By a plaint dated 27th February 2018, the Respondent instituted a suit against the Appellant seeking a declaration that the Appellant was under an obligation to satisfy a decree issued in Kisii CMCC No. 506 of 2012 – Domnic Onyari Nyaberi v Ouru Super Stores Limited – together with consequential losses and expenses, general damages for breach of contract, costs, and interest.
The Respondent’s claim was premised on the contention that it had taken out an insurance policy with the Appellant to cover its employees against injuries arising in the course of employment. On 12th March 2012, one of its employees, the said Domnic Onyari Nyaberi, sustained injuries while at work. The Appellant was notified of the accident and furnished with documents relating to the claim.
The Appellant did not settle the claim, and the injured employee subsequently filed Kisii CMCC No. 506 of 2012 against the Respondent. The suit proceeded to full hearing, culminating in a judgment against the Respondent. Execution followed, leading to attachment and payment of decretal sums amounting to Kshs. 523,201/= together with attendant costs.
It was the Respondent’s case that the Appellant’s failure to indemnify it for the employee’s claim amounted to a breach of the insurance contract.
The brief background of the claim herein was narrated by PW1 Kennedy Nyakundi the General Manager Ouru superstores. He adopted the statement he recorded with his advocate and produced the documentary exhibits he had filed in court Exhibits 2,3,4,5 5,6, 7, 9, 10, 11.12, 13
He also identified MFI 1 and 14 being policy document and statement showing loss of income.
In cross examination by Mr. Nyachiro Advocate PW1 said that Exhibit 2 is an invoice from UAP. Item 7 is marked WIBA. We paid for WIBA.
He said a claim under common law is not indicated in the policy document.
He said that this case arises out of Kisii CMCC 506 of 2012 between Dominic versus Ouru Superstores Limited. He said that the Plaintiff in Kisii CMCC No 506 of 2012 brought the suit as a result of injuries at his place of work.
In re-examination by Godia, advocate PW1 said that Dominic was an employee of their superstores and he got injured.
By consent of the Advocates on record for the parties in the trial court the police document, was produced as exhibit 1; and PW1 be recalled for further cross examination. The defendant was granted leave to file a further document within 3 days and serve.
When PW1 was recalled for further cross examination by Mr. Ndege, advocate he said that Exhibit 1 was not signed by Uhuru Super store and there was no provision for them to sign. He said the policy was to cover employees for injuries. He said they had several policies with regard to this case and a claim form was filled and given to UAP. PW1 said he was not aware it was taken to the Labour office.
The insurance was to cover injuries arising out of employment. Claims arising out of employment. That was the need for the cover. The risk for injuries was covered. Work injury was covered.
In further re-examination of PW1 by Mr. Godia, advocate he said that the policy document was generated by UAP INSURANCE and there was no requirement for them to sign and that is why they did not sign.
He said that Clause 2 of the Policy document - referred to - exhibit 1 at Page talks of insured employee and it was made pursuant to WIBA.
PW2 Geoffrey Isita Ondieki an Accountant with Charles and Company testified that he prepared MFI 6 _ a loss of earning report dated 1.12.2017 and the same was signed by John Gichana who is an Accountant and also a partner.
He said they computed daily revenue of Kshs. 10,500 three trips at kshs.3500/= for Motor vehicle Reg. KCH 701 B. He said that between 31st October 2017 and 20th November 2017 the expected revenue was 173,040/-. He produced the report as Ex P 16.
In cross examination by Mr. Nyachiro Advocate PW2 said that Section 24 of the Accountants Act shows the qualification. He gave his registration number as 2972 with ICPAK.
He said he is a representative to Charles to Company which is assigned No. 2972 by ICPAK. He said that Cheryos Charles Kibii is one of the partners and they have a practicing certificate. He said he is an employee of Charles and Company.
I do not have a C.P.A. number. He said he was given a vehicle log book sheet - showing the movement of KCH 701B with Current transport rate. Bank statements come out with a bulk.
He said one cannot ascertain each vehicle.
He said that the plaint shows KCH 710B which is an error. He said he did not look at the work ticket.
The vehicle log book sheet/ work ticket was supplied. PW2 said he had not shown fuel receipts. He said he had practiced for 5 years but was not registered.
He said he was not given the police from UAP Insurance.
DW1- Erick Onderi Legal Officer with old Mutual formerly UAP adopted his statement as his evidence in chief. He confirmed that they had insured the plaintiff under WIBA. He said that the insured had however, not taken a cover known as employee’s liability which could have come into play where the insured was sued by the employee in case of an accident.
He said that for WIBA the only compensation they get is calculated in terms of
(i) The number of days an employee is not at work
There are some matters that could have been settled had there been an employee’s liability cover.
He said there was no work injury policy (employee’s liability) between the plaintiff and the defendant and the defendant was not liable to compensate the plaintiff’s employee in the case against his employer. DW1 produced a sample of the employee’s liability policy document. He also produced further list of documents No. 1 Dex 1. He said the Premium that Insured paid were for WIBA and motor vehicle but not employee’s liability hence we could not settle any judgment that arose where they are sued by their employees.
In cross-examination by Nyang’acha DW1 said that WIBA covers the number of days’ employee is not at work among other instances. It is one of the formulas used. Yes, I adopted my statement. (Witness reads paragraph 5 & 6) of his statement. He said they issued WIBA in 2012 (item 7) and premiums were paid. He said he was aware of the primary suit where an employee was injured and someone erroneously gave instructions to have the matter defended and they undertook the defence and there was a judgment.
He said he was not sure of auctioneers’ costs. He said that they had not settled the claim as there was no policy in place. He said he was not aware if the Respondent was forced to settle the judgment. DW1 said that each policy is specific as to what it provides for and for what it covers.
In re-examination DW1 said that the plaintiff could not claim for compensation as it did not have an employee’s liability cover and that is why they did not compensate.
He said the invoice was issued to their office but it is not proof of payment and also does not contain employee’s liability cover.
Once an invoice is issued, the client confirms what he wants to pay for and he does.
Upon considering the evidence on record the Trial Magistrate found that the Respondent had proved its case on a balance of probability and entered judgment as prayed and awarded Kshs. 200,000/= as damages for breach of contract as the Appellant had refused to make good the claim by the Respondent’s employee. In the final analysis the court ordered that the Appellant pays Kshs.231,161/=being the decretal sums and Kshs. 115,000/= being decretal sums and Auctioneers fees.
The Appellant was aggrieved by the decree and it filed appeal herein vide Memorandum of Appeal dated 17th October 2023 on the following grounds: -
a. THAT the learned trial magistrate erred in law and facts in using the wrong principle in the assessment of damages thereby arriving at an erroneous decision.
b. THAT the learned trial magistrate erred in law and facts by misdirecting himself in his assessment of damages awardable to the Respondent which was manifestly high.
c. THAT the learned trial magistrate erred in law and facts by failing to consider the evidence adduced by the Appellant.
d. THAT the learned trial magistrate erred in law and facts by failing to consider the submissions by the Appellant.
REASONS WHEREFORE, the Appellant prays that the judgement of the subordinate court be set aside and: -
a) The judgement and decree of the lower court be, set aside and be substituted with a proper finding by this honourable court.
b) That this honorable court be pleased to make any or further orders as may be just and expedient in the circumstances.
c) That the cost of this appeal be borne by the Respondent.
This appeal was canvassed by way of written submissions. The Appellants submissions are dated 7th January 2025.
The Appellant’s submissions are that the trial court failed to consider his submissions and evidence in arriving at the decision. The Appellant raised the following issues for determination by this appeal as follows:
1. Whether there was a policy between the Appellant and the Respondent for employers’ liability.
2. Whether the Appellant was under an obligation to pay the decretal sum in the suit Kisii CMCC NO. 506 OF 2012.
The Appellant submitted that it had not covered the risk alleged by the Respondent as the Respondent had not paid and/or taken out employer’s liability cover. It was conceded that the Respondent had taken WIBA policy with the Appellant which is distinguishable from an Employers’ Liability Policy.
According to the Appellant the Work Injury Benefits Act policy is a policy designed to cover employees against accidental loss of life or disability arising out of work-related accidents. The policy covers the following items;
- Medical expenses
- Funeral expenses
- Accidental death
- Permanent Total Disablement (PTD)
- Temporary Total Disablement
- Occupational diseases
It was also submitted that Employers’ Liability policy is a policy that covers against legal liability under common law, negligence, or breach of statutory duty for damages and claimant's costs and expenses of litigation in respect of accidents, diseases or even death to employees happening in the course of employment.
The Appellant further submitted that Employers’ Liability policy responds to indemnify the employer against the expenses awarded to the employee by the court of law up and above what is paid under WIBA up to limits specified in the policy. The Appellant argued that most employers take up Employers Liability insurance in addition to WIBA policy which is compulsory by law. That in the event any settlement/compensation under The Work Injury Benefit Act (WIBA) leaves the injured employee/claimant dissatisfied, the employer may be sued for further compensation. In such an event, the employer's liability insurance shall defend the suit and bear all the legal expenses the employer may incur including indemnifying for any liability attaching to the insured, subsequently.
That in essence Employers Liability covers liability to employees for work related bodily injury or disease, other than liability imposed on the insured by a workers compensation law.
The Appellant submitted that under Section 156 (1) of the Insurance Act, an Insurer can only assume risks when:
a. Premium has been paid and received by him or
b. Where the premium has been guaranteed by such person or
c. A deposit of a prescribed amount is made in advance.
Premium has been defined under Section 2 of the Insurance Act as to include the consideration for the granting of an annuity.
Section 156 (1) of the Insurance Act ("the Act") provides as follows;
"No insurer shall assume a risk in Kenya in respect of insurance business unless and until the premium payable thereon is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed, or unless and until a deposit of a prescribed amount, is made in advance in the prescribed manner.”
The Appellant argued that before issuing a cover, an insurer has a duty to ensure that the premium is paid, or payment is guaranteed, or a deposit thereof has been paid in advance. In the circumstances, it was submitted that the Appellant gave the Respondent various invoices for different policies but the Respondent only paid for a few and did not pay for employer's liability and cannot therefore be indemnified for any loss or damage that occurs during the period of cover.
It was submitted that since the premium was not paid for Employers Liability policy, there was no obligation on the Appellant to settle the claim by the company as parties are bound by the terms of contract agreed between them and the Court cannot rewrite an agreement which is not even there in the first place.
It was further submitted that this Honourable Court has a duty to interpret the contract executed herein by both parties establishing their respective rights and obligations but should be cautious not to re-write or renegotiate the contract already established by the parties herein. To support their position the Appellant cited the holding in Environment Land Case No. 382 of 2008 Njowamu Construction Company Ltd & another vs. Samuel Ngige Kiarie [20141 eKLR and urged the court to be guided by the case of Macharia Mwangi Maina & Others vs. Davidson Mwangi Kagiri C.A Civil Appeal No. 26 of 2011 as considered with Civil Appeal No. 26 and 27 Of 2011 [20141 eKLR where the court held that;
no man shall benefit from his own wrongdoing and equity detests unjust enrichment.... ',
The Appellant also relied on the holding in the case of Attorney General of Belize et al vs. Belize Telecom Ltd & Another (2009), 1 WLR 1980 at page 1993, citing Lord Person in Trollope Colls Ltd vs. North West Metropolitan Regional Hospital Board (1973) I WLR 601 at 609, where he held as follows:-
"The court does not make a contract for the parties. The court will not even improve the contract which the parties have made for themselves. If the express terms are perfectly clear and from ambiguity, there is no choice to be made between different meanings. The clear terms must be applied even if the court thinks some other terms could have been more suitable. "
The Appellant submitted that in Kisii CMCC No. 506 of 2012 which forms the basis for this instant suit, the Respondent was sued by their employee and had taken a WIBA policy with the Appellant and had not taken up an Employers Liability Policy with the Appellant.
That the Appellant was therefore not in any legal or contractual position to settle the decree in Kisii CMCC No. 506 and the judgment therein should be set aside as the Respondent did not prove their case to the required standards.
The court was urged to allow the appeal with costs as it has merit.
The Respondent failed to file submissions in opposition or support of the appeal and this court will therefore rely on the Appellant’s grounds of appeal, Records of appeal and the Appellant’s submissions to make a decision as to whether the appeal has merits or not.
ANALYSIS AND DETERMINATION
This being a first appeal, this court has an obligation to re-evaluate, re-analyse and re-assess the evidence adduced before the Trial court and come up with its own inference on whether to allow the appeal bearing in mind that this court did not have the opportunity to observe the witnesses testify. This is position enumerated in the case of Abok James Odera T/A A.J Odera & Associates vs John Patrick Machira T/A Machira & Co. Advocates (2013) eKLR the Court of appeal held as follows;
“This being a first appeal, we are reminded of our primary role as a first appellate court namely, to re-evaluate, re-assess and reanalyze the extracts on the record and then determine whether the conclusions reached by the learned trial Judge are to stand or not and give reasons either way.”
Similarly, in Selle & Another vs. Associated Motor Boat Co. Ltd & Others [1968] EA this principle was enunciated thus:
"...this court is not bound necessarily to accept the findings of fact by the court below. An appeal to this court ... is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect..."
Having considered the record, the grounds of appeal, and the submissions by counsel, the following issues arise for determination:
i. Whether there existed an Employers’ Liability insurance policy between the Appellant and the Respondent;
ii. ii. Whether the Appellant was under an obligation to indemnify the Respondent for the decree in Kisii CMCC No. 506 of 2012;
iii. iii. Whether the finding of breach of contract and the awards made by the trial court were sustainable in law; and
iv. What orders should issue.
On whether there existed an Employers’ Liability policy the evidence on record is clear and largely uncontested that the Respondent held a WIBA policy issued by the Appellant. PW1 expressly admitted in cross-examination that the policy document did not indicate cover for common law claims. DW1’s evidence, which was not shaken on cross-examination, was that the Respondent had not taken out an Employers’ Liability policy and had not paid any premium for such cover. Section 156(1) of the Insurance Act prohibits an insurer from assuming a risk unless the premium is paid, guaranteed, or deposited. In the absence of proof of payment of premium or existence of an Employers’ Liability policy, this Court finds that no such policy existed between the parties.
On whether the Appellant was obliged to indemnify the Respondent a WIBA policy provides for statutory compensation to employees for work-related injuries under the Work Injury Benefits Act. It does not indemnify an employer against liability arising from a common law claim grounded on negligence. The Court of Appeal, has consistently drawn a clear distinction between compensation payable under the Work Injury Benefits Act and damages recoverable under common law.
In Attorney General v Law Society of Kenya & another [2017] eKLR, the Court of Appeal affirmed that WIBA establishes a statutory compensation mechanism for work-related injuries that is distinct from, and does not equate to, common law claims founded on negligence. The Court emphasized that the Act regulates compensation payable under statute and does not, of itself, impose indemnity obligations on insurers beyond the scope of the policy taken out.
Further, in Cannon Assurance (Kenya) Limited v JKN (suing through father and next friend MN) [2021] eKLR, the Court of Appeal underscored that an insurer’s liability is strictly circumscribed by the terms of the policy and the risks expressly assumed thereunder. The Court reiterated that courts cannot extend insurance cover by implication or sympathy where the contract does not so provide.
The Court of Appeal has also consistently held that parties are bound by the terms of their contract and that courts must refrain from rewriting agreements. In Kenya Breweries Limited v Kiambu General Transport Agency Limited [2000] 2 EA 398, the Court stated that a court of law cannot reframe a contract for the parties or impose obligations that were never contemplated.
The decree in Kisii CMCC No. 506 of 2012 arose from a suit filed by an employee against the Respondent under common law. In the absence of an Employers’ Liability policy, and in light of the foregoing authorities, there was no contractual or legal basis upon which the Appellant could be compelled to indemnify the Respondent.
The trial court, with respect, therefore fell into error by collapsing WIBA cover with Employers’ Liability cover and by imposing obligations on the Appellant that were not contemplated under the insurance contract.
On issue of breach of contract and damages this court having found that there was no obligation on the Appellant to indemnify the Respondent for the common law judgment, it follows that the finding of breach of contract cannot stand. One cannot be in breach of an obligation that does not exist. Consequently, the award of Kshs. 200,000/= as damages for breach of contract, together with the decretal sums and auctioneers’ fees, lacked a legal foundation and was erroneous.
In Conclusion and in consideration of the foregoing, this Court finds that the Respondent did not prove its claim against the Appellant on a balance of probabilities. The appeal is therefore merited.
The appeal is hereby allowed. The judgment and decree of the Chief Magistrate’s Court at Kisii in Kisii CMCC No 140 of 2018 are hereby set aside in their entirety and substituted with an order dismissing the Respondent’s suit against the Appellant.
The Appellant shall have the costs of the suit in the subordinate court and of this appeal.
DATED, SIGNED AND DELIVERED AT KISII THIS 22ND DAY OF JANUARY, 2026
The Respondent’s claim was premised on the contention that it had taken out an insurance policy with the Appellant to cover its employees against injuries arising in the course of employment. On 12th March 2012, one of its employees, the said Domnic Onyari Nyaberi, sustained injuries while at work. The Appellant was notified of the accident and furnished with documents relating to the claim.
The Appellant did not settle the claim, and the injured employee subsequently filed Kisii CMCC No. 506 of 2012 against the Respondent. The suit proceeded to full hearing, culminating in a judgment against the Respondent. Execution followed, leading to attachment and payment of decretal sums amounting to Kshs. 523,201/= together with attendant costs.
It was the Respondent’s case that the Appellant’s failure to indemnify it for the employee’s claim amounted to a breach of the insurance contract.
The brief background of the claim herein was narrated by PW1 Kennedy Nyakundi the General Manager Ouru superstores. He adopted the statement he recorded with his advocate and produced the documentary exhibits he had filed in court Exhibits 2,3,4,5 5,6, 7, 9, 10, 11.12, 13
He also identified MFI 1 and 14 being policy document and statement showing loss of income.
In cross examination by Mr. Nyachiro Advocate PW1 said that Exhibit 2 is an invoice from UAP. Item 7 is marked WIBA. We paid for WIBA.
He said a claim under common law is not indicated in the policy document.
He said that this case arises out of Kisii CMCC 506 of 2012 between Dominic versus Ouru Superstores Limited. He said that the Plaintiff in Kisii CMCC No 506 of 2012 brought the suit as a result of injuries at his place of work.
In re-examination by Godia, advocate PW1 said that Dominic was an employee of their superstores and he got injured.
By consent of the Advocates on record for the parties in the trial court the police document, was produced as exhibit 1; and PW1 be recalled for further cross examination. The defendant was granted leave to file a further document within 3 days and serve.
When PW1 was recalled for further cross examination by Mr. Ndege, advocate he said that Exhibit 1 was not signed by Uhuru Super store and there was no provision for them to sign. He said the policy was to cover employees for injuries. He said they had several policies with regard to this case and a claim form was filled and given to UAP. PW1 said he was not aware it was taken to the Labour office.
The insurance was to cover injuries arising out of employment. Claims arising out of employment. That was the need for the cover. The risk for injuries was covered. Work injury was covered.
In further re-examination of PW1 by Mr. Godia, advocate he said that the policy document was generated by UAP INSURANCE and there was no requirement for them to sign and that is why they did not sign.
He said that Clause 2 of the Policy document - referred to - exhibit 1 at Page talks of insured employee and it was made pursuant to WIBA.
PW2 Geoffrey Isita Ondieki an Accountant with Charles and Company testified that he prepared MFI 6 _ a loss of earning report dated 1.12.2017 and the same was signed by John Gichana who is an Accountant and also a partner.
He said they computed daily revenue of Kshs. 10,500 three trips at kshs.3500/= for Motor vehicle Reg. KCH 701 B. He said that between 31st October 2017 and 20th November 2017 the expected revenue was 173,040/-. He produced the report as Ex P 16.
In cross examination by Mr. Nyachiro Advocate PW2 said that Section 24 of the Accountants Act shows the qualification. He gave his registration number as 2972 with ICPAK.
He said he is a representative to Charles to Company which is assigned No. 2972 by ICPAK. He said that Cheryos Charles Kibii is one of the partners and they have a practicing certificate. He said he is an employee of Charles and Company.
I do not have a C.P.A. number. He said he was given a vehicle log book sheet - showing the movement of KCH 701B with Current transport rate. Bank statements come out with a bulk.
He said one cannot ascertain each vehicle.
He said that the plaint shows KCH 710B which is an error. He said he did not look at the work ticket.
The vehicle log book sheet/ work ticket was supplied. PW2 said he had not shown fuel receipts. He said he had practiced for 5 years but was not registered.
He said he was not given the police from UAP Insurance.
DW1- Erick Onderi Legal Officer with old Mutual formerly UAP adopted his statement as his evidence in chief. He confirmed that they had insured the plaintiff under WIBA. He said that the insured had however, not taken a cover known as employee’s liability which could have come into play where the insured was sued by the employee in case of an accident.
He said that for WIBA the only compensation they get is calculated in terms of
(i) The number of days an employee is not at work
There are some matters that could have been settled had there been an employee’s liability cover.
He said there was no work injury policy (employee’s liability) between the plaintiff and the defendant and the defendant was not liable to compensate the plaintiff’s employee in the case against his employer. DW1 produced a sample of the employee’s liability policy document. He also produced further list of documents No. 1 Dex 1. He said the Premium that Insured paid were for WIBA and motor vehicle but not employee’s liability hence we could not settle any judgment that arose where they are sued by their employees.
In cross-examination by Nyang’acha DW1 said that WIBA covers the number of days’ employee is not at work among other instances. It is one of the formulas used. Yes, I adopted my statement. (Witness reads paragraph 5 & 6) of his statement. He said they issued WIBA in 2012 (item 7) and premiums were paid. He said he was aware of the primary suit where an employee was injured and someone erroneously gave instructions to have the matter defended and they undertook the defence and there was a judgment.
He said he was not sure of auctioneers’ costs. He said that they had not settled the claim as there was no policy in place. He said he was not aware if the Respondent was forced to settle the judgment. DW1 said that each policy is specific as to what it provides for and for what it covers.
In re-examination DW1 said that the plaintiff could not claim for compensation as it did not have an employee’s liability cover and that is why they did not compensate.
He said the invoice was issued to their office but it is not proof of payment and also does not contain employee’s liability cover.
Once an invoice is issued, the client confirms what he wants to pay for and he does.
Upon considering the evidence on record the Trial Magistrate found that the Respondent had proved its case on a balance of probability and entered judgment as prayed and awarded Kshs. 200,000/= as damages for breach of contract as the Appellant had refused to make good the claim by the Respondent’s employee. In the final analysis the court ordered that the Appellant pays Kshs.231,161/=being the decretal sums and Kshs. 115,000/= being decretal sums and Auctioneers fees.
The Appellant was aggrieved by the decree and it filed appeal herein vide Memorandum of Appeal dated 17th October 2023 on the following grounds: -
a. THAT the learned trial magistrate erred in law and facts in using the wrong principle in the assessment of damages thereby arriving at an erroneous decision.
b. THAT the learned trial magistrate erred in law and facts by misdirecting himself in his assessment of damages awardable to the Respondent which was manifestly high.
c. THAT the learned trial magistrate erred in law and facts by failing to consider the evidence adduced by the Appellant.
d. THAT the learned trial magistrate erred in law and facts by failing to consider the submissions by the Appellant.
REASONS WHEREFORE, the Appellant prays that the judgement of the subordinate court be set aside and: -
a) The judgement and decree of the lower court be, set aside and be substituted with a proper finding by this honourable court.
b) That this honorable court be pleased to make any or further orders as may be just and expedient in the circumstances.
c) That the cost of this appeal be borne by the Respondent.
This appeal was canvassed by way of written submissions. The Appellants submissions are dated 7th January 2025.
The Appellant’s submissions are that the trial court failed to consider his submissions and evidence in arriving at the decision. The Appellant raised the following issues for determination by this appeal as follows:
1. Whether there was a policy between the Appellant and the Respondent for employers’ liability.
2. Whether the Appellant was under an obligation to pay the decretal sum in the suit Kisii CMCC NO. 506 OF 2012.
The Appellant submitted that it had not covered the risk alleged by the Respondent as the Respondent had not paid and/or taken out employer’s liability cover. It was conceded that the Respondent had taken WIBA policy with the Appellant which is distinguishable from an Employers’ Liability Policy.
According to the Appellant the Work Injury Benefits Act policy is a policy designed to cover employees against accidental loss of life or disability arising out of work-related accidents. The policy covers the following items;
- Medical expenses
- Funeral expenses
- Accidental death
- Permanent Total Disablement (PTD)
- Temporary Total Disablement
- Occupational diseases
It was also submitted that Employers’ Liability policy is a policy that covers against legal liability under common law, negligence, or breach of statutory duty for damages and claimant's costs and expenses of litigation in respect of accidents, diseases or even death to employees happening in the course of employment.
The Appellant further submitted that Employers’ Liability policy responds to indemnify the employer against the expenses awarded to the employee by the court of law up and above what is paid under WIBA up to limits specified in the policy. The Appellant argued that most employers take up Employers Liability insurance in addition to WIBA policy which is compulsory by law. That in the event any settlement/compensation under The Work Injury Benefit Act (WIBA) leaves the injured employee/claimant dissatisfied, the employer may be sued for further compensation. In such an event, the employer's liability insurance shall defend the suit and bear all the legal expenses the employer may incur including indemnifying for any liability attaching to the insured, subsequently.
That in essence Employers Liability covers liability to employees for work related bodily injury or disease, other than liability imposed on the insured by a workers compensation law.
The Appellant submitted that under Section 156 (1) of the Insurance Act, an Insurer can only assume risks when:
a. Premium has been paid and received by him or
b. Where the premium has been guaranteed by such person or
c. A deposit of a prescribed amount is made in advance.
Premium has been defined under Section 2 of the Insurance Act as to include the consideration for the granting of an annuity.
Section 156 (1) of the Insurance Act ("the Act") provides as follows;
"No insurer shall assume a risk in Kenya in respect of insurance business unless and until the premium payable thereon is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed, or unless and until a deposit of a prescribed amount, is made in advance in the prescribed manner.”
The Appellant argued that before issuing a cover, an insurer has a duty to ensure that the premium is paid, or payment is guaranteed, or a deposit thereof has been paid in advance. In the circumstances, it was submitted that the Appellant gave the Respondent various invoices for different policies but the Respondent only paid for a few and did not pay for employer's liability and cannot therefore be indemnified for any loss or damage that occurs during the period of cover.
It was submitted that since the premium was not paid for Employers Liability policy, there was no obligation on the Appellant to settle the claim by the company as parties are bound by the terms of contract agreed between them and the Court cannot rewrite an agreement which is not even there in the first place.
It was further submitted that this Honourable Court has a duty to interpret the contract executed herein by both parties establishing their respective rights and obligations but should be cautious not to re-write or renegotiate the contract already established by the parties herein. To support their position the Appellant cited the holding in Environment Land Case No. 382 of 2008 Njowamu Construction Company Ltd & another vs. Samuel Ngige Kiarie [20141 eKLR and urged the court to be guided by the case of Macharia Mwangi Maina & Others vs. Davidson Mwangi Kagiri C.A Civil Appeal No. 26 of 2011 as considered with Civil Appeal No. 26 and 27 Of 2011 [20141 eKLR where the court held that;
no man shall benefit from his own wrongdoing and equity detests unjust enrichment.... ',
The Appellant also relied on the holding in the case of Attorney General of Belize et al vs. Belize Telecom Ltd & Another (2009), 1 WLR 1980 at page 1993, citing Lord Person in Trollope Colls Ltd vs. North West Metropolitan Regional Hospital Board (1973) I WLR 601 at 609, where he held as follows:-
"The court does not make a contract for the parties. The court will not even improve the contract which the parties have made for themselves. If the express terms are perfectly clear and from ambiguity, there is no choice to be made between different meanings. The clear terms must be applied even if the court thinks some other terms could have been more suitable. "
The Appellant submitted that in Kisii CMCC No. 506 of 2012 which forms the basis for this instant suit, the Respondent was sued by their employee and had taken a WIBA policy with the Appellant and had not taken up an Employers Liability Policy with the Appellant.
That the Appellant was therefore not in any legal or contractual position to settle the decree in Kisii CMCC No. 506 and the judgment therein should be set aside as the Respondent did not prove their case to the required standards.
The court was urged to allow the appeal with costs as it has merit.
The Respondent failed to file submissions in opposition or support of the appeal and this court will therefore rely on the Appellant’s grounds of appeal, Records of appeal and the Appellant’s submissions to make a decision as to whether the appeal has merits or not.
ANALYSIS AND DETERMINATION
This being a first appeal, this court has an obligation to re-evaluate, re-analyse and re-assess the evidence adduced before the Trial court and come up with its own inference on whether to allow the appeal bearing in mind that this court did not have the opportunity to observe the witnesses testify. This is position enumerated in the case of Abok James Odera T/A A.J Odera & Associates vs John Patrick Machira T/A Machira & Co. Advocates (2013) eKLR the Court of appeal held as follows;
“This being a first appeal, we are reminded of our primary role as a first appellate court namely, to re-evaluate, re-assess and reanalyze the extracts on the record and then determine whether the conclusions reached by the learned trial Judge are to stand or not and give reasons either way.”
Similarly, in Selle & Another vs. Associated Motor Boat Co. Ltd & Others [1968] EA this principle was enunciated thus:
"...this court is not bound necessarily to accept the findings of fact by the court below. An appeal to this court ... is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect..."
Having considered the record, the grounds of appeal, and the submissions by counsel, the following issues arise for determination:
i. Whether there existed an Employers’ Liability insurance policy between the Appellant and the Respondent;
ii. ii. Whether the Appellant was under an obligation to indemnify the Respondent for the decree in Kisii CMCC No. 506 of 2012;
iii. iii. Whether the finding of breach of contract and the awards made by the trial court were sustainable in law; and
iv. What orders should issue.
On whether there existed an Employers’ Liability policy the evidence on record is clear and largely uncontested that the Respondent held a WIBA policy issued by the Appellant. PW1 expressly admitted in cross-examination that the policy document did not indicate cover for common law claims. DW1’s evidence, which was not shaken on cross-examination, was that the Respondent had not taken out an Employers’ Liability policy and had not paid any premium for such cover. Section 156(1) of the Insurance Act prohibits an insurer from assuming a risk unless the premium is paid, guaranteed, or deposited. In the absence of proof of payment of premium or existence of an Employers’ Liability policy, this Court finds that no such policy existed between the parties.
On whether the Appellant was obliged to indemnify the Respondent a WIBA policy provides for statutory compensation to employees for work-related injuries under the Work Injury Benefits Act. It does not indemnify an employer against liability arising from a common law claim grounded on negligence. The Court of Appeal, has consistently drawn a clear distinction between compensation payable under the Work Injury Benefits Act and damages recoverable under common law.
In Attorney General v Law Society of Kenya & another [2017] eKLR, the Court of Appeal affirmed that WIBA establishes a statutory compensation mechanism for work-related injuries that is distinct from, and does not equate to, common law claims founded on negligence. The Court emphasized that the Act regulates compensation payable under statute and does not, of itself, impose indemnity obligations on insurers beyond the scope of the policy taken out.
Further, in Cannon Assurance (Kenya) Limited v JKN (suing through father and next friend MN) [2021] eKLR, the Court of Appeal underscored that an insurer’s liability is strictly circumscribed by the terms of the policy and the risks expressly assumed thereunder. The Court reiterated that courts cannot extend insurance cover by implication or sympathy where the contract does not so provide.
The Court of Appeal has also consistently held that parties are bound by the terms of their contract and that courts must refrain from rewriting agreements. In Kenya Breweries Limited v Kiambu General Transport Agency Limited [2000] 2 EA 398, the Court stated that a court of law cannot reframe a contract for the parties or impose obligations that were never contemplated.
The decree in Kisii CMCC No. 506 of 2012 arose from a suit filed by an employee against the Respondent under common law. In the absence of an Employers’ Liability policy, and in light of the foregoing authorities, there was no contractual or legal basis upon which the Appellant could be compelled to indemnify the Respondent.
The trial court, with respect, therefore fell into error by collapsing WIBA cover with Employers’ Liability cover and by imposing obligations on the Appellant that were not contemplated under the insurance contract.
On issue of breach of contract and damages this court having found that there was no obligation on the Appellant to indemnify the Respondent for the common law judgment, it follows that the finding of breach of contract cannot stand. One cannot be in breach of an obligation that does not exist. Consequently, the award of Kshs. 200,000/= as damages for breach of contract, together with the decretal sums and auctioneers’ fees, lacked a legal foundation and was erroneous.
In Conclusion and in consideration of the foregoing, this Court finds that the Respondent did not prove its claim against the Appellant on a balance of probabilities. The appeal is therefore merited.
The appeal is hereby allowed. The judgment and decree of the Chief Magistrate’s Court at Kisii in Kisii CMCC No 140 of 2018 are hereby set aside in their entirety and substituted with an order dismissing the Respondent’s suit against the Appellant.
The Appellant shall have the costs of the suit in the subordinate court and of this appeal.
DATED, SIGNED AND DELIVERED AT KISII THIS 22ND DAY OF JANUARY, 2026