DIAMOND TRUST BANK (K) LTD vs MARY NYAMVULA KINGA [2001] KEHC 388 (KLR)

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT MOMBASA CIVIL SUIT NO.355 OF 2000

DIAMOND TRUST BANK (K) LTD…………………………..PLAINTIFF

=V E R S U S=

MARY NYAMVULA KINGA……………………………….DEFENDANT

R U L I N G

The matter under consideration is the Notice of Motion dated 16. 11. 00 which was taken out by the Plaintiff under O.12 r.6 Civil Procedure Rules for orders:-.

1. That Judgment on admission be entered in favour of the Plaintiff against the Defendant as prayed in the Plaint.

2. That in the alternative judgment on admission be entered in favour of the Plaintiff against the Defendant for the sum of Kshs.252,310. 00 being part of the sum prayed for in the plaint and the balance of the amount claimed to proceed to hearing.”

To succeed in such prayers the Plaintiff must show that the admissions made by the Defendant are clear, unambiguous and unconditional. In the poetic words of Madan, J.A. (as he then was) in Choitram –v- Nazari,(1982 – 88) 1 KAR 467:

“For the purposes of O.XII r.6 admi ssions have to be plain and obvious, as plain as a pikestaff and clearly readable because they may result in judgment being entered. They must be obvious on the face of them without requiring a magnifying glass to ascertain their meaning. Much depends up on the language used. The admission must leave no room for doubt that the parties passed out of the stage of negotiations on to a definite contract. It matters not even if the situation is arguable, even if there is a substantial argument, it is an ingre dient of jurisprudence, provided that a plain and obvious case is established upon admission by analysis”.

Let me state on the outset that the alternative prayer is conceded both in the defence filed at paragraph 6 and in submissions by learned counsel for the Defendant, Mr. Kenzi. I would therefore not belabour that point and would readily enter judgment for the admitted sum of Kshs.242,310/= if the main prayer fails. Has the Plaintiff discharged the onus of establishing the admission relating to the total sum claimed of “Kshs.591,639. 50 together with interest thereon at 47% from 24. 6.2000 until payment in full?”

A short recap of the facts is pertinent.

The Plaintiff company herein is described as “a Financial Institution and Bank”, (hereinafter “the Bank”) but the transaction the subject-matter of this suit did not arise out of the normal Bank/Customer relationship. What is pleaded is a Hire-Purchase agreement entered into on10. 6.1997 in which the Bank let to the Defendant (hereinafter “the hirer”) a Nissan Caravan Van (hereinafter the vehicle) valued at Kshs.720,000/- on terms that the hirer would have the option to purchase the same after payment of monthly hire purchase instalments of Kshs.28,655. 85. For some unexplained reason none of the parties saw it fit to exhibit the said agreement although both rely on its terms in support of their pleadings.

Be that as it may, for a period of about one year until 25. 6.1998 the hirer made various irregular hirepurchase instalments but was still in arrears of Kshs.517,310/- together with interest thereon and other penalties. The Bank then invoked Clause 4 of the Agreement (which I am unable to verify) and repossessed the vehicle on that day. For some reason, which again is unexplained, the vehicle was not sold immediately but the Bank says it sold it 4 months later on 28. 10. 1998 and fetched Kshs.275,000/-. By that time they had incurred storage charges and further interest raising the debt due to kshs.591,997. 20. Since then the Bank charged interest at a rate which it says was contractual but which I am unable to verify, for another period of about 20 months until 7. 6.2000 when they formally demanded payment of Kshs.543,452. 95. They stated:

“The amount has risen as a result of an agreement made between yourself and the Bank …….”

It gave 14 days’ Notice before legal action was taken. But the notice period came and went apparently without any response.

Two months later on 8. 8.2000, a letter was addressed to the Bank’s Advocates by the hirer. It made no reference to any previous letter or other communication but merely stated:-

“I do wish to state as follows:

(1) I agree to pay the outstanding debt arising from the above mentioned vehicle.

(2) Payment to begain end of September after the schools open at an insta lment of Kshs.40,000/ - p.m. till payment is made in full”.

It is that letter which learned counsel for the Bank Mr. Mugambi latched on to submit that there was unequivocal admission of liability for the amounts demanded by the Bank and the basis upon which the application for summary judgment was made.

It seems to me however that the same Advocate had lingering doubts about the content and enforceability of the said letter. Soon after, on 1. 9.00 he advised his client, the Bank that

“it was better to serve summons on the hirer so that the necessary consent could be obtained from court in respect of the request made by the hirer”.

That is when a letter was addressed to the hirer on 7. 9.00 making a demand for Kshs.676,345. 30 with interest at 25%”. Interest had hitherto been charged at 47% p.a. There was no response to that letter and apparently the hirer could not be drawn to enter into any consent.

When he was served with summons to enter appearance the hirer protested against the amount as calculated with interest at 47% p.a. More importantly, she raised the fundamental issue as to when the Hire Purchase Agreement was terminated and the legal consequences of such termination. In her view, which Mr. Kenzi argued fervently, the agreement was terminated on 25. 6.1998 when the Bank repossessed the vehicle and the legal consequence was that the Bank was only entitled to receive the arrears of the monthly payments as at that date with interest thereon. Some of those arrears, he argued, were paid off upon the sale of the vehicle and all that the hirer was obliged to pay was the shortfall. The rate of interest charged is also disputed. The view taken by Mr. Mugambi on the other hand was that the hire purchase agreement was not terminated by repossession of the vehicle on 25. 6.1998 but by Notice served on the hirer on 17. 8.1999. Once again that Notice has not been exhibited and it is not clear on what basis it was served.

I have carefully considered this matter and the material laid before me and I think the issue raised by the hirer through Mr. Kenzi is weighty enough to deprive the Bank of summary judgment. It cannot be fully adumbrated in the absence of relevant material that the court has not had the benefit of analysing, having been omitted, whether by design or accident. There certainly seems to be some substance on authority, for the proposition that:

“Where under a hire purchase agreement the hire is determined by the owner because the hirer is in arrears with his payments of the hire instalments, the damages receivable by the owner are the instalments in arrears and unpaid and the interest on such arrears”.

That was stated in Credit Finance Corporation Ltd –vs- Lanani [1964] E.A. 317.

As to when that agreement was determined and for how long the interest on arrears should run, or the rate thereof, that has to await the trial.

I decline to grant prayer (1) in the application. There is nothing plain and obvious about it at this stage. I dismiss prayer (1) and grant the alternative prayer with interest thereon at court rates from the date of filing suit. The balance of the amount claimed shall go for trial.

The Applicant has only been partially successful. I grant half the costs of the application to the Plaintiff/Applicant.

Dated this 14th day of March, 2001.

P.N. WAKI

J U D G E