Channan Agricultural Contractors Kenya Ltd v Rosemary Nanjala Oyula,Raju t/a Channan Agricultural Contractors Ltd & Weldon Kipyegon Korir [2013] KEHC 1595 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT BUSIA

CIVIL APPEAL NO. 6 OF 2010

CHANNAN AGRICULTURAL CONTRACTORS KENYA LTD………….… APPELLANT

VERSUS

ROSEMARY NANJALA OYULA………………………………...…1ST RESPONDENT

RAJU T/A CHANNAN AGRICULTURAL CONTRACTORS LTD…... 2ND RESPONDENT

WELDON KIPYEGON KORIR…………………………………….…..3RD RESPONDENT

J U D G M E N T

These proceedings demonstrates how faulty pleadings, if not corrected, can imperil an action right to the end.    In a running down matter the 1st Respondent sued the 2nd and 3rd Respondents for a claim in General and Special Damages.  After hearing the witnesses, the Trial Court entered Judgment for the 1st Respondent in the sum of Kshs. 454,080 plus costs.

The realization of the decree from that Judgment has not been plain sailing.  On instruction of the 1st Respondent Eshikoni Agency Auctioneers, a firm of Auctioneers proclaimed the following property

Tractor Reg. No. KAT 502 S

Motor Vehicle Reg. No. KAR 594 B Plup

Pick Up Reg. No. KAR 593 B

Pick Up Reg. No. KAR 592 B

Tractor No. KAP 506 S plus its Trailer

That proclamation immediately instigated an objection by the Appellant herein.  The decision of the Trial Court on the objection proceedings is the subject of this appeal.

The Appellant is known by the name “Channan Agricultural Contractors Kenya Limited.”  It is a Limited Liability Company duly incorporated on 31st March 2000 under the provisions of the Companies Act (Cap 496).  In the objection proceedings the Appellant contended, as it now maintains, that it is a different legal entity from the 2nd Respondent.  The Appellant sought to demonstrate that it had legal or equitable interest in the proclaimed property and the same could not suffer attachment on account of a decree against the 2nd Respondent.

In answer, 1st Respondent thought that any difference between the Appellant and the 2nd Respondent was cosmetic.  This is how Julius Orina Manwari Counsel appearing for the 1st Respondent in the objection proceedings put it in his affidavit sworn on 23rd June 2009.

“That if there is any difference between the 1st Defendant and the Objector the same lies only in the cosmetic detail of having the name “RAJU” come before the company name”.

It was the 1st Respondents further contention that the 2nd Respondent had interchangeably described itself as follows;

“RAJU T/A AS CHANNAN AGRICULTURAL CONTRACTORS LIMITED, RAJU T/A CHANNAN AGRICULTURAL CONTRACTORS & CHANNAN AGRICULTURAL CONTRACTORS (K) LIMITED”

Counsel for the 1st Respondent argued that the Appellant and the 2nd Respondent were one and the same thing.

So is the difference in names a small matter? It is elementary that a limited liability company is a distinct legal person. It is distinct and separate from its Shareholders or Directors.  In its own pleadings of 4th September 1998, the 1st Respondent describes the 2nd Respondent  as follows:

“The 1st Defendant is a Limited Liability company duly incorporated having its registered office within the Republic of Kenya (service of process upon it to be effected through he Plaintiff’s Advocate offices).”

The party sued was a Corporate Person. The name of that person was said to be RAJU T/A CHANNAN AGRICUTURAL CONTRACTORS LTD. But the Appellant is CHANNAN AGRICULTURAL CONTRACTORS KENYA LTD.  And the Appellant exists by virtue of the Certificate of Incorporation dated 31st March 2000.  So was it a mere  misdescription?  Perhaps not because at the time the cause of action accrued the Appellant was nonexistent. This is a not a simple matter. The accident occurred on 7th October 1997. The Appellant came into existence on 31st March 2000.  If the Appellant must take responsibility for that accident then it must be proved that it legally assumed liability for an incident that happened before its inception. That is not proved. The Appellant cannot carry the burden of a wrong that happened before its birthday.

That being my view, then I now embark on examining whether or not the Appellant had legal or equitable interest in the proclaimed property.

Shown to the trial Court were log books to four of the vehicles.  The table below shows the details of registration.

Vehicle                              Registered owner

KAR 592B                        Channan

Agricultural Contractor

& Diamond Trust

Bank Ltd P.O. Box

1081 Kisumu.

KAR 593B                        Channan

Agricultural Contractors

Ltd & Diamond

Trust Bank (K) Ltd

P.O. Box 1081 Kisumu.

KAR 594B                        Channan

Agricultural Contractors

(K) Ltd &

Diamond Trust Bank

(K) Ltd P.O. Box

1081 Kisumu

KAT 502S                         Channan Agricultural

Contractors (K) Ltd &

Stanbic Bank(K) Ltd

P.O. Box 30113 NRB.

Also shown to Court was a Hire purchase Agreement between the Appellant and Diamond Trust Bank Kenya Ltd as proof that the Bank financed the Appellant for the purchase of motor vehicles KAR 591B, KAR 592B, KAR 593B, KAR 594B and KAR 595B.  Further shown to Court was a letter dated 29th September 2009 from the Bank to the Appellant confirming that the Appellant had fully liquidated the facility.  It is also in that letter that it is confirmed that the original logbooks had been returned to the Appellant together with transfer forms signed in its favour.

From the evidence not only is motor vehicle KAR 594B duly registered in the name of the Appellant but the Hire Purchase agreement and letter from the Bank confirms that the Appellant is the legal owner thereof.

As to motor vehicle KAT 502S it is registered in the name of the Appellant and Stanbic Bank (K) Ltd.  It was explained that Stanbic financed the purchase of this vehicle.  In so far as the Appellant is co-registered with the Bank, I would hold that the Appellant has equitable, if not, legal interest therein.

Motor vehicles KAR 592B and KAR 593B are somewhat unique.  In the logbook to motor vehicle KAR 592B the registered owners are “Channan Agricultural Contractors” and Diamond Trust Bank.  That is not an accurate description of the Appellant.  No explanation was given for this by the Appellant.  There is no telling whether it was a mere clerical error or the entity therein is  different from the Appellant.  The same can be said of the log book to motor vehicle KAR 593B which was registered in the name of the Bank and “Channan Agricultural Contractors Ltd.”  Here the word “Kenya” is missing.  One could say that this clearly is a clerical error as it is unlikely that the Registrar of Companies would allow the registration of two companies with very similar names (see  Section 19 of the Companies Act Cap 486) But that would be  speculation!

Yet, because of the evidence contained in the Hire purchase agreement and the letter from Diamond Trust Bank, this Court must give regard to the purport of the provisions of Section 8 of The Traffic Act.  That provides

“The person in whose name a vehicle is registered shall, unless the contrary is proved, be deemed to be the owner of the vehicle.”

Registration is not conclusive evidence of ownership.  Although the logbooks to motor vehicles KAR 592B and KAR 593B could tell a different story, there is evidence from the person who financed the purchase of the vehicles that the vehicles belong to the Appellant. On the balance of probabilities, I believe the Appellant when it says that it is the legal owner of the two vehicles.

Let me say something about “any other movable property of the J/D” before making some observations on tractor KAP 506S. This Court has held that the Appellant is not the judgment debtor.  The Auctioneer cannot therefore proclaim “any other movable property” of the Appellant in execution of the decree.

A fifth property that had been proclaimed was Motor Tractor KAP 506S.  This too was the subject of the objection proceedings.  But unlike the other vehicles, there was a studious silence by the Appellant about the ownership of this vehicle.  No documents of ownership, either by way of logbook, Search certificate or otherwise, were shown to the Court.  In the objection proceedings the Appellant asserted that the tractor KAP 506S and its trailer belonged to it.  The Appellant was under an obligation to prove that it had Legal or equitable interest in the tractor and trailer.  It is an obligation that it has failed to discharge.

The outcome of this appeal is as follows:-

I allow the appeal in respect to the following movable property,

Tractor KAT 502S

Motor vehicle KAR 594B

Motor vehicle KAR 593B

Motor vehicle KAR 592B

Any other movable property.

The Appeal fails in respect to motor tractor KAP 506s and its trailer.

A question would then arise as to who should pay the auctioneers costs for the “botched up” execution.  An auctioneer is under a duty to investigate the ownership of any property before executing.  The Auctioneer must take the blame for an unlawful attachment unless the Auctioneer can show that he was led down that road by the judgment creditor.  This issue never arose in the objection proceedings and in fairness the Lower Court must determine it after hearing the Judgment Creditor and the Auctioneer.  One thing is sure the Appellant cannot pay charges for the unlawful attachment.

The Appellant has very substantially succeeded on this Appeal and an order on costs must reflect that success.  The Appellant shall have ¾ costs both for the objection proceedings and for the Appeal.

DATED, SIGNED AND DELIVERED AT BUSIA THIS 4TH DAY OF NOVEMBER 2013.

F. TUIYOTT

J U D G E

IN THE PRESENCE OF:

MUTAI………………………………………………………COURT CLERK

ONSONGO H/B GICHABA………………………..FOR THE APPELLANT

MANWARI……………………………………FOR THE 1ST RESPONDENT

N/A……………………………………………FOR THE 2ND RESPONDENT

N/A……………………………………………FOR THE 3RD RESPONDENT