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Court of AppealPartially AllowedCivil Appeal 105 of 2003· [2006] KECA 350 (KLR)

Johnson M. Mburugu v Fidelity Shield Insurance Company Ltd

Court of Appeal of Kenya
26 May 2006
Philip Kiptoo TunoiP.K. TunoiEOE.O. O'KubasuJOJ.W. Onyango Otieno
8,916 words in judgment
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The bottom line

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Kenya's Court of Appeal ruled an insurer must pay the full insured value of a stolen truck, holding that whoever denies theft must prove it.

What this practically means

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Executive summary

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The appellant, a transporter, insured four trucks with the respondent through AON Minet brokers; the subject vehicle KAH 964L was covered for Ksh.4 million. On 1st July 2000 his driver reported the vehicle stolen after an armed robbery at Outer Ring Road; the theft was reported to Athi River and Buru Buru police stations the same day and to the brokers on 10th July 2000. The respondent declined liability, asserting no theft occurred and later that notice was not given 'as soon as possible' under condition 4 of the policy. Mbaluto J dismissed the suit, finding theft unproved and notice non-compliant, and indicated he would have awarded only Ksh.1.4 million. The Court of Appeal, as a first appeal, re-analysed the evidence afresh. It held the respondent, having positively pleaded that no theft occurred, assumed the onus of proving that assertion and could not rely on mere suspicion; the alleged inconsistencies in the driver's evidence were peripheral. The trial judge also erred in relying on the derelict condition of other vehicles - extraneous matters - and on an assessor who never saw the vehicle. Notice nine days later was 'as soon as possible' in the circumstances, particularly as the policy issued after the incident and the insurer accepted the report and issued a claim form. The claim for loss of earnings of Ksh.20,000/= per day was rightly dismissed as excluded consequential loss and unproved special damages. The delay of eleven and a half months in delivering judgment did not vitiate it, following Nyagwoka Ogora. The appeal was allowed: Ksh.3,900,000/= (insured value less maximum excess) with interest at court rates from filing, and two-thirds of the appeal costs to the appellant.

Key legal issues

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01

Proof of theft on a balance of probability

Holding

The appellant proved the theft on a balance of probability; the trial judge erred in rejecting his evidence and in releasing the respondent from its own positive assertion that no theft occurred.

Reasoning

The respondent pleaded positively that there was no theft, thereby assuming the onus of disproving it. It adduced no positive evidence - no police contradiction, no investigator's report that the vehicle was not stolen. The alleged inconsistencies in the driver's evidence were peripheral and did not go to the root of the theft issue. Police reports made the same day remained uncontradicted.

p. 9
02

Compliance with condition 4 - notice 'as soon as possible'

Holding

Notice of theft given nine days after the incident was given 'as soon as possible' in the circumstances; the insurer's conduct in accepting the report and issuing a claim form contradicted its later repudiation on this ground.

Reasoning

The theft occurred on a Saturday; the insurer's letter declining liability two months after the report raised only lack of proof of theft, never late notice. The policy containing condition 4 was issued months after the incident, so the insured could not have read it beforehand. The insurer accepted the report and supplied a claim form, treating the notice as adequate.

p. 11
03

Consequential loss / loss of earnings

Holding

The claim for Ksh.20,000/= per day loss of earnings was rightly dismissed as it was excluded by the policy and unproved as special damages.

Reasoning

Clause 4 of the policy expressly excluded consequential loss. Treating the claim as damages for the insurer's refusal to pay would punish it for exercising its legal rights. As special damages it required strict proof, and no evidence was tendered to prove it.

p. 5
04

Quantum - value of the insured vehicle

Holding

The appellant was awarded the full insured value of Ksh.4 million less the maximum excess of Ksh.100,000/=, i.e. Ksh.3,900,000/=, upholding the parties' agreement rather than the assessor's valuation of Ksh.1.4 million.

Reasoning

The trial judge's reliance on Gaya's valuation was a misdirection: Gaya never saw the vehicle and relied partly on documents from parties who did not testify. The vehicle was insured at Ksh.4 million with an agreed premium, and Matheka had valued it at Ksh.4.2 million six months before the loss. Agreements between parties should be upheld.

p. 12
05

Effect of delay in delivering judgment

Holding

The eleven and a half months' delay in delivering judgment did not vitiate the judgment; Order XX rule 1 prescribes no consequence for non-compliance.

Reasoning

Following Nyagwoka Ogora v Francis Osoro Maiko, voiding judgments delivered after 42 days would cause more injustice than justice and deprive trial judges of jurisdiction to write and pronounce judgments in cases they have heard. The delay warranted censure but not nullification, though here the delay may have affected the judge's grasp of the evidence.

p. 13

Legal principles established

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  • A party who positively asserts that an event did not occur bears the onus of proving that assertion and cannot rely merely on raising suspicion about the other party's case.
  • In civil cases, he who makes an allegation must prove it on a balance of probability, per section 3(2) of the Evidence Act.
  • A court may not decide the condition of one vehicle by considering extraneous matters, namely the condition of other vehicles not in issue.
  • Non-compliance with Order XX rule 1 (judgment within 42 days) does not vitiate a duly delivered judgment, though it may warrant censure of the judicial officer.
  • Special damages must be both pleaded and strictly proved.
  • An insurer who accepts a late claim report and processes the claim form cannot later repudiate on the ground of late notice; the insured's agreement value is upheld less the contractual excess.

Court orders

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  1. 1.The appeal is allowed save for the claim for loss of earnings at the rate of Ksh.20,000/= per day which was rightly dismissed
  2. 2.The appellant is awarded Ksh.3,900,000/= being the sum insured less the excess payment of Ksh.100,000/=
  3. 3.The sum awarded will attract interest at the court rate from the date the suit was filed in court till payment in full
  4. 4.The appellant is awarded 2/3 (two thirds) of the costs of the appeal

Authorities

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Legislation

  • Evidence Act (Cap 80 Laws of Kenya)section 3(2)
  • Civil Procedure RulesOrder XX rule 1

Cases cited (1)

  • Nyagwoka Ogora alias Kennedy Kemoni Bwogora vs. Francis Osoro Maiko – Civil Appeal No. 271 of 2000
    unreported

    Non-compliance with Order XX rule 1 (judgment within 42 days) does not vitiate a duly delivered judgment.

On appeal from
High Court of Kenya at Milimani Commercial Courts
H.C.C.C No. 2013 of 2000
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (Civil Appeal 105 of 2003)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (10)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Johnson M. Mburugu v Fidelity Shield Insurance Company Ltd", Case Analysis (2006). Civil Appeal 105 of 2003. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2006/350/eng@2006-05-26

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.