Multiple Hauliers (E.A.) Limited v Cannon Assurance Limited [2017] KEHC 85 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

ADMIRALTY & COMMERCIAL DIVISION

CIVIL SUIT NO. 675 OF 2012

MULTIPLE HAULIERS (E.A.) LIMITED....................PLAINTIFF

VERSUSCANNON ASSURANCE LIMITED........DEFENDANT

RULING

1. In the Dead of the night of 18th November 2010, Bulldozers and other heavy machines belonging to and acting on the instructions of the Government of Kenya demolished a section of a Perimeter wall, Office Blocks and other structures erected on LR No. 9042/607 and L.R. No. 9041/608, Embakasi, North Airport Road, Nairobi.  It is the case for Multiple Hauliers (E.A.) Ltd that because of that action it has suffered loss and damage to its property.

2. It is also the case for the Plaintiff that the aforesaid loss, which has been assessed by the Plaintiff at Kshs. 84,193,425. 86, was a loss that was indemnifiable by Cannon Assurance Ltd (The Defendant) within the terms of the Policy) of insurance No. 04/041/415/96.

3. The Defendant does not think so and has sought a summary determination of these proceedings by way of a Motion of 6th September 2016 in which it seeks that the Plaintiff’s suit be struck out for not disclosing a Cause of Action and being an abuse of Court process.

4. It would be necessary to set out the backdrop of this dispute before considering the Grounds upon which it is predicated and resisted.

5. It is alleged by the Plaintiff that it is the registered owner of Plot Nos. L.R. 9042 and L.R. 9042/608.  The word “alleged” is purposefully used because of facts that will emerge shortly.  It does not seem disputed that the Plaintiff caused to be erected on the said property buildings and other associated facilities that included a Perimeter wall.

6. Sometime in the year 2007, the Defendant in consideration of payment by the Plaintiff to it of premium issued to the Plaintiff policy No. 04/041/415/96 hereinafter (the policy).  It was an endorsement (the malicious damage Endorsement) of the policy that it would cover loss of and damage to the property insured directly caused by the malicious act of any person not being an act excluded under the Riot and Strike endorsement.

7. There was then condition 5 to the Riot and Strike Endorsement which provides that:-

i. This insurance does not cover:-

a) Loss of earnings, loss by delay, loss of market or other consequential or indirect loss or damage of any kind or description whatsoever.

b) Loss or damage resulting from total or partial cessation of work or the retarding or interruption of any process or operation.

c)  Loss or damage occasioned by permanent or temporary dispossessions resulting from confiscation commandeering or requisition by any lawfully constituted authority.

d) Loss or damage occasioned by permanent or temporary dispossession of any building resulting from the unlawful occupation by any person of such building.

e) Loss or damage directly or indirectly caused by or arising from or in consequence of or contributed to by nuclear weapons material.

PROVIDED nevertheless that the Company is not relieved under (c) or (d) above of any liability to the insured in respect of physical damage to the property insured occurring before dispossession.

ii. This insurance does not cover loss of damage directly or indirectly caused by or arising from or in consequence of or contributed to by ionizing radiations or contamination by nuclear fuel.  For the purposes of this Condition 5 (ii) only combustion shall include any self-sustaining process of nuclear fission.

8. It is common ground that during the occurrence of the demolition hereinbefore referred, the policy had been extended and was in force.

9. Following that demolition, the Plaintiff filed a Constitutional Petition (being Petition No. 88 of 2010) against the following:-

a) The Attorney General

b) Kenya Urban Roads Authority

c)  The Permanent Secretary, Ministry of Roads

d) The Ministry of Lands

e) The Permanent Secretary Ministry of Lands

f)  The Minister, Ministry of Local Government

g) Ministry of Local Government

h) The Director of City Planning, City Council of Nairobi

i) The City Council of Nairobi.

NIC Bank joined in as an Interested Party.

10. In a decision dated 19th December 2013, Hon. Mumbi Ngugi J. made the following findings:-

“My findings in this matter therefore, and which I shall take in account in considering what reliefs to grant the Petitioner, are as follows:

i. That this matter is properly before the Court and cannot be struck out solely on the basis that some of the reliefs sought are available in civil proceedings or that the facts giving rise to the petition are contentious. It is the duty of any Court to evaluate the evidence before it, whether presented by way of affidavit or viva voce or both, and determine on a balance of probability where the truth lies.

ii. That there was no unlawful or arbitrary acquisition of the Petitioner’s property as the evidence on record indicates that the boundary of the suit property had encroached on a road service.

iii. That the Respondents violated the Petitioner’s right to fair administrative action by failing to accord it a hearing and an opportunity to make representations with regard to the encroachment on the road reserve prior to proceeding with the demolition of the perimeter wall and other structures erected on the portions of the suit property in dispute”.

In the end the only relief granted to Plaintiff by the good Judge was an award of Kshs. 2,000,000/= for violation of its right to fair administrative action and costs of the Petition.

11. Although, the Plaintiff had through its Replying affidavit sworn by John Diro on 2nd October 2016, stated that the Plaintiff had filed an Appeal against that decision and the same is pending hearing and determination at the Court of Appeal, no proof of the filing, and pendency thereof was provided.  This Court shall therefore be making a finding that no Appeal has been preferred.

12. Looking at the Plaintiff’s submissions, this Court has understood the  attack on the Plaintiff’s suit to be three pronged;

(i) That so as to prevail on the malicious damage endorsement, the Plaintiff needs to establish that the loss and damage resulted from the malicious act of a person.

(ii) The insured will not be indemnified by the insurer, under the Special conditions to the Material Damage Endorsement, where the loss or damage results from the confiscation, commandeering or requisition by any lawful constituted authority.

(iii) The contract of insurance is illegal and unenforceable as the insured lacked an insurable interest on the property at the time of entering the policy.

13. Yet the motion before Court has not set out the third limb as a ground for seeking the orders for striking out.   To allow the Defendant to argue that the Contract of insurance is illegal and unenforceable is to allow the Defendant to expand its Application beyond the contemplation of the Motion as presented.  This would be to unduly prejudice the Plaintiff.  For that reason this Court will only consider and determine the other two heads.

14. The Application before Court seeks the summary striking out of the Plaintiff for not disclosing a cause of action and being an abuse of Court process.  It is a jurisdiction to be sparingly exercised.  It should only be applied in plain and obvious cases (D.T. Dobie & Company (Kenya) Limited vs Joseph Mbaria Muchina & Another(1980) eKLR).

15. The Plaintiff’s case rests on the interpretation and application of the Malicious Damage Endorsement Clause.  The clause extended the insurance to include Malicious Damage within the meaning thereunder.  The Clause reads:-

“it is hereby agreed and declared that the insurance under the said Riot and Strike Endorsement shall extend to include MALICIOUS DAMAGE  which for the purpose of this extension shall mean loss of damage to the property insured directly caused by the malicious act of any person (whether or not such act is committed in the course of disturbance of the public peace) not being an act amounting to or committed in connection with an occurrence mentioned in Special Condition 6 of the said Riot and Strike Endorsement but the Company shall not be liable under this extension for any loss or damage by fire or explosion nor for any loss or damage arising out of in the course of burglary, house breaking, theft or larceny or any attempt thereat or caused by any person taking part therein. Provided always that all the conditions and provisos of the said Riot and strike Endorsement shall apply to this extension as if they had been incorporated herein”.

16. The Plaintiff specifically pleaded that the insurance cover was inter alia to cover loss of or damage to property insured directly caused by the malicious act of any person not being an act excluded under the Riot and Strike Endorsement.

17. In paragraph 8 of the Plaint, it is averred as follows:-

“It was further condition of the said Riot and Strike Endorsement that the Defendant would not be relieved of its liability in respect of permanent or temporary dispossession resulting from confiscation, commandeering or requisition by any lawfully constituted authority whereby such physical damage or loss to the property insured occurred before dispossession.”

18. Reading the Malicious Damage Endorsement clause, the Court accepts the submission by the Defendant that the conditions and provisions of the Riot and Strike Endorsement must be read into the Malicious Damage Endorsement.  Indeed the Malicious Damage Endorsement expressly incorporates the conditions and provisions of the Riot and Strike Endorsement.

19. The Defendant then points to condition 5 of the Riot and Strike Endorsement clause which reads:-

I. This insurance does not cover:-

a) Loss of earnings, loss by delay, loss of market or other consequential or indirect loss or damage of any kind or description whatsoever.

b) Loss or damage resulting from total or partial cessation of work or the retarding or interruption of any process or operation.

c)  Loss or damage occasioned by permanent or temporary dispossessions resulting from confiscation commandeering or requisition by any lawfully constituted authority.

d) Loss or damage occasioned by permanent or temporary dispossession of any building resulting from the unlawful occupation by any person of such building.

e) Loss or damage directly or indirectly caused by or arising from or in consequence of or contributed to by nuclear weapons material.

PROVIDED nevertheless that the Company is not relieved under (c) or (f) above of any liability to the insured in respect of physical damage to the property insured occurring before dispossession.

ii. This insurance does not cover loss of damage directly or indirectly caused by or arising from or in consequence of or contributed to by ionizing radiations or contamination by nuclear fuel.  For the purposes of this Condition 5 (ii) only combustion shall include any self-sustaining process of nuclear fission.

20. It would seem to be common ground that this condition is indeed incorporated as the Plaintiff itself acknowledges this in its pleadings (paragraph 7 and 8 of the Plaint):

“(7) It was an endorsement (the Malicious Damage Endorsement) of the said Policy document that the Insurance cover was inter alia to cover loss of or damage to the property insured directly caused by the malicious act of any person not being an act excluded under the Riot and Strike Endorsement.  The Plaintiff will refer to the said Endorsements for their full terms and the true purport thereof.

(8) it was further condition of the said Riot and Strike Endorsement that the Defendant would not be relieved of its liability in respect of permanent or temporary dispossession resulting from confiscation, commandeering or requisition by any lawfully constituted authority whereby such physical damage or loss to the property insured occurred before dispossession”.

20. Now the circumstances under which the Plaintiff’s property was damaged are not controversial.   Using Bulldozers and heavy machinery, agents of the Government of Kenya brought down a section of the Perimeter wall, Office Blocks and structures erected on the properties so as to pave way for the construction of a Public Road, a road linking Mombasa Road at the City Cabanas junction with Thika Road at Ruiru.

21. What was controversial was whether or not the act was unfair, unjust, unlawful and unconstitutional.  That question was submitted to the determination of Court in Petition No. 88 of 2010.  The Court made the following findings in that respect:-

“(i) That this matter is properly before the Court and cannot be struck out solely on the basis that some of the reliefs sought are available in civil proceedings or that the facts giving rise to the petition are contentious.  It is the duty of any court to evaluate the evidence before it, whether presented by way of affidavit of viva voce or both, and determine on a balance of probability where the truth lies.

(ii) That there was no unlawful or arbitrary acquisition of the petitioner’s property as the evidence on record indicates that the boundary of the suit property had encroached on a road reserve.

(iii) That the respondents violated the Petitioner’s right to fair administrative action by failing to accord it a hearing and an opportunity to make representations with regard to the encroachment on the road reserve prior to proceeding with the demolition of the perimeter wall and other structures erected on the portions of the suit property in dispute.”

22. The argument by the Defendant is that there was no malice in the demolition of the property as the Court has in Petition No. 88 of 2010 determined that the Government had justifiable cause and acted lawfully in acquiring part of Plaintiff’s illegally acquired property.  The Defendant cites the definition of the word malice to support this argument.

23. According to Blacks Law Dictionary (8th Edition),Malice means:-

“the intent, without justification or excuse, to commit a wrongful act.  It also means a reckless disregard of the law or of a person’s legal rights and ill will, wickedness of heart.”

24. The Defendant makes the argument that if a Party’s actions are lawful then it would not matter whether the intention was bad or not and the Court having made a determination that the Government’s actions were lawful, bad motive cannot exist.

25. Counsel for the Defendant further submitted:-

“Also your Lordship, it is on record that the Judge in the Constitutional Court observed that the Government did not notify the Respondent of its intention to acquire part of L.R No.9042/607 and L.R 9042/608 in 2003, April 2006 and 15th of September 2011 via advertisement in the daillies. It is evident that the Respondent was aware of its illegal encroachment and the Governments rights over the property.  An argument of bad motive cannot thus suffice”.

26. To these arguments, the Plaintiff’s asserts that the Court in Petition No. 88 of 2010 had found that the Government had acted without following a fair administrative process and had in that sense violated the Plaintiff’s constitutional rights.  Further that the time (1. 00am) at which the demolition took place was intended to prevent the Plaintiff from seeking legal redress.  The Plaintiff sees malice.

27. Both Parties to this litigation adopt the meaning of the word “malice” as defined in The Blacks Law Dictionary (whether the 8th Edition or 9th Edition). While the Defendant is emphatic that the Government’s action was not malicious because the Constitutional Court has held that there was no unlawful or arbitrary acquisition of the Plaintiff’s property, the Plaintiff prefers the Court to give regard to the second meaning of the word malice, which is “Reckless disregard of the law or of a person’s legal rights.”

28. On my part, I do not think that the matter is as simple and straightforward as proposed by the Defendant.  This is reflected in the following findings by the Constitutional Court:-

“That the Respondents violated the Petitioner’s right to fair administrative action by failing to accord it a hearing and an opportunity to make representations with regard to the encroachment on the road reserve prior to proceeding with the demolition of the perimeter wall and other structures erected on the portions of the suit property in dispute”.

29. While the Constitutional Court held that the demolished structures had been improperly constructed on a Road reserve, it also found that the demolition proceeded in violation of the Plaintiff’s right to fair administrative action.  In others words, the Government was doing something right in the wrong way.

30. There was an argument by the Defendant that the Plaintiff was aware of its illegal encroachment and the Government’s rights over the property.  The Defendant had submitted that;-

“Therefore, it is on record that the Judge in the Constitution Court observed that the Government did notify the Respondent of its intention to acquire part of L.R. No. 9042/607 and L.R. 902/608 in 2013, April 2006 and 15th September 2011 via advertisement in the dailies.”

31. This argument, however, ignores an important finding of the Court that the notices did not satisfy the requirement of fair administrative action.  This is what the Court said:-

“I have examined the said notices and in my view, they do not satisfy the clear requirements of Article 47. They are not addressed to the petitioner, and the land reference number to which they pertain would not, on a cursory glance thereat, give any indication that it was intended for or would affect the Petitioner’s property.  Consequently, it is my finding that the Respondents failed to give notice to the Petitioner of their intention to reclaim the portion of the road reserve that it had encroached upon, and in failing to give such notice, violated the petitioner’s right to fair administrative action. When the Respondents demolished portions of the perimeter wall and some of the structures erected on the portions of the land alleged to be encroachments on the road reserve.  The action taken by the Respondents was to that extent unlawful and unfair”.

32. This Court takes a view that whether or not, the Government’s disregard of the law on fair administrative action is a malicious Act is call to be made by the Trial court and is not as plain as the Defendants would want this Court have it.

33. That however is not the end of the matter as the Defendants had also submitted that condition 5 ( c ) of the policy has precluded the Plaintiff’s claim  under condition 5.   The insurance cover does not cover,

‘(c) loss or damage occasioned by permanent or temporary dispossession, resulting from confiscation, commandeering or requisition by any lawfully constituted authority’.

34. While there is no doubt that the Government was reclaiming back property that had been illegally taken away, it is arguable whether the action of the Government on that night can be said to be an Act by a lawful constituted authority when it was done in breach of the Plaintiff’s Constitutional right to fair administrative action.

35. In the circumstances of the matter, I am not persuaded that the Plaintiff’s case is so plainly hopeless and is so weak and discloses no reasonable cause of action.  The Motion of 6th September 2016 is hereby dismissed with costs.

Dated, Signed and Delivered in Court at Nairobi this 3rd day ofNovember, 2017.

F. TUIYOTT

JUDGE

PRESENT;

Angwenyi for Plaintiff

Mulindi for Inamdar for Defendant

Alex – Court clerk