[2017] KEHC 10018 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL AND TAX DIVISION

CIVIL SUIT NO. 405 OF 2016

DIAMOND TRUST BANK KENYA LIMITED…....................APPELLANT

- VERSUS -

SHADRACK MUTEI MAUUYE T/A

SHASHCAH ENTERPRISES……..……………...….….……RESPONDENT

JUDGEMENT

1. By a judgement delivered on 29th November 2011, the learned trial magistrate dismissed both the suit and the counterclaim.

2. The plaintiff, DIAMOND TRUST BANK KENYA LIMITED, was dissatisfied with the judgement, and it lodged an appeal to this suit.

3. However, the defendant, SHADRACK MUTEI MAUUYE T/A SHASHCAH ENTERPRISES, did not appeal against the dismissal of the counterclaim.

4. The grounds of the appeal can be summarized as follows;

a) The trial court erred by finding that the appellant’s claim was not particularized in the plaint.

b) The trial court erred by finding that there was no evidence about how the sum of Kshs. 288,628/88 was arrived at.

c) The trial court erred by finding that the appellant was in breach of the Hire Purchase Agreement, by accepting cash deposits at its Capital Centre Branch, as opposed to the Nation Centre Branch; and that therefore the appellant was estopped from seeking to enforce the terms of the Agreement against the respondent.

d) The trial court took into consideration issues which were not raised nor pleaded by the parties; and which were neither relevant nor material to the cases put forward by the parties.

e) The trial court failed to consider the issues which the parties raised and pleaded; and by so doing, it arrived at an erroneous decision.

f) The evidence was not evaluated conclusively by the trial court, leading to the erroneous conclusion that the respondent did not owe the sums claimed in the plaint.

5. Before delving into the substance of the appeal, it is important to set out a summary of the case.

6. The plaintiff carries on Banking business, including the provision of finances to customers who wish to acquire vehicles on Hire Purchase.

7. It is common ground that the parties herein executed a Hire Purchase Agreement, which enabled the respondent to purchase an ISUZU TRUCK, Registration KAS 437B.

8. The funds provided amounted to Kshs. 2,290,500/-, which the respondent undertook to repay by monthly instalments of Kshs. 76,031. 88, over a period of 36 months.

9. The respondent admitted, in his Defence, that if any instalment was not paid punctually, he would pay additional interest.

10. He also admitted that if he defaulted in any instalment, the total hire purchase amount, together with interest, would become immediately payable.

11. At paragraph 3 of the Defence, the respondent admitted that in the case of a default on his part, the appellant;

“…would be at liberty to terminate the Agreement , repossess and dispose of the truck?.

12. It is common ground that the respondent defaulted on 2 instalments, and that the appellant repossessed the truck.

13. In the plaint, the appellant stated that the truck was sold for Kshs. 1. 9 Million, which sum was credited to the respondent’s account.

14. At paragraph 8 of the plaint, it was pleaded thus;

“The plaintiff’s claim as against the Defendant is for Kshs. 288,628. 88 being the sum outstanding under the subject hire purchase facility as at 15th February 2006. The said sum continues to attract interest at the rate of 21. 77% p.a from 15th February 2006 until payment in full?.

15. Whilst conceding that the appellant had a right to repossess the truck, and to dispose of it, the respondent denied paragraph 7 of the plaint. In effect, the respondent denied the appellant’s contention that the truck was sold for Kshs. 1. 9 Million.

16. Indeed, the respondent indicated clearly, that he would put the appellant to strict proof, in that respect.

17. The respondent’s case was that when the appellant received payment of Kshs. 80,000/- on 30th December 2004, the rights which had accrued to the appellant were lost, because the payment was made on the understanding that the appellant would release the truck back to the respondent.

18. As the appellant did not release the truck to the respondent, even after it received the payment of Kshs. 80,000/-, the respondent asserted that the sale of the truck was wrongful.

19. The respondent had also asserted that the appellant was not entitled to claim interest after 7th January 2005, which is the date when the truck was originally scheduled for auction.

20. The auction did not lead to the sale of the truck.

21. It is common ground that the truck was subsequently sold by private treaty.

22. The Defence indicated that the defendant had demanded an account from the appellant, together with money which the respondent believes he was entitled to receive, after the sale proceeds had cleared the outstanding amounts.

23. It was therefore the respondent’s view that the appellant had only sued him to pre-empt the demands from the respondent.

24. During the trial, the appellant produced exhibits, with a view to proving the following expenses which it had incurred when repossessing the truck, and when arranging for it to be sold;

a) Valuation Kshs. 3,480. 00

b) Storage charges (in Mombasa) Kshs. 9,320. 00

c) Storage charges (at Leakey) Kshs. 15,660. 00

d) Transfer of vehicle from Mombasa to Nairobi Kshs. 13,920. 00

e) Costs of Repossession Kshs. 55,000. 00

Total Kshs. 97,380. 00

25. Although the appellant did produce documents which reflected those expenses, the said expenses had not been itemized in the plaint.

26. When a party makes a claim in respect to actual disbursements incurred, such claim is known as Special Damages.

27. In CHARLES SANDE Vs KENYA CO-OPERATIVE CREAMERIES LIMITED, CIVIL APPEAL No. 154 of 1992, the Court of Appeal said;

“As we have pointed out at the beginning of this judgement, Mr. Lakha readily agreed that these sums constituting the total amount were in the nature of special damages. They were not pleaded. It is now trite law that special damages must not only be pleaded but must also be specifically proved. We do not think we need to cite any authority for this simple and hackneyed proposition of law”.

28. In this case the appellant led evidence on the special damages, but it had not pleaded the same in the plaint.

29. In COAST BUS SERVICE LIMITED Vs MURUNGA DANYI & 2 OTHERS, CIVIL APPEAL No. 192 of 1992, the Court of Appeal restated the position on the need to plead special damages, as follows;

“Special damages must be pleaded with as much particularity as circumstances permit and in this connection, it is not enough to simply aver in the plaint, as was done in this case, that the particulars of special damages were to be supplied at the time of trial.

……..

It is only when the particulars of the special damages are pleaded in the plaint that a claimant will be allowed to proceed to strict proof of those particulars?.

30. It therefore follows that when special damages had not been specifically particularized in the plaint, the evidence which was led in that regard did not go towards proving any averment in the plaint.

31. In this case, the appellant put forward the claim for Kshs. 288,628/88. The appellant did not specify in the plaint that that sum was comprised of the balance still outstanding, after the truck was sold, PLUS other specific costs and expenses which the appellant had incurred.

32. If anything, the appellant stated thus;

“8. The plaintiff’s claim as against the Defendant is for Kshs. 288,628. 88 being the sum outstanding under the subject hire purchase facility as at 15th February 2006…?

33. The impression created is that after the appellant credited the account with Kshs. 1. 9 million, which were the proceeds from the sale of the truck, the outstanding balance was Kshs. 288,628. 88.

34. When the appellant led evidence to try and demonstrate that the sum claimed included other costs and expenses which the appellant had incurred, but which were not specifically pleaded in the plaint, that constituted a surprise being visited upon the respondent.

35. It was a surprise because the evidence about the costs and expenses did not spring from the plaint.

36. If such evidence were to be admitted, when the plaint had not been amended to incorporate the particulars of the special damages being claimed, the court would have allowed the appellant to adduce evidence which did not support its pleadings.

37. In the case of DAKIANGA DISTRIBUTORS (K) LTD Vs KENYA SEED COMPANY LIMITED, CIVIL APPEAL No. 168 of 2011, the trial court had held that the defendant was entitled to credit for sums which it had paid, even though the Defence did not assert such payments.

38. The Court of Appeal said;

“We are of the respectful opinion that the learned Judge, after holding correctly that parties were bound by their pleadings, erred in holding that the appellant was entitled to credit on sums which were not pleaded in the defence at all?.

39. In the result, the learned trial magistrate cannot be faulted for holding that the appellant’s claims in respect to the costs and expenses were special damages, which ought to have been specifically pleaded in the plaint.

40. On the question as to whether or not the court was right to hold that the appellant was in breach of the Hire Purchase Agreement, the court had held that the appellant was estopped from seeking to enforce the Agreement which it had breached.

41. Nowhere in the Defence was any issue of Estoppel raised. Therefore such an issue could not have arisen and did not arise for determination by the trial court.

42. In any event, when the respondent remitted payments in cash, there would be nothing wrong if the appellant received such payment.

43. When the appellant received payments from the respondent in a form other than that specified in the Agreement, the respondent was not prejudiced.

44. And the respondent cannot complain that the appellant received cash from him, when he remitted such payment. If there were any breach of the Agreement, the same was initiated by the respondent, when he remitted payment in cash, and when he did so at a venue other than the one prescribed in the Agreement.

45. The learned trial magistrate’s court erred when it held that an estoppel had arisen, which would stop the appellant from enforcing the Agreement.

46. It is noteworthy that the trial court had also held that the appellant was entitled to repossess the vehicle and to sell it, because the respondent had defaulted in payment of hire instalments. It was on that basis that the trial court held that the respondent was not entitled to general damages.

47. The right to repossess the vehicle and to sell it, arose from the terms of the agreement. It cannot be said that the appellant was, on the one hand, right to repossess and to sell the vehicle, but on the other hand, it could not enforce the very agreement which gave to it the rights it gave effect to.

48. The appellant reasoned that when the respondent paid Kshs. 80,000/-, that was solely for the purposes of enabling him to get audience with Mr. Kennedy, for the purposes of holding negotiations.

49. If indeed that were factually correct, I would have concluded that the officer, (Mr. Kennedy), was involved in a practice which bordered on corruption.

50. But I do not think that the submission by the appellant is borne out by the facts and circumstances surrounding the payment of Kshs. 80,000/-. I so find because the said sum of money was merely received by Kennedy, who then credited it to the respondent’s account. Kennedy did not keep the money to himself.

51. In any event, the appellant’s witness testified that she did not know the circumstances under which the money was paid. In fact, the plaintiff’s witness did not even know the officer who attended to the respondent.

52. Therefore, when the appellant now suggests that the only reason why the money was received by it, after the agreement was terminated, was for purposes of enabling the respondent to negotiate with Kennedy, that suggestion is idle speculation.

53. At page 74 of the Record of Appeal is the respondent’s statement of account. It shows that as at 31st March 2005, the debit balance was Kshs. 1,979,533. 22.

54. On 4th April 2005, Sale Proceeds amounting to Kshs. 1,900,000/- was credited into the respondent’s account.

55. For some reason, it is only the sum of Kshs. 1,788,475. 94 which was then applied by the appellant towards the Principal Balance.

56. I find no reason why the account was not credited with whole amount of Kshs. 1,900,000/-.

57. Of course, if the appellant had then wanted to recover the costs and expenses, through court proceedings, it would then have had to claim them as special damages.

58. In the result, I find that after crediting the account of the respondent with Kshs. 1,900,000/-, the outstanding balance would have been Kshs.91, 057. 28.

59. The appellant is entitled to judgement for that amount.

60. As regards interest, the letter of offer specified 7. 5%, p.a whilst the arrears would attract interest at 16. 08% over and above the said 7. 5%.

61. In effect, the agreement did not stipulate that the Hire Purchase amount would attract interest at 21. 77% per annum.

62. When the appellant had sold the truck, it recovered the bulk of the money due to it. The question that then arises is whether the balance outstanding could be construed as arrears.

63. That question arises because, by its own position, the appellant had already terminated the agreement.

64. In my considered opinion, after the agreement was terminated, the appellant could not talk about arrears, as the respondent was no longer expected to be making monthly payments.

65. In the result, I find that the outstanding balance of Kshs. 91,057. 28 should attract interest at Court rates from the date of judgement.

66. Accordingly, the appeal is allowed, to the extent that the dismissal of the appellant’s suit is set aside. In its place, I enter judgement in favour of the appellant for Kshs. 91,057. 28, together with interest at court rates from 29th November 2011.

67. The appellant is awarded the costs of the suit, plus one-half of the costs of the appeal.

68. In respect to the appeal I award only 50% of costs because the appeal was only partially successful.

DATED, SIGNED and DELIVERED at NAIROBI this10th dayof October2017.

FRED A. OCHIENG

JUDGE

Judgement read in open court in the presence of

Shah for Kisinga for the Appellant

Mwangi for the Respondent

Collins Odhiambo – Court clerk.