Shiundu & another (Suing on behalf of Nzoia Kabras Self Help Group) v Ukerio Motors Limited [2023] KEHC 24733 (KLR)

Shiundu & another (Suing on behalf of Nzoia Kabras Self Help Group) v Ukerio Motors Limited (Civil Appeal E059 of 2021) [2023] KEHC 24733 (KLR) (1 November 2023) (Judgment)

Neutral citation: [2023] KEHC 24733 (KLR)

Republic of Kenya

In the High Court at Bungoma

Civil Appeal E059 of 2021

REA Ougo, J

November 1, 2023

Between

Julius Shiundu

1st Appellant

Ben Liru

2nd Appellant

Suing on behalf of Nzoia Kabras Self Help Group

and

Ukerio Motors Limited

Respondent

(An appeal arising from the judgment of and decision delivered on 26th June 2021 by Hon. C.A.S Mutai (SPM)

Judgment

1. A brief background to this appeal is that the appellants, who were the plaintiffs in the lower court, sought general and special damages after they entered into an agreement with the respondent for the purchase of a 51-seater bus. The total cost of the bus was Kshs. 7. 1 million. The appellants paid a downpayment of Kshs 1,420,000/- to the respondent and the balance was to be paid through a bank facility. The respondent unilaterally rescinded the contract and remitted part of the deposit, Kshs 270,000/- to the appellants. The appellants’ claim was for the balance of Kshs 1,150,000/- and general damages for breach of contract.

2. The respondents in their defence denied rescinding the contract. It was averred that it was the appellants who were in breach of contract after they failed to remit the agreed deposit of Kshs 2,000,000/-. According to the respondents, the appellants took back their Kshs 1,420,000/- when they received motor vehicle registration number KAN 375L and Kshs 100,000/- sent to Ben Liru.

3. The appellant filed a response to the defence where it maintained that 20% of the purchase price was Kshs. 1,420,000/- and the balance was to be settled by the bank. The appellants denied that the sale of KAN 375L bore no connection to the sale of the bus and receiving Kshs 100,000/- from the respondent.

4. The suit proceeded to a full hearing but was dismissed by the trial magistrate on account that the self-group is not a legal person in law capable of being sued. The court observed that the appellants could have sued on behalf of its members upon complying with the provisions of Order 1 Rule 8 of the Civil Procedure Rules.

5. The appellants dissatisfied with the decision of the trial magistrate have preferred this appeal on the following grounds:1. That the learned magistrate erred in dismissing the case summarily on the contention that Nzoia Kabra self-help group is not a legal person capable of being sued or suing when the same had two physical plaintiffs suing on its behalf.2. That the learned magistrate erred in dismissing the representative authority of the appellants herein.3. That the learned magistrate erred in law in summarily dismissing the case contrary to the legal provision of the law Order 1 Rule 9, Cap 21 and other provisions.4. That the learned magistrate erred in upholding technicalities of the pleadings contrary to law.5. That the learned magistrate erred in imposing reasons not pleaded by any of the parties.6. That the learned magistrate erred in not making findings in accordance with the evidence on record.

6. The appeal was canvassed by way of written submissions. Only the appellant filed written submissions. The appellant submits that they were not present when the judgment was delivered and, in any event, the judgment was dated 26/6/2021 which was a Saturday. They also submit that the trial court erred in finding that the appellant was not a legal person capable of suing yet they indicated on the plaint that Julius Shiundu and Ben Liru were suing on behalf of the group. They also argue that the issue of capacity to sue was not raised in the defence and only surfaced at the judgment stage. According to Order 1 Rule 9 of the Civil Procedure Rules, mere misdescription of the parties, misjoinder or non-joinder on its own cannot be a basis for dismissal of a suit. The appellants also relied on the decision of the court in Rose Florence Wanjiru v Standard Chartered Bank Limited & 2 Others 2014 eKLR. They urged the court to consider some of its members including the group's officials authorizing appellants to file the suit. They argue that none of its members have complained about being left out as was the case in Elud Mathew & 3 Others v Gared George 2001 where the court held as follows:“…the purpose of requiring the plaintiff to get permission to sue is a noble one in that the two person should not just be on their own and constitute themselves to be representatives of others some time even without consent of others.”

Analysis And Determination 7. I will first consider whether the trial magistrate erred in dismissing the suit filed by the appellants. Order 1 Rule 8 of the Civil Procedure Rules provides as follows:8. One person may sue or defend on behalf of all in same interest(1)Where numerous persons have the same interest in any proceedings, the proceedings may be commenced, and unless the Court otherwise orders, continued, by or against any one or more of them as representing all or as representing all except one or more of them.(2)The parties shall in such case give notice of the suit to all such persons either by personal service or, where from the number of persons or any other cause such service is not reasonably practicable, by public advertisement, as the court in each case may direct.(3)Any person on whose behalf or for whose benefit a suit is instituted or defended under subrule (1) may apply to the court to be made a party to such suit.

8. The court in Thachuma Bar Owners Self Help Group v Tharaka Nithi County Government & 2 others [2019] eKLR cited with approval the decision in Kipsiwo Community Self Help Group v A.G & 6 Others [2013] eKLR, where Munya J held inter alia that,“Self Help Groups having no legal personality cannot institute proceedings in their own name and that Kipsiwo Self Help Group had no capacity to institute an action in its own name. A person recognized in law had to sue on behalf of members of Kipsiwo Self Help Group and such members had to be named and identified with precision. The person bringing the action has to demonstrate that he has permission to bring the action on behalf of the members of the group or on behalf of the people he seeks to represent if it is a representative suit. The importance of this, is to recognize the persons who seek legal redress and so that orders are not issued in favour or against people who cannot be precisely identified. This may look minor but it is extremely significant. In litigation, rights and duties will be imposed on the litigants. If the court does not know who the litigants are, then it becomes impossible for the court to enforce its own orders, for it will never be clear, who the beneficiary of the order was, or who had the obligations to obey or enforce such order.”

9. The appellants provided the group’s minutes 16/8/2016 authorizing the firm of M/s Ombito & Co. to represent the self-group to pursue Kshs 1,150,000/- from the respondent. Julius Shiundu and Ben Liru in their capacity as chairman and organizing secretary, respectively, were also authorized to act on behalf of the self-group. The appellants also filed an authorization from its members that allowed Julius Shiundu and Ben Liru to sign all relevant documents pertaining to the suit and also appear in the suit on behalf of the self-help group.

10. The members of the self-help group, in my view, had notice of the suit instituted based on the authorization that was signed by its members. However, the appellants did not serve them with notice of the suit after the same was instituted. What then is the effect of this on the appellant’s suit? The issue was discussed by the court in Ahmed Dolal & 9 others (suing on their behalf and on behalf of 27 Members of Likoley Farmers) v Kengen & another [2018] eKLR where it was held that:“The purpose of that provision was well put in the case of Yiapas Ole Seese & 4 Others v Sakita Ole Narok & 2 Others [2008] eKLR where the court held:“The whole purpose of the provisions of Order 1 Rule 8 is to ensure that all persons with unlitigated similar cause of action who are desirous of having their cause determined are included in the suit for their own convenience and to obviate a multiplicity of suits. Hence the need to notify them of the institution of the suit so that in case any of them wishes to take part he is given the opportunity to do so…….until notices under Order 1 Rule 8, Civil Procedure Rules, are served, one may not know whether or not they will accept being treated as Plaintiffs. Service of the notice as we stated earlier, is to give them an opportunity to make an election whether or not to become parties.My plain reading of Order 1 Rule 8 is that such a notice is not a mandatory requirement that can render a suit fatally defective for non-compliance. The spirit of the law in requiring notice to be given to persons likely to be affected in the case of a representative nature is a procedural requirement that cannot be elevated to a fetish for non-compliance. The rule should not be treated as a rigid matter of principle but a flexible tool of convenience in the administration of justice to the parties.”

11. Having considered the circumstances of this case, including the authorization from members of the self-help group to the appellants to file the suit, I find thata notice was not a mandatory requirement that could render the suit fatally defective for non-compliance. I therefore fault the trial magistrate for dismissing the appellant’s suit yetthey had demonstrated that they had permission to bring the action on behalf of the members of the self-help group.

12. Next, I will proceed to consider the merits of the appellant’s case. As a first appellate court, this court’s role is to subject the whole of the evidence to fresh and exhaustive scrutiny and make my own conclusions about it, bearing in mind that I did not have the opportunity to see and hear the witnesses first-hand. This duty was well stated in Selle & Another v Associated Motor Boat Co Ltd & Others (1968) EA 123.

13. Julius Shiundu (Pw1) testified that he is the chairman of the self-help group and adopted his statement as his evidence in chief. He testified that they paid the respondent 20% of the purchase and the balance was to be financed. Their loan was approved by the bank however, the respondent unilaterally transferred the dealership to Associated Motors Limited. The bank then began processing an approval for the loan once the respondent gave a written cancellation. Pw1 testified that Associated Motors Limited thereafter on 3/6/2015 delivered a bus, Reg. No. KCC 007Y. Pw1 testified that they have requested the respondent for the downpayment they made but the respondent has only refunded Kshs. 270,000/-. On cross-examination, he testified that the plaintiff entered into an agreement with the respondent for the purchase of Nissan ODMKB 2PX and their contract was never terminated.

14. The defence case was closed without calling any witnesses.

15. There is clear evidence that there was an agreement between the appellant and the respondent for the supply of a 51-seater Nissan at Kshs 7. 1 million. The appellants paid a total of Kshs 1,420,000/- to the respondents and were issued with the receipt. However, before the respondent performed its obligations, the respondent nominated Associated Motors Limited to supply the bus to the appellant and notified the appellant’s bank. It also notified the bank that there would be a change of make and model of the bus to Isuzu FRR33l. The quotation from Associated Motors to the respondent for the bus was for the price of Kshs 7. 1 million and it expected that a deposit of Kshs. 1,420,000/- would be paid. This meant that the deposit of Kshs 1,420,000/- paid by the appellant would be applied to the sale between Associated Motors Limited and the appellant as Associated Motors was then tasked to complete the respondent’s obligation under the new contract. The bank in its letter dated 16/4/2015 approved the asset finance facility for the purchase of the New Isuzu FRR 51-seater bus. The amount to be financed by the bank remained the same i.e., Kshs 5,680,000/-.

16. At this point the terms of the contract had changed and the appellant made no objections to the new terms but instead, it proceeded with the sale. In this regard, the bank in its letter dated 19/5/2015 wrote to the appellant acceding to the appellant’s request to change the unit being purchased and dealership. The bank's letter acted as an addendum to the contract, deleted clauses 3 and 8. 1 of their letter of offer and captured the new terms as a result of the change in unit and dealership. Thereafter, the transaction proceeded smoothly and the appellant received the motor vehicle. There was evidence of delivery vide the delivery note dated 11/6/2015 from Associated Motors Limited.

17. After a review of the appellant’s evidence, it is clear the parties' mutually varied terms of their contract. In Housing Finance Co. of Kenya Limited v Gilbert Kibe Njuguna Nairobi HCCC No. 1601 of 1999, it was held:“…Courts are not for as where parties indulging in varying terms of their agreements with others will get sanction to enforce the varied contracts. Contracts belong to the parties and they are at liberty to negotiate and even vary the terms as and when they choose and this they must do together and with meeting of the minds. If it appears to the Court that one party varied terms of the contract with another, without the knowledge, consent or otherwise of the other, and that other demonstrates that the contract did not permit such variation, the Court will say no to the enforcement of such contract.”

18. Before the variation of terms, Associated Motors Ltd gave the appellant a quotation for a similar bus, Isuzu model FRR33L at the price point of Kshs 6,184,000/- vide its letter dated 25/3/2015. Even with the knowledge of the price offered by Associated Motors in this quotation, the appellant proceeded with the contract with the varied terms and bought the bus at Kshs 7. 1 million.

19. In the end, I find that the appellant failed to prove on a balance of probabilities that the respondent was in breach of contract. I find that the parties mutually varied the terms of their contract. The net effect is that the appeal is hereby dismissed. There shall be no orders as to costs.

DATED, SIGNED, AND DELIVERED AT BUNGOMA THIS 1ST DAY OF NOVEMBER 2023. R.E. OUGOJUDGEIn the presence of:Julius Shiundu / Appellant - PresentMiss Nanzushi h/b for Mr. Ombito for the appellants – PresentRespondent - AbsentWilkister -C/A