Formax Insurance Limited v Costarica Rentals & Safaris Limited [2024] KEHC 545 (KLR)

Formax Insurance Limited v Costarica Rentals & Safaris Limited (Civil Appeal 331 of 2018) [2024] KEHC 545 (KLR) (Civ) (31 January 2024) (Judgment)

Neutral citation: [2024] KEHC 545 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal 331 of 2018

DAS Majanja, J

January 31, 2024

Between

Formax Insurance Limited

Appellant

and

Costarica Rentals & Safaris Limited

Respondent

(Being an appeal from the Judgment and Decree of Hon. M. Murage, SRM dated 18th June 2018 at the Magistrates Court at Nairobi, Milimani in Civil Case No. 5813 of 2011)

Judgment

Introduction and Background 1. The Appellant appeals against the judgment of the Subordinate Court dismissing its suit. In its case before that court, the Appellant claimed that in 2009, the Respondent requested it to use its services to procure insurance policies on its behalf with Kenindia Assurance Company Limited (Kenindia) and that it was agreed with the parties that the premiums for the said policies would be Kshs 122,249. 00 and that the Respondent was issued with debit notes for the same. The Appellant claimed that the Respondent was credited with a sum of Kshs 93,986 leaving an outstanding balance of Kshs 28,063. 00, which the Appellant claimed the Respondent had refused to pay. The Appellant thus sought this sum together with costs of the suit and interest.

2. In its response, the Respondent admitted seeking the Appellant’s services to procure the said insurance policies from Keninidia. It however stated that on 25. 03. 2010, the Appellant transferred the insurance policies to Jubilee Insurance Company Limited (Jubilee) wherein the Appellant relinquished its claim for outstanding insurance premium and the Respondent waived its outstanding claim settlements against Kenindia. The Respondent averred that this agreement completely discharged it of all claims by the Appellant for the outstanding premiums as at 25. 03. 2010.

3. The Respondent further stated that the insurance premium from the aforementioned date was financed by Giro Bank Limited (Giro Bank) and the applicable installments were paid directly to Giro Bank. Thus, the Respondent stated that there was no cause of action between the parties.

4. In its reply to the Respondent’s defence, the Appellant stated that the said transfer of the insurance policies was at the request of the Respondent and that the agreement of 25. 03. 2010 was to facilitate the Respondent’s borrowing through Insurance Premium Finance Scheme with Giro Bank to pay part of the outstanding premium. The Appellant stated that it did not relinquish its claim for outstanding premium against the Respondent as alleged and that the Respondent did not waive outstanding claim settlements against Kenindia as no such claims existed as none were lodged and supported by documents required as required in law. The Appellant averred that at the time of arrangement for the Respondent to borrow Kshs 1,300,000. 00 through Giro Bank, the outstanding premium was Kshs 2,106,560. 00 and the borrowing left Kshs 806,560. 00 outstanding which has not been paid to date. The Appellant further averred that subsequent premium arrears were incurred by the Respondent until March 2011 when the parties stopped dealings and averred that the same was due and payable by the Respondent to the Appellant. It thus reiterated that there had been no payment, waiver of set-off of the premium due from the Respondent.

5. The matter was set down for hearing where the Appellant called its Technical Manager Titus Nzuki Wambua (PW1) as its witness. The Defendant called its administrator, Johnson Mutua (DW1). After the hearing, the parties were directed to file written submissions and after the lower court considered the same together with the evidence presented, it rendered a judgment on 18. 06. 2018. The Subordinate Court found that the Appellant did not prove that it paid the amount claimed on behalf of the Respondent even though it claimed that it had made payment in advance. That in the agreement of 25. 03. 2010, the Appellant did not make any mention of the balance of the premium and as such failed to demonstrate that it had already paid premiums in advance and that there was a balance due as per the plaint. It is for these reasons that the suit was dismissed and as stated, this decision forms the basis of the instant appeal which the Appellant has grounded in its memorandum of appeal dated 17. 07. 2018. The appeal has canvassed by way of written submissions which are on record and since they rehash the positions taken by the parties that I have already summarized above, I will not highlight the same but only make relevant references to in my analysis and determination below.

Analysis and Determination 6. In determining this appeal, I am cognizant of the role of the first appellate court which it to re-evaluate and re-assess the evidence before the court of first instance and at the same time, keeping in mind the fact that the trial court interacted first hand with the parties (see Selle v Associated Motor Boat Co. [1968] EA 123).

7. Even though the Appellant raises 13 grounds in its memorandum of appeal, it has condensed them to 3 grounds. It urges the court to determine whether having correctly found that indeed Kenindia provided the Respondent with various policy covers, the trial magistrate erred in fact and law in finding that the Appellant had not proved her case that indeed it paid for the premiums in advance on behalf of the Respondent. Whether having correctly found that the Respondent was to pay for the insurance premiums issued to it by Kenindia through the Appellant, the trial erred in law and fact in finding that the Respondent indeed paid for the premiums without any evidence adduced by the Respondent to prove such payments and whether the magistrate erred in law and fact in arriving at a finding that the Memorandum dated 25. 5.2010 was valid and that it related to the parties and the issues in this matter.

8. As noted by the Subordinate Court, it was not in dispute that the Respondent sought the services of the Appellant to procure insurance policies on its behalf from Keninidia and that the premiums were to be paid up front. Further, that sometime in March 2010, the polices were transferred from Keninidia to Jubilee and that the insurance premium was to be financed by Giro Bank. In an agreement/memorandum dated 25. 03. 2010, the Appellant stated in part as follows:As agreed, although the outstanding premium is reflected as Kshs 2,106,560/=, you are to finance the premium amount of Kshs.1,300,000/=, since the remaining amount is to be held by yourselves against outstanding claims settlements from your previous underwriters M/s Keninidia Ass. Co. LtdKindly therefore complete the finance form and return to our offices along with one current and nine subsequent monthly post-dated cheques for Kshs 135,460 each….

9. Even though the Appellant averred that the Respondent never relinquished, set-off or waived any outstanding claims against Keninidia, the above is clear that the same was to be waived and set-off once the Respondent makes payment of Kshs 1,300,000. 00 in instalments and in the manner stipulated above. The Respondent produced copies of 9 cheque vouchers that were received by the Appellant which indicate that the same were for the sums of Kshs 135,460. 00 and thus the Respondent stated that it owed the Appellant nothing in light of this. On its part, the Appellant stated that it had paid insurance premiums in advance and on behalf of the Respondent and thus sought the balance of what had not been paid by the Respondent. The Respondent refuted that the Appellant had made such advance premium payment or that it owed the Appellant for any advance payment. In its testimony, PW1 admitted that there was nothing to prove that it had paid insurance premium on behalf of the Respondent to Keninidia.

10. Section 107 of the Evidence Act provides that “whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exists.” Section 109 therein stipulates that the burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence. It was incumbent upon the Appellant to prove these advance payments to Kenindia. Once this was not done and the Respondent rebutted by producing the said agreement of 25. 03. 2010 which makes no claim of any outstanding premiums meant that the Appellant’s claim remained unsubstantiated and I cannot fault the lower court for coming to this conclusion. Even if the Appellant paid the said premiums in advance, it still had to demonstrate how and when the same was paid, how and when the same was repaid by the Respondent and what balance remained after repayment. This the Appellant did not do and thus, it failed to prove that it had indeed already paid premiums in advance and that the balance due was as per its Plaint.

Disposition 11. The Appellant’s appeal lacks merit. It is dismissed with costs to the Respondent. The costs are assessed at Kshs 30,000. 00

DATED AND DELIVERED AT NAIROBI THIS 31ST DAY OF JANUARY 2024. D. S. MAJANJAJUDGEMr Ali instructed by Ali and Company Advocates for the Appellant.Instructed by Morara Apiemo and Nyangito Advocates for the Respondent.