Mua Insurance Kenya Limited v Ireri; Muriungi (Interested Party) [2023] KEHC 26539 (KLR)

Mua Insurance Kenya Limited v Ireri; Muriungi (Interested Party) (Civil Suit E015 of 2022) [2023] KEHC 26539 (KLR) (11 December 2023) (Ruling)

Neutral citation: [2023] KEHC 26539 (KLR)

Republic of Kenya

In the High Court at Meru

Civil Suit E015 of 2022

EM Muriithi, J

December 11, 2023

Between

Mua Insurance Kenya Limited

Plaintiff

and

Moses Njeru Ireri

Defendant

and

Geoffrey Mwongera Muriungi

Interested Party

Ruling

1. Against a background of a suit in negligence arising from a road traffic accident involving the Interested Party herein as plaintiff against the defendant filed in Githongo Senior Principal Magistrate’s Court Civil Suit NO. E028 of 2022, the plaintiff herein, an insurance company, filed a Plaint dated 7/10/2022 a declaratory/disclaimer suit seeking to avoid liability and satisfaction of any decree that may result or issue against its insurance contract with the defendant on the ground that the latter had, in breach of the insurance contract, used the insured motor vehicle for uninsured commercial purposes.

2. Contemporaneously with the suit, the Plaintiff filed an application by Notice of Motion of the same date expressed to be brought Under Sections 1A, 1Band 3A of the Civil Procedure Act, Cap 21 laws of Kenya and Order 51 Rule 1 of the Civil Procedure Rules 2010 seeking a stay of proceedings of the negligence suit in the in the lower court in specific orders as follows:1. That the application be certified urgent and heard exparte in the first instance and thereafter on priority basis in view of its urgent nature and that service be dispensed with in the first instance.2. That an order of Stay do issue staying Proceedings in Githongo SPMCC E028 OF 2022; Geoffrey Mwongera Muriungi (Suing as legal administrator and/or personal representative of the estate of the estate of JOsaphat Kithiuru Murungi-deceased) Vs. Moses Njeru Ireri pending the hearing and determination of this application inter parties.3. That an order of stay do issue staying proceedings in Githongo SPMCC E028 OF 2022; Geoffrey Mwongera Muriungi (Suing as legal administrator and/or personal representative of the estate of the estate of Josapha T Kithiuru Murungi-deceased) Vs. Moses Njeruireri pending hearing and determination of the Suit herein.4. That this Honourable Court may grant any other orders it deems just to grant.5. That the cost of this application be in the cause.”

3. The grounds of the application were set out in the application as follows:A.That the plaintiff has filed a declaratory suit against the defendant/ respondent herein seeking to avoid liability in respect to any accident that occurred on 4th March, 2022. B.That if the suit Githongo SPMCC E028 OF 2022; Geoffrey Mwongera Muriungi (Suing as legal administrator and/or personal representative of the estate of the estate of Josaphat Kithiuru Murungi-deceased) Vs. Moses Njeru Ireri. succeeds then the plaintiff herein will be compelled to settle any claim arising from the said suit.e.That it is in the interest of justice to stay proceedings in Githongo SPMCC E028 OF 2022; Geoffrey Mwongera Muriungi (Suing as legal administrator and for personal representative of the estate of the estate of Josaphat Kithiuru Murungi-Deceased) VS. Moses Njeru Ireri to enable this Honourable court to determine if the plaintiff herein is liable to settle the claim.d.That There shall be no prejudice suffered by the Defendant if the said stay of Proceedings herein is granted.e.That the plaintiff stands to suffer irreparable damage unless this application is allowed.”

4. The application was supported by the affidavit of the Plaintiff’s Deputy Legal Manager Lilian Simiyu sworn on 7/10/2022 principally at paragraphs 2-10, in terms as follows:2. The plaintiff has filed a declaratory suit against the defendant/ respondent herein seeking to avoid liability in respect to any accident that occurred on 4th March, 2022. 3.If the suit Githongo SPMCC E028 OF 2022; Geoffrey Mwongera Muriungi (Suing as legal administrator and/or personal representative of the estate of the estate of Josaphat Kithiuru Murungi-deceased) Vs. Moses Njeru Ireri succeeds then the plaintiff herein will be compelled to settle any claim arising from the said suit. (A true copies of the pleadings in Githongo PMCC no. E028 of2022 is annexed herewith and marked as LS-1).4. The defendant at the time of the accident was using the motor vehicle for commercial gain in total breach of insurance policy number, 1215/16/07/CO/R6. (attached and marked LS-2 is the insurance policy documents for ease of reference.)5. We instructed Rapidtech insurance Loss Investigators who issued my employer with an investigation report confirming the motor vehicle registration number KCC 4850 was being used for commercial gain at the time of the accident on 4th March, 2022. (Attached and marked L5-3 is the investigation report for ease of reference).6. If the declaratory suit herein succeeds, the Plaintiff herein will not be liable to settle the claims in suit Githongo SPMCC E028 OF 2022; Geoffrey Mwongera Muriungi (Suing as legal administrator and/or personal representative of the estate of the estate of Josaphat Kithiuru Murungi-Deceased) vs. Moses Njeru Ireri.7. It is in the interest of justice that the proceedings in Githongo PMCC E028 0 F 2022 be stayed to allow the hearing and determination of this suit and determine if the plaintiff is liable to settle any judgment resulting from Githongo PMCC E02BOF 2022. 8.It is in the interest of justice that the instant suit be determined first to enable the plaintiff make decision on whether there is a need to defend insured in Githongo PMCC E028 OF2022. 9.There will be no undue prejudice suffered by the Defendant if the said stay of proceedings is granted by this Honourable Court.10. The plaintiff stands to suffer irreparable damage unless this Application is allowed because it would be compelled to settle any judgment issued by lower court.”

5. The application was opposed by the defendant who asserted that the suit was pre-emptive in a Replying Affidavit sworn on 23/11/2022 as follows:3. That the orders sought for stay of proceedings are unmerited and ought to be dismisscd having not met the threshold needed for issuance of such.4. That the Respondent's Advocate has requested the Applicant's Counsel to suppy the full replying affidavit and annextures if any and in the List of Documents quoted and attached to the Plaint to no avail. Annexed herein. And marked “MNI” is an extract of the email correspondence requesting for particulars.5. That Without and bereft of the opportunity to study and scrutinize the said pleadings the same leaves the Respondents with literally nothing to respond to and he shall beseech the court to compel the applicant to supply every pleadings filed for and on behalf of the applicant and in default shall pray for the instant application to be dismissed with costs.6. That the application is undeserving of any orders in the interim until the applicant exchanges and /or serves all pleadings with the respondent in the interest of a fair and expedient determination.7. That further the suit is preemptive as no evidence of determination has been availed to this court or proceedings on the status of the lower court to warrant issuance of the orders sought.”

6. For the Interested Party a Replying Affidavit sworn on 7/3/2023 urged at paragraphs 2-9 that the suit by the Plaintiff was speculative and premature as follows:2. That I have read and understood the Plaintiff/Applicant's Notice of Motion dated the 7th day of October 2022 and it is in reply thereto that I swear this affidavit.3. That the application before this court is based on an insurance contract between the Plaintiff and the Defendant in which the Interested Party is not a party.4. That the Plaintiff is not a party to Githongo SPMCC No. E028 of 2022 (Geoffrey Mwongera Murungi - Suing as the Administrator of the estate of Josaphatkithiurumurungi- deceased) v Moses Njeru Ireri] which is sought to be stayed and whatever judgement that the court might ultimately enter cannot be executed against it.5. That the application is based on a presumption that the Defendant herein will not be able to satisfy any judgement entered against him in Githongo SPMCC No. E028 of 2022 and therefore the Interested Party will be filing a declaratory suit against it.6. That the said Githongo SPMCC No. E028 of 2022 is yet to be efixed for hearing and there is no reason for the Applicant to believe that the same will be concluded before this suit.7. That in any event, the Defendant has not filed any defence in Githongo E028of 2022 and might as well not be opposed to Interested Party's suit.8. That even in the event the Interested Party succeeds in Githongo SPMCC No. E028 of 2022 and decides to file a declaratory suit against the Plaintiff herein, it can still move this court to stay it on the basis of this suit. The Plaintiff will therefore not be prejudiced if this application is disallowed.9. That granting an order of stay of proceedings will negate the right of the Interested Party to have his case determined expeditiously yet the Applicant is not a party to Githongo SPMCC No. E028of 2022. ”

7. No supplementary affidavits were filed by any party.

Submissions 8. Counsel for the parties filed respective submissions on their contention. The applicant’s Submissions dated 31/5/2023 primarily urged a risk of prejudice that the negligence suit could be concluded, in the absence of a defence by the defendant, through interlocutory judgment upon which the plaintiff would be called upon to satisfy the decree under the statutory obligation of Insurance (Motor Vehicle Third Party Risks) Act cap 405 as follows:3. 3.The Plaintiff is of the position that the prayer of stay of execution should be issued at this juncture for the following reasons:(a)The Interested Party admits at paragraph 7 of their Replying Affidavit, that the Defendant herein has not filed a Defence in Githongo SPMCC No. E028 of 2022 thus there is a very present risk that the Interested Party may obtain interlocutory judgment against them and hasten the conclusion of Githongo SPMCC No. E028 of 2022 and seek to execute the anticipated judgment against the Plaintiff herein. The risk of prejudice against the Plaintiff is thus established.(b)The Plaintiff herein is not a party to the proceedings in Githongo SPMCC No. E028 of 2022, thus they are not in a position to champion their cause to avoid the insurance policy with the Defendant except by these proceedings.(c)The provisions of Section 10(4) of the Insurance (Motor Vehicles Third Party Risks) Act grant an Insurer only 3 months after proceedings under a motor vehicle policy have been commenced against their insured, to avoid a motor vehicle insurance policy by way of a declaratory suit. The Interested Party has already revealed the suit herein is already at risk of entry of interlocutory judgment on liability and expedited judgment on quantum in Githongo SPMCC No. E028 of 2022. In these circumstances, the most efficient use of available judicial resources is to first dispose of the Plaintiff's declaratory suit, which has already been filed, so that court may settle whether the Plaintiff is liable to settle any final judgment in Githongo SPMCC No. E028of 2022. (d)It is worth considering that the Defendant herein has ignored defending the claim in Githongo SPMCC No. E028of 2022, due to the expectation that any eventual claim would be automatically settled by the Plaintiff herein. Thus, it is in the interests of both the Plaintiff and Defendant to have the suit herein heard and determined before further progression of Githongo SPMCC No. E028of 2022. 3.4The Court should also be alive to the practice, conceded by the Interested Party, that courts usually grant stay of proceedings after the initial suit is concluded to enable any ongoing declaratory suit be concluded; therefore there is no special case being advanced herein when the Plaintiff seeks stay of Githongo SPMCC No. E028 of 2022 pending conclusion of this suit. This would also enable the Court and the Interested Party avoid any future declaratory suit and the applicable costs since the Plaintiff has already instituted this suit and conclusion of the same would settle the issue of their liability as an insurer to settle any potential award in Githongo SPMCC No. E028 of 2022. In the case of Andrew Linge Mutua v Geminia Insurance Company Limited; Zipporah Mwende Mutua (Interested Party) [2021] eKLR, the High Court held:"27. It is my view that in these circumstances, justice would be done to all the parties if there was a stay of proceedings for a short period to enable the Applicant prosecute his case. Accordingly, I hereby grant an order staying execution in Machakos Chief Magistrate Court Civil Case Number 312 of2018 pending the determination of this suit on condition that the Plaintiff/Applicant prosecutes his case within 60 days from the date o[this ruling. In default the stay will automatically lapse." [Emphasis added]3. 5.From the above, there are clear and solid grounds for exercise of the Court's discretion to stay proceedings in Githongo SPMCC No. E028of 2022pending the outcome of the declaratory suit herein.4. Appropriate OrdersIn view of the foregoing arguments and authorities, it is our humble submission that the Plaintiff/ Applicant has proved the application to be merited and therefore is deserving of prayers no. 3 and 5 of the application. We urge for orders in tandem.”

9. The defendant urged no prejudice in the absence of a judgment and submitted as follows:“Your lordship, the prayer for stay of proceedings is an equitable relief. An applicant must have come to court with clean hands. In the instant matter, the insurance policy between the applicant and the respondent has not been repudiated and is therefore in force. The application merely serves as a bad attempt to avoid indemnity should liability be determined in favour of the interested party in the Githongo case.We are humbly submitting that the same should be dismissed seeing that liability in the Githongo and/or lower courts case where the applicant is not a party to has not been determined and therefore seeking to edge out the respondent who has complied with the terms of the insurance policy is evasive and ought not to be entertained at this stage seeing it is pre-emptive.The applicant by making unproven assertions of non-compliance of the insurance policy by the insured respondent only seeks to distance itself from satisfying any judgment should such be passed against its insured who is the respondent at the lower court in Githongo and this court has held before that a court cannot and should not rewrite terms of a contract.We are further submitting that a court cannot aid in the bending or circumventing of rules and a shifting of goal posts for, while it may seem to aid one side, it unfairly harms the innocent party who strives to abide by the rules and in this case an applicant who satisfied all premiums and was granted a legal and undisputable cover. We apprehend that it is in the even-handed and dispassionate application of rules that courts give assurance that there is clear method in the manner in which things are done so that outcomes can be anticipated with a measure of confidence, certainty and clarity where issues of rules and their application are concerned.We are further submitting that section 10 (1) of the Insurance (Motor Vehicles Thord Party Risk) Act Cap. 105 which provides that "If after a policy of insurance has been effected, judgment in respect of my 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 my 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 my sum payable thereunder in respect of the liability, including my amount payable in respect of costs sad my sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments’.In this case, liability at Githongo Law Courts has not been determined and therefore there is no reasonor the applicant to have filed this suit which in our view is an abuse of court process and ought to be deemed as such with costs to the respondent. The applicant received premiums dutifully but now seeks to abandon its duties and obligations to the insured where liability has not even been determined.Let the applicant await the outcome of the lower court proceedings.”

10. In submissions dated 3/5/2023, the Interested Party pointed to the unconcluded nature of the proceedings before the trial court and urged that this suit was speculative and premature as follows:“The issue emerging for consideration from the pleadings can be summed up as follows:-(a)Whether the plaintiff has satisfied the conditions for granting stay of proceedings in Githongo SPMCC E028OF 2022 between Geoffrey Mwongera Murungi (Suing as the Administrator and/or Legal Representative of the estate of Josaphat Kithiuru- Deceased Vs Moses Njeru Ireri?The Plaintiff's main reason for seeking stay of proceedings is the fact that the defendant breached the terms and conditions of the insurance contract, Policy Number 1215/16/07/CO/R6 thus entitling the Plaintiff to avoid the obligations under policy and further on determination of the lower court suit after which the Plaintiff will be held liable to settle the claims under theprovisions of the Insurance (Motor Vehicle Third Party Risk) Act, Cap 415. Would it be in the interest of justice to stay proceedings in the lower court?Justice F.Gikonyo in Britam Insurance Co Ltd v Jane Muthoni Mwangi; Kevin Ouma Ochieng & 3 others (Interested Parties) [20211 eKLR, placed reliance on Halsbury's Law of England, 4th Edition. Vol. 37 page 330 and 332, that:"The stay of proceedings is a serious, grave and fundamental interruption in the right that a party has to conduct his litigation towards the trial on the basis of the substantive merits of his case, and therefore the court's general practice is that a stay of proceedings should not be imposed unless the proceeding beyond all reasonable doubt ought not to be allowed to continue.""This is a power which, it has been emphasized, ought to be exercised sparingly, and only in exceptional cases."It will be exercised where the proceedings are shown to be frivolous, vexatious or harassing or to be manifestly groundless or in which there is clearly no cause of action in law or in equity. The applicant for a stay on this ground must show not merely that the plaintiff might not, or probably would not, succeed but that he could not possibly succeed on the basis of the pleading and the facts of the case."Based on the above quote, there is no reason to stay proceedings in the lower court as the Plaintiff herein is not a party to those proceedings and there is no judgement that has been entered in that case that would warrant a stay of proceedings. The case is yet to be heard. Thus their grounds are merely speculative and seek to deny the interested party his civil right to a fast and expeditious trial and determination of the issues he has brought before the court in effect negating the provision of Article 159 of the Constitution of Kenya which articulate on the need for justice not to be delayed but for it to be administered without regard to procedural technicalities. It is our view that this suit is meant to stall the lower court proceedings to the detriment of the interested party.At this stage, the Interested party does not seek for indemnity from the Plaintiff but determination of his case between himself and the Defendant and as such granting the orders of stay would be premature and unjustified as the plaintiff is not bound to pay after judgement is delivered if it has a good defence and which issues can be raised once declaratory suit is filed against it by the interested party if successful in the lower court case.In these circumstances, we are of the view that there is no loss or damages that the Plaintiff is exposed or reasonable cause that could warrant the stay of proceedings. The approach' adopted by the Plaintiff could be problematic in so far as it seeks to subject the right of third parties to litigate their case against the insured to the determination of this case. In light of the above submissions. We humbly ask this court to dismiss the Plaintiff's application.”

11. Ruling was reserved.

Issue before the Court 12. The question before the court is whether the court will in the circumstances of this case order stay of proceedings of the negligence suit in the trial court pending the hearing and determination of this declaratory/disclaimer suit in this court to avoid liability under the contract between the plaintiff and the defendant.

Determination 13. The suit and application for stay founded on it is clearly premature. If the trial court suit ends with a dismissal of the negligence suit against the defendant, there will be no liability to avoid for the plaintiff insurer in this case, and the suit will be rendered redundant!

14. This suit is distinguishable from the High Court decision relied on by the applicant, Andrew Linge Mutua v Geminia Insurance Company Limited; Zipporah Mwende Mutua (Interested Party) [2021] eKLR in that in the latter it was a declaratory suit by an insured seeking to compel an insurer to meet the judgment already adjudged against him and the Judge properly found that the suit by the insured would be rendered nugatory if execution of the judgment was not stayed in the meantime.

15. The Court in the Andrew Linge Mutua v Geminia Insurance Company Limited; Zipporah Mwende Mutua (Interested Party) (Odunga J., as he then was), clearly noted the special circumstances of the case as follows:“24 In the instant application, the Applicant seeks stay execution of the decree in the primary suit pending the determination of this suit. However, whereas an insured may well be entitled to seek a declaration that its insurer is entitled to settle the claims covered under the insurance policy, that statutory right of action does not bar a person who is injured from executing the decree issued in his favour against the insured directly.25. However, one cannot close his eyes to the fact that the Applicant is in effect seeking that the Defendants pays the Interested Party the sum due to the Interested Party from the Applicant. Unless some measure of protection is given to the Applicant, his suit as presently framed may well be an academic exercise. ….26. I must however state that the primary obligation of settling the decree falls squarely on the Applicant and in the event the Defendant as his insurer fails to satisfy the decree, the Applicant will still be called upon to satisfy the same. The mere fact that the Defendant is bound both contractually and statutorily to satisfy the decree does not absolve the Applicant from meeting his obligations under the tort of negligence. It must be noted that nothing prevents the Applicant from settling the decretal sum and then suing the Defendant for compensation or reimbursement.27. It is my view that in these circumstances, justice would be done to all the parties if there was a stay of proceedings for a short period to enable the Applicant prosecute his case. Accordingly, I hereby grant an order staying execution in Machakos Chief Magistrate Court Civil Case Number 312 of 2018 pending the determination of this suit on condition that the Plaintiff/Applicant prosecutes his case within 60 days from the date of this ruling. In default the stay will automatically lapse.28. The costs of this application are awarded to the Interested Pray in any event.”

16. In this case there is no judgment against the insured and it cannot be assumed that because the defendant has not field a defence, there shall follow an interlocutory judgment and thereafter a final judgment which the insurer the plaintiff herein shall quickly be called upon to satisfy. It is not unknown of cases where even after entry of interlocutory judgment the case is lost at formal proof, this not being a claim for liquidated demand which proceeds ot judgment without need for formal proof and assessment of damages.

17. As urged by the Interested Party’s counsel, “the said Githongo SPMCC No. E028 of 2022 is yet to be fixed for hearing and that the defendant herein is yet to file his defence thus there is no reason for the plaintiff to believe that the lower court matter will be concluded before this current suit”.

18. I respectfully agree with F. Gikonyo, J. in Britam Insurance Co. Ltd. case, supra, on the principle that stay of proceedings ought to be granted sparingly and only in exceptional cases.

19. The court must carefully distinguish between stay of execution and proceedings post judgment and the situation as here where the dispute is pending hearing and determination. The present situation is one of stay of prosecution of a suit which must depend on clearest evidence of abuse of process of court if it were not to run foul of the constitutional right to access to justice under Article 48 of the Constitution. The victim of negligence has a constitutional right to sue and recover compensation for the wrong committed against him by the tortfeasor, and any statutory or contractual insurance arrangement between the tortfeasor and an insurance company is irrelevant to his right of recovery of damages for his injury.

20. Indeed, the Court in Andrew Linge Mutua, supra, emphasized the right of a victim to recover from the insured, and that is, with respect, the sense in understand the passage of the ruling of the court –“26. I must however state that the primary obligation of settling the decree falls squarely on the Applicant and in the event the Defendant as his insurer fails to satisfy the decree, the Applicant will still be called upon to satisfy the same. The mere fact that the Defendant is bound both contractually and statutorily to satisfy the decree does not absolve the Applicant from meeting his obligations under the tort of negligence. It must be noted that nothing prevents the Applicant from settling the decretal sum and then suing the Defendant for compensation or reimbursement.”

21. This Court does not find any justification to grant a stay of proceedings in a suit for recovery of damages for negligence pending hearing and determination before the trial court, to enable the prior prosecution of a declaratory suit by an insurer against the insured who is the defendant in the pending suit. Once judgment is obtained against the said defendant there shall be a substratum of liability for an application for stay of execution and proceedings to hold the status quo pending the question of avoidance of liability between the defendant insured and the insurer.

22. For now, and before judgment is entered against the insured, the application for stay of proceedings based on the likely expected outcome of the negligence suit is speculative and premature.

Orders 23. Accordingly, for the reasons set out above, the Court finds that the application dated 7/10/2022 is speculative and premature, and it is, therefore, dismissed.

24. Costs in the cause.

Order accordingly.

DATED AND DELIVERED ON THIS 11TH DAY OF DECEMBER, 2023. EDWARD M. MURIITHIJUDGEAppearances:M/S Kiruki & Kayika Advocates for the PlaintiffM/S Chiuri & Chiuri CO. Advocates for the Defendant.M/S Nkunja & Co. Advocates for the Interested Party.