Maghema & another (As Legal Representatives of the Estate of Bonface Mwakio Kaluvu) v Heritage Insurance Company Limited [2022] KEHC 11834 (KLR)

Maghema & another (As Legal Representatives of the Estate of Bonface Mwakio Kaluvu) v Heritage Insurance Company Limited (Civil Appeal 250 of 2019) [2022] KEHC 11834 (KLR) (9 June 2022) (Judgment)

Neutral citation: [2022] KEHC 11834 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Appeal 250 of 2019

OA Sewe, J

June 9, 2022

Between

Peris Wakesho Maghema

1st Appellant

Francis Kaluyu Muyanga

2nd Appellant

As Legal Representatives of the Estate of Bonface Mwakio Kaluvu

and

Heritage Insurance Company Limited

Defendant

(Being an appeal from the Judgment and Decree of the Hon. E.K. Makori, Chief Magistrate, delivered on 28th November 2019 in Mombasa CMCC No. 816 of 2017)

Judgment

[1]The appellants are the legal representatives of the estate of the late Bonface Mwakio Kaluvu. The deceased died in a road accident that took place on June 30, 2012 near Kwa Chege Hotel on the Mombasa-Nairobi Road. The deceased was then travelling as a pillion passenger aboard Motor Cycle Registration No xxxx which was hit by Motor Vehicle Registration No xxxx. The appellants had alleged negligence in Mombasa CMCC No 1215 of 2013: Peris Wakesho Maghema and Francis Kaluyu Muyango (as legal representatives of Bonface Mwakio Kaluyu) v Maclex Makori Magabi, Hakika Transporters Company Limited and Stephen Chepkwony; a suit filed by them to recover damages under the Law Reform Act, Chapter 26 of the Laws of Kenya and the Fatal Accidents Act, Chapter 32 of the Laws of Kenya.

[2]Upon the successful conclusion of Mombasa CMCC No 1215 of 2013, the appellants filed a declaratory suit against the respondent, Heritage Insurance Company Ltd, to recover the judgment sum of Kshs 1,486,160/= together with costs and interest; being Mombasa CMCC No 816 of 2017. The claim against the respondent was predicated on a Policy of Insurance issued by the respondent; and in a judgment delivered on November 28, 2018, Hon Makori, CM, came to the conclusion that:'12. In this case plaintiff contend the policy in the primary suit covered a 3rd party like the plaintiff hence the insurance company- the Defendant should be declared responsible to compensate as per the law.13. In the primary suit policy No xxxx covered motor cycle xxxx whether the cover was covering 3rd parties too is not clear. The suit concluded there was a cover but the extent of the cover is not known.14. The defendant raised an issue that the cover was for private use vide:'MC001M.CI use for social domestic and pleasure purposes and for the insured business. The policy does not cover use for racing competitions rallies or trials (or use for practice for any of them) or for the carriage of passengers for hire or reward.'15. Was this point that the cover was meant and limited to private use covered in the primary suit? No The court was only shown that there was a cover the extent was not.'

[3]The learned magistrate proceeded to conclude that:'16. To me this was fatal to the plaintiff’s case because this court cannot assume what was contained in that cover - whether it covered 3rd parties – has not been proved in this matter leaving the defence that 3rd parties were never covered in the primary suit- unchallenged.17. It also not clear why the plaintiff elected to bring the insurers of one Defendant in the primary suit and the manner the claim ought to have been apportioned.18. The plaintiff as stated above has failed to proof [sic] that the subsisting cover extended to cover of 3rd parties as in this case.19. The plaintiff’s suit is hereby dismissed with costs to the Defendants.'

[4]Being aggrieved by the foregoing outcome, the appellants filed this appeal on December 5, 2019 on the following grounds:(a)That the learned magistrate erred in law and in fact in dismissing the appellant’s suit;(b)That the learned magistrate erred in law and in fact in misapprehending the evidence adduced before him;(c)That the learned magistrate erred in law and in fact by holding that the respondent was not liable to the appellant; and,(d)That the learned magistrate erred in law and in fact in awarding costs of the suit to the respondent.

[5]Consequently, the appellants prayed that their appeal be allowed; that the judgment delivered on November 28, 2019 be set aside; and that the case be heard afresh before a different magistrate. In the alternative, they prayed that this Court does take up the case and issue judgment thereon on the merits. They also prayed that the costs of the appeal be paid to them by the respondent.

[6]The appeal was urged by way of written submissions, pursuant to the directions given herein on February 8, 2021. The appellants’ written submissions were filed herein on July 6, 2021 by Mr Maundu; and in support of the ground that the learned magistrate misapprehended the law and the evidence adduced before it, he pointed out that Section 10 of the Insurance (Motor Vehicles Third Party Risks) Act, Chapter 405 of the Laws of Kenya, does not require that the terms of the cover be proved in the primary suit; because the insurance company is often not a party in the primary suit. Mr Maundu added that the question whether the liability was one covered in the policy is usually determined in the declaratory suit against the insurer. He therefore submitted that the reason given by the learned magistrate for dismissing the suit was erroneous.

[7]Mr Maundu further submitted that, although the lower court correctly rejected the documents presented by the respondent, it incorrectly interpreted the effect thereof when it held that the defence case in the primary suit was unchallenged. He surmised that the court seemed to say that the rejection of the purported policy documents was prejudicial to the appellant’s case, because they were then unable to prove the terms of the policy; in particular, that the policy extended to 3rd parties. He further contended that in so saying the court improperly handled the principle of the burden of proof by ignoring the evidence adduced by the appellants by way of Police Abstract and Certificate of Insurance, which showed that the respondents had insured the subject motor cycle in favour of Maclex Makori Magabi vide a third party Policy No xxxx. He also pointed out that this fact was conceded by the respondent’s own witness at page 223 of the Record of Appeal.

[8]Accordingly, Mr Maundu submitted that, as the appellants’ evidence in this regard was unrebutted, the lower court ought to have found in their favour. He relied on B K N & Another v T N W [2019] eKLR to demonstrate that, the appellants having discharged the legal burden of proof, the evidential burden shifted to the responded to convince the court as to why they should not be called upon to satisfy the decree. He added that, since third party policy cover is compulsory in Kenya under Section 4 of the Act, it was erroneous for the learned magistrate to place the burden on the appellants to prove that the cover in question extended to 3rd parties. He cited In Re Blue Shield Insurance Company Ltd [2020] eKLR and Directline Assurance Co Ltd v Peter Micheni Muguo[2018] eKLR for the proposition that the very purpose of Insurance (Motor Vehicles Third Party Risks) Act was to make provision for compensation against third party risks arising out of the use of motor vehicles; and that this is why it is a mandatory requirement under Section 4 of the Act for every motor vehicle using the roads in Kenya to be insured against third party risks.

[9]On whether the appellants had proved their case on a balance of probabilities, Mr Maundu made reference to Section 10(1) and (2) of the Act with regard to the duty of an insurer to satisfy judgments against its insured. He added that the appellants had availed evidence to show that there was a valid third party policy cover issued by the respondent in respect of the period between August 12, 2011 and July 5, 2012; and therefore that when the accident occurred, the said policy was valid for Motor Cycle Registration No xxxx. Counsel further pointed out that the respondent did nothing to move the court for a declaration within the time allowed under Section 10(4) of the Insurance (Motor Vehicles Third Party Risks) Act or at all. He accordingly urged the Court to find that the appellants had proved their case on a balance of probabilities and allow the appeal as prayed.

[10]On his part, Mr Mbago, learned counsel for the respondent relied on his written submissions filed on August 10, 2021 in which he proposed the following issues for determination:(a)Whether the deceased was a third party covered under the insurance policy issued by the respondent;(b)Whether the respondent was required to file a declaratory suit against the insured to disclaim liability to third parties;(c)Whether the learned magistrate misapprehended the law and evidence adduced before him; and,(d)Whether the respondent is bound to settle the entire decretal amount adjudged in the primary suit.

[11]In respect of the 1st issue, Mr Mbago relied on Section 5(b) of the Insurance (Motor Vehicles Third Party Risks) Act to support his argument that the insurer only becomes liable to settle third party claims in cases where such persons are covered under the particular insurance policy. He added that, in the instant suit, the subject policy expressly excluded the carriage of passengers for hire or reward. Counsel therefore submitted that the respondent cannot be compelled to settle the judgment obtained by the appellants herein. He made reference to Kenya Alliance Insurance Co Limited v Naomi Wambui Ngira & Another (suing as the legal representatives and administrators of the Estate of Nelson Machari Maina (Deceased) [2021] eKLR; Daniel Opar Ouya v First Assurance Company Limited [2018] eKLR and Corporate Insurance Company Ltd v Elias Okinyi Ofire [1999] eKLR.

[12]On whether the respondent was required to file a declaratory suit against its insured to disclaim liability to third parties, Mr Mbago took the posturing that the provisions of Section 10(4) of Cap 405 cannot be interpreted in isolation, but must be read together with Section 5(b) of the Act. He cited Kenyan Alliance Insurance Company Limited v Naomi Wambui Ngira & Another (supra) to support his submission that the requirement for an insurer to file a declaratory suit under Section 10(4) of Cap 405 is intended for only those liabilities for which the insurer is entitled to repudiate for reasons beyond the express provisions of the policy, such as non-disclosure of material facts or misrepresentation; which is not the case herein.

[13]On whether the lower court misapprehended the law and evidence adduced before it, Mr Mbago submitted that although there were a few discrepancies between the insurance policy document produced by the defence witness, the Certificate of Insurance and the Police Abstract, the policy document tallies with the insurance policy in material particulars. He therefore contended that the appellants cannot seek to have the policy invalidated since they were not parties to the contract in question. He also submitted that the authorities relied on by the appellants, such as ICEA Lion General Insurance v Chris Ndolo [2021] eKLR and Directline Assurance Co Ltd v Peter Micheni Mugo_[2018] eKLR are not applicable to the circumstances of the instant suit since the parties to those suits were the insurer and the insured.

[14]Mr Mbago further argued that, in the absence of evidence from the respondent’s insured, Mr Maclex Makori Magabi, the only way to invalidate the policy document was to adduce sufficient proof showing the document to be a forgery, which the appellants did not do. He added that, at any rate, it was not open to the appellants to allege that the subject motor cycle was insured by the respondent, and yet also claim that the cover was invalid. He consequently urged the Court to find that the appellants utterly failed to discharge the burden of proving their case and cannot now argue that the learned magistrate misapprehended the law and the facts as presented by the parties. He added that the learned magistrate was indeed alive to the law and the principles pertaining to the burden of proof in holding that the insurance policy issued by the respondent excluded carriage of passengers for hire and reward.

[15]Lastly, Mr Mbago submitted that respondent is not bound to settle the entire decretal amount adjudged in the primary suit since the deceased was not a third party as contemplated under the insurance policy. He further submitted that, should the Court be inclined to find otherwise then the respondent should only shoulder part of the decretal amount; since to require full payment from the respondent would amount to double compensation. He further stated that no justification was given as to why only the respondent was sued in the declaratory suit. He consequently relied on Kenya Airways Limited v Mwaniki Gichohi in which Hon Ringera, J (as he then was) held that:'The concept of joint and several liability comprehends one judgment and decree against two or more persons who are liable collectively and individually to the full extent of such decree; however double compensation is not allowed and accordingly whatever portion of the decree is recovered against one of such defendant cannot be recovered from the other defendant(s).'

[16]In the premises, Mr Mbago submitted that the appeal is unmerited and therefore ought to be dismissed with costs.

[17]This being a first appeal, it is the duty of the Court to re-evaluate the evidence adduced before the lower court with a view of coming to its own findings and conclusions thereon; while giving due consideration for the fact that it did not have the advantage of seeing or hearing the witnesses. This is in line with Selle & Another vs Associated Motor Boat Co Ltd & Others [1968] EA 123 wherein it was held that:'This court is not bound necessarily to accept the findings of fact by the court below. An appeal to this court is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect.'

[18]Before the lower court, evidence was called from the 1st appellant, Peris Wakesho Maghema. She relied on her written statement dated November 3, 2016 which was filed herein on May 17, 2017. She stated that on March 14, 2016 she was awarded Judgment for Kshs 1,486,160/= plus costs and interest, making a total of Kshs 1,670,185/= in Mombasa CMCC No 1215 of 2013: Peris Wakesho Maghema & Another v Maclex Makoi Mgabi & Another. The award was in respect of the fatal injuries sustained by the deceased, Bonface Mwakio Kaluvu, in a road traffic accident that occurred on June 30, 2012 involving Motor Cycle Registration No xxxx and Motor Vehicle Registration No xxxx. She added that, the respondent having covered the subject motor cycle at the time of the accident, the respondent is statutorily bound to satisfy the Judgment in the primary suit.

[19]In addition to the evidence of the 1st appellant, the appellants called Zakayo Otieno who was then the Chief Executive Officer at Mombasa Law Courts to produce the original file for Mombasa CMCC No 1215 of 2013 in the declaratory suit. And, on behalf of the Respondent, the Branch Manager, Mombasa, Edwin Mwangi, testified on June 20, 2019. He conceded that the respondent had indeed insured the subject motor cycle which was then owned by Maclex Makori Magabi vide Policy No xxxxx; and that the said motor cycle was involved in a road traffic accident on the June 30, 2012 wherein the rider and the pillion passenger succumbed to the injuries suffered consequent to the accident. He was however categorical that the policy was in respect of private use of the motor cycle and therefore did not envisage third party claims.

[20]From the foregoing summary of evidence, there is no dispute that the appellants herein filed a suit CMCC Civil Suit No 1215 of 2013 Peris Wakesho Maghema & Another v Maclex Makori Magabi & Others for a personal injury claim due to a road accident that occurred on or about June 30, 2012. The said suit was heard and the defendants therein found wholly liable for the accident. Judgment was thereafter entered in favor of the appellant by Hon J M Nang’ea on the March 14, 2016 for sum of Kshs 1, 486, 160. 00/= plus costs of the suit. The appellants had their costs taxed in the sum of Kshs 184, 025. 00/=. According to the appellants, the total amount due was, thus Kshs 1, 670, 185. 00/= plus interest at 12% per annum from March 14, 2016 until payment in full.

[21]Armed with that Decree and Certificate of costs, the appellants filed a declaratory suit against the respondent on May 17, 2017; being Mombasa CMCC Civil Suit No 816 of 2017 in its capacity as the insurer of a Motor cycle KMCR xxxx that was, at the time of the accident, owned by Maclex Makori Magabi. The appellants thereby prayed for judgment against the respondent for the sum of Kshs 1, 486, 160. 00/= plus costs under Section 10 of the Insurance (Motor Vehicle Third Risks Act) Chapter 405, Laws of Kenya.

[22]Before the trial court the appellants produced a certificate of insurance with the Policy Number indicated as xxxx to support their contention that the cover was issued by the respondent in respect of Motor cycle xxxx; and therefore that the respondent, as the insurer, was liable to settle the decretal sum awarded in CMCC Civil Suit No 1215 of 2013 Peris Wakesho Maghema & Another v Maclex Makori Magabi & Others.

[23]It is further manifest from the foregoing summary that the respondent, through DW1, admitted that, at the material time, Motor cycle xxxx was insured by the respondent. In particular, DW1 testified that the policy was valid between August 12, 2011 and July 5, 2012. Clearly therefore the policy cover was valid as at June 30, 2012 when the accident occurred. The respondent’s only contention was that the motor cycle was, at the time of the accident, being used for hire and reward, a purpose that was not contemplated in the policy cover. According to DW1, the insurance cover issued for Motor cycle xxxx was for private use and was not to extend to perils in connection with third parties.

[24]From the foregoing summary of evidence, the issues emerging for reconsideration and determination are as hereunder:(a)What was the scope of the subject insurance policy and whether the deceased, as a third party, was covered under the insurance policy issued by the respondent;(b)Whether the respondent was required to file a declaratory suit against the insured to disclaim liability to third parties;

[a] On the Scope of the Policy [25]A careful perusal of the evidence presented before the lower court shows that all the appellants did was to present a certificate of insurance whose purport was that the subject motor cycle was under insurance between August 12, 2011 and July 5, 2012; and that when the accident occurred on June 30, 2012 the said policy was valid. While it was their assertion that the cover extended to third party risks, the contention of the respondent was all along that the cover was limited to risks related to private use of the motor cycle; and that the policy expressly excluded risks to third parties; especially carriage for hire and reward.

[26]Faced with such evidence, the trial magistrate concluded, and rightly so in my view, that the appellants had fallen short of proving their claim against the respondent on a balance of probabilities. This conclusion was well founded because it is firmly predicated on the provisions of Sections 107,108 and 109 of the Evidence Act, Chapter 80 of the Laws of Kenya, which provisions are explicit that:107(1) 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 acts exist.(2)When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.108The burden of proof in a suit or proceeding lies in that person who would fail if no evidence at all were given an either side.109The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.

[27]The Court of Appeal in the case of Antony Francis Wareham t/a AF Wareham & 2 others v Kenya Post Office Savings Bank [2004] eKLR held: -'We are impelled to state unequivocally that in our adversarial system of litigation, cases are tried and determined on the basis of the pleadings made and the issues of fact or law framed by the parties or the Court on the basis of those pleadings pursuant to the provisions of order XIV of the Civil Procedure Rules. And the burden of proof is on the plaintiff and the degree thereof is on a balance of probabilities. In discharging that burden, the only evidence to be adduced is evidence of existence or non-existence of the facts in issue or facts relevant to the issue. It follows from those principles that only evidence of facts pleaded is to be admitted and if the evidence does not support the facts pleaded, the party with the burden of proof should fail'

[28]Similarly, inPalace Investment Ltd v Geoffrey Kariuki Mwenda & Another [2015] eKLR, it was held that:'Denning J, in Miller –vs- Minister of Pensions [1947] 2 All ER 372 discussing the burden of proof had this to say; -a.'That degree is well settled. It must carry a reasonable degree of probability, but not so high as is required in a criminal case. If the evidence is such that a tribunal can say: we think it more probable than not; the burden is discharged, but, if the probabilities are equal it is not.b.This burden on a balance or preponderance of probabilities means a win however narrow. A draw is not enough. So, in any case in which the tribunal cannot decide one way or the other which evidence to accept where both parties are equally (un) convincing, the party bearing the burden of proof will lose because the requisite standard will not have been attained.'

[29]It was therefore not sufficient for the appellants to rely on the cover note alone in a case where the respondent’s stance was that the scope of the cover issued excluded carriage for hire and reward. In this connection, I find instructive the expressions of Blackburn, J inHarris vs Great Western Railway Company [1876] 1 QBD 515 at page 530 that:'It is clear law that where there is a writing, into which the terms of any agreement are reduced, the terms are to be regulated by that writing by assenting to the contract thus reduced to writing, [a party] represents to the other side that he has made himself acquainted with the contents of that writing and assents to them, and so induces the other side to act upon that representation by entering into the contract with him, and is consequently precluded from denying that he did make himself acquainted with those terms.'

[30]It is in this regard that I entirely agree with the position taken in Kenyan Alliance Insurance Company Ltd v Naomi Wambui Ngira & Another (supra) that:'In this case, the liability has been expressly excluded by virtue of the aforesaid Section 5(b)(l) of the Act. Should the insurer be obligated to settle any such judgment, this would not only have the effect of ascribing on parties that which they did not contract, but also to find against the provisions of law. The end result would be to confer an unnecessary benefit on an undeserving party while punishing the insurer for that which it did not contract and/or acquiesce to. This Court finds that the requirement that the insurer settles the decretal amount following entry of judgment is only applicable for such judgments involving liability which is required to be covered both under the Act and under the insurance policy.'[b]On repudiation and whether the respondent was required to file a declaratory suit against the insured to disclaim liability to third parties:

[31]An argument was made by counsel for the appellants that, for the respondent to escape liability it ought to have filed a declaratory suit against its insured for purposes of Section 10(4) of the Insurance (Motor Vehicles Third Party Risks) Act. That provision states that:'No sum shall be payable by an insurer under the foregoing provisions of this section if in an action commenced before, or within three months after, the commencement of the proceedings in which the judgment was given, he has obtained a declaration that, apart from any provision 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 a declaration as aforesaid in an action shall not thereby become entitled to the benefit of this subsection as respects any judgment 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 or 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 thereto.'

[32]It is manifest therefore that it was not obligatory for the respondent to file a declaratory suit. Hence, in Kenyan Alliance Insurance Company v Naomi Wambui (supra) it was held that:'The requirement for an insurer to file a declaratory suit is intended for only those liabilities for which the insurer is entitled to repudiate and/or avoid for reasons beyond the express provisions of the policy, specifically being that there was non-disclosure of material facts or a misrepresentation of a material fact. The liability in issue in this case is not one such contemplated by the said section. This court therefore finds that there was no obligation to file a declaratory suit as per Section 10(4) of the Act, in view of the fact that the liability in question is not one covered by the Act and further that the avoidance of liability was on account of an express provision of the policy.'

[33]In the light of the foregoing, it cannot be said that the learned magistrate misapprehended the evidence adduced before him or the applicable law. In the circumstances of this case, it is clear why the declaratory Orders sought could not issue as the appellants failed to prove on balance of probabilities that the respondent was liable to settle the decretal sum awarded in CMCC Civil Suit No 1215 of 2013 Peris Wakesho Maghema & Another v Maclex Makori Magabi & Others.

[34]The upshot is that the appeal fails and is hereby dismissed. Granted the circumstances of the matter, it is it is hereby ordered that each party shall bear own costs of the appeal.It is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY AT MOMBASA THIS 9TH JUNE 2022. .................OLGA SEWEJUDGE