Uap Old Mutual v Chev Energies Limited

4. It was further pleaded that the Defendant was to adhere to the principle uberrimae fidei and report the occurrence of any accident in an honest manner including, but not limited to accurately reporting the damage suffered. 5. That on 27th December 2021 a road traffic accident occurred involving the defendant’s insured motor vehicle and a Motor Cycle KMFU 031 B. That whereas the rider was to blame for the accident, he proceeded to institute a suit in Bungoma Chief Magistrates’ Court being Bungoma Civil Suit 123 of 2022 against the Defendant. 6. The plaintiff avers that while reporting the occurrence of the accident, the Defendant misrepresented and exaggerated the damages occasioned to Motor Vehicle KDA 874 J and thus breached the express and/or implied term of the policy of insurance by failing to disclose all material facts and misrepresented material facts. 7. The plaintiff further avers that the Kenya Automobile Valuers and Assessors Ltd did an assessment of the costs of repair of Motor Vehicle KDA 874 J and established that the damage inflicted could be repaired at a cost of Kshs. 82,100/=. 8. The Plaintiff avers that it was neither legal nor contractually bound to compensate the Defendant for the alleged repairs or pay the decretal sum arising from Bungoma Civil Suit 123 of 2022 on account of the Defendant’s said acts of breach of the policy of insurance; by failing to act in utmost good faith towards the Plaintiff wherefore the Defendant should bear the liability arising from Bungoma Civil Suit 123 of 2022. 9. The Defendant filed and defence and a counter -claim. It denied that it had exaggerated the damages; was categorical that the damages as captured by the Kenya Automobile Valuers and Assessors Ltd on the parts of Motor Vehicle KDA 874 J coincided with the parts that the Defendant had reported to have been damaged as a result of the accident. 10. In counterclaim, the Defendant avers that it had at all material times comprehensively insured the subject motor vehicle with the plaintiff vide a policy No 030/080/9/007529/2021. That upon materialization of the insured risk it was entitled to indemnification. 11. The defendant pleaded that third party risks were duly insured under the said insurance policy and that the plaintiff was in breach of the material terms and conditions of the contract in the following respect 12. In light of the foregoing, the Defendant’s counterclaim against the Plaintiff is for an order compelling the Plaintiff to abide and/or unconditionally comply with the contract of insurance pertaining to the Motor Vehicle KDA 874 J. 13. In their counterclaim, the Defendant posits that the 3rd party aspect of the said insurance cover is/was compulsory and in place at all material times thereof as the accident occurred during the currency of the policy cover with the Plaintiff wherefore the plaintiff was duty bound to indemnify it for third party claims. 14. The matter proceeded for hearing with each of the party presenting witnesses in support of their respective cases. B. Evidence 15. PW1, Peter Nderitu Muiga, an insurance investigator at Gaska Insurance Investigators and Assessors told the Court that Motor Vehicle KDA 874 J collided with Motor Cycle KMFU 031 and on investigations he established that the Motor Cycle was to blame for the accident and that the Motor https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/3554/eng@2026-02-13 2

page 2 of 7

Vehicle suffered exterior damage on the driver’s cabin and that the estimated costs of repair at Kshs. 82, 100/= was exaggerated by the Defendant to Kshs. 488,300/=. It was his view that the sum of Kshs. 82,100/= was a fair estimate as per the assessment done by Kenya Automobile Valuers and Assessors Ltd. He produced his investigation report dated 12th January 2022, in Court as PEXH1. 16. On cross examination PW1 conceded that he did not produce his practicing license from the Association of Kenya Insurers and that he also failed to indicate in his report that he had received a copy of the loss assessor’s report. Further that his report did not list the damaged parts. He stated that the vehicle had a comprehensive insurance cover and that both the material damage claim and the third party claims were valid. 17. PW2, Julius Kaburu Waweru, testified that he is an automobile assessor trading as Kenya Pride Valuers & Assessors Limited and that on 29th December 2021, he received instructions from the Plaintiff to conduct a loss assessment of Motor Vehicle KDA 874 J which was in the insured;Defendant’s yard at Webuye. That he conducted the assessment on 4th January 2022, and complied a report stipulating the details of the motor vehicle, the damages and the costs of repair. He told the Court the costs of repair were Kshs. 118,600/= and the costs of replacement of parts was Kshs. 82,100/=. He told the Court that he perused the claim forms, scene accident photos and was able to compare what was physically available and the scene of the accident and concluded that Motor Vehicle KDA 874 J appeared different from how it was immediately after the accident. He told the Court that he observed that some damages were inflicted long after the accident and that he excluded the post-accident damages from his report. He told the Court that his conclusions were based on the photos taken immediately after the accident and listed the parts damaged in the accident. He produced his assessment report listed in the Plaintiff’s list of documents No. 4 as PEXH 2. 18. On cross examination PW2 conceded that he had not annexed his practicing license in his report yet it is a legal requirement. This witness admitted that he had prepared two reports one of which had a higher figure of the estimated repair costs as compared to the one that he produced. He could not recall the date of the first report. He stated that at the time of assessment the vehicle had already been striped for repairs. He stated that he did not annex the photographs that he had viewed before preparing the second report that had a lower figure. 19. PW3, Franklin Njuki Nyaga, a legal officer at the Plaintiff, adopted his recorded witness statement dated 6th May 2024 and his evidence in chief and produced the filed list of documents dated 14th June 2022 as the Plaintiff’s exhibits. He told the Court that the Defendant had purchased a motor vehicle commercial cover with the Defendant. According to him, the Defendant filed a claim form, but the Plaintiff declined the same due to assessment of repair costs and breach of duty of outmost good faith. He told the Court that the Defendant’s repair charges were in variation and the failure to disclose material facts, breach of policy condition and misrepresentation of material facts led to the decline of his claim. He told the Court that it was the Defendant who availed photos of the scene of accident upon notification of the accident. 20. PW3 testified that the Defendant’s policy covered own damage and 3rd Party damages and that due to the breach of material facts condition as regards the costs of repairs, the Plaintiff declined to cover the 3rd party claim. This witness maintained that the Plaintiff should not be held liable for anything that arose from the said accident and that despite listing the same damaged parts, the 1st loss assessors report had inflated cost, prompting a second report which revealed that some of the material damages were sustained post-accident. He admitted that on cross examination that the plaintiff had not reported any case of fraud against it’s insured as the plaintiff had flagged the exaggerated costs wherefore it did not loss any money. https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/3554/eng@2026-02-13 3

page 3 of 7

21. DW1, Albert Makundi Muchai, testified that he is the director of the Defendant herein and adopted his recorded statement dated 17th January 2024 as his evidence in chief and list of filed documents dated 17th January 2024 and Defendant’s exhibits. According to him, the Plaintiff authorized him to proceed with the repairs as it had no issue with the attached quotations and an officer from the Plaintiff verified the damaged parts prior to the authorization to repair. He urged this Court to allow the Defendant’s counter claim. He told the Court as per DEXH 5 he did the quotation by himself even though he is not an assessor by profession, but as the owner of the Motor Vehicle he knew, from experience gained in his course of operating the motor vehicle, where to source for the spare parts. DW1 conceded that his quotation did not disclose declares no sourcing of the price and the same is not executed although it ought to have been executed. He contended that he was not aware that the Plaintiff was at liberty to repudiate the contract. 22. Pursuant to the directions of this honorable Court, the respective parties filed their written submissions. C. Legal Analysis and Determination 23. I have addressed the circumstances in this case and as well considered the written submissions by counsel for the respective parties. Ultimately, I find the following issues to arise for determination: a. Whether there was a breach of contract, and by which party. b. What remedies are available to the compliant party c. Who should meet the costs of this suit. Was there a breach of contract and if so by which party 24. As a general rule all insurance contracts are governed by the principle of uberrimae fidei or outmost good faith. Parties to an insurance are dutybound to deal in good faith by making full declaration of all material facts in the insurance proposal so as to ensure that the contract may accurately reflect the actual risk being undertaken. Misrepresentation or non-disclosure once established leads to an inference of breach of the uberrimae fidei principle and the policy may be avoided. 25. Lord Mansfield rendered himself on the principles underlying the doctrine of uberrimae fidei in the case of Carter v Boehm (1766) 97 ER 1162, 1164, thus: “ Insurance is a contract of speculation... The special facts, upon which the contingent chance is to be computed, lie most commonly in the knowledge of the insured only: the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstances in his knowledge, to mislead the under-writer into a belief that the circumstance does not exist... Good faith forbids either party by concealing what he privately knows, to draw the other into a bargain from his ignorance of that fact, and his believing the contrary. 26. The Plaintiff herein contends that it is entitled to repudiated and avoid the insurance contract on account of what is calls inflated repair costs occasioned by inclusion by the defendant of post- accident damages. https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/3554/eng@2026-02-13 4

page 4 of 7

27. In the case of British Foreign Marine Insurance Co. Ltd v Gaunt [1924] 2AC 41 where the court held that: “ In order to claim under the policy, the insured must establish that he has suffered a loss caused by the risk covered by the policy. However, where the policy contains exceptions to the cover, the burden is on the insurer to prove that the insured loss was caused by one of the exempted risks.” 28. See the case of Spinneys Ltd & Others v Royal Insurance Co Ltd [1980] the Court held, inter alia that the insurers cannot bring a clause into play simply by asserting that the loss was excluded by a particular exception and challenge the insured to prove the contrary but that the insurer must produce evidence from which it can reasonably be argued that; (a) a state of affairs existed or an event occurred falling within an exception and (b) the excepted peril directly or indirectly caused the loss. 29. The duty applies and runs both before and after the execution of the contract as the object of disclosure is to inform the parties of matters immediately under consideration. (See Black King Shipping Corporation v Massie “The Litsion Pride” [1985] 1 Lloyds R 137 and also Manifest Shipping Co. Ltd v Union Polaris Insurance Co. Ltd “The Star Sea” [1995] 1 Lloyds R 651) where the Courts held the view that commercial good sense dictated that the duty extend beyond execution of the insurance contract and run until after a claim is actually filed in Court. Where there is breach then the aggrieved party is entitled to avoid the policy. 30. The question that this court must answer whether there was a breach of the contact and by which party to the contact. 31. It is undisputed that the defendant’s motor vehicle registration Number KDA874J was involved in a road traffic accident with a motor cycle registration Number KMFU031B on 27.12.2021 during the subsistence of the insurance policy NO 030/080/9/007529/2021 which covered the said vehicle for the period running from 23.11.2021 to 22.10.2022. It also conceded by both parties that the said vehicle sustained material damages and the rider of the motor cycle sustained bodily injuries. The point of departure is the quantification of the costs of repairs of the subject motor vehicle. 32. The defendant duly informed the plaintiff of the occurrence of the said accident and sent photographs of the vehicle depicting the damaged parts. Subsequently the Plaintiff authorized the defendant to undertake repairs and later sent a loss assessor to assess the damages long after the vehicle had been striped for repairs. The plaintiff had authorized the repairs by the defendant. 33. It was evidence of PW1 that his report (PEXH 1) failed to capture the damaged parts of the Defendant’s Motor Vehicle KDA 874 J. In the same report he opined that the Defendant’s claim and that of the third party and rider of motor cycle KMFU 031B make Bajaj Boxer were genuine and lawful. He further opined that the rider was to blame for causation of the accident wherefore the Plaintiff was bound to perform it’s part of the insurance contract by indemnifying the defendant for repair costs and settling third party claims that arose from the accident. 34. PW2 admitted to authoring two reports with varying repair costs estimates. The report that he produced as PEX NO2 placed the repair costs at Ksh 118,600. The source of the price list was never disclosed. 35. PW3 had difficulties in explaining the nexus between the alleged inflated repair costs and the third party’s claim. https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/3554/eng@2026-02-13 5

page 5 of 7

36. DW1 conceded that he was not an expert in loss assessment but maintained that he had gotten expertise on spare parts sourcing in the course of operating his fleet of vehicles. 37. The Plaintiff bears the burden of proving that the Defendant’s assessment report of the damages and the repair costs were intended to defraud it. 38. Section 107 of the Evidence Act lays this bare; “ S 107 (1) Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist. (2) When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.” 39. The testimony of PW1 supports the counter- claim; that the claims by the insured and the rider were genuine and legitimate. 40. Given that the Plaintiff’s assessor complied two varying reports and failed to produce the report with high repair costs, I find that the said omission was deliberate and the inference that I make is that the said omitted report would have been adverse to the plaintiff’s case. It is noteworthy that PW2 stated that he could not recall the date of that report yet he was it’s author. This cavalier attitude of PW2 impacts negatively on his credibility yet the entire plaintiff’s case is based on his loss assessment. 41. Upon weighing the evidence placed before this court I find that there was breach of the policy of insurance by the plaintiff who has declined to indemnify the defendant of repair costs and has further failed to retain advocates to defend third party’s claim that the plaintiff’s own investigator, PW1 had found to be genuine. 42. Given that the insured risk had materialized the Plaintiff is bound to perform it’s part of the insurance contract by indemnifying the defendant and I find that it cannot avoid it based on the incredible evidence of PW2. An insurer is a none party that it affected by a judgment entered against it’s insured wherefore it is in it’s best interest to retain advocates to defend such claims as in this instance, Bungoma CMCC NO 123 of 2022. D. Conclusion 43. The upshot of the foregoing is that I find the Plaintiff has failed to prove it’s case on a preponderance of evidence and I hereby dismiss it’s case with costs to the Defendant. 44. Judgment is entered against the Plaintiff in term of the Defendant’s Counter Claim dated 17th January 2024. I therefore make the following orders:a) A declaration is hereby made that the plaintiff breached the terms and conditions of the insurance contract specifically policy NO 030/080/9/007529/2021 by failing to take up the defence in the case filed by a third party against it’s insured in Bungoma CMCC NO 123 of 2022 : Hassan Salim Ijaka v Chev Energies Limited and by further failing to indemnify the defendant of the material damage claim in respect of the insured motor vehicle registration Number KDA 874 J which was involved in a collision with a motor cycle registration Number KMFU 031B on 27.12.2021 during the currency of the insurance policy. b. An order of specific performance is hereby issued against the defendant compelling it to settle the decretal sum plus cost in Bungoma CMCC NO 123 of 2023 and all claims arising from https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/3554/eng@2026-02-13 6

page 6 of 7

the accident had occurred on 27.12.2021 involving the defendant’s motor vehicle registration Number KDA 874 J and to indemnify the defendant of the material damage claim of the sum of Ksh 488,300, being the authorized motor vehicle repairs costs. c. The defendant is awarded the costs of this case. Orders accordingly DELIVERED, SIGNED AND DATED AT BUNGOMA THIS 13TH DAY OF FEBRUARY 2026. MWANAISHA.S. SHARIFF JUDGE In the presence of: N/A by G & G for the Plaintiff N/A by Anwar & Company for the Defendant Peter Machoni – Court Assistant https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/3554/eng@2026-02-13 7

page 7 of 7