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Small ClaimsDismissedApplication dated 3/4/2025· [2025] SCC 5 (KLR)

Mtemi Nasaba Limited v Gwada (Civil Case E004 of 2025) [2025] SCC 5 (KLR)

Small Claims Court / Magistrates Court, Voi Law Courts
16 May 2025
FMF.M. Mulama
1,396 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 applicant, through the affidavit of Samson Kibugi Muiruri, sought referral of the dispute arising from a 1/12/2024 road accident along the Nairobi-Mombasa highway involving motor vehicles KBH 852U and KCA 289N, insured by Mayfair Insurance and CIC General Insurance respectively, for settlement under a knock for knock agreement said to have taken effect on 1/5/2007. The claimant opposed through a replying affidavit of Charity Njuguna, a legal officer of Mayfair Insurance, averring that the 2007 agreement had been superseded by an amended 2023 agreement which Mayfair had not signed, and to which no schedule of participating companies was attached. The court framed two issues: which agreement binds the parties, and costs. It found that both agreements exist but that the 2007 agreement had been superseded by the 2023 agreement, as confirmed by circulars annexed to both documents, and that the applicant was being dishonest in asserting the 2007 agreement was operative. However, the 2023 agreement as filed contained no schedule of participating insurance companies, making it impossible to ascertain which companies had bound themselves to its terms. The court accepted that a company becomes a party to the knock for knock agreement by signing the schedule, and since neither insurer was shown to have signed, the referral could not be granted. The application was dismissed with costs to the claimant, such costs to be in the cause. Judgment delivered at Voi Law Courts on 16 May 2025 by F.M. Mulama, Adjudicator/RM.

Key legal issues

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01

Whether the 2007 or 2023 knock for knock agreement governs the parties

Holding

The 2007 agreement was superseded by the 2023 agreement, which is the one in operation; however, the 2023 agreement filed has no schedule of participating insurance companies and therefore cannot be shown to bind the two insurers.

Reasoning

The court perused both agreements and found they largely contain the same clauses, differing only on the schedule of participating member companies. Circulars annexed to both agreements indicated periodic revisions, showing the 2007 agreement had been superseded. But since the 2023 agreement as filed has no schedule, the court could not ascertain which companies bound themselves to it, so no referral could be ordered.

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02

Whether the applicant should be granted the referral order sought

Holding

The application was dismissed because the claim rested on an agreement that could not be shown to bind the parties.

Reasoning

The claimant argued that only insurers who sign the schedule become party to the knock for knock agreement, and Mayfair was not a signatory to the 2023 agreement. The court agreed that a company becomes a party by signing the schedule. Since the 2023 agreement had no indication of signatories, there was no basis to grant the referral order sought.

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Legal principles established

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  • A party can only be bound to a knock for knock agreement by signing the schedule of participating companies; an unsigned agreement without a schedule cannot bind non-signatories.
  • The basic rule on costs is that costs follow the event, and the principle compensates the successful party rather than penalising the losing party.

Court orders

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  1. 1.The application dated 3/4/2025 is dismissed with costs to the claimant
  2. 2.The costs shall be in the cause
Jurisdiction invoked
Original jurisdiction over the suit matter; application brought under provisions on the face of the application

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, "Mtemi Nasaba Limited v Gwada (Civil Case E004 of 2025) [2025] SCC 5 (KLR)", Case Analysis (2025). Application dated 3/4/2025. Source: https://new.kenyalaw.org/akn/ke/judgment/scc/2025/5/eng@2025-05-16

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