Bridge-Up Container Services Ltd v CFC Stanbic Bank Ltd [2023] KEHC 25941 (KLR)

Bridge-Up Container Services Ltd v CFC Stanbic Bank Ltd (Civil Suit 233 of 2010) [2023] KEHC 25941 (KLR) (21 November 2023) (Judgment)

Neutral citation: [2023] KEHC 25941 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Suit 233 of 2010

DKN Magare, J

November 21, 2023

Between

Bridge-Up Container Services Ltd

Plaintiff

and

CFC Stanbic Bank Ltd

Defendant

Judgment

1. The mater is a fairly straight forward one. the parties were in a relationship as a bank and customer. someone was jolted on the way. Vide an amended plaint dated 9/2/2028, the Plaintiff amended their claim for Kshs. 28,436,030 to 18,900,000 as loss of income. They also sought the following prayers: -a.A declaration that the Defendant’s actions are wrongful and illegal.b.A declaration that the Defendant’s repossession, detention and the eventual purported sale of the Plaintiff’s items is wrongful and illegal.c.Payment of Kshs. 18,900,000/= being loss of income as set out in paragraph 14. d.General damages.e.Interest at Court rates on (b) and (d)f.Costs of the suit.

2. The plaintiff pleaded that on 15/10/2007 the Defendants repossessed 5 Mastey Ferguson tractors, 3 trailer and 1 lone forklift Mache. They had taken a facility where they were financed by hire purchase for 13,000,000 to purchase;5 trailers5 tractors1 tone forklift

3. Out of all these all the tractors were repossessed and the forklift on 2 trailers remained out of Kshs. 13,000,000 which had been paid. According to the plaintiff on 2,859,5444. 89 inclusive of interest was due, as at 17/8/2007. They negotiated for release of vehicles with 1. 5 million to be paid and, every 200,000/= was to release one tractor and 100,000/= was to release a trailer.

4. The plaintiff sold one trailer, with the consent of the defendant and Kshs. 800,000/== was deposited in the account. The plaintiff deposited a total of 1,6000,00/= but the assets were not released. They posited that by dint of Section 15 (1) of Cap 507, the Defendant was not entitled to repossesses the said items having paid more than two thirds. The said section states as follows: -“15. Recovery of possession where two-thirds of price paid(1)Where goods have been let under a hire-purchase agreement and two thirds of the hire-purchase price has been paid, whether in pursuance of the agreement or of a judgment or otherwise, or has been tendered by or on behalf of the hirer or a guarantor, the owner shall not enforce any right to recover possession of the goods from the hirer otherwise than by suit.(2)If an owner retakes possession of goods in contravention of subsection (1), the hire-purchase agreement, if not previously terminated, shall terminate and—(a)the hirer shall be released from all liability under the agreement and shall be entitled to recover from the owner by suit all sums paid by the hirer under the agreement or under any security given by him in respect thereof; and(b)guarantor shall be entitled to recover from the owner by suit all sums paid by him under the contract of guarantee or under any security given by him in respect thereof.(3)This section does not apply where the hirer has terminated the agreement or the bailment by virtue of any right vested in him, or to the removal of goods under section 16(3)(b).

5. The said repossession was thus a violation of Section 15(1) of the Hire Purchase Act, Cap 507. The repossession of 5//10/2007 was without court order or filing suit. They stated that they consulted interest Advisory Centre and after sampling of the account, they noted that the debt was 30/4/2008 was 4,250,325 while the Defendant was claiming 5,758,928. 89. The plaintiff claimed for prayers sought as aforesaid.

Defence 6. The Defendant filed defence and counter claim dated 25th August 2010. In the defence, they made a general denial. They stated that they extended a lot of indulgence to the plaint.

7. They denied that the plaints had operations issued and they thus concluded that the defendant’s actions were lawful and valid. The actions are not named. The defence is one that the court of Appeal had in mind in the case of Raghbir Singh Chatte v National Bank of Kenya Limited [1996] eKLR, where the court of Appeal stated as doth: -“The main object of this rule and r.14 is to bring the parties by their pleadings to an issue, and indeed to narrow them down to definite issues, and so diminish expense and delay, especially as regards the amount of testimony required on either side at the hearing (per Jessel M. R. in Thorp v Holdworth (1876) 3 Ch. D. 637). This object is secured by requiring that each party in turn should fully admit or clearly deny every material allegation made against him. Thus, in an action for a debt or liquidated demand in money, a mere denial of the debt is wholly inadmissible”, (underling supplied).I will also add that the crucial deficiency of a general denial which I have already described, also applies to the evasive, inconsistent and contradictory alternative general traverse in the appellant’s defence. This was that if the respondent had extended any overdraft facilities without stating the amount involved, to the appellant which was moreover, denied, then the same and here again, without stating how and when, had been paid. Such a spurious pleading in the alternative cannot give any merit to the defence and so also makes it one which discloses no reasonable defence for all purposes including that of 0 6 r 13(1)(a).”

8. They set a counter claim stating that the vehicles were collectively referred as units. They stated thus there was 1 used 7-ton Forklift. They stated that the agreement provided for repossession. The interest was a sole discretion of the Defendant. They state that the Plaintiff was indebted to a tune of Kshs. 8,101,720. 04 with interest of 2. 75% per month which is more the 33% per annum. The defendant prayed for Kshs. 8,104,780. 04 and interest at 2. 75 % per annum from 29/9/2009.

9. I have never seen a Defence that is louder than the one filed by the Defendant. The defence was louder in silence then what it says. The defence is completely unhelpful and evasive. It does not disclose or answer: -(a)Whether a loan of Kshs. 13,00,000 /= was given.(b)Whether 5 trailers five tractors, one forklift were on hire purchase(c)That whether payment made was at over 2/3. The defendant picked a ruling date and thus there was no cross sectional cognisance. At no point was the date 29/9/2009 in use.

10. The operative date was 5/10/2007. By simple deductive reasoning the court can authoritative note that at 33% interest, the amount due at 29/9/2007 was 4,581,819. This is works out backwards from Ksh. 8,104,780. 04, allegedly due as at 29/9/2009 as 4,581,819. This amount approximately to the amount of Ksh 4,250,325 .06 pleaded in paragraph 17 of the plaint. There is no answer to the question of whooping interest. A party who wishes the court to make a finding on an issue pleaded in the defence, must specifically traverse the under Order 2 Rule 4 (1) the Civil Procedure Rules provided as doth: -“Matters which must be specifically pleadedA party shall in any pleading subsequent to a plaint plead specifically any matter, for example performance, release, payment, fraud, inevitable accident, act of God, any relevant Statute of limitation or any fact showing illegality—(a)which he alleges makes any claim or defence of the opposite party not maintainable;(b)which, if not specifically pleaded, might take the opposite party by surprise; or(c)which raises issues of fact not arising out of the preceding pleading.

11. I therefore find, that by the plaintiff being evasive on the decree, a sum of Kshs. 1,478,603. 79 was illegally loaded with the plaintiff’s account, as at 30/4/2008.

Evidence 12. The matter was initially dismissed when the plaintiff failed to proceed. The dismissal was set aside. PW1 testified on 20/7/2023 Caroline Mkoma Mbote Testified at that and adopted the witness statement dated 18/7/2023 and a list of statement dated 15/7/2023. They were filed on the eve of the hearing.

13. On cross examination, she stated that they paid all instalments. She stated that the counter claim for 8,104,780 is not due. She stated that the property was secured when over 14,000,000/= had been paid out of the principal of 13,000,000/=. This was the 800,0000/= for sale of one trailer that 1. 6 million as per the agreement. Their case was paragraph 8 of the amended plaint. Was not been specifically traversed.

14. Fides Mukhumba testified for there bank she is a team leader at the Defendants Digo branch. She adopted a statement dated 17/2/2022 and a list of documents dated 19/8/2016. On cross examination, she stated that she had worked for the defendant for one year and 6 months. She stated she was unable to authenticate that 17,556,400 was the net amount financed. She was also unable to state the source of the figure of Ksh 18,681,789. She then changed and stated that the final payment together with interest was Ksh 17,556,400. She agreed that is was true that two thirds of the total amount was to be Ksh. 11,704,426.

15. The bank statement was not produced to show the indebtedness. She could not be able to explain the level f indebtedness that the bank was being owed and monies paid. She was at pains to explain what was sold and what was not.

Defendant’s submissions 16. I adjourned the judgment last time to be able to get the defence submissions. As at 20/11/2023, when I am finalising this judgment, I have not seen the submissions on the portal.

Plaintiff’s submission 17. The Plaintiff field humongous but succinct submissions on the matters in issue. They stated that they had sought, inter alia refund of 14,338,610. 21 and 5,681,789 being the deposits they made for the vehicles.

18. They reiterated the contents of the further amended defence of 18/7/2023 and filed on 19/7/2023. They seek inter alia a refund of Ksh 14,338,610. 21 and deposit of Ksh 5,681,789.

19. They also claim loss of income. In that they rely on the case of Safarilink Aviation Limited v Trident Aviation Kenya Limited & another [2015] eKLR, where justice A. Mabeya held as doth: -“It has been held severally by this court that failure to rebut evidence tendered by one party leaves the court with no option but to draw an inference that the facts as presented are true. See Karuru Munyoro v. Joseph Ndumia Murage & Another Nyeri HCCC No. 95 of 1988 where Makhandia J. discussed the effect of failure to rebut evidence as follows:-“The plaintiff proved on a balance of probability that she was entitled to the orders sought in the plaint and in the absence of the defendants and or their counsel to cross-examine her on the evidence, the plaintiff’s evidence remained unchallenged and uncontroverted. It was thus credible and it is the kind of evidence that a court of law should be able to act upon.”

20. This in relation to the defendant who never rebutted the evidence of loss of income.

21. They further support their case by the decision of Justice in the case of Zum Zum Investment Limited v Habib Bank Limited [2014] eKLR, where the court reportedly stated that there must be valuation. A reading of Rtd Justice Mary Kasango’s decision does not yield that position.

22. They also submitted on bankers bools which I shall be dealing with in the analysis.

Analysis 23. The defendant has special knowledge of the operations of the account. They maintain banker’s books. By didn’t of section 176 of the evidence act, certified copies of bankers books are admissible in court as evidence of the transactions they relate to.

24. Section 112 of the Evidence Act provides as doth: -“112. Proof of special knowledge in civil proceedings. In civil proceedings, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disproving that fact is upon him.”

25. Further section 176 of the evidence act provides as doth: -“176. Mode of proof of entries in bankers’ books. Subject to the provisions of this Chapter of this Act, a copy of any entry in a banker’s book shall in all legal proceedings be received as prima facie evidence of such entry, and of the matters, transaction and accounts therein recorded.”

26. The defendants have burden of proving their counter claim. They also have a burden of showing they were indebted. The plaintiff positively stated that they had paid over two third. They also showed there was an agreement to pay and redeem the vehicles. They paid but unfortunately they did not get the vehicles. The defendant was completely mute on this aspect. Where are the vehicles and how much was recovered from their sale, whether legal or illegal.

27. I am aware that the burden of proof is on whosoever alleges. This is succinctly set out in sections 107-109 of the evidence act which provides as follow: -“107. Burden of proof.(1)Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.(2)When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.108. Incidence of burden.The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.109. Proof of particular fact.The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.”

28. The court will start with the counter claim which is fairly simple. The defendants set up a counter claim for 8,104,780. 04. These amounts can only be proved though the bankers books as set out in section 176 of the Evidence Act. The defendants must be the only strangers in paradise. They did not produce a single bankers book or statements to show indebtedness. Ins spite of setting up the counter claim for 8,104,780. 04, they did not produce any evidence completely. Even the witness was not sure whether the amount is due.

29. I got a definite perception that the defendant knew that there was cooked and eaten but wanted to go through the motions. There was no evidence tendered to support the defendants claim for 8,104,780. 04.

30. It was the duty of the defendant to prove their counter claim. By failing to do so, the court has no option than to dismiss the counter claim with costs.

31. The defence admitted that at the exact time and state, that the balance due was Kshs. 2,859,440 due to the bank. This is also admitted by the plaintiff who stated that they negotiated to 1,600,000/= which was paid. The payments were elaborated and shown in the documents by the plaintiff. They were made to the defendant.

32. The defendant chose to be silent on the negotiation and agreement to pay 1,600,000/= instead of Ksh 2. 8M the amount also tells us another story. The amount due is less than one third of the total amount under the hire purchase agreement. Parties must know that the court does not act of conjecture, surmises and hyperbole. This is a court of law and must be furnished with evidence.

33. In this case, I did not find the Defence witness credible. She was evasive even on she stated that at 17/8/ 2017 the amount outstanding was 2,859,444. I noted that the witness was evasive when answering questions on cross examination. She stated that she was not aware whether the vehicles were repossessed. She stated that the sum due was 8,104,780. 04 attracting interest at 2. 09 per month. She stated that she did not have anything to show for the same.

34. This coupled with an admission that only Ksh. 2, 859, 444/= due on the date of repossession. This is to show that less that 25% was outstanding. It is therefore my considered opinion that the counter claim is based on hot air. It is not anchored in reality. It is what Lord Denning MR, had in mind in Macfoy vs. United Africa Co. Ltd [1961] 3 All E.R. 1169 Lord Denning delivering the opinion of the Privy Council at page 1172 (1) said;“If an act is void, then it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order of the Court to set it aside. It is automatically null and void without more ado, though it is sometimes convenient to have the Court declare it to be so. And every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse.”

35. I therefore proceed to dismiss the counter claim with costs of Kshs. 175,000 to the plaintiff.

36. Having repossessed the vehicles after being paid over 75% of the hire purchase amount payable, I find and hold that the repossession was illegal, null and void and contrary to section 15(1) of the Hire Purchase Act, cap 107. The Plaintiff was as a fact relieved from paying any amount.

37. I need to disabuse the defendant that they financed Ksh. 18,681,789. This was the value of the goods to be financed. The values of each of tractors was given in the letter dated 19/12/2003 as doth: -5 tractors at Ksh. 1,823,530 (total5 trailers @ 800,000 4,000,00/=1 forklift at Ksh. 4,318,000

38. The total value of all these was Ksh. 18,681,781out of which Kshs 5,681,789, 30. 41 % was self-financed at 59. 59 was financed by the defendant interest charged was 15. 5 % or 8. 72 flat.

39. In other words, the flat rate of 8. 72 % was used as calculations done up to the end. This is what the plaintiff signed into. Not 33%. 15. 5 % translates to 1. 292%.

40. By charging exorbitant interest outside contracts interest, the defendant was in pursuit of unlawful endeavour. When the goods were unlawfully repossessed, the title had crystallised in the plaintiff.

41. By committing as illegality the defendant cannot be led to escape due punishment. Luckily the trailer that was sold gave us an inkling on how much depreciation had been done. There was none.

42. Consequently, the plaintiff is entitled to damages. There can be no damages for breach of contract. However, the plaintiff did not base his claim on contract is not, on the illegality committed. The repossession having been void, there is no room for condoning an illegality. The loss caused by an illegality can only be ameliorated by award of damages.

43. In the case In the case of Nyambati Nyaswabu Erick Vs Toyota Kenya Ltd & 2 Others (2019) eKLR, Justice D.S Majanja held as doth:“General damages are damages at large and the Court does the best it can in reaching an award that reflects the nature and gravity of the injuries. In assessing damages, the general method approach should be that comparable injuries would as far as possible be compensated by comparable awards but it must be recalled that no two cases are exactly the same.”

44. In this case 5 tractors, 4 trailers including one that were sold without effect and the one for 16,635,650. Upon illegally repossessing the motor vehicles, they were not sold. There was apparently nothing given to the plaintiff. We are not told the fate of the tractors. It must be presumed that they were illegally sold.

45. Samuel Kamau Macharia Vs Kenya Commercial Bank Limited, Kenya Commercial Finance Company Limited [2003] eKLR, a matter that has found itself in courts forever, the court stated as doth: -“As Lord Goff of Chieveley and Professor Gareth Jones state in their monumental treatise, The Law of Restitution, 5th edn (1998), at pp 11-12:“Most mature systems of law have found it necessary to provide, outside the fields of contract and civil wrongs, for the restoration of benefits on grounds of unjust enrichment.”This statement is founded on the observation of Lord Wright in the English case of Fibrosa Spolka Akeyjna v Fairbairn Lawson Combe Barbour, Ltd, [1943] AC 32, at p 61 where he said:“It is clear that any civilized system of law is bound to provide remedies for cases of what has been called unjust e nrichment or unjust benefit ……. Such remedies …… are generically different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi - contract or restitution.”

46. In Chase International Investment Corporation and Another v Laxman Keshra and 3 others [1978] eKLR, the court of Appeal [Madan, Wambuzi & Law JJ A] stated as doth: -“It seems to me that upon a fine analysis the first category, ie the contract of guarantee which I have discussed above, blends into the theory of restitution which gives it the foundation to justify it. Goff and Jones in their treatise, Law of Restitution, state (page 11):Most mature systems of law have found it necessary to provide, outside the fields of contract and civil wrongs, for the restoration of benefits on grounds of unjust enrichment. There are many circumstances in which a defendant may find himself in possession of a benefit which, in justice, he should restore to the plaintiff.Obvious examples are where the plaintiff has himself conferred the benefit on the defendant through mistake or compulsion. To allow the defendant to retain such a benefit would result in his being unjustly enriched at the plaintiff’s expense, and this, subject to certain defined limits, the law will not allow ... The principle of unjust enrichment presupposes three things: first, that the defendant has been enriched by the receipt of a benefit; secondly, that he has been so enriched at the plaintiff’s expense; and thirdly, that it would be unjust to allow him to retain the benefit. All the three foregoing conditions are satisfied in this case: the appellants have been enriched by the receipt of benefit at the expense of Laxmanbhai, and, so obviously, it would be unjust to allow the appellants to retain the benefit of it to the full extent of Laxmanbhai’s claim. Goff and Jones also state (at page 12):The principle of unjust enrichment is placed in the forefront of the American Restatement of Restitution. Paragraph 1 provides that ‘a person who has been unjustly enriched at the expense of another is required to make restitution to the other”

47. I therefore note that if the plaintiff receives the damages that will restore them to the position he was, restitution ad integrium.

48. Had the tractor been sold and indeed they must have had been sold these many years later. The only amount then legitimately due was 2,859,444. Out of this the plaintiff paid 800,000 / though leaving a balance of 2,059,444. This is the money the vehicles should have returned to the defendant after sale. Out of the possible value of 16,635,650 the illegally repossessed items, only 2,859,444, the value that the plaintiff lost was 14,576,206/=

49. Given the impunity with which this was done in disregard of the of law, in particular the law, in particular Section 15(1) of Cap 405 award of damages of Kshs. 15,00,000 to the plaintiff will suit a damages for unlawful repossession.

50. The defendant did not release the motor vehicles upto the tune 1. 6 million was paid. They refused to release. There is a claim for loss of income. The sales is not well documented. The award under damages for unlawful repossession is sufficient. The plaintiff did not properly raise the claim of loss of user of the said vehicles. I consequently dismiss the claim for loss of income. In any case these being total loss, the plaintiff was under duty to mitigate losses.

51. I therefore find for the plaintiff against the defendant. I equally dismiss the counterclaim with costs.

Determination 52. In the end I make the following orders: -a.The plaintiff had cleared the indebtedness to the defendantb.The repossession, detention and sale are wrongful and illegal and as such released the plaintiff from liability to pay any indebtedness.c.Damages of for unjust enrichment on the basis of restitution ad integrum Kshs. 15,000,000/=.d.The counterclaim is dismissed with costs of 175,000/=.e.Interest on the said amount from the date of filing suit till payment in full.f.Costs of the suit to the plaintiff to be taxed.g.Interest on the said damages from the date of filing suit.

DELIVERED, DATED AND SIGNED AT MOMBASA ON THIS 21ST DAY OF NOVEMBER, 2023. JUDGMENT DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORM.KIZITO MAGAREJUDGEIn the presence of:Mr. Mwanzia for the PlaintiffNo appearance for the DefendantCourt Assistant - Brian