National Industrial Credit Bank Ltd v Felister Mwende Musyimi & Ann Ndunge Muasya [2016] KEHC 2431 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT MACHAKOS

CIVIL APPEAL NO 207 OF 2015

NATIONAL INDUSTRIAL CREDIT BANK LTD….…APPELLANT

VERSUS

FELISTER MWENDE MUSYIMI………………..1STRESPONDENT

ANN NDUNGE MUASYA………………………..2ND RESPONDENT

(An Appeal arising out of the ruling of Hon. P.Wambugu Mwangi SRM  delivered on1st December 2015 in Kilungu Principal Magistrate’s Court Civil Case No. 73 of 2015)

JUDGMENT

The Appellant was the 2nd Defendant  in Civil Case No. 73 of 2015 at Kilungu Principal Magistrate’s Court, and has appealed against a ruling of the learned trial Magistrate, which was delivered in the said suit on 1st December 2015. The said ruling was on an application brought by the Appellant in the trial Court by way of a Notice of Motion dated 14th August 2015, seeking that the suit against the 2nd Defendant be struck out, and that the costs of the application and suit be borne by the Plaintiff. The learned magistrate in his ruling dismissed the said application.

The Appellants subsequently moved this Court through a Memorandum of Appeal dated 16th December 2015, wherein their grounds of appeal are as follows:

That the trial Magistrate erred in law and in fact by sustaining the claim against the Appellant.

That the trial Magistrate erred in law and in fact by failing to consider the Appellant’s list of authorities.

That the trial Magistrate considered extraneous matters in his decision.

That the trial Magistrate erred in holding that rebuttal of prima facie evidence of registration of a motor vehicle cannot be done at a preliminary stage.

The Magistrate failed to appreciate the nature of hire purchase agreements.

The Appellant prays for orders that that the ruling by Hon. P. Wambugu dismissing the 2nd defendant’s application be set aside, and that the suit against the 2nd Defendant in Kilungu Civil Case No. 73 of 2015 be struck out with costs to the Appellant.

The Facts and Submissions

The facts giving rise to the Appellant’s application in the trial court by way of the Notice of Motion application dated 14th August 2015 was that the Appellant was seeking for orders that it be struck out of the proceedings, on the grounds that it had been improperly joined to the suit as they were merely financiers and it did not have any interest in motor vehicle registration number KBW 063G. It was also stated that the Appellant was not vicariously liable as it was neither the principal nor the insured of the vehicle when the alleged accident occurred.

The cause of action in the suit in the trial Court arose from a fatal road accident along Mombasa-Nairobi road at Malili on 24the December 2014, and the Respondents thereafter sued the Appellant together with two others as the registered owners of motor vehicle registration number KBW 063G which was involved in the accident. The Respondents were seeking damages in the said suit.

The learned trial Magistrate however declined to strike out the suit as against the Appellant for reasons that while the Appellant’s contention that its inclusion as owner in the certificate of registration of the said motor vehicle was a rebuttable presumption was correct, this rebuttal could not be done at that preliminary stage. Further, that the suit against the Appellant is not a clear case for striking out considering that there was a contract for hire purchase, which still retained the option to purchase and the vehicle could still be repossessed.

Musyimi & Company Advocates, the Appellant’s learned counsel, filed submissions on this appeal dated 31st March 2016, wherein it was argued that there was no contractual relationship between the 2nd Defendant and the deceased since the 2nd Defendant appeared on the record of the motor vehicle as a financier. Further, that the joint registration was only done to secure the 2nd Defendant’s interest as a financier. In citing the decisions in Onrmord and Another V Crosville Motor Services Ltd and Another (Murphie, third party)(1953) 2All ER 755and Morgans  vs Launchbury and Others (1972) 2All ER 606 which were quoted with approval in Nakuru Authomobile House Ltd vs Ziaudin, 1997 e KLR, it was submitted that the 2nd Defendant was not in possession, control or management of the motor vehicle at the time of the alleged accident.

It was further argued that the trial magistrate did not consider the submissions of the 2nd Defendant where there were authorities that would have allowed the 2nd Defendant’s application to strike out the suit against it, namely  Richard Obiero Bwai VS Guerci & Company Ltd & 2 Others,Nairobi HCCC 4772 of 1998, Justus Kavisi Kilonzo vs Coast Broadway Company Ltd & Another (2008) eKLR, Ali Lali Khalifa and 8 Others vs Pollman’s Tours and Safaris Ltd & Another,Mombasa HCCC No 106 of 2002,and Jane Wairimu Turanta vs Githae John Vickery & 2 Others, Nairobi HCCC 483 OF 2012. It was stated that the magistrate considered the case as one of striking out of pleadings, yet it was one for striking out the suit.

It was contended that the 1st and 2nd Defendant had a hire purchase relationship and that the 2nd Defendant had ceased to have control or management of the motor vehicle the moment the same was hired to the 1st Defendant. It was further submitted that the presumption that a certificate of registration was prima facie evidence had been rebutted by the 2nd Defendant through the hire purchase agreement, statements of accounts and the police abstract provided by the plaintiff. According to the Appellant, the trial court could have determined whether there was a cause of action against the 2nd Defendant at the preliminary stage as was stated in Investment and Mortgage Bank Ltd V Nancy Thumari& 3 Others (2015) eKLR and in General Motors East Africa V Eunice Allia Ndeswa & Another (2015) eKLR.

Finally, it was submitted that having hired the subject motor vehicle to the 1st Defendant, the 2nd Defendant ceased to either be in possession, control or management of motor vehicle registration number KBW 063G. That vicarious liability could thus not arise as possession control and management of the motor vehicle in question vested in the 1st Defendant by way of hire purchase. The decision in Ali LaliKhalif and 8 Others V Pollman’s Tours and Safafis Ltd and Another (supra)was referred to in this regard.

The Respondent’s learned counsel,  Mutinda Kimeu & Company Advocates argued in submissions dated 4th April 2016 that there were two issues for determination in the appeal. The first being whether the Appellant was properly joined as a party to the suit, and the second as to whether this appeal is competent. In this regard it was pointed out that that the liability of the Appellant arose from the fact that it was a registered owner jointly with the 1st Defendant of the subject motor vehicle. Further, that the Appellant did not disclose that it was a financier of the 1st Defendant’s and were relying on a Hire Purchase agreement when it was served with the demand notice.

It was further submitted that the issue as to whether the Appellant were financiers could not be determined at the preliminary stage.  Reliance was placed on Order 1 rules 6 and 7 of the Civil Procedure Rules or the position that a Plaintiff could join more than one Defendant in a suit if in doubt as the person to provide redress. It was also urged that under section 8 of the Traffic Act a certificate of registration was a prima facie evidence of ownership of a vehicle, and it was upon the Appellant to rebut that presumption of being the registered owner during the hearing and not at the preliminary stage.

Finally, it was submitted that the Respondent did not err in joining the Appellant to the proceedings as the hire purchase agreement is a contract, and if the Appellant repossess the motor vehicle the respondent would have been left with no party to claim from.

The Issues and Determination

It is now settled law that the duty of the first appellate court is to re-evaluate the evidence in the subordinate court both on points of law and facts and come up with its findings and conclusions. See in this regard the decisions in this respect Jabane vs. Olenja [1986] KLR 661, Selle vs Associated Motor Boat Company Limited[1968] EA 123 and Peters vs. Sunday Post[1958] E.A. 424.

From the grounds of, and relief sought in this appeal, and the submissions made thereon by the parties, the issue that is sought to be determined in this appeal is whether the trial magistrate erred in not striking out the suit against the Appellant on the ground that it was a financier of the 1st Defendant.

The law on removing a party from proceedings is found in the provisions of Order 1 Rule 10 (2)) of the Civil Procedure Rules, which provides as follows:

“The court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all questions involved in the suit, be added. “

The Appellant has been at pains to show that it was improperly joined as it is only a financier of the 1st Defendant, and was not in control of the motor vehicle registration number KBW 063 G that was the subject of the accident which is the subject matter of the suit in the trial Court. I have perused the Plaint dated 16th June 2015 filed in the trial  Court on 18th June 2015 and note that in paragraphs 8 to 12 thereof, the Appellant is sued in its capacity as registered owner of motor vehicle, and as Principal and/or employer of the 3rd Defendant whose negligence it is alleged caused the accident.

The Appellant did annex a copy of the Hire Purchase agreement between it and the 1st Defendant dated 10th September 2013 with respect to the said motor vehicle, and evidence of payments by the 1st Defendant in this regard. The said annexure was marked “KM-1” to the supporting affidavit sworn by Kevin Mbaabu which supported the Notice of Motion filed in the trial Court dated on 14th August 2015.

Armed with this evidence, the trial Court ought to have interrogated the issue as to whether the Defendant was a proper and necessary party in the suit, in light of various decisions that have held that a financier of a buyer of a motor vehicle cannot be held vicariously liable for the acts of an agent of the buyer. See in this regard the decisions by Aburili J. in Investment and Mortgage Bank Ltd V Nancy Thumari& 3 Others (2015) eKLR and in General Motors East Africa V Eunice Allia Ndeswa & Another (2015) eKLR.

In the present appeal, the material and relevant time for rebuttal of ownership of motor vehicle registration number KBW 063 G would be at the time of the accident, which according to the Plaint filed in the trial Court was on 24th December 2014. Therefore, it was possible and proper at the time of hearing of the Appellant’s application in the trial Court to rebut such ownership. Given that there was evidence of the existence of a financing or hire purchase agreement between the Appellant and 1st Defendant by the date of the said accident, the fact of actual and beneficial ownership by the Appellant by way of registration at the time of the accident involving the said motor vehicle was thus effectively rebutted, and there was an error made in not striking out the Appellant from the suit.

I however find sympathy with the argument by the Respondents that the Appellant ought to have notified them of its position as financier much earlier upon service of the demand notice, but this is an issue that will only affect costs.

In the premises I find that the Appellant’s appeal has merit, and set aside the orders by  the trial magistrate made in Kilungu Principal Magistrate’s Court Civil Case No. 73 of 2013 in the ruling delivered therein on 1st December 2015, and  substitute them with the following orders:

(1) That the suit against the 2nd Defendant  in Kilungu Principal Magistrate’s Court Civil Case No. 73 of 2013 be and is hereby struck out;

(2) That the Plaintiff and Defendants shall each meet their respective costs of this appeal, and of the Notice of Motion dated 1th August 2015 and suit in Kilungu Principal Magistrate’s Court Civil Case No. 73 of 2013  .

It is so ordered.

DATED AT MACHAKOS THIS  1ST DAY OF SEPTEMBER 2016.

P. NYAMWEYA

JUDGE