GEORGE MORARA BARAKE v INSURANCE CO. OF EAST AFRICA [2010] KEHC 4043 (KLR) | Insurance Contracts | Esheria

GEORGE MORARA BARAKE v INSURANCE CO. OF EAST AFRICA [2010] KEHC 4043 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAKURU

Civil Suit 79 of 2008

GEORGE MORARA BARAKE…...………………..PLAINTIFF

VERSUS

INSURANCE CO. OF EAST AFRICA…….…....DEFENDANT

JUDGMENT

The plaintiff claims in his plaint that on 15th February 2007 his driver was robbed of his motor vehicle Registration Number KAU 243L (the vehicle) at Mbaruk while driving it to Nakuru from Nairobi along Nairobi/ Nakuru road. At that time the vehicle was comprehensively insured by the defendant but the defendant, citing alleged breach of the conditions or terms of the policy of insurance, has refused to indemnify him of the loss of the vehicle. He denies being in breach of any condition or term of the policy of insurance and claims a sum of Kshs.2,483,480/= being the value of the vehicle at the time it was stolen.

In its defence the defendant denies that it had insured the vehicle and or that it was stolen as alleged or at all. In the alternative, the defendant avers that if it insured the vehicle, then its contract of insurance with the plaintiff was vitiated by the plaintiff’s breach of the conditions thereof thus rendering it null and void. It gives the particulars of the breach as using the vehicle for hire and reward contrary to the terms of the policy of insurance; failure to have the registration number and marks of the vehicle embossed on its windows; failure to have the vehicle fitted with a remote controlled alarm system incorporating an engine immobilizer and failure to take reasonable steps and precautions to prevent the loss.  It therefore denies the claim and prays for the dismissal of this suit with costs.

In his testimony the plaintiff stated that he was financed by Standard Chattered Bank to purchase the vehicle. As the Bank required him to comprehensively cover of the vehicle he went to M/S Ronrift Insurance Agency (the Agents) in Nakuru and completed a proposal form in which he specified that he would use the vehicle for carriage of his own goods as well as those of third parties for hire and reward. He signed that proposal form and left it with the Agents. He denied having signed the proposal form Exh.D1 and said that the signature on it does not even resemble his. After that he completed the details of the insurance cover on the advice Exh.2 that the vehicle had been comprehensively covered, signed it and handed it over to Standard Bank. He later received the policy of insurance which he produced as Exh.3 after he had fitted the vehicle with the car transmission lock and submitted the certificate Exh.4 to the defendant. After one year the policy was renewed and he was issued with a certificate of insurance Exh.5.

On 15th February 2007 while the vehicle was transporting 140 bags of cement that he had bought from Hardware Trading Stores in Nakuru but had taken delivery of from E.A. Portland Cement Factory at Athi River, it was stolen at Mbaruk near Nakuru and has since not been traced. He reported the matter to the defendant who after investigations offered to pay him, on ex-gratia basis, a sum of Kshs.1,242,740/- being half of its value on the ground that he had breached terms of the policy of insurance. He denied being in breach and rejected that offer and when the plaintiff refused to compensate him fully he filed this suit.

The evidence of the plaintiff’s first witness, Jackson Okongo Odhiambo, PW2, an employee of Dee-Gee-O-Enterprises which distributes Blue Triangle Cement in Nakuru was that he authorized the plaintiff to take delivery of 140 bags of cement which he had bought from Hardware Trading Stores Nakuru from E.A. Portland Cement Factory at Athi River. He said he had to give the authority because the plaintiff was not a distributor and could not therefore take any cement from E.A. Portland Cement Factory at Athi River. Besides narrating how the vehicle was stolen from him at gun point, the plaintiff’s driver, Moses Kipkemboi Kiptum, PW3, also stated that the vehicle was used for both transportation of the plaintiff’s goods and for hire and reward.

On its part the defendant called only one witness, its Underwriting Officer, Austin Machira Githinji, DW1. He testified that as a policy the defendant does not insurer passenger carrying vehicles or those carrying goods for hire and reward.  On 15th February 2007 they were rung that the vehicle, which they had comprehensively insured, had been stolen along Nairobi-Nakuru Highway. The defendant repudiated liability after discovering, upon investigations, that contrary to the terms of the policy the plaintiff had been using his vehicle for hire and reward and that the plaintiff had not fitted the vehicle with an engine immobilizer. He produced the proposal form Exh.D1 in which, he said, the plaintiff had declared that he was going to use the vehicle for carriage of his own goods. He also produced a copy of the policy Exh.D2 which has that limitation clause on page 6.

Although DW1 conceded in cross examination that the signature on the proposal form Exh.D1 did not resemble that of the plaintiff in Exhs.2 he insisted that Exh.D1 is the proposal form they received from the Agents which had been signed by the plaintiff. He said the policy Exh.3 had been mutilated as pages 1 to 11 thereof are missing. He, however, conceded that the defendant has no proof that the plaintiff received a copy of the policy Exh.D2.

Counsel for the plaintiff, in their submissions, referred me to the plaintiff’s testimony disowning the proposal form Exh.D1 as a forgery, and asked me, in exercise of my discretion under Section 76(1) of the Evidence Act, to compare the plaintiff’s signature thereon with the one on Ex. 2 and dismiss the proposal form, Ex. D 1, as a forgery. They further submitted that the proposal form was, at any rate, spent and was not in force at the time of the accident. They said the defendant should have produced the one for the renewed policy.

Counsel for the plaintiff further submitted that the plaintiff fitted the vehicle with car transmission lock and was issued with a certificate No. 5947 which he gave to the defendant. The defendant having not raised any objection and having even renewed the policy, it cannot now be heard to complain that the vehicle was not fitted with an engine immobilizer. The plaintiff was issued with the policy EX. 3 which has even been certified by the defendant as the true copy of the original. Under Section 120 of the Evidence Act, counsel submitted that the defendant is estopped from denying its authenticity. As it is the defendant who is disowning Ex. 3, they further argued, it is obligated under Section 107 of the Evidence Act to prove that it is a forgery. Counsel pointed out that both exhibits are not serialized. They wondered how the insured’s name could be somewhere in the middle of Ex. D 2 and not on the first page as it is on Ex. 3.

In response, counsel for the defendant citing the old English case of Carter Vs Boehm, [1766] 97 ER 1162, and the local cases of Gateway Insurance Co Ltd Vs Nganga Njuguna, Nairobi HCCC No. 22 of 2003; Standard Assurance (K) Ltd Vs James Itotia, Nairobi HCCC No. 166 of 2003 and Insurance Co of EA Vs Ndabuki Kisau, Machakos HCCC No. 82 of 2000 submitted that the contracts of insurance are governed by the doctrine of uberrima fide (utmost good faith) which requires the insured to reveal to the insurer the exact nature and potential of the risks that he transfers to the insurer.

In this case on the basis of the plaintiff’s declaration in the proposal form Ex.D1 that the vehicle was for his own use and not for hire and reward, the defendant covered the vehicle and issued the plaintiff with the policy of insurance Ex.D2. It was a further term of the contract of insurance that the plaintiff was to fit the vehicle with an anti-theft device, to wit a remote controlled alarm system incorporating an engine immobilizer and a reverse gear lock and submit a certificate of compliance at the commencement of the cover. Counsel submitted that contrary to these terms, as is clear from the evidence of PW2 and PW3, the plaintiff regularly transported for reward animal feeds for Unga Farm Care EA from Nakuru to Nairobi and on the return journey cement for Dee-Gee-O-Enterprises from Athi River to Nakuru and that, according to PW3, he did not fit the vehicle with an engine immobilizer. In the circumstances the defendant had no option but to repudiate liability to indemnify the plaintiff for the loss of the vehicle.

Counsel for the defendant further submitted that the plaintiff has failed to discharge the burden of proof cast on him by Sections 107 and 109 of the Evidence Act that the proposal produced by the defendant as Ex.D1 is a forgery. They dismissed as fallacious and erroneous the submission by counsel for the plaintiff that that proposal form was, at any rate, spent and said that a proposal form is completed only once in the life of a contract of insurance and not every time the policy is renewed. The plaintiff having refused the defendant’s ex-gratia offer of 50% indemnity, his case should be dismissed with costs.

I have considered these submissions along with the evidence on record. It is not in dispute that the defendant comprehensibly insured the vehicle. That is clear from the evidence of DW1. The plaintiff together with his driver, Moses Kipkemboi Kiptum, PW2, readily admitted that the vehicle, in addition to carrying the plaintiff’s own goods, was used for hire and reward.    The issue therefore is whether or not the plaintiff was in breach of the terms of the policy by failing to fit the vehicle with an engine immobilizer, and in using the vehicle for hire and reward thus entitling the defendant to repudiate liability to compensate the plaintiff for the loss of the vehicle.

The plaintiff does not dispute the fact that he was required to fit the vehicle with a remote controlled alarm system incorporating an engine immobilizer and a reverse gear lock and submit a certificate of compliance at the commencement of the cover. His evidence, if I understand him well, is that he fitted the vehicle with a gear transmission lock and thought that sufficed. On that I think he is right. He fitted the vehicle with only a reverse gear lock and submitted to the defendant a certificate to that effect. The defendant did not raise any objection or demand strict compliance of that requirement. It instead issued him with a policy of insurance and in fact even renewed it after one year. In the circumstances I find that the defendant waived that requirement and it cannot now be allowed to rely on it to repudiate liability to compensate the plaintiff for the loss of the vehicle.

The other ground for repudiating liability was that the plaintiff used the vehicle for hire and reward contrary to the terms of the policy. In support of this ground the defendant relied on the proposal form Exh.D1 produced in evidence by DW1 in which, it is alleged, the plaintiff declared that he was not going to use the vehicle for hire and reward but only for transportation of his own goods. The defendant also relies on the policy of insurance Exh.D2 which has a clause (on the handwritten page 6 thereof) limiting the use of the vehicle to transportation of insured’s own goods.

The plaintiff disowned both the proposal form, Exh.D1 and the policy of insurance, Exh.D2. In his evidence he admitted that he had signed a proposal form but he was categorical that it was not Exh.D1.

I do not agree with counsel for the defendant that it is the plaintiff who has the burden of proving that the plaintiff signed the proposal form Exh.D1. As it is the defendant who is relying on it and produced it as well as the policy of insurance Exh.D2, I find that, under Section 107 of the Evidence Act, (see also Koinange Vs Koinange,[1986] KLR 23 at p.43), it has the burden of proving the authenticity of the two documents.

The defendant did not call any expert evidence to prove that the signature on Exh.D1 is that of the plaintiff. Instead, its witness, DW1, in cross examination conceded and supported the plaintiff’s contention that the signature on Exh.D1 is different from the known signature of the plaintiff on Exhs.2. In the circumstances I find that the plaintiff did not sign the proposal form Exh.D1. That being my view I must accept his evidence that the proposal form he signed on which the policy of insurance was based did not restrict the vehicle to the transportation of only his own goods.

The plaintiff has also denied having received the policy Exh.D2.    He said the one he received is Exh.3 which does not have the limitation clause on the use of the vehicle. I have perused both these exhibits.  They are not paginated. Exh.D2 has hand pagination which extends to the other exhibits. That must have been done when assembling the documents the defendant wanted to produce in this case. In the circumstances it is right to say that both Exh.D2 and Exh.3 are not paginated. Page 2 of Exh.3 is entitled “MEMORANDA ATTACHING TO AND FORMING PART OF POLICY NO. 024/980/1/023145/2005 ISSUED IN THE NAME OF GEORGE M. BARAKE.” That makes it clear that what followed was an attachment to the policy of insurance and would rend credence to DW1’s testimony that Exh.3 is a mutilated part of the policy sent to the plaintiff.

But the matter is not as simple as that. The plaintiff denied mutilating the policy and said that Exh.3 is intact as he received it from the Agents. The burden then turns to the defendant to prove that it sent to the plaintiff a copy of the policy of insurance Exh.D2. as I have already stated in his testimony DW1 conceded in cross examination that the defendant has no proof that the plaintiff received the original of Exh.D2 and not Exh.3. The Agents were not called to say which of the two policies they forwarded to the plaintiff. In the circumstances I am again left with no option but to accept the plaintiff’s evidence that what was sent to him is Exh.3 and not Exh.D2. I think in compiling the policy to be sent to the plaintiff, the defendant’s clerk, or whoever did that, simply left out the other pages which are in Exh.D2.

Having found that the plaintiff neither signed the proposal form Exh.D1 nor received the policy Exh.D2 it follows that he is not bound by the limitation of the use of the vehicle to transportation of his own goods. In the circumstances I find that the defendant was not entitled to repudiate liability.

Other than in its defence the defendant has not disputed the plaintiff’s claim of Kshs.2,483,480/- as the value of the stolen vehicle. As a matter of fact DW1 did not address the issue of quantum in his evidence. Consequently I find that the plaintiff has proved, on a balance of probabilities, his claim against the defendant for Kshs.2,483,480/- and I accordingly enter judgment for him in that sum together with costs and interest.

DATED and delivered this 21st day of January, 2010.

D. K. MARAGA

JUDGE.