1.The respondent filed Milimani SCCC No. E5918/2022 against the appellant in respect of motor vehicle registration no. KBR 296C which the appellant had insured vide insurance policy no. KTD/107/001103/2011.
2.The appellant repudiated the claim on the basis that the respondent did not pay excess of kshs.30,000.
3.The trial court found that there was no evidence that the letter demanding the excess dated 24/7/2015 was ever received by the respondent.
4.The trial court entered judgment in favour of the respondent against the respondent in the sum of ksh.205,868 plus costs and interest.
5.The appellant has appealed to this court on the following grounds;i.That the honourable learned magistrate erred in law by failing to consider the four-corner rule of construction of a contract as a result arrived at an incorrect conclusion by applying extrinsic/extraneous factors that had been expressly covered/provided for within the contract such as payment of excess by the respondent in the event of a peril.ii.That the honourable learned magistrate erred in law by failing to consider the four-corner rule of construction of a contract as a result arrived at an incorrect conclusion by apply extrinsic/extraneous factors that had been expressly covered/provided for within the contract such as the procedure for dispute resolution.iii.That the honourable learned magistrate erred in law by re-writing the contract between two consenting parties by shifting the burden of proof to the respondent against the weight of evidence.iv.That the honourable learned magistrate erred in law by failing to consider the fact that the dispute was statue barred for want of compliance with the limitation of actions act.v.That the honourable learned magistrate erred in law and fact by dismissing the respondent/appellant’s response by accepting the evidence of the plaintiff in the trial court and thereby arriving at a finding on the basis of documentary hearsay.
6.The parties filed written submissions as follows; the appellant submitted that it was an express provision of the insurance policy that a policy excess was conditional for the performance of the insurance policy and to hold out that the necessity to do so is the burden of the respondent makes for an extraneous interpretation of the contract whereas the parties to the contract have freely consented.
7.Further, that the policy excess guarantees performance and failure to pay the same makes the contract voidable at the instance of the insurance contract.
8.The appellant argued that once the matter was brought to the attention of the appellant through a demand letter by the third party’s counsel. The insurance wrote to the respondent to ensure that he complies with the condition to pay third party excess vide a letter dated 24/7/2015. Performance of the insurance contract to the effect that the insurance would instruct counsel to defend, counterclaim and/or set-off the Milimani Civil Suit 2202 of 2015 was dependent on the performance by the respondent as this was not an instance where a determination of who was liable had been established by court at the time of the receipt of the demand.
9.Thus, the argument made by the respondent that the fact that he failed to pay Kshs 10,000 as policy excess was not expressed to him and for the court then to shift that burden to the appellant who is an equal partner in this contract makes for an interpretation that exceeds the boundaries of what bound the parties. The plaintiff/respondent had the burden of proof to prove that upon due compliance with obligations necessary per policy the insurance the appellant failed and/or refused to honor their obligations.
10.On the forum of dispute, the appellant submitted that by neglecting to address the fundamental issue concerning the designated forum for dispute resolution, as explicitly enshrined within the parameters of the insurance policy, the court effectively disregarded a cornerstone of contractual obligations. The respondent's non-compliance with these prescribed avenues is not only a deviation from the contractual undertakings but also a departure from the broader legal principle of exhausting available remedies.
11.The appellant further argued that the magistrate's failure to appreciate and apply the statutory limitation period is a clear error in law.
12.Further, the statute of limitations is a fundamental legal principle designed to promote fairness and finality in legal proceedings.In this case, the magistrate's oversight in recognizing that the claim falls outside the prescribed six-year limitation period indicates a misapplication of this crucial legal doctrine.
13.The appellant submitted that the trial court, regrettably, fell short of ensuring that the claimant/respondent had adequately demonstrated compliance with all prerequisites outlined in the insurance policy. Consequently, it failed to effectuate the necessary shift in the burden of proof. Instead, the onus was erroneously placed on the appellant/respondent, necessitating them to establish that they had fulfilled all essential obligations to repudiate the claim, even when the claimant failed to substantiate such contentions.
14.The respondent on the contrary submitted that he was not handed any written insurance contract except for the standard (by virtue of S. 7 of Insurance (Motor Vehicles Third Party Risks) Act Cap 405) duplicate certificate of insurance in the form of a motor vehicle sticker. The appellant has however produced before the trial court documents which were termed as “policy documents” which include one titled “PSV Private Hire Policy Schedule” and another titled “Motor Commercial Insurance Policy”.
15.Further that none of the said documents was executed by the respondent and no evidence was presented at trial court to demonstrate that the two document were brought to the respondent’s attention.
16.The respondent on Excess argued that the requirement to pay excess was not disclosed to him when he took up the policy or when he reported the accident. He has never been privy to any contractual or policy terms that required him to pay up ‘excess’ before being represented in, or indemnified of a third party claim. There was no prior communication of the need to pay excess and the respondent testified at trial to the fact that if he had been made aware of the requirement to pay excess he would have done so.
17.On the forum of the dispute the respondent argued that the appellant failed to provide any contract ratified by both the appellant and the respondent requiring parties to explore first, alternative dispute resolution mechanisms before approaching court.
18.On the burden of proof it was the respondents contention that at trial that there was an active insurance policy cover between him and the Respondent and that the Appellant failed to represent him or indemnify him when a claim by a third party was made against him.
19.Further, that in evidence, the Respondent produced a police abstract, capturing details of the certificate of insurance. The appellant also admitted that there was an insurer-insured relationship between the parties and that it was bound to represent the Respondent in the resulting third-party claim, but failed to do so because the Respondent did not pay excess, which was a term on the policy.
20.The respondent on the statutory limitation argued that the Cause of action is the Appellant’s failure to Indemnify the Respondent in MCCC/2202/2015. It accrued when Respondent realized that Appellant was not going to indemnify him against the claim on 28/7/2022. No communication of the decision was made to the Respondent earlier, and the Appellant could have appointed counsel to represent the Respondent or indemnified him against the claim in MCCC/2202/2015 at any time from the date of the accident on 22/4/2012 to the conclusion of the case on 20/6/2022.
21.This being a first appeal, the duty of the first appellate court is to re evaluate the evidence adduced by the parties in the trial court and to arrive at its own conclusion whether to support the findings of the trial court while bearing in mind that the trial court had the opportunity to see the witnesses. In Selle –Vs- Associated Motor Boat Co.  EA 123 it was held in the following terms: -
22.The issues for determination in this case are as follows;i.Whether the respondent’s claim was statute time barred.ii.Whether the trial court was right in finding the appellant liable to indemnify the respondent.iii.Whether the appeal should be allowed.
23.On the issue as to whether the respondent’s claim is statute time barred, I find that the cause of action arose when the appellant declined to honour the claim and not when the accident occurred.
24.The accident occurred on 22/4/2012 when the respondents motor vehicle was involved in an accident with motor vehicle registration no. KAP 859K along Ngong road at Kenol.
25.The appellant’s letter dated 24/7/2015 was in respect of the excess. The appellant cannot turn back and say the claim was statute time barred.
26.On the issue as to whether the trial court was right in finding that the appellant was liable, the appellant submitted that the trial court re-wrote the contract between the parties and arrived at an incorrect conclusion by applying factors that were not covered in the contract.
27.I find that the appellants were entitled to the excess of ksh.30,000.
28.I accordingly direct that the same be deducted from the sum of ksh.205,868.
29.The appeal succeeds partially and for that reason each party to bear its own costs of this appeal.
30.The amount payable to the respondents is kshs.175,868 and not 205,868.
31.I set aside the judgment for kshs.205,868 and replace it with judgment in favour of the respondent against the appellant in the sum of kshs.175,868 plus costs in the original suit from the date of judgment.
32.Each party to bear its own costs of the appeal.