[2020] KEHC 7653 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT KISII

CIVIL APPEAL NO 145 OF 2018

CFC STANBIC BANK LIMITED................................................1ST APPELLANT

PAUL MBOYA OKETCH T/A PAMBO AUCTIONEERS.......2ND APPELLANT

VERSUS

MIDGELEY MARK GOGO.............................................................RESPONDENT

(Being an appeal from the judgment of the Chief Magistrates Court at Kisii, before Hon. N.S Lutta S.P.M delivered on the 20th November 2018 in Kisii CMCC No. 28 of 2016)

JUDGMENT

1. The appellants were the defendants before the subordinate court while the respondent was the plaintiff. I shall refer to the parties in their capacities before the trial court for ease of reference unless the context otherwise admits. The plaintiff filed his claim before the trial court contemporaneously with a Notice of Motion on the18th January 2018. In due course the plaintiff amended his plaint through an amended plaint dated 19th July 2018 seeking the following orders:

i. Declaration that the re-possession and/or seizure of Motor Vehicle registration number KCD 948 E, Mitsubishi FH 215 levied by the 2nd defendant on the 5th day of January 2016 instructions of the 1st Defendant was illegal, unlawful and fraudulent and otherwise amounts to trespass.

ii. An order compelling the Defendants herein to release Motor Vehicle Registration Number KCD 984 E, Mitsubishi FH 215 to the Plaintiff.

iii. Permanent injunction restraining the Defendants by themselves, agents, servants, employees and/or any other person acting on their instructions from further repossessing, seizing, confiscating, detaining, interfering with and/or otherwise dealing with Motor Vehicle Registration Number KCD 948 E, Mitsubishi FH 215, without regard to due process of the law.

iv. Payment of the sum of Kshs. 2,543,880/- only.

v. General damages for trespass.

vi. Cost of the suit.

2. It was the plaintiff’s case was that he had sought loan facility from the 1st defendant with a view of financing the purchase of Motor Vehicle Mitsubishi FH 215 Canter. The 1st Defendant upon granting the financial facility caused a Hire Purchase Agreement to be drawn and executed by the parties. He claimed to have remitted the monthly installments in favour of the 1st Defendant and he further pleaded that upon taking possession of the vehicle he engaged in the business of transporting and selling LPG Gas. On 5th January 2016 the 1st Defendant unlawfully without issuing the requisite notice instructed the 2nd Defendant to repossess the motor vehicle and the 2nd Defendant repossessed the vehicle in Awendo Town. He contends that at the time of repossession the vehicle was carrying 400 (6Kg) Gas cylinders worth Kshs 900,000/=. Out of the 400 gas cylinders, 210 were duly filed with gas which was worth Kshs 199,500/-. He averred that he lost all the gas cylinders when the vehicle was repossessed by the 1st defendant and also claimed that the deprivation of use the vehicle occasioned him loss profits estimated at Kshs 1,444,380/-.

3. The defendants opposed the plaintiff’s claim and filed their statement of defence dated 17thFebruary 2016. They claimed that through the Higher Purchase Agreement they covenanted with the plaintiff that the 1st defendant would finance him with Kenya Shillings Four Million Five Hundred and Ninety (Kshs 4,590,000/-) towards the acquisition of Motor Vehicle Registration Number KCD 948 E, Mitsubishi FH 215. They further averred that the parties signed a Right of Set Off-Accounts & Securities which formed part of the agreement between the parties. It was agreed that the 1st Defendant had discretion to:

a) Realize the securities and apply the proceeds to set-off any other accounts held by the plaintiff or against other accounts or indebtedness in respect of which the plaintiff is liable.

b) Apply payments receive in respect of any designated accounts to any other accounts held by the Plaintiff or against any other account or indebtedness in respect of which the plaintiff is liable.

4. The 1st defendant further alleged that on 29th December 2015, the plaintiff got his current account wrongfully credited with Kenya Shillings Two Hundred Thousand (Kshs 200,000/-) which he utilized. The sum was recoverable from the Plaintiff as part of his liabilities with the 1st Defendant. As at 4th January 2016, the outstanding arrears amounted to Kshs 324,018. 46/= whereupon the 1st defendant issued to Keysian Auctioneers a repossession order and the said auctioneer served a proclamation notice upon the plaintiff and subsequently repossessed and stored the vehicle in the 2nd Defendant’s storage yard. The 1st defendant in its counterclaim seeks Four Million, Four Hundred and Fifty-Three Thousand, Seven Hundred and Fifty, Cents Eighty-Five (Kshs 4,453,750. 85) from the plaintiff as the outstanding debt as at 29th January 2016.

5. Before the matter was set down for hearing the trial court considered the Notice of Motion dated 18th January 2016. The trial court found that the plaintiff had breached the Hire Purchase Agreement by falling into arrears. The court also found that the repossession before the expiry of the 7 days grace period by the 1st defendant and its auctioneers was wrong.

6. Subsequently, the hearing of the main suit commenced and after an elaborate trial, the learned magistrate found that the plaintiff had proved his case against the defendant and found the defendant 100% liable. The trial court awarded the plaintiff Kshs 2,543,880/- as general damages.

7. The defendant dissatisfied with the findings of the trial court lodged the instant appeal on the following grounds;

1. The learned Magistrate erred in law and in fact in assessing general damages in the sum of Kshs 2,543,480/- as compensation for trespass to property.

2. The learned magistrate erred in law and in fact in failing to consider and/or disregarding the evidence and submissions by the appellant in assessing general damages at Kshs 2,543,480/-.

3. The learned magistrate erred in law and in fact by wrongly evaluating the evidence on record, failing to consider and/or disregarding the evidence and submissions by the appellant and thereby arriving at a wrong conclusion that the appellant was 100% liable for the alleged loss suffered by the respondent.

4. The learned magistrate in law and in failing to deliver a determination on the counterclaim lodged by the appellant.

5. The learned magistrate erred in law and in fact in failing to find that the respondent had defaulted in servicing the hire purchase facility, and consequently the appellant was entitled to repossess the subject motor vehicle and dispose it off.

6. The learned magistrate erred in law and fact in finding that that the plaintiff suffering as a result of the loss of the gas cylinders without also finding that the plaintiff orchestrated his own misfortune by defaulting in payment of the hire purchase facility which led to the repossession of the subject motor vehicle.

7. The learned magistrate erred and applied wrong principles in assessment and award of general damages to the plaintiff.

8. The said assessment and award of general damages manifestly excessive an inordinately high as to amount to a miscarriage of justice.

9. There was no good or proper basis for the said assessment of damages, and finding the appellant 100% liable.

8. The appeal was canvassed by way of written submissions. The defendants filed their submission on 15th October 2019. They contend that the repossession was lawful as the Hire Purchase Agreement allowed the 1stdefendant to retake possession of the vehicle without notice once the Hirer defaults in making payment. They urged that they were entitled to the Kshs 4,453,750. 85/- plus the accrued interest and accrued penalty as they produced a statement of accounts which was not challenged. According to the proclamation notice there was no indication that there was cargo in the vehicle and as a result the plaintiff failed to prove his claim to the required standard. They also advanced that having demonstrated that the plaintiff was in breach of the agreement; he ought not to be allowed to benefit from such breach.

9. The plaintiff filed his submissions on 24th October 2019. He advanced that the repossession was unlawful as the attachment of the vehicle was carried out pre-maturely and in any event before the lapse of the statutory timeline. He contends that according to Rule 12 (b) of the Auctioneers Rules 1997 the plaintiff ought to have been served with a 7 day proclamation notice. They also submitted that the monies received on account of sale of the vehicle ought to have been credited to the Hire Purchase Account and the same would have diminished or settled the debt due on the account. They cited Iddi Ayub Shabani v City Council of Nairobi (1982-88) 1KAR, 681and Credit Finance Corporation Limited v Abdul Aziz Lanani, (1964) E.A, page 318 to support its case.

10. I have considered the rival submissions by counsel and examined the record of appeal. As this is a first appeal, it is my duty to analyze and re-assess the evidence on record and reach my own conclusions in the matter. (SeeSelle -vs- Associated Motor Boat Co. [1968] EA 123)

11. At the hearing before the trial Court theplaintifftestifiedas Pw1. He told court that the when the motor vehicle was released he lost 400 cylinders valued at Kshs 900,000/- and LPG gas worth Kshs276,000/-. He claimed he did not owe the 1st Defendant any arrears as the motor vehicle was later repossessed. On cross examination he admitted that there was a default on his part in regard to the payments. He explained that on 24th March 2016 he paid Kshs 544,000/- being the accrued loan amount and that there is a balance which is yet to be paid. Henry Chuma Nyakundi (Pw2) told court that he prepared a report on the income and expenditure covering the period from June 2015-December 2015 from the bank statements and expenditure receipts. He testified that for the said period the plaintiff collected Kshs 13,000,000/-, while his expenditure was Kshs 8,000,000/- and he therefore made a profit of Kshs 4,000,000/-. He testified that the plaintiff lost Kshs 1,733,200/- when the vehicle was repossessed.

12. The 1st defendant called Stella Orengo (Dw1) as its witness. She adopted her statement dated 19/7/2018 as her evidence. On cross examination she testified that the statements were printed from the banks system and that they were not certified. She told court that the repossession ought to have been on 11/01/2016. She confirmed that the vehicle was repossessed a second time and sold. She also admitted that at the time of filing the counterclaim the vehicle had not been repossessed for the second time.

ANALYSIS AND DETERMINATION

13. Before looking at the issues in dispute, I do note that the following are not in dispute from the evidence presented by the parties:

That the plaintiff was unable to pay the rental installments as agreed.

That the first repossession of 5th January 2016 was found to be wrong by the trial court in its ruling dated 18th March 2016.

That the motor vehicle was released to the plaintiff t and thereafter repossessed and sold by the 1st defendant.

14. It is against this background that I find that the issues for the Court’s determination are as follows:

a) Whether the plaintiff is entitled to Kshs 2,543,880/- in regard to loss of profit and lost gas cylinders

b) Whether the defendant’s action constitute trespass

c) Whether the 1st defendant is entitled to Kshs 4,453,750. 85/- as an outstanding sum upon exercise of its rights under the Higher Purchase agreement.

a. Whether the plaintiff is entitled to Kshs 2,543,880/- in regard to loss of profit and lost gas cylinders

15. In this appeal the defendants contend that the learned Magistrate erred in assessing general damages in the sum of Kshs 2,543,480/- as compensation for trespass. In Henry Hidaya Ilanga v Manyema Manyoka [1961] EA 713, the court cited with approval the decision of the Privy Council in Nance vs British Columbia Electric Railway Co Ltd (4), (1951) AC page 613 where the court elaborately discussed the circumstances in which the appellate court may disturb quantum of damages awarded by a trial court. It was observed that:-

“The principles which apply under this head are not in doubt. Whether the assessment of damages be by a judge or jury, the appellate court is not justified in substituting a figure of its own for that awarded below simply because it would have awarded a different figure if it had tried the case at the first instance. Even if the tribunal of first instance was a judge sitting alone, then before the appellate court can properly intervene, it must be satisfied either that the judge, in assessing the damages, applied a wrong principle of law (as by taking into account some irrelevant factor or leaving out of account some relevant one); or, short of this, that the amount awarded is so inordinately low or so inordinately high that it must be a wholly erroneous estimate of the damage.”

16. The trial court in its judgment found as follows:

“32. I find that the plaintiff has proved his case against the defendant on a balance of probabilities. The defendant is 100% liable.

33. In my considered view, an award of Kshs 2,543,880/- would be adequate compensation to the plaintiff as general damages.

34. I enter judgment for the plaintiff against the defendants in the sum of Kshs 2,543,888/- as general damages together with the costs of the suit and interests.”

17. From the plaint the amount of Kshs 2,543,880/- sought by the plaintiff comprise of Kshs 1,444,380/- for loss of profit, Kshs 900,000/- for the price of gas cylinders and Kshs 199,500 for the price of the LPG gas. The payment of sum of Kshs 2,543,880/- sought by the plaintiff is in the nature of special damages and not general damages as found by the trial court. It is trite law that special damages must be pleaded with particularity and must be strictly proved. Loss of income is special damages, which must be pleaded and proved (see Peter Njuguna Joseph and EARS vs. Anna Moraa Civil Appeal number 23 of 1991).The plaintiff’s claim is the nature of special damages is twofold: he claims loss of profit; and loss of 400 gas cylinders and LPG gas.

18. In this case the plaintiff sought services of NyakundiMwencha& Associates to prepare a report for the transactions for the period June 2015-December 2015 with a view of estimating lost income between 5the January 2016 to 24th March 2016. Pw1 testified that the report relied on was prepared by his accountant Pw2. The report presented by Pw2 was not supported by any business books or any documentation (bank statements and expenditure receipts) to show how the accountant arrived at the revenue earned and the expenditure incurred. In Nicholas Angwenyi Siro t/a Riverside Continental Resort v Finlay Kirui & another [2019] eKLR the court held that;

“the projection relied upon by the plaintiff is not supported by any other business books like audited accounts for the period to show that the business was a going concern, that it had employees and was carrying on business that would produce an income. The law requires that the special damages must be pleaded and proved according to the nature of the claim and in this case a claim for substantial loss of profit cannot stand based on one report whose basis is doubtful. I therefore reject the claim for loss of business.”

In the circumstance, I find that the plaintiff failed to prove his claim for loss of profit and dismiss his claim.

19. I now turn to the plaintiff’s claim that he lost 400 LPG gas cylinders. The plaintiff availed an invoice and fiscal receipt both dated 24th November 2015 issued by Salama Gas Ltd for 400 cylinders with LPG gas each weighing 6Kilograms. Pw1 testified that the 400 cylinders are valued at Kshs 900,000/- and each costs Kshs 2,250/-. Pw1’s testimony remained unshaken during cross examination and his evidence that the plaintiff bought 400 gas cylinders with LPG gas each weighing 6Kilograms was unchallenged. In Safarilink Aviation Limited vs. Trident Aviation Kenya Limited & Another [2015] eKLR, Mabeya, J. expressed the view that:

"...failure to rebut evidence tendered by one party leaves the court with no option but to draw an inference that the facts as presented are true..."

20. Having found that the plaintiff had 400 LPG gas cylinders all valued at Kshs. 900,000/-, I find that the plaintiff was entitled to compensation for the lost LPG gas cylinders.

21. The plaintiff also claimed that 210 of his gas cylinder were filled with gas which would have been sold at Kshs 950/- per cylinder and thus he would have earned a total of Kshs 199,500/- from their sale/refill.However, there was no evidence to show that out of the 400 gas cylinders the plaintiff had sold 190 gas cylinders.The plaintiff did not produce any sales invoices showing the number of cylinders containing the LPG gas that he had sold. Pw1 during cross examination testified that he had no invoices of what he had sold. In this regard I find that the plaintiff did not meet the threshold set for proving special damages and therefore dismiss his claim for Kshs 199,500/-.

b. Whether the Defendants’ action constitute trespass

22. It is undisputed that the plaintiff had defaulted in making the monthly the rental installments as agreed by the parties and the plaintiff was therefore in breach the Hire Purchase Agreement and thus cannot lay claim general damages for trespass.

c. Whether the 1st defendant is entitled to Kshs 4,453,750. 85/- as an outstanding sum upon exercise of its rights under the Higher Purchase agreement

23. Dw1 testified that the vehicle was again repossessed and sold. The 1st defendant did not disclose how much the vehicle was sold for or how much of the proceeds of sale were utilized to offset the amount due from the plaintiff. There was no evidence by the 1st defendant that Kshs 4,453,750. 85/- was the outstanding debt after the sale of the motor vehicle.The court in Eunice Kanugu Kingori v NIC Bank Limited [2018] eKLRfound as follows:

“It is also not in dispute that at the time the vehicle was repossessed, the Plaintiff was in arrears. It is also a fact that eventually the motor vehicle was repossessed and sold. What is evidently missing in this matter is how much the vehicle was sold for and how much was owing as at that time. Unfortunately, the Plaintiff has not sought for any order for accounts in relation to the proceeds of sale. Had this been done, the Defendant would have been compelled to account and all allegations of extra charges imposed would have been dealt. All that the Plaintiff has done is to submit at length that the conduct of the Defendant is oppressive, was in breach of the contract, amounts to unjust enrichment and is calculated to impoverish her. These allegations can only be ascertained if the court is given evidence as to how much was payable, paid, realized from the sale and how it was all applied. These matters were purely within the knowledge of the Defendant and the Plaintiff has had all the rights to call for it and/or demand that it be provided. That was not done. In the given circumstances, the Court is not able to come to a conclusion that the Defendant realized more than was deserved and/or was in breach of the contract.”

24. It is not possible for the court to ascertain how much was owing to the 1st Defendant after the sale of the motor vehicle. The admission by Dw1 that the motor vehicle was already sold can only mean that the money realized from the sale was utilized to offset the plaintiff’s debt and in any event if there was a balance not covered by the proceeds of the sale then the 1st defendant was obligated to present the statement of account in full.

25. The upshot is that I allow the appeal, set aside the award of general damages by the subordinate court and substitute it with an award of Kshs. 900,000/- as special damages.

Dated, signed and delivered at KISII this 4thday of March, 2020

R. E. OUGO

JUDGE

In the Presence of;

Miss Nyandoro h/b Mr. Mose For Mr. Muri Mwaniki

Mr. Adawo For the Respondent

Ms. Rael Court Assistant