Warm the oil in a dutch oven or stainless steel pot on medium heat. When warm, add chicken and brown on all sides.
While the chicken is browning, chop the onions, mince the garlic, and peel and cut the carrots into coins. If you have Yukon gold potatoes instead of the smaller gold variety, chop them into quarters (no need to peel).
Remove chicken from the pot and deglaze if there are any pieces left sticking. You can use a little water or sherry to scrape the pieces off.
Add extra oil to the pot if necessary, then add the onion. Saute until onions are soft and translucent.
When the onion is ready, add garlic and stir for about ten seconds to release the fragrance without letting them burn.
Add the chicken back to the pot, along with carrots, potatoes and bay leaves, and add water about a quarter of the way up the pot. Everything does not need to be completely covered, as you can come back and stir once or twice. Bring the water to a boil, then turn down to simmer for 25-30 minutes, or until you can easily slide a fork through a potato.
Once the potatoes are ready, remove the bay leaves and add crushed tomatoes, sugar, and salt and pepper to taste.
Simmer on low for 30 minutes so the sauce has some time to reduce and thicken up.
Serve with rice.