Doa Doa Tented Camps and Lodges Limited v Jubilee Insurance Company Kenya Limited (Civil Suit 14 of 2020) [2023] KEHC 18622 (KLR) (24 May 2023) (Judgment)

Key Facts

Transaction Type

Issues

• The court assessed whether the plaintiff is entitled to damages for the loss of business resulting from the defendant's failure to compensate the plaintiff after the losses in April 2018, considering the closure of the camp and projected financial losses.
• The court determined whether the plaintiff had a valid insurance policy with the defendant, whether the claims arose during the policy period, whether the defendant breached the insurance policy, and if the plaintiff is entitled to compensation for the damages incurred on April 14, 2018 and April 24, 2018.
• The court decided who is responsible for paying the costs of the suit, noting that the defendant is to bear the costs and interest, as per the plaintiff's submissions and the discretionary nature of cost awards.

Holdings

• General damages for loss of business were awarded at Kshs 50,000,000, acknowledging the plaintiff's projected losses post-closure but adjusting for economic uncertainties.
• The court determined the defendant is obligated to indemnify the plaintiff Kshs 35,243,145 for the April 24, 2018 flood damage and Kshs 378,600 for the April 14, 2018 wind damage.
• The court found that the plaintiff had a valid insurance cover with the defendant at the time of the losses on April 14, 2018 and April 24, 2018, and the defendant breached the policy by failing to indemnify the plaintiff.
• The defendant's counterclaim was dismissed, and the court ruled the defendant must bear all costs of the suit and interest.

Remedies

• The defendant's counterclaim seeking declarations of policy breach and repudiation was dismissed, with the court finding no valid grounds for avoiding liability under the insurance policy.
• The court declared that Jubilee Insurance Company Kenya Limited breached the insurance policy (P/MSA/1010/2014/14578) and is contractually obligated to indemnify Doa Doa Tented Camps and Lodges Limited for losses occurring on April 14, 2018 and April 24, 2018 at the insured business premises.
• The plaintiff was awarded Kshs 50,000,000/- as general damages for loss of business resulting from the closure of the camp after the insured losses in 2018, despite pandemic-related uncertainties affecting potential profits.
• The judgment mandated the defendant to bear the full costs of the suit and pay interest at court rates, with no stay of execution granted for this portion of the award.
• An order was issued compelling the defendant to indemnify the plaintiff Kshs 35,243,145/- for losses suffered on April 24, 2018 (claim No C/MSA/1010/2018/10266) including destruction of 16 canvas tents, staff quarters, bungalows, restaurant block, machinery, furniture, fixtures, and kitchen equipment.
• The court ordered the defendant to indemnify the plaintiff Kshs 378,600/- for damages caused by a tree collapse on April 14, 2018 (claim No C/MSA/1010/2018/10235) to tents, guest houses, and furniture, with the amount confirmed via a signed discharge voucher.

Contract Value

Monetary Damages

Legal Principles

• The defendant bore the burden of proving the plaintiff breached the insurance policy terms (e.g., non-disclosure of flood risks or unpaid premiums). The court found insufficient evidence to support these allegations, placing the onus on the defendant to demonstrate such breaches.
• The judgment applied indemnity principles, requiring the defendant to compensate the plaintiff for actual losses without exceeding policy limits. The court awarded general damages for lost business, acknowledging uncertainties in quantification but emphasizing the insurer's obligation to cover legitimate claims.
• The court emphasized the principle of uberrima fides (utmost good faith) in insurance contracts, finding the plaintiff provided full and material disclosure when renewing the policy in 2018. The defendant failed to prove the plaintiff acted in bad faith by withholding material information about risks, including flood forecasts.
• The court relied on the doctrine of 'act of God' to address natural disasters (floods and wind damage) as unforeseeable and unavoidable events. It referenced legal definitions and precedents to determine these events were not preventable by reasonable care.

Precedent Name

• Jebrock Sugarcane Growers Ltd v Jackson Chege Busi
• Co-operative Insurance Company Ltd v David Wachira Wambugu
• Liki River Farm Limited v Tausi Assurance Co Ltd
• Peter Gichibi Njuguna v Jubilee Insurance Co Ltd
• Insurance Company of East Africa v Marwa Distributors Limited
• Samuel Kariuki Nyangoti v Johaan Distelberger
• Virani t/a Kisumu Beach Resort v Phoenix of East Africa Assurance Company Ltd
• Imara Steel Mills Ltd v Heritage Insurance Co Kenya Ltd & others
• Ryde v Bushell & another
• Crisp v Security Nat'l Ins Co

Key Disputed Contract Clauses

• The judgment emphasized the defendant's duty to indemnify the plaintiff for actual losses, citing indemnity principles from 'Crisp v Security Nat'l Ins Co' and ensuring compensation did not exceed policy limits. The court ordered payment for both assessed losses.
• The court analyzed the plaintiff's compliance with the principle of uberrima fides, determining that the plaintiff provided full and material disclosure of risks during policy renewal in 2018. The defendant failed to prove the plaintiff concealed material information about flood risks or acted in bad faith.
• The court ruled the April 2018 floods and wind damage constituted 'acts of God' under the policy, referencing legal definitions and precedents. The defendant could not prove the plaintiff could have foreseen or mitigated these events.
• The court found the plaintiff paid premiums via cheques to the broker, as evidenced by witness testimonies and the defendant's failure to issue any demands for payment. The defendant's claim of non-payment was rejected.

Judge Name

Passage Text

• The court awarded general damages of Kshs 50,000,000 for loss of business, referencing Halsbury's Laws and noting the 'unpredictability of economic times' despite the plaintiff's unproven financial projections.
• The judge ruled that the flooding events were 'natural and unusual; an act of God' and cited Black's Law Dictionary and legal precedents to define this term.
• The court found that the plaintiff did pay the premiums as evidenced by witness testimonies and the absence of any demand for payment from the defendant.

Damages / Relief Type

• General damages of Kshs 50,000,000 for loss of business post-closure
• Declaration that the defendant breached the insurance policy and is liable for indemnification of losses on April 14, 2018 and April 24, 2018
• Defendant ordered to bear all costs and interest at court rates
• Indemnification of Kshs 378,600 for wind damage on April 14, 2018
• Indemnification of Kshs 35,243,145 for flood damage on April 24, 2018