Family Bank Kenya Limited v Kamwara & another [2022] KEHC 608 (KLR)

Family Bank Kenya Limited v Kamwara & another (Civil Appeal E005 of 2021) [2022] KEHC 608 (KLR) (16 March 2022) (Judgment)

Neutral citation: [2022] KEHC 608 (KLR)

Republic of Kenya

In the High Court at Chuka

Civil Appeal E005 of 2021

LW Gitari, J

March 16, 2022

Between

Family Bank Kenya Limited

Appellant

and

Esther Ciamwindu Kamwara

1st Respondent

Delax Motors

2nd Respondent

(The appeal arised from the Judgment in Chuka Chief Magistrate’s Court Civil Case No. 87/2017)

Judgment

Background 1. The 1st Respondent sued the Appellant and the 2nd Respondent for damages in CMCC No. 87 of 2017 (Chuka) vide the Amended Plaint dated 7th November 2017. The 2nd respondent’s claim was as follows:1)A declaration that the defendant’s act of proclaiming the plaintiff’s moveable property was illegal and unwarranted and issue an order of a permanent injunction restraining the defendant, his agent, auctioneers, assigns, servants and anyone acting on his behest from attaching, selling and disposing the plaintiff’s motor vehicle registration number KCF 768 W Toyota Hilux Vigo.2)General damages for breach of contract, mental, anguish, torture and suffering.3)Loss of user of motor vehicle from 22/8/2017 until date of released.4)Costs and interests of the suit.The 1st respondent who was the plaintiff instituted the suit after the motor vehicle KCF 786 W Toyota Vigo that she had acquired through an assets Financing arrangement with the appellant was prematurely and in the most callous, malicious, mischievous and arbitrary manner repossessed/proclaimed.The appellant, Family Bank Kenya Limited is a Financial Banking Institution with branches throughout Kenya while Delax Motors is a private company undertaking motor vehicle sales throughout Kenya and was joined in the suit vide an amended plaint dated 7/11/2017.

2. The 1st Respondent alleged that on or about 23rd March 2016, the 1st Respondent and the Appellant entered into a chattel mortgage agreement and that it was an express term that the 1st Respondent would receive a loan facility of Kshs. 1,720,000/= (one million, seven hundred and twenty thousand only) from the Appellant to finance the purchase a motor vehicle.It was agreed between the parties that in consideration thereof the 1st respondent would repay the advanced loan with interest within a period of thirty six (36) months. It was further a term of agreement that the borrower would repay the loan facility in monthly instalments of Kshs.67,328/- for thirty six months until payment in full. It was a condition of the contract that the lender would retain all the original registration documents for the motor vehicle to act as security for the loan facility until the completion of the loan repayment after which the appellant was to surrender the said documents to the plaintiff. The plaintiff received the motor vehicle KCF 786 W Toyota Hilux Vigo (the said motor vehicle) in the month of April 2016 and started using it for transport business to earn a living she was making Kshs.5000/- per day and was diligently servicing the loan.

3. The 1st respondent alleges that on or about 22/8/2017 the appellant illegally, fraudulently and unlawfully instructed Startruck Auctioneers to proclaim the said motor vehicle without a decree of the court, legal notice and in outright breach of the said contract.The 1st respondent visited the offices of the appellant and was asked to pay Kshs.39,000/- to the appellant and Kshs.43,584/- to of Startruck Auctioneers before the vehicle could be released to her. The appellant ordered the auctioneer to drive the motor vehicle to the premises of the 2nd respondent. The respondent alleged that the appellant breached the terms of the contract as a result of which she suffered loss and damages. The appellant filed a statement of defence and alleged that the 1st respondent breached the terms of the agreements as she defaulted in repaying the loan facility. That it was a term of the agreement that if the borrower failed to pay on due date, the amount outstanding shall become immediately repayable. That as a consequence of default the appellant instructed the auctioneers to repossess the said motor vehicle in a bid to recover the sum advanced to the 1st respondent. The appellant denied that he was in breach of the agreement and urged the court to dismiss the suit with costs.The second respondent contended that he was wrongly and improperly sued. He urged the court to dismiss the suit with costs.

4. The trial proceeded before the learned trial magistrate who rendered his judgment on 7th April 2021 in favour of the 1st Respondent against both the Appellant and the 2nd Respondent, jointly and severally, as follows:a.General damages - Kshs. 200,000/=b.Loss of user - Kshs. 600,000/=c.Repossession fee - Kshs. 43,580/=d.Storage - Kshs. 96,280/=Total - Kshs. 939,860/=e.Plus costs and interest

The Appeal 5. Dissatisfied by the said judgment, the Appellant instituted the present appeal vide a Memorandum of Appeal dated 28th April 2021. The appeal is based on the following grounds:-a.That the learned magistrate erred in law by finding that the Appellant unlawfully withheld the 1st Respondent’s Motor Vehicle registration number KCA 768W Toyota Hilux from 23rd August 2017 to 22nd January 2018 despite the fact that the 1st Respondent produced a release letter dated 23rd August 2017 from the Appellant.b.Thatthe learned magistrate erred in fact by failing to appreciate that the Appellant herein followed due process in repossession of Motor Vehicle registration number KCA 768W Toyota Hilux.c.Thatthe learned magistrate erred in law and fact by awarding the 1st Respondent loss of use at a rate of KShs. 4,000. 00 for 150 days without production of any documents to demonstrate the daily earnings.d.Thatthe learned magistrate erred in law and fact by awarding the 1st Respondent KShs. 200,000. 00 in General Damages despite the 1st Respondent admitting that she was in breach of the Letter of offer and producing Bank Statements which showed that she was in arrears.e.Thatthe learned magistrate erred in law and fact by awarding the 1st Respondent a refund of repossession charges of Kshs. 43,850. 00 despite the 1st Respondent making an admission that she was in default at the time of repossession.f.Thatthe learned magistrate erred in law and fact by awarding the 1st Respondent a refund of storage fee of Kshs. 96,280. 00, an amount that was never specifically pleaded nor paid to the 2nd Respondent herein.

6. The appeal was canvassed by way of written submissions. The Appellant filed its written submissions on 25th November 2021 while the 1st Respondent filed its written submissions on 8th December 2021.

Appellant’s Submissions 7. It was the Appellant’s submission that the trial court erred in finding that the Appellant illegally withheld the 1st Appellant’s motor vehicle for six (6) months. According to the Appellant, the repossession of the 1st Respondent’s motor vehicle was lawful as the 1st Respondent was in default in loan repayment.

8. It was further its submission that the 1st Respondent failed to prove that the subject motor vehicle was engaged in transport business hence the trial court erred in awarding damages for loss of use that were not specifically proved. The Appellant relied on the case of Linus Fredrick Msaky v. Lazaro Thuram Richoro & Another [2016] eKLR.

9. Finally, the Appellant submitted that the award of Kshs. 200,000/= and Kshs. 43,580/= for general damages and repossession fees respectively was wrongful as they were neither pleaded, quantified, nor proved. The Appellant thus urged this court to allow the appeal as prayed, quash the judgment of the trial court, and direct that the decretal sum that was deposited as security be released to the Appellant together with the interest thereon.

1stRespondent’s Submissions 10. In opposing the appeal, the 1st Respondent submitted that the trial magistrate’s judgment and awards thereof were very fair, lawful, well-reasoned and justified. According to her, the subject motor vehicle was impounded, held and retained by the 2nd Respondent at the behest of the Appellant without a lawful justification. As such, the 1st Appellant submitted that the judgment and awards by the trial court was reasonable and appropriate compensation to indemnify her for breach of contract. She thus urged this court to find that the appeal herein is without merit and dismiss the same with costs to the 1st Respondent.

Issues for Determinationa.Whether withholding the 1st Respondent’s motor vehicle registration number KCF 786W Toyota Hilux Vigo during the period from 22nd August 2017 to 4th February 2018 was lawful.b.Whether the Appellant was liable for the acts of the 2nd Respondent.c.Whether the judgment and awards by the trial court were lawful.

Analysis 11. As the first appellate court, this court has a duty to re-evaluate, re-analyze and re-consider the evidence and draw its own conclusions, of course bearing in mind that it did not see witnesses testifying and therefore give due allowance for that.

12. In Gitobu Imanyara & 2 others v. Attorney General[2016] eKLR, the Court of Appeal stated that;“[A]n appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled. Briefly put, they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowances in this respect.”

13. In Peters v. Sunday Post Ltd[1958] EA 424, the Court held that;“Whilst an appellate court has jurisdiction to review the evidence to determine whether the conclusions of the trial judge should stand, this jurisdiction is exercised with caution; if there is no evidence to support a particular conclusion, or if it is shown that the trial judge has failed to appreciate the weight or bearing of circumstances admitted or proved, or had plainly gone wrong, the appellate court will not hesitate so to decide.”

14. Similarly, in Abok James Odera t/a A.J Odera & Associates v John Patrick Machira t/a Machira & Co. Advocates [2013] eKLR, the same stated with regard to the duty of the first appellate court;“This being a first appeal, we are reminded of our primary role as a first appellate court namely, to re-evaluate, re-assess and reanalyze the extracts on the record and then determine whether the conclusions reached by the learned trial Judge are to stand or not and give reasons either way.”

15. It is not in dispute that the Appellant and the 1st Respondent entered into a loan agreement. It is also not in dispute that the 1st Respondent defaulted in the loan repayment prompting the Appellant to repossess the 1st Respondent’s motor vehicle which was security for the loan. The main issue for determination by this is whether the Appellant was justified to authorize the 2nd Respondent to repossess the subject motor vehicle during the period from 22nd August 2017 to 4th February 2018.

Whether the Appellant was justified to repossess the subject motor vehicle 16. The 1st Respondent testified as the only witness in support of her case against the Appellant and the 2nd Respondent. She relied on her statement dated 14th February 2018 as her evidence. She produced a letter of acceptance, copy of logbook of the subject motor vehicle, bank statement, and a release letter dated 23rd August 2017 as P. Exhibits 1, 2, 3, and 4 respectively.

17. As per the loan agreement in question, the 1st Respondent agreed to repay the loan facility in monthly installments of Kshs. 67,328/= until repaid in full. Under Clause 12. 1.3 of the loan agreement, inability by 1st Respondent to repay the debt as they fall due constituted a default of the loan facility.This issue is under grounds 1& 2 of Appeal. The relationship between the appellant and the 1st respondent was based on contract. It was a term of the contract as per the letter of offer dated 4/4/2016 that if the borrower defaulted in payment of the amount due, the lender may by notice to the borrower terminate its obligation and or demand the immediate repayment of the amount outstanding under the proposed facility together with accrued interest and all other amounts due and the borrower will comply with such demand forthwith. It was further a term in the letter of offer that the borrower will indemnify the lender against any loss (including loss of profit) and/or expense which may be incurred as a consequence of any default in payment by the borrower, of any sum hereunder when due and/or occurrence of any event of default, see Clause 12:2 12:3 page 138 of the record. The 1st respondent accepted the terms and conditions and signed the letter of offer. By so doing, she bound herself to abide by the terms and conditions of offer. The appellant served on the 1st respondent the first demand letter dated 14/7/2017 demanding Kshs.46,698. 65 with interests. A second demand letter was issued on 21/7/2017and a demand of Kshs.103,098. 65 was made together with accrued interests, page 151& 152. The 1st respondent had defaulted and hence the demand by the appellant. The1st respondent relied on a bank statement which she produced as exhibits- 3. The statement showed that she had defaulted in repaying the loan. The appellant therefore lawfully demanded the repayment of the outstanding amount as it is what the parties had agreed in the letter of offer. It was upon the borrower to comply with the demand. The 1st respondent admitted during cross-examination that as at the time the vehicle was re-possessed, she had not paid the outstanding amounts and had not repaid the amount which was due on 20/8/2017. The vehicle was repossessed on 22/8/2017. I find that the trial magistrate erred by holding that the re-possession of the motor vehicle by the appellant was illegal null and void. The parties were bound by the terms of the contract and it is a well established principle that a court of law will not re-write contracts entered by the parties. The 1st respondent had defaulted and the appellant’s right to re-possess arose as per the letter of offer. The Chattels Mortgage dated 18/2/2016 which the parties signed, at Clause 8, granted the appellant the right to re-possess in the event of breach. The Clause provided:-“If at any time during the continuance of this instrument default is made by Grantor in payment of any amount in its date of payment according to the terms hereof or if the Grantor shall commit a breach of or shall fail to observe perform any of the other undertakings, agreements and conditions herein expressed or implied……. And in every such case the secured obligations shall immediately become due and payable and the Grantee shall be entitled to exercise all or any of the rights hereby or by the Chattels Transfer Act (Cap 28) conferred on the grantee and without prejudice to the foregoing, the Grantee or any of agents may immediately thereupon or at any time thereafter without any subsequent acceptance or any payment of principal money or interest due on this security shall enter upon any lands or premises whereon the chattel or the time being maybe and take possession thereof and sell or dispose the same by private sale or public auction subject to such conditions as the Grantee may think fit….Any deficiency between the aforesaid purchase price and the sum shall be made good by the Grantor and be recoverable by the Grantee as liquidated damages.”The appellant had complied with all the terms and conditions and the finding by the trial magistrate was therefore in error. The appellant was entitled to repossess the motor vehicle.

18. On the question whether the appellant withheld the 1st respondent’s motor vehicle for six months, the 1st respondent relies on a letter dated 23/8/2017 which was signed by Ignatius Mugambi the branch manager of the appellant at Chuka Town. The letter authorized the 2nd respondent to release the said motor vehicle to the 1st respondent. The 1st respondent in her testimony admitted that she was issued with the release letter on 23/8/2017 and that the second respondent refused to release the motor vehicle. In her evidence the 1st respondent stated that she wanted the respondent to restore the motor vehicle to her. The appellant through its witness (DW1) did not dispute that there was a release letter. He did admit that the vehicle should have been released to the 1st respondent.On being cross-examined the 1st respondent stated that she took the letter to the 2nd defendant but the vehicle was not released.From the record, the 1st respondent had sued the 2nd respondent. Her claim against the 2nd respondent was under paragraph 8F of the amended plaint. The 2nd respondent had filed a defence denying the claim by 1st respondent and stated that his claim to the motor vehicle was limited to payment of its storage charges and security charges. The 2nd respondent did not participate in the hearing. However the Judgment of the trial magistrate states that the 2nd defendant was an agent of the appellant after he got instructions from the appellant to keep the motor vehicle. The trial magistrate found as a fact that the 2nd defendant did not appear in court to give an explanation as to why the 1st respondent’s motor vehicle was not released.From this analysis it is clear that the appellant issued a letter authorizing the release of the 1st respondent’s motor vehicle. The issue is whether liability attaches on the appellant for the wrongful acts of the 2nd respondent.

Whether the Appellant was liable for the acts of the 2ndRespondent 19. Regarding the general liability of an agent for a wrongful act, Halsbury's Laws of England Vol. 1 (2017) at Paragraph 165 provides guidance as follows:“Any agent, including a public agent, who commits a wrongful act in the course of his employment, is personally liable to any third person who suffers loss or damage thereby, notwithstanding that the act was expressly authorized or ratified by the principal, unless it was deprived of its wrongful character. It is immaterial that the agent did the act innocently and without knowledge that it was wrongful except in case where actual malice is essential to constitute the wrong.”

20. The court in National Social Security Fund Board of Trustees v Ankhan Holdings Limited & 2 Others [2006] eKLR cited with approval the decision of the House of Lords in Williams and another v Natural Life Health Foods Ltd and another [1998] 2 All ER 577 at 582 which held that:“Whether the principal is a company or a natural person, someone acting on his behalf may incur personal liability in tort as well as imposing vicarious or attributed liability upon his principal.”

21. In this case, it is not in dispute that the 2nd Respondent was acting under the instruction of the Appellant when it impounded the 1st Respondent’s motor vehicle. It is the 1st Respondent’s case that the 2nd Respondent was an agent of the Appellant, and that the Appellant was therefore liable for the illegal actions of the 2nd Respondent. According to the testimony of the Appellant’s manager, the motor vehicle should have been released to the Appellant once the release letter dated 29th August 2020 was written. I find that the relationship between the principal and agent existed between the appellant and the 2nd respondent.The action of the 2nd respondent cannot be apportioned to the appellant. The 2nd respondent was authorized to impound the motor vehicle and was authorized by the appellant in writing to release the motor vehicle. It was justified to hold it and only release it if 1st respondent paid as instructed by the appellant. No prove was tendered by the appellant to prove that storage and repossession fees was paid. Be thus as it may the law imposes a responsibility on a debtor to pay the auctioneer’s charges. Under Rule 7 of Auctioneers Rules 1997 it is provided with regard to payment of Auctioneer’s charges:“A debtor shall pay the charges of the auctioneers unless-a)that a debtor cannot be found, orb)he has no goods upon which execution can be levied: orc)the sale proceeds are insufficient to cover the charges in which cases the creditor shall pay the charges or the deficiency thereof.”There was an obligation by the 1st respondent to pay auctioneer’s charges. The law imposes a burden on the party who alleges to prove her/his claim. This is the burden of proof. Section 107, 108 and 109 of the Evidence Actprovides:-(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.”The 1st respondent had defaulted in repaying the loan prompting the appellant to re-possess the motor vehicle. It follows that she was a debtor who was supposed to pay the auctioneer’s charges. She did not discharge the burden to prove that she paid the 2nd respondent the fees he incurred. The burden on the 1st respondent never shifted as the appellant proved that she had defaulted. This then brings me to provisions of the contract, general terms and conditions which states that “the borrower is mandated to pay the lender on full indemnity basis all expenses including legal charges out of pocket expenses auctioneer’s fees and any other expense in which the lender may incur in taking action for the recovery of any indebtness by the borrower to the lender.”It follows that any expense that arose due to the default by the 1st respondent was the responsibility of the borrower. It was proved that there was default which the 1st respondent admitted in court as it was reflected in her bank statements. It was therefore the 1st respondent who was supposed to pay auctioneers charges. The trial magistrate erred by stating that the 1st respondent had not defaulted when she herself admitted it.

Whether the judgment and awards of the trial court were lawful 22. The Appellant sought for the following orders:a.A declaration that the Defendants’ act of proclaiming and repossessing the Plaintiff’s movable property as illegal and unwarranted and issue an order of permanent injunction restraining the Defendant, his agent, auctioneers, assigns, servants and anyone acting on his behest from attaching, selling and disposing of the Plaintiff’s motor vehicle registration number KCF 786W Toyota Hilux Vigo.b.General damages for breach of contract, mental anguish, torture and suffering.c.Loss of user of motor vehicle registration number KCF 768W Toyota Hilux from 22nd August 2017 until release date.d.Cost and interest of the suit.

23. I have stated that the 1st respondent breached the terms of the agreement by falling in default. She failed to prove that she paid auctioneers charges which were a consequence of her default. In a contract general damages are awarded to a party who proves there was a breach of contract. Such damages are meant to compensate for the damage, loss or injury the claimant has suffered due to that breach.It has been held by the Court of Appeal that damages for an alleged breach of contract are not recoverable, see Tourism Development Corporation –v- Sundowner Lodge Ltd (2018) eKLR. This the court explained in details in Consolata Anyango Ouma –v- South Nyanza Sugar Co. Ltd (2015) eKLR where it held-“The next question is whether the appellant was entitled to damages as a result of the breach. As a general principle the purpose of damages for breach of contract is, subject to mitigation of loss, the claimant is to be put as far as possible in the same position he would have been if the breach complained off had not occurred. This principle is encapsulated in the Latin phrase- ‘restitution in integrum’ (see Kenya Industrial Estates Ltd –v- Lee Enterprises Ltd NairobiC.A 54/2004 (2009) eKLR………….The measure of damages is in accordance with the rule that the measure of damages is as may be fairly and reasonable be considered arising naturally from the breach itself or such as may reasonable be contemplated by the parties at the time of the contract was made and a probable result of such breach. Such damages are not damages at large or general damages but are in the nature of special damages and they must be pleaded and proved.”The trial court awarded general damages which were not pleaded. In the light of the above decision, the award of Kshs.200,000/- by the learned trial magistrate was plainly wrong. It was also wrong to award damages to a party who had admitted that she was in breach. I find that the award of general damages by the learned trial magistrate cannot be upheld.

24. In regard to special damages the law is quite clear on the head of damages called special damages. Special Damages must be both pleaded and proved, before they can be awarded by the Court. Suffice it to quote from the decision of our Court of Appeal in Hahn V. Singh [1985] eKLR where the Learned Judges of Appeal – Kneller, Nyarangi JJA, and Chesoni Ag. J.A. – held:“Special damages must not only be specifically claimed (pleaded) but also strictly proved…. for they are not the direct natural or probable consequence of the act complained of and may not be inferred from the act. The decree of certainty and particularity of proof required depends on the circumstances and nature of the acts themselves.”

25. It was the Appellant’s testimony that the subject motor vehicle was being used for transport business. Based on the evidence placed before the trial court, it is my view that the 1st Respondent did not demonstrate through evidence to substantiate her claim that she was making the Kshs. 5,000/= per day. Consequently, I opine that the Respondent failed to meet the test of specifically proving special damages for loss of use of the motor vehicle. In addition, the Appellant never pleaded for repossession fee and storage charges. As such, it is my view that the sum of Kshs. 600,000/= for loss of user; Kshs. 43,580/= for repossession fees and Kshs. 96,280/= for storage should not have been awarded by the trial court. As regards Kshs. 200,000/= awarded as general damages, I opine that the same ought not to have been awarded.

Conclusion 30. The upshot of the above is that the appeal succeeds.I order as follows:1)The Judgment of the learned trial magistrate is set aside.2)It is substituted with an order dismissing the 1st respondent’s suit in the lower court with costs to the appellant.3)I award the appellant the costs of this appeal.

DATED, SIGNED AND DELIVERED AT CHUKA THIS 16TH DAY OF MARCH 2022. L.W. GITARIJUDGE16/3/202216/3/2022Judgment has been read out in open court.L.W. GITARIJUDGE16/3/2022