Teenwise Media Limited v Kenatco Taxis Limited & Joseph Njuguna Mwangi [2016] KEHC 3527 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL   APPEAL NO.  247 OF 2005

TEENWISE MEDIA LIMITED …………………….APPELLANT

VERSUS

KENATCO TAXIS LIMITED …………...…..1ST RESPONDENT

JOSEPH NJUGUNA MWANGI……………2ND RESPONDENT

JUDGMENT

1.  This appeal arises from the judgment and decree of the Senior Resident Magistrate’s Court in Nairobi CMCC NO.  1042 of 2004 at Milimani Law Courts delivered by Ms Esther Maina (as she then was) on 22nd March 2005. The Memorandum of Appeal filed  on 19th April  2005  and dated  the  same day  sets out  five (5) grounds of appeal challenging  the  judgment  and decree of the  subordinate court as above  namely:

1. That the Learned magistrate  erred  in fact  and in law in failing to  appreciate  the submissions  made on  behalf of the plaintiff on both  liability and  quantum.

2.  The learned  magistrate erred  in fact and  in law in  disregarding  the evidence  tendered  by the plaintiff’s  witnesses  and especially the  assessor’s  evidence.

3.  The learned  magistrate erred in fact  and in law  in arriving at a  decision  to disregard  the salvage value  of the plaintiff’s  vehicle by not  considering  the  spirit on which the agreement was  made  between  itself  and the  purchaser  thereof, hence  making a  finding that  the evidence  tendered  by the plaintiff   was inconsistent .

4. The learned magistrate erred in law and fact in making a finding that the plaintiff has no locus standi to institute suit.

5.  The learned magistrate erred in law and fact in entering judgment touching on matters not pleaded by the defendant.

The appellant prayed that:

a)  The   order to dismiss the plaintiff’s suit be set   aside and the appeal be allowed.

b)  An award on liability and quantum be made in favour of the appellant against the respondents.

c)  In the alternative case be   remanded to the lower court for proper determination.

d)  That costs of appeal and of the lower court be granted   to the appellant.

e)  Any other order that this court may deem fit to grant.

2. The brief history  of this matter  is that  by a plaint  dated  4th February  2004  and  filed on  6th February 2004, the  appellant  herein  TEENWISE  MEDIA  LTD who was the plaintiff in the subordinate court sued the defendants/respondents  KENATCO TAXIS LTD and JOSEPH  NJUGUNA  MWANGI claiming  for shs  229,850  special damages  being   the loss suffered  as a result of  damages  occasioned  to motor vehicle  registration Number KAG  580P when or about  9th May 2003  the 1st defendant’s motor  vehicle registration No. KAJ 966S collided with the plaintiff’s motor vehicle KAG 580P thereby extensively damaging the latter car.

3.  The appellant alleged that the accident   and damages  were  as a result  of  the negligence   of the  2nd  defendant driver of the 1st defendant  in that he:

a)  Drove without due care and attention.

b) Drove on the wrong side of the road.

c) Drove at a speed that   was exceedingly fast and excessive in the circumstances.

d) Driving without due regard to other road users and contrary to the Traffic Act and the Highway Code.

e) Drove carelessly.

f) Failed  to slow down, swerve or  in  any other way manage  motor  vehicle  registration  number KAJ  966S  so as to avoid  the collision  with the plaintiff’s motor vehicle  KAG 580P.

4.  The appellant pleaded that the 1st defendant   was vicariously liable   for the negligence of the second defendant. The particulars   of loss and damage were pleaded as follows.

Repair  costs  shs    219,750. 00

Towing charges  shs    5,000. 00

Assessor’s fee  shs      5,000. 00

Police abstract  shs         100. 00

Total                   229,850. 00

5.  The respondent upon being  served with summons to enter appearance  entered an  appearance  on 2nd  March 2004 vide  a Memorandum of  Appearance   dated  26th  February 2004  and filed a  defence dated   8th March 2004  on 10th March  2004. Later,  the appellant   with leave  of court  amended  its plaint   on 19th April  2004  and filed it on 18th  May 2004  increasing the amount  of special damages  by including  a prayer that  the value of its motor vehicle   which  was damaged  as a result of the material accident was a write- off and  was shs 380,000 less  shs  120,00 salvage value    leaving shs  260,000.  The total special damages were pleaded as shs 270,100.

6.  The defendants  vide an amended  defence  dated   22nd June  2004   and filed in court  on  24th June  2004   denied the particulars of negligence attributed  to them  and contended that the accident  was  occasioned by the negligence  of the driver  of  motor vehicle  registration No.  KAG 580P in that:

a)  He drove at an excessive speed in the circumstances.

b)  He failed to brake on time or at all.

c)  He failed to  stop, slow down, swerve and or  in any  other manner  to control  the  said motor  vehicle  so as to avoid  the said accident.

d)  Failed to exercise reasonable care and attention.

7. The respondents also denied particulars of loss and the amount claimed. In addition the respondents pleaded  that the claim for  pre accident  value  and salvage  value was an afterthought   created  by the appellant, not based on any  expert opinion  and that it should  have been given an opportunity   to assess the said motor vehicle  prior to the action. The respondents prayed that the appellant’s suit be dismissed with costs.

8. The appellant filed reply to defence as amended on 29th June 2004 joining issues with the respondents and maintaining the averments in the amended plaint.

9. The case  was heard by E.N. Maina (Miss ) Principal Magistrate and in her  judgment  delivered on  22nd March  2005 she dismissed the appellant’s  suit on the grounds that the appellant did not  prove  its case  against the respondents.  She raised issues  with the  date of accident  which   was pleaded  as 9th May  2003 yet the police abstract  showed   7th May 2003, that it  was doubtful  as to whether  the appellant  owned the subject motor  vehicle KAG  580P; that the  assessor  testified that the motor vehicle  was never declared a write-off; and that there was no  evidence  of sale of the salvage since  the execution of  the sale  agreement  left a lot to be  desired.  It is that judgment of the trial magistrate dismissing the appellant’s suit with costs that provoked   this appeal.

10.  This being  a first appeal , this  court is  obliged under  Section  78  of the Civil Procedure Act  Cap  21  Laws of Kenya  to reassess, reconsider and reexamine the evidence  and extracts  on record  and arrive at  its own independent conclusion, bearing in mind that  it neither heard  nor saw the  witnesses  as they testified   and therefore giving due allowance  to that.  (SeeSielle V Associated Motor Boat Company Ltd [1968] EA 123.

11.  Appraising the evidence adduced  in the  lower court, the appellant  called  PW1 Adam  Nyakundi  a director  of the plaintiff company   who testified  that on 9th May 2003  he  was driving  to the office at around  8. 00pm  in the city centre from Nairobi West .  He drove motor vehicle KAG 580P and the road was busy.  Immediately  after the Haile Selasie   Roundabout  on Uhuru Highway, motor vehicle KAJ  966S belonging  to KENATCO hit a  pavement  and veered  from the  right and  hit   motor vehicle  KAG  580P on the right side.  PW1 used the passenger door to get out.  Traffic police went to the scene and assisted him.  The said offending motor vehicle stopped and turned to the direction that PW1 was coming from.  PW1 was slightly injured and was taken to Nairobi West hospital where he was stitched and discharged.  The car was towed to Parklands police station by one of the plaintiff’s other directors and the police.  The following day the plaintiff company paid shs 500/- to a towing company and recorded the statement with the police. That the police blamed the defendant’s vehicle/driver for the accident.  PW1 produced the receipt and police abstracts as exhibits.  The plaintiff company was then referred to the defendant’s insurance company AMACO who advised that ‘survey’ be done.  The plaintiff got Safety Survey who carried out the survey and gave a report   which they submitted to AMACO, after the 1st defendant’s insurers declined to admit liability to the plaintiff/appellants.  As it was too expensive to repair the motor vehicle, the plaintiffs/appellants herein sold the salvage at kshs 120,000.  That the assessor had estimated the cost of repairs at shs 219,750, while its   pre accident value   was shs 380,000.  That they sold the salvage to the garage.  The plaintiff therefore sought for   shs 260,000 pre accident less salvage value, towing charges, assessor’s fees, police abstract charges s and costs and interest.  PW1 blamed the 2nd defendant   for being negligent.  He  stated that  they did not  disclose  to the  1st defendant when  they sold the car and that they sold the said salvage after  one year of  the date of accident  after  exhausting  all avenues  with KENATCO  and  Fairsure,   their agents.

12.  In cross examination, PW1 stated that at the time of the accident the motor vehicle KAG 580P was registered in the names of the three directors of the appellant company.  He also  stated that  he  did not  know who  the registered  owner  of the motor vehicle KAG 580P was at the time of accident  but that  at the time of  sale  in 2004, the motor vehicle   belonged to Teenwise Media.  That he was driving at 60 kilometer per hour and only realized the accident upon being hit by the offending motor vehicle.  Further, that at the 1st defendant’s offices, he dealt   with a Mr Macharia the manager of drivers at night.  He denied ever dealing with AMACO but that they dealt with Fairsure who denied liability from the onset.  He stated  that the assessment  of the  damaged  motor vehicle   was done by Safety  Surveyors, who  advised that it  was  not economical  to repair the motor  vehicle although  the assessors  did not  say expressly that the  motor vehicle   was a write-off.  He admitted that the assessors recommended repairs and that the decision to declare the vehicle a write-off was made by the plaintiff company.  He stated that the plaintiff never tendered the said motor vehicle for sale and neither did they see the need to invite the 1st defendant to tender.  Neither did they inform the insurers of the motor vehicle.  PW1 testified  that they sold the  vehicle to Bill Auto   because  of the amount  they offered to buy the vehicle  at  and that  he  was present when the agreement  for  sale   was signed. PW1 also admitted that the witnessing of the sale agreement   was not done   on the same day.  That the vendor’s  side  was signed by  Ann Ngigi  on 5th December  2003  while  Juma Kimotho  signed for the  purchaser  and witnessed by  Ngaruiya  Githegi  on 23rd  April  2004  and Jacklyne  Opande on 27th April  2004.  That the latter two signed   on the day the final settlement   was being paid out.

13.  On being  questioned  on the discrepancies    on the  dates given, PW1 stated that the  plaintiff  owed  the garage  some  money for   repairs  and that  the garage  paid them the difference but  he again owed up that he had not  brought  the invoices  for the said repairs.  He denied that the  plaintiff sold   the motor vehicle  to Bill Auto  simply because the plaintiff owed the  garage money   and stated that  they could not repair the motor vehicle  until  they had the money and that  they only  finalized the sale on 23rd April  2004.  Further, that as at the time of instituting suit in the lower court, negotiations   were still ongoing.

14.  On being questioned  on whether  there  was a resolution by the company  to sell  the motor vehicle, PW1 answered  in the  affirmative  although he stated that  he did not  have the said  resolution in court.  He denied that the plaintiff still had the custody of the motor vehicle.  He also stated that the motor vehicle was repaired but he did not know at how much. On being shown  exhibits  4 and  5  letters dated  3rd November  2003  addressed to Joseph  Mwangi  and to KENATCO taxis, PW1 stated that  the claimants  were Ngaruiya, Nyakundi and  Muturi  company  which  was  the same  as Teenwise.  He maintained that the pre accident value was shs 380,000.

15.  In re-examination PW1 stated that they changed the name of the company but continued with the same business. Further, that he did not have time to avoid the collision since there were other motor vehicles and PW1 was in the innermost lane.  That the motor vehicle was being used for delivery of the company magazines.  That at the time  a decision  was  made to sell the motor vehicle, the vehicle was wasting away and that their transactions with Bill Auto   was above  board  and  that payment  was by  installments, the motor vehicle was not  in their  custody  and that they had been  paid in full.

16.  The plaintiff also called PW2 Gideon Munene Muchina a motor vehicle assessor with Safety Surveyors Limited since 2000, employed as a motor vehicle assessor/investigator.  That in mid May 2003 they received a call from Anne Ngigi and he later learnt that   she worked with the plaintiff.  PW2 proceeded to the garage with Peter Nganga and assessed the motor vehicle KAG 580P.  That   they physically assessed  the motor vehicle  and obtained  prices from the shops  then negotiated  labour  costs  and prepared  the report which  they co-signed  and sent to their  client.  The report dated 15th May 2003   was produced   with a receipt for the labour charges shs 5,900 inclusive VAT. In his view, a new Toyota would cost shs 2. 2.  Million but that 380,000 was a fair pre accident value.  That repairs would have cost shs 219,750 after getting quotations from three shops.

17.  In cross examination, PW2 stated  that he   was a holder of  a  Diploma  in Automotive Engineering  with 8 years  experience  having worked  with AA of Kenya  before  joining  Safety Surveyors. PW2 maintained that he received instructions from Ann Ngigi   whom he did not know before.  Further, that he had not dealt with Bill Auto Garage before.  That he negotiated for labour charges and denied insinuations that   he negotiated because he had an interest or that he had over quoted on the price of spares.  That the report   of assessment   was an opinion   based on   the prices of spares and the market.  He stated that they got quotations from Shambas Spares on Baricho Road, Masaku Auto Prestige and General Japanese Suppliers Dar esalaam Road which   quotations   were different so they took the lowest.  He  noted that the motor vehicle  had about  8 pre accident  defects  and that the motor vehicle  was consistent  with its age and  mileage, being a 1986  vehicle  imported into Kenya  in  1996 hence in 2003  it  was 3  years old.  He stated that it was for the owner thereof to decide whether to repair the motor vehicle or to do away with it.  That either of the two options could have   applied.  He stated that the engine was not affected and that only the front hand side of the vehicle was affected.  He stated that  Anne Ngigi  gave them the name of  Ngaruiya  Nyakundi and Muturi   as the company that owned  the motor vehicle  but that he did not  see the  engine number  and neither  did  he see the logbook.

18.  In re examination PW2 stated that  as  at the  accident time, the motor  vehicle  was  17 years  old and that  most clients   write off motor  vehicles  at 50%  of the sum assured .

19.  At the close of the appellant’s case the respondents did not call their intended   one witness and so they closed their case. Both parties’  advocates  filed   written submissions, with the appellant’s counsel submitting that the plaintiff  had proved their case  on a balance of probabilities  whereas   the respondent’s  counsel submitted urging the  court to dismiss  the appellant’s  suit with costs  for reasons that:-

a)  There was no proof of special damages to the standard required by law.

b)  The plaintiff had no locus standi to make the claim or sue.

c)  There was uncertainty on the date of cause of action.

d)  PW2’s  evidence  was  tendered after  he had sat  in court throughout  hence it carried very little weight  and should  be expunged.

e)  That there  was no proof of liability and quantum, since   a speed of  60 kilometer per hour  was beyond  the acceptable  limit  of 50 kilometer  per hour  at the accident scene  hence PW1  should have  been held  15%  liable for  contributing   to the accident.

20.  In her judgment, the trial magistrate after analyzing   the evidence   as adduced on record and considering the parties’ submissions, she found that the plaintiff had not proved its case on a balance of probabilities.  The first  reason   was that the suit  was  incompetent  for reasons  that at paragraph 3 of the amended  plaint it had been pleased that the  1st defendant  was under  receivership  with its offices  being  managed  by  one N.K. Kositany yet  no leave  to sue the Company was established  as  required under Section 228 of  the Companies Act.

21. Further, that on the merits, the suit could not stand for reasons that:

i)   There   was a discrepancy as to the date of accident.  The plaint averred 9th May 2003 whereas the police abstract gave 7th May 2003.

ii)  That there was admission as to ownership of the two accident motor vehicles.  However,  that  from evidence  of PW1  it  was doubtful as to whether  the plaintiff owned  KAG  580P since he stated  that there  was   another company before the  plaintiff  who owned  the motor vehicle   and that at the time  the motor vehicle   was registered in the names of the directors  of that other company; that PW1  was  unable to articulate  the nexus  between that company  and the plaintiff hence raising  doubts  as to whether  the plaintiff actually  had the  locus  standi  to bring the suit.

iii)  That on the  issue of  special damages, the assessor  testified  that he never  declared  the motor vehicle   a write off  and that he  only assessed the cost  of repairs  and  the pre-accident  value  and left it  at that.  That the evidence adduced in that regard   was inconsistent and unreliable.

iv)  That execution of the sale agreement left a lot to be desired and that there appears to have been no sale at all.

22. The trial magistrate therefore dismissed the appellant’s suit with costs to the defendants/respondents.  The parties’ advocates in this appeal agreed to dispose of the appeal by way of written submissions. The appellant’s submissions were filed on 10th June 2015, supported by several authorities. The appellant’s counsel submitted on four legal principles namely:

a)  That the issues  for determination in a suit  flow from the pleadings;

b)  Unless there is an amendment, parties  are bound by their  pleadings;

c)  A trial  court can  only pronounce  judgment  on issues   arising  from the  pleadings  or such  issues  as parties   have framed  for the court’s determination;  and

d) A court has no jurisdiction to pronounce judgment on extraneous issues that cannot be crystallized from the pleadings and/or the evidence adduced.

23.  Submitting  on the above  legal principles, the appellant  through  its counsel asserted that the issue of whether or not  leave to institute  proceedings  against the defendant in receivership was not an issue that flowed  from the proceedings  and that   neither   was it an issue  that  was  raised by  the  respondents  or indeed  framed  by the parties  for determination  by the court.  According  to the appellant, the court  engaged  in a frolic  of its  own  to make  a determination  on a matter  that  was not before  it  for  determination  and in effect  proceeded  to dismiss   the appellant’s suit.  The plaintiff’s counsel relied on Bullen & Leake 12 Edition page 3 on the Nature and Function of Pleadings where it is stated that:

“The system of pleadings  operates  to define  and delimit  with clarity  and precision the real mattes in  controversy  between the parties  upon which  they can  prepare   and present their  respective cases  and upon which  the court  will be  called upon to  adjudicate  between them.  It thus serves  the two fold  purpose of  informing  each party  what is  the case of the  opposite   party  which he will have to  meet before at the trial, and  at the  same time   informing  the court what  are the issues   between   the parties which  will govern  interlocutory proceedings before the trial and which we the  court will have to  determine at the trial.”

24.  The appellant’s counsel maintained that parties are bound and confined to their pleadings and that they shall not rely on matters that have not been raised in their pleadings. In their  view, the issue  of locus  standi  to institute  suit  was not  challenged  by the respondent  and that  the issue  of ownership  of the motor vehicles   was also  expressly  admitted by  the respondent. Reliance   was placed on Gitahi & Another  V Maboko  Distributors  Ltd & Another [2005] 1  EALR page  65  where the Court   of Appeal  stated that:

“a trial  court  of law has to decide  a case   before  it on the evidence before it  and  on the law “…..a court of law  would determine  a case on the  issues  that flow from the pleadings   and  judgment  would be pronounced on the issues  arising  from the  pleadings  or from issues  framed for  the court’s  determination  by the  parties.  It is  also a  principle  of law  that parties  are generally  confirmed to  their pleadings   unless  pleadings  were  amended  during the hearing of  a case.  The principle was succinctly  pronounced  in the case  of Galaxy Paints  Company Ltd V Falcon Guards  Ltd[ 2000] 2 EA 385. ”

25.  The appellants’ counsel also cited the Galaxy Paints Ltd Vs Falcon Guards Ltd (supra) where the Court of Appeal was clear that:

“It is  trite law  and  the provisions  of Order XIV  of the Civil Procedure  Rules  are clear that  issues for   determination in a suit  generally flow from  the pleadings and unless  pleadings  are  amended  in accordance  with provisions  of the Civil  Procedure  Rules  the  trial court, by dint  of the provisions of  Order  XX rule  4  of the  aforesaid  Rules  may only  pronounce judgment.  On the issues arising from the pleadings or such issues as the parties have framed for the courts determination”.

26.  In the appellant’ view, the court has no jurisdiction to pronounce judgment on matters   that are not pleaded by the parties.  He relied on Nairobi City Council V Thabiti Enterprises [1995-1998] EA LR 231 at   238 where Akiwumi J stated that:

“I must  now turn to another  issue  raised in this appeal, which having  regard  to my foregoing  determination, I really do not consider except  that counsel  made submissions on it  at some  length.  This is whether  the  learned judge  had any jurisdiction  to determine  the compensation value  of the suit  land without  the pleadings  in the suit having been amended to make  this an  issue in this suit notwithstanding  the apparent  acquiescence   of the parties to this  procedure.  In  this regard, Mr Ngatia  for the appellant  cited a number  of cases in support   of his proposition that a judge  does not  have jurisdiction  to determine a matter  which has not  been pleaded  unless  the pleadings are suitably amended.”

27.  The above  position   was also  stated  in Sand  V Kenya Co-operative  Creameries  [1992] LLR  314  where  the court held that  a judge  has no  power or jurisdiction  to decide  an issue  not raised  before  him and emphasized  that the only way  to raise  issues  before  a judge  is through  the pleadings.   The finding in the above case was endorsed in Nairobi City Council V Thabiti Enterprises (supra) case.

28.  In the appellant’s view, the  trial magistrate not only wrongly  assumed jurisdiction  to determine  an issue that   was not pleaded  or  raised  before her, she  also misdirected  herself   in law  by making  a novel legal  finding  unsupported  by the evidence  before her  that the appellant  had  not obtained  leave of court to  enable  them institute the suit  against  the respondent in receivership.  That the journey   that the trial magistrate embarked on was not defined and delimited by the pleadings and the evidence that   was adduced before her. That the  issue of  locus standi  to institute  suit by the appellant  against  the respondents receiver was  not raised  in the pleadings  or  evidence  as to whether  the receiver  was appointed  by the court  or by  a creditor   under an  instrument  of  debenture  in that whereas  leave  of court   would  be required  in the case where  the receiver  is court  appointed, no such  leave would  be required  in respect  of a company placed under  receivership by a creditor  under  an instrument  or debenture  as  was  held in Lochab Brothers V Kenya  Furfural Company Ltd [1983] KLR page 257. Further, that   had that issue  been raised  in the pleadings  the appellant  would have  adequately met it  and the learned magistrate  therefore  erred  in basing  her judgment  on the said issue.

29.  Further  the appellants  contended that the issue of  ownership  of the motor  vehicle  KAG  580 P  had  been expressly admitted by  the respondents  and parties  are bound  by their pleadings  hence it was not open  for the trial magistrate to make findings contrary to the pleadings  and the evidence that  was adduced before  her as  she lacked such  jurisdiction  to contradict  the pleadings  of both parties. It was therefore contended  that  the trial  magistrate  grossly  misdirected  herself  on the law  and as the evidence  adduced  before  her and arrived at the wrong  decision  hence this  appeal   against her  judgment should be allowed.

30.  The court  notes that  the respondent  was at all times material to this  appeal served with hearing  notices  to attend  court and affidavits  of service  but the  respondent   did not  appear   and neither   did they file their  written  submissions   as directed  by Honourable  Mabeya  J on    8th May 2015.  This court has therefore had to consider the appeal herein based on the lower court record, the appellant’s submissions and authorities   supplied.

31.  I have carefully considered the appeal herein, the lower court record and the detailed able submissions by the appellant’s counsel. I am in total agreement  with the  appellant that the issues that  flow for  determination  by this court  all flow  from the legal principles  identified  by the appellant’s counsel  which are  basically  two namely:

1.  Whether the  trial magistrate  had jurisdiction to determine the suit based on issues  which  were not pleaded; and or not framed by the court for determination; and

2.  whether  the suit  as instituted  against   the 1st respondent  was competent  owing to the pleading  that it  was  under receivership  and that  the trial  magistrate  had no jurisdiction  to determine  that issue  since it    was not in  controversy and or that  it  was snot canvassed by  the parties.

32.  The court observes that in dismissing the appellant’s suit, the trial magistrate   was clear that the appellant’s suit was incompetent   for:

i) Failure to seek and   obtain  leave to  sue  a company  which  was  in receivership; that the

ii) Appellant   had no locus standi to sue as there was contradictory and unreliable evidence as to its being the owner of the motor vehicle KAG 580P;

iii)  There was discrepancy as to the date of accident;

iv)  The assessor’s evidence   was clear that he never declared the motor vehicle a write off hence the claim could not stand; and

v)  The evidence on the sale of the salvage was not reliable  as the sale agreement  was doubtful.

33.  The appellant has attacked those findings and holding  by the trial  magistrate  contending   that the  trial magistrate  had no jurisdiction  to decide on any of the issues  which  were not  in contention or matters  which  were not pleaded  or matters  which  were admitted  in the  pleadings  or even  raised by the  pleadings  or issues which  were  framed for  determination.  Further, that   by so determining on the issues as stated above she went on her own frolic which was a gross misdirection. Counsel referred to sufficient case law in support of his client’s propositions which I have explored in this judgment.

34.  I shall first determine  the issue of whether  the trial  magistrate had jurisdiction  to determine  issues  which  were either; not pleaded, admitted, or not framed for determination. To answer that question, which has many other ancillary questions as seen from the above analysis, a look at the pleadings   is the commencement   point, both in its original as well as in the amended form. Paragraphs 3 and 5 of both original and amended plaints stated:

3:  The 1st defendant is under receivership with its offices being managed by the N.K. Kositany.

5:  At all material times   the 1st defendant   was the registered owner of motor vehicle registration No.  KAJ 966S while the plaintiff   was the driver of motor vehicle registration No, KAG 580P.

35.  In their defence and amended defence, the defendants/respondents joint defence at paragraph 1 and 2 stated:

1. The defendants   admits the contents  of paragraphs  1 to 4  of the plaint they being  descriptive  of the parties  herein save that  their address  for service for  purposes of this suit   only shall be care of ………..”

2. The defendants admits  the  contents  of paragraph  5 and  6   of the plaint”

36.  Indeed, paragraph 1-4 of the plaint   was a description of the parties and their respective addresses of service.  Paragraph 3 described  the respondent  as being in receivership whereas  paragraph  5 described  ownership  of the parties   respective  motor vehicles that  were allegedly  involved in the material  collusion accident.

37.  In his evidence in court, PW1 who was the driver of the motor vehicle KAG 580P stated in cross examination as follows:-

“……….There   are two other directors Ann Ngigi and David Ngaruiya company   was incorporated not certain when that   was. Teenwise took over Ngaruiya, Nyakundi and Muturi in 2003.  I am not sure if   this was before or after the accident.  Ngaruiya Nyakundi and Muturi was dissolved.  Ann Ngigi    was a director   in Ngaruiya, Nyakundi and Muturi.

At time of accident, the registered owner of KAG 580P were the three directors.  I do not know who the registered owner   was at the time of this accident.  At the time we sold   motor vehicle it belonged to Teenwise Media.  The agreement   was on 23rd April 2004……”

38.  From  the above  extract   of the evidence   by PW1  in cross  examination, it  occurred  that albeit   the  appellant pleaded that  it  owned  the motor vehicle KAG 580P, the  evidence  of PW1 raised  serious  doubts  as to whether  the appellant;  the former directors of Ngaruiya , Nyakundi and Muturi company or  the Ngaruiya , Nyakundi  and Muturi  company   were the owners of  the said motor vehicle.  The police abstract did not   disclose who the owners of the respective motor vehicles were.  The law is clear that he who alleges must prove.  In this case, albeit  it is contended that the fact of the plaintiff/appellant  owning the motor vehicle  KAG  580P was  admitted by the defendant/respondents, it is nonetheless clear from the  appellant’s  own evidence that there   was no clear  evidence of  ownership  of the said motor vehicle  whether  by way of registration or by possession  or usage, which issue  raised  doubts  in the mind of  the trial magistrate.

39.  In my view, the fact of the appellant being the owner of motor vehicle KAG 580 P was a matter within the knowledge of the appellant claimant. It was therefore upon it to prove that fact and not give other evidence that raised doubts as to whether it owned the vehicle or not. Further, the defendants having admitted that pleading, the plaintiff should have been aware of that admission and not give evidence that contradicted the admission by the defendants/respondents. In CA 258 of  2006 – Barclays  Bank  of Kenya  Ltd V Patriotic  Guards  Ltd [2015] e KLR  the Court of Appeal  held  that:

“ ……….” although generally parties are  bound by their pleadings, where an issue is  raised  in the course of  the hearing and   the same is  canvassed  by both  parties, the court  would be  in order to  make a determination  on such a matter   and even give   orders based  on such an  issue( See  Odd Jobs V Mubia  [1974] EA 476  CA).”

40.  In this case, albeit the issue  of the plaintiff’s  ownership  of the accident  motor  vehicle  was not  contended  in the pleadings, as  I have  stated earlier, it arose during  cross examination of PW1 and in the respondent’s  submissions  in the lower court  dated 11th March  2005  filed on the  same day, they raised it as  issue No. 2  to the effect   that the appellant  by the  evidence of  PW1, it emerged, was not the owner  of the said motor vehicle  and that there  was no evidence  to show  at what point  in  time  the appellant became   the owner  of the motor vehicle since PW1  stated that  he did not  know who  the owner of the motor vehicle  was at  the material time of the accident.

41.  In my view, therefore, the trial  magistrate did not  error  in making  a finding on the issue  of whether  or not the plaintiff/applicant had locus  standi to sue as the owner of  the motor vehicle  allegedly  damaged  by the 1st  defendant/ respondent’s  motor vehicle  through a  collision.

42.  On whether  the suit  as instituted  against   the 1st respondent  was competent  owing to the pleading  that it  was  under receivership  and that  the trial  magistrate  had no jurisdiction  to determine  that issue  since it    was not in  controversy and or that  it  was snot canvassed by  the parties, the appellant  submitted  in this appeal that the trial  magistrate  in so finding denied  it an opportunity  to address  the  court on that issue  and that if it  had such opportunity, it  would have  proved that  the  1st respondent  though in liquidation, did not  require leave  of court to be sued especially  where the receivership   was  by a creditor, as opposed to a situation  where the  receivership  was by an order of  the court. The plaintiff having pleaded that the 1st respondent was under receivership, that was its case to demonstrate to court that the 1st respondent   was placed  under receivership by a creditor  under a debenture  and therefore  it did  not  require  leave  of court  to sue it.  It did not. Further, if that  were the case, nothing  prevented  the appellant   to seek, on appeal herein, to adduce additional evidence as provided for  under   Section 78 (1)(d)of  the Civil Procedure Act and Order 42 Rules 27 and 28 of the Civil procedure Rules,2010 which  evidence would  have persuaded  this court to either  remand this suit  for  trial  or try  it finally since the court is not bound  or restricted to upholding or setting aside  the trial magistrate’s  judgment.

43.  This court does agree with the  authority  of Lochab Bothers V Kenya Furfural Company Ltd (supra) that a  receiver appointed  out of court   under debenture  instrument is an agent  of all  or any  part of the property  and assets  thereby charged  or agreed  to be charged.  However, the above decision can be distinguished from the instant  case where  the  appellant  did not  attempt to  seek  to adduce such evidence  of an existing  debenture instrument  under which the 1st respondent’s  receiver could  possibly have been appointed  in which  event such  receiver  is not  allowed to originate  any proceedings  in their own  name  on behalf of the company in which they  are receivers. On the other hand, Section 228 of the Companies Act Cap 486 of Laws of Kenya (now repealed) provided that:

“ When a winding up order has  been made or an interim liquidator   has been appointed  under Section  235, No action  or proceeding shall  be proceeded  with or  commenced   against the company except  by  leave of  court and  subject to  such terms as the court may impose.”

44.  The above  legal provision was  buttressed  by the decision of the  Court of Appeal in Sololo Outlets  & 3 Others  V National Social Security  Fund Board  of Trustees  [1994] KLR   473  wherein the court stated that:-

“Under Section 228 of the Companies Act, leave has to be obtained   before a suit is filed against   a company which is in liquidation.”

45.  The above  statutory and case law are clear that  one  requires  leave of  court to be  granted  to institute  suit against a company which is  in liquidation  or  under  receivership or statutory management. As earlier stated, it is the appellant that pleaded the fact of the 1st respondent being under receivership and being managed by the receiver manager a Mr N.K. Kositany.  However, in its evidence in court, the appellant did not attempt to distinguish   whether the receivership was by a creditor under a debenture   instrument   or by appointment by a court.  Section 108 of the Evidence Act provides that:

“Whoever desires any court to give judgment as to any legal right or liability dependent   on the existence if facts.

46.   Further,  Section 109  of the same Act  stipulates that:

“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.”

47.  In Okeno V Republic [1972] EA 32 the Court of appeal held that:

“ An appellant  is entitled to  expect   the evidence as a  whole to be  submitted to a fresh  and exhaustive   examination  and to  the appellate  court’s own decision  on the evidence.  The first appellate court must itself weigh conflicting evidence and draw its own conclusions. It is  not the function of a first appellate  court merely to scrutinize  the  evidence to see if there  was   some evidence  to support  the lower court’s  findings  and conclusions; it must  make its own  conclusions.  Only then can it decide whether the magistrate’s findings can be supported.  In doing so, it should make allowance for the fact that the trial court had an advantage of hearing and seeing the witnesses.”(Emphasis added).

48.  The  above  words  from a criminal  appellate court  were the ones  echoed  in Sielle & Other V  Associated  Motor Boat  Company Ltd & others,Civil Application 31/1967. Therefore, on the basis of   the legal principles set out in Sections  107-109 of the Evidence Act  and from  the cases  of Sielle  & Another Vs  Associated  Motor Boat  Company & Okeno  V Republic (supra), and having   reassessed  the evidence  as adduced  in the lower court, I am entitled  to make my own independent  findings and  conclusions   on the issues raised  by the appellant  that indeed, the appellant  failed to support  its case  on a balance of  probabilities.

49.  On the point that  the trial magistrate  went  on  his own frolic  to determine issues that  were never canvassed  or pleaded  by the parties; and  that the trial magistrate  misdirected  herself on matters  which  were admitted especially  on the issue   of ownership of motor vehicle  KAG  580P, the Court of Appeal  case of  Barclays Bank of Kenya  Ltd  V Patriotic  Guards  Ltd [2015] e KLR is instructive.  In the above appeal, the court considered, among others, the appellant’s complained inter alia, that the  trial judge   should not  have suo moto  raised the  issue of  the appellant’s non  compliance with   Regulation  79 of  Table A  of the Companies Act  as the issue had  neither been  raised  in the pleading  nor had  it been canvassed  during the hearing. The Court of Appeal  in determining  that ground/issue held that as  the  1st appellate court  it  was not  restricted  to  upholding  or rejecting  the trial court’s  findings  and proceeded  to examine all the evidence  along with  the  grounds  of appeal  raised  and submissions  of counsel  to arrive at  its own  independent  decision. The Court of Appeal found the agreement between the parties null and void and consequently unenforceable by either party.  And it further found that the appellant appeared to take leverage on the fact   that the respondent acknowledged the debt and even started paying the loan.  The Court of Appeal further pronounced itself as follows:

“In our view, the said admission cannot be used against him.  He may not have appreciated the legal implications involved, or he just felt as a conscionable human being that he ought to pay.  He cannot  however be penalized  for that  as his  well intentioned  action did not  sanitize  the illegality  in the form of the contract…….

There being no valid enforceable contract between the parties, no claim based on that contract would succeed.  The only order the court could have made was the declaration sought by the plaintiff to the effect that the contract in question   was void   and thus unenforceable.”

“………..Although generally parties are  bound by their pleadings, where  an issue is raised in the course  of the hearing and the same  is canvassed by both parties, the  court would  be in order to make  a determination on such matter and  even give  orders based on  such an issue( See Odd Jobs Mubia [1974] EA  476 CA) .  It is  also  trite law  that a point of law   can be raised  at any stage  even on appeal even  though  not  raised before  the court of  first instance.  The court  can also  on its own  motion raise a point of law  at any point and make a determination  based on  the same   even where  such  point has  not been canvassed  by the parties.  The learned  judge did not therefore  do anything  outrageous  by raising   the issue of  non compliance  of Regulation  79  of the Table  A  of the Companies  Act  and acting on it.”

50.  It is  on the basis of the  above  very recent  authority  from the Court of Appeal, and  which decision  is binding on  this court  that I must determine, as  I hereby do, that the  trial magistrate  was correct in making her finding first,  on matters of  law which  were pleaded but no evidence  was led on the same, particularly  relating to the capacity of  the 1st respondent  to be  sued without   leave of court  and second, on matters  which  though not pleaded, but from  the evidence  it emerged that the evidence  by the appellant’s  witness  concerning the ownership  of the motor vehicle  was not only insufficient but perfectly contradictory.

51.  The  above authority  of Barclays Bank of Kenya  Ltd  V Patriotic Guard  Ltd  though made  by the same  Court of Appeal  is superior  to the earlier decisions relied  on by the appellant as it is the latest decision on the same issues raised in the earlier decisions that although generally parties   are bound  by their  pleadings and that courts ought only to decide on pleaded and canvassed issues, nonetheless, where  an issue  is raised  in the course  of the hearing and the same  is canvassed  by both parties, the court  would be  in order to make a  determination  on such  a matter and  even give orders based on such an issue.

52.  In addition, the Court of Appeal in the above Barclays Bank of Kenya  Ltd  V Patriotic Guard  Ltd case was also  clear that  a point of  law can be  raised  at any stage even on appeal  even though not  raised  before the court  of first  instance.  Further, that trial the  court can  also  on its own  motion raise a  point of law at  any point  of the proceedings and make a determination   based on that issue even where such  point  has not been  canvassed  by the parties.

53.  I  accept the  principle espoused in the above  Court of Appeal decision that a party  cannot take  leverage  on the fact that  the adverse  party acknowledged  or admitted  certain  pleaded facts; as such  admission  cannot be  used against  the party   admitting ; for  he may not have  appreciated  the legal  implications involved, or he just felt  as a conscionable human  being/Legal  entity, of the facts  as pleaded  being  true.  Therefore, such a party cannot be penalized for that as his well intentioned action did not sanitize the illegality in the admitted facts. In other words, where  there is  an illegality, admission  of facts  cannot sanitize  an illegality  for  what is void  in law  cannot be  voidable  by an admission.

54.  Accordingly, I find that the trial  magistrate  did not  do anything  outrageous  and neither did she grossly  misapprehend  the law  when  she raised   the issues of locus standi  of the plaintiff and or competence  of the suit  as against  the 1st respondent  which  was admittedly in receivership. I further find that the trial magistrate did not err in not relying on the admission in the defendant’s written statement of defence to find that the plaintiff/appellant owned the accident motor vehicle since the evidence adduced on ownership thereof was exceedingly contradictory thereby raising sufficient doubts as to the appellant’s ownership thereof.

55. It is  on the above  basis that  I uphold the  decision of  the  trial magistrate  that indeed   the appellant  did not  prove its case  against the  respondents  on a balance of  probabilities  and a  rehearing  thereof  would in my view  serve no useful purpose especially  in the absence of  any new  evidence that  the plaintiff /appellant  has the locus  standi  or legal /or  equitable   interest  in the suit   motor  vehicle or that   the  1st defendant/respondent  is now  possessed  of the capacity n to sue and  or be sued with or  without    leave of   court in view of the  disclosure  that  it  was  at the material time in  receivership.

56.   In the event that Iam found to be wrong in my above decision on the two issues, on whether or not   the respondents  were liable for  the accident  and the purported  loss and  damage  as claimed by  the applicants, the  court wholly  agrees   with the trial magistrate’s finding  that indeed  the evidence  adduced  regarding the state of the motor vehicle  was too contradictory and incapable of belief.  For example, the plaintiff/applicant at first pleaded for the cost of repairs.  In the amended plaint, it sought for the pre accident value less salvage value.  It then led evidence that the motor vehicle   was a write off.   However, its witness PW2 denied that he never declared the motor vehicle a write off and neither did he say it was uneconomical to repair the motor vehicle.  He is the expert   motor vehicle assessor.  Having  disowned the  theory  of a written off vehicle, it follows that  there  was no  independent  expert evidence left  to support  the averment  that the motor vehicle KAG  580P  was a write off and therefore   the claim for  pre accident  value  less salvage  did not  arise.  In addition, this court does not  find any plausible  reason why it should  interfere  with  the factual findings   of the trial  magistrate that  the execution of the sale  agreement of the  salvage  left a lot  to be desired.  For example, the seller’s  representative  Ann Ngigi  signed the  agreement for sale  on 5th December  2003  whereas the witnesses signed  on 23rd April  2004 and  21st April  2004  respectively and the  PW1   was hard pressed to explain those circumstances.  PW1 stated that   the motor vehicle   was sold on  28th February 2004   in  examination  in chief and in  cross examination he stated that the motor vehicle  was sold  on 23rd April  2004.  He also stated that   Ngaruiya  Githegi  signed for  Teenwise   when the agreement  is clear that Ann Ngigi  is the one who signed  in the place  of  vendor  and Ngaruiya  only witnessed.  Indeed, the evidence by PW1   was so inconsistent that the trial magistrate found it difficult to rely on it and neither do I. Accordingly, I accept the trial magistrate’s findings that the plaintiff/appellant did not prove on a balance of probabilities that it was entitled to the damages claimed, even if the respondents were to be found liable for the material accident.

57. For all the foregoing, I would restate my stand that this appeal is devoid   of any merit and proceed to dismiss it. I uphold the trial magistrate’s findings and decision.

58. Costs are in the discretion of the court and in any event, in favour of a successful party.  However,  I note that there were a myriad of legal issues touching on the capacity of the appellant to sue and of the 1st respondent to be sued.  That being the case, I find   no reason why the trial magistrate made an order  for costs in favour of the respondents and  I would on that ground  set that   order aside   and order that   each  party bear  their own costs of the  suit in the subordinate court. On the  costs of this appeal as dismissed, I find that  as the  respondents  did not  participate  in this appeal, I order the appeal  herein dismissed  with no order as  to costs.

Dated, signed and delivered in open court at Nairobi this 12th day of July 2016.

R.E. ABURILI

JUDGE

In the presence of:

Miss Mwaniki h/b for Masese for the Appellant

N/A for the Respondents

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