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High CourtStruck Out

Re: Corporate Insurance Company Limited (Petition of Captain Bulhan)

High Court of Kenya
15 July 1994
461 words in judgment
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The bottom line

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Kenya's High Court struck out a winding-up petition used to pressure an insurer over a disputed claim, confirming that disputed insurance debts belong in civil courts.

What this practically means

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Executive summary

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Captain Bulhan presented a winding-up petition on 27th April 1994 against Corporate Insurance Company Limited, an authorized insurer under Cap 405, founded on an alleged insurance claim arising from the robbery of his Mercedes Benz 200E (registration KAC 303F) valued at KShs 2,000,000 on 6th October 1993. The company, through its Chief Executive Wainaina Kigethi Mungai, sought orders restraining advertisement of the petition, contending it would suffer irreparable harm and that the claim was disputed: it had been investigated and liability repudiated. Shah J held that a company court does not wish to be used as a debt collection court and is not the forum for determining the validity of a disputed claim, that being the province of civil courts. Applying Re: A Company (1894), the court accepted that an injunction will issue where a petition is presented to put pressure on a company. The court further found, relying on Kenindia Assurance v Muturi, that the petitioner had not exhausted the remedies under condition 10 of the insurance policy (the 'all differences clause'), so no cause of action had arisen and the petition was an abuse of process. The petition was struck out with costs; the injunction application was not determined as it was rendered unnecessary.

Key legal issues

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01

Jurisdiction of the company court to restrain advertisement of a winding-up petition

Holding

The company court has jurisdiction to stop advertisement in appropriate cases, particularly where the petition is presented to put pressure on the company.

Reasoning

The court observed that a company court does not like to be used as a debt collection court, but where the debt is undisputed and unpaid, winding up may follow. Where a petition is presented to pressure the company over a disputed claim, an injunction restraining advertisement follows as trite law, per Re: A Company (1894).

p. 2
02

Effect of a disputed insurance claim on a winding-up petition

Holding

The petitioner's insurance claim was disputed; liability had been repudiated and the claim investigated, so the validity of the claim could not be decided in the company court.

Reasoning

Letters from the company's Chief Executive showed the claim was investigated and liability repudiated. Counsel argued documents transferred title to the insurer, but the court found a dispute existed which only civil courts could resolve, not a winding-up forum.

p. 2
03

Failure to exhaust contractual remedies

Holding

The petitioner had not utilized remedies under condition 10 of the insurance policy (the 'all differences clause'), so no cause of action had arisen and the petition was an abuse of process.

Reasoning

Relying on Kenindia Assurance Company Limited vs Patrick Muturi, the court held that where the policy contains an all-differences (arbitration) clause and the petitioner has not invoked it, no cause of action is ripe for court determination, rendering the petition an abuse of process warranting striking out.

p. 2

Legal principles established

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  • A company court will grant an injunction restraining advertisement of a petition presented to put pressure on a company
  • A company court is not the forum for deciding the validity of a disputed debt; that is for the civil courts
  • Failure to exhaust contractual remedies (the arbitration/all differences clause) means no cause of action has arisen and the petition is an abuse of process

Court orders

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  1. 1.The petition is struck out with costs
  2. 2.No decision made on the injunction application since the petition was struck out
Jurisdiction invoked
Company/winding-up jurisdiction of the High Court (Companies Act); company court jurisdiction to restrain advertisement of a winding-up petition

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Re: Corporate Insurance Company Limited (Petition of Captain Bulhan)", Case Analysis (1994). . Source: 

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