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( Being an appeal from the Judgment of the Hon. E. Tsimonjero (SRM) delivered on 31 st July 2024 at Ukwala in PMC Commercial Suit No. E004 of 2021)
The Appeal arises from the Judgment of the Hon. E. Tsimonjero (SRM) delivered on 31 st July 2024 in Ukwala PMCC COMMSU No. E004 of 2021.
The brief facts of the dispute were that on or about 15 th October 2018, the Appellant’s motor vehicle, KCP 856S Isuzu Truck, was involved in a road accident along Kisumu-Busia road at Nzoia River. In the Amended Plaint dated 12 th April 2023, the Appellant pleaded that at all material times, the Respondent was the insurer of the motor vehicle under Policy No. 101878070252(Comprehensive). According to the Appellant, its motor vehicle was towed to Sunshine Auto Mobiles garage in Kisumu Town, where it was kept. The Appellant lodged an indemnity claim with the Respondent, which was investigated by the Respondent’s agents, but on or about 22 nd January 2019, the Respondent denied liability and declined to honour the insurance contract.
The Appellant instructed Paramount Assessors Limited to assess the repairs, and upon assessing the repairs, the Appellant paid an assessment fee of Kshs. 10,000.00. The assessor came up with the total estimated repair costs of Kshs. 2,141,940.00. According to the Appellant, its motor vehicle was their tool of trade for transport services at a fee and earned them an average monthly income of Kshs. 90,000.00, thus entitled to claim for loss of user from the date of the accident. The Appellant claimed for daily storage fee of Kshs. 500, which remains unpaid from the date of the accident, as the motor vehicle is still grounded at Sunshine Auto Mobiles garage. According to the Appellant, the motor vehicle was towed at a cost of Kshs. 34,000.00.
The Appellants sought the following reliefs:
Specific performance of the Insurance Policy regarding compensation, and particularly payment of Kshs. 2, 141,940.00 being the estimated cost of repairs of the damaged motor vehicle;
Special damages of Kshs. 44,000.00, being the amount paid as assessment and towing fee.
Damages for loss of user, from the date of the accident up to the date of entry of judgment.
Payment of daily storage fee, from the date of accident up to the date of entry of judgment.
Costs of the suit.
Interest on (a) (b) (c) and (d) above.
Vide its Statement of Defence dated 2 nd November 2021, the Respondent denied that the motor vehicle belonged to the Appellant or was involved in any accident on 15 th October 2018. It was pleaded that the Appellant, after notifying the Respondent of the accident on or about 14 th October 2018, failed to disclose the load capacity that the motor vehicle was carrying. According to the Respondent, investigations established that the motor vehicle had a capacity of 7,160 tonnes, instead of the licensed capacity of 2,500 tonnes, which was a breach of the fundamental terms and conditions of the policy, particularly regarding overloading; thus, the cover did not operate and stood cancelled. The Respondent asserted that the policy did not cover any liability arising from damages caused by overloading and strain; thus, the Respondent was not liable to pay any sum claimed by the Appellant.
The Respondent pleaded that the suit was brought prematurely without first resorting to arbitration, which is a condition precedent for a court action under the policy of insurance. The Respondent admitted jurisdiction of the Court but denied that the Appellant had any cause of action against the Respondent. According to the Respondent, the Appellant’s suit is bad in law, vague, incoherent, and unimaginable, and that the same was filed without regard to the rules of pleading. The Respondent prayed for the suit to be struck out or dismissed with costs.
Vide a reply dated 24 th January 2022, the Appellant denied all the facts pleaded and prayed for dismissal of the Statement of Defence and judgment be entered as per the Plaint.
PW1 James Nairangu , the Appellant’s Director, stated that his motor vehicle was involved in an accident and that he reported it. He adopted his witness statement dated 27 th September 2021. He adopted his list of documents as exhibits, save for numbers 6 and 7, which were marked as PMF6 and PMF7. He stated that his vehicle carries up to 10 tons and that day he was not overloaded, as he even got clearance from the weighbridge as per Exhibit 4. He claimed that he had taken a comprehensive cover with the insurance.
PW1 was stood down to allow the Respondent to file the Policy document for Commercial vehicle insurance.
PW2 Simon Waweru Kimani , the driver, adopted his witness statement dated 27 th September 2021. He stated that he started the journey on 13 th October 2018 and that the accident occurred at midnight on 13 th or 14 th October 2018. He reported on 14 th October 2018. He stated that the motor vehicle had been weighed on 12 th October 2018 before the journey at about 8.30 PM, and that they had to collect a certificate for purposes of the suit, which they are not ordinarily given when the motor vehicle is weighed. On being cross-examined, he stated that he weighed at Gilgil on 12 th October 2018. He was on the road from 12 th to 14 October 2018. He stated that he knew how much weight he should carry, which is totally unrelated to the logbook, and that overloading cannot cause a motor vehicle to lose control and cause an accident. He stated that the weight was between 3.5 and 10 tons as per the weighbridge report marked as Exhibit 4. In re-examination, PW2 stated that if the vehicle had been overloaded, he would have been stopped at the weighbridge and charged, but was not.
PW1 stated that he was using the motor vehicle for business. He stated that it was insured in June 2018 with Heritage. After the accident, he took it to Sunshine for repairs. He stated that he was getting Kshs. 90,000 to Kshs. 120 per month. He stated that he spent money on towing and repairs. He stated that the motor vehicle is still at Sunshine, which is charging Kshs. 500 daily for storage. On being cross-examined, he stated that he approached Heritage and made a proposal form cover on 7 th June 2018. He wanted a comprehensive commercial policy for his motor vehicle. He stated that his motor vehicle was inspected, and that the capacity in the proposal he filled was a maximum of 7 tons. The tare weight was 5000 Kg, load capacity 2500 Kg, thus a gross weight of 7,500 Kg. He stated that he was issued a Policy document certificate and cover for the motor vehicle, which was to commence from 7 th June 2018 to 6 th July 2019. He stated the cover was for his own cargo and the lives of other parties. He stated that under Clause 4(a) of the Proposal Form, he filled in for general carriage. He stated that he filled a Yes for carriage of other persons. He stated that under Clause 4(c), he answered that he had not altered the motor vehicle to carry more than 2500 kg. He stated that his motor vehicle was involved in a self-involving accident on 15 th October 2018. He filed the Claim Form, and they reported with his driver the accident. He stated that the load of Irish Potatoes weighed 12,160 Kgs, which was confirmed even after investigations by Heritage investigators. He denied carrying more than 7,500 tons. He denied carrying excess. He stated that he got clearance from KeNHA, who cleared his motor vehicle for 18,000 Kgs. He stated that he was still incurring a loss of user since he could make Kshs. 30,000.00. He stated that he could make about Kshs. 90,000.00 per month. He stated that he filed returns with the Kenya Revenue Authority, though the money did not pass through his accounts. He stated that he received cash and incurred expenses in cash, but he did not have any documentation to show that the money was paid in taxes or for routine expenses for repairs. In re-examination, PW1 stated that he had receipts he used to issue to clients. He stated that they had applied with their cargo load as per the type of vehicle and its normal carriage of 12,160. He stated that the insurance had told them that under the general carriage, they could carry other people’s goods. He denied tampering with the motor vehicle as the load capacity was the same.
PW3 Eliud Nashali, an assessor with Paramount Assessors, stated he assessed the motor vehicle, KCP 856S Isuzu NER 75 Lorry, which had been extensively damaged. The assessment costs came to Kshs. 2,141,940.00. He stated that the pre-accident value came to Kshs. 1,550,000.00 while the salvage value is at Kshs. 250,000.00. He stated that they charged Kshs. 10,000.00. On being cross-examined, he stated that the motor vehicle was a total write-off. He stated that the salvage value was above the pre-accident value. He stated that the one who compensates for the accident value keeps the salvage, but if the owner needs it, the salvage value may be deducted from the compensated amount. In re-examination, PW3 stated that it would not be economical to repair the motor vehicle as the cost of repair exceeds its value since the motor vehicle was a total loss.
PW4 Mukesh Patel, the Director of Sunshine Automobile Kisumu , stated that they received a motor vehicle on 31 st October 2018 from Heritage Insurance. He stated that the assessment of the damages was done by Paramount Assessors. He stated that they have not received instructions from the insurer to start the repairs. He stated that they charged a storage fee of Kshs. 500 daily after the grace period of 30 days. He stated that the storage fee from 31 st October 2018 to 16 th October 2023 (1808 days), which aggregates to Kshs. 904,000.00 less Kshs. 15,000.00 for the 30-day grace period, giving a total of Kshs. 889,000.00 plus 16% VAT of Kshs. 142,240, which totals to Kshs. 1,031,240.00. He produced an invoice dated 3 rd April 2023. On being cross-examined, he stated that they were claiming money on the invoice which had not been paid.
The Appellants'' case was closed.
On 19 th March 2024, during the defence hearing, the learned trial Magistrate marked the Respondent’s case as closed for non-appearance by either the advocate or witnesses. The Respondent’s case was reopened after its application dated 22 nd March 2024 was compromised.
DW1 Robert Kioko , the Manager of Legal and Compliance, adopted the witness statement and list of documents dated 19 th January 2023 and 19 th November 2024, respectively. On being cross-examined, he stated that the Appellant had proposed to use the motor vehicle for general carriage. He stated the motor vehicle was insured based on the Appellant’s proposal for his personal goods and goods for other people. He stated that the proposal is the basis of the insurance policy. He stated that PW1 visited them when the registration of the motor vehicle was in process. He stated that the motor vehicle was overloaded as the maximum carrying capacity of the motor vehicle was 7 tons, which included the weight of the motor vehicle, though he stated that he was not certain since he was not an expert. He stated that it was KeNHA to identify the overload and provide a report. He stated that the policy was for his own use, but it was changed to general, though there was no change of user.
DW2 Bryan Nyaga , a Private Insurance Investigator working with Invesco in insurance investigations, stated that he prepared a report dated 18 th January 2018 for motor vehicle KCP 836S, which was involved in an accident on 14 th October 2018. He stated that they established it was involved in an accident, and that the damage was consistent with the same. He stated that the motor vehicle had a 4660 Kg overload. He stated that it was carrying 2,500 Kg. The load carried was 7150 Kg as per the indication by the driver. He stated that the weighbridge indicated 12,160. On being cross-examined, DW2 stated that he did not have any certification from any institution. He stated that the report was prepared by Martin, who was no longer with them. He proofread the report. He never visited the scene. He stated that the load was not there at the time of the investigation, but there was a statement from the driver. He stated that the load the motor vehicle was to carry, as per the manufacturer’s recommendation, was 2,500 kg. He stated that the load was permitted by KeNHA and not by the manufacturers. He stated that he was not a party to the capacity suggested in the proposal of 7 tonnes. He stated that drivers are not required to carry the logbooks while on transit. He stated that the specification was as per the manufacturer, and that any change was to be indicated. He stated that it was a factual thing that the load was 2,500 Kg as per the log book, which may be or not for a small vehicle. He stated that he did not wish to comment on what the truck should carry.
In his judgment, the learned trial Magistrate noted that the motor vehicle had been insured by the Respondent and that it was involved in an accident on or about 14 th October 2018 and extensively damaged. On whether the motor vehicle had carried excess beyond its capacity, the learned trial Magistrate held that a reading of Clause NP 8 of the Policy Document titled “ Overloading of Vehicles ” provided on the exceptions to indemnity on condition of overload, that the same was only applicable where there was a load greater than what is permissible by law in force at the time. According to the learned trial Magistrate, the policy did not refer to excess load as per the manufacturer’s recommendations, but specifically the load permissible under the law. The earned trial Magistrate held that the Appellant''s proposal for a maximum carrying capacity of 7 tons did not include the weight of the motor vehicle itself, but specifically the load to be carried on the motor vehicle. While finding there was no breach of the policy and/or insurance contract by the Appellant, the learned trial Magistrate held that the Appellant did not carry excess load as the load of 12,160 Kg forming the complaint by the Respondent was permissible and within the limit of 18,000 Kg permitted by KeNHA.
Regarding the reliefs sought by the Appellant, the learned trial Magistrate found the Appellant was not entitled to the repair costs since the Insurance Policy was clear that the Appellant was entitled to the Pre-Accident value of the motor vehicle where there is a total loss, which was not pleaded. Reliance was placed on the case of Permuga Auto Spares & Another vs Margaret Korir Tagi [2015] eKLR . On towing charges and assessment fees, the learned trial Magistrate noted that there was proof of the expenses but held that the claims had no legs on which to stand owing to the fact that the main prayer had failed. Regarding the claim for loss of user under the Policy, the learned trial Magistrate held that it was subject to the Appellant proving that it had paid an additional premium and the alleged income of Kshs. 90,000.00 supported by cogent evidence, but the Appellant''s production of some fee receipts of payments received was not sufficient. The learned trial Magistrate noted that PW1 confirmed that their dealings were mostly in cash and without any money going through the account. The claim failed.
On the claim for storage fee, the learned trial Magistrate held that it was not economical for the Appellant to store what had been declared to be written off and total loss. According to the learned trial Magistrate, after the 30-day grace period, the Appellant could have mitigated the loss by having the motor vehicle released to them for storage at their yard as they pursued the Respondent for compensation, but the Appellant failed to do so.
On costs, the learned trial Magistrate held that due to the corporate nature of the Respondent, each party was to bear its own costs. The learned trial Magistrate dismissed the Appellant’s suit in its entirety.
Aggrieved, the Appellant has appealed vide the Memorandum of Appeal dated 27 th August 2024, contending that:
The learned trial magistrate erred in law and in fact in taking into account irrelevant issues and arriving at a wrong conclusion.
The learned trial magistrate erred in law and fact in dismissing the Appellant’s claim on account of a technicality despite having found that there was no breach of the Policy and/or insurance contract by the Appellant.
The learned trial magistrate erred in law and fact in holding that the Appellant had not sought the appropriate reliefs, yet the prayers sought included a relief for specific performance of the insurance policy regarding compensation.
The learned trial magistrate erred in law and fact in failing to make an award on special damages despite having determined that there was proof of the expenses.
The learned trial magistrate erred in law and fact in holding that there was no evidence proving the claim for the loss of user, ignoring the overwhelming evidence adduced and the circumstances of the case.
The learned trial magistrate erred in law and fact in failing to make an award on storage charges, ignoring the overwhelming evidence adduced and the circumstances of the case.
The learned trial magistrate erred in law and fact in failing to judiciously analyze the Appellant’s evidence and explanation together with the Appellant’s submissions.
The learned trial magistrate''s findings were completely unfounded and unsupported in law.
The learned trial magistrate arrived at an unfair decision that led to a miscarriage of justice.
The Appellant prays that the judgment and decree against the Appellant be set aside, and the costs of this appeal and the suit be awarded to the Appellant.
The appeal was canvassed by way of written submissions.
The Appellant submits that the learned trial Magistrate, having found that there was no fault on the part of the Appellant, the Appellant was entitled to the reliefs sought in the Plaint. The Appellant submits that the learned trial Magistrate erred in law and fact in holding that the Appellant had not sought the appropriate reliefs, yet the prayers sought included a relief for specific performance of the insurance policy regarding compensation. According to the Appellant, it pleaded that the Respondent blatantly denied liability by declining to honor the insurance contract entered into between themselves and the Appellant. The Appellant submits having acknowledged that the Appellant had suffered a tort, it would have been fair if the learned trial Magistrate had awarded the Appellant the Pre-Accident value of the motor vehicle so as to reinstate him to the position before the accident in line with the principle of restitution in integrum . The Appellant urges this Court to invoke and apply the inherent power of the court, overriding the objective principle of the court and the non-technicality principle of the Constitution by revisiting the record, re-analyzing it on its own and reversing the impugned orders of the trial court. The Appellant urges this Court to consider the first relief sought in the Amended Plaint for specific performance as per the insurance policy, which stipulates that the Pre-Accident value is payable to the insured in case of total loss. Reliance is placed on Silas Mutua Mberia vs Muthoni Njue Veronica [2021]eKLR, where the Court held that it would be unjust for the trial court to be too technical on the rule that parties are bound by their pleadings, thus the Appellant was entitled to be compensated for the loss occasioned to him by the Respondent. Further reliance is placed on Ahmed Abubakar Hassan vs Attorney General [2013] eKLR, where the High Court made an award to the Plaintiff for Pre-Accident value less the salvage value, even though the Plaintiff had claimed for repair costs.
On the assessment and towing fee of Kshs. 44,000.00 not granted by the learned trial Magistrate, the Appellant submits that the same were specifically proved through receipts produced as exhibits on a balance of probabilities. On the claim for loss of user, the Appellant submits that the Appellant’s Director was not cross-examined on whether they had paid premiums or not, thus safer for the learned trial Magistrate to assume that the same had been paid than assume the same had not been paid. According to the Appellant, a bundle of receipts issued by them to different people for transport services was produced as exhibits without any objection from the Respondent. Reliance is placed on Samuel Kariuki Nyangoti vs Johaan Distelberger on the proposition that the loss of use of a profit-making chattel, such as a lorry or matatu, through an accident is similarly a claim in general damages. Further reliance is placed on Peter Njuguna Joseph & Another vs Anna Moraa (Civil Appeal No.23 of 1991), where the Court assessed the loss of use where no single document was produced. The Appellant urges this Court to use its discretion in coming up with the period that the Appellant should be compensated, given the fact that the Appellant also had a duty to mitigate the losses, and noting that the motor vehicle is still stalled at the Respondent’s approved garage. According to the Appellant, the computation should be done against the proved monthly income of Kshs. 90,000.00. The Appellant submits that the motor vehicle was received at PW4’s garage under the instructions of the Respondent; thus, the Appellant is entitled to the storage fee claim to settle with the garage. Reference is made to the proforma invoice produced as Exhibit 12 showing the daily storage charges. The Appellant claims a sum of Kshs. 1,300,000.00 being the Pre-Accident value (Kshs. 1,500,000.00 less the salvage value of Kshs. 250,000.00); special damages of Kshs. 44,000.00 being the assessment and towing fee; damages for loss of use and daily storage fee for the period to be determined by the Court after taking into account the duty of mitigation of losses; and costs of the suit and interest.
Regarding the Respondent’s Cross Appeal, the Appellant submits that its motor vehicle was cleared by the weighbridge to proceed with the journey as it was not overloaded. It is submitted that the Respondent did not tender any material to show the motor vehicle was indeed overloaded. The Appellant submits that the tonnage of the subject motor vehicle on the material date was not anything near the said 7-ton limit indicated in the proposal form. The Appellant submits that since the date of the proposal form is 4 th June 2018 and the log book is dated 3 rd July 2018, the log book was not part of the documents needed for them to be issued with the insurance cover. According to the Appellant, the weighbridge ticket produced in evidence clearly indicated that the load capacity of the motor vehicle was legal. It is submitted that the Respondent never produced any material which showed that the subject motor vehicle''s gross weight on the material day exceeded the prescribed legal limits for the vehicle on any particular part of the public roads. The Appellant urges this Court to uphold the trial Court’s finding on liability that there was no breach of the policy and/or insurance contract by the Appellant, thus the Respondent was liable for breach of the insurance contract. The Appellant urges this Court to dismiss the Cross Appeal with costs.
Aggrieved by the judgment, the Respondent has filed a Memorandum of Cross Appeal dated 4 th October 2024 , contending that:
The learned trial Magistrate erred in law and in fact in holding that the Appellant was not in breach of the policy condition against overloading.
The learned trial Magistrate erred in law and in fact in failing to hold that the Appellant was in breach of the fundamental terms and conditions of the policy, being overloading, and thus that the insurance cover did not operate and stood cancelled.
The learned trial Magistrate erred in law and fact in failing to hold that the Appellant’s motor vehicle was carrying a load in excess of the manufacturer’s specification.
The learned trial Magistrate erred in law and in fact in failing to hold that the Appellant overloaded the vehicle by carrying a load higher than disclosed at the time of the issuance of the policy.
The learned trial Magistrate erred in law and in fact in failing to find that the Appellant was by contract not entitled or permitted to carry a load heavier than indicated in the vehicle’s log book upon which the policy was based.
The learned trial Magistrate erred in law and in fact in holding that the tonnage allowed by law to be carried by the vehicle was 18,000 Kgs when there was no such evidence.
The learned trial Magistrate erred in law and in fact in holding that since the Appellant’s vehicle had been allowed to pass a weighbridge by KeNHA officials, which was evidence that it was the lorry’s authorized capacity.
The learned trial Magistrate erred in law and in fact in failing to find that the Appellant breached the policy of insurance by failing to notify the Respondent of important changes affecting the vehicle or its use.
The Respondent prays that:
The trial Court’s decision that the Appellant was not in breach of the policy conditions relating to overloading be set aside and replaced with a finding that the Appellant was in breach of the policy thereof.
The Court does hold that the Appellant was in breach of the policy by overloading and by failure to notify the Respondent of any important changes affecting the vehicle covered under the policy and/or its use.
The costs of the appeal and the Cross Appeal shall be paid by the Appellant to the Respondent.
The Respondent submits that at the time of the accident, the motor vehicle had a gross weight of 12,160 Kg, which was more than the weight allowed by the manufacturer of 7,500 Kg. According to the Respondent, the excess weight with reference to the vehicle''s log book was 4,160Kg kg at the time of the accident. Reference was made to Condition 1 of the Policy that the Respondent would only make payment under the Policy only “if the information you have provided in the proposal for this insurance is true and complete to the best of your knowledge and belief.” The Respondent submits that the log book showed that the vehicle’s carrying capacity was 2,500 Kg with a total tonnage (vehicle plus load) of 7,500 Kg, but on the date of the accident, the tonnage was 12.160 Kg, which is 4,660Kg more than the load indicated in the logbook. The Respondent asserts that the fact that the vehicle was allowed to pass a weight bridge carrying a load above its manufacturer’s stated load does not make the load legal. According to the Respondent, the Appellant had an obligation under Condition 3 of the Policy to inform the Respondent that the motor vehicle was going to carry a load that was more than stated in his proposal and incorporated in the Policy, or more than was allowed under the vehicle registration certificate. Reference is made to Section 56 of the Traffic Act prohibiting the use of a vehicle on a road with a load greater than specified by the manufacturer, or than the load capacity determined by an inspector under the Traffic Act. It is submitted that the load specified by the manufacturer was 2,500 Kg and had not been specified by an inspector under the Act. The Respondent submits that Section 57 provides for exemptions where the Highway Authority grants a permit allowing the motor vehicle to carry a load greater than specified in the manufacturer’s logbook. It is submitted that the weigh bridge ticket was not a permit under Section 57 of the Traffic Act. Reference is made to Kenya Road (Kenya National Highway Authority) Regulations LN 86 of 2013, where overload is defined to mean “that the axle combinations or gross vehicle mass on a vehicle exceeds the prescribed legal limits for any particular part of public roads.” The Respondent asserts that the trial Court erred gravely in assuming that the law in force in relation to loading and overloading was a weighbridge ticket that purportedly allowed the vehicle to pass the weighbridge. The Respondent urges this Court to allow the Cross Appeal with costs.
Regarding the Appeal, the Respondent submits that the motor vehicle could not be economically repaired, thus the Appellant could not be awarded costs of repairs. The Respondent submits that the Court cannot give judgment based on some unpleaded issues as held by the court in Rose Mule Kimuyu & Another vs Equity Bank & Another [2019]eKLR, Machakos HCCC No. 6 of 2018 where the Court cited Court of Appeal decision in Dakianga Distributors (K) Ltd vs Kenya Seed Company Limited[2015]eKLR, Esso Petroleum Co.Ltd vs Southport Corporation[1956]AC 218 at 238, Independent Electoral and Boundaries Commission & Another vs Stephen Mutinda Mule & 3 Others; Civil Appeal No. 219 of 2013(2014)eKLR, Supreme Court of Malawi in Malawi Railways Ltd vs Nyasulu[1988]MWSC 3, MNM vs DMK & 13 Others[2017]eKLR, Kenya Commercial Bank Ltd vs Sheikh Osman Mohammed, CA No. 179 of 2010 ; and Raila Amolo Odinga & Another vs IEBC & 2 Others(2017) eKLR . According to the Respondent, since the Appellant did not seek a remedy based on a total loss, the Respondent had no opportunity to bring evidence to either support or counter the Appellant’s evidence on the lorry’s value, such as a vehicle’s assessment report, that would have shown what was, in the Respondent’s assessment, the Pre accident value and the salvage value. The Respondent asserts that the trial Court was correct in holding that the Appellant could not be given judgment for a cause of action, namely, total loss of the vehicle, that it did not plead. According to the Respondent, had that been pleaded, the Respondent would have had an opportunity to bring evidence on the pre-accident value of the vehicle and its salvage. It is submitted that by not claiming the total loss, the Respondent was denied a chance to present evidence of wh
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( Being an appeal from the Judgment of the Hon. E. Tsimonjero (SRM) delivered on 31 st July 2024 at Ukwala in PMC Commercial Suit No. E004 of 2021)
The Appeal arises from the Judgment of the Hon. E. Tsimonjero (SRM) delivered on 31 st July 2024 in Ukwala PMCC COMMSU No. E004 of 2021.
The brief facts of the dispute were that on or about 15 th October 2018, the Appellant’s motor vehicle, KCP 856S Isuzu Truck, was involved in a road accident along Kisumu-Busia road at Nzoia River. In the Amended Plaint dated 12 th April 2023, the Appellant pleaded that at all material times, the Respondent was the insurer of the motor vehicle under Policy No. 101878070252(Comprehensive). According to the Appellant, its motor vehicle was towed to Sunshine Auto Mobiles garage in Kisumu Town, where it was kept. The Appellant lodged an indemnity claim with the Respondent, which was investigated by the Respondent’s agents, but on or about 22 nd January 2019, the Respondent denied liability and declined to honour the insurance contract.
The Appellant instructed Paramount Assessors Limited to assess the repairs, and upon assessing the repairs, the Appellant paid an assessment fee of Kshs. 10,000.00. The assessor came up with the total estimated repair costs of Kshs. 2,141,940.00. According to the Appellant, its motor vehicle was their tool of trade for transport services at a fee and earned them an average monthly income of Kshs. 90,000.00, thus entitled to claim for loss of user from the date of the accident. The Appellant claimed for daily storage fee of Kshs. 500, which remains unpaid from the date of the accident, as the motor vehicle is still grounded at Sunshine Auto Mobiles garage. According to the Appellant, the motor vehicle was towed at a cost of Kshs. 34,000.00.
The Appellants sought the following reliefs:
Specific performance of the Insurance Policy regarding compensation, and particularly payment of Kshs. 2, 141,940.00 being the estimated cost of repairs of the damaged motor vehicle;
Special damages of Kshs. 44,000.00, being the amount paid as assessment and towing fee.
Damages for loss of user, from the date of the accident up to the date of entry of judgment.
Payment of daily storage fee, from the date of accident up to the date of entry of judgment.
Costs of the suit.
Interest on (a) (b) (c) and (d) above.
Vide its Statement of Defence dated 2 nd November 2021, the Respondent denied that the motor vehicle belonged to the Appellant or was involved in any accident on 15 th October 2018. It was pleaded that the Appellant, after notifying the Respondent of the accident on or about 14 th October 2018, failed to disclose the load capacity that the motor vehicle was carrying. According to the Respondent, investigations established that the motor vehicle had a capacity of 7,160 tonnes, instead of the licensed capacity of 2,500 tonnes, which was a breach of the fundamental terms and conditions of the policy, particularly regarding overloading; thus, the cover did not operate and stood cancelled. The Respondent asserted that the policy did not cover any liability arising from damages caused by overloading and strain; thus, the Respondent was not liable to pay any sum claimed by the Appellant.
The Respondent pleaded that the suit was brought prematurely without first resorting to arbitration, which is a condition precedent for a court action under the policy of insurance. The Respondent admitted jurisdiction of the Court but denied that the Appellant had any cause of action against the Respondent. According to the Respondent, the Appellant’s suit is bad in law, vague, incoherent, and unimaginable, and that the same was filed without regard to the rules of pleading. The Respondent prayed for the suit to be struck out or dismissed with costs.
Vide a reply dated 24 th January 2022, the Appellant denied all the facts pleaded and prayed for dismissal of the Statement of Defence and judgment be entered as per the Plaint.
PW1 James Nairangu , the Appellant’s Director, stated that his motor vehicle was involved in an accident and that he reported it. He adopted his witness statement dated 27 th September 2021. He adopted his list of documents as exhibits, save for numbers 6 and 7, which were marked as PMF6 and PMF7. He stated that his vehicle carries up to 10 tons and that day he was not overloaded, as he even got clearance from the weighbridge as per Exhibit 4. He claimed that he had taken a comprehensive cover with the insurance.
PW1 was stood down to allow the Respondent to file the Policy document for Commercial vehicle insurance.
PW2 Simon Waweru Kimani , the driver, adopted his witness statement dated 27 th September 2021. He stated that he started the journey on 13 th October 2018 and that the accident occurred at midnight on 13 th or 14 th October 2018. He reported on 14 th October 2018. He stated that the motor vehicle had been weighed on 12 th October 2018 before the journey at about 8.30 PM, and that they had to collect a certificate for purposes of the suit, which they are not ordinarily given when the motor vehicle is weighed. On being cross-examined, he stated that he weighed at Gilgil on 12 th October 2018. He was on the road from 12 th to 14 October 2018. He stated that he knew how much weight he should carry, which is totally unrelated to the logbook, and that overloading cannot cause a motor vehicle to lose control and cause an accident. He stated that the weight was between 3.5 and 10 tons as per the weighbridge report marked as Exhibit 4. In re-examination, PW2 stated that if the vehicle had been overloaded, he would have been stopped at the weighbridge and charged, but was not.
PW1 stated that he was using the motor vehicle for business. He stated that it was insured in June 2018 with Heritage. After the accident, he took it to Sunshine for repairs. He stated that he was getting Kshs. 90,000 to Kshs. 120 per month. He stated that he spent money on towing and repairs. He stated that the motor vehicle is still at Sunshine, which is charging Kshs. 500 daily for storage. On being cross-examined, he stated that he approached Heritage and made a proposal form cover on 7 th June 2018. He wanted a comprehensive commercial policy for his motor vehicle. He stated that his motor vehicle was inspected, and that the capacity in the proposal he filled was a maximum of 7 tons. The tare weight was 5000 Kg, load capacity 2500 Kg, thus a gross weight of 7,500 Kg. He stated that he was issued a Policy document certificate and cover for the motor vehicle, which was to commence from 7 th June 2018 to 6 th July 2019. He stated the cover was for his own cargo and the lives of other parties. He stated that under Clause 4(a) of the Proposal Form, he filled in for general carriage. He stated that he filled a Yes for carriage of other persons. He stated that under Clause 4(c), he answered that he had not altered the motor vehicle to carry more than 2500 kg. He stated that his motor vehicle was involved in a self-involving accident on 15 th October 2018. He filed the Claim Form, and they reported with his driver the accident. He stated that the load of Irish Potatoes weighed 12,160 Kgs, which was confirmed even after investigations by Heritage investigators. He denied carrying more than 7,500 tons. He denied carrying excess. He stated that he got clearance from KeNHA, who cleared his motor vehicle for 18,000 Kgs. He stated that he was still incurring a loss of user since he could make Kshs. 30,000.00. He stated that he could make about Kshs. 90,000.00 per month. He stated that he filed returns with the Kenya Revenue Authority, though the money did not pass through his accounts. He stated that he received cash and incurred expenses in cash, but he did not have any documentation to show that the money was paid in taxes or for routine expenses for repairs. In re-examination, PW1 stated that he had receipts he used to issue to clients. He stated that they had applied with their cargo load as per the type of vehicle and its normal carriage of 12,160. He stated that the insurance had told them that under the general carriage, they could carry other people’s goods. He denied tampering with the motor vehicle as the load capacity was the same.
PW3 Eliud Nashali, an assessor with Paramount Assessors, stated he assessed the motor vehicle, KCP 856S Isuzu NER 75 Lorry, which had been extensively damaged. The assessment costs came to Kshs. 2,141,940.00. He stated that the pre-accident value came to Kshs. 1,550,000.00 while the salvage value is at Kshs. 250,000.00. He stated that they charged Kshs. 10,000.00. On being cross-examined, he stated that the motor vehicle was a total write-off. He stated that the salvage value was above the pre-accident value. He stated that the one who compensates for the accident value keeps the salvage, but if the owner needs it, the salvage value may be deducted from the compensated amount. In re-examination, PW3 stated that it would not be economical to repair the motor vehicle as the cost of repair exceeds its value since the motor vehicle was a total loss.
PW4 Mukesh Patel, the Director of Sunshine Automobile Kisumu , stated that they received a motor vehicle on 31 st October 2018 from Heritage Insurance. He stated that the assessment of the damages was done by Paramount Assessors. He stated that they have not received instructions from the insurer to start the repairs. He stated that they charged a storage fee of Kshs. 500 daily after the grace period of 30 days. He stated that the storage fee from 31 st October 2018 to 16 th October 2023 (1808 days), which aggregates to Kshs. 904,000.00 less Kshs. 15,000.00 for the 30-day grace period, giving a total of Kshs. 889,000.00 plus 16% VAT of Kshs. 142,240, which totals to Kshs. 1,031,240.00. He produced an invoice dated 3 rd April 2023. On being cross-examined, he stated that they were claiming money on the invoice which had not been paid.
The Appellants'' case was closed.
On 19 th March 2024, during the defence hearing, the learned trial Magistrate marked the Respondent’s case as closed for non-appearance by either the advocate or witnesses. The Respondent’s case was reopened after its application dated 22 nd March 2024 was compromised.
DW1 Robert Kioko , the Manager of Legal and Compliance, adopted the witness statement and list of documents dated 19 th January 2023 and 19 th November 2024, respectively. On being cross-examined, he stated that the Appellant had proposed to use the motor vehicle for general carriage. He stated the motor vehicle was insured based on the Appellant’s proposal for his personal goods and goods for other people. He stated that the proposal is the basis of the insurance policy. He stated that PW1 visited them when the registration of the motor vehicle was in process. He stated that the motor vehicle was overloaded as the maximum carrying capacity of the motor vehicle was 7 tons, which included the weight of the motor vehicle, though he stated that he was not certain since he was not an expert. He stated that it was KeNHA to identify the overload and provide a report. He stated that the policy was for his own use, but it was changed to general, though there was no change of user.
DW2 Bryan Nyaga , a Private Insurance Investigator working with Invesco in insurance investigations, stated that he prepared a report dated 18 th January 2018 for motor vehicle KCP 836S, which was involved in an accident on 14 th October 2018. He stated that they established it was involved in an accident, and that the damage was consistent with the same. He stated that the motor vehicle had a 4660 Kg overload. He stated that it was carrying 2,500 Kg. The load carried was 7150 Kg as per the indication by the driver. He stated that the weighbridge indicated 12,160. On being cross-examined, DW2 stated that he did not have any certification from any institution. He stated that the report was prepared by Martin, who was no longer with them. He proofread the report. He never visited the scene. He stated that the load was not there at the time of the investigation, but there was a statement from the driver. He stated that the load the motor vehicle was to carry, as per the manufacturer’s recommendation, was 2,500 kg. He stated that the load was permitted by KeNHA and not by the manufacturers. He stated that he was not a party to the capacity suggested in the proposal of 7 tonnes. He stated that drivers are not required to carry the logbooks while on transit. He stated that the specification was as per the manufacturer, and that any change was to be indicated. He stated that it was a factual thing that the load was 2,500 Kg as per the log book, which may be or not for a small vehicle. He stated that he did not wish to comment on what the truck should carry.
In his judgment, the learned trial Magistrate noted that the motor vehicle had been insured by the Respondent and that it was involved in an accident on or about 14 th October 2018 and extensively damaged. On whether the motor vehicle had carried excess beyond its capacity, the learned trial Magistrate held that a reading of Clause NP 8 of the Policy Document titled “ Overloading of Vehicles ” provided on the exceptions to indemnity on condition of overload, that the same was only applicable where there was a load greater than what is permissible by law in force at the time. According to the learned trial Magistrate, the policy did not refer to excess load as per the manufacturer’s recommendations, but specifically the load permissible under the law. The earned trial Magistrate held that the Appellant''s proposal for a maximum carrying capacity of 7 tons did not include the weight of the motor vehicle itself, but specifically the load to be carried on the motor vehicle. While finding there was no breach of the policy and/or insurance contract by the Appellant, the learned trial Magistrate held that the Appellant did not carry excess load as the load of 12,160 Kg forming the complaint by the Respondent was permissible and within the limit of 18,000 Kg permitted by KeNHA.
Regarding the reliefs sought by the Appellant, the learned trial Magistrate found the Appellant was not entitled to the repair costs since the Insurance Policy was clear that the Appellant was entitled to the Pre-Accident value of the motor vehicle where there is a total loss, which was not pleaded. Reliance was placed on the case of Permuga Auto Spares & Another vs Margaret Korir Tagi [2015] eKLR . On towing charges and assessment fees, the learned trial Magistrate noted that there was proof of the expenses but held that the claims had no legs on which to stand owing to the fact that the main prayer had failed. Regarding the claim for loss of user under the Policy, the learned trial Magistrate held that it was subject to the Appellant proving that it had paid an additional premium and the alleged income of Kshs. 90,000.00 supported by cogent evidence, but the Appellant''s production of some fee receipts of payments received was not sufficient. The learned trial Magistrate noted that PW1 confirmed that their dealings were mostly in cash and without any money going through the account. The claim failed.
On the claim for storage fee, the learned trial Magistrate held that it was not economical for the Appellant to store what had been declared to be written off and total loss. According to the learned trial Magistrate, after the 30-day grace period, the Appellant could have mitigated the loss by having the motor vehicle released to them for storage at their yard as they pursued the Respondent for compensation, but the Appellant failed to do so.
On costs, the learned trial Magistrate held that due to the corporate nature of the Respondent, each party was to bear its own costs. The learned trial Magistrate dismissed the Appellant’s suit in its entirety.
Aggrieved, the Appellant has appealed vide the Memorandum of Appeal dated 27 th August 2024, contending that:
The learned trial magistrate erred in law and in fact in taking into account irrelevant issues and arriving at a wrong conclusion.
The learned trial magistrate erred in law and fact in dismissing the Appellant’s claim on account of a technicality despite having found that there was no breach of the Policy and/or insurance contract by the Appellant.
The learned trial magistrate erred in law and fact in holding that the Appellant had not sought the appropriate reliefs, yet the prayers sought included a relief for specific performance of the insurance policy regarding compensation.
The learned trial magistrate erred in law and fact in failing to make an award on special damages despite having determined that there was proof of the expenses.
The learned trial magistrate erred in law and fact in holding that there was no evidence proving the claim for the loss of user, ignoring the overwhelming evidence adduced and the circumstances of the case.
The learned trial magistrate erred in law and fact in failing to make an award on storage charges, ignoring the overwhelming evidence adduced and the circumstances of the case.
The learned trial magistrate erred in law and fact in failing to judiciously analyze the Appellant’s evidence and explanation together with the Appellant’s submissions.
The learned trial magistrate''s findings were completely unfounded and unsupported in law.
The learned trial magistrate arrived at an unfair decision that led to a miscarriage of justice.
The Appellant prays that the judgment and decree against the Appellant be set aside, and the costs of this appeal and the suit be awarded to the Appellant.
The appeal was canvassed by way of written submissions.
The Appellant submits that the learned trial Magistrate, having found that there was no fault on the part of the Appellant, the Appellant was entitled to the reliefs sought in the Plaint. The Appellant submits that the learned trial Magistrate erred in law and fact in holding that the Appellant had not sought the appropriate reliefs, yet the prayers sought included a relief for specific performance of the insurance policy regarding compensation. According to the Appellant, it pleaded that the Respondent blatantly denied liability by declining to honor the insurance contract entered into between themselves and the Appellant. The Appellant submits having acknowledged that the Appellant had suffered a tort, it would have been fair if the learned trial Magistrate had awarded the Appellant the Pre-Accident value of the motor vehicle so as to reinstate him to the position before the accident in line with the principle of restitution in integrum . The Appellant urges this Court to invoke and apply the inherent power of the court, overriding the objective principle of the court and the non-technicality principle of the Constitution by revisiting the record, re-analyzing it on its own and reversing the impugned orders of the trial court. The Appellant urges this Court to consider the first relief sought in the Amended Plaint for specific performance as per the insurance policy, which stipulates that the Pre-Accident value is payable to the insured in case of total loss. Reliance is placed on Silas Mutua Mberia vs Muthoni Njue Veronica [2021]eKLR, where the Court held that it would be unjust for the trial court to be too technical on the rule that parties are bound by their pleadings, thus the Appellant was entitled to be compensated for the loss occasioned to him by the Respondent. Further reliance is placed on Ahmed Abubakar Hassan vs Attorney General [2013] eKLR, where the High Court made an award to the Plaintiff for Pre-Accident value less the salvage value, even though the Plaintiff had claimed for repair costs.
On the assessment and towing fee of Kshs. 44,000.00 not granted by the learned trial Magistrate, the Appellant submits that the same were specifically proved through receipts produced as exhibits on a balance of probabilities. On the claim for loss of user, the Appellant submits that the Appellant’s Director was not cross-examined on whether they had paid premiums or not, thus safer for the learned trial Magistrate to assume that the same had been paid than assume the same had not been paid. According to the Appellant, a bundle of receipts issued by them to different people for transport services was produced as exhibits without any objection from the Respondent. Reliance is placed on Samuel Kariuki Nyangoti vs Johaan Distelberger on the proposition that the loss of use of a profit-making chattel, such as a lorry or matatu, through an accident is similarly a claim in general damages. Further reliance is placed on Peter Njuguna Joseph & Another vs Anna Moraa (Civil Appeal No.23 of 1991), where the Court assessed the loss of use where no single document was produced. The Appellant urges this Court to use its discretion in coming up with the period that the Appellant should be compensated, given the fact that the Appellant also had a duty to mitigate the losses, and noting that the motor vehicle is still stalled at the Respondent’s approved garage. According to the Appellant, the computation should be done against the proved monthly income of Kshs. 90,000.00. The Appellant submits that the motor vehicle was received at PW4’s garage under the instructions of the Respondent; thus, the Appellant is entitled to the storage fee claim to settle with the garage. Reference is made to the proforma invoice produced as Exhibit 12 showing the daily storage charges. The Appellant claims a sum of Kshs. 1,300,000.00 being the Pre-Accident value (Kshs. 1,500,000.00 less the salvage value of Kshs. 250,000.00); special damages of Kshs. 44,000.00 being the assessment and towing fee; damages for loss of use and daily storage fee for the period to be determined by the Court after taking into account the duty of mitigation of losses; and costs of the suit and interest.
Regarding the Respondent’s Cross Appeal, the Appellant submits that its motor vehicle was cleared by the weighbridge to proceed with the journey as it was not overloaded. It is submitted that the Respondent did not tender any material to show the motor vehicle was indeed overloaded. The Appellant submits that the tonnage of the subject motor vehicle on the material date was not anything near the said 7-ton limit indicated in the proposal form. The Appellant submits that since the date of the proposal form is 4 th June 2018 and the log book is dated 3 rd July 2018, the log book was not part of the documents needed for them to be issued with the insurance cover. According to the Appellant, the weighbridge ticket produced in evidence clearly indicated that the load capacity of the motor vehicle was legal. It is submitted that the Respondent never produced any material which showed that the subject motor vehicle''s gross weight on the material day exceeded the prescribed legal limits for the vehicle on any particular part of the public roads. The Appellant urges this Court to uphold the trial Court’s finding on liability that there was no breach of the policy and/or insurance contract by the Appellant, thus the Respondent was liable for breach of the insurance contract. The Appellant urges this Court to dismiss the Cross Appeal with costs.
Aggrieved by the judgment, the Respondent has filed a Memorandum of Cross Appeal dated 4 th October 2024 , contending that:
The learned trial Magistrate erred in law and in fact in holding that the Appellant was not in breach of the policy condition against overloading.
The learned trial Magistrate erred in law and in fact in failing to hold that the Appellant was in breach of the fundamental terms and conditions of the policy, being overloading, and thus that the insurance cover did not operate and stood cancelled.
The learned trial Magistrate erred in law and fact in failing to hold that the Appellant’s motor vehicle was carrying a load in excess of the manufacturer’s specification.
The learned trial Magistrate erred in law and in fact in failing to hold that the Appellant overloaded the vehicle by carrying a load higher than disclosed at the time of the issuance of the policy.
The learned trial Magistrate erred in law and in fact in failing to find that the Appellant was by contract not entitled or permitted to carry a load heavier than indicated in the vehicle’s log book upon which the policy was based.
The learned trial Magistrate erred in law and in fact in holding that the tonnage allowed by law to be carried by the vehicle was 18,000 Kgs when there was no such evidence.
The learned trial Magistrate erred in law and in fact in holding that since the Appellant’s vehicle had been allowed to pass a weighbridge by KeNHA officials, which was evidence that it was the lorry’s authorized capacity.
The learned trial Magistrate erred in law and in fact in failing to find that the Appellant breached the policy of insurance by failing to notify the Respondent of important changes affecting the vehicle or its use.
The Respondent prays that:
The trial Court’s decision that the Appellant was not in breach of the policy conditions relating to overloading be set aside and replaced with a finding that the Appellant was in breach of the policy thereof.
The Court does hold that the Appellant was in breach of the policy by overloading and by failure to notify the Respondent of any important changes affecting the vehicle covered under the policy and/or its use.
The costs of the appeal and the Cross Appeal shall be paid by the Appellant to the Respondent.
The Respondent submits that at the time of the accident, the motor vehicle had a gross weight of 12,160 Kg, which was more than the weight allowed by the manufacturer of 7,500 Kg. According to the Respondent, the excess weight with reference to the vehicle''s log book was 4,160Kg kg at the time of the accident. Reference was made to Condition 1 of the Policy that the Respondent would only make payment under the Policy only “if the information you have provided in the proposal for this insurance is true and complete to the best of your knowledge and belief.” The Respondent submits that the log book showed that the vehicle’s carrying capacity was 2,500 Kg with a total tonnage (vehicle plus load) of 7,500 Kg, but on the date of the accident, the tonnage was 12.160 Kg, which is 4,660Kg more than the load indicated in the logbook. The Respondent asserts that the fact that the vehicle was allowed to pass a weight bridge carrying a load above its manufacturer’s stated load does not make the load legal. According to the Respondent, the Appellant had an obligation under Condition 3 of the Policy to inform the Respondent that the motor vehicle was going to carry a load that was more than stated in his proposal and incorporated in the Policy, or more than was allowed under the vehicle registration certificate. Reference is made to Section 56 of the Traffic Act prohibiting the use of a vehicle on a road with a load greater than specified by the manufacturer, or than the load capacity determined by an inspector under the Traffic Act. It is submitted that the load specified by the manufacturer was 2,500 Kg and had not been specified by an inspector under the Act. The Respondent submits that Section 57 provides for exemptions where the Highway Authority grants a permit allowing the motor vehicle to carry a load greater than specified in the manufacturer’s logbook. It is submitted that the weigh bridge ticket was not a permit under Section 57 of the Traffic Act. Reference is made to Kenya Road (Kenya National Highway Authority) Regulations LN 86 of 2013, where overload is defined to mean “that the axle combinations or gross vehicle mass on a vehicle exceeds the prescribed legal limits for any particular part of public roads.” The Respondent asserts that the trial Court erred gravely in assuming that the law in force in relation to loading and overloading was a weighbridge ticket that purportedly allowed the vehicle to pass the weighbridge. The Respondent urges this Court to allow the Cross Appeal with costs.
Regarding the Appeal, the Respondent submits that the motor vehicle could not be economically repaired, thus the Appellant could not be awarded costs of repairs. The Respondent submits that the Court cannot give judgment based on some unpleaded issues as held by the court in Rose Mule Kimuyu & Another vs Equity Bank & Another [2019]eKLR, Machakos HCCC No. 6 of 2018 where the Court cited Court of Appeal decision in Dakianga Distributors (K) Ltd vs Kenya Seed Company Limited[2015]eKLR, Esso Petroleum Co.Ltd vs Southport Corporation[1956]AC 218 at 238, Independent Electoral and Boundaries Commission & Another vs Stephen Mutinda Mule & 3 Others; Civil Appeal No. 219 of 2013(2014)eKLR, Supreme Court of Malawi in Malawi Railways Ltd vs Nyasulu[1988]MWSC 3, MNM vs DMK & 13 Others[2017]eKLR, Kenya Commercial Bank Ltd vs Sheikh Osman Mohammed, CA No. 179 of 2010 ; and Raila Amolo Odinga & Another vs IEBC & 2 Others(2017) eKLR . According to the Respondent, since the Appellant did not seek a remedy based on a total loss, the Respondent had no opportunity to bring evidence to either support or counter the Appellant’s evidence on the lorry’s value, such as a vehicle’s assessment report, that would have shown what was, in the Respondent’s assessment, the Pre accident value and the salvage value. The Respondent asserts that the trial Court was correct in holding that the Appellant could not be given judgment for a cause of action, namely, total loss of the vehicle, that it did not plead. According to the Respondent, had that been pleaded, the Respondent would have had an opportunity to bring evidence on the pre-accident value of the vehicle and its salvage. It is submitted that by not claiming the total loss, the Respondent was denied a chance to present evidence of wh
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