Pacis Insurance Company Limited v Ichanga [2022] KEHC 16303 (KLR)

Pacis Insurance Company Limited v Ichanga (Commercial Case E004 of 2022) [2022] KEHC 16303 (KLR) (13 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16303 (KLR)

Republic of Kenya

In the High Court at Machakos

Commercial Case E004 of 2022

MW Muigai, J

December 13, 2022

Between

Pacis Insurance Company Limited

Plaintiff

and

Samwel Kimani Ichanga

Defendant

Ruling

Notice of Motion 1. By a Notice of Motion dated 18th March, 2022 and sought the following orders;-a.(Spent)b.There be a stay of proceedings in any suit arising out of or claiming to arise out of an accident involving motor vehicle registration No. KCS 872 B Nissan AD insured by the Plaintiff under policy No.060/0070/131305/2018 issued concerning the accident of 11/10/2021 along Nairobi-Mombasa road at Kwa D.O’s area in Malili and the named claimants named herein and other unknown persons and any suit to be filed so stand stayed pending hearing of this application interpartes and thereafter pending the hearing and determination of this case.c.That the order in (b) above do apply to all suits filed and to be filed in respect of the said accident of 11/10/2021 involving motor vehicle registration No. KCS 872 B Nissan AD including:-i.Kilungu CMCC No. E57 of 2022 – Valerie Mutheu (Minor) suing through next friend and kin Irene Mbula –vs- Samuel Ichanga Kimani & 3 others.ii.Kilungu CMCC No. E54 of 2022 – Denis Mwendo Mwololo –vs- Samuel Ichanga Kimani & 3 others.iii.Kilungu CMCC No. E55 of 2022 –Irene Mbula –vs- Samuel Ichanga Kimani & 3 others.iv.Kilungu CMCC No. E56 of 2022 – Shadrack Mbaluka (Minor) suing through next friend and kin Irene Mbula –vs- Samuel Ichanga Kimani & 3 others.v.Suit by Mary Munyanga Kasyuki of P.O. Box 199 Nunguni.d.Consequent upon the order above, the Court to certify this matter to be heard on priority basis.e.Costs be provided for.

2. The Motion is supported by the affidavit of Anne Njoki Kinyua sworn on 18th March, 2022 deposing that the Plaintiff/applicant is the insurer of the Defendant’s Motor Vehicle registration No. KCS 872 B Nissan AD vide police No. No.060/0070/131305/2018 valid from 1/03/2021 to 30/11/2021; that on 25/02/2022 the Plaintiff was served with a statutory notices by the 4 Claimants/Plaintiffs in Kilungu CMCC No.E54 of 2022, CMCC E55/2022, CMCC No.E56 of 2022, CMCC E57/2022; that prior to 25/2/2022 the Plaintiff was not aware that the said insured M/v No. KCS 872B was involved in any accident; that when they inquired from the insured (the defendant herein) on the whereabouts of the claim documents the insured denied knowledge of the said accident; it is over 5 months now since the alleged accident and the insured has not made any report of the said accident to the Plaintiff; that the Plaintiff filed suit for declarations pursuant to Section 10(4) of the Insurance (Motor Vehicle Third Party Risks) Act, Cap 405 Laws of Kenya; that is necessary that this suit be heard first before the primary suits to determine liability of the Plaintiff to pay any judgment arising out of the accident.

3. On 21/10/2022 both parties appeared before this Court. This Court directed the parties to file written submissions.

4. On 17/11/2022 when this matter came up for mention for directions before this Court, the Court confirmed that the Plaintiff/Applicant filed their written submissions on 10/08/2022 while the Respondent told the Court that they did not wish to put in any replying Affidavit or Submissions.

Applicant’s Submissions 5. The Applicant raised two issues for determination:-a.Whether the applicant meets the threshold for stay of proceedings,b.Whether the Court has jurisdiction.

6. On whether the Applicant meets the threshold for stay of proceedings it is submitted that there is sufficient cause for the grant of stay of proceedings considering that the Applicant would suffer loss as a result of the proceedings before the hearing and determination of the suit application. The Applicant further submits that failure to grant stay of proceedings may cause waste of judicial time as judgments arising out of these proceedings would have to be reversed if it is found the Applicant is not liable.

7. In the case of Britam General Insurance Company (K) limited –vs- Stephen Wambua Masila & 11 Others[2020] eKLR and Monarch Insurance Co. Limited –vs- Wycliffe Onyango Odendy [2016] eKLR.

8. It is further submitted that there is an arguable case in favour of the applicant having established that the Respondent is guilty of non-disclosure of material facts, which includes the Respondent having failed to report the accident and delaying for a period of 5 months. The respondent also failed to disclose the fact that the driver of the said motor vehicle was unauthorized.

9. Section 10(4) of the Insurance Act states that:-“No sum shall be payable by an insurer under the foregoing provisions of this section if in an action commenced before, or within three months after, the commencement of the proceedings in which the judgment was given, he has obtained a declaration that, apart from any provision contained in the policy he is entitled to avoid it on the ground that it was obtained by the non-disclosure of a material fact, or by a representation of fact which was false in some material particular, or, if he has avoided the policy on that ground, that he was entitled so to do apart from any provision contained in it.”

10. In the case ofPacis Insurance Company Limited –vs- Mohamed F. Hussein [2017] eKLR the Court in determining the issue of stay of proceedings stated that:-“The question that begs determination by the court is whether or not failure to report an accident is a ground for an insurer to avoid a policy under the statute. In my understanding of the law, an insurer who intends to avoid a policy under section 10(4) must meet the following conditions:-(i)Prior to filing of a suit to which it is bound to settle a decree or within three months of its commencement he filed a suit seeking a declaration to avoid the policy.(ii)The suit is grounded on reasons that:-a.It was obtained by the non-disclosure of a material fact.b.It was obtained by presentation of facts which was false in some material particular.c.The insurer has avoided the policy on such ground that he was entitled to do so apart from the provision in the policy.

11. On whether the Court has jurisdiction it is submitted that Order 42, rule 6(1) of the Civil Procedure Rulesenables the Courts to stay proceedings subject to Rule 6(2) under which no order for stay of execution shall be made unless the Court is satisfied that the substantial loss may result to the Applicant unless the order is made and that the application has been made without unreasonable delay and such security as the Court orders for the due performance of such decree or order as may ultimately be binding on him has been given by the Applicant.

12. Article 163 (c) of the Constitution of Kenya Provides that:-“The High Court has supervisory jurisdiction over the subordinate Courts and over any person, body or authority exercising a judicial or quasi-judicial function, but not over a Superior Court.”

13. The Defendant/Respondent opted not to/waived the right to file response to the instant application or written submissions.

Determination 14. The Court considered pleadings and submissions on record and the single issue for determination is whether the Court should grant stay of proceedings of the series of cases filed in Kilungu Court CMCC E57 of 2022; CMCC E 54 of 2012; CMCC E55 of 2022; CMCC E56 of 2022 pending hearing and determination of the pending suit or not.

Stay Of Proceedings 15. LJ Githua in Kenya Power & Lighting Company Limited vs. Esther Wanjiru Wokabi [2014] eKLR stated:“………the courts discretion in deciding whether or not to grant stay of proceedings as sought in this application must be guided by any of the following three main principle;a)Whether the applicant has established that he/she has a prima facie arguable case;b)Whether the application was filed expeditiously; andc)Whether the applicant has established sufficient cause to the satisfaction of the court that it is in the interest of justice to grant the orders sought.”

16. Ringera J. (as he then was) in Global Tours &Travels Limited; Nairobi HC Winding Up Cause No. 43 of 2000 stated thus;“….whether or not to grant a stay of proceedings or further proceedings on a decree or order appealed from is a matter of judicial discretion to be exercised in the interest of Justice .... the sole question is whether it is in the interest of justice to order a stay of proceedings and if it is, on what terms it should be granted. In deciding whether to order a stay, the court should essentially weigh the pros and cons of granting or not granting the order. And in considering those matters, it should bear in mind such factors as the need for expeditious disposal of cases, the prima facie merits of the intended appeal, in the sense of not whether it will probably succeed or not but whether it is an arguable one, the scarcity and optimum utilization of judicial time and whether the application has been brought expeditiously”.

17. According to the Halsbury’s Law of England, 4th Edition. Vol. 37 page 330 and 332,“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.”

18. The Applicant’s declaratory suit is pegged on Section 10(4) of the Insurance (Motor Vehicle Third Party Risks) Act Cap 405:

19. The above provision is to the effect that the insurer can avoid a judgment made in favor of a third party if ".... before or within three months after the commencement......." of the primary suit, the Insurer has obtained a declaration that he was entitled to avoid the policy.

20. The Applicant relies on the following grounds in support of its application;a.The Plaintiff/Applicant is the insurer of Defendant’s motor vehicle Registration Number KCS 872B Nissan AD vide Policy No 060/0070/131305/2018 valid from 1/3/2021- 30/11/2021. b.On 25/2/2022 the Plaintiff was served with statutory notice by 4 Claimants/Plaintiffs in the above cited cases lodged in Kilungu Court.c.The Defendant failed to report the accident which allegedly occurred on 11/10/2021 along Nairobi- Mombasa Road at Kwa Do’s area in Malili.d.The insured was under a duty to report the/an accident within 48 hours, instead it was after 5 months since the alleged accident took place and the Insured made no report.The Plaintiff/Applicant /Insurer repudiated liability for the alleged accident, non-disclosure of material facts, failing to report the accident and the driver was unauthorized.

20. In deciding whether to order stay of proceedings, the Court has weighed the pros and cons of granting or not granting the stay order. In considering the suit filed herein the parties, the copies of Plaints attached to the Application; the Plaintiffs have sued Equity Bank as one of the registered owners of the vehicle KCS 872B Nissan AD & Margaret Wanjiru Ichanga as joint owners of the vehicle; 3rd Defendant is the insured owner of the vehicle and 4th Defendant, the alleged unauthorized driver who was involved in the subject accident.

21. The Trial Court has the opportunity to ventilate the issue of liability and/or quantum between the parties who at this stage does not include the Plaintiff/Applicant. The Plaintiff/Applicant is not one of parties to the suit and there is no evidence that the Plaintiff/Applicant has sought to be joined as a 3rd Party in these proceedings.

22. The Proceedings and resulting judgment shall be between parties and binds parties to the suit but in the process may attach to the Plaintiff/Applicant as the insurer and before stay of execution orders are obtained from Court the Applicant would suffer loss as a result of the proceedings before the hearing and determination of the suit application. The Plaintiff/Applicant’s suit would be rendered nugatory.

23. The issue whether the Defendant breached the contract of insurance and/or whether the Plaintiff/Applicant may legally avoid Insurance Policy will be determined in the current suit pending for hearing and determination.

24. The Court finds that the Plaintiff /Applicant will suffer prejudice if the proceedings before the Trial Court are not stayed. Stay of proceedings is granted where the Applicant establishes a prima facie case, shows sufficient reason that in the interest of justice the stay is granted. The Applicant has also established sufficient cause to the satisfaction of the court that it is in the interest of justice to grant the orders sought.

25. The grounds advanced by the Plaintiff/Applicant are arguable issues of law for hearing and determination. This Court notes with concern, the Defendant waived the right to contest the application and/or file written submissions. Consequently, the application is substantively unopposed.

DISPOSITION 26Accordingly, the court issues the following orders: - 1. The Court finds that the application has meri and is hereby granted.

2. The application for stay of proceedings accordingly granted for 3 months upto April 2023 for hearing and determination of the pending suit in default the stay of proceedings shall vacate forthwith.

DELIVERED, DATED AND SIGNED IN OPEN COURT AT MACHAKOS THIS 13TH DAY OF DECEMBER, 2022 (VIRTUAL/PHYSICAL CONFERENCE)M. W. MUIGAIJUDGEIN THE PRESENCE OF:Magare - For the Plaintiff/ApplicantMs Nicole- For the Defendant/RespondentGeoffrey/Patrick - Court Assistant(s)