Wamba (As Personal Representative of the Estate of Phillipe Wamba) v UAP Insurance Company

the portion against Thuri was unpaid, Cornelia took out a declaratory suit against UAP Insurance Company Limited (UAP), the insurer of Thuri, in Nairobi HCC No. 232 of 2024, claiming a total sum of Ksh. 2,383, 362.40 and USD 600,000.00. The foundation of the declaratory action being section 10 of the Insurance (Motor Vehicle Third Party Risks) Act (the Act) which places a duty on an insurer to satisfy judgments against persons insured with respect to third-party claims arising out of the use of motor vehicles absent of the circumstances set out in subsection 2 of that provision. 4. UAP set up two defences; that Cornelia did not serve the statutory notice of intention to sue it as required under the Act and; that the policy indemnied Thuri up to a limit of Ksh. 3,000,000.00 which amount had been exhausted in payment made to the rm of advocates who defended Thuri in the primary suit. 5. In a judgment dated 17th December 2020, the impugned decision, Sergon, J. found that whilst Cornelia did not serve the statutory notice in the strict sense of the word, UAP was aware of the primary suit and was suciently notied of her intention to lodge the declaratory suit. Regarding the second defence, the court held that the terms of the policy document entered between UAP and its insured set a limit of liability of Ksh.3,000,000.00 against the insurer and that there was no evidence that any payments had been made by UAP. With those two holdings, the learned Judge made a declaration that UAP was bound to satisfy the judgment arising from the primary suit against Thuri limited to a sum of Ksh. 3,000,000.00. 6. At the core of the appellant’s grievance in this appeal is that the learned Judge of the High Court erred in nding that the applicable clause in the insurance policy between UAP and Thuri governing the insured’s liability to the dependants and estate of the deceased was contained in Section 11 Clause 2 and not Section 11 Clause 1(a) as a consequence of which the learned Judge reached the fundamental conclusion that UAP’s liability was capped at the sum of Ksh. 3,000,000.00. Nevertheless, for reasons that will be apparent shortly, we are of the rm view that two interrelated grounds in the amended memorandum of appeal 2 grounds are dispositive of this appeal. These are; 7. “ 5. Having correctly found that Section 5(b) of the (Motor Vehicle Third Party Risks) Act, Cap 405 as amended in the year 2006 limiting the Appellants claim suing on behalf of a deceased Third-Party to Kes.3,000,000/-, did not have a retrospective eect, the Learned Judge fell into grave error in holding that the Respondent’s liability to the Appellant suing on behalf of a deceased ThirdParty is limited to the sum of Kes 3,000,000/-as stipulated in subject ThirdParty insurance Policy. 6. In erroneously nding that the subject Third-Party Insurance Policy between the Respondent and its insured, limited the Respondent’s liability to the Appellant suing on behalf of a deceased Third-Party is to the sum of Kes.3,000,000/-, the Learned Judge erred both in law and in fact in failing to take into account the Provisions of Section 5(b) and 10(2) of the Insurance (Motor Vehicle Third-Party risks) Act, CAP 405 applicable to the subject policy at the material time when the cause of action arose.” In written submissions led on her behalf, Cornelia asserts that the statutory regime that mandatorily obliged UAP to fully recompense her were the provisions of the Act that were in force at the material time in the year 2002, citing section 10(5) of the statute as it then read. It was contended that the insurer was liable to fully satisfy a judgment obtained by a third party against the insured. Reference was also made to section 5 of the Act as it then provided. At plenary hearing of the appeal, learned counsel Mr https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1773/eng@2026-09-25 2

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Olieti who represented Cornelia lauded the trial court for at least holding that the amendments to the statute could not operate retrospectively. 8. The written submissions led on behalf of UAP were dedicated to supporting the learned Judge’s nding that the applicable clause in the policy was Section 11 Clause 2 and not Section11 Clause 1(a). However, at plenary hearing of the appeal, learned counsel Mr Kiche appearing for the insurer, contended that section 10 provided that the obligation of an insurer is subject to the limit covered in the terms of a policy, in this event Ksh. 3,000.000.00. He emphasised that even at the time of making the contract, which was a date before the amendment to section 5, the contracting parties had capped the liability. 9. Counsel made an alternative proposition that if, arguendo, the amendments were not of retrospective operation, the relevant date for consideration would be the date of the judgment, presumably of the primary suit, which would be post 2009 when the two amendments had already come into eect. 10. This rst appeal substantially raises issues of law only as the facts are not contested. We will reconsider the issues on the basis of statute, the law and the material before the trial court. 11. The stated objective of the Act is to make provision against third party risks arising out of the use of motor vehicles on the road. Prior to an amendment introduced by section 34 of Act No. 10 of 2006, section 5 of the Act read as follows; “ 5. In order to comply with the requirements of section 4, the policy of insurance must be a policy which – (a) is issued by a company which is required under the Insurance Act, 1984 to carry on motor vehicle insurance business; and (b) insures such person, persons or classes of persons as may be specied in the policy in respect of any liability which may be incurred by him or them in respect of the death of, or bodily injury to, any person caused by or arising out of the use of the vehicle on a road: Provided that a policy in terms of this section shall not be required to cover(i) liability in respect of the death arising out of and in the course of his employment of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment; or (ii) except in the case of a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, liability in respect of the death of or bodily injury to persons being carried in or upon or https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1773/eng@2026-09-25 3

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entering or getting on to or alighting from the vehicle at the time of the occurrence of the event out of which the claims arose; or (iii) 12. The amendment introduced paragraph (iv) to section 5 which reads; “ (iv) 13. any contractual liability.” liability of any sum in excess of three million shillings, arising out of a claim by one person.” Again, prior to deletion through the Finance Act (Act No. 8 of 2009), was subsection 5 to section 10 of the Act. But so as to fully comprehend the import of the deletion, we reproduce the entire section 10 before the amendment; “ 10. (1) If, after a policy of insurance has been eected, judgment in respect of any such liability as is required to be covered by a policy under paragraph (b) of section 5 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled, the policy, the insurer shall, subject to the provisions of this section, pay to the persons entitled to the benet of the judgment any sum payable thereunder in respect of the liability, including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments. (2) No sum shall be payable by an insurer under the foregoing provisions of this section(a) in respect of any judgment, unless before or within fourteen days after the commencement of the proceedings in which the judgment was given, the insurer had notice of the bringing of the proceedings; or (b) in respect of any judgment, so long as execution thereon is stayed pending an appeal; or (c) in connection with any liability if, before the happening of the event which was the cause of the death or bodily injury giving rise to the liability, the policy was cancelled by mutual consent or by virtue of any provision contained therein, and either(i) before the happening of the event the certicate was surrendered to the insurer, or the person to whom the https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1773/eng@2026-09-25 4

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certicate was issued made a statutory declaration stating that the certicate had been lost or destroyed; or (ii) after the happening of the event, but the expiration of a period of fourteen days from the taking eect of the cancellation of the policy, the certicate was surrendered to the insurer, or the person to whom the certicate was issued made such a statutory declaration as aforesaid; or (iii) either before or after the happening of the event, but within a period of twenty-eight days from the taking eect of the cancellation of the policy, the insurer has notied the Registrar of Motor Vehicles and the Commissioner of Police in writing of the failure to surrender the certicate. (3) It shall be the duty of a person who makes a statutory declaration, as provided in subparagraphs (i) and (ii) of paragraph (c) of subsection (2), to cause such statutory declaration to be delivered to the insurer. (4) No sum shall be payable by an insurer under the foregoing provisions of this section if, in an action commenced before, or within three months after, the commencement of the proceedings in which the judgment was given, he has obtained a declaration that, apart from any provision contained in the policy he is entitled to avoid it on the ground that it was obtained by the non- disclosure of a material fact, or by a representation of fact which was false in some material particular, or, if he has avoided the policy on that ground, that he was entitled so to do apart from any provision contained in it: Provided that an insurer who has obtained such a declaration as aforesaid in an action shall not thereby become entitled to the benet of this subsection as respects any judgment obtained in proceedings commenced before the commencement of that action, unless before or within fourteen days after the commencement of that action he has given notice thereof to the person who is the plainti in the said proceedings specifying the non-disclosure or false representation on which he proposes to rely, and any person to whom notice of such action is so given shall be entitled, if he thinks t, to be made a party thereto. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1773/eng@2026-09-25 5

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(5) If the amount which an insurer becomes liable under this section to pay in respect of a liability of a person insured by a policy exceeds the amount for which he would, apart from the provisions of this section, be liable under the policy in respect of that liability, he shall be entitled to recover the excess from that person. (6) In this section, "material" means of such a nature as to inuence the judgment of a prudent insurer in determining whether he will take the risk, and, if so, at what premium and on what conditions; and "liability covered by the terms of the policy" means a liability which is covered by the policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel, or has avoided or cancelled, the policy. (7) In this Act, references to a certicate of insurance in any provision relating to the surrender or the loss or - destruction of a certicate of insurance shall, in relation to policies under which more than one certicate is issued, be construed as references to all the certicates, and shall, where any copy has been issued of any certicate, be construed as including a reference to that coру.” 14. Section 4 of the Act, in consonance with the central purpose of the statute, places a mandatory requirement on any person using or causing or permitting use of a motor vehicle on a road to have in force, in relation to such user, a policy of insurance or such a security in respect to third party risks as complies with the requirements of the Act. Those requirements are set out in section 5 so that, as is relevant to the controversy here and prior to the amendment, there was no limit to the liability arising out of a claim by one person. The eect of the amendment was to only mandatorily require a policy, meeting the other conditions set out in the provision, that covered up to a claim of Ksh 3,000,000.00 by one person. In other words, the insured and the insurer could, after the introduction of (iv) into section 5, contract to cap the liability of the insurer to a third party to a sum Ksh 3,000,000.00. The amendment was not idle and must count for something. It is clear to us that it marked a consequential shift to the scheme regarding third party risks from a limitless liability against the insurer to one that could in terms of a policy be capped to Ksh 3,000,000.00 to a claim by one third party. 15. Given that prior to the amendment to section 5, the insurer could be liable to a limitless third-party claim, sub-section 5 of section 10 permitted the insurer to recover from the insured any sum paid out to a third party that exceeded the amount that was otherwise provided in the policy. This was so intended to somewhat cushion the insurer who had to, by dint of the statutory provisions, pay sums to third parties that exceeded those contemplated in the contract of insurance entered between it and the insured. It would seem that this protection was deemed unnecessary once the liability of the insurer was capped following the amendment to section 5 and hence the deletion of subsection 5 from the provisions of section 10 three years later by Act No. 8 of 2009. 16. Having set out the scope and intent of the two key statutory provisions, then the next task is to determine the law applicable regarding the matter at hand. First is to observe that there is no serious contestation that the amendments did not have retrospective eect and the learned Judge’s holding in that regard was not faulted and cannot now be faulted. The real question arising is whether the law applicable should be that as at the time of the accident or as at the time the primary suit was https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1773/eng@2026-09-25 6

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commenced or as at the time of the judgment in the primary suit or as at the time the declaratory suit was commenced. 17. We think, and so hold, that the language in section 4(1) of the Act which imposes the mandatory third party insurance provides the starting point in discovering the answer. It reads; “ 4. Motor vehicles to be insured against third party risks. (1) Subject to this Act, no person shall use, or cause or permit any other person to use, a motor vehicle on a road unless there is in force in relation to the user of the vehicle by that person or that other person, as the case may be, such a policy of insurance or such a security in respect of third party risks as complies with the requirements of this Act. (2) Any person who contravenes subsection (1) shall be guilty of an oence and be liable to a ne not exceeding ten thousand shillings or to imprisonment for a term not exceeding two years or to both, and such person upon a rst conviction for such oence may, and upon a second or subsequent conviction for any such oence shall, unless the court for special reason thinks t to order otherwise, be disqualied from holding or obtaining a driving licence or provisional licence under the Traffic Act (Cap. 403) for a period of twelve months from the date of such conviction or for such longer period as the court may think t. (3) This section shall not apply to any motor vehicle owned by the Government, or to a motor tractor or other motor vehicle used solely or mainly for agricultural purposes, if the use of such motor tractor or other motor vehicle on a road consists only of moving it by road from one part of the land of the owner thereof to another part of the land of such owner.” 18. The provision requires third party insurance in respect to third party risks during the use of a motor vehicle. So, the risk covered is at the time of use of the motor vehicle on a road. 19. Then there is section 5(b) which requires that the third party policy insures such person, persons or classes of persons as may be specied in respect of any liability which may be incurred by him or them in respect of death or bodily injury to a third party caused by or arising out of the use of the motor vehicle. The duty of the insurer to satisfy judgments in respect to such liability against the insured is in section 10(1). 20. Borne out of the language of the statute is that the third party risk that is to be covered and compensated is the liability that arises at the time of the accident. Liability arises from death or bodily injuries arising, connected or attributable to the accident. Although the insured is liable to satisfy a judgment in a primary suit once pronounced, its liability arises at the time of the accident. That is why, for instance, the insurer will instruct an investigator to investigate the circumstances of the accident or an advocate to defend it’s insured in any civil proceedings that may ensue. The obligation does not arise simply when the claim is made or adjudged by a court or tribunal. In any event, the right of the third party to bring a running down action, ordinarily, accrues on the day of the accident. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1773/eng@2026-09-25 7

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21. The conclusion to be drawn is that the applicable law is that which was operative at the time of the accident, that is on 11th September 2002. The law is the provisions of the Act prior to the amendments introduced in 2006 and 2009. It being so, the Judge fell into error in holding that the indemnity of the insurer to Cornelia was capped at Ksh 3,000,000.00 and this appeal is for allowing. 22. We hereby set aside the judgment of the High Court delivered on 17th December 2020 and in its place enter judgment for the appellant against the respondent as prayed for in the plaint for a sum of Ksh. 2,283, 362.40 and US$600,000 with interest thereon at Court rates from the date when the Nairobi HCCC No. 232 of 2014 was led until payment in full. Costs both here and at the High Court shall be to the appellant against the respondent. DATED AND DELIVERED AT NAIROBI THIS 25TH DAY OF SEPTEMBER 2026. F. TUIYOTT …………………………… JUDGE OF APPEAL L. M. NDOLO …………………………… JUDGE OF APPEAL A.I. HASSAN ………………………… JUDGE OF APPEAL I certify that this is a true copy of the original. Signed DEPUTY REGISTRAR. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1773/eng@2026-09-25 8

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