Background and introduction
1. By way of a Notice of Motion application dated 16th October, 2024, brought under Sections 1A, 3A & 63(e) of the Civil Procedure Act, Order 1 Rule 10(2), Order 1 Rule 23 and Order 51 Rule 1 of the Civil Procedure Rules, the Third Party/Applicant herein seeks the following orders:
i. That this Honourable Court be pleased to strike out the name of Geminia Insurance Company Limited the Third Party/Applicant herein from this suit and proceedings thereto.
ii. That the costs of the suit and application herein be borne by the Defendant/Respondent.
2. The application is supported by the affidavit sworn on even date by Kelvin Maina, the Legal Officer of Geminia Insurance Company Limited.
3. In the affidavit, Mr. Maina contends that the claim before the court pertains to a breach of contract arising from a Transportation and Logistics Services Agreement executed on the 18th of July, 2024, between the Plaintiff and the Defendant. As such, he denies any legal basis for the Defendant’s claim of indemnity against the Third Party, asserting that no reasonable cause of action has been disclosed against the third party. He asserts that the plaint does not disclose any cause of action against the Third Party neither does it raise any issue to be settled between the Plaintiff and Third Party.
4. In a replying affidavit sworn on 5th November 2024, Stanley Gitari, the Principal Legal Officer of the Defendant confirms that the Defendant had obtained an insurance policy with the Third Party to cover transportation and haulage risks. This policy was intended to indemnify the Defendant for liabilities arising from damages during the transportation of goods and services.
5. He avers that an accident that occurred on 3rd June, 2020 involving Defendant’s train caused damage to goods being transported on behalf of the Plaintiff, leading to Plaintiff's claim. The Defendant reported the incident to the third party and its insurance brokers, Minet Insurance Brokers. However, the third-party failed to take substantive action or compensate the Plaintiff.
6. As a result, the Defendant argues that the Third Party's inclusion in the proceedings is necessary and justified. The Defendant also claims that the current application is an attempt to appeal or re-litigate the court orders of 25th September 2024, which had already enjoined the third party to the case.
Analysis and Determination
7. I have carefully considered the application, response, written submissions and authorities cited by the Third Party/Applicant and the Defendant/Respondent. The Plaintiff did not participate in the application.
8. When this matter came up on 25th September 2024, Mr. Muchiri, counsel for the Defendant informed the court that the Third-Party Notice had been served on the Third Party and that there was no objection to the application. Mr. Kamwara appearing for the Plaintiff confirmed that the Plaintiff was not opposed to the application. On that basis and on the strength of the Affidavit of Service sworn on 23rd September 2023 confirming that indeed the Third Party had been served, this court allowed the application dated 6th September 2024.
9. That was before the present application which now essentially seeks to revise that order. Order 1 Rule 15(1) of the Civil Procedure Rules mandates the court to allow an application for the joinder of a party to a suit if it is demonstrated that the third party is a necessary party to the proceedings. Conversely, Order 1 Rule 10 grants the court the authority to strike out a party improperly joined in the suit.
10. As it turns out, the relationship between the Third Party and the Defendant is that of an insurer and insured, governed by a separate insurance contract. I do concur with the Third Party that the appropriate procedure for resolving disputes regarding liability between an insurer and its insured is through a declaratory suit, which offers a full remedy between the parties.
11. The Third Party referenced several judicial authorities including Blue Shield Insurance Co Ltd V Raymond Buuri M’Nchabu, [2005] eKLR, where the court held that insurers cannot be involved in primary contractual disputes to which they are not privy. Likewise, in Dong Yi (Suing on his own behalf and as the Administrators of the Estate of the Late Luo Jinli) V Sun Africa Hotels Limited T/A Keekorok Lodge Masai Mara; First Assurance Co Ltd (Intended Third Party), [2023] KEHC 1666 (KLR), this court (Gikonyo, J) held as follows:
“The relationship between the insured and the insurer is contractual, and is governed by the contract of insurance between them. Liability between the defendant and the intended third party herein arises in accordance with the contract of insurance between them. And, if liability underwritten benefits a third party, the accepted procedure for determination of such liability is a declaratory suit which provides full remedy under the contract of insurance. I do not think the procedure of declaratory suits is guilty of duplication of suits-which third party procedure seeks to avert-but one specially designed for situations such as this one where liability or questions of indemnity in respect of injury to a third party should be determined between the insured and the insurer...In such special contractual relationship between the insured and the insurer, any question or issue relating to or connected with the policy or liability between the two, cannot be said to be substantially the same question or issue arising between the plaintiff and the defendant and which should properly be determined not only as between the plaintiff and the defendant but as between the plaintiff and defendant and the third party...In my view, liability between the defendant and the third party may not be or conveniently determined through third party procedure under Order 1 Rule 15 (1) of the Civil Procedure Rules. I have already stated that the accepted procedure for determining such liability is a declaratory suit which provides for full remedy between the parties.”
12. Likewise, in Idris Faridi & 2 Others V Karithi Peter Murungi, [2018] KEHC 515 (KLR) the court cited from Laichard Shah & Another V Kenindia Insurance Co Ltd, (2005) eKLR, (Ang’awa J). When dealing with a similar situation the court held:
“The insurance company according to law are never enjoined as a party in a tort suit. This is because the cause of action against an insurance company arises after liability and quantum has been determined by a court of law. All the party suing requires to do before trial is to issue a statutory notice to the insurance company to notify them that a suit will be filed against their insured where the tort case is finalized and there is no pending appeals, review application and any issues. The insurance company on behalf of its insured would be obliged to pay. If it fails to do so, the plaintiffs are to file a declaratory suit in the High Court seeking for the court to pronounce that they are owed the award.”
13. I fully align with the judicial reasoning outlined above. The dispute between the Plaintiff and the Defendant is still pending, and the Defendant's liability has yet to be determined. As such, the question of indemnity does not arise at this stage. Established legal principles dictate that an insurer’s liability is only triggered once the insured’s liability is ascertained. I find no justification to deviate from this well-settled position.
14. The Defendants has relied on this court’s orders of 25th September 2024, which allowed the application dated 6th September 2024 for joinder of the Third Party. However, those orders were granted on the understanding that there was no objection from the Third Party, and the application was not determined on its merits. The present application has now provided the Defendant with an opportunity to fully address the objection to joinder, ensuring that the matter is considered substantively.
15. Given these circumstances, I find that the Defendant has not suffered any prejudice. The Defendant still retains the right to pursue indemnity against the Third Party through a declaratory suit, which is the appropriate legal recourse. Striking out the Third Party from these proceedings does not negate its potential liability under the insurance contract but merely ensures that such liability is adjudicated in the proper forum. Accordingly, this court invokes its inherent jurisdiction to ensure that justice is served in this case.
16. I therefore conclude that GEMINIA INSURANCE COMPANY LIMITED is not a necessary party to this suit. Its inclusion at this stage is premature, as the issues before the court do not directly involve it and can be fully determined without its participation. Consequently, the orders issued on 25th September 2024 are hereby varied and set aside.
Disposition
17. Accordingly, the application dated 16th October 2024 is hereby allowed, and the Third Party's name is struck out from the suit. Costs of the application are awarded to the Third Party, GEMINIA INSURANCE COMPANY LIMITED.
DATED, SIGNED AND DELIVERED IN NAIROBI
THIS 21ST DAY OF FEBRUARY 2025.
F. MUGAMBI
JUDGE