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ELCDismissedMombasa High Court Miscellaneous Application (Environment and Land Court)· [2020] KEELC 2296 (KLR)

County Government of Kwale v United Insurance Company (Under Statutory Management) & another [2020] KEELC 2296 (KLR)

Environment and Land Court
13 May 2020
2,760 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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The defendants, United Insurance Company Limited (an insurance company under statutory management) and the Policyholders Compensation Fund (its statutory manager), moved the court by notice of motion dated 25 November 2019 seeking consolidation of the plaintiff's suit with Mombasa High Court Miscellaneous Application No. 262 of 2017, setting aside or vacating the leave granted on 2 May 2018 to the plaintiff to sue, a stay of the proceedings during the pendency of a moratorium declared over the 1st defendant, and in the alternative striking out of the suit. The plaintiff, the County Government of Kwale, claims ownership of Plot No. 33 (Kwale/Diani Complex) as public land and alleges the 1st defendant irregularly created Plots Nos. 724 and 725 from it, seeking revocation of those titles and a permanent injunction. The defendants argued that the leave was improperly granted because a moratorium suspended litigation against the company. The court held that the miscellaneous application was finalized and nothing could be consolidated; that it lacked jurisdiction to set aside the spent leave orders, the remedy being appeal or review; and that, on its proper construction, the moratorium only covers payment of insurance claims and settlement of accounts, not litigation for recovery of land allegedly fraudulently taken, which may proceed without prejudice to the defendants, who suffer no prejudice compensable only by costs. The application was dismissed with costs to the plaintiff on 13 May 2020.

Key legal issues

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01

Scope of a moratorium over a company in statutory management

Holding

The moratorium only covers payment of insurance claims and settlement of debts and accounts; it does not bar suits for recovery of land allegedly fraudulently acquired.

Reasoning

The court reasoned contextually: the 1st defendant is an insurance company whose moratorium was meant to stop payment of matured insurance claims pending revival or winding up. Extending the moratorium to all litigation would make the company above the law, contrary to public policy. Recovery of land claimed to be public land is unrelated to insurance claims, so such litigation may continue, and the statutory manager suffers no prejudice compensable by costs.

p. 3
02

Jurisdiction to set aside leave orders granted in a finalized miscellaneous application

Holding

The court has no jurisdiction to set aside or vacate the leave orders; the leave was spent once the suit was filed, and the remedy was appeal or review.

Reasoning

The leave orders of 2 May 2018 merely permitted the plaintiff to sue a company under statutory management. Once the suit was filed, the orders were spent. The miscellaneous application was finalized and there was nothing to consolidate. The application was, in substance, an attempt to appeal the leave orders, which this court cannot do; the proper avenues were appeal or review.

p. 3

Legal principles established

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  • A moratorium over an insurance company under statutory management only stops insurance claims and settlement of accounts, and does not bar litigation for recovery of land claimed not to be a company asset.
  • Extending a moratorium to all litigation would place the company above the law and offend public policy.
  • A court cannot sit on appeal over its own leave orders; the remedy of an aggrieved party is appeal or review.

Court orders

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  1. 1.Prayer for consolidation of this suit with Mombasa HCCC Miscellaneous Application No. 262 of 2017 declined
  2. 2.Prayers to set aside and to vacate the orders of 2 May 2018 granting leave to commence suit declined for want of jurisdiction
  3. 3.Prayer for stay of the proceedings during the pendency of the moratorium declined
  4. 4.Prayer for striking out of the proceedings declined
  5. 5.The defendants' application dated 25 November 2019 dismissed with costs to the plaintiff

Authorities

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Legislation

  • Civil Procedure Act, Cap 21, Laws of KenyaSection 1A
  • Civil Procedure Act, Cap 21, Laws of KenyaSection 3A
  • Civil Procedure RulesOrder 40 Rule 7
  • Civil Procedure RulesOrder 11 Rule 3(1)(h)
  • Civil Procedure RulesOrder 51 Rules 1 and 3
  • Insurance ActSection 179
  • Insurance ActSection 67(e)
Jurisdiction invoked
Environment and Land Court jurisdiction over land disputes; application premised on Order 40 Rule 7, Order 11 Rule 3(1)(h), Order 51 Rules 1 and 3, Sections 1A and 3A of the Civil Procedure Act, Cap 21

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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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, "County Government of Kwale v United Insurance Company (Under Statutory Management) & another [2020] KEELC 2296 (KLR)", Case Analysis (2020). Mombasa High Court Miscellaneous Application (Environment and Land Court). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/2296/eng@2020-05-13

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