(Being an appeal from ruling of Hon. A.G. Njuguna (RM) dated 20.6.25 in Milimani SCCC E793 of 2023)
The appellant herein had filed a personal injury claim to wit Milimani SCCC E793 of 2023 against the respondents seeking compensation and costs on account of a road accident. The claim was defended by the respondent. Subsequently, judgment was delivered on 8.3.24 in favour of the appellant against the respondent together with cost and interest. A decree was issued on 5.6.24 for Kshs. 791,249.14/-.
The appellant had warrants of attachment issued against the respondents, as consequence of which the respondents’ motor vehicle reg No. KAW 981V was attached. The respondents engaged the appellant and the parties reached a consent by which the respondent were to pay Kshs. 150,000 and auctioneer’s fees to secure release of their motor vehicle, pay a further Kshs. 150,000 after 14 days and the outstanding balance in monthly instalments of Kshs. 100,000. The respondents paid the 1 st payment of Kshs. 150,000 and auctioneer’s fees and their motor vehicle was released.
After release of the respondents’ motor vehicle, they defaulted the terms of the consent, thereby necessitating the filing of an application dated 27.2.25 seeking for stay of execution on the grounds that they are policy holders of Invesco Company Ltd which was currently under statutory management. The learned magistrate allowed the application by her ruling dated 20.6.25, for the duration of the moratorium and directed that the appellant is a creditor to the insurer and should follow set procedure under the insurance Act for the payment of the outstanding decretal sum. The appellant, aggrieved by the ruling, filed this appeal.
The appeal was disposed of by way of written submissions.
APPELLANT’S SUBMISSIONS
The appellant submitted that the judgment before the trial court was against the respondent and that they are obligated to settle the same. That the respondent personally settled the 1 st instalment of the decretal sum despite knowing that their insurer was placed under moratorium. The appellant submitted that the learned magistrate misconstrued the provisions of Section 67 C (10) and (11) of the Insurance Act. That the appellant is not a policy holder nor a creditor to the insurer of the respondent.
The appellant cited the case of Odhiambo v Monarch Insurance Co. Ltd 2022 KEHC 15610 (KLR) and Muthuri Ntara & another v Francis Mworia Igweta (2016) KEHC 4780 (KLR).
RESPONDENTS’ SUBMISSIONS
The respondents submitted that the trial magistrate correctly applied Section 67 C (10) and (11) of the Insurance Act. That Section 67 (C) of the Insurance Act prohibits proceedings against an insured and policy holder whose insurer has been placed under statutory management.
The respondent cited the case of Re Blue Shield Insurance Co. Ltd (2020) eKLR . The respondents’ case is that having considered the fact that the appellant had entered into a consent with the respondents’ insurer and received part payment of the decretal sum, the magistrate correctly held that this made the appellant a creditor to the insurance. That the appellant could claim from the Policy Holder’s Compensation Fund.
ANALYSIS AND DETERMINATION
This being an appeal to the first appellate court (though on issues of law only), I am required to evaluate the evidence and make a determination whether the learned magistrate’s ruling is sound in law.
The court is required to determine whether the learned magistrate erred in law by misapprehending the provisions of Section 67 C (10) and (11) of the Insurance Act and thereby granted stay of execution.
A reading of Section 67 C (10) of the Insurance Act reveal that a moratorium declared under the said section is meant to protect the insurer against its policy holders/creditors and not the policy holders against the third parties. The appellant other than being a judgement/creditor in the suit before the magistrate court was not a creditor or a policy holder of the insurer. The appellant’s suit was against the respondents/tortfeasors.
I seek reliance in the case of Re Blue Shield Insurance Company Ltd, under statutory management civil suit No. 465 of 2011 (O.S) where Justice L. Njuguna held:
“I have considered the submissions by the opposing parties and it is clear that there is no dispute that the said moratorium was issued under section 67 C (10). The section only seeks to protect the insurers against claims from its policy holders and creditors thereby excluding claims against the policy holders from third parties. In fact, there is no privity of contracts between the insurer and third parties for a moratorium to extend to the third parties. If insurers were allowed to issue moratoriums to third parties, then it is the third parties who would be prejudiced as they would not be in a position to enforce claims against negligent policy holders. The interested parties were not parties to the initial proceedings declaring the moratorium as a result of which they did not have the opportunity to oppose the application.”
It is therefore my finding that the moratorium was meant to protect the insurer against policy holders and creditors. It was not meant to protect policy holders and shield them from meeting their obligations to third parties whether in contract, tort or under statute.
In Odhiambo v Monarch Insurance Co. Ltd; Senge & Another Interested parties (2022) KEHC 15610 (KLR), Aburili R.E.J. stated:
“I must however state that the primary obligation of settling the decree falls squarely on the plaintiff and in the event that the defendant as his insurer fails to satisfy the decree, the plaintiff will still be called upon to satisfy the same. In other words, the mere fact that the defendant is bound both contractually and statutorily to satisfy the decree does not absolve the plaintiff from meeting his obligations under the tort of negligence. In addition, nothing prevents the plaintiff from settling the decretal sum and then enforcing the same decree against the defendant for reimbursement.”
Similarly, in Muthuri Ntara & another v Francis Mworia Igweta (2016) KEHC 4780 (KLR) the court stated that:
“Therefore, a moratorium issued to protect the insurance company whose fortunes have now dwindled, leading to statutory management does not operate as stay of execution of decrees against the insured. A moratorium is declared by the statutory manager under section 67 C (10) of the Insurance Act and it protects the insurer against claims by the policy holders and creditors of the insurer. Accordingly, mere declaration of a moratorium does not mean an automatic stay of execution against the insured; the insured must prove before the trial court upon lawful grounds that a stay of execution is merited .”
The learned trial magistrate failed to appreciate that the appellant’s suit before her was not a declaratory suit against the insurer. The decree was against the tortfeasor, the respondent and there were no justifiable reasons to warrant granting orders of stay of execution. For the foregoing reasons, the appeal has merit and it is accordingly allowed.
The ruling of Hon. A.G. Njuguna dated 20.6.25 is set aside and substituted with one dismissing the application dated 27.2.25 with costs. The appellant shall have costs of this appeal.
DATED, SIGNED AND DELIVERED THIS 15 th JULY 2026
D.O. ONYANGO
JUDGE
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The appellant herein had filed a personal injury claim to wit Milimani SCCC E793 of 2023 against the respondents seeking compensation and costs on account of a road accident. The claim was defended by the respondent. Subsequently, judgment was delivered on 8.3.24 in favour of the appellant against the respondent together with cost and interest. A decree was issued on 5.6.24 for Kshs. 791,249.14/-.
The appellant had warrants of attachment issued against the respondents, as consequence of which the respondents’ motor vehicle reg No. KAW 981V was attached. The respondents engaged the appellant and the parties reached a consent by which the respondent were to pay Kshs. 150,000 and auctioneer’s fees to secure release of their motor vehicle, pay a further Kshs. 150,000 after 14 days and the outstanding balance in monthly instalments of Kshs. 100,000. The respondents paid the 1 st payment of Kshs. 150,000 and auctioneer’s fees and their motor vehicle was released.
After release of the respondents’ motor vehicle, they defaulted the terms of the consent, thereby necessitating the filing of an application dated 27.2.25 seeking for stay of execution on the grounds that they are policy holders of Invesco Company Ltd which was currently under statutory management. The learned magistrate allowed the application by her ruling dated 20.6.25, for the duration of the moratorium and directed that the appellant is a creditor to the insurer and should follow set procedure under the insurance Act for the payment of the outstanding decretal sum. The appellant, aggrieved by the ruling, filed this appeal.
The appeal was disposed of by way of written submissions.
APPELLANT’S SUBMISSIONS
The appellant submitted that the judgment before the trial court was against the respondent and that they are obligated to settle the same. That the respondent personally settled the 1 st instalment of the decretal sum despite knowing that their insurer was placed under moratorium. The appellant submitted that the learned magistrate misconstrued the provisions of Section 67 C (10) and (11) of the Insurance Act. That the appellant is not a policy holder nor a creditor to the insurer of the respondent.
The appellant cited the case of Odhiambo v Monarch Insurance Co. Ltd 2022 KEHC 15610 (KLR) and Muthuri Ntara & another v Francis Mworia Igweta (2016) KEHC 4780 (KLR).
RESPONDENTS’ SUBMISSIONS
The respondents submitted that the trial magistrate correctly applied Section 67 C (10) and (11) of the Insurance Act. That Section 67 (C) of the Insurance Act prohibits proceedings against an insured and policy holder whose insurer has been placed under statutory management.
The respondent cited the case of Re Blue Shield Insurance Co. Ltd (2020) eKLR . The respondents’ case is that having considered the fact that the appellant had entered into a consent with the respondents’ insurer and received part payment of the decretal sum, the magistrate correctly held that this made the appellant a creditor to the insurance. That the appellant could claim from the Policy Holder’s Compensation Fund.
ANALYSIS AND DETERMINATION
This being an appeal to the first appellate court (though on issues of law only), I am required to evaluate the evidence and make a determination whether the learned magistrate’s ruling is sound in law.
The court is required to determine whether the learned magistrate erred in law by misapprehending the provisions of Section 67 C (10) and (11) of the Insurance Act and thereby granted stay of execution.
A reading of Section 67 C (10) of the Insurance Act reveal that a moratorium declared under the said section is meant to protect the insurer against its policy holders/creditors and not the policy holders against the third parties. The appellant other than being a judgement/creditor in the suit before the magistrate court was not a creditor or a policy holder of the insurer. The appellant’s suit was against the respondents/tortfeasors.
I seek reliance in the case of Re Blue Shield Insurance Company Ltd, under statutory management civil suit No. 465 of 2011 (O.S) where Justice L. Njuguna held:
“I have considered the submissions by the opposing parties and it is clear that there is no dispute that the said moratorium was issued under section 67 C (10). The section only seeks to protect the insurers against claims from its policy holders and creditors thereby excluding claims against the policy holders from third parties. In fact, there is no privity of contracts between the insurer and third parties for a moratorium to extend to the third parties. If insurers were allowed to issue moratoriums to third parties, then it is the third parties who would be prejudiced as they would not be in a position to enforce claims against negligent policy holders. The interested parties were not parties to the initial proceedings declaring the moratorium as a result of which they did not have the opportunity to oppose the application.”
It is therefore my finding that the moratorium was meant to protect the insurer against policy holders and creditors. It was not meant to protect policy holders and shield them from meeting their obligations to third parties whether in contract, tort or under statute.
In Odhiambo v Monarch Insurance Co. Ltd; Senge & Another Interested parties (2022) KEHC 15610 (KLR), Aburili R.E.J. stated:
“I must however state that the primary obligation of settling the decree falls squarely on the plaintiff and in the event that the defendant as his insurer fails to satisfy the decree, the plaintiff will still be called upon to satisfy the same. In other words, the mere fact that the defendant is bound both contractually and statutorily to satisfy the decree does not absolve the plaintiff from meeting his obligations under the tort of negligence. In addition, nothing prevents the plaintiff from settling the decretal sum and then enforcing the same decree against the defendant for reimbursement.”
Similarly, in Muthuri Ntara & another v Francis Mworia Igweta (2016) KEHC 4780 (KLR) the court stated that:
“Therefore, a moratorium issued to protect the insurance company whose fortunes have now dwindled, leading to statutory management does not operate as stay of execution of decrees against the insured. A moratorium is declared by the statutory manager under section 67 C (10) of the Insurance Act and it protects the insurer against claims by the policy holders and creditors of the insurer. Accordingly, mere declaration of a moratorium does not mean an automatic stay of execution against the insured; the insured must prove before the trial court upon lawful grounds that a stay of execution is merited .”
The learned trial magistrate failed to appreciate that the appellant’s suit before her was not a declaratory suit against the insurer. The decree was against the tortfeasor, the respondent and there were no justifiable reasons to warrant granting orders of stay of execution. For the foregoing reasons, the appeal has merit and it is accordingly allowed.
The ruling of Hon. A.G. Njuguna dated 20.6.25 is set aside and substituted with one dismissing the application dated 27.2.25 with costs. The appellant shall have costs of this appeal.
DATED, SIGNED AND DELIVERED THIS 15 th JULY 2026
D.O. ONYANGO
JUDGE
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