Please Wait. Searching ...
|Case Number:||Appeal 2 of 2019|
|Parties:||Amirali Hassanali Mohammed Mapara v Commissioner of Insurance; AAR Insurance Kenya Limited(Interested Party)|
|Date Delivered:||13 Feb 2020|
|Court:||Insurance Appeals Tribunal|
|Judge(s):||Hon. Mr. Wambua Kilonzo Chairperson, Insurance Appeals Tribunal Hon. Mr. Martin Mugambi Mithega Member, Insurance Appeals Tribunal Hon. Mr. Thomas Koyier Member, Ins|
|Citation:||Amirali Hassanali Mohammed Mapara v Commissioner of Insurance; AAR Insurance Kenya Limited(Interested Party)  eKLR|
|Case Outcome:||Tribunal revoked|
|Disclaimer:||The information contained in the above segment is not part of the judicial opinion delivered by the Court. The metadata has been prepared by Kenya Law as a guide in understanding the subject of the judicial opinion. Kenya Law makes no warranties as to the comprehensiveness or accuracy of the information|
REPUBLIC OF KENYA
IN THE INSURANCE APPEALS TRIBUNAL
APPEAL NO. 2 OF 2019
AMIRALI HASSANALI MOHAMMED MAPARA......APPELLANT
COMMISSIONER OF INSURANCE............................RESPONDENT
AAR INSURANCE KENYA LIMITED............INTERESTED PARTY
A. INTRODUCTION AND BACKGROUND
1. This Appeal arises out of the Respondent’s decision dated 1st August, 2019 relating to a complaint that the Appellant had lodged with the Respondent against the Interested Party. The Appellant had taken a medical insurance policy with the Interested Party covering a number of his family members who included his deceased wife Mrs. Zarina Amerali Mapara, whose medical bill is the subject of this Appeal.
2. The Appellant’s position is that his wife was admitted at The Aga Khan University Hospital on 19th May, 2017 and discharged on 7th June, 2017 after incurring a medical bill of Kshs.3,801,924/= as per invoice number HFB15517/17 captured in the Inpatient Final Bill supplied by the Appellant to the Tribunal.
3. The Interested Party refused to settle the claim and the Appellant lodged his complaint with the Respondent. His complaint is captured in the complaint dated 28th March, 2018 and it is to the effect that:
i. That the Appellant has had a long standing medical insurance relationship with the Interested Party since 1997 that was initially handled by the Interested Party’s agent known as Harrison Kimani before being taken over by one Leah Ngugi said to have been the Interested Party’s in-house agent;
ii. That the said Leah Ngugi allegedly left the Interested Party’s employment and the Appellant insurance business was handed over to a new agency without the Appellant’s consent or knowledge;
iii. That the policy lapsed without any communication from the Interested Party and/or Ms. Ngugi yet AAR Credit Services Ltd (hereinafter referred to as “the financier”), and which is the Interested Party’s sister company, was still holding Appellant’s unbanked cheques;
iv. That the Appellant had not stopped the financier from banking the cheques and he would have replaced them if at all he was required to do so;
v. That the policy lapsed due to lack of communication on the part of the Interested Party and its agent;
vi. The Appellant requested the Respondent to find and hold that:
a. The Interested Party be compelled to pay at least 50% of the medical bill of the Appellant’s deceased wife;
b. Leah Ngugi be reprimanded and be found liable for professional negligence;
c. The Interested Party be compelled to refund premiums paid before the lapse of the policy;
d. The Interested Party be ordered to return three unbanked cheques and compensate the Appellant for the loss suffered.
4. At the hearing before the Respondent, the Interested Party acknowledged that it has had a long insurance relationship with the Appellant. Its representations were to the effect that the renewal of the policy was based on a premium financing arrangement between the Appellant and the financier in which the financier paid the premium for and on behalf of the Appellant. It stated that the Appellant had agreed to service the advanced credit facility failing which the financier would have the policy cancelled. It averred that the Insurance Premium Finance Agreement (IPF), amended the insured’s and insurer’s right to cancel the policy relieving the insurer of the obligation to give twenty one (21) days notice as per their insurance policy. The Interested Party emphasized that the cancellation of the policy was purely because of the default in premium payment and the Appellant was duly notified by the financier. The Interested Party further stated that through the intervention of the Appellant’s broker, it made an ex-gratia payment to the Appellant to lighten his financial burden.
5. This complaint was heard by the Respondent who made the decision dated 1st August, 2019. In its decision, the Respondent noted that the issue for determination was whether the AAR Credit Services were justified in cancelling the medical insurance policy the Appellant had with the Interested Party. The Respondent noted that the medical policy was issued upon receipt of renewal premium paid on behalf of the Appellant by the financier. The Respondent also noted that the Appellant had authorised the financier to suspend or cancel the cover in the event of default in meeting the monthly payments to the financier. The Appellant defaulted as result of which a seven (7) days’ notice was issued followed by the cancellation of the policy by the financier. The Respondent made a finding to the effect that the insurance contract was premised on the financing contract without which the insurance contract would not have been granted or sustained and as such the two contracts are to be read together. The Respondent therefore, came to the conclusion that the cancellation effected by the financier was authorized by the Appellant and it was in order and as such the Interested Party could not be compelled to settle the claim.
6. The Appellant being dissatisfied with the Respondent’s findings lodged this Appeal on 30th August, 2019. Subsequently, the Appellant amended his Memorandum of Appeal and filed an amended Memorandum of Appeal on 22nd November, 2019 with the following ten grounds:
i. “The Commissioner of Insurance misdirected herself in failing to make a finding against the Interested Party.
ii. The Commissioner of Insurance erred in law and fact in failing to consider any of the compelling evidence adduced by the Appellant at the tribunal hearing.
iii. The Commissioner of Insurance erred in law and in fact in failing to find there existed an Agency relationship between Leah Ngugi and the Interested Party.
iv. The Commissioner of Insurance misdirected herself in totally disregarding the evidence tendered by the Appellant in the issue of negligence by the Interested Party and/or its agents.
v. The Commissioner of Insurance erred in law and fact in failing to find that the Interested Party and/or its agent misrepresented the Appellant.
vi. The Commissioner of Insurance erred in law and fact in failing to find that there was privity and/or mutuality of contract.
vii. The Commissioner of Insurance erred in law and in fact in failing to find that the agreement between AAR Credits and the Appellant did not amend the agreement between AAR Insurance and the Appellant.
viii. The Commissioner of Insurance erred in law and fact in failing to find that the Interested Party were not justified in cancelling the policy without issuing 21 days’ notice as per the agreement.
ix. The Commissioner of Insurance erred in law and fact in disregarding and failing to take into account credible and reliable evidence and issues presented by the Appellant.
x. All in all the Commissioner of Insurance misdirected herself on matters of law and facts to occasion the miscarriage of justice against the Appellant.”
7. Reasons wherefore the Appellant sought the following prayers from the Tribunal
a. The decision made dismissing the Appellant claim in SFN/IRA/01/037/03/6949 be set aside and substituted with the one allowing the Appellant’s claim.
b. Costs of this Appeal.
8. The Appellant’s Amended Statement of Facts filed on 5th December, 2019 is to the effect that the Appellant and the Interested Party have had a long running medical insurance relationship. The Appellant avers that one Leah Ngugi was the Interested Party’s agent in charge of all matters relating to the policy. In 2016, the Appellant entered into an IPF agreement with the financier and issued to them some ten cheques for purposes of financing the policy. It is alleged that the seventh cheque bounced as a result of which the financier instructed the Interested Party to have the policy cancelled due to non-payment of premiums. The Appellant’s position is that he was not given any notice by the Interested Party before the cancellation of the policy. He further states that one Leah Ngugi was the Interested Party’s agent in charge of his policy, and she never notified him of the dishonored cheques and or any other notice or notices thereof. His position is that the alleged notice of 7 days issued by the financier could not override the 21 days’ notice stipulated in the insurance policy that the Interested Party is required to give before cancellation of his policy. He maintains that the Respondent erred in finding and holding that the insurance policy was subject to the IPF agreement.
9. The Respondent filed his response on 17th October, 2019. Its position is that the Appellant entered into a valid agreement with the financier and which agreement had the effect of creating an agency relationship between the Appellant and the financier. According to the Respondent the Appellant authorized the financier to have the policy cancelled upon issuance of a seven days’ notice in case of default.
The Respondent avers that the IPF agreement had a bearing and direct effect on the operation of the policy document and the Appellant should not be heard to complain in the circumstances.
10. The Interested Party’s position is captured in its response that was filed on 7th November, 2019. The Interested Party avers that the Appellant’s policy was subject to the terms and conditions in the IPF agreement in that it would only remain in force as long as the IPF agreement was honored. The Interested Party further states that the rights to cancel the policy were amended by the financing agreement that relieved it of the responsibility of giving the 21 days’ notice. The Insurer further avers that the Appellant is presumed to have received the cancellation notice since it was addressed to his last known address. The Insurer denies liability and states that the ex-gratia payment was purely made on business consideration and does not amount to admission of liability.
11. The Appeal came up for directions on 11th December, 2019 and the parties indicated that they would call one witness each and file supplementary list of documents in support of their respective positions. The Appeal was then fixed for hearing on 16th January, 2020 on which date the Appellant called one witness one Ms. Shirin Amirali Hassanalia, daughter of the Appellant whose evidence is in line with the Appellant’s pleadings and supporting documents. The Interested Party and the Respondent availed their representatives at the hearing of this Appeal and they were represented by their Advocates. The parties Advocates made their oral submissions in line with their pleadings and supporting documents.
B. THE APPELLANT’S CASE & SUBMISSIONS
12. The Appellant’s witness duly sworn testified that she is a daughter of the Appellant and that her family has had a long standing insurance relationship with the Interested Party which started in 1997. She stated that in the initial years of their relationship, the Interested Party had appointed one Mr. Harrison Kimani as its agent but he was replaced by one Ms. Leah Ngugi and the Appellant was duly notified by the Interested Party of the change. She stated that Ms. Ngugi was their contact person that dealt with all matters relating to their policy including renewals, premium payments and all related notices and correspondences.
13. She stated that in 2016, Ms. Ngugi failed to communicate as was the norm as a result of which they were not made aware of the fact that some of their cheques had bounced as alleged by the Interested Party and that their cover had been suspended and subsequently cancelled. She stated that they never received any policy cancellation notice from the Interested Party and/or the financier. She further stated that the Interested Party and its agent had the responsibility of notifying them of any changes relating to their insurance relationship before effecting any adverse decisions. She further stated that if at all Ms. Ngugi had left the Interested Party’s employment she ought to have been notified as such by the Interested Party.
14. She further testified that her mother was admitted at The Aga Khan University Hospital on the strength of the medical insurance cover the subject matter of this Appeal but the Interested Party refused to settle the medical bill of Kshs.3,801,924/= and only paid Kshs.250,000/= on an ex-gratia basis. She stated that the Interested Party was wrong in cancelling their policy without any notice on alleged non-payment of premium yet the financier was still holding some unbanked cheques which cheques are yet to be returned to them. She further stated that they would have made good any bounced cheque if at all the same was brought to their attention.
15. At the close of her evidence her Advocate, Mr. Okullo, submitted that the insurance contract between the Appellant and the Interested party could only be cancelled by giving a 21 days’ notice as provided in clause 11 therein. He further submitted that the provisions of the IPF agreement could not adversely amend the insurance policy. He further submitted that the IPF agreement is contrary to the principle of mutuality of contract that must be honored in regard to the insurance policy between the parties. He further submitted that there is no privity of contract between the financier, the Appellant and the Interested Party as relates to the insurance policy and as such the financier could not purport to issue a cancellation notice of that contract. The Learned Counsel concluded that the Respondent erred in his decision in failing to appreciate that there was a valid insurance policy between the Appellant and the Interested Party and that policy could only come to an end as provided therein.
C. THE RESPONDENT’S CASE & SUBMISSIONS
16. The Respondent’s Counsel, Mr. Odero, made submissions in line with the Respondent’s statement of facts dated 17th October, 2019 and filed on the same date. The Learned Counsel submitted that the cheques issued by the Appellant towards premium finance repayment were dishonored and the Interested Party was justified in cancelling the policy as per the terms in the IPF agreement. The Respondent’s Counsel submitted that the IPF agreement had the effect of creating an agency relationship between the Appellant and the financier. He pointed out that the IPF agreement was entered into without any mistake, undue influence, or misrepresentation and as such the Appellant is bound by the same.
17. Counsel further submitted that the ex-gratia payment made by the Interested Party was made in accordance with the principle of treating customers fairly. Mr. Odero further submitted that General & Health Insurance Agency was at all material times acting for the Interested Party registered and is licensed by the Insurance Regulatory Authority.
18. Mr. Odero further invoked principle of equity and submitted that the Appellant having defaulted in premium payment he was before the Tribunal with dirty hands and as such he was not entitled to the reliefs sought.
19. On being questioned by the Tribunal, Mrs. Monica Thirima who is the Respondent’s Consumer Protection Manager, acknowledged that there is no mention of the IPF agreement in the insurance policy.
D. THE INTERESTED PARTY’S CASE & SUBMISSIONS
20. The Interested Party through its Counsel Mr. Mbichire and Dr. Osoro opposed the Appeal and relied on their response to Memorandum of Appeal dated 5th November, 2019 and filed on 7th November, 2019. They submitted that the Appellant was fully aware that he had an obligation to repay the premium finance facility as agreed with the financier to keep the policy alive. They emphasized that the Appellant granted the financier the right to cancel the policy in case of default in repayment of the loan and that the Interested Party was relieved by the IPF agreement of the need to give the 21 days’ notice as per the insurance policy. They pointed out that the cancellation notice issued by the financier was sufficient and it was posted to the Appellant through his last known address. Learned Counsel for the Interested Party further emphasized that the ex-gratia payment made to the Appellant does not amount to admission of liability.
E. ISSUES FOR DETERMINATION
21. At the close of the oral submissions the parties had not filed any list of agreed and/or separate issues for determination by the Tribunal. The pleadings and submissions of the parties reveal the following are the issues for determination in this matter:
i. Whether the Appellant had a valid medical insurance policy with the Interested Party;
ii. Whether the medical insurance policy was properly cancelled for non-payment of premiums;
iii. Whether the Appellant is entitled to any of the reliefs sought in this Appeal;
iv. Who should bear the costs of the Appeal.
F.DISCUSSION AND DETERMINATION
i. Whether the Appellant had a valid medical insurance policy with the Interested Party:
22. There is no dispute that the Appellant has had a long-standing medical insurance relationship with the Interested Party. It is clear from the documents filed by the parties that this relationship started in 1997. It is also clear that the Interested Party’s initial agent in this relationship was one Mr. Harrison Kimani before one Ms. Leah Ngugi took over the business. There is also evidence on record that on or about the year 2016 the business was taken over by an agency known as General & Health Insurance Agency. Much as the Appellant’s evidence is to the effect that he was never notified of the changes in the agency. Indeed, among the documents filed by the Respondent, there are three certificates of renewal of agency issued by Insurance Regulatory Authority in favour of General & Health Insurance Agency for the years 2015, 2016, and 2017 confirming the existence and validity of this agency.
23. Further, there is no dispute that at the material time, the Interested Party had renewed the policy based on a premium financing arrangement between the Appellant and the financier. This is a fact admitted by the Interested Party in its response to the Memorandum of Appeal filed on 7th November, 2019. Clearly, the Interested Party could not have renewed the policy without payment of premium because this would have contravened Section 156 (1) of the Insurance Act (“the Act”) which provides as follows;
“No insurer shall assume a risk in Kenya in respect of insurance business unless and until the premium payable thereon is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed, or unless and until a deposit of a prescribed amount, is made in advance in the prescribed manner.
Provided that in the case of motor vehicles or fire insurance business, the broker shall remit the amount of the premium to the insurer the same day he receives the premium from the policy holder, and the insurer shall assume risk upon receipt of such premium.”
It is very clear that under Section 156 (1) an Insurer can only assume risks when:
a. Premium has been paid and received by him or
b. Where the premium has been guaranteed by such person or
c. A deposit of a prescribed amount is made in advance.
24. This means that before issuing a cover, an insurer has a duty to ensure that the premium is paid, or payment is guaranteed, or a deposit thereof has been paid in advance. In the circumstances, it is inconceivable that the Interested Party could have issued the policy in total disregard of the provisions of Section 156(1) of the Act. Further, it is worth noting that MacGillivray & Parkington on Insurance Law, 7th Edition at paragraph 861 states the following on payment of premium:
“There is no rule of law to the effect that there cannot be a complete contract of insurance concluded until the premium is paid, and it has been held in several jurisdictions that the courts will not imply a condition that the insurance is not to attach until payment. It would seem to follow that, if credit has been given for the premium, the insurer is liable to pay in the event of a loss before payment, although, as has been held in a South African decision, the insurer would be entitled to deduct the amount of the premium from the loss payable, at least where the period of credit had expired by that time, since the assured could not insist on payment when in breach of any obligation assumed on his part under the contract.”
25. It therefore follows that, a policy of insurance remains valid once issued and liability attaches despite non-payment of a premium due. In any event, there is no doubt that premium was fully paid before issuance of the policy. All doubts are cleared by the fact that payment of the premium is clearly acknowledged in the Preamble of the policy document filed by the Interested Party that provides as follows:
“WHEREAS the insured named in the Policy Schedule has applied to AAR Insurance Kenya Limited (hereinafter referred to as the Company) for the medical insurance hereinafter specified in respect of the Insured and their dependants hereinafter referred to as the Members) and has paid the premium as consideration for such insurance” (emphasis added)
26. In any event, no evidence is on record to show that the financier asked for refund of the premium paid. Similarly, there is no evidence that the Insurer refunded the premium to the financier. Further, there is also no evidence that the alleged unpaid cheques together with the unbanked cheques were returned to the Appellant.
27. In view of the above, the Tribunal finds and holds that the Appellant had a valid medical insurance policy with the Interested Party that was fully renewed following payment of the relevant renewal premium by the financier on the strength of a premium finance arrangement between the Appellant and the financier. The cancellation of the said medical insurance policy is only subject to the terms and conditions contained in the policy document.
ii. Whether the medical insurance policy was properly cancelled for non-payment of premiums:
28. There is no dispute that the Interested Party never gave any notice of cancellation of the policy to the Appellant. As already noted, the Interested Party’s position is that the financier at the instance of the Appellant’s failure to service the premium loan issued a purported cancellation notice and as such it was not obligated to issue any further notice at all. The Interested Party concedes that under Clause 11 of the policy document it is obligated to issue a 21 days’ cancellation notice but it was relieved of such obligation once it received a cancellation notice from the financier. Clause 11 of the policy document provides as follows;
“Cancellation: The Company may cancel this Policy by sending 21 days’ notice by registered letter to the Insured’s last known address and in such event the Company shall refund to the Insured a pro-rata portion of the premium for the unexpired term of the current period of Insurance. The Employer may cancel this policy by giving 21 days’ notice by registered letter and the refund of any premiums shall be at the discretion of the Company. Refund of premium in both cases will be subject to no reported and/or incurred losses or claims” (emphasis added)
29. Clearly, under the insurance policy, the Interested Party is obligated to issue a 21 days’ cancellation notice and that notice must be sent to the last known address of the insured by registered post. Having found that a valid medical insurance policy was issued by the Interested Party following receipt of premium payable, the question that begs for an answer in this issue is whether clause 11 of the insurance policy is applicable in this matter and if so whether the Interested Party was relieved of this obligation as submitted before the Tribunal.
30. This Tribunal reiterates that the relationship between the Appellant and the Interested Party is strictly governed by the terms and conditions contained in the policy document. There is nothing in the policy document to the effect that the policy would be cancelled in the event of the non-repayment of the premium finance to the financier. The financier is not even a party in the policy document and its interest if any, is not noted in the policy document. The Interested Party is also not a party in the IPF agreement and there is nothing in the IPF agreement to the effect that it should be read together with the policy document.
31. Clearly, the issues in the policy document are issues between the Appellant and the Interested Party only. Similarly, the issues in the IPF agreement are issues between the Appellant and the financier only. The policy document does not confer any rights upon the financier to cancel it in the event of default in repayment of the premium finance. Similarly, the IPF agreement does not extinguish the rights and obligations in the policy document. The Tribunal notes that no tripartite agreement exists between the Appellant, the Interested Party and the financier.
32. It is not disputed that the Appellant and the financier had a premium finance arrangement in which the financier paid for and on behalf of the Appellant the premium payable to the Interested Party for the medical insurance cover in issue. A copy of the alleged IPF agreement is among the documents filed by the
Interested Party. It is worth noting that the alleged agreement is not signed by the financier. Nonetheless, the Appellant admits that he gave ten cheques to cater for the required monthly installments towards repayment of the premium finance loan. However, he denies that he authorised the financier to cancel the policy in the event of default. Clause 4 of this document provides as follows:
“To suspend/cancel/and/or terminate my/our AAR membership as the case may be upon the expiry of seven (7) days after the due date to my/our continued default in meeting the required monthly installments and/or credit charge. The suspension/cancellation/termination does not absolve me from liability to AAR Credit Services Ltd for any amount outstanding on account inclusive of late payment charges as herein above specified until full settlement of the account”
33. The Interested Party insists that the financier issued a 7 days’ cancellation notice and a copy of this notice was provided to the Tribunal. The Appellant insists that he never got such notice and that in any event this notice did not discharge the Interested Party from its duty to issue a 21 days’ cancellation notice under Clause 11 of the policy document. It is trite law that he who alleges must prove. The Interested Party had a duty to prove that the alleged notice of 7 days was issued by the financier as alleged. There is no certificate of postage that was tendered as evidence. Further, the Tribunal notes that the financier was not a party in these proceedings and that it was not even called as witness to shed light on unsigned IPF agreement, the alleged bounced cheques and subsequent notice(s). The agent who handled the Appellant’s business was also not called as a witness.
34. The Tribunal agrees with the submissions by the Learned Counsel for the Appellant that there was no privity of contract between the Appellant, the financier, and the Interested Party and the financier could not purport to cancel a validly issued insurance policy on the basis of an unsigned IPF agreement. In any event the Tribunal finds and holds that the Insurance agreement between the Appellant and the Interested Party is the principle document and its terms cannot be amended by an IPF agreement. The Tribunal holds that the Interested Party cannot rely on the unsigned IPF agreement which is not even mentioned in the policy document. The finance agreement ought to have been a tripartite agreement.
The true effects of non-payment of premium can only be found in the policy document and not some other secondary documents like the unsigned IPF agreement. To this end, the Tribunal stands guided by the case of Liki River Farm Limited v Tausi Assurance Co. Ltd  eKLR where the court stated as follows:
“The true effect of non-payment of premium will therefore have to turn on the terms of the Insurance Contract and the language used. The Policy commences with this recital,
“whereas the Insured by a proposal and declaration which shall be the basis of this Contract and is deemed to be incorporated herein has applied to the Tausi Assurance Company Ltd (hereinafter called the Company) for the Insurance hereinafter contained and has paid or agreed to pay the premium as consideration for such Insurance”.
The important words would be, has paid or agreed to pay the premium. The Finance Agreement referred to by the witness is an Insurance Premium Broker Finance Agreement dated 29th June 2007. It was intended to be a tripartite agreement involving NIC Bank, Crownscope and Tausi. Although dated 29th June 2007, the Agreement appears to have been signed by only the representatives of Crownscope and Tausi. A Copy of that Agreement produced in Court shows that the Bank (The financier) did not execute the Agreement. It must follow that the document cannot be a proper undertaking/guarantee for payment of the premium because the financier (who is a Primary party to such an arrangement) had not executed the agreement”.
35. Does this mean the financier has no remedy for the alleged bounced cheques? The answer is in the negative. The Tribunal finds and holds that the financier’s remedy is not in cancelling a validly issued policy. There is no law that prevents a financier, a broker, or an agent from recovering anything unjustly gained by an insured where he has incurred such an expense on behalf of an insured. In this situation, the financier financed the premium on the strength of cheques issued by the Appellant some of which allegedly bounced on presentation. The financier is a guaranteed holder of a bill of exchange. Under Section 73(1) of the Bills of Exchange Act, Cap 27, a cheque is a bill of exchange drawn on a bank payable on demand. By Section 55(1) of the said Act, the drawer guarantees, that on due presentation, it shall be paid according to its tenor and that if it is dishonoured, he will compensate the holder or a subsequent endorser who is compelled to pay it. This Tribunal therefore concludes that the financier’s remedy lies in an action against the drawer of the dishonoured cheques if any and not in cancellation of a validly issued policy. In any event the Interested Party did not present the alleged bounced cheques either to the Appellant, the Respondent and/or to this Tribunal.
36. In this matter, the issue of cancellation of the policy for non-payment of premium does not even arise. This is because the premium was duly paid and acknowledged in the policy document itself. This Tribunal finds and holds that the Interested Party was wrong to purport to cancel the policy on the strength of a notice of cancellation issued by a third party. To this end, the Tribunal hereby finds and holds that the insurance policy was not properly cancelled by the Interested Party for non-payment of premiums or for any other reason since no evidence of such cancellation was given to the Appellant, the Respondent and/or the Tribunal.
iii. Whether the Appellant is entitled to any of the reliefs sought in this Appeal
37. Having answered the two foregoing issues in favour of the Appellant, it would logically follow that this issue should also be answered in his favour. However, the Tribunal shall address itself to each of the reliefs sought by the Appellant before the Respondent and make its findings on the same. As already noted, the Appellant’s claim before the Respondent was for the following findings:
i. The Interested Party be compelled to pay at least 50% of the medical bill of his deceased wife;
ii. Leah Ngugi be reprimanded and be found liable for professional negligence;
iii. The Interested Party be compelled to refund premiums paid before the lapse of the policy;
iv. The Interested Party be ordered to return three unbanked cheques and compensate the Appellant for the loss suffered
38. It is not clear to us why the Appellant prays that the Interested Party be compelled to pay at least 50% of his deceased wife’s medical bill. Having found that there existed a valid medical insurance policy and the same was not properly cancelled, we hereby find and hold that the Interested Party was bound to pay the medical bill in its entirety. Evidence having been presented to the effect that the Appellant through his own effort did in fact pay the full bill, it follows that the Interested Party must make good that loss incurred by the Appellant in its entirety less the ex-gratia payment already made. During submissions, the Interested Party’s representative, Dr. Osoro, indicated that even if the interested Party were to settle the claim, it would not settle the entire medical bill incurred by the Appellant’s deceased wife since the illness fell under some unspecified sub-limits that it did not address to the Tribunal. The Tribunal has on its part, examined the medical policy document provided by the Interested Party in its list of Documents dated 23rd January, 2020 and filed herein on 24th January, 2020 and the Tribunal finds and holds that the medical bill is covered under inclusion No.8 with a limit of Ksh.10,000,000/=.
39. To this end the Tribunal notes that, the Interested Party had paid a sum of Kshs.250,000/= on what it terms ex-gratia basis. In Milton M Isanya v Aga Khan Hospital Kisumu  eKLR the court noted the following;
“By its definition ex gratia is a payment made out of the giver's own grace. The definition of ex gratia according the Blacks Law Dictionary is “As a favour; not legally necessary.”
The same position was also taken by the court in Benson Owenga Anjere v Kivati Nduto & another  eKLR where the court further noted that ex-gratia payment is defined as;
“Payment made by one who recognises no legal obligation to pay but who makes payment to avoid greater expense as in the case of a settlement by an insurance company to avoid costs of a suit. A payment without legal consideration.”
40. Clearly, ex-gratia payments are payments done without any legal obligation. However, this Tribunal observes that an Insurance Company cannot make an ex gratia payment to a total stranger. It follows that there must have been a relationship of some sort between the Appellant and the Interested Party for it to make a payment on whatever basis. The Tribunal finds that basis is the insurance policy in existence between the Appellant and the Interested Party.
41. The Tribunal having concluded that the Appellant had a valid policy with the Interested Party and that the policy was not properly cancelled, it follows that the Interested Party was and remains bound by the terms and conditions in the policy document. To this end the Tribunal is guided by the Court of Appeal’s decision in
Anne N Parmena v Housing Finance Compnany of Kenya Limited  eKLR where the court said;
“What inference should be drawn from these facts? We take cognizance that the borrower is deceased and the respondent is making the assertion that no life insurance policy was taken out after the death of the borrower; the dead tell no tales and the statements by the respondent could only be controverted by the deceased who can tell no tale. It was open to the respondent when the deceased borrower was alive to inform and advice him that no life insurance policy had been taken out – this, the respondent did not do; the respondent continued holding out that an insurance policy had been taken out till the letter dated 15th November 2001, when the respondent regretted to inform the appellant that the deceased borrower Dr. Parmena was not covered under its Group Mortgage Protection (Life) Assurance Scheme….Having made representations and held out that a life insurance cover was in place in relation to the deceased, we hold that the respondent is estopped from alleging that there was no life insurance cover for the deceased”.
42. The Tribunal therefore, finds and holds that the Interested Party having failed to issue a cancellation notice to the Appellant, or present evidence of such cancellation to the Appellant, the Interested Party continued holding out that a medical insurance policy was in place and it cannot be allowed to deny this position after the relevant medical bill had been incurred by the Appellant’s deceased wife. The Interested Party is therefore, estopped from denying the existence of the medical insurance policy. The Tribunal finds and holds that the Interested Party is liable to make good the loss incurred by the Appellant in settling the medical bill incurred by the Appellants deceased wife at the Aga Khan University Hospital in its entirety less the purported ex-gratia payment
43. The Appellant had made a prayer that Ms. Leah Ngugi be reprimanded for professional negligence. This Tribunal finds and holds that Ms. Leah Ngugi was an agent of the Interested Party. In law a principal is liable for acts and omissions of his agent. The Tribunal notes that no evidence was tendered to prove professional negligence as alleged. The Tribunal therefore, finds and holds that the Appellant is not entitled to this relief.
44. Similarly, the Tribunal having found that there was a medical insurance valid policy in place at the material time, the Appellant is not entitled to a refund of the premiums paid allegedly before the alleged cancellation of the policy. In any event there was no evidence tendered that the Interested Party refunded the premiums to the financier after the alleged cancellation in order for the Appellant to claim the same. Further, since a claim for refund of premium can only be made against the financier and the financier not being a party in these proceedings this relief cannot be granted. Furthermore, a refund of premium would only be attainable where the cancellation of the policy was proper which is not the case in this matter.
45. As regards the prayer for the return of the unbanked cheques and compensation for the loss suffered, the Tribunal finds and holds that the Appellant has been adequately compensated by the award in his first prayer and that the unbanked cheques if they exist are of no value at all. In any event, as already noted earlier, the financier retains a cause of action against the Appellant for any loss it may have incurred in premium financing if it so desires but this issue is not in our purview.
iv. Who should bear the costs of the Appeal:
46. The Tribunal notes that costs are at its discretion. In exercising this discretion, the Tribunal has considered two factors. Firstly, the Tribunal has noted that the Interested Party made a business decision to make some payment to relieve the Appellant of some financial burden in settling the bill. Secondly, the Tribunal notes that the Appellant has been largely successful in this Appeal. The Tribunal, therefore holds that each party bears its own costs of the Appeal.
In conclusion, the Tribunal hereby revokes the Respondent’s decision dated 1st August, 2019 and by the powers conferred upon the Tribunal under Section 173(1) and (2) of the Insurance Act, Cap 487, the Tribunal hereby makes the following orders:
1. The Interested Party shall pay the Appellant the entire sum of Kshs. 3,801,924/= being the medical bill incurred by the Appellant’s deceased wife Mrs. Zarina Amirali Mapara at The Aga Khan University Hospital as at 7th June, 2017 less the Kshs.250,000/= already paid.
2. Each party to bear its own costs of the Appeal
DATED and DELIVERED at NAIROBI on the 13th day of February 2020
Hon. Mr. Wambua Kilonzo
Chairperson, Insurance Appeals Tribunal
Hon. Mr. Martin Mugambi Mithega
Member, Insurance Appeals Tribunal
Hon. Mr. Thomas Koyier
Member, Insurance Appeals Tribunal
Hon. Ms. Monica Mucheke
Member, Insurance Appeals Tribunal
Hon. Mr. Charles Kipkulei
Member, Insurance Appeals Tribunal