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JudgmentDirectline Assurance Company Limited VS Shedrack Itumo Mutuku11 min read

Directline Assurance Company Limited VS Shedrack Itumo Mutuku

High Court at Milimani High Court · · Wendy Micheni

(Being an Appeal from the Ruling of the Honourable Court D.O Mbeja delivered on the 17th September, 2021, in Nairobi Chief Magistrate’s Court Civil Suit No. E7134 of 2020)

RULING

  1. The Plaintiffs/Applicant (hereinafter the Respondent), Shadrack Itumo Mutuku filed a Declaratory suit against the Defendant (hereinafter the appellant), Directline Assurance, seeking judgment against the Defendant for a declaration that the Defendant is liable to satisfy judgment in CMCC No. 6309 of 2017, and thus judgment be entered for the decretal amount therein plus interest thereon at court rate from the date of judgment until payment in full.
  2. The appellant then filed a Defence dated 18th July, 2021 denying the said claim. The filing the defence prompted the application by the respondent dated 8th March, 2021, brought pursuant to Order 2 Rule 15 (b), (c) and (d) of the Civil Procedure Rules, seeking orders that the trial court do strike out the statement of defence dated 18th January, 2021 by the appellant and judgement to be entered against the Respondent as prayed in the plaint dated 10th November, 2020.
  3. The said application was supported by the grounds on its face and the affidavit by the plaintiff, which grounds are inter alia that on 30th April, 2020, Judgment was delivered in Nairobi CMCC No. E7134 OF 2020 in favour of the plaintiff as against the 1st Defendant; being the registered owner of the subject motor vehicle registration number KBV 498A, who was found 100% liable and ordered to pay kshs.1,009,550/=. 
  4. The respondent stated that the police abstract filled following the said accident indicates that the appellant herein was the insurer of the said vehicle at the time of the accident. The Plaintiff notified the Defendant of the accident resulting to the said case vide demand letter and statutory notice both of which were received and stamped by the Defendant/Respondent herein with an indication that the Defendant were aware of the said accident and impending subsequent suit against their insured.
  5. The respondent therefore through his advocates demanded for the insurer, the appellant herein, in compliance with the said judgment and under Motor Vehicle Third Party Risk Act, and upon failure to settled the claim, they instituted a declaratory suit.
  6. The Respondent stated the said defence discloses no Defence in law and is therefore it is an abuse of court process and it is only meant to delay and embarrass the conclusion of the declaratory suit. That, unless the said Defence is struck out it will delay a fair and expeditious hearing and disposal of the action herein.
  7. The appellant filed a replying affidavit in response to the application, sworn by Pauline Waruhiu, their head of claims legal, who deponed that the respondent herein was the employee of the defendants/insured in the primary suit, and are not liable to settle any claims resulting thereto during his course of employment. Simply put the defendant in its defence has raised issues that can only be determined through full trial. 
  8. Upon hearing the parties on the application, the trial court delivered a ruling dated 17th September 2021 dismissing the application and ordered as follows;

“In the result given the circumstances obtaining in the instant suit, I am satisfied that the application before court has merit. The defence filed herein consists of mere denials. In the result, the application dated 8th March, 2021 is allowed with costs to the plaintiff, all circumstances of this case considered”

  1. Being aggrieved by the above ruling the appellant filed this instant memorandum of appeal on the following grounds of appeal;
  2. THAT, the learned trial Magistrate erred in law and in fact by striking out the appellant’s statement of defence and thus denying the appellant the chance to canvass their defence on full trial.
  3. THAT the learned trial Magistrate erred in law and in fact by striking out the appellant’s statement of defence when the same was not vexatious, scandalous and raised triable issues in law.
  4. THAT the learned trial Magistrate erred in law and in fact by failing to consider and appreciate the appellant’s grounds of opposition as well as the appellant’s replying affidavit in response to the respondent’s application to strike out defence.
  5. THAT, the learned trial magistrate erred in law and fact in taking draconian measure by striking out the appellant’s statement of defence when the circumstances did not call for such a measure.
  6. THAT, the learned Magistrate overlooked the appellant’s grounds of opposition, appellant’s replying affidavit, and misconstrued the legal principles for striking out pleadings, thereby taking an improper course of striking out the appellant’s statement of defence in the presence of triable issues and analyzing the merits of the case without first hearing the parties.
  7. THAT, the learned Magistrate erred in law and in fact in disregarding the provisions of Section 5 (b) (i) of the Insurance (Motor Vehicle Third Party Risks) Act which were pleaded as a defence in the appellant’s ground of opposition as well as the appellant’s replying affidavit in response to the respondent’s application to strike out the defence.
  8. THAT the learned trial magistrate erred in law and in fact in failing to appreciate or take into consideration the appellant’s submissions or at all.
  9. This appeal was canvassed by way of written submission. The appellant filed written submission dated 17th April, 2024 whilst the respondent filed written submissions dated 10th April, 2024, which rival arguments, I have carefully analyzed and considered the authorities cited and the position of law.

Analysis and determination

  1. From the pleadings the main issues for consideration are; -
  2. Whether this court should vacate the orders issued on 17th September 2021 by the trial court striking out the appellant’s defence and entering judgment against itself?
  3. As this is the first appeal, this court is called upon to analyse and re-assess the evidence on record and reach its own conclusions bearing in mind that it neither saw nor heard the witnesses testify (see Selle v Associated Motor Boat Co. [1968] EA 123).
  4. In Kiruga v Kiruga & Another [1988] KLR 348, the Court of Appeal observed that;

An appeal court cannot properly substitute its own factual finding for that of a trial court unless there is no evidence to support the finding or unless the judge can be said to be plainly wrong.  An appellate court has jurisdiction to review the evidence in order to determine whether the conclusion reached upon that evidence should stand but this is a jurisdiction which should be exercised with caution.

  1. The main issue for determination in this appeal is whether the order to strike out the appellant’s defence was made against the established clear principles set out by Order 2 rule 15 of the Civil Procedure Rules which provides as follows:

“Rule 15. (1) At any stage of the proceedings the court may order to be struck out or amended any pleading on the ground that—

(a) It discloses no reasonable cause of action or defence in law; or

(b) It is scandalous, frivolous or vexatious; or

(c) It may prejudice, embarrass or delay the fair trial of the action; or

(d) It is otherwise an abuse of the process of the court, and may order the suit to be stayed or dismissed or judgment to be entered accordingly, as the case may be.”

  1. A statement of defence is said to raise reasonable defence if that defence raises a prima facie triable issue. In the case of Olympic Escort International Co. Ltd. & 2 Others –vs- Parminder Singh Sandhu & Another [2009] eKLR, the Court of Appeal held that for an issue to be triable, it has to be bona fide. The court stated as follows:

“It is trite that, a triable issue is not necessarily one that the defendant would ultimately succeed on. It need only be bona fide.”

  1. The issue of summary procedure and striking out of pleadings was given very careful consideration by this Court in Dt Dobie & Company (Kenya) Ltd. v. Muchina [1982] KLR 1 in which Madan J.A. at page 9 said: -

“ At this stage, the court ought not to deal with any merits of the case for that is a function solely reserved for the judge at the trial as the court itself is not usually fully informed so as to deal with the merits “without discovery, without oral evidence tested by cross-examination in the ordinary way.”

As far as possible indeed, there should be no opinions expressed upon the application which may prejudice the fair trial of the action or make it uncomfortable or restrict the freedom of the trial judge in disposing of the case in the way he thinks right.”

It is deducible that in dealing with the issue of triable issues, I must point out that even one triable issue would be sufficient. 

  1. In the instant, I have perused the appellant’s defence in the trial court which was pegged on limbs that, as at the time of the accident it did not insure the suit vehicle, it was not served with the statutory notices under Cap 405, and that the respondent is not a Third Party within the definition of the Insurance (Motor Vehicle Third Party Risks) Act, Cap 405.
  2. It is noteworthy that upon entry of judgement in accident claims, where the defendant’s insured was sued, Section 10 of the Insurance (Motor Vehicles Third Party Risks) Act obligates an insurer to settle the decretal amount/sum.
  3. First, it is evidenced that the “primary suit” contained a regular judgment where the appellant’s insured thereto vigorously participated.
  4. I have further taken note, that a demand notice and a statutory notice pursuant to Section 10 of the Insurance (Motor Vehicles Third Party Risks) Act was long served upon the appellant herein and received by seal thereto, at the onset of the primary suit.
  5. Consequently, the respondent failed to reply or object to the same and is thus precluded from challenging its statutory obligation to settle the liability claims at the penultimate juncture.
  6. The Court considers that Section 10 of the Insurance (Motor Vehicles Third Party Risks) Act provides for the duty of an insurer to settle a decretal amount as follows: -

10. Duty of insurer to satisfy judgments against persons insured

(1) If, after a policy of insurance has been effected, 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) 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.

Provided that the sum payable under a judgment for a liability pursuant to this section shall not exceed the maximum percentage of the sum specified in Section 5 (b) prescribed in respect thereof in the Schedule.

  1. This notwithstanding, there only two (2) statutory proffered defences in circumstances as the instant, to an insurer under the Insurance (Motor Vehicle Third Party Risks) Act. See Court of Appeal in Blue Shield Insurance Co. Ltd; Raymond M’Rimberia [1998] eKLR
  2. The Act affords an insurer certain statutory defence in section 10(2) of the Act which provides:

(2) No sum shall be payable by an insurer under the foregoing provisions of this section—

(a) in respect of any judgment, unless before or within fourteen days after the commencement of the proceedings in which the judgment was given, the insurer had notice of the bringing of the proceedings;

or

(b) in respect of any judgment, so long as execution thereon is stayed pending an appeal; or

(c) in connexion with any liability if, before the happening of the event which was the cause of the death or bodily injury giving rise to the liability, the policy was cancelled by mutual consent or by virtue of any provision contained therein, and either—

(i) before the happening of the event the certificate was surrendered to the insurer, or the person to whom the certificate was issued made a statutory declaration stating that the certificate had been lost or destroyed; or

(ii) after the happening of the event, but before  expiration of a period of fourteen days from the taking effect of the cancellation of the policy, the certificate was surrendered to the insurer, or the person to whom the certificate was issued made such a statutory declaration as aforesaid; or

(iii) either before or after the happening of the event, but within a period of twenty-eight days from the taking effect of the cancellation of the policy, the insurer has notified the Registrar of Motor Vehicles and the Commissioner of Police in writing of the failure to surrender the certificate.”

  1. The plain reading of the subsection is that an insurer is exempted from satisfying the decree obtained against an insured if the insurer is able to come within those exceptions. Neither was utilised by the appellant at the trial court.
  2. Further, Section 10 (4) of the Act requires an insurer who wants to deny liability, to obtain a declaration either before or not more than three (3) months following commencement of the primary suit. The jurisprudence of our courts informs me that, the manner in which to obtain such a declaration is by filing a declaratory suit in court.
  3. Again, this action would only be valid, if the insurer within the fourteen (14 days) after the filing of the primary suit, gave notice to the plaintiff, in that matter, that it is not liable.
  4. Simply put, by the appellants failure to utilize the statutory reprieves under Section 10 (4) of the Act, denouncing its obligations, either through notice to the plaintiff within 14 days after filing the primary suit or by way of filing a declaratory suit, the appellant is thus precluded from abdicating its obligations at this juncture.
  5. It would follow that the its defence at the declaratory suit in the trial court would be moot, and inconsequential. I uphold the finding by the learned trial Magistrate.

Conclusion

  1. I find that the appeal lacks merit and is hereby dismissed.
  2. Costs of the appeal assessed at Khs.50,000 all-inclusive and are awarded to the respondent.

Dated, Signed and Delivered at NAIROBI Virtually this 31st Day of JULY, 2024.


WENDY MICHENI

JUDGE