F O & another v APA Insurance Company Limited [2015] eKLR

Key Facts

Transaction Type

Issues

• Whether the defendant (APA Insurance Company Limited) is legally obligated to indemnify the plaintiffs following the alleged merger between Pan Africa Insurance Company Limited and Apollo Insurance Company Limited, as per Gazette Notice 8126 and section 10(1) of the Insurance Motor Vehicle Third Party Risks Act.
• Whether the defendant's defense, which primarily consisted of denials and arguments about procedural correctness, was scandalous, frivolous, or vexatious under Order 2 Rule 15 of the Civil Procedure Rules, warranting summary judgment in favor of the plaintiffs.

Holdings

• The court struck out the defendant's defense, finding it to be an abuse of the court process and lacking in substantial response to the plaintiffs' claim. The defense was deemed frivolous, vexatious, and not disclosing any reasonable cause of action or triable issues.
• The court affirmed that the defendant's admission of receiving the statutory notice (via Gazette Notice 8126) constituted clear acknowledgment of liability, and rejected the defendant's argument that the merger lacked approval, citing prior rulings in similar cases (e.g., APA Insurance Limited vs Benadah Irusa).
• The court granted summary judgment in favor of the plaintiffs, determining that the defendant is statutorily obligated under the Motor Vehicle Third Party Risks Act (Cap 405) to settle the judgments obtained against Kenya Bus Service Limited, as the defendant assumed liabilities from the merger of Pan Africa Insurance and Apollo Insurance.

Remedies

• The court determined that the defendant is legally obligated to settle the judgments and entered a summary judgment in favor of the plaintiffs, awarding the decretal amounts of Ksh 808,510 and Ksh 259,632, along with costs and interest at court rates.
• The court found that the defendant's defense was an abuse of the court process and struck it out, allowing the plaintiffs' application to proceed.

Legal Principles

• The court emphasized that the power to strike out pleadings is a discretionary measure to be used cautiously, as it deprives a party of the opportunity to present their case. This was based on Order 2 Rule 15 of the Civil Procedure Rules, which allows striking out pleadings that disclose no reasonable cause of action or defense, are scandalous, frivolous, vexatious, or prejudicial to a fair trial.
• The defendant's defense, consisting of mere denials without addressing substantive legal or factual issues, failed to meet the burden of proof required to raise a triable issue. The court found this insufficient under the legal standards for summary judgment.
• Section 10(1) of the Insurance Motor Vehicle Third Party Risks Act was applied to determine the defendant's liability. The court held that the defendant, as a successor entity via merger, remained obligated to pay the plaintiffs' judgments despite potential policy cancellations.
• The ruling underscored the principle of natural justice, stating that courts must not drive away litigants from the seat of justice regardless of the weakness of their case. This principle was cited as a key limitation on the use of summary judgment procedures.

Precedent Name

• DT DOBIE & COMPANY (KENYA) LTD vs MUCHINA
• APA Insurance Limited vs Benadah Irusa & Another
• Rose of Sharon Academy Limited & Another vs National Land Commission & Another
• CRESCENT CONSTRUCTION CO. LTD v DELPHIS BANK LTD
• HARIT SHETH T/A HARIT SHETH ADVOCATES V SHAMAS CHARANIA
• APA Insurance Ltd vs Japhy Elliot Ogundoh Okuwa
• Raghbir Singh Chatte vs National Bank of Kenya Limited

Cited Statute

• Civil Procedure Act
• Insurance Motor Vehicle Third Party Risks Act
• Evidence Act, Cap 80
• Motor Vehicle Third Party Risks Act, Cap 405
• Civil Procedure Rules, 2010

Judge Name

Passage Text

• I find that the matter here is plain and obvious in the sense that the defendant is obligated under section 10(1) of the Insurance Motor Vehicle Third Party Risks Act to settle the claim herein. Section 10 thereof provides: '10.(1) If after a policy of insurance has been effected, judgment in respect of any such liability as is required to be covered by a policy under paragraph (b) of Section 5 (being liability covered by the terms of the policy) is obtained against any person insured by the policy then notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided'cancelled the policy, the insurer shall subject to the provisions of this section pay to the persons entitled to the benefit of the judgment any sum payable there under in respect of interest on that sum by virtue of any enactment relating to interest of judgments.'
• In their submissions the defendant has admitted the existence of a merger but stated that the same has not been approved therefore averments by the defendant that the merger between Pan African Insurance Co Ltd and Apollo Insurance Co. Ltd to form APA Insurance Company does not exist cannot be true. The defendant herein took the liabilities of Pan African Insurance Co Ltd and therefore liable to compensate the plaintiffs.
• By dint of Gazette Notice 8126 and other reasons stated herein, the defendant is liable and obliged by law to settle the judgments and decrees in favour of the plaintiffs. It is for those reasons that this court should enter summary judgment in favour of the plaintiffs, as I am satisfied that there are no triable issues which need to be determined by the court at a full trial.

Damages / Relief Type

• Declaration that APA Insurance must indemnify plaintiffs for judgments in CMCC 11889/2004 and CMCC 2401/2005
• Order to pay Ksh 808,510 and Ksh 259,632, plus costs and interest at court rates