Concord Insurance Company Limited v David Otieno Alinyo & 1 other

The pleaded breaches were sub-standard repairs and refusal to replace the body, not delay; the trial judge misapprehended the dispute. Under clause 2 of section 1 Concord could, at its own option, repair, reinstate or replace. Gohil, the assessor and loss adjuster, priced the repairs at Shs.70,757 as a fair cost of restoring pre-accident condition and on re-inspection found them satisfactory; Ruprah, the mechanic, confirmed the body was repairable. Their unshaken expert evidence was preferred over the unsubstantiated claim of sub-standard repairs by the insured's son, who had no specialised knowledge and never commissioned an independent assessment.

Finding no direct insurance-law authority on when repairs suffice, the Court borrowed the tort measure for damaged chattels: restitution integrum, with the prima facie measure of diminution in value being the cost of repairs (Darbishire v Warran; Burdis v Livsey; McGregor on Damages). Because the insurer's option under clause 2 to repair, reinstate or replace depends on the extent of the damage, an insured cannot demand a new body where the repairs amount to full indemnity. Here the body was repairable and satisfactorily repaired, so Concord was not in breach.

Damages for breach of an insurance policy are circumscribed by its terms, not at large. The policy covered loss or damage to the lorry or its parts, so the direct loss from failure to indemnify was the value of the load body, not loss of user, which arose subsequently and was peculiar to the insured's beer-distribution business. Following this Court's decisions in Corporate Insurance Company v Wachira and Madison Insurance Company Limited v Kinara, such consequential loss is irrecoverable under a standard form policy unless expressly covered.

The load body had been repaired by 7th August 1986. The insured could have paid the repair costs and collected the vehicle without forfeiting his right to pursue Concord for the value of a new load body; instead he refused to sign the discharge voucher, left the lorry at the garage, and it was ultimately sold to meet repair and storage charges. Loss flowing from that refusal was avoidable and irrecoverable. The trial judge's award of Shs.1,642,580 for 547 days' loss of user was therefore unsustainable and was set aside on appeal.

Relying on Kenya National Assurance Co Ltd v Kimani, where Plat JA and Apaloo JA distinguished premium — the consideration creating the contract — from excess, the insured's agreed contribution to the loss whose payment demands performance, the Court held that an insured who pays excess demands performance on the insured part of the loss. Concord performed nothing: it neither paid Ruprah the Shs.70,757 repair costs nor funded a new body, and the insured had not claimed those sums. Retention of the excess was therefore unjustified.