BUDUL INVESTMENT COMPANY LIMITED VS INTRA AFRICA ASSURANCE COMPANY LIMITED

RULING

1. The plaintiff filed suit vide plaint dated 2/6/2022 seeking orders: -
2. A declaration that the defendant is liable and bound to satisfy the judgment and decree of the Honourable court in Kilungu CMCC No. 263 of 2019 Kilonzo Mueke – vs Budul Investment Company Limited together with interest and costs from the date of the judgment.
3. Costs of this suit
4. Interest on (b) above at court rates.
5. Such other or further reliefs as this Honourable court deems fit.
6. This was on the ground that the defendant is the insurer for motor vehicle registration KBW 885J which was involved in a road traffic accident involving number KBT 913Z along MSA-NBI highway at Tangu Area.
7. One Kilonzo  Mueke who was a passenger in m/v registration no KBT 913Z   filed suit for general  damages for pain and suffering in Kilungu MCCC 263 of 2019 – and was awarded damages of Kshs.293, 708 against the plaintiff herein.
8. That he plaintiff had informed the defendant of the matter but the defendant failed/refused/neglected to appoint advocate to defend the suit.
9. The matter proceeded undefended and the above award made.
10. On or about 16/6/2022 the insured (plaintiff) was served with decree, warrants of attachment and proclamation in execution of the said judgment and decree.
11. The plaintiff’s position is that the defendant is liable to settle the decree on behalf of the plaintiff vide the Insurance Policy No. 18/LH/WORL/COMP/CV/002 against 3^rd party risks for motor vehicle registration No. KBW 885J.
12. Together with the plaint, the plaintiff filed Notice of Motion dated 21/6/2022 under sub section 5 and 10 of the Insurance (Third Party Risk) Act and Order 50 Rule 6 of CPR, sub section 1A, 1B and 3A of Civil Procedure Act seeking orders:
13. Spent
14. That the Honourable court be pleased to stay execution of the judgment and decree of the lower court in civil suit Kilungu CMCC No. 263 of 2019 Kilonzo Mueke –vs- Budul

Investment Company Limited issued on 8^th June 2022 interpartes hearing and determination of this application.

1. That the Honourable Court be pleased to stay execution of the judgment an decree of the lower court in civil suit Kilungu CMCC No. 263 of 2019 Kilonzo Mueke –vs- Budul Investment Company Limited issued on 8^th June 2022 pending inter partes hearing and determination of the declaration suit filed herein.
2. That the cost of this application be provided for.

Supported by the affidavit of Ali Adan the registered owner of the motor vehicle KBW 885J - the insured motor vehicle. The grounds for the application reiterate what is in the suit.

1. A replying affidavit was filed on 14/7/2022 sworn by John L. Wainaina the claims manager of the defendant/respondent sworn on 6/7/2022.
2. He conceded that they issued the policy in issue – but that:
3. It was an express term of the policy document that the plaintiff’s employees were not covered under the subject policy and the plaintiff were obligated in law and in fact to take out a work injury benefit cover in respect of their  employees which cover is different and distinct from the policy cover taken out by the plaintiffs in respect to the claim herein.
4. The plaintiff has clearly detailed the claimant in Kilungu CMCC No. 263 of 2019 as his employee at paragraph 13 of the claim form dated 5/7/2019 (annexed herewith and marked ‘JLW1’ is a copy of the accident claim form to attest as such.
5. That upon receipt of the plaintiff/applicant’s claim form, they discovered that the claim against which the plaintiff was claiming was not an insured peril as per the terms and conditions of the policy document on grounds that the claimant was an employee of the plaintiff hence not covered by the policy document.
6. That they duly advised their insured that the claim was not covered and they ought to have taken out a separate cover for its employees under the Work Injury Benefit Act as the comprehensive policy cover does not extend to the employees of an insured.
7. They also filed a defence on 14/7/2022 denied the allegations against it stating that the subject suit in Kilungu CMCC No. 263 of 2019 was as between an employee and his employer.
8. The defendant averred  that the suit against the plaintiff in the subject cases is a work injury benefit claim relating to employer – employee relationship.
9. The defendant further averred that subject judgment in Kilungu CMCC No. 263 of 2019 was a work injury claim which the honourable magistrate in Kilungu had no jurisdiction to sit and arbitrate over the same and the resultant judgment does not involve their client both in law and in contract.
10. The defendant averred that the declaratory order sought by the plaintiff was unavailable in the circumstances as the claimant was expressly excluded from the beneficiaries of the provisions of section 5 of Cap 405 and there was no basis in law or in contract against which the declaratory order could issue.
11. The defendant further averred that the duty of an insurer to satisfy judgments against persons insured was subject to such liability required to be covered under section 5 of Cap 405 and liability in respect of the claim herein had been expressly excluded hence no duty/obligation by the defendant to shoulder any liability in respect of the claim herein.
12. At paragraph 17 the defendant raised a Preliminary Objection. The defendant averred that the instant suit is fictitious, lacks a cause in action in law or in contract, frivolous an abuse of the court process. The same is incompetent and a preliminary objection shall lie at the earliest opportunity seeking to have the same struck out and dismissed.
13. Parties agreed to argue the both the application and the P.O together.
14. For the respondent it is  submitted that this court does not have jurisdiction to hear the matter – see for definition of Preliminary  Objection Mukisa Biscuit Manufacturing Co. Ltd –vs- West End Distributors Ltd (1969) E.A 696 at page 700 and on jurisdiction – Owners of Motor Vessel ‘Lilian S’ v. Caltex Oil (Kenya) Limited [1989] KLR 1, which bears the following passage (Nyarangi, JA at page 1) “I think that it is reasonably plain that a question of jurisdiction ought to be raised at the earliest opportunity and the court seized of the matter is then obliged to decide the  issue right away on the material before it. Jurisdiction is everything. Without it, a court has no power to make one more step.”
15. It is submitted that this court must down its tools for the following reasons:
16. That the insurance policy of the insured excluded the insured’s employee in that the insurance motor vehicle Third party Risks Act Cap 405 does not cover employees section 5(b)(1) states:-

5.” Requirements in respect of insurance policies

In order to comply with the requirements of section 4, the policy of insurance must be a policy which –

… (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 cause 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 –

1. Liability in respect of the death arising out of and in the course of his 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”

Section 10(1) provides that,

“If, after a policy of insurance has been effected, judgment in respect of any such liability as is require to be covered by a policy under paragraph (b) of section 5 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled, the policy, the insurer shall, subject to the provisions of this section, pay to the persons entitled to the benefit of the judgment any sum payable thereunder in respect of the liability, including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.”

1. The respondent also relies on Kenyan Alliance Insurance Company Limited –vs- Naomi Wambui Ngira & Another (suing as the Legal Representatives an Administrators of the Estate of Nelson Machari Maina (deceased) [2021] e KLR, where the court held:

This court finds that the requirement that the insurer settles the decretal amount following entry of judgment is only applicable for such judgments involving liability which is required to be covered both under the Act and under the insurance policy. The Act uses the following terms to describe the type of judgment which ought to be settled:

Judgment in respect of any such liability as is required to be covered by a policy under paragraph (b) of section 5 (being a liability covered by the terms of the policy).

In the premises, it would be wrong to compel an insurance company to settle a judgment which arises from liability not contemplated by the law makers and even then which is not the subject of an insurance policy between the parties involved. In fact, in this case, the liability has been expressly excluded by virtue of the aforesaid section 5(b)(i) of the Act. Should the insurer be obligated to settler any such judgment, this would not only have the effect of ascribing on parties that which they did not contract, but also to find against the provisions of law. The end result would be to confer an unnecessary benefit on an undeserving party while punishing the insurer for that which it did not contract and/or acquiesce to.”

1. This view was further enunciated in The Great Insurance Company of India Ltd – vs Lilian Everlyn Cross and Another [1966] E.A 90, 97,, where Newbold V.P sitting at the Court of Appeal held a follows with respect to the applicability of section 10 of the Act:-

“It is submitted on behalf of the insurer that this section only applies where the liability is covered by the terms of the policy and that in this case no liability arose under the policy for any injury caused by a disqualified driver. I accept that this section only applies where  both the liability is required under section 5(b) to be covered by a policy and the liability is in fact covered by the terms of the policy.”

1. That the policy did not cover employees of the plaintiff herein and hence this was an employment matter
2. I have carefully considered the rival affidavits and the submissions and there are two issues: whether the P.O is merited and if not whether the application for stay the hearing and determination of the plaintiff’s suit is merited,
3. On the P.O it is clearly evident that the Insurance Policy excludes cover of the insured’s employees. That is set out at clause 5. It is admitted in all the documents in the file that the plaintiff in the Kilungu matter was an employee of the plaintiff at the time of the accident.
4. The exclusion clause therefor applies on the Kilonzo Mueke and hence he was not covered by the third Party Insurance Policy that the plaintiff had taken for its m/v registration KBW 885J.
5. That therefor speaks to the jurisdiction of this court as this was indeed a work injury matter that ought to have been placed before the court with jurisdiction.
6. I am persuaded that this court is devoid of jurisdiction to deal with this matter.
7. That takes care of the matter of the application. If the P.O as without merit, then it would only have been fair to grant the stay order pending the hearing and determination of this suit.
8. In the circumstances the P.O is upheld and this suit is struck out for want of jurisdiction
9. Costs to the respondent.

Dated, signed and delivered on  on 17^th May 2024

………………………………………………………..

Mumbua T Matheka

Judge

NB: the system has distorted the paragraphing