Halima Abdinoor Hassan & 3 others v Corporate Insurance Company Limited [2015] eKLR

Key Facts

Deceased Name

Transaction Type

Issues

• Whether Buraq Sheikh Ahmed was a minor and incapable of entering into contract, making the insurance contract void ab initio
• Whether the defendant is liable under the policy to compensate the plaintiffs
• Whether the renewed policy lapsed on 8th August 1999
• Whether the plaintiffs are the administrators of the estate of the late Abdullahi Sheikh Ahmed
• Whether the insurance policy was taken out between the deceased and the defendant or between the defendant and Buraq Sheikh Ahmed
• Damages awarded to the plaintiffs
• Whether the deceased was the registered owner of the aircraft Beech King Air 200 Registration Number 5Y-BIW
• Whether the plaintiff or deceased paid premiums to the defendant
• Whether the fire explosion was excluded from the policy cover
• Whether the plaintiffs have any cause of action against the defendant
• Whether the insurance policy was in force on 20th September 1999 when the aircraft was destroyed
• Whether the plaintiffs' claims are barred by effluxion of time under General Condition 9 of the policy

Date of Death

Holdings

• The Plaintiffs' case fails and is dismissed, with no order for costs due to the unfavorable conduct of both parties. The court found that the Plaintiffs did not sufficiently explain why the insurance policy was taken out in the name of a minor (Buraq Sheikh Ahmed) rather than the registered owner (the deceased). The court also dismissed the Defendant's defense of malicious damage due to lack of concrete evidence.
• The Defendant is not liable under the policy because the Plaintiffs' claim was based on a contract in the name of a minor, not the registered owner of the aircraft. The court emphasized that the registered owner (the deceased) had insurable interest, but the policy was not validly in his name.
• The fire and explosion that destroyed the aircraft were not excluded from policy coverage as they were not proven to be malicious acts by the insured or their agents. The Defendant's witnesses provided no concrete evidence to support this claim.
• Both parties were found to have non-disclosed material information: the Plaintiffs failed to disclose the insured was a minor and the aircraft's ownership details, while the Defendant underwrote the policy without verifying these facts. The court noted this mutual failure but did not declare the contract void ab initio.

Contract Value

Probate Status

Legal Principles

• The court addressed the doctrine of estoppel, where the plaintiffs argued the insurer should be barred from disclaiming liability after accepting premiums from the deceased (who was not the registered owner). However, the court concluded estoppel did not apply because the insurer lacked knowledge of the insured's minority and the misrepresentation in the policy inception.
• The judgment referenced the legal capacity of a minor to contract, a principle not explicitly listed in the schema's facet enum. The court noted the insured (Buraq Sheikh Ahmed) was a minor at the time of the policy, but declined to declare the contract void ab initio due to the complexity of the circumstances and the minor's absence as a party.
• The court held the plaintiffs bore the burden of proving their case, including the insured's capacity and the absence of malicious damage. The plaintiffs failed to meet this burden, as the evidence did not conclusively establish their entitlement to indemnity under the policy.
• The duty of utmost good faith (uberrimae fides) was central to the case. The court found the plaintiffs failed to disclose material facts (insured's minority, disputed ownership) during the policy inception, while the insurer was criticized for underwriting without verifying key details. Both parties were deemed to have acted with blemishes.
• The court examined the privity of contract, determining that the plaintiffs, as administrators of the deceased's estate, could not enforce the insurance policy as they were not parties to the original contract between the insurer and the insured minor (Buraq Sheikh Ahmed). The judgment emphasized that only parties to a contract can enforce it, and the plaintiffs failed to establish a valid basis for third-party enforcement.

Succession Regime

Precedent Name

• Moorgate Mercantile Co. Limited vs. Twitchings
• The Motor Union Co Ltd v AK Damba
• Kamithi and another v Kenindia Assurance Company Ltd
• KCB Ltd v Stephen Mukiri Ndegwa & Another
• Newsholme Bros. v Road Transport and General Insurance Co. Ltd
• Halsbury's Law of England Fourth Edition Vol.16 para 1609
• Dharamshi v Karsan
• Spiro vs. Lintern & others

Key Disputed Contract Clauses

• The defendant argued Buraq Sheikh Ahmed (the insured) lacked insurable interest as the aircraft was registered in her father's name. The court acknowledged the deceased's insurable interest but dismissed the plaintiffs' claim due to the policy being in the minor's name without proper disclosure of ownership.
• The policy's duty of utmost good faith required disclosure of material facts in the proposal form. The court found the plaintiffs failed to disclose that the insured was a minor, the aircraft was not registered in her name, and ownership disputes existed. This non-disclosure rendered the contract voidable at the insurer's discretion.
• The policy clause excluding liability for 'loss or damage caused by fire, explosion or impact of the aircraft with an external object arising from such cause' was central to the dispute. The plaintiffs argued the fire was a covered peril, while the defendant claimed it was excluded as a malicious act. The court found the fire was not malicious, thus within coverage.
• General Exclusion paragraph 8 explicitly excluded coverage for 'loss or damage attributable to the willful and malicious act of the insured or of any agent or servant of the insured'. The defendant relied on this to disclaim liability, but the court rejected the defense due to lack of evidence proving malicious intent.

Executor Name

• Jelle Sheikh Ahmed
• Halima Abdinoor Hassan
• AbdiKheir Sheikh Ahmed

Cited Statute

• Insurance Act
• Evidence Act

Executor Appointment

Judge Name

Passage Text

• I have found and held that the fire explosion which destroyed the aircraft on 20th September 1999 was not a willful and malicious act of the Plaintiffs or their agents. The evidence produced by the defendant's witnesses was pure conjecture lacking any concrete evidence.
• The evidence shows that there were various claims on the aircraft and it had even been grounded by a court order. But all these circumstantial evidence does not support their conclusions. The conclusions are therefore, mere suspicion and cannot found any reasonable inference that the explosion was malicious and was caused by the insured or the Plaintiffs or their agents or servants.
• Therefore, even if they paid full premiums to the Defendant, their claim would be limited to return of premiums with interest. Certainly, despite the lack of diligence on the part of the Defendant in the way it handled the policy, it cannot be said that they had knowledge of the circumstances which would entitle them to avoid the policy but went ahead to collect premiums from the Plaintiffs.

Beneficiary Classes

Damages / Relief Type

• Costs of the suit and interest at court rates
• USD 1,000,000 (Kshs. 90 million) with interest at commercial rates
• Any other relief deemed fit and just by the court
• General damages for breach of contract with interest