The Court of Appeal found no credible evidence linking Nakuru Polyplast to the devastating 2016 factory fire, dismissing Mayfair Insurance’s allegations of deliberate destruction. Judges upheld the KSh 64.85 million award, citing the insurer’s accepted property valuation and investigators’ findings that up to 95 per cent of factory contents were damaged.
A decade-long insurance dispute has ended with Mayfair Insurance losing its fight against a KSh 64.85 million compensation award.
The Court of Appeal dismissed an appeal challenging liability for a devastating fire. The January 2016 inferno destroyed property belonging to Nakuru Polyplast Limited’s factory in Nakuru.
The judges found no convincing evidence that the company deliberately caused the fire. They also upheld the High Court’s assessment of the insured loss.
The dispute centred on a Fire and Special Perils Insurance Policy issued by Mayfair. The policy covered Nakuru Polyplast’s factory along the Nakuru-Nairobi Highway.
The insurance arrangement began in October 2013 through Tevee Insurance Brokers Limited. Mayfair subsequently renewed the cover in 2014 and October 2015.
The renewed policy valued the insured property at KSh 64.85 million. It covered stock, raw materials, finished goods, machinery, generators, and office equipment.
Nakuru Polyplast paid KSh 194,550 for cover running until September 30, 2016. But disaster struck four months later, when fire engulfed the factory.
The January 31, 2016, blaze destroyed factory contents and severely damaged the building. Its roof collapsed, while the walls suffered significant structural damage.
Nakuru Polyplast immediately notified Mayfair, which appointed Safety Surveyors Limited to investigate. The company subsequently submitted a KSh 68.5 million compensation claim on February 19.
Mayfair rejected the claim on August 17, 2016, arguing that the fire was not accidental. Its decision triggered a legal battle over the insurer’s contractual obligations.
Arson Claims
Mayfair maintained that Nakuru Polyplast, its employees or associates deliberately caused the fire. It argued that the policy allowed it to decline compensation following wilful destruction.
The insurer pointed to several circumstances it considered suspicious surrounding the incident. These included an opening in the factory wall, outstanding bank debts, and business difficulties.
However, the appellate judges found these circumstances insufficient to establish deliberate destruction. They emphasised that suspicion could not replace convincing evidence.
The investigators’ final report described the fire’s cause as a suspected act of arson. The judges considered that qualification important when evaluating Mayfair’s defence.
They observed that investigators had not conclusively established deliberate destruction. The report therefore could not independently sustain the insurer’s allegations.
The court also examined evidence from security personnel guarding the compound. Moses Wekhanya Maika, representing Brinks Security Services, testified that nobody entered.
The compound had a perimeter wall, which security personnel guarded. Maika maintained that the firm detected no intrusion during the incident.
Daniel Mwaura of Bob Morgan also testified about the factory’s intruder alarm. His evidence indicated that the system detected no unauthorised entry.
The judges found that the trial court properly weighed these accounts against investigators’ opinions. They rejected Mayfair’s argument that its investigation report deserved automatic acceptance.
The judgement stated, “There was no cogent evidence that the fire was caused by the wilful act or connivance of the 1st Respondent.”
The Money Trail
Mayfair also questioned Nakuru Polyplast’s financial position before the fire. It suggested that the company’s circumstances raised questions about its possible motive.
But the appellate judges examined correspondence between Nakuru Polyplast and Bank of Baroda. The documents showed regular declarations of raw materials and finished goods.
In a December 18, 2015 letter, the company reported substantial stock holdings. Raw materials stood at KSh 14.44 million, while finished goods reached KSh 12.81 million.
Together, the declared stock was valued at KSh 27,248,344. The company also invited the bank to verify the figures physically.
The judges considered this evidence inconsistent with claims of imminent business collapse. They found no convincing connection between financial difficulties and deliberate destruction.
The court also examined how the disputed insurance valuation had originated. Tevee Insurance Brokers had assessed the property when arranging the insurance cover.
Mayfair subsequently calculated its premium using that assessment and accepted payment. The judges found this important when considering the insurer’s challenge against valuation.
The Final Blow
Mayfair further argued that the High Court ignored the residual value of surviving machinery. It wanted the compensation adjusted to reflect property remaining after the fire.
However, the appellate judges found substantial evidence supporting the total-loss assessment. Investigators estimated that 90 to 95 per cent of production-floor contents suffered damage.
Their preliminary report identified the externally relocated standby generator as the only item spared. The investigators and loss adjusters initially recommended a reserve below KSh 55 million.
Their final report subsequently assessed the damage on a total-loss basis. It made no provision for salvage value in calculating the loss.
Mayfair also failed to demonstrate that surviving machinery retained practical value. The appellate judges therefore found no reason to deduct residual value.
The original High Court judgement had been delivered by Justice Rachel Ngetich on May 14, 2020. Mayfair subsequently challenged the decision through eight grounds of appeal.
A three-judge bench comprising Justices John Mativo, Brown Kairaria and Ahmed Issack Hassan heard the appeal. They delivered their judgement at Nakuru on October 9, 2026.
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The judges dismissed the appeal and awarded costs to Nakuru Polyplast. Their decision preserved the original KSh 64.85 million compensation award.
The ruling reinforces an important principle governing insurance disputes in Kenya. Insurers must support allegations of deliberate destruction with credible evidence.
Financial difficulties, suspicious circumstances, and inconclusive investigations cannot independently defeat contractual obligations.
For Nakuru Polyplast, the decision marks a significant victory after years of litigation.
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