https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11309

 REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT MACHAKOS COUNTY COURT NAME: MACHAKOS HIGH COURT CASE NUMBER: HCCA/E300/2024 KEPHA EDWIN RATEMO NYAANGA VS AZAN MOTORS LIMITED AND JOSEPH MUSYA MBITHI JUDGMENT BACKGROUND 1. This appeal arises from a claim filed in the Small Claims Court. The dispute began after a road traffic accident said to have occurred on 3rd January 2024 along Mombasa Road near Mlolongo Primary School. The accident involved motor vehicle registration number KDC 907B. 2. The Appellant sued two parties. He sued Azan Motors Limited, the 1st Respondent, mainly because the vehicle’s logbook was still in its name. He also sued Joseph Musya Mbithi, the 2nd Respondent, who was the person using the vehicle at the time. 3. In the lower court, the 1st Respondent took the position that it should not be held liable. Its case was that the vehicle had been sold to the 2nd Respondent long before the accident under a hire purchase arrangement. According to the 1st Respondent, the logbook remained in its name only because the 2nd Respondent had not completed payment. 4. The 1st Respondent relied on a cluster of documents that I took into consideration. First, there was an Authority Letter dated 2nd March 2021, in which Azan Motors authorised Moiz Motors Limited to sell the vehicle and receive funds on its behalf. 5. Next, there was a Hire Purchase Agreement dated 29th March 2021 between the 2nd Respondent and the selling party being Azan Motors through Moiz Motors Limited. The purchase price was stated as Kshs. 870,000, with a deposit of Kshs. 270,000, and a balance of Kshs. 600,000 payable in instalments. 1. The 1st Respondent also relied on several documents executed on 29th March 2021, including an Affidavit of Motor Vehicle Sale and Responsibility, and other related undertakings referred to in the record, such as an Affidavit of Liability and a Deed of Indemnity and Consent. The common theme in those documents is that the 2nd Respondent acknowledged responsibility for the vehicle while it was in his possession, pending transfer. 2. In addition, the 1st Respondent relied on a financial statement showing that, as at the accident date of 3rd January 2024, the 2nd Respondent had not completed payment. That, according to the 1st Respondent, explained why the logbook had not been transferred. 3. The 1st Respondent also placed reliance on the police abstract and insurance details. In simple terms, its argument was that the person who insured the vehicle and had it in his hands was the 2nd Respondent, not the 1st Respondent. 4. The 2nd Respondent, on his part, supported the point that he was in possession of the vehicle under the hire purchase arrangement. However, he raised a different and equally important issue. He argued that the Appellant’s claim was pleaded as a subrogation claim and, on the evidence, the Appellant did not prove the basic requirements of subrogation. 5. The Small Claims Court delivered judgment on 22nd October 2024. The court dismissed the claim against the 1st Respondent and treated the 2nd Respondent as the party responsible on the accident side. The court also found that the Appellant had not proved the subrogation basis of his suit. 6. The Appellant has now appealed. APPELLANT’S CASE 1. The Appellant’s case is that he sued the 1st Respondent because motor vehicle registration number KDC 907B was still registered in the 1st Respondent’s name at the time of the accident on 3rd January 2024. On that basis, he contends that the trial court fell into error by removing the 1st Respondent from liability. The Appellant also framed his claim as one brought under the doctrine of subrogation, and he maintains that the trial court misdirected itself in finding that subrogation was not proved. In his view, the evidence placed before the Small Claims Court was sufficient to establish the right to recover from the Respondents, and the appeal should therefore be allowed. DEFENDANTS’ CASE 1. The 1st Respondent’s case is that, although the logbook remained in its name, it had sold motor vehicle KDC 907B to the 2nd Respondent under a hire purchase arrangement and had surrendered possession and control long before the accident of 3rd January 2024. 2. In particular, it relies on an Authority Letter dated 2nd March 2021 authorizing Moiz Motors Limited to sell and receive funds on its behalf, and on a Hire Purchase Agreement dated 29th March 2021, together with related documents executed on 29th March 2021, including a Deed of Indemnity and Consent, an Affidavit of Liability, and an Affidavit of Motor Vehicle Sale and Responsibility. 1. Further, the 1st Respondent’s position is that these documents show that the 2nd Respondent took possession upon payment of the deposit and assumed responsibility for liabilities arising from the vehicle’s use, while the logbook remained with the 1st Respondent only as security pending completion of payment. 2. The 1st Respondent also filed supplementary submissions stated to be “further to our submissions dated 10th March 2026”, complaining that the Appellant’s Record of Appeal contained an incorrect List of Documents and Witness Statement. It stated that the correct List of Documents and Witness Statement used at trial were dated 22nd August 2024, and it attached those documents to assist the Court and to show what the trial court actually relied on. 3. The 2nd Respondent on the other hand supports the position that he was the person in possession and control of the vehicle under the hire purchase arrangement. Separately, he argues that the Appellant’s claim, as pleaded, was a subrogation claim and that it failed because the Appellant did not prove the key foundations of subrogation, including proof of the insurance contract and proof that payment was made under that contract so as to justify recovery from the alleged tortfeasor. ISSUES FOR DETERMINATION 1. After reading the record and the submissions, the issues that arise for determination are as follows;- 2. First, whether the trial court erred in finding that Azan Motors was not liable, even though the logbook was still in its name on 3rd January 2024. 3. Second, whether the trial court erred in finding that the Appellant did not prove the subrogation claim as pleaded. DUTY OF THIS COURT 1. This is a first appeal. I am required to reconsider the evidence and reach my own conclusion. At the same time, I must keep in mind that the trial court had the advantage of seeing and hearing the witnesses. 2. The parties cited several authorities on ownership and liability where the logbook remains in one name but possession is with another. 3. Whether the trial court erred in finding that Azan Motors was not liable, even though the logbook was still in its name on 3rd January 2024 1. The 1st Respondent cited Synergy Industrial Credit Ltd v Monikah Mukenyi Ndung’u [2020] KEHC 4571 (KLR). That case is directly relevant because it involved a hire purchase arrangement. The High Court held that a financier registered as owner can rebut the presumption of ownership by showing the hirer had possession and control at the time of the accident. 2. The 1st Respondent also relied on Ignatius Makau Mutisya v Reuben Musyoki Muli [2015] KECA 612 (KLR). In that case, the Court of Appeal accepted that registration is not the end of the inquiry, because evidence of sale and long possession by the buyer can show who the real owner was for liability purposes. 3. The Appellant’s list of authorities included Muhambi Koja v Said Mbwana Abdi [2015] KECA 635 (KLR). That case is a helpful counterweight. It does not say beneficial ownership cannot be proved. What it says, in plain terms, is that if you claim someone else was the beneficial or insured owner, you must produce clear evidence linking that person to the vehicle beyond bare statements. 4. On subrogation, both sides referenced the usual test. A subrogation claim requires proof of an insurance contract and proof that the insurer actually paid under that contract. 5. The High Court decision in Richard v Njeru [2022] KEHC 17083 (KLR) is a good example of what proper proof looks like. The court upheld the subrogation claim because there were documents showing the policy relationship, the insured’s consent, and payment by the insurer. 6. Another useful authority is Gahir Engineering Works Limited v Rapid Kate Services Limited & John Mburu Ngugi [2018] KEHC 5321 (KLR) where the court held that a policy document is not the only way to prove insurance. Still, the claimant must place enough evidence before the court to show the insurance relationship and payment on a balance of probabilities. 7. Second, whether the trial court erred in finding that the Appellant did not prove the subrogation claim as pleaded. 8. The Appellant’s point is understandable. A logbook is often the first place one looks when identifying the owner. However, as the cases show, the law does not stop there. 9. What matters here is whether the 1st Respondent provided believable evidence showing that, by 3rd January 2024, it was not the person who had the vehicle in its hands or under its control. 10. On a review of the record, the documentary evidence presents a clear and consistent narrative throughout. 11. The relationship begins with the Authority Letter dated 2nd March 2021, which explains why Moiz Motors Limited appears in the transaction. It also explains why the hire purchase arrangement is attributed to Azan Motors. 1. The next key document is the Hire Purchase Agreement dated 29th March 2021. It is not a vague document. It sets out the price, the deposit, the instalments, and the fact that the buyer would take the vehicle on an “as is where is” basis. 2. After that, the record shows signed undertakings made on 29th March 2021, including the Affidavit of Motor Vehicle Sale and Responsibility. In that document, the buyer pledges that while the vehicle remains in his possession and before official transfer, he will take responsibility for accidents and other incidents. Even if those undertakings do not bind the Appellant as a stranger, they are still strong evidence of who actually had the vehicle and treated it as his own. 3. Then there is the evidence about payment not being complete. The 1st Respondent relies on a financial statement to show that the instalments had not been fully cleared by 3rd January 2024, which explains why the logbook remained with the 1st Respondent. 4. This evidence falls squarely within the kind of material that the High Court accepted as sufficient to rebut the presumption of liability in Synergy Industrial Credit Ltd v Monikah Mukenyi Ndung’u [2020] KEHC 4571 (KLR).The registered owner in that case was essentially a financier. The court said the key question is possession and control at the time of the accident. 5. I also find support in Ignatius Makau Mutisya v Reuben Musyoki Muli, (Supra) because it confirms that long possession by the buyer and a clear transaction history can displace registration. 6. The Appellant further relied on Muhambi Koja v Said Mbwana Abdi (Supra) and I agree with its warning that the court should not accept “beneficial owner” as a label without proof. The difference here is that Azan Motors did not rely on a label. It produced dated documents showing the sale arrangement and transfer of possession. 7. For these reasons, I agree with the trial court that Azan Motors should not be held liable for the accident simply because the logbook had not been transferred. ii) Second, whether the trial court erred in finding that the Appellant did not prove the subrogation claim as pleaded. 1. The Appellant pleaded subrogation. That choice mattered because it imposed a clear evidentiary burden. The Appellant had to show, at minimum, that there was an insurance relationship giving rise to indemnity and that payment was made under that relationship. 2. In Richard v Njeru [2022] KEHC 17083 (KLR), the court upheld subrogation because there was a clear paper trail. The insured’s consent was visible, and payment was demonstrated through discharge and payment vouchers. 3. In Gahir Engineering Works, (Supra) the court accepted that the insurance policy itself may not always be produced, but the court must still see enough evidence connecting the insured, the insurer, the loss, and the payment. 4. In this appeal, the record, as reproduced in the 2nd Respondent’s submissions, points to gaps that were never closed. The Appellant’s witness is said to have admitted that the policy was not filed. The vouchers were said to be in another name. The relationship between the Appellant and the named insured entity was not explained. 5. This is not a minor technicality. It goes to the centre of subrogation. Without proof that the Appellant is the insured, or that the suit is properly brought in the insured’s name with a clear link to the insurance contract and payment, the court is left guessing. A court cannot decide a subrogation case on guesses. DETERMINATION 1. I have been guided by Court of Appeal decisions on two areas that sit at the centre of this appeal. The first area is subrogation. The second area is proof of motor vehicle ownership and when the logbook presumption can be displaced. 2. On subrogation, the Court of Appeal has consistently held that subrogation does not create a direct right of action by an insurer against the tortfeasor in the insurer’s own name. In Octagon Private Investigation Security Services v Lion of Kenya Insurance Co. [1994] KECA 105 (KLR), the court reaffirmed that subrogation simply allows the insurer to step into the shoes of the insured, and the claim must therefore be prosecuted in the insured’s name unless there is a legally effective assignment. 3. The same position is reflected in Kenya Airfreight Handling Limited v Indemnity Insurance Company of North America, Phoenix Assurance Company of New York, Marine Office of America Corporation & Swiss Air Transport Company Limited [2001] KECA 288 (KLR), where the Court of Appeal recognised that an insurer may sue in its own name only where there is an assignment. Absent assignment, the claim must be properly framed and anchored on the insured’s right, with proof of the indemnity foundation. 4. In Richard Norman Mudibo v Patrick Osoo Odhiambo [2020] KECA 887 (KLR), the Court of Appeal dismissed the claim because the person suing could not properly anchor the alleged subrogation right. In plain terms, the court insisted that a subrogation claim must be traceable to the insured’s right under the policy and the indemnity that has actually been paid. 5. Applying those holdings to this appeal, the Appellant pleaded that the claim was brought under subrogation. That pleading placed on him the burden to show a clear insurance foundation and a clear right to recover in the manner pleaded. The record, as captured in the 2nd Respondent’s submissions, points to gaps that were never closed, including the absence of the policy and the mismatch between the Appellant and the entity reflected in the payment and discharge documents. On the Court of Appeal approach above, those gaps are not technical. They go to the root of standing and proof. 6. On motor vehicle ownership and liability, the Court of Appeal has held that the logbook is strong evidence of ownership but it is not conclusive. In Ignatius Makau Mutisya v Reuben Musyoki Muli [2015] KECA 612 (KLR), the court accepted that the registration presumption can be rebutted by credible evidence showing that the vehicle had been sold and that possession and control had passed to the buyer, even if registration had not been updated. 1. When I apply that principle here, the 1st Respondent placed before the trial court dated documents showing a hire purchase sale and transfer of possession and control to the 2nd Respondent well before the accident date. Those documents included the authority and transaction instruments executed in March 2021 and the responsibility and indemnity documents of the same date. That evidence was sufficient to rebut the logbook presumption as explained by the Court of Appeal in Ignatius Makau Mutisya v Reuben Musyoki Muli (Supra). 2. For those reasons, and guided by the above Court of Appeal authorities, I find no basis to interfere with the trial court’s conclusion that the claim against the 1st Respondent could not stand on the evidence, and that the appeal lacks merit. 3. The 1st Respondent produced dated documents showing that possession and control of motor vehicle KDC 907B passed to the 2nd Respondent on 29th March 2021 and remained with him up to 3rd January 2024. That evidence rebutted the usual presumption drawn from registration. 4. At the same time, the Appellant did not prove the subrogation foundation on which his claim was pleaded. The missing links were not filled. The trial court was therefore entitled to dismiss the claim as framed. ORDERS 45. The appeal is dismissed with costs to the Respondents. READ, SIGNED AND PUBLISHED THIS 2ND JULY 2026 IN THE PRESENCE OF: NO APPEARANCE BY EITHER PARTY BEFORE HON JUSTICE J. M. GANDANI, JUDGE SIGNED BY/FOR: **★ TH E JUDICIAR Y O F KENY A ★** **HON. LADY JUSTICE JOYCE MKAMBE GANDANI** Machakos High Court High Court Div Date: 2026-07-08 11:31:29