Automated Summary
Key Facts
The plaintiff, John Kagenyi Nganga, had a valid insurance policy (TP/08/81427/07(TPO)) for his motor vehicle (KBB 006G Mitsubishi FH) from 14th June 2020 to 13th July 2020. On 27th June 2020, the vehicle was involved in an accident causing injuries to Jackline Chepkoech Kipruto and Joyce Chemtai Korir. The injured parties instituted civil suits (Eldoret CMCC No. 203 of 2021 and No. 251 of 2020) against the plaintiff, resulting in judgments of Kshs. 547,810 and Kshs. 549,326 respectively by 22nd March 2024. The defendant, Occidental Insurance Company Limited, failed to satisfy these judgments despite being notified under section 10 of the Insurance (Motor Vehicle Third Party Risks) Act. The court confirmed a valid insurance contract existed at the time of the accident and declared the defendant liable to cover the judgments and consequential costs.
Transaction Type
Insurance Policy under the Motor Vehicle Third Party Risks Act
Issues
- The court had to determine if the plaintiff had a valid insurance contract with the defendant under the Insurance (Motor Vehicle Third Party Risks) Act Cap 405 when his vehicle was involved in an accident on 27th June 2020. Section 10(1) of the Act imposes a statutory obligation on insurers to pay sums due under judgments obtained against insured persons for liabilities covered by the policy. The evidence established the policy was in force at the time of the incident.
- The second issue concerned the plaintiff's entitlement to the reliefs requested, particularly the declaration that the defendant must satisfy judgments and the loss of user claim. Section 5(b)(iv) of the Act caps third-party compensation at Kshs. 3,000,000/=. While the insurer must cover up to this limit, the plaintiff remains liable for any amounts exceeding it. The court granted a declaration of liability and awarded six months of loss of user at Kshs. 2,000/ per day.
Holdings
- The court declared that the defendant is and has at all material times been liable under a statutory obligation under the policy to satisfy the judgements and decrees from Eldoret CMCC NO. 203 OF 2021 & Eldoret CMCC NO. 251 OF 2020 made in favour of the decree holders, together with auctioneer's costs.
- The court awarded loss of user at Kshs. 2,000 per day for a period of six months to the plaintiff, as the defendant's failure to appear or contest the claim left the plaintiff vulnerable to property execution risks.
- The court ordered that the costs of the suit be borne by the defendant, as the plaintiff's claims were not contested and the defendant did not file a response.
Remedies
- A declaration that the defendant is and has at all material times been liable under a statutory obligation under the policy to satisfy the judgements and decrees and all consequential orders that have arisen in Eldoret CMCC NO. 203 OF 2021 & Eldoret CMCC NO. 251 OF 2020 made in favour of the decree holders together with the auctioneer's costs.
- Loss of user at Kshs. 2,000/= per day for a period of six months.
- The costs of this suit be borne by the Defendant.
Legal Principles
- The plaintiff was required to prove their case on the balance of probabilities under Sections 107-109 of the Evidence Act. The court reiterated that even if the defendant does not contest the case, the plaintiff must still meet this standard of proof.
- The court emphasized that an insurer has a statutory obligation under Section 10(1) of the Insurance (Motor Vehicles Third Party Risks) Act (Cap 405) to pay sums awarded in judgments for liabilities covered by the policy, including costs and interest, regardless of whether the policy was avoided or cancelled. This obligation cannot be shifted to the insured through contractual terms.
Precedent Name
- Law Society of Kenya v Attorney General & 3 others
- Joseph Mwangi Gitundu v Gateway Insurance Co Ltd
Cited Statute
- Insurance (Motor Vehicles Third Party Risks) Act, Chapter 405 of the Laws of Kenya
- Evidence Act, Sections 107, 108 and 109
Judge Name
Robert Nyakundi
Passage Text
- "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 a 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 or 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 thereunder in respect of the liability, including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments."
- "In order to comply with the requirements of section 4, the policy of insurance must be a policy which-(b)insures such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of, or bodily harm to, any person caused by or arising out of the use of the vehicle on a road; Provided that a policy in terms of this section shall not be required to cover —...(iv)liability of any sum in excess of three million shilling arising out of a claim by one person..."
- a. A declaration that the defendant is and has at all material times been liable under a statutory obligation under the policy to satisfy the judgements and decrees and all consequential orders that have arisen in Eldoret CMCC NO. 203 OF 2021 & Eldoret CMCC NO. 251 OF 2020 made in favour of the decree holders together with the auctioneer's costs.
Damages / Relief Type
- Costs of the suit to be borne by the defendant.
- Declaration that the defendant is liable to satisfy the judgements and decrees from Eldoret CMCC No. 203 of 2021 and 251 of 2020.
- Loss of user at Kshs. 2,000 per day for six months.