Automated Summary
Key Facts
This civil appeal (E828 of 2021) concerns joint and several liability between two insurance companies (Madison Insurance Co Ltd and Xplico Insurance Co Limited) under Kenya's Insurance (Motor Vehicles Third Party Risks) Act. The lower court declared both liable for Kshs.1,979,541.83, but the appellate court capped their liability at the statutory maximum of Kshs.3,000,000 each. Madison had already paid Kshs.1,603,229.30, leaving Kshs.1,396,770.70 as their remaining obligation. Xplico, having paid nothing, remains responsible for the full balance including costs and interest. The court emphasized that liability cannot be apportioned beyond the statutory limit and that the 2nd respondent (David Kamau Mwangi) admitted the payment.
Issues
- The court was required to evaluate if the lower court misdirected itself by failing to consider and determine the extent of the appellant's and 2nd respondent's respective liabilities in the 1st respondent's claim, as raised in the appeal.
- The court had to assess whether the joint and several liability declared in the earlier suit (Milimani CMCC No. 5493 of 2015) could be directly applied to the current case without being retried, as the appellant argued the lower court erred in not treating this as a separate issue requiring determination.
- The appeal challenged the lower court's failure to recognize that its judgment against the appellant exceeded the Kshs.3,000,000 statutory liability cap under Section 5(b)(iv) of the Insurance (Motor Vehicles Third Party Risks) Act, Cap 405, rendering the decision patently unlawful.
- The court was tasked with determining whether the appellant's partial payment of Kshs.1,603,229 to the 1st respondent satisfied its statutory obligation under the Insurance (Motor Vehicles Third Party Risks) Act, Cap 405, particularly when the lower court failed to recognize this as a defense.
- The court had to address whether the lower court erred in awarding interest from 5/04/2019 against the appellant, who had not yet been determined liable, and whether this interest claim lacked a contractual foundation as required by law.
Holdings
- The Appellant can only pay a further sum of Kshs. 1,396,770.70 in full settlement of the claim, capped at the statutory limit of Kshs. 3,000,000/- per insurance company.
- Each party shall bear their own costs due to the confusion caused by the Respondents.
- The two insurance companies may claim indemnity against each other, but interest accruing after the Appellant's payment shall be borne exclusively by the 1st Respondent.
- The court declared that the Appellant has paid a sum of Kshs. 1,603,229.30.
- Upon payment of Kshs. 1,396,770.70 by the Appellant, the case against them shall be marked as settled.
- The balance of Kshs. 1,979,541.83 (including costs and interest) shall be settled by the 1st Respondent until full payment, with interest accruing indefinitely for unpaid amounts.
- The court confirmed the file is closed following the delivery of the judgment.
Remedies
- The Appellant is liable to pay a maximum of Kshs. 3,000,000/-, with a further sum of Kshs. 1,396,770.70 to settle the claim.
- Given the confusion caused, each party shall bear their own costs.
- The two insurance companies can claim indemnity against each other, but the interest accruing after the second Appellant's payment is exclusively the 1st Respondent's responsibility.
- The court declared that the Appellant has paid a sum of Kshs. 1,603,229.30 to the 1st Respondent.
- The balance of the claim, including all costs and accrued interest, must be settled by the 1st Respondent until full payment.
- Upon payment of Kshs. 1,396,770.70, the case against the Appellant shall be marked as settled.
- The court closed the file after delivering the judgment.
Monetary Damages
2938601.83
Legal Principles
The court applied the Literal Rule in interpreting Section 5(b)(iv) of the Insurance (Motor Vehicles Third Party Risks) Act, Cap 405, to cap each insurer's liability at Kshs. 3,000,000. This statutory interpretation determined that the lower court erred in not accounting for the maximum limit, leading to a revised decree limiting the Appellant's further payment to Kshs. 1,396,770.70.
Precedent Name
- William Charles Fryda Vs Lance P. Nadeau and Another
- R v the Permanent Secretary In Charge of Internal Security exparte Joshua Paul
- Africa Merchant Assurance Co. Limited Vs Confas Maranga Ntabo
- Merry Beach Ltd Vs Barclays Bank of Kenya Ltd and Another
- Job Kiloch Vs Nation Media Group Ltd Salaba Agencies Ltd and Michael Riorio
Cited Statute
Insurance (Motor Vehicles) Third Party Risks Act, Cap 405
Judge Name
DKN Magare
Passage Text
- Therefore, I set aside the decree in respect only to the Appellant and decree that they are liable to pay a maximum of Kshs. 3,000,000/-
- This court is of the view that the lower court was correct in stating that it cannot apportion liability between the two defendants that is the Appellant and 1st Respondent. I concur with the decisions as relied upon by the lower court as follows: William Charles Fryda Vs Lance P. Nadeau & Another (2015) eKLR and Job Kiloch Vs Nation Media Group Ltd Salaba Agencies Ltd and Michael Riorio (2015) eKLR together with Merry Beach Ltd Vs Barclays Bank of Kenya Ltd and Another (2014) eKLR.
- It is hereby declared that the Appellant has paid a sum of Kshs. 1,603,229.30. The Appellant can only pay a further sum of Kshs. 1,396,770.70 in full settlement of the claim.