The High Court has ordered an insurer to pay a macadamia firm more than Sh48 million over rotten fruits exported to the US.

Justice Alfred Mabeya ordered American insurance company AIG, to pay Wondernut International Limited, after finding that the insurer owed the Kenyan company for a cover on the fruits gone bad.

The court heard that on August 24, 2018, Wondernut shipped five containers of macadamia nuts worth Sh34.3 million to the US for its customer, Torn and Glasser.

The court heard that when the consignment arrived in the US, nuts in one of the containers had gone bad and were rejected by America’s regulator, the Food and Drug Administration (FDA).The FDA sent a report saying that the nuts “appear to consist in whole or in part of a filthy, putrid and decomposed substance or otherwise unfit food,” ordering the shipment to be sent back to Kenya.

In Kenya, the Kenya Bureau of Standards (Kebs) inspected it and found the nuts had mold and recommended their destruction at the cost of Wondernut.

The company had a contract with AIG that was to be in place for six years. The firm went to the insurance company demanding compensation for the loss incurred under the contract of insurance dated May 8, 2019, but the insurer declined to pay, saying that their claim was not covered under their contract.

In court, Wondernut demanded to be paid Sh391,772 and Sh47.9 million with interest set by the court from December 18, 2019, until AIG finished paying the amount in full.

AIG argued that the agreement covered contamination and that the nuts were not contaminated whether by accident or intentionally during production, preparation, manufacture or packaging.

Wondernut first lodged their case with the Insurance Regulatory Agency which ruled that AIG should not compensate them.

Stanley Githinji, an insurance broker who procured AIG services on behalf of Wondernut, told the court that accidental contamination meant any loss that the insured may suffer as a result of the product getting contaminated when it is not deliberate.

He also added that it was impossible to have documentary evidence of accidental contamination.

A witness on behalf of Wondernut testified that he saw the destruction of the shipment as ordered by Kebs, adding that a representative of AIG took samples for further testing.

John Miners, who assessed the losses incurred by Wondernut on behalf of AIG, said that he could not tell when the contamination happened as he was not qualified to do so.

Miners further said that it was upon the company to prove their loss. From his assessment, he said that the compensation should be to the tune of Sh3.4 million.

Linda Wanjiru, who was the defence witness, said that the cover was global and not limited to where the contamination occurred.

In his judgement, Judge Mabeya said there is no doubt that the nuts went bad and it was confirmed by FDA and Kebs.

“All that was required was that the contamination should have been during or as a result of its production, preparation, manufacture or packaging,” he said.

He rejected the claim by AIG that the discovery of the contamination ought to have taken place during the packaging process in Kenya.

In the end, he awarded Wondernut Sh48.3 million, saying that they had proven the actual loss suffered and that the contract was for reimbursement of the loss suffered.