Otury v Directline Assurance Company Limited [2023] KEHC 25379 (KLR)

Otury v Directline Assurance Company Limited (Civil Appeal E137 & E140 of 2023 (Consolidated)) [2023] KEHC 25379 (KLR) (Civ) (17 November 2023) (Judgment)

Neutral citation: [2023] KEHC 25379 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E137 & E140 of 2023 (Consolidated)

DAS Majanja, J

November 17, 2023

Between

Don Peter Otury

Appellant

and

Directline Assurance Company Limited

Respondent

(Being appeals from the Judgement and Decree of Hon. V.M. Mochache,RM/ Adjudicator dated 6th February 2023 at the Small Claims Court at Nairobi SCC Claim No. E6662 of 2022)

Judgment

Introduction and Background 1. Both parties appeal against the judgment of the Small Claims Court dated 06. 02. 2023 which allowed the Appellant’s claim and entered judgment in his favour for the following:a.Pre-accident value – Kshs 455,000. 00b.Assessment report charges – Kshs 5,000. 00c.Towing expenses – Kshs 6,000. 00d.Alternative transportation expenses – Kshs 75. 000. 00e.Storage Costs – Kshs 15,000. 00f.Total Kshs 556,000. 00g.Costs of the claimh.Interest from the date of filing until paid in full

2. The facts giving rise to the claim were largely common cause. On 30. 05. 2022, the Appellant took out a comprehensive insurance policy cover with the Respondent (“the policy”) for his motor vehicle registration number K6Q (“the motor vehicle”). The policy was to run for a period between 30. 05. 2022 and 29. 05. 2023 and was for an insured assessed value of Kshs 750,000. 00.

3. In a Statement of Claim dated 28. 10. 2022, the Appellant stated that on 10. 06. 2022, the motor vehicle was involved in a road traffic accident along Muranga-Thika Road resulting in extensive damages to the motor vehicle. The scene of the accident was attended to by a police officer who supervised the towing of the motor vehicle to Pangani Police Station where the Appellant duly reported the accident.

4. The Appellant proceeded to notify the Respondent of the accident as required by the policy. He supplied all the supporting documents to enable the Respondent process his claim. While the Respondent was processing the claim, the Appellant learnt that it had instructed insurance investigators and loss assessors to investigate, assess and authenticate the claim. He co-operated with the investigators in establishing the circumstances of the accident.

5. The Appellant averred that upon conclusion of the investigations, the Respondent declined to settle the claim citing “vague, unsubstantiated and concocted reasons”. The Appellant accused it of breach of the policy contract and thus claimed the repair costs, towing expenses, assessment report costs, alternate transport expenses and garage storage costs totaling Kshs 803,740. 00.

6. The Respondent filed its defence and urged the court to dismiss the claim. It stated that the policy was subject to strict adherence of the express and/or implied terms by the Appellant and any indemnity if any was subject to the terms and conditions of the policy. It averred that it could not be faulted for conducting its due diligence in investigating the claim and that the Appellant was kept informed throughout the investigations.

7. The Respondent stated that its investigator in its report dated 12. 08. 2022 concluded that the Appellant’s submission that the accident was reportedly caused by a distraction of an unknown pedestrian was unsubstantiated and not captured in the police records. That the damage incurred on the motor vehicle compared with the scene’s features were inconsistent with the circumstances of the accident as narrated by the Appellant, that prior to the policy’s commencement, there was a botched attempt by the Appellant to cover the motor vehicle with General Accident Insurance as evident in the Appellant’s call records and that the motor vehicle was brought to the accident scene already damaged.

8. The Respondent stated that it was an express term in the policy that the Appellant would lose any rights under the policy if it is found that the Appellant made a fraudulent claim or that the Appellant or any person acting on the Respondent’s behalf misrepresented facts or information relating to a claim. That the Respondent informed the Appellant that he had misrepresented material information when reporting the claim and the Respondent admitted that it indeed declined the claim through its letter of 23. 08. 2022. Thus, the Respondent asserted that it declined to admit the Appellant’s claim on grounds that the Appellant misrepresented and/or concealed material facts when reporting the claim which was a clear breach of the principle of utmost good faith and breach of the policy.

9. The parties agreed to proceed and dispose of the matter by way of documents and written submissions. The Adjudicator rendered a judgment on 06. 02. 2023. She identified two issues for determination; whether the Respondent was justified in declining the claim and whether the Appellant was entitled to the reliefs sought. On the first issue, the Adjudicator found that the Respondent did not go beyond setting out its suspicion and failed to provide and alternative set of facts and stopped at only stating that the accident did not happen in the manner narrated by the Appellant. That the Respondent neither claimed nor proved any material non-disclosure on the Appellant’s part before the conclusion of the policy contract. The Adjudicator therefore concluded that the Respondent’s defence was a mere denial and that there was no justification to decline the claim and as such, the Respondent was in breach of the policy.

10. On the reliefs sought by the Appellant, the Adjudicator considered the assessment reports filed by both parties and concluded that it would not make any economic sense to repair the vehicle hence the Appellant was entitled to the pre-accident value of the motor vehicle less the salvage value. The Adjudicator arrived at a figure of Kshs, 655,000. 00 as the pre-accident value based on the different pre-accident values of Kshs 725,000. 00 and Kshs 585,000. 00. As for the salvage value, the Adjudicator noted that there was no such indication in the report prepared by the Respondent and it thus went with the salvage value prepared by the Nordics Assessors which placed it at Kshs 200,000. 00. The court awarded Kshs 455,000. 00 under this head after reducing the pre-accident value of Kshs 655,000. 00 by the salvage value of Kshs 200,000. 00.

11. The Adjudicator held that the Appellant had proved the assessment and towing charges amounting to Kshs 5,000. 00 and Kshs 6,000. 00 respectively. The Adjudicator declined the full claim for the cost of alternative transportation which was in the nature of loss of user on the ground that the claim was not reasonable and the Appellant had a duty to mitigate his loss. Further, that it was not probable that the Appellant used a cab every day to work for a total of 74 days noting that advocates do not work every day of the week. Thus, the court awarded Kshs, 75,000,00 transportation costs based on 30 days at a rate of Kshs 2,500. 00 per day. The court applied this reasoning to award Kshs 15,000. 00 storage costs for 30 days at a rate of Kshs 500. 00.

12. It is for the above reasons that the Subordinate Court entered judgment for the amount set out in Para.1 above. This is the decision that triggered the appeals by both parties. The parties filed written submission in support of the positions in the consolidated appeals.

Analysis and Determination 13. The court’s jurisdiction in dealing with appeals from the Small Claims Court is limited by section 38(1) of the Small Claims Court Act, 2016 which provides that ‘A person aggrieved by the decision or an order of the Court may appeal against that decision or order to the High Court on matters of law.’A court limited to matters of law is not permitted to substitute the subordinate court’s decision with its own conclusions based on its own analysis and appreciation of the facts unless the findings are so perverse that no reasonable tribunal would have arrived at them (John Munuve Mati v Returning Officer Mwingi North Constituency & 2 others [2018] eKLR).

14. The Respondent appeals against the entire judgment while the Appellant appeals against the damages awarded as he claimed to have specifically pleaded and proved each claim; all the cost of repairs, towing expenses, alternative transportation expenses and garage storage charges. All in all, the parties are inviting the court to interrogate whether the Subordinate Court’s findings are perverse and whether any reasonable court directing itself on the matter would have arrived at the same decision as the Adjudicator.

15. The Respondent’s case is that it proved that Appellant had misrepresented and/or concealed material facts when reporting the claim which was a clear breach of the principle of utmost good faith and breach of the policy. It is common ground that the Respondent arrived at this decision based on the report dated 12. 08. 2022 from its investigators, Parity Loss Assessors & Consultants Limited. As stated, the parties agreed to dispose of the matter by way of documents, thus it was not expected that the author of the report would testify as to how they arrived at the said conclusions. All the Adjudicator could do, was to weigh the pleadings and documents on record and make a determination based on which of them held more sway than the other.

16. The Respondent relied on the said investigator’s report dated 12. 08. 2022 while the Appellant supported its case with 13 documents including a copy of the motor vehicle’s logbook, the policy document and schedule, Mpesa excerpts showing payment of the premium, the police abstract, the motor vehicle’s accident report and claim intimation form, the disclaimer letter dated 23. 08. 2022 from the Respondent, assessment reports from Leone Motor Assessors and Nordics Auto Assessors, receipts, car hire agreement from Toffy Touch Investment, Letter from Murgweng Enterprises Garage dated 12. 08. 2022 and the demand letter before action dated 18. 10. 2022.

17. Based on the material before the court, I agree with the Adjudicator that there was little or no dispute by the Respondent that the accident indeed happened and if at all there was such a dispute, the police abstract confirmed the accident. Even the Respondent’s investigator did not dispute the occurrence of the accident. What the Respondent seemed to be disputing was how the accident occurred and the damage sustained by the motor vehicle.

18. The totality of the evidence supported the conclusions of the Adjudicator that the Respondent’s case was based on suspicion, conjecture and subjective opinions of the investigators rather than facts showing how the accident occurred and the damage on the motor vehicle, were inconsistent with the Appellant’s version of events. On the part of the Appellant, his statements to the Respondent and investigators was consistent with the available evidence including the photographs attached to the Assessment reports which corroborate the Appellant’s claim that the motor vehicle sustained damages as a result of the accident. I find and hold that the Adjudicator did not err in concluding that the Respondent had failed to prove its case.

19. As regards the Appellant’s case, the Adjudicator cited Virani t/a Kisumu Beach Resort v Phoenix of East Africa Assurance Company Ltd [2004] eKLR where the Court of Appeal held that a claim for special damages should not only be pleaded but strictly proved. The Appellant claimed assessed repair costs of the motor vehicle of Kshs 523,740. 00, towing expenses of Kshs 22,000. 00, assessment report costs of Kshs 5,000. 00, alternative transport expenses of Kshs 185,000. 00 and garage storage charges of Kshs 68,000. 00. The Appellant was thus required to demonstrate that he incurred these expenses by adducing evidence proving that he made payments for the same. On the assessed repair costs, the Appellant relied on the assessment given in the report by Nordics Auto Assessors which gave repair estimates of Kshs 523,740. 00. There was nothing to show that the motor vehicle was repaired or that the Appellant expended this sum as repair costs. It is a well settled principle of law that an invoice is not proof of payment and that special damages can only be proved by producing actual receipts or invoices endorsed with the word “Paid” (see Total (Kenya) Limited Formally Caltex Oil (Kenya) Limited v Janevams Limited [2015] eKLR and Guardian Coach Ltd & another v Kiptoo (Civil Appeal 34 of 2020) [2022] KEHC 12397 (KLR) (26 May 2022) (Judgment)). This claim was therefore not proved and I find that the learned Adjudicator erred in awarding this sum based on assessed estimated costs rather than actual receipts or other evidence as proof of payment for any such repair costs. The Respondent’s appeal therefore succeeds on this ground.

20. On towing expenses, I agree with the Learned Adjudicator that even though the Appellant sought Kshs 22,000. 00, what was proved by way of an invoice endorsed with the word “paid” was Kshs 6,000. 00. I further agree that the Appellant proved the payment of Kshs 5,000. 00 for the assessment report by adducing a receipt for the same. On the alternative transport expenses of Kshs 185,000. 00, I note that the Appellant produced a receipt for the said sum. However, the Adjudicator rejected this claim and her reason for rejecting it on the ground that, “advocates do not work every day of the week,” is not a matter that the court could take judicial notice and was not supported by any evidence. The Appellant’s receipt was sufficient to prove his claim that he spent alternative transport expenses of Kshs 185,000. 00. In any case, the Respondent did not rebut this figure by proving that the Appellant could not have spent this amount. The award of Kshs 75,000. 00 was therefore without basis and is set aside.

21. The Appellant did not produce any evidence of payment for garage storage charges. What is on record is a demand letter by the garage to the Appellant seeking this amount. As I have stated, a demand for payment is not proof of payment and therefore the Appellant did not prove that he had expended any sums on storage charges. This ground of appeal by the Respondent succeeds and the Adjudicator’s award of Kshs 15,000. 00 is set aside.

Disposition 22. For the above reasons, I find that both appeals partly succeed. In the circumstances, each party shall bear its own costs of the appeal.

23. The judgment of the Subordinate Court dated 06. 02. 2023 is set aside and substituted with the following judgment entered for the Appellant against the Respondent for:1. Kshs 196,000. 00 made up as follows:a.Assessment report charges – Kshs 5,000. 00b.Towing expenses – Kshs 6,000. 00c.Alternative transportation expenses – Kshs185. 000. 002. Interest on the amount in (1) from the date of filing suit until paid in full3. Each party shall bear its own costs.

DATED AND DELIVERED AT NAIROBI THIS 17TH DAY OF NOVEMBER 2023. D. S. MAJANJAJUDGEMr Mambiri instructed by Vusha, Onsembe and Mambiri Company Advocates for the AppellantMr Awino instructed by Cootow and Associates Advocates for the Respondent