UAP Insurance Company Limited v Gachau [2023] KEHC 24732 (KLR)

UAP Insurance Company Limited v Gachau (Civil Appeal 146 of 2019) [2023] KEHC 24732 (KLR) (3 November 2023) (Judgment)

Neutral citation: [2023] KEHC 24732 (KLR)

Republic of Kenya

In the High Court at Nakuru

Civil Appeal 146 of 2019

SM Mohochi, J

November 3, 2023

Between

Uap Insurance Company Limited

Appellant

and

James Karagu Gachau

Respondent

(Being an appeal arising from the Judgment and decree of the Honourable B. Mararo delivered on 7th August 2013 in Nakuru CMCC No. 314 of 2013)

Judgment

1. This Appeal arises from the judgement of Honorable Honourable B. Mararo delivered on 7th August 2013 in Nakuru CMCC No. 314 of 2013.

Trial Court’s Case 2. Before the trial court was a claim commenced by a Plaint dated 20th April, 2017 and amended on 11th November, 2016 in which the Respondent herein (Plaintiff in the trial court) sued the Appellant herein (the 2nd Defendant in the trial Court) and Joseph Mucheru Nganga (1st Defendant) seeking:a.A declaration that the subject motor vehicle was stolen while in the Plaintiff’s course of business for carriage of goods in connection with his business.b.A declaration that the Plaintiff is entitled to compensation for the loss of the subject motor vehicle by the 2nd Defendant by virtue of the subsisting insurance policy and or contract between the Plaintiff and the 2nd Defendant at the time of the said loss.c.A mandatory injunction and or specific performance compelling the 2nd Defendant to compensate and or indemnify the Plaintiff for the loss of the subject motor vehicle as per policy within such as a period that this Honourable Court might deem fit taking into account the circumstances of this case.a.Special damages of Kshs. 1,950,000b.Damages for Kshs. 640,000 for loss of userd.Costs of this suit.e.Any other remedy that his Honourable Court might deem fit to grant.

3. The Respondent pleaded that he was the rightful registered owner of Motor vehicle registration number KBL 986U while the 1st Defendant was the driver and the Appellant was the insurer under Policy Number 100/080/1/011627/2001.

4. That on or around 15th May, 2012 the subject motor vehicle was stolen while in course of business where the Respondent had instructed the 1st Defendant to collect onions and deliver them to Nakuru. The Respondent further pleaded that by virtue of the existing insurance policy, the Appellant was liable to indemnify him for the loss.

5. That the Respondent had suffered loss of damage as a result of the theft and held the Appellant liable for special damages for the value of the vehicle in the sum of Kshs. 1,950,000 and loss of user for 120 days for Kshs 640,000.

6. The Appellants in its Defence dated 30th May, 2017 admitted to being the insurer of the subject motor vehicle but denied that the vehicle was valued at Kshs 1,950,000 or that under the policy it was obliged to compensate the Respondent for loss of user for the sum of Kshs. 640,000.

7. The Appellant further averred on a without prejudice basis that consequential loss was excluded in the policy document and that the Appellants had investigated and found out that the Respondent had hired out the subject vehicle to a third party which was contrary to the policy terms hence repudiation of liability and sought that the Respondent’s suit to be dismissed with costs.

8. The Appellant averred that the Respondent could not be compensated since the vehicle was lost when it was operating outside the Respondent’s business.

EvidenceThe suit proceeded to trial 9. PW1 James Kiragu Gachau, testified that he was the owner of the subject vehicle of which he used it for his own business of supply of cereals and food materials at Nakuru. He also testified that the vehicle was insured by the Appellant at the time of the accident as the policy was valid. He sent his driver to pick onions and was carjacked. He reported to the insurance company and they did not pay. He had to hire another vehicle for loss of user. No investigators spoke to him. There was an attempt to arbitrate but they refused.

10. On cross examination, he testified that he was a business man and the goods were for his business. He had taken an insurance policy for fire and theft and was aware that the insurance would not cover what was not covered in the policy. That he was not investigated. He gave the appellant his statement and that his vehicle was not hire and that he took the policy for protection.

11. PW2 Joseph Mucheru Nganga, testified that he was the driver of the subject vehicle and stated that he was sent by the Respondent to collect onions at Emali when some young men told him to go to the store and has the proceeded he was blind folded and his hands tied. Was taken to a thicket and left for four hours until he unbound himself. He reported to Emali police station and recorded a statement. He denied being hired but reiterated that he was sent by the Respondent who he worked for 2 years and the work that he did was for the Respondent not for hire.

12. DW1, Joseph Mwai, Legal Office of the Appellant adopted his witness statement. On cross-examination he testified that the subject vehicle was stolen on the said date. The Respondent had insured it for own goods on a comprehensive cover. That on investigations, the driver had been hired by two ladies and the police report indicated the onions were owned by two ladies.

13. DW2, Brian Njeru Nyaga testified that he was the investigator appointed by the Appellant to investigate loss of the subject vehicle and came to a conclusion after investigations that the vehicle was hired by a lady in Emali hence the claim was void.

14. On cross examination, he did not have letter of reference nor find the ladies. His report does not include statement of insured and OB does not state that the vehicle was hired. Did not come across hire purchase agreement. Used OB extract.

15. The trial court found the Appellants to have contributed to the accident and entered the judgment for the Respondent against the Appellants jointly and severally as follows;A.A declaration is hereby made that the subject motor vehicle was stolen while in the Plaintiff’s course of business.B.A declaration that the Plaintiff is entitled to compensation for the loss of the subject motor vehicle by the 2nd Defendant by virtue of a policy.C.The 2nd Defendant is hereby directed to compensate and indemnify the Plaintiff as follows.a.Special damages of Kshs. 1,950,000. b.Damages for Kshs. 200,000 for loss of user.c.Costs/ Interests at court rates.

The Appeal 16. The Appellants being dissatisfied by the decision of the trial court lodged this appeal vide a memorandum of Appeal dated 4th September, 2019. The Appeal is premised on the grounds THAT: -i.The learned trial Magistrate erred in law in fact in finding that the Respondent proved his case to the required standard.ii.That the learned trial magistrate erred in fact in finding that the subject motor vehicle registration number KBL 988U was stolen while in the normal cause of Respondent’s business.iii.That the learned trial magistrate erred in fact in failing to find that the Respondent’s motor vehicle registration was hired to third parties at the time it was stolen.iv.That the learned trial magistrate erred in fact and in law by finding that the Appellant is entitled to compensate the Respondent for loss of the subject motor vehicle by virtue of the subsisting policy.v.That the learned trial magistrate erred in law and in fact for finding that the Respondent is entitled to damages for loss of user whereas there was no evidence of any loss whatsoever.vi.That the learned trial magistrate erred in law and in fact by finding that the Respondent is entitled to loss of the motor vehicle.vii.That the learned trial magistrate erred in law and in fact in failing to consider that the totality of the evidence adduced by the Appellant was sufficient to dismiss the suit.viii.That the learned trial magistrate erred in law and in fact by awarding damages to the Respondent that were inordinately high and unwarranted in the circumstances.

Appellant’s Submissions 17. The Appellant submitted that the Respondent’s vehicle was hired by third Parties because the Respondent failed to provide receipts to show that he was in the business of buying and selling onions. The Appellant contends that the Respondent failed to show the nexus between him and the goods, that he should have produced m-pesa statement to show that he had sent his driver 8000 to go and collect onions and that he ought to have called the lady whom the onions were to be collected from as a witness. As such the Appellant was in violation of the insurance policy

18. The Appellant also submitted that, the failure of the Respondent to show that the goods, were in his nature of business, he ought not to have received any compensation and relied on Paul Mutisya v Jubilee Insurance Company of Kenya Limited (2018) eKLR.

19. The appellant submitted that, the Respondent pleaded but failed to prove loss of user failed to prove the same. Macharia Waiguru v Muranga Municipal Council & another (2014) and Savana Development Co. Limited vs Posts and Telecommunications Employees Housing Co-op Society Ltd are the authorities that were relied on by the Appellant in buttressing that the Respondent was not entitled to the award of loss of user.

20. The Appellant has also submitted that, even if there was satisfaction as to the theft the award of Kshs. 1,950,000 which the Appellant submitted was to high bearing in mind the aspect of wear and tear and relied on the judicial decision in Joseph Macharia Nderitu vs Real Insurance Company limited (2014) eKLR

21. It was the Appellant’s contention that the Respondent failed to prove his case to the legally required standard of proof and place reliance on the case of Stanley Maira Kaguongo vs Isaack Kibiru Kahuthia (2022) as well the position held by Lord Denning in Miller vs Minister of Pensions (1942) 2 AL ER 372

Respondent’s Submissions 22. The Respondent in opposing the Appeal through his counsel submitted that, he submitted that an appellate court should not readily interfere with a trial court’s exercise of discretion unless there are grounds to do so and relied on Selle v Associated Motor Boat Co Ltd & Others [1968] EA 123)

23. The Respondent submitted that the Learned trial Magistrate correctly found that the Respondent had proved his case through his testimony and that of his driver. Further that the Appellant did not deny that vehicle was stolen or that it had insured the subject vehicle.

24. The Respondent further submitted that the Appellant failed to demonstrate that the subject vehicle was hired by failing to produce a hire agreement.

25. It was the Respondent’s submission that there was no contestation that the vehicle was stolen and as such was entitled to compensation and damages for loss of user and relied on the case of Joseph Mwangi Gitundu v Gateway Insurance Co. Limited (2015) eKLR

26. The Respondent urged the court to find that the Trial Magistrate correctly decided the matter in the subordinate court and as such should dismiss the instant appeal

Duty Of The Court 27. This being a first appeal it is by way of re-trial, I am reminded of my duty to re-evaluate, re-analyze and re-consider the evidence and make my own conclusion. I am also reminded of the fact that the trial court had the privilege of hearing the witnesses as they testified and as such give due allowance to it. See Selle v Associated Motor Boat Co Ltd & Others [1968] EA 123)

28. In Gitobu Imanyara & 2 others v Attorney General [2016] eKLR, the Court of Appeal held:This being a first appeal, it is trite law, that this Court is not bound necessarily to accept the findings of fact by the court below and that an appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled. Briefly put, they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowances in this respect.

Analysis And Determination 29. I have perused the Record of Appeal; the subordinate court file and I have also analyzed the rival submissions by the parties. The issues for determination are thus;i.Did the Appellant prove that the vehicle was hired?ii.Did the Respondent prove that the vehicle was stolen in the course of his business?iii.Was the Respondent entitled to compensation as a result of theft of the insured vehicle?iv.Did the Respondent adduce enough evidence to support his claim for loss of user?

30. On the first issue Did the Appellant prove that the vehicle was hired by third parties?

31. It is an undisputed fact that the vehicle was stolen, what is in dispute is whether at the time of the said theft, was the vehicle being used any manner or purpose to suggest that it was hired or in any manner to suggest that the vehicle was used contrary to the terms of the policy.

32. The Appellant contends that the vehicle was stolen whilst it was hired by third parties which was contrary to the terms of the insurance policy and therefore faulted the trial court for finding that the Appellant was liable to compensate the Respondent. During trial the Appellant relied on the investigation carried out by DW2.

33. The general rule of evidence is that “He who alleges must prove”. The rule grounded in law under the Evidence Act.

34. Under Section 107 (1) Burden of proof;“107. (1)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…”

35. Section 109 Proof of particular fact.“109. The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.”

36. The initial burden of proof was on the Respondent to prove his case the burden thereafter shifted to the Appellant after it stated that the vehicle was hired. It was incumbent for the Appellant to substantiate its claims beyond reasonable doubt.

37. In Evans Nyakwana –vs- Cleophas Bwana Ongaro [2015] eKLR it was held that:“As a general preposition the legal burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue. That is the purport of Section 107 (i) of the Evidence Act, Chapter 80 Laws of Kenya. Furthermore, the evidential burden…is cast upon any party, the burden of proving any particular fact which he desires the court to believe in its existence. That is captured in Section 109 and 112 of law that proof of that fact shall lie on any particular person…The appellant did not discharge that burden and as Section 108 of the Evidence Act provides the burden lies in that person who would fail fi no evidence at all were given as either side.”

38. DW2 testified that the investigation report dated 29th June, 2012 was based on the OB extract. The OB extract was not provided. The trial magistrate noted the same.

39. Both DW1 and DW2 testified to not having the hire agreement, on record there was equally no hire agreement document or any evidence linking the “two ladies” to the vehicle. I agree with the Respondent’s counsel that there was no evidence to prove that the motor vehicle had been given out for hire.

40. The allegation that the vehicle was hired out ought to have been substantiated by the evidence presented. It is not enough to claim occurrence or existence of something without proving beyond reasonable doubt of its existence.

41. In my considered view the Appellant has failed to prove to the required standards with the evidence it tendered that the subject vehicle had been hired out at the time of the theft. The ground of appeal thus fails

Did The Appellant Prove That The Vehicle Was Stolen In The Course Of His Business? 42. The Appellant faulted the Court for awarding the Appellant compensation since the Respondent failed to show that the goods were in his nature of business. The Respondent testified that the vehicle was stolen in the course of his business. PW2 also confirmed that he was attending to the Respondent’s business. The onus was on the Appellant to substantiate its claims within the legally required standards.

43. Having found that the Appellant failed to prove that the Respondents vehicle was hired this ground of appeal equally fails.

Was The Respondent Entitled To Compensation As A Result Of Theft Of The Insured Vehicle? 44. First and foremost, insurance policy was for the period between 27th July, 2011 to 26th July, 2012. The theft took place on or around 15th May, 2012. Therefore, there was a valid insurance policy as at the time of theft with the Appellant.

45. Secondly in the insurance policy document at Clause 1: Insurance of the Motor Vehicle state as follows:“The Company will indemnify the Insured against accidental loss of or damage to the Motor Vehicle and its accessories spare parts whilst thereon shall not be liable to pay for:a.……b.…..c.burglary, housekeeping or theft

46. This clause is very clear as what is covered under the policy.

47. The theft occurred within the cover period, the theft was covered under the policy the Appellant was duty bound to indemnify the Respondent as per the terms agreed upon. The required legal threshold was discharged.

48. Thirdly, the Respondent at paragraph 6(a) pleaded that that he has suffered loss and damage as a result of the theft of his motor vehicle valued at Ksh.1,950000. Therefore, was the Respondent entitled to award of Kshs 1,950,000?

49. The Appellant has faulted the trial court for awarding damages that were inordinately high and unwarranted. The Appellant submitted that as per the insurance policy the vehicle was insured for Kshs. 1,985,000.

50. The Learned Trial Magistrate in her judgment stated;“In regards to the value of the motor vehicle I note that the Defendant had assessed its value at Kshs. 1,950,000 which I find reasonable and award the same”

51. Looking at the “specification to and forming part of policy….” the vehicle indeed was insured for the sum of Kshs. 1,985,000, Further the assessment report dated 15th March, 2011 assessed the vehicle at Kshs. 1,985,000/-.

52. The contention of the Appellant is that the award was reduced by Kshs. 30,000. The Appellant submitted that the trial court should have factored in reasonable wear and tear.

53. In relying on the judicial decision in Joseph Macharia Nderitu vs Real Insurance Company Limited (supra) the Appellant failed to note that there was an assessment of the pre-theft value of the Plaintiff’s motor vehicle based on the guidelines given by the Automobiles Association. The pre-theft assessment was done establish the estimated value of the motor vehicle before the theft for purpose of compensation.

54. The Appellant never gave the court such an assessment or an amount to controvert the amount in the assessment report dated 15th March, 2011 or the amount sought by the Respondent. It is not clear why the Respondent pleaded a lower amount besides what was in the assessment report dated 15th March, 2011. Since the amount was not controverted, the Learned trial Magistrate awarded what was pleaded I see no reason why I should disturb the same. This ground also fails.

Loss of user 55. On the final issue the Appellant faulted the trial court for allowing the Respondent’s claim for loss of user. The Appellant argued that loss of user being in the nature of a special damage the Respondent was required to prove the loss in terms of the amount lost by way of documents and receipts detailing that he earned what was pleaded. The Appellant argued that Appellant pleaded but the trial court went ahead and proved the loss of user.

56. The Respondent; In paragraph 6 (b) of the Amended Plaint dated 11th November, 2016 pleaded for Kshs. 640,000 for loss of user for 120 days. He relied on his note book as evidence of how much he made per month that he was receiving Kshs. 160,000 net income per month from his business.

57. The Respondent attributed the loss of user to the breach of the comprehensive insurance contract and of terms of the comprehensive insurance policy cover whereby the Appellant was to compensate him for loss of the vehicle and failed.

58. The Learned Trial Magistrate after considering the evidence was satisfied that the respondent had proved his case on a balance of probabilities and in the judgement stated;“In the absence of actual proof of loss of earnings, I will not award Kshs. 160,000 claimed per month but I note that it was a commercial vehicle from which he used to make earnings. I have looked at the policy documents and I note that loss of user is covered under “limits of liability attaching to and forming part of the policy” A (in respects of series of claims arising out of one event -Kshs. 100,000,000. Having found the subject vehicle to being a commercial one I will award a modest sum of Kshs. 50,000 per month which works out to Kshs. 200,000 for the 4 months claimed costs”

59. I agree with the Appellant that Loss of user is an ascertainable item of loss thus a special damage. I however take judicial notice that nature of business that the Respondent was to supply food materials the nature of which was sporadic. There is no doubt that the Respondent lost use of the vehicle as a result of the theft the question to be determined is whether the Respondent proved the loss of use within the acceptable legal standards.

60. In Joseph Mutunga Wambua v Kantilal Khimji Patel & another [1986] eKLR, Apallo J. (as he then was) stated:“Nevertheless, I am satisfied that he was in the cattle trade and earned his livelihood from that business. A wrong doer must take his victim as he finds him. The defendants ought not to be heard to say the plaintiff should be denied his earnings because he did not develop more sophisticated business method”

61. The Court goes on further to state that:“…. But a victim does not lose his remedy in damages because the quantification is difficult.”

62. In Samuel Kariuki Nyangoti vs. Johaan Distelberger [2017] eKLR the court awarded claims for loss of user without any supporting documentary proof by way of books of accounts on loss of income.

63. The court further went on and cited the judicial decision in Jebrock Sugarcane Growers Co. Limited v. Jackson Chege Busi, Civil Appeal No. 10 of 1991 (Kisumu) and stated……the court in allowing a claim for general damages for loss of user of a lorry relied on p.226 para 394 of Halsbury’s Laws of England Vol. 11 3rd Edition which stated thus:“The fact that damages are difficult to estimate and cannot be assessed with certainty or precision does not relieve the wrong doer of the necessity of paying damages for his breach of duty and is no ground for awarding only normal damages”.“Where it is established, however, that damage has been incurred for which a defendant should be held liable, the plaintiff may be accorded the benefit of every reasonable presumption as to the loss suffered. Thus, the court or a jury doing the best that can be done with insufficient material may have to form conclusions on matters on which there is no evidence and to make allowance for contingencies even to the extent of making a pure guess…”

64. Coming to the issue at hand, I note the excerpts of note book produced by the Respondent as evidence may not be a receipt book, on account of how much the Respondent made, but it appears the Respondent was recording everything related to the vehicle in the notebook from payment of salary, service of the vehicle, how much was taken to the bank and even the amounts (bribes) he gave to the police from the year 2010 up the year 2012 just before the vehicle was stolen.

65. That in my view, the note-book amounts to adequate evidence to support his contention. The Respondent shall not lose his remedy because the quantification of what he lost as a result of the theft is difficult.

66. I note that in making the award of KShs.200,000, the learned trial magistrate reasoned that, the vehicle being a commercial one and was earning from it thus gave a figure of Kshs. 50,000 per month for the 4 months, I see no reason as why the same should be disturbed. The award of KShs.200,000 for loss of user is thus upheld.

67. For reasons given above, the appeal herein is dismissed with costs to the Respondent.

It is so ordered.

DELIVERED, DATED AND SIGNED AT NAKURU THIS 3RD DAY OF NOVEMBER, 2023______________________________MOHOCHI S.M.JUDGE OF THE HIGH COURTIn the presence of:Gitau for AppellantMbiyu for the Respondent