Direct Line Assurance Company Limited v Sospeter [2022] KEHC 17210 (KLR)

Direct Line Assurance Company Limited v Sospeter (Civil Appeal E237 of 2020) [2022] KEHC 17210 (KLR) (Civ) (10 November 2022) (Judgment)

Neutral citation: [2022] KEHC 17210 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E237 of 2020

DO Chepkwony, J

November 10, 2022

Between

Direct Line Assurance Company Limited

Appellant

and

Esther Muthoni Sospeter

Respondent

(Being an Appeal from the Judgment and Decree of the Chief Magistrate’s Court at Nairobi delivered on 28th May, 2020 by Hon. P.N. Gesora (Mr) CM in Nairobi Chief Magistrate’s Civil Case No.1350 of 2017)

Judgment

Background 1. The background of this appeal is that on March 6, 2017, the respondent filed a suit by way of a plaint seeking for the following prayers;a.An injunction to compel the defendant to pay the plaintiff the sum of Kshs 5,250,000/= as the value of the suit motor vehicle pending the hearing and determination of the suit.b.Special damages of Kshs 120,000/= plus daily loss of user in the sum of Kshs 14,000/= from July 6, 2017 until payment in full.c.General damages for breach of contract.d.Costs of the suit.

2. The respondent alleged that at all material times the appellant issued a comprehensive insurance cover for the respondent’s passenger motor vehicle registration number KCF 438Z.

3. The value of the motor vehicle insurable sum over the vehicle was Kshs 6,500,000/= on which monthly premium for the insurance was pegged. It was a term of the said policy of insurance that should the said motor vehicle be damaged to the extent of being written off, the appellant would pay the respondent the said sum of Kshs 6,500,000/= less depreciation of the said vehicle.

4. It was a further term of the contract of insurance that any damage to the motor vehicle that exceeded more than half the value of the motor vehicle at the time of the damage meant that would be regarded as an amount to the said motor vehicle being regarded as a write off.

5. On or about December 6, 2016, the motor vehicle was involved in an accident along Mombasa-Nairobi road near Voi resulting in serious damage to the said vehicle. The vehicle was towed to Voi Police Station and later to a garage at Ukunda in Kwale county for the assessment of the damage and possible repairs.

6. The motor vehicle was seriously vandalized in the hands of the police at Voi Police Station as major parts of the motor vehicle were removed thereby depleting the value of the motor vehicle.

Evidence 7. The matter proceeded for hearing before the trial court on May 29, 2019 whereby the respondent called three witnesses, namely, PW1, PW2 and PW3 herself, who testified in support of her case. The appellant on the other hand called two witnesses DW1 and DW2 who testified on August 19, 2019 and September 23, 2019 respectively.

8. PW1-Eric Otieno Ayieko testified on May 29, 2019. He averred that he is a motor vehicle assessor and valuer with a bachelor’s degree in automotive engineering, having 15 years experience. He stated that on February 17, 2017 he received instructions from the respondent to assess a motor vehicle that was in a garage in Kwale. That he did the assessment and prepared a report wherein the total costs for parts and repairs to Kshs 2,529,000/=. The value of the motor vehicle was Kshs 5,250,000/= at the time. He further stated that the garage Kismart Auto Fabricators had given a quotation of Kshs 3,911,545/=. On cross-examination PW1, declared the vehicle was written off.

9. PW2-Hamisi Said, while giving evidence stated that he has a garage and gave a quotation of Kshs 3,900,000/=. He said that when he received the motor vehicle, there were some parts that were missing. On cross-examination PW2, stated that he received the motor vehicle on January 8, 2017. The accident had occurred a month earlier and the respondent’s assessors gave an estimate of Kshs 2,200,000/= which was below the Kshs 3,900,000/=.

10. PW3-Esther Muthoni testified that she is a business lady in the transport industry and the owner of motor vehicle registration number KCF 438Z. she went on to state that the motor vehicle was involved in an accident when it collided with a trailer and was towed to Voi Police Station, having been damaged on the front part. The same was assessed at Kshs 2,200,000/= and she declined to accept it. The vehicle was vandalized while at the police station. She also stated that she got a registered assessor who assessed it at Kshs 3,300,000/=. PW3 prayed to be compensated a sum of Kshs 5,200,000/= as the value of the vehicle. On cross-examination, PW3 claimed for breach of contract as she claimed to have lost business from the date of accident to date. She also stated that if the repair costs are above 50%, the same be declared a write off.

11. The defence called a total of two witnesses in support of its case. DW1-Michael Mwangi Rujugi stated that he is a motor vehicle assessor and did author the assessors report dated January 22, 2017. The first assessment was Kshs 2,200,000/= and Kshs 2,288,680/= in a second report. Investigations carried out indicated that the motor vehicle was vandalized at the police station. He testsified that Kismart Auto Fabricators gave an estimate of Kshs 3,900,000/= while Duma Assessors gave an estimate of Kshs 3,300,000/=. Lastly, he stated that the motor vehicle was repairable.

12. On cross-examination, DW1 stated that the motor vehicle was vandalized and blamed the insured. The pre-accident value was Kshs 6,500,000/= while the salvage value was Kshs 2,500,000/=. He did not know whether the mechanic would have fixed the motor vehicle. The other assessors gave an estimate of Kshs 3,300,000/=.

13. DW2-Kelvin Ngure testified that he works for the appellant as the deputy claims manager. He stated that as per the plaint, it was a term of the contract that any damage that exceeds ½ the value of the motor vehicle, would render the motor vehicle a write-off. He also stated that they get assessment report and the appellant decides what to do and they can either order for repair or cash payment or write off the vehicle.

14. On cross-examination, DW2 stated that the vehicle was comprehensively insured and all premiums and excess were paid. That there was no agreement on repair costs. The repairer had to give its repair costs at Kshs.3,700,000/= and the appellant’s was Kshs.2,800,000/=. He clarified that it is the Insured and not the Insurer who can authorize repairs on a motor vehicle. He averred that an internal assessor did not visit the garage and suggested that the motor vehicle was repairable. He then stated that the only issue was the cost of repairs and can only indemnify her within their terms and conditions.

15. Upon considering the evidence, the trial court delivered judgment in favour of the respondent for a sum of Kshs 5,250,000/=, special damages of Kshs 120,000/= plus costs and interest.

16. Being dissatisfied with the judgment and decree of the trial court, the appellant preferred an appeal before this court. The appellant in their memorandum of appeal dated June 19, 2020 cited the following grounds of appeal;a.That the learned trial magistrate erred in fact and in law by ignoring the appellant’s evidence on record and therefore misdirected himself when he failed to appreciate the salient terms of the contract of insurance governing the relationship between the appellant and the respondent which were:i.The appellant would indemnify the respondent against loss and damage to the insured vehicle in accordance with section 1a clause 1 of the motor vehicle policy insurance;ii.In indemnifying the respondent, the appellant would at its own discretion either repair, reinstate, compensate the respondent by paying to the respondent cash in lieu of lost or damaged parts;iii.The liability of the appellant under the policy would not exceed the value of the parts lost or damaged and the reasonable costs of fitting such parts. Further, in the event that the appellant opted to pay the respondent cash in lieu of missing parts, the value of such parts would be determined by the appellant and would be subject to a 20% discount of their value in accordance with section 1a clause 1 of the policy of insurance.iv.The indemnity provided to the respondent under the insurance policy did not extend to any consequential loss suffered by the respondent or to depreciation and wear and tear to the insured vehicle in accordance with section 1b clauses 1(a) and 1(b) of the policy of insurance; andv.In the event of own damage to the insured vehicle, the respondent would be entitled to compensation up to the pre-accident value of the motor vehicle (in accordance with clause (b) of the policy schedule).b.That the learned trial magistrate erred in fact and in law and further misdirected himself by purporting to amend the terms of the insurance contract when it held that the appellant was legally bound to indemnify the respondent by paying the respondent the pre-accident value of the insured motor vehicle.c.That the learned trial magistrate erred in fact and in law and further misdirected himself by placing undue weight to the respondent’s evidence that the appellant unreasonably delayed in repairing the insured motor vehicle while at the same time neglecting the appellant’s evidence that it was the respondent who occasioned the delay (if any) by declining repairs to the insured motor vehicle and demanding that the same be written-off.d.That the learned trial magistrate erred in law and in fact and further misdirected himself by failing to find and/or appreciate that contracts of insurance are founded on the doctrine of utmost good faith (uberrima fidei) and the respondent was in breach of the same by frustrating the appellant’s efforts to perform its contractual obligations by undertaking repairs on the insured motor vehicle having found the same repairable.e.That the learned trial magistrate erred in law and in fact by substituting the respondent’s prayer for a mandatory injunction with a prayer for general damages of Kshs 5,250,000/= which was not pleaded in the plaint.f.That the learned trial magistrate erred in law and in fact and further misdirected himself by failing to appreciate that the respondent’s prayer for a mandatory injunction pending the hearing and determination of the suit had been overtaken by events.g.That the learned trial magistrate erred in law and in fact in making an award of Kshs 5,250,000/= as special damages which were neither pleaded nor proved.h.That the learned trial magistrate erred in law in awarding the respondent interest on the award of Kshs 5,250,000/= from the date of filing suit until payment in full yet the award fell in the category of general damages which ought to attract interest from the date of judgment.i.That the learned trial magistrate erred in law and in fact by failing to consider the appellant’s submissions and binding authorities and in doing so arrived at an erroneous decision.j.That the learned trial magistrate erred in law by placing undue reliance on a decision which was arrived at per incuriam and made in obiter to arrive at his decision.Reasons wherefore the appellant pray for orders: -a.That the appeal be allowed.b.That the judgment and decree of the subordinate court delivered on May 28, 2020 be set aside and substituted with an order dismissing the respondent’s suit before the subordinate court; andc.That the respondent do pay the costs of this appeal as well as the appellant’s costs before the subordinate court.

17. On February 28, 2022 this court issued directions that this appeal shall be disposed of by way of written submissions. Both parties complied with this court’s directions and the appellant’s submissions are dated May 20, 2022 while the respondent’s submissions are dated July 13, 2022.

Analysis and Determination 18. I have considered the grounds of appeal, the memorandum of appeal in light of the proceedings before the trial court and the rival submissions by both parties. As the first appellate court, this court has a duty to analyse and re-evaluate the evidence adduced before the trial court afresh and make its own inference while bearing in mind that the trial court had the benefit of hearing and seeing the witnesses testify.

19. This is the position taken by the court in the case of Selle & another v Associated Motor Boat Co Ltd & others (1968) EA 123, where the court stated as follows;“The appellate court is not bound necessarily to accept the findings of fact by the court below. An appeal to the Court of Appeal form a trial by the High Court is by way of a retrial and the principles upon the Court of Appeal acts are that the court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect, in particular the court is not bound necessarily to follow the trial Judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanour of a witness is inconsistent with the evidence in the case generally.”

20. The same position was reiterated by the Court of Appeal in the case of Bashir Ahmed Butt v Uwais Ahmed Khan (1982-88) KAR, where it was held that:“An appellate court will not disturb an award for general damages unless it is so inordinately high or low as to represent an entirely erroneous estimate. It must be shown that the judge proceeded on wrong principles, or that he misapprehended the evidence in some material respect and so arrived at a figure which was either inordinately high or low...”

21. From the evidence adduced, this court is satisfied that there was no dispute that at the material time of the accident there was a valid contract between the appellant and the respondent.

22. It is not also in doubt that the appellant provided a comprehensive insurance cover for the respondent’s motor vehicle registration number KCF 438Z with effect from December 31, 2015 to December 30, 2016 being policy No 7xxx1.

23. The occurrence of the accident on December 6, 2016 was also not disputed by either of the parties. In any event several documents have been produced to confirm that the accident occurred and the motor vehicle was towed to Voi Police Station.

24. According to the appellant’s pleadings, the only contention is that the trial court ventured into re-writing the contract between the parties and went ahead to issue an award of damages which was not pleaded in the plaint.

25. I have had the opportunity to peruse the pleadings and in particular the plaint. I note that amongst the respondent’s prayers before the trial court was an injunction to compel the defendant to pay the plaintiff the sum of Kshs 5,250,000/= as the value of the suit motor vehicle pending the hearing and determination of the suit.

26. The appellant submitted that the decision to repair or write-off a vehicle involved in an accident is solely on the appellant after engaging a competent motor vehicle assessor. Having proved that the contract allows the appellant the discretion to repair or write-off a motor vehicle, the courts ought not to have changed that clause in its judgment.

27. It is important to note that the purpose of an insurance contract is to take back the Insured to the same position it was in before the loss. This is what the principle of indemnity entails. The Black’s Law Dictionary 10th Edition has defined indemnity as:-“To reimburse (another) for a loss suffered because of third parties or one’s own act or default.”

28. In the Indian Supreme Court case of United India Insurance Company v Kantika Colour Lab & others, civil appeal No 6337 of 2001, the court stated as follows:-“Contracts of insurance are generally in the nature of contracts of indemnity. Except in the case of contracts of life insurance, personal accident and sickness or contracts of contingency insurance, all other contracts of insurance entitle the assured for the reimbursement of actual loss that is proved to have been suffered by him. The happening of the event against which insurance cover has been taken does not by itself entitle the assured to claim the amount stipulated in the policy. It is only upon proof of the actual loss, that the assured can claim reimbursement of the loss to the extent it is established, not exceeding the amount stipulated in the contract of Insurance which signifies the outer limit of the insurance company’s liability. The amount mentioned in the policy does not signify that the insurance company guarantees payment of the said amount regardless of the actual loss suffered by the insured. The law on the subject in this country is no different from that prevalent in England; which has been summed up in Halsbury’s Laws of England – 4th Edition.”

29. From the record of appeal the respondent was able to prove that indeed the accident occurred and was therefore entitled to compensation in line with the policy of insurance with the appellant.

30. The prayers as enumerated in the plaint before the trial court and more importantly prayer No (a) were intended to ask the court for compensation to the initial position before the loss occurred.

31. In this case, the respondent sought the trial court to issue an injunctive order to compel the appellant to pay Kshs 5,250,000/= as the value of the suit motor vehicle.

32. It is my considered view that the aforementioned prayer before the trial court and the eventual award was meant to compensate the respondent for the loss suffered as a result of the accident.

33. From the evidence adduced from before the trial court, the question of whether the motor vehicle was written off is in the affirmative as the evidence points to the same.

34. I have had a chance to read the reports prepared in regard to the said accident. I am of the view that the vehicle in question was unrepairable contrary to the position taken by the appellant. On interest and costs, it is trite law that an award of interest is discretionary in nature, hence an award of interest is dependent on a judicial officer.

35. Section 26(2) of the Civil Procedure Act provides that:“1)Where and in so far as a decree is for the payment of money, the court may, in the decree, order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged from the date of the suit to the date of the decree in addition to any interest adjudged on such principal sum for any period before the institution of the suit, with further interest at such rate as the court deems reasonable on the aggregate sum so adjudged from the date of the decree to the date of payment or to such earlier date as the court thinks fit.2)Where such a decree is silent with respect to the payment of further interest on such aggregate sum as aforesaid from the date of the decree to the date of payment or other earlier date, the court shall be deemed to have ordered interest at 6 per cent per annum.”

36. Section 27(2) of the CivilProcedureAct provides as follows:“1)Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incidental to all suits shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid; and the fact that the court or judge has no jurisdiction to try the suit shall be no bar to the exercise of those powers: Provided that the costs of any action, cause or other matter or issue shall follow the event unless the court or judge shall for good reason otherwise order.2)The court or judge may give interest on costs at any rate not exceeding fourteen per cent per annum, and such interest shall be added to the costs and shall be recoverable as such.”

37. In view of the above-provisions, I find it was therefore proper for the trial court to arrive at the conclusion that the appellant was liable to indemnify the respondent the value of the insured motor vehicle in terms of the insurance policy or any loss arising from the material accident as this court would arrive at a similar position based on the evidence that was adduced before the trial court.

38. In the end, I find that the appeal is devoid of merit and is hereby dismissed with costs to the respondent.

It is so ordered.JUDGMENT DELIVERED VIRTUALLY, DATED AND SIGNED AT NAIROBI THIS 10TH__ DAY OFNOVEMBER__ , 2022. D. O. CHEPKWONYJUDGE