Nairobi — Philip Kimani Gikonyo v Gateway Inusrance Company Limited [2007] eKLR

High Court of Kenya at Nairobi

Visram J

November 21, 2007

Is a judgment which has been obtained against the insured's driver enforceable against the insurer?

Section 5 (b) of the Insurance (Motor Vehicle Third Party Risks) Act (the Act) makes it mandatory for any car owner to take a third party insurance for death and bodily injury sustained by any person with the exception of certain categories of persons such as employees.

Further, Section 10 (1) of the Act puts the insurer under a duty to satisfy judgments against the insured under Section 5 (b).

Many court decisions have evaluated the scope of the insurer's duty to satisfy a judgement against persons insured.

Insurance cover

For instance, courts have been faced with such questions as whether third party insurance covers material damage or whether a judgment which has been obtained against the insured's driver is enforceable against the insurer.

Courts have held that there has to be a judgment against the insured for the insurer to be held liable. However, a decision delivered by Mr Justice Visram on Wednesday last week distinguished and departed from these decisions.

The case involved the appellant Philip Kimani Gikonyo, who was hit and injured in 1984 by a car driven by Mr Jeremiah Gikonyo, the director of Glass Fibre Reinforces Plastics Limited. He filed a suit in the lower court and obtained judgement against the company's director in the sum of Sh300,500.

Unable to recover to recover the judgment sum, Mr Gikonyo, filed a declaratory suit against the insured of the motor vehicle, Gateway Insurance Company. The lower court dismissed that suit since the judgment was against the insured's driver and not the insured, Glass Fibre Reinforces Plastics Limited, therefore the same could not be enforced against the insurer. Secondly, the lower court held that the insurer had not been served with the statutory notice required under section 10 (2) of the Act.

According to the lower court, the demand sent to the insurer did not constitute notice under the Act and that the actual one was served long after the fourteen period stipulated in the Act.

On appeal, the court deliberated on two main issues. First, whether the statutory notice required under the Act was given with the prescribed period. Counsel for both parties agreed that the Act simply requires that notice be given to the insurer but the Act does not stipulate the format of the notice.

The court held does it does not matter what format the notice takes. In the case, it was not disputed that the insurer had been served with a copy of the demand letter. Therefore, the lower court's refusal to accept it as actual notice was clearly wrong. In the court's view the notice had been properly given.

The second important issue before the court related to whether the judgment against the insured's driver was enforceable against the insurer.

In this case, the judgment was against the insured's driver, not the insured.

Counsel for the insurance company argued that for an insurer to be liable, there must be a judgment against the insured. He relied on Section 10 of the Act, and on the cases Kenindia Assurance Company v James and Kesereka v Gateway Insurance Company Limited. In the Kenindia case, the Court of Appeal had held that the requirement under Section 10 of the Act that judgment be obtained against the insured before the insurer can become liable under the Act was an essential pre-condition of liability under the Act.

Pay damages

Without it, the court had no jurisdiction to the insurer to pay damages for injuries to the respondent.

The court noted that the in the Kenindia case, the claimant was an employee of the insured and not a third party and was therefore an exception to the categories of the people required to be covered under Section 5 of the Act.

In addition, the issue before the court in the Kenindia case was one of jurisdiction that is whether the High Court in the first place had jurisdiction to entertain a claim by an employee against the insurance company. By applying section 5 (b) of the Act, the court held that there was indeed no judgment against the insured capable of enforcement.

The court pointed out that the situation in the Kenindia case was very different.

The appellant in this case was a third party in respect of whom it was mandatory to take out third party insurance covering the risk of death of bodily injury.

But should there have been a judgment against the insured in addition to one against his authorised driver?

To answer this question the court looked at the critical words of section 10 (1) of the Act which reads "If .judgment is obtained against any person insured by the policy .the insurer shall pay to the persons entitled to the benefit of the judgment "

Who then was the person insured by the policy?

Section 2 of the insurance policy recognises any authorised driver as an insured person provided he observed the terms of the policy as though he were insured.

It was not in dispute that the driver in this case was indeed the authorised driver. If the driver was deemed to be the insured in accordance with the terms of the policy, and the injured party here was the person entitled to the benefit of the judgment , the inevitable conclusion by the court was that the appellant's judgment against the insured's driver was enforceable against the insurance company.