Kenya Orient Insurance Co. Ltd v Paul Mathenge Gichuki & James Mwololo Mungithya also known as James Mwololo Muyithya also known as James Mwololo Munjithya [2017] KEHC 4394 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MOMBASA

CIVIL APPEAL NO. 40 OF 2014

KENYA ORIENT INSURANCE CO. LTD…...APPEALLANT

VERSUS

1. PAUL MATHENGE GICHUKI

2. JAMES MWOLOLO MUNGITHYA ALSO KNOWN AS

JAMES MWOLOLO MUYITHYA ALSO KNOWN AS

JAMES MWOLOLO MUNJITHYA..........RESPONDENTS

CONSOLIDATED WITH

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MALINDI

CIVIL APPEAL NO. 44 OF 2013

KENYA ORIENT INSURANCE CO. LTD…..APPELLANT

VERSUS

PAUL MATHENGE GICHUKI....................RESPONDENT

J U D G M E N T

Outline

1. The appellant herein has challenged the ruling and decision of the trial court N. Shiundu (SPM) dated the 24/9/2013.  That ruling was pursuant to the Respondent’s application dated 12/6/2013 which sought to strike out the Appellant’s Ammended Statement of Defence dated the 6/6/2013.  The trial court did accede to the application by the ruling appealed against and held that the appellant did not have a valid defense to the claim.

2. The application giving rise to the ruling subject of this appeal was grounded on facts among others that the plaintiff, now as Appellant, was involved in an accident while travelling as a passenger in the defendants motor vehicle KAV 829N at a time the said motor vehicle was insured by the Appellant; that the Respondent did file suit No. 449 of 2010 against the Appellants insured and obtained a judgment to which no appeal had been preferred and that a statutory Notice was duly served but the Appellant refused and declined to settle the decree hence the declaratory suit.

3. Clearly the application attacked the amended statement of defence for raising no triables issue.  It was therefore the duty of the court when faced with that application to determine whether or not there was a single triable issue raised in the defence and if any presented itself, the Appellant was entitled to an unconditional leave to defend.  In the converse, if none was discernible then the defence was subject to being struck out.

4. The Application was opposed by a Replying affidavit of one Sarah Weru, a legal officer with the Appellant who swore to be well conversant with the facts of the case and had perusal all records pertinent to the case and was thus competent to swear the affidavit.

5. The deponent took the position that the appellant was not bound to settle the decrees in the two suits because it was entitled to avoid the policy because the policy sued upon was obtained by non-disclosure of material fact or representation of facts which were false in some material particulars; that there was breach of the policy and provisions of the law under Cap 405; that the plaintiffs were never covered under the class of persons contemplated under the policy and the Act and that the insured was duly informed.  Curiously though there were never details of the breaches alleged nor any exhibits to show what the Appellant did after the breach,  in relation to the policy of insurance the Respondents were seeking to enforce.

6. It is also necessary to note that the Appellant did file identical statements of defence in the two suits.  That defence in particular denied that the plaintiff were ever covered by the policy issued by the Appellant and therefore the Appellant was not bound under the statute to honour the two decrees in the primary suits or indeed any decree arising out of the accident giving rise to the two suits.  The defendant denied having been served with a statutory notice but contended that even if any was served the same was of no consequence and lastly that the suit as disclosed in the plaint was hollow and inept.

Analysis

7. The suits giving rise to the appeal were a declaratory suits filed pursuant to the provisions of section 10 Cap 405.  That provision is worded as follows:-

Duty of insurer to satisfy judgments against persons insured

(1) 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.(2) No sum shall be payable by an insurer under the foregoing provisions of this section—

a.  in respect of any judgment, unless before or within fourteen days after the commencement of the proceedings in which the judgment was given, the insurer had notice of the bringing of the proceedings; or in respect of any judgment, so long as execution thereon is stayed pending an appeal; or

(c) in connexion with any liability if, before the happening of the event which was the cause of the death or bodily injury giving rise to the liability, the policy was cancelled by mutual consent or by virtue of any provision contained therein, and either—

(i) before the happening of the event the certificate was surrendered to the insurer, or the person to whom the certificate was issued made a statutory declaration stating that the certificate had been lost or destroyed; or

(ii) after the happening of the event, but before the expiration of a period of fourteen days from the taking effect of the cancellation of the policy, the certificate was surrendered to the insurer, or the person to whom the certificate was issued made such a statutory declaration as aforesaid; or

(iii)  either before or after the happening of the event, but within a period of twenty-eight days from the taking effect of the cancellation of the policy, the insurer has notified the Registrar of Motor Vehicles and the Commissioner of Police in writing of the failure to surrender the certificate.

8. My understanding of the law is that a plaintiff seeking to enforce a decree against an insurer only needs to prove that there was an accident during the currency of insurance cover in respect of the offending motor vehicle; that there was a suit against the insured which suit resulted into a decree and the decree remain to be settled.  The plaintiff has the additional duty to prove that prior to filing the primary suit or within 14 days after the commencement of the suit, he did serve a notice thereon upon the insurer.

9. On the other side the insurer against whom a declaratory suit is brought has the right to avoid settling the decree if it shows that:-

i. The policy of insurance issued did not cover the class of persons the plaintiff alleges to have been.

ii. The judgment has been stayed pending an appeal.

iii. The policy had prior to the accident been cancelled by mutual consent or by operation of its terms and the certificate surrendered to the insurer or the insured made a declaration of the loss or the insurer notified the registrar of motor vehicle and the commissioner of police of failure to surrender the certificate by the insurer.

iv. The insurer had prior to the commencement of the Primary suit or within three months after the commencement, had commenced a suit and obtained a declaration that it is not bound to meet the decree.

10. To get those benefit, the insured is duty bond to notify any claimant who has filed a suit of the non-disclosure or mis-representation so that if such a plaintiff so wishes he can become a party to the suit seeking to avoid the policy.

11. Based on the foregoing, the suit before the trial court upon which the Appellants defence was struck out was grounded on the fact that the plaintiff had obtained decrees after serving due notices and that the decree was yet to be settled.  In striking out the defence, the trial court rendered itself as follows:-

“I have considered the submissions made by both sides in this  matter and the authorities cited.  The defendant does not deny that they had insured the motor vehicle registration KAV 829N at that time of the accident vide policy number MSA/102/007030/comp at the time of the accident.

Prior to institution of CMCC No. 449/2010, a demand letter was issued to the defendant together with the statutory notice as required by law.

The said civil suit was determined in favour of the plaintiff and there is no pending appeal.  The judgment on liability was arrived at by consent.

In my considered view therefore, the defendant is bound to make good the claim as the insurer.  They do not have a valid defence to the claim.  I proceed to allow the application dated 12/6/2013 with costs to the applicant”.

12. I have had the benefit of reading not only reading the plaint, and statement of defence but also the submissions filed by the parties both here and before the trial court.

13. Those submissions have captured, very well, the principles applicable in an application to strike out a statement of defence.  The now notorious case of DT Dobie & Co. (K) Ltd vs Joseph Muchina [1980] eKLRwas cited and extensively quoted to the trial court.  It however would appear that the trial court did not apply or adequately apply its mind to the law therein enunciated.  The law therein enumerated is that courts should be slow at striking out a pleading and should only do so in the clearest of the clear cases and where such a pleading is so hopeless and plainly lacking in substance as to be incapable of injection with life even by an amendment.

14. For this matter, there was before the trial court an amended defence as aforesaid, (page 104 of the Record) which at paragraphs 5, 6, 7 & 8 the Appellant pleaded:-

5. “The Defendant strongly denies and disclaims the claim herein since the same does not fall under The Insurance (Third Party Motor Vehicle Risks) Act Cap 405 of the Laws of Kenya.  The Defendant therefore vehemently contends that the alleged road traffic accident was and is not covered by the subject policy mentioned herein above.  The plaintiff is again invited to very strict proof of any allegation to the contrary.

6. The Defendant is a stranger to this declaratory suit and therefore avers that it’s not statutorily bound to honour and/or settle the judgment in Malindi CMCC No. 451,449 of 2010 or any other suit in respect of an accident involving motor vehicle number KAV 829N, which allegedly occurred on the 17th day of October 2009; for the fact that the claimants thereof are not covered under the class of claimants contemplated under the subject Policy Number MSA/102/007030/COMP and also under The Insurance (Third Party Motor Vehicle Risks) Act Cap 405 of the Laws of Kenya.

7. The Defendant avers that on or about the 31st day of 2011, it expressly informed and advised its insured, one Nicholas F.K. Okumu that the alleged road traffic accident was and is not covered by the subject policy mentioned herein above; full particulars of which are well within the knowledge of the said Nicholas F.K. Okumu, the 2nd Defendant in the original suit Malindi CMCC No. 451 449 OF 2010.

8. The Defendant further aver that the said Nicholas F.K. Okumu then proceeded to appoint the firm of Gekanana & Company Advocates, Orange House, 1st Floor, Malindi; to act for him as the 2nd Defendant in the original suits Malindi CMCC No. 451 of 2010 and Malindi CMCC No. 449 of 2010, full facts and particulars of which are well within the knowledge of the parties herein”.

15. It is clear and plain to me that the defendant said in the said defence that the insurance cover it did issue to the insured was one that did not cover for or cover the plaintiffs claim and that it had in fact communicated that to the insured who then appointed own advocate to defend the suit on his behalf.

16. That to me was a pleading that ought to have been tested on the merits by production of evidence at trial and should not have been shut out and dealt with in the manner the trial court did.  This court takes the view that the defence filed was not so frivolous as to invite the finding by the trial court that they do not have a valid defence”.

17. Secondly in this appeal the courts attention has been drawn to the documents filed by the defendant before the trial court.  Those documents included the policy document which at clause MP 007 expressly excluded compensation for any injury or death to a passenger in the motor vehicle.  Had the trial court duly applied its mind to all the materials availed, it would have found that there was an issue as to whether the policy that had been issued and which the plaintiff sought to enforce under the provisions of section 10 was a policy issued pursuant to Section 5 of Cap 405.  Where the defendant shows even an iota of a triable issue the court has no otherwise but to grant to the defendant his inalienable right to defend unconditionally.  In Kenya Trade Combine Ltd vs Shah quoted with approval in Kwacha Group of Companies vs Almond Print Ltd [2016] eKLR for the holding that:

“In a matter of this nature all a  defendant is supposed to show is that a defence on record raises triable issues which ought to go for trial.  We should hasten to add that in this respect, a defence which raises triable issues does not mean a defence that must succeed”.

18. More related to the matter before the court, was a decision also by the court of appeal and which binds this court and was binding upon the trial court.  That decision which was also cited to court is the decision in Ccorporate Insurance Co. Ltd vs Ehhas Okinyi Ofire Caca No. 12 of 1998 where the court said:-

“If an insured, after obtaining an insurance cover for a commercial vehicle for use in connection with his business changes the nature of the vehicle to that of a ‘a matatu’ the nature of the policy remains that of a commercial vehicle policy and such change does not and cannot make the insurer liable to passenger who are thereafter carried in the vehicle for reward”.

19. It follows that the trial court ran into an error when it allowed the Respondent’s application by striking out a defence that obviously and openly raised triable issues.  With that error the only avenue open to this court is that decision must be set aside.  I order it set aside and in its place substituted an order that the application dated 12/6/2013 is dismissed with costs to the defendant.

20. The result is that the lower court file be remitted back to the Chief Magistrate Malindi who shall allocate it to a Magistrate in that court to have it heard and determined on the merits.

21. The appeal is therefore allowed and the costs awarded to the Appellant.

Dated and Delivered at Mombasa this 18th day of July 2017.

P. J. O.  OTIENO

JUDGE