Geminia Insurance Company Limited v Kithinji; Irungu (Interested Party) [2022] KEHC 487 (KLR)

Geminia Insurance Company Limited v Kithinji; Irungu (Interested Party) (Civil Suit E009 of 2021) [2022] KEHC 487 (KLR) (12 May 2022) (Ruling)

Neutral citation: [2022] KEHC 487 (KLR)

Republic of Kenya

In the High Court at Embu

Civil Suit E009 of 2021

LM Njuguna, J

May 12, 2022

Between

Geminia Insurance Company Limited

Plaintiff

and

Jeremiah Ngari Kithinji

Defendant

and

Peterson Waweru Irungu

Interested Party

Ruling

1. The matters for determination are the notices of preliminary objection dated 11. 02. 2022 and 03. 12. 2021 brought by the defendant and the interested party seeking same orders and based on the grounds that:i.The suit is fatally defective as it offends the mandatory provisions of section 10 of the Insurance (Motor Vehicle Third Party Risks) Act Cap 405 Laws of Kenya.ii.The suit is fatally defective since no leave was sought to file the instant suit.

2. The plaintiff filed a replying affidavit sworn by Javan Ombado, in which he deposed that the provisions of Section 10(4) of the Insurance (Motor Vehicle Third Party Risks) Act Cap. 405 has no application to the current suit as the same is founded on fraud and not on misrepresentation of facts or non-disclosure of material facts. That after the accident they instructed Explicit Insurance Investigators & Assessors Limited to conduct investigations which revealed that the defendant had obtained insurance cover MPC/NYI/2020/228855 – comp. commencing on 1/12/2020. Further, they obtained information, which they verily believed to be true that as at the time of the accident, the defendant had a subsisting insurance cover with Trident Insurance Company Limited vide Insurance policy No. 010/070/1/096356/2018 which was expiring on 23/02/2021. That they were also able to establish that the policy alleged to have been insured by them had been obtained on 4/12/2020 a day after the occurrence of the accident and backdated to commence on 1/12/2020, which act by the defendant was fraudulent and as such, their claim is based on fraud and they are within the statutory period to file the suit.

3. The preliminary objections were canvassed by way of written submissions and the parties herein complied.

4. The interested party submitted that the suit herein is fatally defective as it offends the mandatory provisions of section 10 of the Insurance (Motor Vehicle Third Party Risks) Act Cap 405 Laws of Kenya. Reliance was placed on the case of Speaker of the National Assembly v James Njenga Karume [1992] eKLR. That the suit herein was filed 4 months after the service of the statutory notice by the interested party in Embu CC No. 49 of 2021 upon the plaintiff, which is outside the 3 months period within which they were to file the subject suit and therefore for failure to abide by the strict provisions of the Act, their right to rely on the said provision was extinguished. Reliance was made on the cases of Gateway Insurance Limited v Moses Jaika Luvai [2008] eKLR and Britam General Insurance co Ltd v Josephat Ondiek[2018] eKLR. Further, failure to seek leave to file the suit out of the three months period was fatal and the suit is liable to being struck out. Reliance was placed on the case of Patrick Kiruja Kithinji v Victor Mugira Marete [2015] eKLR. In the end, this court was urged to allow the preliminary objection as the same is merited.

5. The defendant submitted that the plaintiff’s suit should be struck out on the grounds that the suit is fatally defective as it offends the mandatory provisions of section 10 of the Insurance (Motor Vehicle Third Party Risks) Act Cap 405 Laws of Kenya as the same was filed without leave of the court. That, at all material times relevant to this suit, the defendant was the registered owner of Motor Vehicle KCH 851C which was insured by the defendant vide policy number MPC/NYI/2020/228855, commencing on 01. 12. 2020 and expiring on 01. 12. 2021. That on 03. 12. 2020, the defendant’s aforesaid motor vehicle was involved in an accident with motor vehicle registration number KAU 585C and the defendant’s motor vehicle was extensively damaged. It was submitted that the defendant informed the plaintiff of the said accident and the plaintiff caused the said motor vehicle to be towed to Racy Auto garage for purposes of being repaired. That the plaintiff then refused to pay repair fees which was an afterthought and which resulted to the plaintiff instituting the suit herein seeking for a declaration that the defendant had breached the insurance contract. Reliance was made on the case of Kenyan Alliance Insurance company Limited v Naomi Wambui Ngira & another (Suing as the legal representative and administrator of the estate of Nelson Machari Maina (Deceased) [2021] eKLR. In the end, it was prayed that the suit herein be struck out with costs to the defendant.

6. The plaintiff on its part submitted that the preliminary objection ought to fail as it is not based on a pure ground of law. That the Insurance (Motor Vehicle Third Party Risks) Act Cap 405 Laws of Kenya provides the duty of insurer to satisfy judgments against persons insured. The plaintiff submitted that the case herein is based on fraud and has nothing to do with a claim against the insured by a third party, and that the same falls outside of the ambits of section 10 Cap 405. That the plaintiff was not the insurer of the defendant at the time of the accident. Reliance was placed on the case of Paul Mutsya v Jubilee Insurance Company of Kenya Limited [2018] eKLR. It was further submitted that the interested party should institute a claim against the defendant and the insurance company (Trident Insurance Company) which had insured the motor vehicle at the time of the accident. In the end, it was prayed that the preliminary objection herein be dismissed as the same are misplaced.

7. The Court has carefully read and considered the grounds in support of the preliminary objections and the written submissions by the parties. The issue for determination is whether the preliminary objections are merited.

8. A Preliminary Objection is clearly defined in the case of I N & 5 others v Board of Management St G. School Nairobi & another (2017) eKLR where it was stated:-“Definition of a preliminary objection 7. I find it necessary to define what constitutes a preliminary objection on a point of law. A preliminary objection must first, raise a point of law based on ascertained facts and not on evidence. Secondly, if the objection is sustained, that should dispose of the matter. A preliminary objection is in the nature of a legal objection not based on the merits or facts of the case, but must be on pure points of law.

8. It may be noted that preliminary objections are narrow in scope and cannot raise substantive issues raised in the pleadings that may have to be determined by the court after perusal of evidence. Understanding the nature and scope of preliminary objections is very important for practicing lawyers. Knowing how to raise a properly formulated preliminary objection, and when to raise it, can save a lot of time and costs.

9. Discussing what constitutes a preliminary objection, Law JA in Mukisa Biscuit Manufacturers Ltd v Westend Distributors Ltd said:-“...so far as I am aware, a preliminary objection consists of a pure point of law which has been pleaded, or which arises by clear implication out of pleadings, and which if argued as a preliminary objection may dispose of the suit. Examples are an objection to the jurisdiction of the court, or a plea of limitation, or a submission that the parties are bound by the contract giving rise to the suit, to refer the dispute to arbitration."10. In the words of Sir Charles Newbold P at page 701, B:-“...A preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. The improper raising of preliminary objections does nothing but unnecessarily increase costs and, on occasion, confuse the issues, and this improper practice should stop.”

10. Thus, a preliminary objection may only be raised on a pure question of law where there is no contest as to the facts. The facts are deemed agreed, as they are prima facie presented in the pleadings on record.

11. The written law governing contracts of insurance is found in section 10 of Insurance (Motor Vehicle Third Party Risks) ActCap 405 Laws of Kenya and it provides as follows:“(1)if after a policy of insurance has been effected, judgement is respect of any such liability as is required to be covered by a policy under paragraph 5 being a liability covered by the terms of the policy is obtained against any person insured by the policy, then notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the persons entitled to the benefit of the judgement any sum payable there under in respect of the liability, including any amount payable in respect of loss and any sum payable in respect on that sum by virtue of any enactment relating to interest on judgement”“(4)No sum shall be payable by an insurer under the foregoing provisions of this section if, in an action commenced before, or within time mention after the commencement of the proceedings in which the judgement was given, he has obtained a declaration that, apart from any provisions contained in the policy he is entitled to avoid it on the ground that it was obtained by the non-disclosure of a material fact, or by a representation of fact which was false in some material particular, or if he has avoided the policy on that ground, that he was entitled so to do apart from any provision contained in it provided that an insurer who has obtained such declaration as a foresaid in an action shall not thereby become entitled to the benefit of this sub-section as respects any judgement obtained in proceedings commenced before the commencement of that action, unless before or within fourteen days after the commencement of that action he has given notice thereof to the person who is the plaintiff in the said proceedings specifying the non-disclosure of false representation on which he proposes to rely, and any person to whom notice of such action is so given shall be entitled if he thinks fit to be made a party to”

12. In the present case, the accident occurred on the 3. 12. 2020. The plaintiff filed the suit herein on the 8th day of September, 2021 against the defendant for a declaration that the defendant has breached the insurance contract in respect of motor vehicle KCH 851C and a further order of declaration that it avoids all claims of liability and satisfaction of all decrees that may arise or be issued against it in respect of policy No. MPC/NYI/ 2020/228855 comp.

13. In his submissions, the interested party, contended that the suit was filed out of time. He averred that he was one of the passengers in motor vehicle KAU 585C and he has sued the defendant herein for compensation in Embu CMCC No. 49 of 2021. Further that, he served the plaintiff with a statutory notice in compliance with Section 10(2) of the Act and thus, the suit offends the provisions of Section 10(4) of the Insurance (Motor Vehicle Third Party Risks) as the same has been filed outside the three months statutory period.

14. In respect to the interested party’s preliminary objection, the court notes that though he avers that he filed civil suit No. 49 of 2021, the date of filing of that suit was not disclosed. A copy of the plaint was not availed to court. Secondly and most importantly, there is no evidence that the plaintiff herein was served with a statutory notice within the period required under the law. If such a notice was ever served, the same was not availed to court for perusal. It is trite that unless the plaintiff was served with the statutory notice as required under Cap. 405, no cause of action can be sustained in the form of a declaratory suit to enforce a judgment obtained against it as the insured of a vehicle that has been involved in an accident. Lastly, a clear reading of Section 10(4) in my view, reveals that the interested party’s cause of action against the plaintiff, if any, is premature at this moment. The sub-section talks about commencement of an action before or within three months after the commencement of the proceedings in which a judgment was given….

15. In the case before me, the interested party has not obtained any judgment against the plaintiff, and if any has been obtained, the same was not exhibited to this court. In my considered view, his cause of action against the plaintiff has not crystalized as yet and he ought to hold his horses until such a time that he obtains the final judgment against the defendant. In any event, he is not privy to the contract of insurance between the plaintiff and the defendant herein and the only way he can go against the plaintiff is by way of a declaratory suit to enforce a decree issued in a primary suit between him and the defendant. In that regard, I find that his preliminary objection is not merited.

16. As regards the defendant’s preliminary objection, my view is that the cause of action between the plaintiff and the defendant is premised on fraud and breach of contract as particularized in paragraph 9 of the plaint. The gist of the plaintiff’s suit is that the alleged policy of insurance between it and the defendant was obtained a day after the accident by the defendant, in collusion with an agent who organized his cover and assisted the defendant to backdate the insurance cover to commence on 1/12/2020.

17. The plaintiff also alleges that at the same time, the defendant had another cover with Trident Insurance Company being policy No. 010/070/1/096356/2018 which was to expire on 23. 02. 2021. In the replying affidavit sworn by Javan Ombado, he deposes that Section 10(4) relates to applications for declaratory orders in relation to misrepresentation of facts or non-disclosure of material facts. That the plaintiff’s cause of action being premised on fraud, it is not time barred and it does not fall within the provisions of Section 10.

18. I am persuaded by the plaintiff’s submissions and I agree with the same. To that extent, I find that the defendant’s preliminary objection has no merit as well.

19. In the end both preliminary objections are hereby dismissed.

20. It is so ordered.

DELIVERED, DATED AND SIGNED AT EMBU THIS 12TH DAY OF MAY, 2022. L. NJUGUNAJUDGE……………………………………….for the Plaintiff………………………………………for the Defendants