Fidelity Shield Insurance Company Limited v Karuri [2025] KEHC 4359 (KLR)

Fidelity Shield Insurance Company Limited v Karuri (Civil Appeal E032 of 2022) [2025] KEHC 4359 (KLR) (Civ) (3 April 2025) (Judgment)

Neutral citation: [2025] KEHC 4359 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E032 of 2022

AC Mrima, J

April 3, 2025

Between

Fidelity Shield Insurance Company Limited

Appellant

and

James Mwangi Karuri

Respondent

(Being an appeal from the Judgment and decree of Hon. A. N. Makau [Principal Magistrate] delivered on 21st December 2021 in Milimani CMCC Case No. E4146 of 2021)

Judgment

1. The appeal subject of this judgment was necessitated by the judgment of the trial Court rendered on 21st December 2021 where the Court in allowing the claim found that the Appellant herein did not prove any misrepresentation on the part of the Respondent as to amount to a repudiation of the contract of insurance between the parties.

2. In its quest to challenge the above decision, and that the appeal be allowed with costs and the judgment be set aside, the Appellant preferred the following grounds of appeal: -1. That the learned Magistrate erred and misdirected herself in law and fact in failing to address the issue of misrepresentation of material facts and its effect on the contract between the parties.2. That the learned Magistrate erred and misdirected herself in law and fact in failing to take into account the issues for determination presented by the Appellant.3. That the learned Magistrate erred and misdirected herself in law and fact by applying the wrong and or did not apply the correct law, tests, doctrines and principles relating to evidence produced by the Appellant.4. That the learned Magistrate erred in fact and law in failing to consider the evidence on record and the vast submissions made by the Appellant.5. That the learned Magistrate erred in law and fact by taking irrelevant matters or by not taking relevant matters/evidence into consideration.

3. The brief background of the appeal is that the Respondent herein, James Mwangi Karuri, instituted Milimani CMCC Case No. E4146 of 2020 [hereinafter referred to as ‘the suit’] against the Appellant herein,Fidelity Shield Insurance Company Limited, vide a Plaint dated 12th August 2020. The Respondent averred that he had comprehensively insured his motor vehicle registration number KCL 481Q [hereinafter referred to as ‘the vehicle’] with the Appellant under Policy Number CBD/P/503/141306/19 and that on 12th October 2019 as he was driving the vehicle along Thika Super Highway, he was involved in an accident after the vehicle had a tyre burst, veered to the left side of the road and hit the guard rails. The vehicle sustained extensive damage such that it was declared written off on assessment. Upon the Respondent’s lodging his claim with the Appellant, the Appellant declined to honour it alleging that the Respondent was guilty of non-disclosure of material facts. It is as a result of the Appellant’s failure to compensate the Respondent that the suit was filed. The Respondent claimed for the sum Kshs. 475,800/= with costs and interest.

4. The Appellant resisted the suit by filing a Statement of Defence dated 25th September 2020 wherein it inter alia averred that the Respondent misrepresented facts on how and where the accident occurred. The suit was eventually heard. The Respondent testified as PW1 and called a witness one Patrick Mwangi [PW2] who had assessed the vehicle after the accident. On its part, the Appellant called two witnesses being a Private Investigator one John Githinji [DW1] and Chrispinus Maina [DW2] the Appellant’s Claims Analyst. Several exhibits were produced in evidence.

5. Upon closure of the parties’ cases, written submissions were filed and the trial Court rendered its judgment on 21st December 2021 in favour of the Respondent. It was that decision that resulted to the instant appeal.

6. The appeal was canvassed by way of written submissions where both parties duly complied. The Appellant’s submissions were dated 14th March 2024 and the Respondent’s submissions were 15th March 2024. Each party persuaded the Court to find in its favour and referred to several decisions thereto whose gist shall be considered later in this decision.

7. From the perusal of the record of appeal, the parties’ submissions and the decisions referred to, it is now for this Court determine whether there was misrepresentation of material facts by the Respondent that amounted to the repudiation of the contract of insurance between the parties.

8. The starting point is what misrepresentation means. Courts have, over time, dealt with the term. In Kelvin Mutua and 197 Others vs. Athi Water Services Board (2021) eKLR the Court defined the word misrepresentation as follows: -Mary Charman in her book Contract Law defines misrepresentation as follows; A misrepresentation is an untrue statement of fact, made by one party to a contract to another, which is not a term of the contract, but has an inducing effect on it. [emphasis added]

9. Further, at paragraph 36, the Court proceeded to posit that: -Misrepresentation of facts can be made by carelessly issuing facts without checking the actual details. Also, misrepresentation can be a deliberate lie, intended to deceive and stated in the full knowledge that it is untrue. An innocent party in both types of misrepresentation is entitled to rescind the contract if he chooses to (Mary Charman, 2007, pg. 179).

10. Additionally, the Court in Sachin Shaha v Jagat Mahendra Kumar Shah & another [2020] eKLR held in paragraph 30 as follows: -…As to the relationship between non-disclosure and misrepresentation, Chitty on Contracts, General Principles, 31st Edition states:Non-disclosure. The general rule is that mere non-disclosure does not constitute misrepresentation, for there is, in general, no duty on the parties to contract to disclose material facts to each other, however dishonest such non-disclosure may be in particular circumstances.But there are exceptions to the general rule that there is no duty to disclose. First, there are many statutory exceptions. Second, there are exceptions at common law where the contract is within the class of contracts uberrimae fidei, where there is a fiduciary relationship between the parties, and where failure to disclose some facts distorts a positive representation. It is also possible for a person to be guilty of misrepresentation by conduct.

11. The Meriam Webster Dictionary defines misrepresentation as follows: -… a false or misleading representation, often made intentionally to deceive or cause harm, which can be verbal, by conduct, or even through nondisclosure or concealment.

12. Deriving from the foregoing, the term misrepresentation generally relates to an intentional false act or conduct, whether orally or by deed, aimed at misleading a fact. On this issue, the Appellant alleged that the Respondent was not forthright on the exact place where the accident occurred, who was driving the vehicle, what the vehicle was being used for at the time of the accident and whether the driver had a valid driving licence. It also alleged that there were several inconsistencies and discrepancies which the trial Court overlooked and thereby unfairly found fault on the Appellant.

13. The Respondent testified on how and where the accident occurred. He also called a witness and produced exhibits including the Appellant’s Claim Form he filled. A close scrutiny of the pleadings, the statements, the exhibits and the evidence make it difficult to comprehend exactly what the Appellant’s complaint was all about. This Court so states since there’s ample evidence on the exact place where the accident occurred, who was driving the vehicle and what the vehicle was being used for at the time of the accident. On the issue as to whether the driver had a valid driving licence, the record is silent on the same and as such the issue cannot be raised at the tail-end through submissions.

14. To this Court, the Respondent fully discharged his burden and that rendered the Appellant liable to satisfy the decree. According to the record, there is no evidence of any misrepresentation either as alleged or otherwise as against the Respondent.

15. Since the appeal was centred on the alleged misrepresentations and having found that none of such were proved, it is this Court finding and holding that the appeal is unsuccessful and is hereby dismissed with costs.

16. Orders accordingly.

DELIVERED, DATED AND SIGNED AT NAIROBI THIS 3RD DAY OF APRIL, 2025. A. C. MRIMAJUDGEJudgment virtually delivered in the presence of:Mr. Mugambi, Learned Counsel for the Appellant.Mr. Kimani, Learned Counsel for the Respondent.Michael/Amina – Court Assistants.