1.The appeal is to is from the decision of Hon. F Kyambia, CM on 6/7/2018where he found the Appellant liable for breach of contract and awarded special damages of Ksh 111,638/= and general damages for Ksh. 1,000,000/= a Declaration that the Appellant was to pay. Ksh 30,000/= to Richard A Shoshi.
Background to the case.
2.The suit was filed after the Appellant declined pay for medical expenses incurred by the Respondent in treatment at Pandya hospital. The Respondent had medical insurance, where the Appellant had undertaken, subject to payment of premiums, to meet medical expenses up to certain limits.
3.The limit is not in issue in this matter. However, the exclusion clauses were in issue since the Appellant declined to pay in view of the preliminary diagnosis on the nature of ailment the Respondent was being treated. A doctor diagnosed the Respondent with pancreatitis - possible alcoholic. As a result, the Appellant declined to pay the hospital bill incurred. The Appellant was informed on the 2nd day, that is 24/5/2014.
4.This resulted in the hospital prematurely discharging the Respondent on 26/5/2014. Upon discharge the Respondent was reportedly held from 9.00 am to 6pm of the same day. It forced the Respondent’s employer to pay the Hospital bill.
5.The Respondent was released upon the bill being paid. Thereafter the Respondent had to write an agreement on refund of the money paid by the employer. The Respondent allegedly got embarrassed and suffered traumatic experience of being detained for hours to pay the debt. All these trails were blamed on the Appellant resulting in the impugned judgment.
6.The Appellant was aggrieved and appealed both on liability and quantum. The appeal has been pending till 25/6/2022, when a moratorium was declared against the Appellant. The Appellant filed in court a letter from the Managing Trustee, the policyholders’ compensation fund, declaring a moratorium in exercise of Section 67(2) 10 of the Insurance Act for a period of 12 months from 14/6/2022.
7.The moratorium was as a sanctioned vide an order in Nairobi Milimani HCC No. E168 of 2022 issued by the high court. The order stayed all proceedings against the Appellant herein. However, the order did not stay proceedings by Resolution Health ltd. This is for a good reason. The company ought to recover money from its debtors in order to regain liquidity, if poor debt management was the Course of its woes. This appeal is filed by Resolution Health hence not subject to the moratorium.
8.On the date fixed for direction on hearing of the Appeal, only the Respondent attended court. On the request by the Respondent., I gave them a date for Judgment today since all parties had filed submissions as earlier directed. The dates for direction had been fixed on 26/10/22 by Hon. Lady Justice Njoki Mwangi.
9.I gave direction on 20/2/2023. I note that there was a note by the Deputy Registrar that all matters against the Appellant had been stayed. That is true. However, this appeal is not against the Appellant but by the Appellant. When reading the court orders that are restricting rights, they should be strictly construed so that whatever is not included is specifically excluded. Expressio unius est exclusio alterius. Only Cases against the Resolution Health are excluded.
10.In the case of Oduor & 3 others v Magistrates and Judges Vetting Board & another (Civil Appeal 457, 458, 466, & 475 (Consolidated) of 2018)  KECA 92 (KLR) (22 October 2021) (Judgment) (with dissent - HM Okwengu, JA) held as doth regarding the canon: -
11.When an order, a law or some other enactment lists things, it is deemed that those not listed are excluded. In Mary Wanjuhi Muigai v Attorney General & another  eKLR Hon Lady justice Mumbi Ngugi J (as then she was stated as follows: -
12.This rule of interpretation helps to be able to find a common sense way of looking at things. It gives guidance on what to include or exclude. in Mike Muli v Justus Mwandikwa Kilonzo & 4 others  eKLR, the court observed: -
13.The conclusion I get is that the Appeal is properly proceeding in this court. The Respondent may however not execute any judgment that may result in view of the moratorium.
The duty of the Appellate court
14.The duty of the 1st Appellate Court is truly settled. Justice Law JA as then he was, in the locus Classicus case of Selle and another Vs Associated Motor Board Company and Others  EA 123, stated as follows: -
15.This means that the court will take cognizance to the observations of the lower court in relation to the witnesses and bear in mind that it has not heard nor seen the witnesses. This does not however apply where the trial is concluded by affidavits evidence only. This is because the court is at the same position as the court of Appeal in interpreting the affidavits, as they are documents.
16.The rationale for the position above is that trials by way of tendering witness evidence, it is the trial court that has observed the demeanor and truthfulness of the witnesses and gotten nuances that hardly come out in the appellate court. The appellate could ends with only proceedings without those nuances. It does not however, mean that the court cannot get nuances of its own. It only warns itself that they have no seen nor heard the witnesses.
17.In Barnabas Biwott v Thomas Kipkorir Bundotich  eKLR, Hon Lady justice OLGA Sewe had this to say on the duty of the fist appellate court.
18.Several other decision address the issiue of the duty of the first appellate court. In Kenya Ports Authority vs. Kuston (Kenya) Limited  2 EA 212 where the Court of Appeal held that:-
19.On the other hand, documents will speak for themselves. The observation of documents is the same as the lower court. Parties cannot read into those documents matters extrinsic to them. This is in line with the Court of Appeal (Ouko as then he was), Kiage and Murgor JJA) who stated in Fidelity & Commercial Bank Ltd V Kenya Grange Vehicle Industries Ltd (2017) eKLR as doth;-
20.I summarize the duty of the court in analyzing evidence as follows: -a.Where there is evidence tendered, the court will not differ with the court below unless it is not flowing from the generality of the evidence on record.b.The demeanor of witnesses is a province of the court that heard and saw the witnesses.c.The court will evaluate the totality of evidence and come into its independent conclusion bearing in mind it neither saw nor heard the witnesses.d.Even where further evidence is adduced at the Appeal level, it should not be given undue weigh from evidence already on record.e.It is only as regarding written documents that the court has same power as the lower court in interpreting the said documents. The cannons of interpretation, common sense, four corners of the documents and evidence act are used to interpret.
Background of the appeal.
21.The Respondent was the Appellant’s customer since 2007. He was entitled to certain kind of medical benefits upon payment of premiums. The Respondent was admitted in General male ward. He went through various Doctors, ending with Dr. Rishad Ali Shoshi, who wanted a CT scan done. The results did not come till the following day when the Respondent was diagnosed with pancreatitis.
22.The dispute in this matter revolves around the cause of the ailment. The medical evidence on record is to the effect that the said condition can be caused by many things, that is, gallstones, alcoholism, certain medication, infection, injury, trauma pancreatic cancer among other causes,
23.On 24/5/2014, the Appellant’s representative informed the Respondent that the Appellant had declined liability to settle his medical bill as the diagnosis was alcohol related. The diagnosis was a surmise by Dr. Rishad Ali Shoshi who did not justify the same.
24.The good doctor did not find it necessary nor prudent, for reasons only known to him, to carry other tests to confirm the preliminary observation or other causes. The Respondent was livid that had this been alcohol related, withdrawal symptoms could have been seen while in hospital.
25.On 26/5/2014, the Respondent was prematurely discharged by the hospital since the hospital reportedly indicated that he could not afford and the bill was escalating. He was detained by the hospital till 6 pm of the same day, when the Respondent’s employer settled the bill.
26.As it usually happens in these cases, there was no dispute on premiums or terms of the contract of insurance. They had a standard insurance with terms and exclusions. The Respondent is under the duty to act in utmost good faith. The duty to act in uberrime fidei is a duty placed on the insured to disclose to the insurer factors that a party ought to know about himself.
27.It is real irrelevant that the Insured had no actual knowledge. Absolute honesty in all matters, whether material or not, is called for. However, this duty works in commonsensical way. You cannot disclose that which you have not been asked to disclose. It is the Appellant who have special knowledge on what needs to be disclosed. There should also be an opportunity to disclose.
28.The Respondent testified that he had sudden attack of abdominal pain and decided to seek treatment at Pandya Memorial Hospital. The pain was said to be excruciating. The Appellant approved investigations on the cause of pain. This was sought by Dr. Kaburu Shilla, after admission on 23/5/2014.
29.He narrated the story as above stated. He was of the view that he needed to be shown the report by Dr. Rishad Ali Shoshi and to be able to answer any questions. He was never given a chance to do so till when the matter came to court.
30.The Respondents called a doctor who ruled out alcoholism as the cause and gave evidence supported by medical reasoning. It is therefore an issue between two medical experts. I was argued to rely on the more senior of the two. I decline the invitation. I am of the view that seniority in practice of medicine has nothing to do with the exercise.
31.I will turn the words of the Court of Appeal regarding the judges on their head and apply the same to doctors. In the locus classicus case of Butt v Rent Restriction Tribunal  eKLR, The Court of Appeal, (Madan, Miller and Potter JJA), when faced with a situation similar to the one this one stated as doth: -
32.The two doctors have both taken Hippocratic Oath and as such I cannot dismiss one over the other simply because of their level of expertise. I will not prefer one over the other. I will use the law to arrive at the proper finding.
33.The case will therefore turn on the doctrine of Uberrime fidei. The duty to act in utmost good faith is the key to settle the evidentially imbroglio brought about by the two doctors, each of whom is hired by the other party. Whereas it is true that whoever pays the piper, calls for the tune, I am of he considered view that most doctors could rise about partisanship and be the students of the truth. Therefore, it is not expected that this court will simply believe one doctor over another. This court’s duty is to find out if the burden of proof placed on the parties was discharged.
34.The Evidence Act gives guidance in this matters. Sections 107, 108 and 109 of the evidence Act are germane. The sections provide as doth:
35.In this case, the initial burden lay with the Respondent to proof that he had a contract of insurance and also to proof that the same was breached and as a result he suffered damage. Both parties agree that there was a contract of insurance, the Appellant was informed of the occurrence of the insured event, that is falling sick of the Respondent.
36.It is also agreed that the Respondent paid Ksh. 111,638/= as treatment charges for the insurable event. To that extent the Respondent discharged, effectively his burden of proof. Without anything to the contrary, a court will have to find the Appellant liable.
37.The next question regards the assertion by the Appellant that it was not bound to pay since the insurable event occurred or resulted from the Respondent’s alcoholism. The burden of proof is on the Appellant, under Section 108 of the Evidence Act to proof those particular facts, that is: -a.The Respondent was an alcoholicb.The insurable event resulted from alcoholismc.The Respondent did not disclose the alcoholismd.The Appellant is entitled to avoid the policy due to Alcoholism.
38.Under section 112, of the Evidence Act to the burden of proving or disproving special knowledge is on the person with such knowledge. The section provides: -
39.Whether or not the Respondent is an alcoholic, is a fact within his knowledge. This means he is the best placed person to answer the question of alcoholism. However, in this case, the Respondent was not asked about alcoholism, he was not tested for alcoholism. He was not treated for alcoholism or even given a report on alcoholism.
40.Even in the garden of Eden, the Almighty, who was all knowing did not condemn the parties unheard. He heard even the snake. This right to be heard permeates all and sundry. It does not apply only in serious government multibillion tenders but even in a classroom situation. Before noise makers are punished, they are heard. It is ingrained in our common law. It is common sense.
41.In Republic v Public Procurement Complaints Review & Appeals Board Ex Parte Invesco Assurance Co. Ltd  eKLR, Justice George Vincent Odunga, as then he was, quoted in extension a statemen Msagha vs. Chief Justice & 7 Others Nairobi HCMCA No. 1062 of 2004  2 KLR 553 the High Court expressed itself as follows: -
42.The duty to act fairly is even ingrained in the doctrine of Uberrime fidei. It is a doctrine that allows insurance companies to be informed of facts that could unduly affect their liability. Insurance related to an occurrence of an uncertain event. If an event is certain, the insurance ends up being condemned to pay for an event that was to occur, anyway.
43.In British American Insurance Co. Limited & another v Isaac Njenga Ngugi  eKLR, Hon Justice Richard Mwongo, was of the view that: -
44.The burden of proof is on the person alleging it is entitled to decline or repudiate a policy. In this case the burden of proof was on the Appellant to show that it is entitled to repudiate the policy. In British American Insurance Co. Limited & another v Isaac Njenga Ngugi  eKLR, (supra), the court stated as doth: -
45.In BMK v AIG Kenya Insurance Ltd  eKLR , the court, lady Justice Maureen A. Odero had these to say: -
46.It follows that for the alcoholism to be used as a reason for not paying, the Respondent ought to have been asked about it and the answer be from the proposal form or answered it correctly, up to a certain point. Thereafter, he needed to disclose if there were changes in circumstances. From the evidence, the preliminary prognosis of ‘possible alcoholism’ was never tested. It remains a mere possibility.
47.My understanding is that a case of possible alcoholism is not the same as secondary to alcoholism. The Respondent was never given an opportunity first to be tested on alcoholism and, secondly to answer the question of alcoholism.
48.That is why, even why a person is caught in flagrante delicto, he is still given a chance to deny or accept. It the foundation of our constitutional order. I am firmly of the view that no one is so useless that it can be concluded in his favour that he does not need to be heard. To that extent it is doubtful that the aspect of alcoholism was proven.
49.All circumstances considered, I am of the opinion that the court below was right in finding the Appellant liable. Consequently, I hold and find that the Appellant had no reason to decline to settle the hospital and doctor’s expenses. The Appeal on liability is consequently dismissed for being bereft of merit.
50.As regards to damages, there are two aspects. These are: -a.Special damages of Ksh. 111,638/=b.General damages of 1,000,000/=
51.The Respondent pleaded special damages of Ksh. 111,638/=. These were supported by requisite evidence being invoices, receipts cheques and the undertaking to settle the employer’s dues.
52.The issue of special damages was settled in the case of David Bagine Vs Martin Bundi  eKLR, where the court of Appeal, Gicheru, Shah & Pall, JJ.A) held as doth: -Plaintiffs must understand that if they bring actions for damages it is for them to prove damage, it is not enough to write down the particulars and, so to speak, throw them at the head of the court, saying, 'this is what I have lost, I ask you to give me these damages.' They have to prove it"
53.Looking at the documents produced by the Respondent and admitted by the Appellant, the special damages were proved. The Respondent went for an overkill, producing every possible document. Special damages were thus well proved. The Appeal on special damages is thus unmeritorious and is consequently dismissed.
54.The sums payable to Dr Richard A Shoshi are attributable to the Appellant. The Respondent, even where, I was to find that that the Appellant is not liable to settle the claim, still the Appellant was liable to pay their own doctor. He was in their instructions to investigate the claim. There is no basis for the Appellant not to pay. The court below was thus perfectly in order in so declaring. Therefore an appeal on that claim is dismissed as it is bereft of merit.
55.The court awarded general damages for the breach of contract as seen from the events up to and including the time of discharge and release from hospital.
56.My understanding is that damages must flow from a certain breach which causes injury. Where there are damages caused but here is no legal liability, a party is not bound to settle the same.
57.This court as an appellate court has a specific duty as regards damages. By their very nature, general damages are discretionary. Setting the same aside, this court must as corollary meet standards for setting aside discretion. Discretion must be judicious and not capricious.
58.The Court of Appeal in Catholic Diocese of Kisumu vs. Sophia Achieng Tete Civil Appeal No. 284 of 2001  2 KLR 55 set out the circumstances under which an appellate court can interfere with an award of damages in the following terms:
59.The principle to take into consideration should thus flow from the nature of the injury or wrong and the kind of damages suffered. In the ordinary course of things, breach of contract attracts special damages. On the other hand, a tortious liability attracts general damages.
60.An example will be if one pays Ksh 100 as fare from Omokonge village to Ekerema, but the Matatu travels for one km and asks the passengers to alight, he should be able to take them back to the bus stage and refund fare together with any increase of fare, to enable parties to travel to the original destination.
61.In case fare increases to 120, the passengers should be able to claim that amount. They cannot claim for lost opportunity time and a date missed or a feast missed or expenses for a meal you missed in the wedding you were going.
62.On the other hand, if he we board and on reaching Kabeo and the vehicle is involved in have a road traffic accident, passengers are not t get a refund. Each of the injured passengers will be paid to the extent of the injuries and amounts used in treatment.
63.Those with slight injuries will get lesser than those with more serious injuries. however, in either case, if we meet peaceful demonstrators and they peacefully cause us injuries, the owner is not liable. The village names can be substituted for better understanding.)
64.That was the position in Woodruff vs. Dupont  EA 404 where it was held by the East African Court of Appeal that:
65.In Mbogo & Another v Shah  EA 93, the Court, (Sir Newbold, P.) stated at page 96:
66.This court, being the first appellate court, stands in the same position as the court of appeal in relation to subordinate court. I cannot interfere with the award of damages if the same are not arbitrary and actually arise from the conduct of the Appellant.
67.In Kemfro Africa Ltd t/a “Meru Express Services (1976)” & Another v Lubia and Another (No.2)  eKLR, the court restated the above test on the issue of damages as follows: -
68.In this matter, we are faced with a claim for general damages arising from breach of contract. These damages, not only cover the breach by refusal to settle the hospital bill but the harassment and retention up to 6pm on 26/4/2015 when the bill was paid. As a result of the said traumatic events the Respondent was granted a calmly amount of damages amounting to Ksh 1,000,000=.
69.Sitting in this air-conditioned court chambers I may not know much. However, walking down to Nkurumah road, to a maskan where wananchi while away time discussing everything under the sun, is there a soul who can truly associate the events of 26/5/2014 to the events of 4pm on 24/5/2014, knowing everything and of average intelligence? I don’t think so.
70.What kept the Respondent in hospital is an ailment he contracted. The Appellant’s duty was to indemnify the Respondent for the hospital bill up to a maximum of Ksh. 2,500,000/=. Has the bill been over that amount, the Appellant was only bound to pay only the contractual amount. The amount to be paid were known.
71.Further, the Appellant did not participate in keeping the Respondent in hospital or after he was discharged. The hospital allegedly made a decision to discharge since the bill was not paid. No evidence of this was tendered. In any case any premature discharge and retention at the hospital is a matter purely between the hospital and the Respondent.
72.Assuming for argument purpose the hospital kept the Respondent falsely imprisoned over an unpaid bill on 26/45/2014, where does the Appellant come into the picture. The hospital is not an agent of the Appellant. The Appellant terminated engagements 2 days earlier. If the respondent thought that he could not pay the bill, that was also the point to disengage. He remained in hospital for two days, knowing the insurance is not paying and not arranging how to pay. If the Hospital was wrong in discharging him, it is the hospital that should answer for such.
73.False imprisonment was a tort, allegedly carried out by the hospital. The hospital is not party. Retaining someone against their will is illegal. A party cannot be held liable for a crime or illegality allegedly committed by another person. The embarrassment, anxiety and distress allegedly suffered are too remote. They do not arise from the contract of insurance but from actions of the hospital and Respondent. The only damage due are those pleaded as special damages. There were no damages at large.
74.In Kenya Women Microfinance Ltd v Martha Wangari Kamau  eKLR, the court stated: -
75.The reason general damages are not paid for breach of contract is because the amounts are known in advance. They are not at large. The risk assumed is known and there can be no injury outside he contractual terms.
76.There is an aspect the court overlooked and as a result fell into deep error. As the Respondent testified, the Agent of the Appellant gave him the information, rudely at 4pm on 24/5/2014. She refused to engage further saying it is not her business. The agent may have been discourteous but that is a moral and business issue, in terms of liability, that rude end marked the end of the engagement.
77.No liability will arise from actions of other people. There may be damage or injury suffered but it occurred independent of the Appellant. It is understood that when breach of contract occurs, it is annoying and emotional, especially, when personal safely and treatment is concerned. Parties tend to be bitter and seek revenge. Unfortunately, that is the nature of the law of contract. It is impersonal. It does not appeal to common decency or sense of care. It deals with the res, the thing.
78.The above decisions affirm the position that what is suffered or is believed to have been suffered, the damage that is to be compensated by way of damages, can only be known by the party and it is claimed in specific terms which has to be proved.
79.In BMK v AIG Kenya Insurance Ltd (supra) the court stated as doth–
80.In Prof. James Ole Kiyapi, Permanent Secretary, Ministry of Medical Services & Attorney General v DOL International Ltd & Kenya Anti-Corruption Commission (2016) eKLR, the court of Appeal, (Visram, G. B. M. Kariuki & J. Mohammed, JJ.A), (had this to say: -
81.Justice Majanja J in Barclays Bank of Kenya Limited v Mema (Civil Appeal E011 of 2021)  KEHC 333 (KLR) (Commercial and Tax) (3 December 2021) (Judgment) stated as follows regarding damages: -
82.Where special damages are not incurred, the only damages that ought paid are nominal damages. In the case of Peter Umbuku Muyaka v Henry Sitati Mmbasu  eKLR, Justice J Njagi stated as doth: -29.A claimant for general damages for breach of contract who does not prove that he suffered loss is all the same entitled to damages, though nominal. In the Anson’s Law of Contract, 28th Edition at pg 589 and 590 the law is stated to be that:-
83.In this case, special damages have already been awarded. This then takes care of damages. No general damages can issue.
84.Flowing from the above principles of law, the Respondent was not entitled to damages for breach of contractual obligations, having raised a specific claim for special damages. The trial court applied wrong principles, and misapprehended the evidence, thus fell into error in awarding general damages of Ksh 1,000,000/= to the Respondent. This award must be set aside in entirety.
85.The Appellant was the insurer of the Respondent. Had they been keen on completing necessary forms and paying a due claim this case could have been totally unnecessary. They did not act in their best interest. Though they are partly successful, their conduct does not please a court of equity. They will be disentitled to cost.
86.In case of Prof. James Ole Kiyapi, Permanent Secretary, Ministry of Medical Services & Attorney General v DOL International Ltd & Kenya Anti-Corruption Commission, the court of Appeal, (VISRAM, G. B. M. KARIUKI & J. MOHAMMED, JJ.A) , (Supra), the court of appeal stated as doth regarding costs: -
87.The end result is that the appeal partly succeeds.
DELIVERED, DATED AND SIGNED AT MOMBASA ON THIS 20TH DAY OF MARCH, 2023. JUDGMENT DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORM.HON. MR. JUSTICE DENNIS KIZITO MAGAREJUDGE OF THE HIGH COURT, MOMBASAIn the presence of:No appearance for the AppellantNo Appearance for the RespondentCourt Assistant – Firdaus Ndalu
88.I therefore make the following determination: -a.The appeal on liability is totally unmeritorious and is thus dismissed.b.The Appeal against special damages fails and is accordingly dismissedc.The award of Ksh 1,000,000/= general damages was made in error. The award of general damages is therefore set aside in its entirety and in lieu therefore, an order is issued dismissing the entire claim for general damages.d.Given the circumstance of the case, judgment is entitled for the special damages of Ksh 111., 638/= as awarded by the court below together with costs on the lower court based on the claim for special damages. The same to attract interest from the date of filing in the lower court.e.The appeal against the declaration that the Appellant I bound to pay DR Richard A Shoshi’s medical expenses is dismissed.f.Each party to bear their costs in the lower court.g.Given that there is a moratorium on the Appellant, execution in the lower court do await the termination of the moratorium.h.This file is closed.