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APA Insurance’s bid to block payout for fire fails
APA’s claim that Britind’s office furniture and fittings, motor vehicles, machinery, tools and equipment, and computer equipment were valued at Sh7.53 million as at the end of March 2015, as opposed to the valuation done before the fire outbreak, was rejected.
The Court of Appeal has ordered APA Insurance to pay a manufacturing firm Sh58.6 million as compensation following a fire that gutted the firm’s premises, hardly two months after the insurance took effect.
The award is a 28.8 percent reduction from the Sh82.33 million that the High Court had awarded the manufacturer—Britind Industries Limited— in February 2023 before APA appealed the decision, claiming that the fire was “deliberately or wilfully” started by the firm.
Britind, which manufactures and sells wooden pallets, toilet tissues, serviettes, and other paper-based materials, had taken a policy with APA against business risks or losses, including damage from fire. The contract was effective from November 12, 2015.
The company reported that it had suffered a fire on its premises on December 31, 2015, and thereafter sought Sh83.45 million compensation from APA. However, APA declined the claim in March 2016, accusing Britind of deliberately starting the blaze.
Britind moved to the High Court, which ordered APA to compensate the manufacturer Sh82.33 million. The High Court decided after APA failed to prove that it was Britind who wilfully started the fire.
However, APA proceeded to the Court of Appeal in an attempt to overturn the award. APA claimed that the High Court failed to appreciate that it rightfully rejected the claim after Britind “contravened” the terms and conditions of the policy.
Further, APA claimed the High Court erred in finding that the manufacturer suffered total loss as a result of the fire.
The Court of Appeal threw out APA’s claim that Britind was the “author of its own misfortune." However, it revised the award downwards to Sh58.6 million after taking into account reports from valuers and structural engineers.
“It did not matter that the policy was only two months old and a valuation had been conducted at inception,” said the Court of Appeal.
“The upshot is that the appeal fails on liability and succeeds partially on quantum. The special damages shall be reduced to Sh58,608,224 with interest thereon at the court rate from the date the suit was filed until payment in full.”
APA’s claim that Britind’s office furniture and fittings, motor vehicles, machinery, tools and equipment, and computer equipment were valued at Sh7.53 million as at the end of March 2015, as opposed to the valuation done before the fire outbreak, was rejected.
The judges said “drastic change” in the value of the insured items could happen in just two months.
