[2017] KEHC 5808 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAKURU

CIVIL NUMBER 51 OF 2007

JOSEPH C. CHEPKWONY.................................................PLAINTIFF

VERSUS

KIPTAGICH TEA ESTATE LTD................................1ST DEFENDANT

VITALIS KEITANY …..............................................2ND DEFENDANT

JUDGMENT

1. At all material times, and specifically between 5th April 2005 and 25th January 2007 the plaintiff Joseph C. Chepkwony was the registered owner of Nissan Lorry registration Number KAC 073 R (the suit vehicle).

On or about the month of April 2005, the plaintiff contracted his lorry to do work for the defendant company having entered into an oral agreement with the 2nd defendant who was the General Manager for the company.

2. The oral agreement was to the effect that the said lorry together with its driver would work for the company and the plaintiff would be paid 75% of the proceeds while the company(the first Defendant) would retain 25% after paying off fuel and salary for the driver per month. The contract was duly performed and the 1st defendant through its General manager the 2nd defendant paid the 75% share of proceeds to the plaintiff for the months of April, May, June, July and August 2005.

However, from September 2005 upto December 2005 the defendants failed jointly and severally failed to disclose to the plaintiff his share of income. During the same month (December 2005), and 2nd Defendant called for the lorry's Logbook apparently to facilitate inspection of the lorry. Little did he know that the 2nd Defendant wold convert the vehicle to his own, and indeed effected a transfer and registration of the lorry into his name and thus denied owing the plaintiff any income from the lorry as agreed for the period. The 2nd defendant fraudulently obtained a duplicate logbook to perfect the fraud.

3. By his Amended plaint dated 6th March 2008, the plaintiff alleged a breach of the oral agreement by the defendants and blames the 2nd defendant for frustrating his business relationship with the 2nd Defendant by withholding payments for work done and fraudulently transferring his lorry to himself. He therefore sought that the defendants be ordered to pay the withheld dues and or his share of the income from the business and work by the lorry and or his share of the income from the business and work by the lorry and release of the lorry to him and mandatory injunction to compel the defendants render an account of the work schedule of the lorry and amount payable for the period 5th April 2005 upto date of release of the vehicle.

4. The defendants in their separate defences denied all allegations against them as stated by the plaintiff, and in particular denied any form of fraud in conversion and ownership of the plaintiff lorry by the 2nd defendant.

They however admitted that the subject lorry was being used by the company but denied there being any form of contract or agreement between the 1st defendant on monthly payment for the use of the vehicle.

The 1st defendant admitted and stated that the said lorry was being hired from the 2nd defendant and all payments were made to the 2nd defendant for the use of the lorry for the suit period.

I have stated above that the 2nd defendant fraudulently converted the subject lorry to his own property through a fraudulent scheme by fraudulently obtaining a fake duplicate log-book and registration into his name. The plaintiff went to court to claim back ownership of the subject lorry in Nakuru CMCC No. 888 of 2008. The court upon hearing the case held that the 2nd defendant procured registration of the subject lorry himself fraudulently and unlawfully and directed revocation of the registration of the log book to Lorry No. KAC 073R to the defendant. On appeal by the 2nd defendant vide Nakuru High Court Civil appeal No. 32 of 2011 against the Chief Magistrates Judgment, the court (J. Emukule ) on the 7th November 2014 upheld the Chief magistrates judgment and dismissed the appeal.

6. The net effect of the above court orders and judgment is that the plaintiff is and was at all material times the lawful owner of motor vehicle registration Number KAC 073R. On the claim for conversion and damages, the court held that the said claim should be determined in this case. That is what I am now called upon to determine, including issue of unpaid profits earned by the defendants by the use of the plaintiffs vehicle registration number KAC 073R by the defendants.

7. Plaintiffs Evidence.

The plaintiff testified before me on the 5th April 2016. He relied on his written statement and documents filed and produced by consent of counsel.

It was his testimony that he approached the 2nd defendant being the General Manager of the 1st Defendant and whom he knew, and sought for business from the company.

That upon an oral agreement, the 2nd defendant as General Manager of the company allowed him to give the company his lorry Registration No. KAC 073R together with the driver, upon terms that upon using the vehicle the company would pay him on monthly basis, 75% of the business profits and the company would retain 25%. He continued that from 5th April 2005 upto August 2005, the company through the 2nd Defendant paid between Kshs.20,000/= and Kshs.50,000/= per month and that, the 2nd Defendant kept all the vehicle records and work ticket in the office and never released them to him, or his driver.

8. That from August 2005 upto December 2005, the 2nd defendant failed to pay him and requested for the original logbook for the vehicle inspection purposes which he gave him but it was never returned to him culminating to the fraudulent transfer and registration of the vehicle to the 2nd defendant's name, and failure to return the vehicle. The plaintiff further testified that on average he used to be paid between Kshs.20,000/= and Kshs.50,000/= monthly and sought that the court directs payments from September 2005 for six(6) years, upto 18th March 2011 when the defendants handed over the vehicle to the plaintiff, damaged as scrap.

He sought Kshs.1,400,000/= per year for the six years with costs.

Upon cross examination, the plaintiff stated that there was an inventory that the driver used to sign for all work done but the company failed to release the documents, and that the work was for the company, not for the General manager, the 2nd defendant.

9. In answer to the 2nd defendants cross examination, the plaintiff stated that he had no written agreement with either the company or the 2nd defendant but his share of profits used to be paid in cash and would sign payment vouchers that were kept by the company at the factory, together with all other records and documents for the vehicle. He produced no bank statements nor any other documents to support the sum of Kshs.1,400,000/= per year as income.

10. PW2 was Eliud Simiyu, the driver of the lorry, and employee of the plaintiff.

His evidence was that the 2nd defendant used to give him work at the Tea Estate and but the plaintiff used to pay him Kshs.8,000/= per month as salary for three years when the vehicle was being used by the defendants. He further testified that the vehicle work records were kept by the 2nd defendant.

The defendants did not call any evidence but proceeded to file written submissions by their Advocates. The plaintiff also filed his submissions.

11. Analysis of evidence and findings

It has been admitted by the 1st Defendant in its statement of Amended Defence dated 19th March 2008 and filed on the 10th April 2008 that the subject motor vehicle was working and being used by the company in its tea estates, but that it had hired the same from the 2nd Defendant who had possession of the vehicle and that the payments for the use of the vehicle was made to the 2nd Defendant. What the 1st defendant failed to admit is that the 2nd defendant was its General Manager and that the use of the vehicle and terms thereof were orally agreed between the plaintiff and its General Manager, the 2nd Defendant, and that it colluded to fraudulently deny the plaintiff the profits from the use of the vehicle.

12. I have considered the pleadings, evidence and submissions. The issues that arise for determination and framed by parties are as follows.

1. Whether there was a written or oral agreement between the plaintiff and the Defendants for the use of the plaintiffs motor vehicle registration Number KAC 073R Nissan Lorry and if so the terms thereof.

2. Whether there was breach of the agreement, by the defendants.

3. Whether the plaintiff is entitled to the reliefs sought in the Amended plaint.

4. Costs.

13. There is no dispute as to ownership of the suit lorry registration Number KAC 073R that having been resolved by the court in HCA No. 32 of 2011(Nakuru). It was the property of the plaintiff. It is also not in dispute that the 2nd defendant was the 1st Defendant's general manager. The 1st defendant acknowledged that it paid the profit for the use of the lorry to the 2nd Defendant when it knew and ought to have known that the lorry belonged to the plaintiff.

See the courts judgment and rulings in Nakuru CMCC No. 888 of 2008 and HCA No. 32 of 2011which courts both found that the 2nd Defendant unlawfully and fraudulently registered the subject lorry into his name.

14. Having admitted that the lorry was being used by the 1st defendant, and that payments for its use were paid to the 2nd defendant, it was its duty and obligation to produce the vehicles work tickets and payment schedules and vouchers and its failure to do so amounted to fraud. Evidence was tendered and not controverted or challenged that the 1st defendant and the 2nd defendant retained the vehicle documents, work ticket payment vouchers for its purposes that culminated to unlawful and fraudulent conversion and change of ownership of the vehicle to the 2nd defendant.

15. It is trite that a party cannot be allowed to benefit from an illegality or fraud.

In Tobias Ojede Onditi -v-s John Nyangaya Ndege & 3 Ethers (2015)e KLR, the court held that cannot merely allege fraud and leave it at that, actual evidence established the fraud has to be tendered and proved.

It is therefore this court's finding that the plaintiff proved on a balance of probability that there was a calculated scheme between the defendants to defraud the plaintiff of his lorry and profits that accrued from the use of his vehicle by the defendants jointly and severally.

I am satisfied that the plaintiff tendered evidence and proved the fraud – against both defendants as pleaded in the plaint.

16. Coming to the issue whether or not there was a contract between the plaintiff and the defendants or any of them, I have considered the pleadings and admissions by the defendants in their defences. It is evident and no denying that an oral agreement existed. This is clear from the 1st defendants admission that the lorry was being used by itself from May 2005, and that the proceeds profits for its use were being paid to the 2nd defendant who supported to be its owner. That alone is evidence of the existence of an oral agreement for the use of the plaintiffs lorry for the benefit of the 1st benefit of the 1st defendant in its tea estate. Documentary evidence need not be the only form of proving a contract between parties save for a contract for sale of land.

I decline to accept the 2nd defendant's submission that since no written agreement or contract could be produced, there was no such contract. The 2nd defendant failed to tell the court on what basis the subject lorry came to be used by and for the benefit or his employer, the 1st defendant, a fact admitted.

17. The plaintiff testified that from May 2005 to August 2005, the defendants paid him between Kshs.20,000/= to Kshs.50,000/= per month, that he signed vouchers that were all retained by them, and continued to give an average income of his 75% share at a sum of Kshs.30,000/= and Kshs.50,000/= per month.

It is instructive to note that the defendants other than pleading failed to tender any evidence.

Parties are bound by their pleadings See IEBC & Another -vs- Stephen Mutinda Mule & Others (2014) e KLR. The defendants failed to testify thereby denied the court crucial information and disclosure. In the case Kisumu Criminal Appeal No. 106 of 1983 Nguku -vs- Rthe Court held that where there is failure to adduce evidence a presumption arises that the evidence if produced could be unfavorable to that party that fails to produce it. It is trite that failure to adduce evidence by a defendant leaves the plaintiffs evidence unchallenged and uncontroverted.

See NBI HCCC No. 79 of 2011 Linus Nganga Kiongo & Others -vs- Town Council of Kikiyu and Ruambusi Co. Ltd -vs- Antony Mwaniki Nzioki (2016) e KLR, to the effect that pleadings remain as mere statements when evidence is not called. See also Sections 107 and 108 of the Evidence Act. He who asserts in pleadings must support their assertions by way of evidence.

18. To that extent, it is only the plaintiffs evidence that is before the court. I find that the plaintiff has proved his case on a balance of probabilities. In Evanson Okello -vs- Stephen Z.K. Njoroge (2005)e KLR,it was held that the standard of proof in civil cases is on a balance of probability and that in the absence of any contradictory evidence the trial court was right inholding that the respondent has proved his case against the appellant.

19. I do not agree with the 1st defendant's pleadings and submissions that it never contracted the plaintiff who was a total stranger to it. The 1st defendant is a limited liability company. It cannot practically and legally work on its own but through its agents and employees. It is evident that the 2nd Defendant being the General manager was the 1st Defendant's agent through whom the oral contract and agreement with the plaintiff was entered into and transacted.

The 1st defendant admitted that payments for work done by the plaintiff's lorry since May 2005 was paid through the 2nd defendant who also admitted having had possession of and thereafter fraudulently registered it in his name. The 2nd defendant opted not to contravert the above evidence. It is upon the above evidence that the court comes to findings that there existed an oral contract between the plaintiff and the 1st defendant through its general manager, the 2nd defendant who opted not to adduce evince that he was not an agent and employee of the 1st defendant and therefore authorised to transaction business on behalf of the 1st defendant.

20. Having used the plaintiffs vehicle for the period May 2005 upto the 11th March 2011 when the same was returned back to the plaintiff through a court order, damaged and as a scrap, the court finds that the defendants jointly and severally are obligated to compensate the plaintiff by way of payment of the profits earned by the plaintiff for the said period which as admitted by the 1st Defendant were paid to the 2nd defendant who failed to transmit to the plaintiff. See Karanja -vs- Phoenix of EA Assurance Co. Ltd (1991) e KLR. It is evident that the acts of the 2nd defendant were within the scope of his apparent authority by the 1st defendant. He might have acted fraudulently but his principal the 1st defendant is bound and is too held liable.

21. Having come to the above findings and conclusions now then should the unpaid profits be calculated?

I have considered the Amended plaint. The order sought to compel the defendants to handover and give possession of the Lorry registration number KAC 073R to the plaintiff was complied with and satisfied by order of the court in the two cases stated above. The vehicle was handed over to the plaintiff by the defendants on the 18th March 2011.

It was the plaintiff's uncontroverted and unchallenged evidence that he was being paid an average of Kshs.30,000/= between May 2005 and August 2005. He did not plead for an account to be given by the defendants, of the vehicles work schedule including the amount of money that ought to have been paid monthly.

22. In the case Nbi C.A. NO 23 of 1976 Vyas Industries -vs- Dioceses of Meru, faced with similar circumstances were no general damages were pleaded, the court held that a court may base its decision an upleaded issue if during the cause of trial the issue would have been left for the decision of the court.

There is no dispute that the evidence tendered by the plaintiff was evident that the plaintiff suffered damages for conversion of his lorry and none payment for services rendered, and duly acknowledged for the period September 2005 to March 2011. That is six years ( 72 months). The average payments for the months of May 2005 – August 2005 - about Kshs.30,000/=.

23. Though no proof of the payments was tendered, and for reasons stated earlier, it cannot be gain stated that the lorry admittedly being used for various jobs by the defendants for the six year period was making profits that were being paid by 1st defendant apparently to the 2nd defendant.

I am constrained to find that the plaintiff was locked out of the use and profits from use of his vehicle.

The defendants did not suggest to the court that the vehicle was out of service for the period. Their pleadings are clear that the vehicle was indeed being used, and money or profits as agreed in the oral agreement paid, but that money never reached the plaintiff. The defendants cannot be left to go scott free in view of the illegal and fraudulent dealings between themselves and collusion to deny the plaintiff fruits of his lorry's use by themselves.

24. For those reasons, and guided by the uncontroverted evidence tendered by the plaintiff and admissions in the defendants defences, I am persuaded that the plaintiff ought to be awarded damages for he wrongful conversion of his vehicle by the 2nd defendant and none payment of his share of profit by both the defendants.

I have adopted a very conservative loss of profits at Kshs.20,000/= per month for 72 months ( six years) for the period the lorry was being used and in possession of the defendants. This works up as follows:

20,000 X 12 X 6 = Kshs.1,440,000/=.

This sum shall be paid to the plaintiff by the Defendants jointly and severally.

25. For the fraudulent and unlawful conversion and registration of the lorry in his favour, the 2nd Defendant shall pay to the plaintiff general damages for conversion and the pain and suffering, and loss occasioned to the plaintiff as he had to seek court intervention to reclaim his vehicle that was eventually returned to him after six years having been damaged for no fault on his part. Being a general damage, and assessed upon the courts discretion and having considered all the circumstances, I am persuaded to award Kshs.2,000,000/= to the plaintiff.

26. Consequently, there shall be judgment entered for the plaintiff against the defendants as follows:

1. The Defendants shall jointly and severally pay to the plaintiff Kshs.1,440,000/=being monies/profits not paid to the plaintiff on account of use of the plaintiff's motor vehicle registration No. KAC 073R at the rate of Ks.20,000/= per month for 72 months from September 2005 up to March 2011.

2. The 2nd defendant shall pay to the plaintiff the sum of Kshs.2,000,000/= being damages for unlawful and fraudulent conversion of motor vehicle registration No. KAC 073R and registration of the same in his favour.

3. The above amounts shall accrue interest from the date of this judgment.

4. The costs of the suit shall be borne by both the defendants.

Dated, Signed and Delivered this 13th Day of April 2017.

J. N. MULWA

JUDGE