Kenya Orient Insurance Co Limited v Kennedy Kagai Kiruku [2022] KEHC 986 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL APPEAL NO. E344 OF 2020

KENYA ORIENT INSURANCE CO. LIMITED.........................................APPELLANT

VERSUS

KENNEDY KAGAI KIRUKU....................................................................RESPONDENT

(Being an appeal from the ruling and order of Honourable G.A. Mmasi (Mrs.)

(Senior Principal Magistrate) delivered on 30th November, 2020

in Milimani CMCC no. 6900 OF 2019)

JUDGMENT

1. The respondent who was the plaintiff in Civil Suit No. 6900 of 2019 before the Chief Magistrate’s Court at Milimani Commercial Courts instituted a declaratory suit against the appellant by way of the plaint dated 16th September, 2019 and sought for a declaratory order to the effect that the appellant is liable to pay the decretal amount of Kshs.8,955,310/ in Nairobi CMCC No. 6727 of 2017 (Kennedy Kagai Kiruku v Vincent Molouche Bowen & Osman Hassan Bashir) (“the primary suit”) together with costs and interest thereon, arising out of a road traffic accident.

2.   The respondent pleaded in the plaint that the defendants in the primary suit were at all material times the driver and registered owner of the motor vehicle registration number KBX 160V (“the subject motor vehicle”) and that the subject motor vehicle was at all material times insured by the appellant herein and hence the appellant is liable to pay the decretal sum awarded in the primary suit.

3.   Upon service of summons, the appellant entered appearance and filed its statement of defence on 4th October, 2019 to deny the respondent’s claim, specifically the claim that it was served with the statutory notice or that it is liable to satisfy the judgment sum in the primary suit.

4.   At the trial, the respondent testified whereas the appellant did not call any witnesses.

5.   Upon filing of submissions, the trial court delivered judgment on 29th May, 2020 in favour of the respondent and against the appellant as prayed in the plaint by awarding him the sum of Kshs.8,955,310/= plus costs of the suit and interest thereon.

6.  The judgment triggered the Notice of Motion dated 29th July, 2020 and amended on 27th August, 2020 where the appellant sought to have the aforementioned judgment reviewed and substituted with a judgment in the sum of Kshs.3,000,000/=. The Amended Notice of Motion was opposed by the respondent who filed Grounds of Opposition dated 8th September, 2020.

7.  Upon hearing the parties on the amended application, the trial court vide the ruling delivered on 30th November, 2020 dismissed the same with no order as to costs.

8.  The aforesaid decision has precipitated the appeal presently before this court, with the appellant filing the memorandum of appeal dated 3rd December, 2020 and amended on 29th June, 2021 featuring the following grounds:

i.  The learned trial magistrate erred both in law and fact in dismissing the amended application dated 27th August, 2020 in whole and holding that there were no grounds that the applicant had demonstrated showing that there was an error on the face of the record and there were sufficient reasons to warrant a review.

ii. The learned trial magistrate erred both in law and fact in failing to appreciate that the applicant’s legal obligation as insurer was limited to the statutory and contractual indemnity limit of Kshs.3,000,000/ which amount the appellant had already remitted to the respondent.

iii.  The learned trial magistrate erred both in law and fact in disregarding the written submissions as filed by the appellant in support of the application for review.

iv. The learned trial magistrate erred both in law and fact in holding that the appellant in its amended application was seeking to prosecute the suit again when it was seeking review based on legitimate grounds.

v.The learned trial magistrate erred both in law and fact in not appreciating the strength of the appellant’s application.

9.  The appeal was disposed of through the filing of written submissions. On its part, the appellant argues that the decretal amount awarded in the declaratory suit exceeded the statutory sum that the appellant would be required to pay, pursuant to the provisions of Section 10 of the Insurance (Motor Vehicles Third Party Risks) Act Cap. 405 Laws of Kenya (“the Act”) which stipulates that:

“If, after a policy of insurance has been effected, judgment in respect of any such liability as is required to be covered by a policy under paragraph (b) of section 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 judgment any sum payable thereunder in respect of the liability, including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.

Provided that the sum payable under a judgment for a liability pursuant to this section shall not exceed the maximum percentage of the sum specified in section 5(b) prescribed in respect thereof in the Schedule.”

10. The appellant has also cited the proviso of Section 5(b)mentioned above which reads as follows:

“In order to comply with the requirements of section 4, the policy of insurance must be a policy which—

…

(b) insures such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of, or bodily injury to, any person caused by or arising out of the use of the vehicle on a road:

Provided that a policy in terms of this section shall not be required to cover—

…

(iv)    liability of any sum in excess of three million shillings, arising out of a claim by one person.”

11. According to the appellant, it was only required to pay the sum of Kshs.3,000,000/= out of the decretal sum and which sum was in fact fully paid, and yet the trial court declined to review its earlier judgment where it held the appellant liable to pay the entire decretal sum.

12. To support its argument above, the appellant has made reference to the case of Law Society of Kenya v Attorney General & 3 others [2016] eKLRwhere the court held thus:

“What the Principal Act has done is cap the amount of money that the insurer pays to the injured person. Nothing in the Principal Act stops a litigant or the injured person from pursuing a claim against the insured individual where an award in excess of the amount recoverable from the insurer is made.

I hasten to add that the provision as to the mandatory insurance cover of the amount of Kshs. 3,000,000/= does not in any way prohibit any insured who may be minded to source and seek a higher cover from agreeing with the insurer on such cover, subject of course to a higher premium and other agreement on the terms of the policy.”

13. The appellant therefore further submits that the balance of the decretal sum ought to be pursued from the insured and not the insurer.

14. For the foregoing reasons, the appellant urges this court to allow the appeal and consequently, to disturb the decision of the trial court by setting aside the impugned ruling.

15. The respondent on the other part argues that at the trial, theappellant did not bring any evidence to rebut that of the respondent and hence the trial court was left to make reference to its pleadings, of which it remains bound by.

16. The respondent therefore argues that there was no proper basis for seeking a review of the judgment delivered in the declaratory suit and that in any case, the appellant’s application for review could not stand as it was based on a point of law which therefore ought to have been brought as an appeal rather than a review.

17. To buttress his point above, the respondent quotes the case ofPancras T. Swai v Kenya Breweries Limited [2014] eKLRwhere the Court of Appeal rendered itself thus:

“It seems clear to us that the appellant, in basing his review application on the failure by the Court to apply the law correctly faulted the decision on a point of law.  That was a good ground for appeal but not a ground for an application for review.  If parties were allowed to seek review of decisions on grounds that the decisions are erroneous in law, either because a Judge has failed to apply the law correctly or at all, a dangerous precedent would be set in which court decisions that ought to be examined on appeal would be exposed to attacks in the courts in which they were made under the guise of review when such courts are functus officio and have no appellate jurisdiction.”

18. The respondent is therefore of the view that the trial court arrived at a correct finding that the appellant was liable to pay the entire decretal sum arising out of the primary suit.

19. I have considered the rival submissions on record alongside the relevant authorities cited. As is the legal requirement for a court sitting on a first appeal, I have re-evaluated the material and evidence which was placed before the trial court. It is clear that the appeal lies against the decision by the trial court to decline to review its judgment on liability in the declaratory suit. I will therefore tackle the 5 grounds of appeal contemporaneously.

20. As earlier noted, following the judgment by the learned trial magistrate where it held the appellant liable to pay the entire decretal sum of Kshs.8,955,310/= to the respondent arising out of the primary suit, the appellant filed the amended application and sought to have the judgment set aside and substituted with the sum of Kshs.3,000,000/=.

21. In the supporting affidavit sworn by Catherine Kendi, a Legal Officer employed by the appellant, she stated that going by the provisions of the Act, the appellant would only be liable to pay the sum of Kshs.3,000,000/= and hence the need for a review of the judgment.

22. In his Grounds of Opposition, the respondent essentially argued that the appellant had not satisfied the requirements for granting a review.

23. In her ruling, the learned trial magistrate concluded that in the case of Law Society of Kenya v Attorney General & 3 others [2016] eKLRit was held that the courts are at liberty to award damages over and above the limit of Kshs.3,000,000/= stipulated in the Act. On that basis, the learned trial magistrate declined to review her judgment and consequently dismissed the amended application.

24. Upon my re-examination of the pleadings and material on record, it is not in dispute that the appellant had insured one of the defendants in the primary suit in relation to the subject motor vehicle. It is also not in dispute that judgment was entered in favour of the respondent and against the defendants in the primary suit.

25. The provisions of Order 45, Rule 1 of the Civil Procedure Rules,  2010 and Section 80 of the Civil Procedure Act, Cap 21 Laws of Kenya which lay out the grounds under which an order for review may be sought, thus:

a. the discovery of new and important matter or evidence, or

b. some mistake or error apparent on the face of the record, or

c.any other sufficient reason.

26. Upon my study of the record, I observed that the appellant approached the learned trial magistrate under the grounds of ‘error apparent on the face of the record’ and ‘any other sufficient reason.’

27. The Court of Appeal in the case of Muyodi v Industrial and Commercial Development Corporation & Anor [2006] 1 EA 243 rendered itself in the following manner on the subject of error:

“In Nyamogo and Nyamogo v Kogo [2001] EA 174 this court said that an error apparent on the face of the record cannot be defined precisely or exhaustively, there being an element of indefiniteness inherent in its very nature, and it must be left to be determined judicially on the facts of each case. There is real distinction between a mere erroneous decision and an error apparent on the face of the record. Where an error on a substantial point of law stares one in the face, and there could reasonably be no two opinions, a clear case of error apparent on the face of the record would be made out. An error which has to be established by a long drawn process of reasoning or on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record. Again, if a view adopted by the court in the original record is a possible one, it cannot be an error apparent on the face of the record even though another view was also possible. Mere error or wrong view is certainly no ground for a review although it may be for an appeal. This laid down principle of law is indeed applicable in the matter before us.”

28. From the foregoing, it is clear that an error apparent on the face of the record must be a self-evident error which need not require elaborate arguments to support it.

29. From my study of the pleadings and material which was placed before the trial court, I note that the error being referenced by the appellant was in relation to the provisions of Section 10 of the Act which I have cited hereinabove and which when read together with Section 5(b), expressing that liability of an insurance company is limited to a sum not exceeding Kshs.3,000,000/=.

30. Upon my re-examination of the evidence, I observed that the appellant tendered a copy of the policy document which shows that in respect to the limits of liability arising out of the death or bodily injury to any person; as was the case here; the same is indicated as being Kshs.3,000,000/=. It is therefore apparent that the policy document in question set the limit at Kshs.3,000,000/= which limit is now supported by statute as seen above.

31. In view of the foregoing, I find that the appellant’s liability to the respondent was limited to the sum of Kshs.3,000,000/=. To this extent, I therefore find that the appellant was correct in pointing out an error apparent on the face of the record since the learned trial magistrate ought to have taken the above factors into account, when delivering her judgment.

32. Moreover, the above would equally constitute ‘sufficient reasons’ to warrant a review of the judgment.

33. That notwithstanding, I support the reasoning by the learned trial magistrate that courts have the discretion to award damages above the limit of Kshs.3,000,000/=, save to add that any sums above the limit may be sought from the insured, as was succinctly stated by the court in the case of Law Society of Kenya v Attorney General & 3 others(supra) as follows:

“What the Principal Act has done is cap the amount of money that the insurer pays to the injured person. Nothing in the Principal Act stops a litigant or the injured person from pursuing a claim against the insured individual where an award in excess of the amount recoverable from the insurer is made.

34. In the present instance, upon establishing that the insurance policy taken out with the appellant set the limit of claims at the sum of Kshs.3,000,000/= it follows that the respondent was required to pursue any additional sums from the insured and not the appellant.

35. In that respect, I agree with the argument brought forth by the appellant that sufficient grounds had been established to warrant a review of the judgment in the declaratory suit. I therefore have reason to disturb the ruling on that basis.

36. This brings me to the question on whether the statutory payments had been made to the respondent by the appellant. Upon my study of the pleadings and exhibits, I observed that the appellant had brought credible evidence by way of copies of three (3) cheques totaling the sum of Kshs.3,000,000/= paid to the respondent through his advocates. This position was not rebutted by the respondent and was also acknowledged by the learned trial magistrate in her ruling.

37. In the absence of anything to indicate a position to the contrary,

I find that the appellant has since satisfied the judgment to the extent of the sum of Kshs.3,000,000/= and has therefore discharged its statutory obligations on liability.

38. In view of the foregoing circumstances, I find that the appeal succeeds on merit. The appeal is allowed thus giving rise to issuance of the following orders:

i.The ruling delivered on 30th November, 2011 is hereby set aside and is substituted with an order allowing the Amended Notice of Motion dated 29th June, 2021, with no order on costs.

ii.The judgment award in the sum of Kshs.8,955,310/= or as the case may be, is hereby set aside and is substituted with an award in the sum of Kshs.3,000,000/= being the statutory and contractual sum payable by the appellant to the respondent, and which sum has since been paid in full.

iii.The respondent is also entitled to costs of the declaratory suit.

iv.The respondent is at liberty to pursue the remaining balance of the judgment sum from Osman Hassan Bashir, being the person insured by the appellant at all material times and in respect to the motor vehicle registration number KBX 160V.

v. In the circumstances, a fair order on costs is to order the parties to bear their respective costs on the appeal.

DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOFT TEAMS AT NAIROBI THIS 25TH DAY OF MARCH, 2022.

.........................

J. K. SERGON

JUDGE

IN THE PRESENCE OF:

.......................................FOR THE APPELLANT

.................................FOR THE RESPONDENT