard and determined according to the Law in force in Kenya.”

29.  Both sides having agreed that the Plaintiff’s camp and property were razed down by a fire, the Plaintiff’s uncontroverted evidence is that the cause of this fire was as a result of malicious damage which is defined in the same policy document as follow:-

@00043 it is hereby agreed and declared that the insurance under the said  riot and strike endorsement shall extend to include malicious damage which for purposes of this extension shall mean loss or damage to the property insured directly caused by the malicious acts of any person (whether or not such an act is committed in the cause of a disturbance of the public peace) not being an act amounting to or committed in correction with an occurrence mentioned in special condition 6 of the said riot and strike endorsement”.

In addition to exclusion 6 above liability does not arise where fire causing damage was a result of burglary, house breaking, theft or  larceny, or attempted threat or caused by any person taking part in a threat”.

30.  Special Condition 6 expands on the exceptions that exclude liability.  It provides:-

“This insurance does not cover…

a)  War, invasion, act of foreign enemy, hostilities or war-like activities (whether war be declared or not), civil war;

b)  Mutiny, civil commotion…..

c)  Acts of terrorism committed by a person or persons acting on behalf of or in connection with any organization”.

31.  The Defendant’ letter dated 11th August, 2015 repudiating liability limited its field of causation to fortuitous only.  The meaning of fortuitous is, happening unexpectedly, by chance, unanticipated, unexpected, or unforeseen.

32.  Special Condition 6 shifts proof to a party relying on it to show that the cause of fire is not one of the exclusions under it.  The Plaintiff’s witnesses have shown that the cause of fire is as a result of malicious damage which is not one of the events.

33.  It was PW4’s evidence that some persons suspected to be arsonists disappeared into the darkness in the nearby thicket.  There is no investigation report from a competent authority or state security agents which has established that the fire was caused in any other manner and by who.  What is there is what is alleged by the Plaintiff.

34.  I therefore find and hold that the Plaintiff has proved that it is entitled to be compensated by the Defendant.  I am guided by the decision in National Bank of Kenya Ltd –vs- Pipeplastic Sankolit (K) Ltd & Anor [2001]eKLR, where the Court of Appeal stated as follows:- the

“A court of law cannot re-write a contract between the parties.  The parties are bound by the terms of their contract, unless coercion, fraud and undue influence are pleaded and proved”.

In the same case,  the court stated as follows:-

“It is clear beyond para-adventure that save for those special cases, where equity might be prepared to relieve a party from a bad bargain, it is ordinarily n part of equity’s function to allow a party to escape from a bad bargain”.  (Fina ank Ltd –vs- Spares & Industries Ltd, Civil Appeal No.51 of 2000UR)

35.  The next issue for determination is how much the Plaintiff is entitled to be compensated.  Literature is abound on the subject.  Both parties have relied on texts and authorities that define what is meant by indemnity policy and non-indemnity policy.  This is a contract governed by Section 76 of the Insurance Act which we laid out at paragraph 28 of this Judgment.  It is a specific insurance that specifies the value assured.  The Act makes it mandatory that an Insurance Company holding out the policy, ought to pay.

36. The evidence before court reveals that the buildings were reduced to a ramble whereby the Defendant’s loss adjuster put the salvage value at Kshs.200,000. 00. What this means is that it was a total loss.  The sum assured for the buildings was Kshs.68,000,000. 00. This is what is awarded to the Plaintiff.

37. The next item is with regard to the contents in the buildings. From the evidence of PW4, the court was told that what was salvaged was a generator.  The Plaintiff did not avail any evidence on how the generator was the only item salvaged.  There is also no evidence that was adduced to the effect that there were occasional visitors/guests at the camp to rebut the claim that the camp was unoperational. The said item No.2 is therefore declined.

38.  It is worthnoting that the Plaintiff abandoned item number 3.

39.  In the final analysis, I find and hold that the Defendant is liable to pay to the Plaintiff a sum of Kshs.68,000,000. 00, costs of the suit and interest on the sum awarded from the date of filing this suit together with costs from the date of this Judgment at the rate prayed for.

It is hereby so ordered.-

SIGNED, DATED AND DELIVERED VIRTUALLY AT MOMBASA THIS 10TH DAY OF JUNE, 2021.

D. CHEPKWONY

JUDGE

In the presence of:

Mr. Buti Counsel for Plaintiff

Mr. Thuo Counsel holding brief for Mrs. Kingori Counsel for the Defendant

Winnie – Court Assistant