https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9168

Junky Bins Company Ltd v NCBA Bank Kenya PLC (Civil Appeal E062 of 2025) [2026] KEHC 9168 (KLR) (Civ) (25 June 2026) (Judgment) Neutral citation: [2026] KEHC 9168 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Law Courts) Civil Civil Appeal E062 of 2025 JC Mutai, J June 25, 2026 Between Junky Bins Company Limited Appellant and NCBA Bank Kenya PLC Respondent Judgment Introduction 1.This is an appeal by Junky Bins Company Limited (hereinafter "the Appellant") against the judgment of the Chief Magistrate's Court at Milimani delivered on 18th December 2024 in Civil Suit No. E173 of 2023. The learned Magistrate found in favour of NCBA Bank Kenya Limited (hereinafter "the Respondent"), holding that the Appellant had failed to demonstrate that the Respondent had breached the contract as alleged. Background and Salient Fact 2.Having examined the entire record, I find that this is a matter in which the parties are largely in agreement on the material facts. The real controversy lies in what legal rights and obligations flow from those agreed facts. I will accordingly set out the background facts, note any material divergences between the parties' accounts, then proceed to the submissions at the trial court and before this Court, frame the issues for determination, and deliver my analysis and determination. 3.The material facts are as follows. The Appellant is a limited liability company incorporated in Kenya, operating a waste management business. The Respondent is a commercial bank duly licensed by the Central Bank of Kenya to carry out banking business including the taking of deposits and the extension of credit. 4.In or around January 2019, the Appellant sought to acquire a Mitsubishi Fuso FH motor vehicle from Simba Corporation (hereinafter "the dealer") for use in its waste management operations. The Appellant obtained a quotation from the dealer, forwarded it to the Respondent, and applied for a loan facility. 5.By an Offer Letter dated 23rd January 2019, the Respondent agreed to finance the purchase of a Mitsubishi FH 215 on the following terms. The total purchase price was Kshs. 5,138,550.00. The Appellant was to pay Kshs. 513,855.00 directly to the dealer as a 10% deposit. The Respondent was to pay the balance of Kshs. 4,624,695.00, representing 90% of the purchase price, directly to the dealer. The total loan advanced was Kshs. 4,902,176.70, comprising the sum paid to the dealer and a Debt Service Reserve Amount of Kshs. 277,481.70, equivalent to 6% of the amount paid to the dealer. 6.The total repayable amount under the loan was Kshs. 6,703,472.00, payable in 60 monthly instalments of Kshs. 111,540.00 each. This sum comprised the principal of Kshs. 4,902,176.70, total interest of Kshs. 1,789,295.00 charged at 13% per annum on a reducing balance basis over 60 months, an option-to-purchase fee of Kshs. 10,000.00 payable in the final instalment, and Kshs. 2,000.00 being 20% excise duty on that option. 7.As a condition of the Offer Letter, the Appellant was required to select an insurance underwriter from the Respondent's panel of approved licensed underwriters, and to install a tracking device from a tracking service provider on the Respondent's approved list. The Appellant selected Sanlam General Insurance as the underwriter and Track N Trace Limited (hereinafter "TNT") as the tracking service provider. 8.Upon confirmation that all conditions had been satisfied, the Respondent issued a release letter to the dealer, who released the motor vehicle, registration number KCV 190A (hereinafter "the subject motor vehicle"), to the Appellant on 27th June 2019. The motor vehicle was registered in the joint names of the Appellant and the Respondent. 9.The Appellant was operating the motor vehicle in its business when it was stolen on 19th November 2019 from its parking lot. The theft was reported to Kayole Police Station, to the Respondent, and to the insurer, who registered the claim as No. 033/087/9/002760/19/11. Investigations ensued, during which period the Respondent continued servicing the loan facility from the Appellant's account. 10.On 20th February 2020, the insurer confirmed that the theft had occurred but proposed to settle the claim at 80% of the purchase price, being Kshs. 4,110,840.00, withholding the remaining Kshs. 1,027,710.00 on the ground that the tracking device had been found to be deactivated at the time of the theft. The Appellant executed a Motor Vehicle Discharge Voucher dated 20th February 2020, accepting Kshs. 4,110,840.00 as full and final settlement for the theft. 11.On 14th August 2020, the Appellant transferred the logbook to the insurer. On 23rd October 2020, the insurer paid the settlement amount of Kshs. 4,110,840.00 directly into the Appellant's loan account held with the Respondent, which sum the Respondent applied in its entirety towards settlement of the outstanding loan balance. Pleadings at the Trial Court a. Plaint dated 10th January 2023 12.The Appellant's principal complaint was that the Respondent deducted the full insurance settlement of Kshs. 4,110,840.00 without notice or explanation, despite being aware that the motor vehicle had been stolen, that the settlement constituted restitution for the theft, and that the Appellant had not defaulted on its monthly instalments. 13.The Appellant further averred that, notwithstanding the foregoing, the Respondent failed to facilitate the acquisition of a similar motor vehicle so as to enable the Appellant to continue its business and resume payment of the agreed monthly instalments. Numerous demands to the Respondent to this effect were, it was alleged, continuously and maliciously ignored. 14.The Appellant additionally averred that following the theft, it was compelled to hire a replacement truck at Kshs. 9,000 per day of collection in order to sustain its waste management operations, incurring losses attributable to the Respondent's failure to act. The Appellant further averred that the financial strain placed upon its account by the Respondent's conduct affected its bank statements and rendered it unable to secure financing from any other lender. 15.The Appellant emphasised that it had not defaulted on its loan obligations and that no notice of default had ever been issued against it. Based on these averments, the Appellant sought: a declaration that the Respondent had breached the financing agreement; an order for specific performance compelling the Respondent to provide a replacement truck; alternatively, reimbursement of all instalments paid as well as the deposit of Kshs. 513,855.00 paid to the dealer; general damages for breach of contract; special damages for hire of a replacement truck; and costs plus interest. b. Statement of Defence dated 14th April 2023 16.The Respondent admitted having agreed to finance the Appellant's acquisition of the subject motor vehicle. It denied that the deduction of the insurance settlement was made without notice or explanation and denied that it had failed to facilitate the acquisition of a replacement vehicle. The Respondent characterised itself as a stranger to the circumstances surrounding the theft report, the insurer's decision to effect a partial settlement, and the allegation that it had failed to clarify its course of action to the Appellant. 17.The Respondent further averred that the Appellant had defaulted on its loan obligations in breach of the terms and conditions of the Hire Purchase Agreement, prompting it to exercise its contractual rights by issuing listing notification pursuant to Regulation 50(1)(ii) of the Credit Reference Bureau Regulations, 2013, and by issuing several demand letters. Evidence at the Trial Court A a. Appellant's Evidence 18.The Appellant's witness was its director, Kelvin Muchiri, whose Witness Statement was dated 8th September 2024. His statement set out the facts already narrated and produced the following documents: the Offer Letter from NIC Bank dated 23rd January 2019; the Motor Vehicle Registration Certificate for KCV 190A; the Certificate of Installation from Track and Trace; NIC Bank's Tracking Device Approved Service Providers list; the Service Level Agreement between Track and Trace Limited and NIC Bank dated 22nd May 2019; a letter from Sanlam Insurance Company dated 20th February 2020; Junky Bins loan statements; email correspondence between the Appellant and NCBA Bank officials; a Lease Agreement dated 1st January 2022; a Demand Letter dated 5th October 2022; and a Special Resolution of Junky Bins Company Limited. 19.Kelvin Muchiri testified that while investigations were ongoing, the Respondent continued servicing the loan from the Appellant's account despite a request that it be suspended pending the outcome of those investigations. He further testified that after the insurance settlement was paid, the Respondent froze the Appellant's account, recovered all sums paid by the insurer, and then demanded further payments, without offering any explanation when the Appellant's Recovery Department was approached. He additionally testified that on 20th May 2021, the Respondent sent auctioneers to the Appellant's offices to repossess the subject motor vehicle and other vehicles. The Respondent's agent thereafter directed the auctioneers to leave and apologised by email, which was the last communication from the Respondent in the matter. b. Respondent's Evidence 20.The Respondent's witness was Irene Mutuku, a Manager in the Respondent's Retail Recoveries department, whose Witness Statement was dated 2nd September 2024. She confirmed the terms of the loan as set out above and confirmed that the Respondent had been made aware of the theft, although she stated that the circumstances remained unclear as the tracking device was said not to have been operational at the time. She confirmed that the insurer paid the settlement directly to the loan account and asserted that the Respondent had a right over the secured motor vehicle as First Loss Payee, which entitled it to recover its money upon theft of the vehicle. She stated that the Respondent had applied only the amounts owing under the loan facility and had not demanded any payment beyond the agreement. She further stated that although TNT and the insurer were prequalified by the Respondent, they had executed independent contracts with the Appellant, to which the Respondent was not privy, and that accordingly the Respondent was not in default of any obligation. 21.No documentary exhibits were filed by the Respondent at the trial court. Submissions at the Trial Court 22.The Appellant framed three issues for determination: whether the Respondent had breached the contract by frustrating the agreement to purchase the motor vehicle; whether the Appellant was entitled to recover the deposit and instalments paid; and whether it was entitled to general and special damages. The Appellant characterised the appropriation of the insurance proceeds without providing a replacement vehicle as the operative breach, and argued that retaining those proceeds while also holding the deposit and instalments would constitute unjust enrichment, citing Abdul Gayur Yusuf Hasham v National Hospital Insurance Fund [2010] and Madhupaper International Ltd & Another v Kenya Commercial Bank Ltd & 2 Others (2003) eKLR. 23.The Respondent framed four issues: whether the loss of the motor vehicle was an event of default and whether the appropriation of the insurance settlement amounted to a breach; whether the Respondent could be held liable for the defective tracking device; whether the Respondent was obligated to facilitate the acquisition of a replacement vehicle; and whether the Appellant was entitled to any of the reliefs sought. The Respondent submitted that the loss of the motor vehicle rendered the Respondent unsecured and thereby caused the entire outstanding balance to fall due immediately, entitling it to apply the insurance proceeds accordingly. The Respondent denied any obligation to replace the vehicle and denied liability for the tracking device, which operated pursuant to an independent contract between the Appellant and TNT. Judgment of the Trial Court dated 18th December 2024 24.The learned Magistrate framed two issues: whether the Respondent had breached the loan agreement, and whether the Appellant was entitled to the prayers sought. On the first issue, the learned Magistrate found that the theft was not caused by either party, that the Appellant had not adduced evidence of its entitlement to the insurance settlement, and that, given the motor vehicle's registration in the joint names of the parties, the Respondent had a lien thereon and was accordingly entitled to secure and apply the insurance settlement towards redemption of the loan. The learned Magistrate further found that the Appellant's obligation to repay the loan was not contingent on the continued existence of the vehicle and that no evidence established an obligation on the Respondent to supply a replacement vehicle. The Respondent was accordingly found not to have breached the contract, and the Appellant was found not entitled to any of the prayers sought. The Appeal 25.Aggrieved by the decision of the learned Magistrate, the Appellant filed a Memorandum of Appeal dated 15th January 2025 raising eleven grounds. The grounds may be distilled as follows:i.the trial court failed to pronounce upon the fate of the Kshs. 3,190,815.00 paid by the Appellant as deposit and instalments;ii.the trial court failed to determine prayer (c) of the Plaint despite finding that the insurance settlement had "fully indemnified the Plaintiff and the Bank";iii.the trial court erred in failing to determine what the full indemnification of each party required, in circumstances where only the Respondent was in fact indemnified;iv.the trial court erred in finding that no loan agreement had been produced;v.the trial court erred in holding that the Respondent had not breached the agreement in circumstances where it appropriated the entire insurance settlement notwithstanding that the Appellant had not defaulted;vi.the trial court failed to find that the Respondent had unjustly enriched itself;vii.the trial court failed to find that if the Respondent chose to terminate the financing and apply the insurance proceeds, it could only do so after accounting for what the Appellant had paid;viii.the trial court failed to consider the injustice visited upon the Appellant who was left without a vehicle, without the insurance proceeds, and without reimbursement of 24 months of instalments;ix.the trial court erred in permitting the Respondent to benefit from the termination of the contract while retaining the Appellant's payments;x.the trial court failed to consider the Appellant's submissions in their entirety; andxi.the learned Magistrate's finding was inconsistent with the evidence adduced. 26.The Appellant prayed that the appeal be allowed, the judgment set aside, and that the Respondent be ordered to reimburse the Appellant the sums paid as instalments between 29th June 2019 and 31st October 2021 together with the deposit of Kshs. 513,855.00, totalling Kshs. 1,346,470.00, together with interest and costs. Submissions On Appeal 27.This appeal was disposed of by way of written submissions. The Appellant's submissions are dated 13th January 2026 and the Respondent's submissions are dated 25th March 2026. Appellant's Submissions 28.The Appellant submitted on five issues. First, that the Offer Letter constituted a binding contract and that the Respondent breached it by withholding the insurance settlement, failing to provide a replacement vehicle, and failing to refund the deposit and instalments. Second, that while the Appellant had been indemnified by the insurer, the Respondent's appropriation of the settlement prevented the Appellant from receiving the benefit of that indemnity, and that the trial court accordingly erred in holding that the Appellant had been indemnified. Third, that the Respondent had unjustly enriched itself at the Appellant's expense by retaining both the insurance settlement and the amounts paid as deposit and instalments, and that the trial court erred in failing to make any determination on this issue. Fourth, that the appeal raised significant and triable issues warranting interference with the decision below. Fifth, that costs should follow the event in the Appellant's favour. Respondent's Submissions 29.The Respondent equally submitted on five issues. First, that the Offer Letter created a binding agreement and that, upon loss of the collateral, the entire outstanding balance became immediately due and payable, entitling the Respondent as First Loss Payee to apply the insurance settlement accordingly. The Respondent further submitted that the Appellant's failure to report the defective tracking device amounted to negligence or complicity. Second, that the Respondent could not be held liable for the tracking device, which was procured by the Appellant pursuant to an independent contract with TNT. Third, that no clause in the Offer Letter obligated the Respondent to facilitate acquisition of a replacement vehicle, and that this Court should decline the invitation to rewrite the contract. Fourth, that in the absence of any breach, the Appellant was not entitled to any relief. Fifth, that costs should be awarded to the Respondent. Determination 30.I have carefully considered the Record of Appeal, the parties' submissions, and the authorities cited. This appeal raises three issues for determination: whether the Appellant demonstrated that the Respondent breached the contract; whether the Appellant is entitled to any of the prayers sought in the Plaint; and who should bear the costs of the appeal. 31.As a preliminary matter, this Court restates the scope of its jurisdiction as a court of first appeal. The Court of Appeal in Gitobu Imanyara & 2 others v Attorney General [2016] eKLR stated the applicable principles thus:This being a first appeal, it is trite law, that this Court is not bound necessarily to accept the findings of fact by the court below and that an appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled. Briefly put, they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowances in this respect. 32.I will accordingly carry out an independent assessment of the record. Given, however, that the parties are largely agreed on the facts and the real dispute turns on the legal consequences of those facts, I do not anticipate significant departure from the factual findings of the learned Magistrate. Whether the Appellant Demonstrated that the Respondent Breached the Contract 33.This issue is examined under three sub-questions: the existence and nature of the contract between the parties; whether the Appellant demonstrated that the appropriation of the insurance settlement amounted to a breach; and whether the Appellant demonstrated that the Respondent was obligated to facilitate the acquisition of a substitute vehicle. (a) Existence and Nature of the Contract 34.The Appellant, at paragraphs 13 and 18 of its Written Submissions, contended that the learned Magistrate found that no contract existed between the parties. Having read the impugned judgment, I am unable to agree with this characterisation. The learned Magistrate at paragraphs 8 and 9 of the judgment expressly stated:At the outset, both parties admit that they entered into a contract for asset financing involving the purchase of a truck for the plaintiff's waste management operations… Having noted this, the question that arises is, was there a breach of contract on the part of the defendant and if so, what is the nature of the alleged breach? 35.It is plain, therefore, that the learned Magistrate found that a contract existed and proceeded to determine whether it had been breached. The only concern expressed was that the Appellant produced only the Offer Letter rather than the underlying Hire Purchase Agreement, the latter being the instrument that would have contained substantive terms governing termination, breach, loss of the hired asset, and the application of insurance proceeds in the event of total loss. I have examined the Offer Letter, which extends to only two folios, and I unreservedly concur with the learned Magistrate that the Hire Purchase Agreement would have been more probative evidence of the contractual framework governing the parties' rights and obligations. That said, I commend the learned Magistrate for proceeding in the face of this evidentiary lacuna and endeavouring to ascertain, as best the record permitted, the intention of the parties. 36.Having established the existence of the contract, it is necessary to consider what type of arrangement the parties entered into. The Offer Letter characterises the arrangement as a Hire-Purchase Agreement. Section 2 of the Hire-Purchase Act defines a hire-purchase agreement as follows:“hire-purchase agreement" means an agreement for the bailment of goods under which the bailee may buy the goods or under which the property in the goods will or may pass to the bailee; and, where by virtue of two or more agreements none of which by itself constitutes a hire-purchase agreement there is a bailment of goods and either the bailee may buy the goods or the property therein will or may pass to the bailee, the agreement shall be treated for the purposes of this Act as a single agreement made at the time when the last of those agreements was made. 37.The present arrangement falls squarely within this definition. It is one of what A.G. Guest and C.J. Taylor, in The Law of Hire Purchase (1966) at page 34, paragraph 84, describe as the "direct collection" system of hire-purchase finance:Under this system of finance, a finance company purchases the goods, which are to be let on hire, from the dealer who offers or exposes them for sale, and lets them on hire-purchase to the customer. The dealer thus obtains finance in the shape of price paid for the goods by the finance company, and the company obtains security in the shape of the goods let under the hire-purchase agreement. The name "direct collection" is derived from the fact that the finance company collects the instalments of hire direct from the customer, instead of through the dealer as in other systems, and the hire-purchase agreement is made between the hirer and finance company. 38.Lord Denning's celebrated analysis in Bridge v Campbell Discount Co. Ltd [1962] 1 AER 385, cited in Bhawani Sankar Chowdhury's The Law of Hire Purchase in India and England at page 19, is equally instructive. His Lordship famously observed that a hire-purchase arrangement, stripped of its legal trappings, is in essence a mortgage of goods. The hirer intends to purchase but cannot pay the full price; a finance company pays the purchase price to the dealer, acquires ownership of the goods, and lets them to the hirer in exchange for instalments calculated to repay the finance with interest. Upon completion, the hirer exercises an option to purchase for a nominal sum. This precisely describes the arrangement before this Court. I will accordingly proceed on the foundation that the parties entered into a Hire-Purchase Agreement, with the rights and obligations implied thereunder. Whether the Appropriation of the Insurance Settlement Amounted to a Breach 39.The Appellant's primary grievance is that the Respondent appropriated the insurance settlement of Kshs. 4,110,840.00 paid by the insurer, characterising this as an event of breach. The Respondent, in turn, asserts that it was entitled to apply those proceeds as the First Loss Payee under the insurance policy. The dispositive question is therefore which party was entitled to the insurance settlement. 40.The Offer Letter, which is the only contractual document before this Court, does not resolve this question. The insurance clause in the Offer Letter, reproduced at the second folio, obligates the Appellant to insure the motor vehicle comprehensively through the Respondent's approved panel of underwriters. It does not stipulate how insurance proceeds are to be applied in the event of total loss, nor does it designate either party as the loss payee. 41.The insurance policy itself — the primary instrument that would have resolved this question — was not produced by either party. This is a significant and, ultimately, fatal omission. 42.The law is well settled that insurance contracts are personal in nature, meaning the right to indemnification accrues to the party expressly designated as the beneficiary in the policy. The foundational authority for this proposition is Rayner v Preston (1881) 18 ChD 1, where the English Court of Appeal held unanimously that the purchaser of property was not entitled to the benefit of the vendor's insurance policy. Cotton LJ reasoned as follows:The contract [contract for sale of property] passes all things belonging to the vendor appurtenant to, or necessarily connected with, the use and enjoyment of the property mentioned in the contract, but not, in my opinion, a collateral contract, and such, in my opinion, at least, independently of the Act of George III., the policy of insurance is. It is not a contract limiting or affecting the interest of the vendors in the property sold, or affecting their right to enforce the contract for sale... It is a contract not to repair the damage to the building, but to pay a sum, not exceeding the sum insured, as the money value of the injury. In my opinion, the contract of insurance is not of such a nature as to pass, without apt words, under a contract for sale of the thing insured. 43.This principle has been affirmed across Commonwealth jurisdictions. In the law of hire- purchase specifically, J.J. Gow in Hire-Purchase in Scotland (2nd edn, 1968) at page 177 states succinctly:The contract between insured and insurer is personal to each so that the mere disposition by the insured to a third party of the subject matter of the policy does not by itself carry the insurance. Thus if a hirer has effected insurance in his name alone, the owner, whatever may be his rights against the hirer under the hire-purchase contract, has no claim under the policy against the insurer as such. 44.In Malaysia, the courts have consistently held that for an owner under a hire-purchase arrangement to claim rights under an insurance policy, the terms of the policy must unequivocally create those rights. In Malaysian Australian Finance Co. Ltd v The Law Union & Rock Insurance Co Ltd [1972] 2 MLJ 10, a policy endorsement was found to permit the owner to sue under the policy. Conversely, in United General Insurance Co Sdn Bhd v Progress Credit Sdn Bhd [1988] 2 MLJ 297, the wording of the endorsement was found to exclude the owner from bringing suit. The existence and terms of any endorsement are therefore decisive. 45.Kenyan courts have affirmed the personal nature of insurance contracts. In Platinum Credit Limited v Jubilee General Insurance Limited (Civil Appeal E613 of 2022) [2024] KEHC 10546 (KLR), Justice Musyoka held that where a lender's interest was not endorsed in the renewed insurance policy in force at the time of the accident, the lender had no enforceable rights under that policy, stating:In any case, in a policy of insurance taken out by one owner, without inclusion of the name of the other owner, would still mean that that other owner would not be privy to the contract, and cannot enforce it against the insurer. 46.The import of the foregoing authorities is clear: the entitlement to insurance proceeds is determined by the terms of the policy, not by the nature of any collateral contractual arrangement between the insured and a third party. Accordingly, this Court cannot determine who was entitled to the insurance settlement in this matter without examining the insurance policy itself. 47.This Court is also conscious of certain facts suggesting that the Respondent may have had an interest in the proceeds. The insurer's letters of 20th February 2020 — both the confirmation of the theft and the Discharge Voucher — were addressed to the Appellant as the insured. However, the insurer paid the settlement directly into the Appellant's loan account held with the Respondent, which indicates awareness of the Respondent's interest.Furthermore, the opening paragraph of the Discharge Voucher purports to discharge the insurer from the claims not only of the Appellant but also of its assignees — a category that could encompass the Respondent. 48.These observations do not resolve the matter; they merely illustrate the complexity that the insurance policy would have clarified. In the absence of that policy, this Court cannot safely or conclusively determine which party was entitled to the indemnity. 49.On this point, I respectfully depart in part from the finding of the learned Magistrate. At paragraph 15 of the impugned judgment, the learned Magistrate held that because the motor vehicle was registered jointly in the names of both parties and the Respondent therefore had a lien over it, the Respondent was entitled to secure and apply the insurance settlement towards redemption of the loan. I agree with the learned Magistrate that the Appellant did not produce evidence proving its entitlement to the settlement. However, the same difficulty applies equally to the Respondent. The Respondent's assertion that it was a First Loss Payee under the insurance policy was not grounded in any documentary evidence or statutory provision. Its witness stated in her Witness Statement that the Respondent had a right on any secured asset as First Loss Payee and that it therefore had to recover its money — but this bare assertion is not evidence of an insurance policy term conferring that right. 50.In submissions, the Respondent relied on what it described as a "well-established principle in secured lending" that where security is lost or destroyed, the lender may call in the entire outstanding balance. This proposition was stated without any citation to authority, statute, or contractual term. The Respondent cannot assert the status of First Loss Payee without producing the insurance policy that would establish it. 51.This Court finds support for this conclusion in the reasoning of the South African Supreme Court of Appeal in Barloworld Capital Pty Ltd v Napier NO [2006] SCA 48 (RSA), a case whose facts are remarkably apposite. In that matter, an owner under a hire-purchase arrangement sought to establish that the insurer was obligated, by virtue of mere knowledge of the owner's interest, to pay the owner the outstanding balance before paying any surplus to the insured. The court rejected this argument in clear terms at paragraphs 25, 29 and 31:It must be emphasised that the alternative claim does not rest on a term of the insurance agreement (express or tacit) or on a tacit contract between the insurer and the seller. No such contractual foundation was pleaded or sufficiently investigated at the trial to enable one to deal with the matter as if either had been pleaded... I find nothing in the evidence which warrants the conclusion that as a matter of trade usage an insurer, by mere acquisition of knowledge of the seller's interest, becomes bound, as if by contract, to pay the latter ahead of the insured. 52.The Respondent in the present case is in an analogous position: it asserts a right to the insurance proceeds on the basis of its general status as a secured lender, without pointing to any policy term, contractual clause, or statutory provision that establishes that right. This Court finds that assertion insufficient. 53.Before concluding this sub-issue, this Court notes in passing that an argument was available to the Respondent under the Moveable Property Security Rights Act ("the MPSR Act") which was neither pleaded nor raised in submissions. Section 9(1) of the MPSR Act provides that a security right in an asset extends to its identifiable proceeds. Section 2 defines "proceeds" to include insurance proceeds. This statutory framework might have provided a distinct basis for the Respondent's claim to the insurance settlement. Since this argument was not advanced, this Court makes no determination as to its application or outcome — it is merely noted for completeness. 54.Given that neither party produced the insurance policy, neither has discharged its burden of proof in relation to entitlement to the insurance settlement. Section 107 of the Evidence Act provides that whoever desires a court to give judgment as to any legal right or liability dependent on the existence of facts must prove those facts. Section 108 provides that the burden lies on the person who would fail if no evidence at all were given on either side. Section 3(4) provides that a fact is not proved when it is neither proved nor disproved. 55.The Appellant asserted entitlement to the insurance settlement and failed to produce the policy establishing that entitlement. The Respondent asserted the status of First Loss Payee and equally failed to produce the policy confirming it. The Appellant's entitlement to the insurance proceeds is accordingly neither proved nor disproved and remains not proved. I therefore find that the Appellant has failed to demonstrate that the Respondent breached the contract by appropriating the insurance settlement. 56.This Court emphasises that this finding is made on the basis of insufficient evidence — it does not constitute a finding that the Respondent was entitled to the insurance proceeds. (c) Whether the Respondent was Obligated to Facilitate Acquisition of a Substitute Vehicle 57.The Appellant's second ground of alleged breach is that the Respondent was obligated, following the theft and the payment of the insurance settlement, to facilitate the acquisition of a comparable replacement vehicle. 58.This is a contractual question. Having examined the two folios of the Offer Letter — the only contractual document before this Court — I have found no clause, whether express or implied, obligating the Respondent or indeed the Appellant to apply insurance proceeds towards the replacement or substitution of the motor vehicle in the event of its loss. 59.I therefore agree with the learned Magistrate who, at paragraph 16 of the impugned judgment, found that the Appellant had failed to demonstrate that the bank was contractually required to supply a replacement vehicle. Courts do not rewrite contracts for the parties. The Appellant's invitation to find such an obligation by implication, in the absence of any contractual or equitable basis for it, must be declined. 60.Before concluding this issue, this Court makes a brief observation on a terminological error that pervades the pleadings and the impugned judgment. At paragraph 4 of the Appellant's Written Submissions at the trial court, and repeatedly thereafter, the Appellant framed its grievance as whether the Respondent had "frustrated" the contract. The learned Magistrate, at paragraph 11 of the impugned judgment, adopted the same framing without correction. This usage is legally inapt and should not be allowed to pass unremarked. 61."Frustration" in contract law is a doctrine that operates where a supervening event, outside the control of either party, renders contractual performance impossible or radically different from what was contemplated. Crucially, frustration cannot be self-induced. As the Supreme Court noted at paragraph 58 of its judgment in Kwanza Estates Limited v Jomo Kenyatta University of Agriculture and Technology [2024] KESC 74 (KLR), what is sometimes called "self-induced frustration" is in truth not frustration at all but simply breach. Where a party's own conduct makes performance impossible, that is breach. The correct conceptual framework in the present appeal is breach of contract, and I have analysed the case accordingly. Whether the Appellant is Entitled to any of the Prayers Sought 62.I will address each category of relief in turn. a. General Damages 63.Having found that the Appellant failed to demonstrate breach of contract by the Respondent, no basis for an award of general damages arises. In any event, the law is settled that general damages are not ordinarily awarded for breach of contract save in exceptional circumstances — a proposition the Appellant itself conceded at paragraph 33 of its Written Submissions at the trial court, although it went on to argue at paragraph 35 that the circumstances of this case brought it within the recognised exceptions. 64.The Appellant pointed to the Respondent's freezing of its account, appropriation of the entire insurance proceeds, and continued demands for payment over approximately two years as evidence of conduct that was oppressive, high-handed, outrageous and vindictive. The Court of Appeal in Capital Fish Kenya Limited v The Kenya Power & Lighting Company Limited [2016] KECA 56 (KLR) held as follows:The appellant having conceded to the general proposition regarding the award of damages for breach of contract, it was incumbent upon it to lead evidence so as to bring the respondent's conduct into the exceptions it alluded to above. 65.Given that the Appellant has not established that the Respondent was contractually precluded from deducting the insurance proceeds, it cannot characterise that deduction as oppressive or high-handed. As for the continued demands for payment, it is plausible — and indeed consistent with the record — that the Respondent was acting on the assumption that the Appellant remained liable for the shortfall between the insurance settlement and the outstanding hire-purchase price. That assumption may or may not have been correct, but it does not constitute oppression. The Appellant has not established the exceptional circumstances necessary to ground a claim for general damages. This prayer accordingly fails. b. Special Damages for Hire of a Replacement Truck 66.The Appellant sought special damages for the costs of hiring a replacement truck following the theft of the motor vehicle. This claim fails for two independent reasons. 67.First, I have found no breach of contract on the part of the Respondent. In the absence of breach, the Respondent cannot be held liable for losses arising from the Appellant's need to hire a replacement vehicle. 68.Second, and in any event, the claim was neither specifically pleaded in the Plaint nor strictly proved by evidence. In the Plaint, the Appellant stated that it was incurring hire costs of Kshs. 9,000 per day of collection, but did not state the number of days for which the vehicle was hired, nor the total sum claimed. The first quantification of the claim appeared only in the Appellant's Written Submissions at the trial court, where it was stated to be Kshs. 648,000 for 72 days. Submissions are not pleadings, and claims for special damages must be particularised in the pleadings, not introduced for the first time in submissions. The Court of Appeal in Vishva Stones Supplies Company Limited v RSR Stone (2006) Limited [2024] KECA 978 (KLR) affirmed that special damages must be specifically computed in the plaint. 69.Furthermore, even if the claim had been adequately pleaded, the evidentiary support was insufficient. The Lease Agreement between the Appellant and Joram Wanyiri Gathungu was dated 1st January 2022 — long after the period of alleged hire — and stated a lease term running from 10th January 2022 to 31st December 2021, an evident error in the end date. This document does not confirm three months of hire at the rate claimed. No invoices, receipts, mobile money transfer records or bank statements were produced to confirm that Kshs. 648,000 was actually paid for the hire of a replacement truck. As the Court of Appeal confirmed in Capital Fish Kenya Limited v The Kenya Power & Lighting Company Limited (supra), claims for special damages must be supported by credible evidence. This claim fails on both pleading and proof. c. Reimbursement of Deposit and Instalments 70.The Appellant seeks reimbursement of the deposit of Kshs. 513,855.00 paid directly to the dealer, and of the monthly instalments paid during the currency of the Hire Purchase Agreement, relying on the doctrine of unjust enrichment and on the principle in Fibrosa Societe Anonyme v Fairbairn Lawson Combe Barbour Ltd [1942] UKHL 4, that where there has been a total failure of consideration, money paid pursuant to a failed contract is recoverable. The Deposit 71.The deposit of Kshs. 513,855.00 was paid directly by the Appellant to the dealer and was not part of the hire-purchase price as defined in the Offer Letter. This raises the threshold question of whether the Respondent was the party enriched by that payment. The deposit went to the dealer, an independent third party, and I have confirmed that it was not incorporated into the loan principal advanced by the Respondent. 72.In any event, even if the Respondent could be characterised as a beneficiary of the deposit, I find that there was no total failure of consideration. After the deposit was paid, the Respondent paid the balance of the purchase price to the dealer, procured delivery of the motor vehicle, provided the Appellant with a list of approved service providers, arranged for the vehicle to be registered in the parties' joint names, and granted the Appellant quiet possession and use of the vehicle for a period of nearly five months from 27th June 2019 until the theft on 19th November 2019. Throughout this period the Appellant operated the vehicle commercially, generating revenue from its waste management business. The HPA further conferred on the Appellant the option to purchase the vehicle outright upon completion of the instalment payments. These constitute substantial consideration for the deposit, and the doctrine of total failure of consideration cannot therefore be invoked. The Instalments 73.I differentiate between instalments paid before the theft and those paid after. 74.For instalments paid before 19th November 2019, when the Appellant had full use and quiet possession of the subject motor vehicle and was earning from it commercially, there is plainly no unjust enrichment on the part of the Respondent. Those instalments were consideration for the use of the vehicle and the financing extended. They are not recoverable. 75.For instalments paid after the theft, there is a more compelling argument. Once the Appellant no longer had possession of the vehicle, the consideration for those payments had in principle ceased. To the extent that amounts paid by the Appellant after the theft exceeded the outstanding loan balance at the time of theft — after accounting for the insurance settlement — a question of unjust enrichment might in principle arise. 76.However, this analysis cannot be completed in the present case because the Appellant has fatally failed to quantify its claim with any consistency or precision. Prayer (c) of the Plaint, as reproduced at page 44 of the Record of Appeal, seeks reimbursement of "all the sums paid as instalments towards the purchase of the Truck" without specifying any figure. The Written Submissions at the trial court asserted 24 monthly payments of Kshs. 111,540.00, totalling Kshs. 2,676,960.00. The first ground of appeal refers to a total of Kshs. 3,190,815.00 as the combined deposit and instalments. Prayer (b) of the Memorandum of Appeal quantifies the same figure at Kshs. 1,346,470.00. The Appellant's witness stated under oath — and maintained in cross-examination — that the amount paid after the theft was Kshs. 927,261.00. There are accordingly at least three different figures advanced by the Appellant at different stages of this litigation in support of what purports to be the same claim. 77.Special damages must be pleaded with particularity and proved strictly. In Afric Pak International Ltd v Jared Odhiambo Odero [2010] KEHC 4068 (KLR), this Court affirmed the long-established principle, echoed in Coast Bus Services Ltd v Sisco E. Murunga Ndanyi, CA No. 192 of 1992, that special damages must be pleaded with as much particularity as the circumstances permit and strictly proved by credible evidence. The Appellant's bank statements, produced as exhibits, do not support the claim as particularised. For instance, the statement at page 84 of the Record of Appeal shows a payment of only Kshs. 914.60 in February 2021, which is far removed from the asserted monthly instalment of Kshs. 111,540.00. 78.The Appellant has not only failed to plead a specific and consistent figure but has also failed to produce credible evidence substantiating any of the figures advanced. The claim for reimbursement of instalments accordingly fails on both pleading and proof. Costs of the Appeal 79.Costs ordinarily follow the event. Having found that the Appellant fails on all issues raised in this appeal, the appeal be dismissed with costs to the Respondent. Final OrdersFor all the foregoing reasons:i.This appeal is dismissed in its entirety.ii.Costs of this appeal are awarded to the Respondent. JUDGEMENT DELIVERED VIRTUALLY ON 25TH JUNE 2026In the presence of;Ooko for the RespondentN/A for the Appellant.C/A Irene ChelangatSigned By/for:THE JUDICIARY OF KENYAHON. LADY JUSTICE CHELANGAT MUTAIMILIMANI HIGH COURTHIGH COURT CIVIL DIVISIONDATE: 2026-06-25 12:43:39