Mwangi v CIC General Insurance; Njenga & another (Interested Parties) [2022] KEHC 16981 (KLR)

Mwangi v CIC General Insurance; Njenga & another (Interested Parties) (Civil Suit 11 of 2019) [2022] KEHC 16981 (KLR) (15 December 2022) (Judgment)

Neutral citation: [2022] KEHC 16981 (KLR)

Republic of Kenya

In the High Court at Naivasha

Civil Suit 11 of 2019

GWN Macharia, J

December 15, 2022

Between

James Njau Mwangi

Plaintiff

and

CIC General Insurance

Defendant

and

Joshua Muriithi Njenga

Interested Party

Peter Njoroge Mbugua

Interested Party

Judgment

1. By a Plaint dated 28th October, 2019, the Plaintiff instituted a suit against CIC General Insurance, the Defendant herein and enjoined Joshua Muriithi Njenga and Peter Njoroge Mbugua as Interested Parties. The Plaintiff sought judgment against the Defendant for:a.A declaration that the Defendant is obligated to indemnify the plaintiff in respect of the claims in Engineer PMCC Nos. 79 and 84 of 2019. b.A declaration that the Defendant is obligated to offer legal representation and appoint counsel to represent the Plaintiff in Engineer PMCC Nos. 79 and 84 of 2019 through the entire hearing and conclusion.c.A declaration that the Defendant should settle any eventual judgments in Engineer PMCC Nos. 79 and 84 of 2019 and a declaration that no execution should be levied against the Plaintiff in Engineer PMCC Nos. 79 and 84 of 2019 and that such execution should be levied against the Defendant.d.Costs of this suit.e.Any other or further relief that this honourable court may deem just and expedient to grant.

2. The Plaintiff’s case is that he was at all material times to this suit the registered owner of motor vehicle registration number KBS 752W Mitsubishi FH Lorry. The vehicle was insured by the Defendant under a comprehensive commercial motor vehicle insurance policy number 004/080/1/063723/2018/05. In consideration of premiums which he duly paid to the Defendant as and when they fell due, the Defendant agreed to indemnify him against any loss or injury occasioned to any third party as a result of any accident involving the motor vehicle. The Defendant also agreed to settle all claims instituted against him by any third parties in respect of any accident involving the motor vehicle and appoint counsel to defend him in all court proceedings instituted in that regard.

3. On 13th April, 2019 during the pendency of the contract of insurance, the Plaintiff’s vehicle was involved in an accident along Kageraini - Mutarakwa Murram Road within Nyandarua South Sub County as a result of which the Interested Parties who were aboard sustained injuries. Subsequently, the 1st and 2nd Interested Parties instituted Engineer PMCC No. 79 of 2019 and Engineer PMCC No. 84 of 2019 respectively against the Plaintiff claiming compensation for injuries sustained in the said accident. However, in breach of the contract, the Defendant declined to take over the claims and appoint counsel to defend him therein and indemnify him claiming that Interested Parties were not covered by the Policy.

4. The Defendant filed a Statement of Defence and Counterclaim dated 23rd December, 2019 in which it denied liability on the basis that the insurance policy taken by the Plaintiff did not extend to the Interested Parties as they were employees of the Plaintiff and thus did not fall in the category of third parties under Section 5 of the Insurance (Motor Vehicle Third Party Risks) Act Chapter 405 Laws of Kenya. In its Counterclaim, the Defendant contends that the Plaintiff breached the terms, conditions and exceptions of the insurance Policy Number 004/080/1/063723/2018/05 at the time of the alleged accident. It therefore prays for judgment against the Plaintiff for:a.A declaration that the Plaintiff is and has at all material times been entitled to avoid the aforesaid policy of insurance no. 004/080/1/063723/2018/05 apart from any provisions contained therein on the ground that the said policy of insurance was breached as follows:i.The Plaintiff through its authorized driver carried the Interested Parties who were in the cause of their employment when the suit motor vehicle was involved in an accident,ii.The Interested Parties were employees of the plaintiff and therefore not covered by the policy of insurance number 004/080/1/063723/2018/05. b.A declaration that the Defendant is not liable to make any payment under the aforesaid policy of insurance no. 004/080/1/063723/2018/05 in respect of any claim against the Plaintiff arising out of injuries or loss sustained by any or all of the passengers travelling in motor vehicle registration number KBS 752W on 13th April, 2019 when the same was involved in an accident.c.A declaration that the Defendant is not liable to settle any eventual judgments in Engineer PMCC Nos. 79 and 84 of 2019 and a declaration that no execution should be levied against the Plaintiff in Engineer PMCC Nos 79 and 84 of 2019.

5. The 1st and 2nd Interested Parties also filed a Defence dated 25th February, 2021 in which they denied being employees of the Plaintiff at the time of the accident. They averred that on the material day, they had hired the Plaintiff's motor vehicle to ferry farm produce and thus they were third parties in terms of the Insurance (Motor Vehicle Third Party) Risks Act. Further, they averred that prior to instituting the suits against the Plaintiff in the subordinate court, their advocates issued the Defendant with the mandatory statutory notice under Section 10 of the Insurance (Motor Vehicles Third Party) Risks Act, Cap 451, Laws of Kenya. However, the Defendant failed to commence its declaratory suit against the Plaintiff and the Interested Parties within the time specified in the law hence its Counterclaim is statutory time-barred and should be dismissed.

6. The Plaintiff filed a Defence to Counterclaim in which it denied breaching the terms of the subject Policy and reiterated the averments in his Plaint.

Summary of evidence 7. PW1, James Njau Mwangi, testified that the Policy endorsement was issued to him on 30th October, 2019 by the Defendant’s agent known as Shine Insurance Agency. The cover insured two passengers. He paid premiums of the cover dated 13th July, 2018 of Kshs. 70,000/-. He was issued with a Certificate of Insurance. After the accident, he was issued with a police abstract. An agent known as Jane filled and signed the insurance claim form which indicates that the two passengers were turn boys. He forwarded the driving license of Joseph Makumi Chege who was driving the subject motor vehicle at the time it got an accident as well as the suit papers in respect to the lower court cases to the Defendant. On 27th September, 2019, the Defendant informed him that they could not pay because the passengers were his employees which is not true. He had only employed the driver and the two passengers were not known to him. The suits in the lower court were filed on 11th September, 2019 and the insurer had three months to disclaim him which lapsed on 11th December, 2019.

8. In Cross examination, PW1 admitted that the claim form shows that the owner of the goods that were carried in the vehicle at the material time is known as Kamotho who is not an Interested Party in this case. He also admitted that he had not presented any report in court to show that the signature on the claim form is not his. Further, PW1 stated that there was no agreement to show that the Interested Parties had hired the vehicle. It was also his assertion that the Interested Parties were to pay Kshs. 20,000/- per day but after the accident, they did not pay. Additionally, he stated that the claim form was filled on 16th April, 2019 by Jane whose offices are in Nakuru. As such, the information he gave to the agent was still fresh in his mind. He stated that he was not with Jane when she filled the claim form. He spoke with her and gave her the contacts of his driver so he could give her details. He later learnt that the claim had been filled wrongly although he did not call the agent who filled the form as his witness. Further, he confirmed that the vehicle was repaired by the Defendant.

9. The Defendant’s witness, DW1, Joseph Karanja Muchiri, was the company’s legal officer. It was his testimony that policy number 004/080/1/063723/2018/06 issued to the Plaintiff was to run for a period of 12 months commencing 17th June, 2018 to 16th July, 2019. This was against sums which the Defendant would become legally liable to pay in the event of an accident by or out of the use of the vehicle, in respect of death and/or bodily harm injury to any third party covered under Section 5(b) of CAP 405. The proposal form and declaration formed part of the contract of insurance. Pursuant to the provisions of Section 7 of the Act, the Defendant furnished the Plaintiff with a Certificate of Insurance No. 119057670 in respect of the Policy. On 16th April, 2014, they received a report that the subject vehicle had been involved in an accident while being driven by the Plaintiff’s authorized driver and on board the vehicle were employees who are the Interested Parties herein. The Plaintiff reported the said accident then filled and signed a motor vehicle insurance claim form wherein the Plaintiff indicated that the 1st and 2nd Interested Parties were turn boys in his vehicle. He had therefore employed them to work for him which entitles the Defendant to avoid the claim. They believed that the information given by the Plaintiff was true and they notified him that they could not pay employees. The Defendant’s Counterclaim is not time barred since the policy did not cover the Plaintiff for death or bodily injury to any person who was injured in the course of employment.

10. In cross examination, he stated that he was not the one who received the claim form and he does not know who filled it and circumstances under which the same was done. He admitted that they repaired the motor vehicle which cannot be done in instances where there is a breach of policy conditions. There was no breach in this case. If it was a legitimate case, disclaimer suits should have been filed by 11th December, 2019, that is, within three months of filing the parent suits. Further, he stated that Shine Insurance Agency is not an agent of the Defendant. It is paid commissions by insurance companies. There is no requirement for the insurer to take action upon receipt of statutory notices so they only acted upon receipt of the Summons from the Interested Parties. Lastly, he stated that no investigations were done in this case.

11. IPW1, Joshua Murithi Njenga, testified on behalf both Interested Parties. It was his testimony that on the material day, he had been engaged by the 2nd Interested Party to source for cabbages from farms around South Kinangop, buy the produce and arrange for the same to be ferried to the main road. The 2nd Interested Party later came with the Plaintiff’s subject lorry to collect the produce along Kagera -Mutarakwa Road to transport the same to various markets where he had orders. They loaded the produce then had an accident along the way. As a consequence, he sustained severe injuries, leading to amputation of his left leg, below the knee. He instructed M/S Wanjohi & Wawuda Advocates to institute a suit for recovery of general and special damages for the injuries sustained. Prior to institution of the suit, the advocates served the Plaintiff with a demand letter, which was copied to the Defendant and issued the Defendant with a statutory notice dated 21st June, 2019 which was received by the Defendant on 2nd July, 2019. Thereafter, his advocates filed Engineer Civil Suit 79 of 2019 against the Plaintiff who entered appearance and filed a defence. The case has however stalled pursuant to orders issued by this Honourable Court.

12. He maintained that they had hired the Plaintiffs’ vehicle in the ordinary course of their business and that they were lawful passengers with the express authority of the Plaintiff’s driver to ride in the vehicle. Their description as "turn-boys" in the claim form is incorrect and whoever filled the form ought to have confirmed with them, or from the police station what class of passengers they were.

13. In cross examination, he confirmed that they were supposed to pay Kshs. 20,000 shillings to deliver the cabbages to the market. Further, he stated that the 2nd Interested Party was also known by the nickname “Kamotho” indicated in the claim form. In re-examination, he stated that they never had any agreement in respect to the cabbage business or for hiring the Plaintiff’s vehicle since payments were made upon delivery.

Analysis and determination 14. The following facts are not in controversy: The Plaintiff’s motor vehicle registration number KBS 752W Mitsubishi Lorry was insured by the Defendant under a comprehensive commercial motor vehicle insurance policy number 004/080/1/063723/2018/05. The policy was issued through Shine Insurance Agency and it was to cover the period commencing 17th May, 2018 to 16th May, 2019, both dates inclusive. Under Clause 016 of the policy, it covered liability for up to two passengers of the Plaintiff's insured motor vehicle. The Plaintiff duly paid the premiums for the said policy. During the period of validity of the insurance cover, the Plaintiff’s vehicle was involved in an accident on 13th April, 2019 along Kageraini - Mutarakwa Murram Road within Nyandarua South Sub County and the Interested Parties herein sustained injuries as a result thereof. The Plaintiff reported the occurrence of this accident to the Defendant. The Defendant compensated the Plaintiff for the damage to the motor vehicle. Meanwhile, the Interested Parties filed Engineer PMCC No. 79 of 2019 and Engineer PMCC No. 84 of 2019 against the Plaintiff seeking compensation for injuries sustained in the said accident. Vide a letter dated 24th September, 2019, the Defendant informed the Plaintiff that it could not take up the claims in the lower court on the basis that the Interested Parties were his employees and therefore not covered by the subject policy.

15. The issues that arise for determination in this suit therefore are:a.Whether the Defendant should indemnify the Plaintiff in respect of the claims by the Interested Parties.b.Whether the Defendant’s Counterclaim is merited.

Whether the Defendant should indemnify the Plaintiff in respect of the claims by the Interested Parties. 16. The bone of contention herein arose from the Motor Insurance Claim Form which indicates that the passengers who were injured who are the Interested Parties herein, were turn boys in the Plaintiff’s vehicle. The Defendant contends that they are under no obligation to indemnify the Plaintiff for liability arising out the injuries sustained by the Interested Parties since the Plaintiff had indeed confirmed that they were his employees through his claim form. The Defendant argued that employees of an insured are not covered by virtue of the provisions of Section 5(b) (ii) of the Insurance (Motor Vehicle Third Party Risks) Act, CAP 405, Laws of Kenya.

17. It was the Defendant’s further submission that this court cannot therefore rewrite an Act of Parliament so as to accommodate the Interested Parties in the Policy of Insurance between the Plaintiff and the Defendant. In this regard, it urged the court to be guided by the case of James Muriithi Mugs V Kenyan Alliance Insurance Company Limited [2010] eKLR. Further, the Defendant submits that an insurer relies on the utmost good faith of the insured to disclose all material facts that are likely to affect its decision on whether to incur the risk as was emphasized by the Court of Appeal in Co-operative Insurance Company Ltd v David Wachira Wambuga [2010] eKLR. According to it therefore, it had every reason to believe that the information given by the Plaintiff in the Motor Claim Form was issued under the principle of utmost good faith as it was material with regards to the accident and the subsequent claim.

18. The Plaintiff on the other hand submits that by virtue of the principle of Uberimmae Fidae (utmost good faith), the Defendant is estopped from avoiding the policy merely because of the obvious erroneous description of the Interested Parties in the Motor Claim Form as “Turn Boys”. The Plaintiff contends that it has established on a balance of probabilities that the Interested Parties were not his employees. He also faults the Defendant for failing to conduct investigations to establish the relationship between him and the Interested Parties. He urged this court to be guided by Article 159(2) (d) of the Constitution to administer justice despite the error. In the alternative, the Plaintiff submitted that even if the two passengers were turn boys as alleged, they were properly covered within the context of Section 5 of the Insurance (Motor Vehicle Third Party) Risks Act. To buttress his point, the Plaintiff relied on the case ofMargaret Gakenia Mwaniki v Kenya Orient Insurance Limited [2020]eKLR.

19. The Interested Parties held a similar view to that of the Plaintiff. They submitted that the testimony of the 1st Interested Party that they were passengers was corroborated by the Police Abstracts dated 16th June, 2016 produced as their Exhibits 1 and 2 which classified them as such. It was thus, their submission that, the purported misrepresentation by the Plaintiff in the Motor Claim Form does not affect their standing as passengers.

20. The first question that this court has to answer at this point therefore is whether the Interested Parties were employees of the Plaintiff as claimed. Before answering the question, it is imperative to appreciate that under Section 107(1) of the Evidence Act, 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 facts exist.

21. As noted hereinabove, the Motor Insurance Claim Form clearly indicates that the Interested Parties herein were turn boys. The Plaintiff testified that the form was erroneously filled and signed by an agent known as Jane and that the information thereon was provided by his driver Joseph Makumi. However, he did not call either of the said people as witnesses to corroborate his testimony. The mere fact that the Plaintiff’s signature on his Verifying Affidavit filed herein differed from the signature on the claim form was not enough. Further, the 2nd Interested Party did not come to court to corroborate the 1st Interested Party’s testimony that he was the ‘Kamotho’ indicated on the Motor Insurance Claim Form as the client/ owner of the cabbages that were being ferried at the time of the accident. This was very important considering that this information was not even contained in the statement of the 2nd Interested Party that was filed in this court.

22. Additionally, whereas the police abstracts tendered in evidence by the Interested Parties indeed classify them as passengers, neither the investigating officer indicated thereon as PC Chomba nor any traffic officer from Magumu Sub-base Police Station was called to specify what type of passengers they were. In the court’s view therefore, the Plaintiff did not present any tangible evidence to rebut the Defendant’s claim that the Interested Parties were his employees or that there was an inadvertent error in their classification in the claim form.

23. The next issue for consideration is whether, the Interested Parties were covered by the Motor Vehicle Insurance Policy number 004/080/1/063723/2018/05 issued to the Plaintiff by the Defendant. Part 016 of the said policy provided as follows regarding liability to passengers:“016 PASSENGER LEGAL LIABILITY – 2 PAX”

24. The Policy did not however expressly indicate what was not covered or the category of the two passengers who the Defendant would be liable for in case of death or bodily injury arising out of the use of the insured motor vehicle. The Defendant’s rely on the provisions of Section 5(b) (ii) of the Insurance (Motor Vehicle Third Party Risks) Act, CAP 405 to support its claim that employees of the Plaintiff were not covered by the Policy. Section 5 of the said Act provides as follows:“5. Requirement in respect of insurance policiesIn order to comply with the requirements of Section 4, the policy of insurance must be a policy which:-

(a)Is issued by a company which is required under the Insurance Act, 1984 (Cap 487) to carry on motor vehicle insurance business; and(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: -i.liability in respect of the death arising out of and in the course of employment of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment; or(ii)except in the case of a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, liability in respect of the death of or bodily injury to persons being carried in or upon or entering or getting on to or alighting from the vehicle at the time of the occurrence of the event out of which the claims arose; or(iii)any contractual liability;(iv)liability of any sum in excess of three million shillings, arising out of a claim by one person. [Act No. 46 of 1960, s. 48, Act No. 10 of 2006, s. 34. ]” (emphasis added)

25. In the case of James Muriithi Mugo v Kenyan Alliance Insurance Company Limited [2010] eKLR, Ouko J. (as he then was) while considering whether a turn boy was covered under Section 5 above observed as follows:-“The Court of Appeal in the case of M’Mairanyi & Others v BlueShield Insurance Company Limited (2005) I E.A 280 (CAK) after tracing the history of this provision to the 1930 British Road Traffic Act observed as follows on the interpretation of Section 5 aforesaid:“It is a section that is perhaps unhappily worded and which has over time generated, differing judicial interpretations. On our part, we think the meaning conveyed is fairly plain. The latter part of proviso (ii) of the Section makes it clear that compulsory insurance is not required in respect of risk to passengers. The first part however, which could well have been a separate provision, exempts “passengers carried for hire or reward or by any reason of or in pursuance of a contract of employment.” That is to say, for that category of passengers it is compulsory.”I understand the foregoing and the provision of Section 5(b)(i) and (ii) aforesaid to distinguish between two employees. One class is not covered while the other is. The first category would at the time of this accident be covered under the Workmen’s Compensation Act (Cap 236) now repealed. These would be employees’ nature of whose work is not connected to the motor vehicle causing the accident. The other category includes the driver and/or the turn-boy, whose terms of employment relate to the motor vehicle. I understand that to be the interpretation given to that provision in the case of M’Mairanyi & Others v BlueShield Insurance Company Limited [2005] I E.A 280 (CAK) (supra), Izzard v Universal Insurance Company Limited [1937] All ER 79, Gateway Insurance Company Limited v Sudan Mathews, HCCC No.1078 of 2000. In Tan Keng Hong & Another v New India Assurance Company Limited [1978] 2 ALL ER 380, the Privy Council interpreted the similar provision as follows:-“The words “by reasons of…..a contract of employment” in the exception had to be read in conjunction with the words “in pursuance of” and so were to be construed as meaning that the passenger was being carried because his contract of employment expressly or impliedly required him, or gave him the right to travel as a passenger in the motor vehicle concerned. Whether a passenger was being carried by reason or in pursuance of a contract of employment within the exception depended solely on the terms of his employment.”On this point, I come to the conclusion that the Plaintiff was an employee of insured, Bernard Macharia Mahungu. That as a turn-boy, he was travelling in the lorry by reason of or in pursuance of a contract of employment within the meaning of Section 5 (b) (ii) of the Act.” [Emphasis added]

26. This court finds persuasion in the above interpretation by the then Ouko, J. This means that even if the Interested Parties were indeed turn boys as declared in the Motor Insurance Claim Form, they were covered by Insurance Policy number 004/080/1/063723/2018/05 taken out by the Plaintiff. They were in the vehicle as passengers, in whatever capacity, for the time being prior to the accident. This simply means that, even if they were indicated to be turn boys in the Claim Form, under the terms of employment for the time being, they were passengers. The Defendant cannot disclaim the policy in the circumstances. Consequently, the Defendant is obliged to take over the defence of Engineer PMCC No. 79 of 2019 and Engineer PMCC No. 84 of 2019 and indemnify the Plaintiff against any claims by the Interested Parties arising therefrom as well as to liquidate any judgment that may be entered against the Plaintiff in that suit. See also Margaret Gakenia Mwaniki v Kenya Orient Insurance Limited(supra).

Whether the Defendant’s Counterclaim is merited. 27. According to the Plaintiff and the Interested Parties, the Defendant’s Counterclaim is incompetent as it is time barred. They both argued that it was not filed within the timelines stipulated under Section 10 (4) of the Insurance (Motor Vehicle Third Party) Risks Act despite the fact that the Defendant was duly served with statutory notices and aware of the suits filed by the Interested Parties in the lower court. On the other hand, the Defendant maintained that its Counterclaim is not time barred because the Interested Parties were excluded from the cover as they were employees of the Plaintiff.

28. The question of whether or not the Interested Parties were employees of the Plaintiff has already been settled hereinabove. The court has also found that the Defendant was bound to indemnify the Plaintiff for any claim by the Interested Parties over the injuries sustained in the accident. This means that the Plaintiff did not breach the contract of insurance as alleged by the Defendant in its counterclaim.

29. However, even assuming that the circumstances of the accident entitled the Defendant to avoid the policy, its Counterclaim as filed would still be time barred. Under Section 10 (4) of the Insurance (Motor Vehicle Third Party) Risks Act, an insurer is required to file a declaratory suit that it is entitled to avoid the policy within three months of the filing of the parent suit in respect of which indemnity is being sought. The said Section 10 provides as follows:“(4)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:...”

30. The Interested Parties filed Engineer PMCC Nos. 79 and 84 of 2019 on 11th September, 2019. In the premises, the Defendant had only three months up until 11th December, 2019 to file a Counterclaim and seek a declaration that it was not liable to make any payment under the subject policy of insurance. In contrast, the Counterclaim herein was filed on 23rd December, 2019 which was beyond the statutory prescribed period. In the case of APA Insurance Limited v Gabriel Opondo Ogenga (Suing as the legal representatives of Jane Akinyi Saida-Deceased) [2018] eKLR cited by the Plaintiff, the court emphasized that disclaimer suits ought to be filed within three months after the commencement of the primary suit as required under Section 10 (4) of the Insurance (Motor Vehicle Third Party) Risks Act. In the case of AA Insurance Company Vincent Nthuka [2018] eKLR, the court struck out the suit with costs for being incompetent as it was filed contrary to provisions of Section 10 (4) of the Insurance (Motor Vehicle Third Party Risks) Act.

31. Consequently, this court finds that the Defendant’s Counterclaim is time barred and thus incompetently filed.

Conclusion 32. Accordingly, I find and hold that the Plaintiff has proved his claim against the Defendant on a balance of probabilities. I enter judgment for the Plaintiff against the Defendant in terms of prayers (a), (b) and (c) of the Plaint dated 28th October, 2019. The Defendant’s Counterclaim dated 23rd December, 2019 is dismissed. The Plaintiff is awarded costs of the suit as well as costs of the Counterclaim plus interests thereon at court rates. It is so ordered.

DATED AND DELIVERED AT NAIVASHA THIS 15TH DECEMBER, 2022. G.W. NGENYE-MACHARIAJUDGEIn the presence of:1. Ms. Chelule for the Plaintiff.2. S.M. Chege for the Defendant-absent duly notified online.3. Mr. Githae h/b for Mr. Wanjohi for the Interested Parties.