Judith Mukhwana Luambo v Mogo Auto Limited & 4 others

**REPUBLIC OF KENYA** **IN THE CHIEF MAGISTRATES COURT AT NAIROBI** **MILIMANI COMMERCIAL COURTS** **MCCC NO. E3753 OF 2024** **JUDITH MUKHWANA LUAMBO**...........................................**PLAINTIFF** VERSUS **MOGO AUTO LIMITED**.................................................**1ST DEFENDANT** **ALI ABDI HASSAN T/A AL-HILAM AUCTIONEERS**........**2ND DEFENDANT** **MERCY MORAA BOSIRE**................................................**3RD DEFENDANT** **DANIEL MUCHERA MUKESELO**.....................................**4TH DEFENDANT** **NATIONAL TRANSPORT AND SAFETY AUTHORITY**........**5TH DEFENDANT** **JUDGMENT** **Introduction** 1. This suit concerns the ownership, repossession and subsequent sale of Motor Vehicle Registration Number **KCJ 765R** (hereinafter referred to as **“the suit motor vehicle”.** 2. The suit was commenced by way of a Plaint dated 26th July 2024, which was subsequently amended on 26th December 2024. 3. The dispute arises from the repossession of the suit motor vehicle on or about 25th July 2024 by the 2nd Defendant, allegedly acting on the instructions of the 1st Defendant. 4. The Plaintiff’s case is that she lawfully purchased the suit motor vehicle from the 3rd Defendant and became its registered owner. She contends that the motor vehicle was forcefully repossessed by the 2nd Defendant without notice to her and was thereafter sold to the 4th Defendant. 5. The 1st Defendant denies liability. Its case is that the motor vehicle had earlier been financed through an Asset Financing Loan Agreement in favour of its client, Angeline Cesary Omare, and had been charged as security for repayment of the loan. The 1st Defendant maintains that its security interest was validly registered and that, following default, it was entitled to repossess and sell the motor vehicle. 6. The 5th Defendant filed a Statement of Defence denying liability and praying for the dismissal of the suit with costs. 7. The central dispute for determination is whether the Plaintiff acquired a valid interest in the suit motor vehicle, whether the 1st Defendant was entitled to repossess it and, if so, whether the repossession and subsequent sale were lawfully carried out. **The Plaintiff’s Case** 1. In the Amended Plaint, the Plaintiff pleaded that she purchased the suit motor vehicle from the 3rd Defendant, Mercy Moraa Bosire, on 13th June 2024 for valuable consideration. 2. The Plaintiff contended that, before purchasing the motor vehicle, she conducted a search to ascertain its ownership and satisfied herself that the 3rd Defendant was the lawful owner. 3. She further pleaded that the 3rd Defendant had acquired the motor vehicle through a public auction and that the sale and transfer were ratified by the Chief Magistrate’s Court at Kisii in **MCCMISC/E013/2024**. 4. The Plaintiff contended that following the purchase, the motor vehicle was registered in her name and a Logbook was issued to her. 5. The Plaintiff pleaded that on 25th July 2024, the 2nd Defendant, alleging that he was acting on the instructions of the 1st Defendant, forcefully took possession of the suit motor vehicle without giving her any prior notice. 6. The Plaintiff’s case is that she was not indebted to the 1st Defendant and was not a party to the financing arrangement between the 1st Defendant and its client. 7. She further pleaded that the repossession and subsequent sale of the motor vehicle were unlawful and amounted to an unlawful interference with her proprietary rights. 8. The Plaintiff therefore sought: 9. A declaration that she is the lawful owner of Motor Vehicle Registration Number KCJ 765R; 10. A declaration that the repossession, attachment and sale of the motor vehicle were unlawful; 11. A declaration that the actions of the 1st and 2nd Defendants were unlawful; 12. General damages; 13. Special damages of Kshs.8,890; 14. Costs of the suit; 15. Interest; and 16. Such further or other relief as the Court may deem just. **The Defendants’ Case** 1. The 1st Defendant denied liability and maintained that the suit motor vehicle had been financed through an Asset Financing Loan Agreement in favour ofAngeline Cesary Omare. 2. Its case was that the motor vehicle had been charged as security for repayment of the facility and that its security interest had been validly registered. 3. The 1st Defendant contended that the borrower defaulted in repayment of the loan, thereby triggering its right to enforce the security. 4. It maintained that its security interest was created before the Plaintiff acquired the motor vehicle and that the subsequent transfer and registration of the motor vehicle in the Plaintiff’s name did not extinguish the security interest. 5. The Plaintiff’s case against the 2nd Defendant was that he physically repossessed the motor vehicle as an agent or servant of the 1st Defendant. 6. The 3rd Defendant’s involvement arises from the fact that she sold the motor vehicle to the Plaintiff. 7. The 4th Defendant is alleged to have subsequently acquired the motor vehicle following its repossession and sale. 8. The 5th Defendant filed a Statement of Defence denying liability and praying for dismissal of the suit with costs. **Plaintiff’s Submissions** 1. The Plaintiff submitted that she was a bona fide purchaser for value. 2. She argued that she purchased the Motor Vehicle after conducting due diligence and after confirming that the 3rd Defendant was the registered owner. 3. She submitted that the Motor Vehicle had been acquired by the 3rd Defendant through a public auction and that the sale had been ratified by a court order. 4. The Plaintiff relied on **Atogo v Agricultural Finance Corporation (1991) eKLR** in support of the argument that a person enforcing a claim over property must undertake proper due diligence. 5. She also relied on **Securicor Kenya Ltd v Kyumba Holdings Civil Appeal No. 73 of 2002** and the decision in **Osapil v Kaddy [2000] 1 EALA 187**, in support of the proposition that a logbook is prima facie evidence of ownership unless the contrary is proved. 6. The Plaintiff submitted that the 1st Defendant had not sufficiently proved that it was registered as a joint owner or that its interest was disclosed in a manner capable of binding her. 7. She argued that the Kisii court order remained valid and had not been set aside and that the 1st Defendant could not simply disregard it. 8. The Plaintiff further relied on **George Omollo Ogoma v Eagle Millers Ltd & Infrastructure Africa Ltd (2016) eKLR**, in support of the protection of an innocent purchaser for value. 9. She contended that the 1st Defendant had failed to protect its alleged interest and that its subsequent actions amounted to conversion. 10. Reliance was also placed on **Amuel Kamau Macharia v Kenya Commercial Bank Limited & Kenya Commercial Finance Company Limited [2003] eKLR** on restitution and unjust enrichment. 11. The Plaintiff urged the Court to declare the repossession and subsequent sale unlawful and award her damages. **1st Defendant’s Submissions** 1. The 1st Defendant submitted that its security interest was created before the Plaintiff’s alleged acquisition of the motor vehicle. 2. It submitted that its interest was perfected under the Movable Property Security Rights Act and that its prior interest prevailed over the Plaintiff’s subsequent interest. 3. It relied on **Real People Kenya Limited v Joseph Tuwei t/a Chepsonoi Posho Mills (Civil Appeal 108 of 2018) [2022] KEHC 11849 (KLR)**, for the proposition that property given as security may be realised upon default. 4. The 1st Defendant argued that the Plaintiff was not a party to the financing agreement and was therefore not entitled to contractual notices issued to the borrower. 5. It submitted that it lawfully exercised its right to realise the security after the borrower defaulted. 6. It further submitted that the Plaintiff had not established any superior proprietary interest capable of defeating its prior perfected security interest. 7. The 1st Defendant submitted that the claim for general, special and punitive damages had no legal basis because the Plaintiff had failed to establish an actionable wrong. 8. It urged the Court to dismiss the suit with costs pursuant to section 27 of the Civil Procedure Act. **The 5th Defendant’s Submissions** 1. The detailed written submissions of the 5th Defendant were not contained in the material placed before the Court. The Court will therefore determine liability against the 5th Defendant on the basis of the pleadings and evidence available. **Analysis and Determination** 1. I have considered the Pleadings, the oral and documentary evidence, the submissions and the authorities relied upon by the parties. 2. The issues for determination are: 1. Whether the Plaintiff acquired an interest in the suit motor vehicle; 2. Whether the 1st Defendant had a valid and enforceable security interest over the suit motor vehicle; 3. Whether the 1st Defendant was entitled to repossess the motor vehicle; 4. Whether the repossession was lawfully carried out; 5. Whether the 1st to 5th Defendants are liable to the Plaintiff; and 6. Whether the Plaintiff is entitled to the reliefs sought. **Whether the Plaintiff Acquired an Interest in the Suit Motor Vehicle** 1. The Plaintiff’s evidence was that she purchased the suit Motor Vehicle from the 3rd Defendant for valuable consideration and subsequently caused it to be registered in her name. 2. She further relied on evidence that the 3rd Defendant had acquired the motor vehicle through a public auction and that the transfer was subsequently regularised. 3. In **Joel Muga Opija v East African Sea Food Limited [2013] eKLR**, the Court held that a certificate of registration is prima facie evidence of ownership, though such ownership may be displaced by other evidence. 4. I am satisfied that the Plaintiff acquired an interest in the suit Motor Vehicle and was subsequently registered as its owner. 5. However, registration of the Motor Vehicle in the Plaintiff’s name did not, by itself, determine whether the Motor Vehicle remained subject to a pre-existing security interest. **Whether the 1st Defendant Had a Valid and Enforceable Security Interest** 1. The 1st Defendant’s case was that the suit motor vehicle had been financed through an Asset Financing Loan Agreement in favour of Angeline Cesary Omare. 2. According to the 1st Defendant, the motor vehicle formed the collateral for repayment of the facility and its security interest had been registered. 3. The Plaintiff did not establish that the 1st Defendant’s security interest had been discharged, cancelled or otherwise lawfully extinguished before she acquired the Motor Vehicle. 4. The Plaintiff’s subsequent acquisition and registration of the motor vehicle did not, without more, defeat a valid security interest that had already attached to the motor vehicle. 5. I therefore find that the 1st Defendant had a valid and enforceable security interest over the suit motor vehicle. **Whether the 1st Defendant was entitled to Repossess the Motor Vehicle** 1. The 1st Defendant’s case was that its borrower defaulted under the Asset Financing Loan Agreement and that its right to enforce the security consequently crystallised. 2. The general principle that parties are bound by their contracts was restated in **National Bank of Kenya Limited v Pipeplastic Samkolit (K) Limited & Another [2001] eKLR**, where the Court of Appeal held that courts cannot rewrite contracts for parties. 3. In **National Industrial Credit Bank Limited v Aquinas Francis Wasike & another [2015] KECA 337 (KLR)**, the Court of Appeal considered a financier's right to repossess a motor vehicle following default. The Court recognised that a financier may have a contractual right to repossess collateral, but that the right must be exercised in accordance with the agreement and the law. 4. The Court of Appeal found that the financier in that case had acted on a wrongly computed and inflated debt and held that the repossession was consequently unlawful. The decision demonstrates that a right to repossess cannot be exercised arbitrarily or otherwise than in accordance with the terms and legal basis upon which the right arises. 5. On the evidence before this Court, I find that the 1st Defendant had a substantive legal basis, upon default, to enforce its security interest against the suit motor vehicle. 6. However, the existence of a right to repossess does not determine the separate question of whether the actual repossession was lawfully carried out. **Whether the Repossession was lawfully carried out** 1. PW2 gave direct evidence concerning the circumstances under which the suit Motor Vehicle was repossessed. 2. His evidence was that the persons who repossessed the Motor Vehicle acted forcefully and that he was removed from the Motor Vehicle. 3. The evidence concerning the actual circumstances of the repossession was not effectively rebutted by the person who physically carried out the repossession. 4. The 2nd Defendant was the person best placed to explain how possession of the motor vehicle was obtained. His failure to rebut the direct evidence concerning the alleged use of force is significant. 5. In **Bukenya & others v Uganda [1972] EA 549**, the Court held that where a party fails to call a material witness, the Court may, where appropriate, draw an adverse inference that the evidence of such witness would have been adverse to that party. 6. I therefore find that that the repossession was forceful. 7. The principle emerging from **National Industrial Credit Bank Limited v Aquinas Francis Wasike & another [2015] KECA 337 (KLR)** is particularly relevant. The Court of Appeal recognised that although a creditor may have a right to repossess, the manner in which that right is exercised must itself be lawful. 8. The existence of a valid security interest did not give the 1st Defendant or its agent an unrestricted licence to use unlawful force in obtaining possession of the motor vehicle. 9. I therefore find that although the 1st Defendant had a substantive right to enforce its security interest, the manner in which the repossession was carried out was unlawful. **Liability of the 1st and 2nd Defendants** 1. The evidence demonstrates that the repossession was undertaken by the 2nd Defendant in furtherance of the 1st Defendant’s efforts to recover its security. 2. In **Securicor Kenya Limited v Kyumba Holdings Limited [2005] eKLR**, the Court of Appeal considered the circumstances under which a principal may be held liable for acts committed by its servant or agent in the course of the authority or duty entrusted to him. 3. In the present case, the 2nd Defendant was not acting independently. The repossession was undertaken for the purpose of recovering collateral subject to the 1st Defendant’s security interest and for the benefit of the 1st Defendant. 4. I find that the 2nd Defendant is directly liable for the unlawful manner in which the repossession was carried out. 5. I further find that the 1st Defendant is vicariously liable for the acts of the 2nd Defendant, who was acting in furtherance of the recovery of the 1st Defendant’s security. 6. The **1st and 2nd Defendants are therefore jointly and severally liable** for the unlawful manner in which the suit Motor Vehicle was repossessed. **Liability of the 3rd Defendant** 1. The 3rd Defendant’s involvement arises from the sale of the Motor Vehicle to the Plaintiff. 2. Sections 107, 108 and 109 of the Evidence Act place the burden of proving the facts establishing liability upon the party asserting them. 3. In **Kiema Mutuku v Kenya Cargo Hauling Services Ltd [1991] 2 KAR 258**, the Court held that there can be no liability without fault and that a party alleging negligence must prove it. 4. The Plaintiff was therefore required to establish a specific wrongful act, fraud, misrepresentation or other actionable conduct attributable to the 3rd Defendant. 5. There was no evidence that the 3rd Defendant participated in, authorised or had knowledge of the forceful repossession. 6. The mere fact that the 3rd Defendant sold the motor vehicle to the Plaintiff did not establish her liability for the subsequent manner in which the 1st Defendant enforced its security interest. 7. I therefore find that the Plaintiff has failed to establish liability against the 3rd Defendant. **Liability of the 4th Defendant** 1. The 4th Defendant is alleged to have subsequently acquired the suit Motor Vehicle following its repossession and sale. 2. The Plaintiff was required to establish the factual and legal basis upon which liability could be imposed upon the 4th Defendant. 3. There was no evidence that the 4th Defendant participated in, authorised or conspired in the forceful repossession of the motor vehicle. 4. Neither was there evidence that the 4th Defendant was present during the repossession or participated in the alleged use of force. 5. The mere fact that the 4th Defendant subsequently acquired the motor vehicle did not, without evidence of participation or collusion in the wrongful repossession, establish liability. 6. I therefore find that the Plaintiff has not established liability against the 4th Defendant. **Liability of the 5th Defendant** 1. The 5th Defendant denied liability. 2. Sections 107, 108 and 109 of the Evidence Act place the burden upon the Plaintiff to prove the facts upon which liability against the 5th Defendant is founded. 3. The Plaintiff did not establish any specific unlawful act, omission or breach of duty attributable to the 5th Defendant. 4. There was no evidence that the 5th Defendant participated in the repossession, authorised the 1st or 2nd Defendants to use force or otherwise contributed to the unlawful manner in which the repossession was carried out. 5. I therefore find that no liability has been established against the 5th Defendant. **Findings on Liability** 1. I find that the 1st Defendant had a valid security interest over the suit motor vehicle and was entitled, upon default, to enforce that security in accordance with the law. 2. I further find that the Plaintiff acquired an interest in the suit motor vehicle, but that interest was subject to the 1st Defendant’s pre-existing security interest. 3. However, the manner in which the repossession was carried out was unlawful. 4. The 2nd Defendant is directly liable for the unlawful manner of repossession, while the 1st Defendant is vicariously liable for the acts of the 2nd Defendant, who was acting in furtherance of the recovery of the 1st Defendant’s security. 5. Accordingly, the 1st and 2nd Defendants are jointly and severally liable to the Plaintiff. 6. The Plaintiff has failed to establish liability against the **3rd, 4th and 5th Defendants**, and the claims against them are dismissed. **General Damages** 1. The Plaintiff seeks General Damages arising from the unlawful repossession of the suit Motor Vehicle. 2. I have found that the 1st Defendant had a valid security interest over the suit motor vehicle and had a substantive basis for enforcing that security. The wrongful conduct established is therefore not the mere assertion of the security interest but the unlawful and forceful manner in which the repossession was carried out. 3. In assessing damages, the Court must compensate the Plaintiff for the unlawful conduct established without placing her in a better position than she would have occupied had the security been lawfully enforced. 4. The Court is guided by **Gumba v Faulu Micro Finance Bank (Civil Appeal E093 of 2022) [2023] KEHC 21491 (KLR)**, a highly comparable decision involving the unlawful repossession of a Motor Vehicle by a financier. 5. In that case, the High Court found that the repossession was illegal and awarded **Kshs.300,000.00**for the illegal and unlawful repossession of the Motor Vehicle. 6. The Court further awarded **Kshs.150,000.00** specifically for the public embarrassment suffered by the appellant during the unlawful and illegal repossession of the Motor Vehicle. 7. The award of **Kshs.150,000.00** in *Gumba* is particularly useful in the present case. The High Court made that award notwithstanding the absence of corroborating evidence from other witnesses concerning the public embarrassment, noting that the unlawful repossession itself had been established. 8. In the present case, there is no evidence establishing the additional aggravating circumstances present in *Gumba*, where the Motor Vehicle was forcefully repossessed in a church and in the presence of other congregants. 9. The present case is therefore distinguishable from *Gumba* to the extent that the evidence does not establish comparable public humiliation or additional aggravating circumstances warranting the separate and higher award made in that case. 10. I have also considered **National Industrial Credit Bank Limited v Aquinas Francis Wasike & another [2015] KECA 337 (KLR)**, where the Court of Appeal found that a financier's repossession and termination of a hire-purchase arrangement had been wrongfully undertaken because the debt relied upon had been improperly computed. The case underscores the principle that even where a financier has a contractual right to repossess, the right must be exercised lawfully. 11. Taking into account: 1. That the 1st Defendant had a valid security interest over the Motor Vehicle; 2. That the Plaintiff’s complaint succeeds only regarding the unlawful and forceful manner in which the security was enforced; 3. That the Plaintiff was not personally indebted to the 1st Defendant; 4. The absence of evidence of additional aggravating circumstances comparable to the public repossession in *Gumba*; and 5. The comparable award of **Kshs.150,000.00** for unlawful public embarrassment in *Gumba v Faulu Micro Finance Bank*, 12. I find that an award of **Kshs.200,000.00** is fair, reasonable and proportionate to the wrong established in this case. 13. I accordingly award the Plaintiff **Kshs.200,000.00** as General Damages against the 1st and 2nd Defendants jointly and severally. **Special Damages** 1. The Plaintiff pleaded special damages of **Kshs.8,890/=**. 2. The law regarding special damages is settled. Special damages must not only be specifically pleaded but must also be strictly proved. In **Hahn v Singh [1985] KLR 716**, the Court of Appeal held that special damages must be specifically pleaded and strictly proved. 3. Similarly, in **David Bagine v Martin Bundi [1997] eKLR**, the Court of Appeal reiterated that a claim for special damages succeeds only where the specific loss pleaded is supported by strict proof. 4. Further, in **Coast Bus Service Ltd v Murunga & Others [1992] eKLR**, the Court held that special damages must be strictly proved and that it is not enough merely to make a claim without evidence supporting it. 5. In the present case, although the Plaintiff specifically pleaded special damages of **Kshs.8,890/=**, no receipts, invoices, vouchers, or other supporting documentary evidence were produced to strictly prove the alleged expenditure. 6. In the absence of such proof, the claim for special damages cannot succeed. I therefore find that the claim for **Kshs.8,890/=** as special damages has not been strictly proved and is **dismissed**. **Final Orders and Disposition** 1. In the result, Judgment is entered for the Plaintiff against the 1st and 2nd Defendants jointly and severally as follows: 1. A declaration is hereby issued that the manner in which Motor Vehicle Registration Number KCJ 765R was repossessed was unlawful; 2. General damages ....................................... **Kshs.200,000.00** 3. Special damages ............................................................... **NIL** **Total ................................................................Kshs.200,000.00** * 1. Interest on the General Damages at Court rates from the date of this Judgment until payment in full; 2. Interest on the Special Damages at Court rates from the date of filing suit until payment in full; and 3. Costs of the suit against the 1st and 2nd Defendants. 4. The Plaintiff’s claims against the 3rd, 4th and 5th Defendants are dismissed. 5. In the circumstances of the case, and noting that the 3rd, 4th and 5th Defendants were brought into the proceedings because of their respective connections with the chain of ownership and subsequent sale of the motor vehicle, I make no order as to costs in their favour. 30 Days Right of Appeal **\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_** **L.A. MUMASSABBA** **PRINCIPAL MAGISTRATE** **26.8.2026** **JUDGEMENT DATED, READ, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI VIA MICROSOFT TEAMS PLATFORM THIS 26TH DAY OF AUGUST,2026** **In the presence of :** Mr.Onduso Holding Brief for Mr.Chesoli for the Plaintiff M/s Maingi Holding Brief for Mr.Okoth for the 1st Defendant for the Defendant: Absent Court Assistant: Phoebe.