Directline Assurance Company Limited v Mganga (Legal representative of the Estate of Simon Chilango Kiwila (Deceased) & another [2023] KEHC 27005 (KLR)

Directline Assurance Company Limited v Mganga (Legal representative of the Estate of Simon Chilango Kiwila (Deceased) & another (Civil Appeal 5 of 2022) [2023] KEHC 27005 (KLR) (21 November 2023) (Judgment)

Neutral citation: [2023] KEHC 27005 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Appeal 5 of 2022

DKN Magare, J

November 21, 2023

Between

Directline Assurance Company Limited

Appellant

and

Patience Nyamvula Mganga (Legal representative of the Estate of Simon Chilango Kiwila (Deceased)

1st Respondent

Africa Merchant Assurance Company

2nd Respondent

Judgment

1. This is an appeal from the Ruling and order of the Honourable E Muchoki RM delivered on 25/11/2021. The appellant filed a 5-ground Memorandum of Appeal. The same raised only one issue, that is, whether the Court erred in striking out the defence. In a bid to camouflage the prolixious grounds the appellant pretended to be arguing all the 5 grounds as one. These are not sub-grounds.

2. The Appellant should file a concise Memorandum of Appeal. Under Order 42 Rule, 1 provides are doth: -“1. Form of appeal –(1)Every appeal to the High Court shall be in the form of a memorandum of appeal signed in the same manner as a pleading.(2)The memorandum of appeal shall set forth concisely and under distinct heads the grounds of objection to the decree or order appealed against, without any argument or narrative, and such grounds shall be numbered consecutively.

3. The Court of Appeal had this to say in regard to rule 86 (which is pari mateira with order 42 Rule 1) in the case of Robinson Kiplagat Tuwei v Felix Kipchoge Limo Langat [2020] eKLR: -“We are yet again confronted with an appeal founded on a memorandum of appeal that is drawn in total disregard of rule 86 of the Court of Appeal Rules. That rule demands that a memorandum of appeal must set forth concisely, without argument or narrative, the grounds upon which a judgment is impugned. What we have before us are some 18 grounds of appeal that lack focus and are repetitively tedious. It is certainly not edifying for counsel to present two dozen grounds of appeal, and end up arguing only two or three issues, on the myth that he has condensed the grounds of appeal. This Court has repeatedly stated that counsel must take time to draw the memoranda of appeal in strict compliance with the rules of the Court. (See Abdi Ali Dere v Firoz Hussein Tundal & 2 Others [2013] eKLR) and Nasri Ibrahim v IEBC & 2 Others [2018] eKLR. In the latter case, this Court lamented:“We must reiterate that counsel must strive to make drafting of grounds of appeal an art, not an exercise in verbosity, repetition, or empty rhetoric…A surfeit of prolixious grounds of appeal do not in anyway enhance the chances of success of an appeal. If they achieve anything, it is only to obfuscate the real issues in dispute, vex and irritate the opposite parties, waste valuable judicial time, and increase costs.” The 18 grounds of appeal presented by the appellant, Robinson Kiplagat Tuwei against the judgment of the Environment and Land Court at Eldoret (Odeny, J) dated 19th September 2018 raise only two issues…”

Duty of the Court 4. This being a first appeal, this court is under a duty to re-evaluate and assess the evidence and make its own conclusions. It must, however, keep at the back of its mind that a trial court, unlike the appellate court, had the advantage of observing the demeanour of the witnesses and hearing their evidence first hand.

5. The first issue was whether the amount of 3,446,998 is beyond 3,000,000 statutory limit. Section 5 (b) (iv) of the Insurance Motor Vehicle Third Party Risks) Cap 405 provides that the limit of liability is 3,000,000/=. It provides as doth: -“Requirements in respect of insurance policies.In order to comply with the requirements of section 4, the policy of insurance must be a policy which—(iv)liability of any sum in excess of three million shillings, arising out of a claim by one person.”

6. The question is whether Section 5(b) (iv) repealed Section 26 of the Civil Procedure Act by implication. To answer this question we need to look at the mischief. Onyango v Dockwide Business (K) Limited & another (Civil Appeal 2 of 2022) [2023] KEHC 24086 (KLR) (25 October 2023) (Judgment), I stated as doth:“The duty of the court regarding damages is settled that the state of the Kenya economy and the people generally and the welfare of the insured and injury public must be at the back of the mind of the trial Court.13. The foregoing was settled in the cases of Butter v Butter Civil Appeal No. 43 of 1983 (1984) KLR where the Court of Appealed held as follows as paragraph 8. “In awarding damages, a Court should consider the general picture of all prevailing circumstance and effect of the injuries of the claimant but some degree of uniformity is to be sought in the awards, so regard would be paid to recent awards in comparable cases in local Courts. The fall of value of monies generally, the levelling up and down of the facts of exchange between currencies…should be taken into consideration.”

7. The legislative intent was, therefore, to bring sanity to the awards made by the courts which were astronomical. This was never meant to shield some bogus insurance companies.

8. The court must endeavour to have premiums maintained at a certain optimum level. This is by keeping the awards down. However, any statutory provisions are to be interpreted.

9. Purportedly, in this case, the Section envisaged responsible will regulate insurance companies that settled claims. It never imagined briefcase insurance companies rogue establishments and shylock insurance companies whose main purpose is to collect premiums but not pay. They then essentially leave the insuring public and victims exposed. It cannot be that the insurance company which was to pay Ksh. 2,000,000/= and evades paying till auctioneers knock. At that time the costs of the suit, interest, auctioneer’s and costs of the declaratory suit overshoot to Ksh. 4,000,000/=. The insurance company cannot then wake up from its slumber and claim that they can only pay a maximum of Ksh. 3,000,000/=.

10. This will be recording crime, malice, malingering and bad manners. Bad manners must be punished.

11. In this case the insurance policy was issued in 2016 /20th December. The deceased suffered injuries during the validity of the insurance policy and sued in Kilifi SPMCC 216 of 2018. On 3/6/2020 the Court awarded as follows: -a.General damages Ksh. 1,685,552/=b.General damages under Law Reform Ksh. 100,000/=c.Loss of expectation of use Ksh. 120,000/=d.Special damages Ksh. 782,213/=e.Total Ksh. 2, 687,765/=f.Costs and interest

12. The amount of costs and the award of Ksh. 2,687,765/= was payable upfront. I don’t need to go to the costs. I note they are exaggerated. However, that is to be settled in the decree in the primary suit. In this case, the judgment was below 3,000,000. The Appellant was bound to settle the whole of it together with costs and interest. That is why they should be available to deal with costs and pay before interest escalates. They did not pay.

13. The Respondent filed Mombasa CMCC 674 of 2021 to enforce the judgment in Kilifi SPMCC 216 of 2018. The court below struck out the defendant's Defence and entered judgment for the Plaintiff. The appellant appealed arguing that the court erred in law and in fact. Parties filed submissions. The appellant submitted that suit in No. CMCC No. 216 of 2018 was filed against the Appellants insured and judgment was only 3/6/2021.

14. The respondent filed a declaratory suit being 674 of 2021 on 4/5/2021. They rely on D.T. Dobie & Company (Kenya) Limited v Joseph Mbaria Muchina & Another [1980] eKLR, where the court held that: -“No suit ought to be summarily dismissed unless it appears so hopeless that it plainly and obviously discloses no reasonable cause of action, and is so weak as to be beyond redemption and incurable by amendment. If a suit shows a mere semblance of a cause of action, provided it can be injected with real life by amendment, it ought to be allowed to go forward for a court of justice ought not to act in darkness without the full facts of a case before it.

15. They also relied on the case ofUAP Insurance v Lameck Bororio Mwene (Suing as the Legal Representative of Brian Lameck Momanyi – Deceased) [2019] eKLR, where the court of Appeal held as doth: -“All the defendant is supposed to show is that a defence on record raises triable issues which ought to go for trial and the triable issues raised does not mean a defence that must succeed (see Kenya Trade Combine Ltd v Shah CA 193/99). The Appellant’s defence contains bona fide triable issue and the Defendant should thus be allowed to defend the suit.”

16. They further relied on the case of Georgina Wangari Mwangi v David Mwangi Muteti [2014] eKLR, where Justice H I Ong’undi. There was nothing stated as per the plaintiff’s submisions. The court never decided any of the issues in this matter. It is thus reliance on an irrelevant authority.

17. Kenya Orient Insurance Limited v Zachary Nyambane Omagwa [2021] eKLR, Justice AN Ongeri stated as doth; -“19. In Civil Appeal No. 34 of 2016, Justice Majanja held as follows; “The insurer is not obliged to pay any amount above Kshs. 3,000,000. 00 nor can the decree-holder recover more than that. and they have no basis for denying the claim.”20. If there is any additional amount to be paid, then the same should be recovered from the insured. In Law Society of Kenya v Attorney NBI Petition No. 148 of 2014 [2016]eKLR, Justice Onguto held that“In the end, I hold that the Principal Act does not exclude compensation to affect proprietary rights. It only limits who pays how much by apportioning a maximum of Kshs. 3,000,000/- to be paid by the insurer and the additional sum if any by the insured.”21. The court of Appeal in Civil Appeal 141 of 2016 further stated that “Unfortunately, under the current system, the third party has been left at the mercy of not just the percentages imposed under the schedule, but should there be any excess recoverable, he must contend with pursuing the insured personally. For example, in the case of Georgina Wangari Mwangi v. David Mwangi Muteti, High Court of Kenya Civil Case No 40 of 2013; it was held that the insurance company is to pay a maximum of Ksh.3, 000, 000 with any excess being payable by the insured party. The plaintiff in that case was awarded damages of Kshs. 14,612,540. 20 out of which only Kshs. 3,000,000 was payable by the insurer, with the rest being recoverable from the insured.”

18. The limit of three million in general damages is not contestable. It is a statutory limit. The question arises, where a court awards amounts less than Ksh. 3,000,000/= and the Insurer is either bogus or takes its sweet time to pay. Does it pay the same Ksh 3,000,000/= years later?

19. The example I have in mind is the authority referred to above where damage for 14 million was awarded. The insurer is to pay 3,000,000/ = and the insured 11 million. If both parties delay and interest increases, does the interest also shift to the insured? If a court awards 3,010,000/=. The insured decides to pay 10,000/= leaving the insurance with 3,000,000/=. Ten years later interest will have gone to 7,200,000/=. Will the insurer require the insured to foot the difference of 4,200,000? This cannot be the legislative intent.

20. In this case, the award by the court was far less than 3,000,000/=. The insurance took its sweet time. The amount exceeded three million. It cannot throw the buck to the insured. This will both be unfair to the insured and the other insurance companies with sound practice of paying their fair share of damages.

21. In this respect they state that order 2 rule 15 provides for striking out cases such as the Appellant’s pleading. Their main issue is that they were being asked to cover liability exceeding Ksh. 3 million. This was answered will not what was being asked of them they were required to cover liability Kshs. 2,687, 765/=. They did not do so. The same has resulted in several suits for enforcement together with the attendant costs interests and special damages.

22. Instead of paying they started running all over the courts to stay the decree. The said amount has attracted interest. Interest is not liability arising out of the Accident. It is interest on the amounts due. I do not find a clam that Kshs. 3,4446,995 is beyond the statutory period. The appellant is being dishonest and disingenuous. In the case of George Wangarai Mwangi v David Mwangi Muteti CA 540 of 2013, the court was clear out of 14,612,540. 20 awarded on 3,000,000 was payable.

23. The amount awardable under the decree is increased by two aspects: -a.Costs of the suitb.Interest on unpaid amounts

Costs 24. Section 27 of the Civil Procedure Act provides as doth: -“27. Costs(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.”

25. Costs are awarded for the amounts incurred for litigation. It is not a sum arising out of the claim. If the insurance companies pay claims before suits are files, then they will not incur legal costs. The very reason they cannot refuse to pay their advocates for work done is simply because there is a limit.

Interest 26. The second element is interest. This is the cost of delaying in making payments. It does not arise out of the accident. It arises out of nonpayment of the claim. Section 26 of the Civil Procedure Act provides as doth: -“26. Interests(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 concerning 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.

27. The limit under section 5(b) (iv) of the Insurance (Motor Vehicles Third Party Risks) Act is not a carte blanche for insurance companies not to pay. The proportionating award shall always attract interest till payment in full. Waiting to pay 3,000,000 before after some months is untenable.

28. I have perused a draft defense. The same raises no issues, triable of otherwise. In the case of Raghbir Singh Chatte v National Bank of Kenya Limited [1996] eKLR, the Court of Appeal stated as doth: -“The main object of this rule and r.14 is to bring the parties by their pleadings to an issue, and indeed to narrow them down to definite issues, and so diminish expense and delay, especially as regards the amount of testimony required on either side at the hearing (per Jessel M. R. in Thorp v Holdsworth (1876) 3 Ch. D. 637). This object is secured by requiring that each party in turn should fully admit or clearly deny every material allegation made against him. Thus, in an action for a debt or liquidated demand in money, a mere denial of the debt is wholly inadmissible”, (underling supplied).I will also add that the crucial deficiency of a general denial which I have already described, also applies to the evasive, inconsistent and contradictory alternative general traverse in the appellant’s defence. This was that if the respondent had extended any overdraft facilities without stating the amount involved, to the appellant which was moreover, denied, then the same and here again, without stating how and when, had been paid. Such a spurious pleading in the alternative cannot give any merit to the defence and so also makes it one which discloses no reasonable defence for all purposes including that of 0 6 r 13(1)(a).”

29. There is no defence that the amount was settled. The issues raised a just red herrings meant to hood wink the Court into wasting precious time.

30. In the circumstances, I find no merit in the Appeal.

31. Accordingly, the same is dismissed with costs.

Determination 32. The upshot is the foregoing is that I make the following orders: -a.The appeal lacks merit and is accordingly dismissedb.The Appellant is to have costs of Kshs. 176,750/= payable within 30 days in default execution to issue.c.The file is closed.

DELIVERED, DATED AND SIGNED AT MOMBASA ON THIS 21ST DAY OF NOVEMBER, 2023. JUDGMENT DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORM.KIZITO MAGAREJUDGEIn the presence of:Miss Ng’ang’a for RespondentNduta for the AppellantCourt Assistant – Brian