Nzau & another (Suing as the Legal Administrators of the Estate of Paul Nzau Nzomo - Deceased) v Monarch Insurance Company Limited (Civil Case E269 of 2023) [2024] KEMC 17 (KLR)
The bottom line
#A Machakos court ordered an insurer to pay a road accident judgment in full, ruling that its own delay in settling cannot push costs onto accident victims.
What this practically means
#Executive summary
#Key legal issues
#Whether the insurer has a statutory duty to satisfy the judgment in the primary suit
Yes. The Plaintiffs proved a valid policy in force, a valid judgment against the insured, and that the insurer has not avoided liability. The Defendant called no evidence, leaving the Plaintiffs' evidence uncontroverted.
Section 10(1) of Cap 405 fastens a strict statutory duty on the insurer to pay third parties entitled to the benefit of a judgment, notwithstanding any right to avoid or cancel the policy. The only statutory grounds of escape under section 10(2) - lack of notice, stay of execution, or pre-accident cancellation - were not established. The Defendant filed a defence but adduced no evidence, so the averments remain mere allegations and the Plaintiffs' evidence stands unchallenged.
The scope and extent of the insurer's liability vis-à-vis the statutory cap of Kshs. 3,000,000 under section 5(b)(iv)
The decretal sum was originally Kshs. 2,950,000, below the cap. Interest that accrued due to the insurer's delay pushed it to Kshs. 3,672,725; the insurer must pay the full outstanding sum, as the delay cannot be visited on the innocent insured.
Relying on Maisha vs. Directline Assurance, the court held that interest and costs are the costs of litigation and delay, not liability, and do not count towards the cap. Where the insurer dilly-dallies and the interest takes the sum above Kshs. 3,000,000, it would be unfair, inequitable and unconscionable to make the insured bear the excess. Ex turpi causa non oritur actio - a court should not aid a party to benefit from its own wrongful conduct.
Costs and interest of this suit
Costs follow the event and were awarded to the Plaintiffs; interest was also awarded given the Defendant's failure to promptly settle, which deprived the Plaintiffs of a capital sum to invest.
The court found no good cause to depart from the general proposition that costs follow the event. On interest, the Defendant's failure to settle promptly meant the Plaintiffs lost the use of their money, warranting an exercise of discretion in their favour.
Legal principles established
#- Once judgment has been entered against the insured under a valid and subsisting policy, the insurer bears a strict statutory duty to pay persons entitled to the benefit of that judgment, including costs and interest, notwithstanding any entitlement to avoid or cancel the policy.
- A plaintiff in a declaratory suit against an insurer need only establish: (i) a policy in force at the material time; (ii) a valid judgment against the insured; and (iii) that the insurer has not avoided liability.
- Where the decretal sum was below the statutory cap of Kshs. 3,000,000 at judgment, an insurer that delays settlement cannot escape liability for the portion of interest that pushes the sum above the cap.
Court orders
#- 1.Declared that the Defendant has a statutory duty to satisfy the Judgment in Machakos MCCC Number 391 of 2020 (the primary suit)
- 2.Declared that the Defendant's liability to the Plaintiffs in the primary suit shall be the total sum outstanding by the time of payment
- 3.Awarded the Plaintiffs costs of this suit, to be paid by the Defendant, together with interest at Court rates from the date of Judgment until payment in full
- Jurisdiction invoked
- Original civil jurisdiction of the Magistrates' Court over a declaratory suit under the Insurance (Motor Vehicles Third Party Risks) Act, Cap 405
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nzau & another (Suing as the Legal Administrators of the Estate of Paul Nzau Nzomo - Deceased) v Monarch Insurance Company Limited (Civil Case E269 of 2023) [2024] KEMC 17 (KLR)", Case Analysis (2024). Machakos MCCC (Declaratory Suit arising from Machakos MCCC No. 391 of 2020). Source: https://new.kenyalaw.org/akn/ke/judgment/kemc/2024/17/eng@2024-09-09
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.