https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10478

Ochung v Mogo Auto Limited (Civil Appeal E237 of 2025) [2026] KEHC 10478 (KLR) (9 July 2026) (Judgment) Neutral citation: [2026] KEHC 10478 (KLR) Republic of Kenya In the High Court at Kisumu Civil Appeal E237 of 2025 AM Hassan, J July 9, 2026 Between Naphtali Owano Ochung Appellant and Mogo Auto Limited Defendant (Being an Appeal from the Judgment of Honorable Magistrate Maureen Nyigei (SPM) delivered on 27th October 2025 in Kisumu Chief Magistrate Court Civil Case No. E288 of 2024) Judgment A. Introduction/ Brief Facts 1.This Appeal arises from the Judgment delivered on 27th October 2025 by Hon. Maureen Nyigei, Principal Magistrate, in Kisumu MCCC No. E288 of 2024, Naphtali Owano Ochung v Mogo Auto Limited. 2.Before the trial court, the Plaintiff (now the Appellant) instituted a suit against the Defendant (now the Respondent), contending that he entered into an asset financing agreement with the Respondent for the purchase of motor vehicle registration number KCW 395C at a financed sum of Kshs. 600,000/=. He averred that upon execution of the agreement, he paid a deposit of Kshs. 150,000/=, leaving an outstanding balance of Kshs. 450,000/= to be settled in accordance with the terms of the agreement. The Appellant further alleged that despite making the said payment, the Respondent failed to include his name in the logbook of the motor vehicle. 3.The Appellant also complained that the Respondent renewed the insurance cover for the motor vehicle without issuing the requisite thirty (30) days’ notice stipulated under Clause 10 of Asset Financing Agreement No. AG005289 dated 10th February 2023. He further asserted that he issued two termination notices pursuant to Clause 9 of the agreement, but the Respondent failed and/or neglected to act upon or honour the same. Additionally, he maintained that he paid the prescribed fee for variation of terms under the agreement and ultimately settled the entire amount financed by the Respondent. 4.In response, the Defendant (now the Respondent) denied the Appellant’s claims in its entirety and attributed the dispute to the Appellant’s own breach of the terms and conditions of the financing agreement. The Respondent maintained that it had acted in accordance with the contractual provisions governing the parties’ relationship. 5.The learned magistrate, after hearing the case and analysis of the documents on record, stated that despite the Plaintiff producing letters on termination of the contract, he failed to show that the same had been served upon the Defendant and therefore a contract cannot be terminated without the other party having received it. It was held that the Plaintiff failed to discharge its duties under section 107 and 108 of the Evidence Act. 6.The Appellant, being dissatisfied with the outcome of the trial court, appealed to this appellate court on the following grounds;1.That the learned Trial Magistrate erred in law and in fact by failing to acknowledge that the issue of receipt of the termination notice was not in issue in dispute.2.That the learned trial magistrate misdirected herself on the assessment of evidence adduced before her in the issue of receipt of the termination notice.3.That the learned trial magistrate erred in law and in fact by failing to appreciate the evidence adduced before her by the Appellant proving receipt of the termination letters by the Respondent.4.That the learned trial magistrate erred in law and in fact by failing to appreciate the witness statement of Erick Omondi DW1, acknowledging receipt of the termination notice by the Respondent.5.That the learned trial magistrate erred in law and in fact by failing to appreciate the correspondence dated 22nd March 2024, adduced as evidence by the Respondent, confirming receipt of the termination notice and the Respondents reply to the said termination notice.6.That the learned trial magistrate erred in law and in fact by holding that the Appellant had not discharged the burden placed on him to prove service of the termination notice upon the Respondent despite evidence being adduced to that effect.7.That the learned trial magistrate erred in law and in fact by not relying on the evidence adduced as proof of receipt of termination notice rendering her judgement. B. Submissions By Parties Appellants Submissions 7.The first ground raised by the Appellant for determination was whether the trial court erred in finding that the termination notice had not been received by the Respondent. The Appellant submitted that the trial court failed to evaluate the entirety of the evidence on record before arriving at its decision. In reference to Sections 107 and 108 of the Evidence Act, the Appellant contended that he had discharged the requisite burden of proof by producing termination letters addressed to the Respondent and demonstrating that correspondence had been exchanged between the parties. On the applicable standard of proof, namely the balance of probabilities, the Appellant relied on Karugi & Another v Kabiya & 3 Others (1987) KLR 347. 8.The Appellant further submitted that DW1, Erick Omondi Onditi, expressly admitted that the Appellant’s Advocates had issued a termination notice and requested account statements. Additionally, the Appellant pointed to an email dated 22nd March 2024, which allegedly evidenced the Respondent’s acknowledgment of the request and its subsequent provision of the loan schedule. 9.In support of his position, the Appellant relied on Choitram v Nazari(1984)KLR 347, submitting that admissions, whether oral or written, constitute the strongest form of evidence against the party making them unless properly explained or withdrawn. The Appellant further argued that, in contractual matters, proof of service of a notice does not require the same strict formalities applicable to the service of court process. In this regard, reliance was placed on Kenya Commercial Bank Ltd v Osebe (1982) KLR 296, where the court recognized that contractual notice requirements may be satisfied by evidence demonstrating that the notice reached the intended recipient. 10.The Appellant further submitted that he had clearly demonstrated that, following the issuance of the termination notice, the Respondent supplied the Appellant’s Advocates with a loan schedule and account statements on 22nd March 2024. According to the Appellant, this conduct evidenced the Respondent’s receipt and acknowledgment of the termination notice and its consideration of the termination request. The Appellant contended that the Respondent’s subsequent actions were only consistent with acknowledgment of the said notice. 11.The Appellant also relied on Trust Bank Limited v Paramount Universal Bank Limited & 2 Others (2009) eKLR, wherein the court held that a trial court commits an error when it disregards undisputed documentary evidence that materially affects the determination of a dispute. 12.Consequently, the Appellant submitted that it had discharged its burden of proving service of the termination notice on a balance of probabilities. It was therefore argued that the learned trial magistrate misdirected herself by failing to properly evaluate the Respondent’s admissions and the documentary evidence allegedly confirming receipt of the notice. 13.The second issue identified by the Appellant for determination was whether the trial court failed to properly evaluate the evidence on record. Relying on Kenya Ports Authority v Kuston (Kenya) Limited (2009) 2 EA 212, the Appellant submitted that a court is under a duty to consider and evaluate all the evidence placed before it before arriving at a determination. The Appellant contended that the learned trial magistrate failed to appreciate that the Respondent had acknowledged receipt of the termination notice and instead confined her analysis to the narrow question of whether service of the letters had been proved. 14.The Appellant further submitted that DW1, Erick Omondi Onditi, admitted in his witness statement that the Appellant’s Advocates had authored and forwarded a notice of termination and requested statements of account. DW1 also confirmed that he responded to the said request on 22nd March 2024 by providing the loan schedule and details of incoming payments. According to the Appellant, this admission clearly demonstrated that the Respondent had received and acknowledged the termination notice. 15.The Appellant also relied on Abdul Hameed Saif v Ali Mohamed Sholan (1955) 22 EACA 270, wherein the court held that an appellate court is entitled to interfere with a judgment where the trial court failed to take into account material evidence placed before it. The Appellant argued that the learned magistrate failed to consider material evidence demonstrating the Respondent’s acknowledgment of the termination notice. 16.The third issue raised by the Appellant was whether the contract had been properly terminated. The Appellant submitted that the learned trial magistrate erred both in law and in fact by finding that the contract had already been terminated in accordance with the express terms of the Asset Financing Loan Agreement No. AG005289 dated 10th February 2023. 17.The Appellant submitted that the evidence on record demonstrated that he invoked Clause 9 of the Agreement, which provided for termination of the contract upon the issuance of notice and settlement of the outstanding balance. The Appellant maintained that he complied with those requirements by issuing a termination notice and paying the requisite amendment fee of Kshs. 2,000/=. In support of this position, the Appellant relied on National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another, where the court held that courts cannot rewrite contracts for parties and that parties are bound by the terms of their agreement unless vitiating factors such as fraud, coercion, or undue influence are established. 18.The Appellant further submitted that, having complied with the contractual provisions governing termination, he effectively brought the contract to an end. He argued that the Respondent’s subsequent conduct, including responding to the termination notice, providing account statements, and acknowledging the outstanding balance, demonstrated recognition of the termination. The Appellant further contended that his payment of Kshs. 115,000/= extinguished the Respondent’s interest in the motor vehicle. 19.The fourth issue raised by the Appellant was whether he had discharged the burden of proof. The Appellant submitted that he had discharged that burden on a balance of probabilities, being the applicable standard in civil proceedings under Sections 107 and 108 of the Evidence Act. He emphasized that the parties had voluntarily entered into the Asset Financing Loan Agreement and that he had fulfilled his obligations thereunder. According to the Appellant, the trial court failed to properly consider the evidence demonstrating compliance with the contractual terms. He therefore urged this court to re-evaluate the evidence and find that he had established his claim on a balance of probabilities. 20.The fifth issue identified by the Appellant was whether the Respondent was entitled to retain possession of the motor vehicle. The Appellant submitted that, having discharged his contractual obligations, there was no lawful basis upon which the Respondent could continue retaining the motor vehicle. 21.Finally, the Appellant submitted that he was entitled to the reliefs sought in the Plaint and urged this court to allow the appeal and grant the prayers sought therein. Respondent’s Submissions 22.On the first issue, the Respondent raised the issue on whether the Appellant proved service of a valid termination notice. The Respondent submitted that the Appellant failed to prove that a valid termination notice was served as required under Clause 9 of the loan agreement. It was argued that the burden of proof lay on the Appellant to demonstrate not only that the notice was sent but also that it was received by the Respondent. According to the Respondent, no affidavit of service, postal certificate, email delivery receipt, read receipt, or acknowledgment was produced. The email dated 22nd March 2024 and the testimony of DW1 merely showed correspondence regarding loan statements and repayment figures and did not amount to proof that a formal termination notice had been served or accepted. The Respondent further maintained that subsequent correspondence could not cure the Appellant's failure to prove service. 23.On the second issue, the Respondent contended that the trial court properly evaluated all the evidence before it and correctly found that there was no proof of service of the termination notice. It argued that the Magistrate considered the Appellant's claims regarding amendments to the agreement, insurance issues, and correspondence between the parties, but rightly found them insufficient in the absence of direct evidence of service and compliance with the contractual terms. The Respondent therefore maintained that there was no misapprehension of the evidence warranting appellate interference. 24.The third issue raised by the Respondent was whether the contract was validly terminated. The Respondent submitted that the loan agreement remained in force because the Appellant did not comply with the termination requirements under Clause 9. It argued that termination required proper notice and full settlement of the outstanding loan amount, including any early repayment charges. The Appellant was said to have paid only approximately Kshs. 115,000, which was substantially below the amount communicated by the Respondent as outstanding. The Respondent further argued that complaints relating to insurance terms or alleged amendments to the agreement did not amount to a lawful termination of the contract and that the court could not rewrite the parties' agreement. 25.The fourth issue raised by the Respondent was whether the Appellant failed to prove his case on a balance of probabilities. The Respondent asserted that the Appellant failed to discharge the burden of proof on a balance of probabilities. It argued that the Appellant's case was largely based on self-serving assertions unsupported by independent evidence of service, while the Respondent's documentary evidence, including loan schedules, statements of account, and correspondence, demonstrated that the loan obligations remained outstanding. 26.On the last issue as to whether the Respondent was entitled to retain the logbook and that the Appellant is not entitled to the prayed reliefs, the Respondent maintained that since the loan obligations had not been fully discharged and the contract had not been validly terminated, it was entitled to retain the vehicle logbook as security. It therefore urged the appellate court to dismiss the appeal, uphold the trial court's decision, decline the orders sought for release or transfer of the logbook, and find that the Appellant was not entitled to any of the reliefs sought. C. Analysis And Determination 27.This being a first appeal, this court is obligated to re-evaluate, reassess and re-analyze the entire evidence on record and draw its own conclusions while bearing in mind that it neither saw nor heard the witnesses testify. This duty was succinctly stated in the case of Okeno v Republic (1972) EA 32 where the court held that a first appellate court is under a duty to reconsider the evidence, evaluate it itself and draw its own conclusions, though making allowance for the fact that it did not have the opportunity of seeing and hearing the witnesses. 28.Having considered the Record of Appeal, the Judgment of the trial court, the grounds of appeal and the submissions by both parties, the following issues arise for determination:i.Whether the Appellant proved service and receipt of the termination notice.ii.Whether the learned trial magistrate properly evaluated the evidence on record.iii.Whether the Asset Financing Agreement was validly terminated.iv.Whether the Appellant discharged the burden of proof on a balance of probabilities.v.Whether the Appellant is entitled to the reliefs sought. Issue 1: Whether the Appellant proved service and receipt of the termination notice 29.The central basis upon which the trial court dismissed the Appellant's claim was that although termination letters had been produced, there was no proof that they had been served upon the Respondent. 30.Upon re-evaluation of the evidence, this court is unable to agree with that finding. The record demonstrates that the issue of service was never genuinely contested during the hearing. More importantly, the Respondent's own witness, DW1 Erick Omondi Onditi, expressly acknowledged receipt of the termination notice. His testimony before the trial court was unequivocal: “On the termination letters, client wrote a notice of termination through his Advocate so we shared an invoice on the amount due before termination could be effected.” 31.That admission is critical. It constitutes a direct acknowledgment that the termination notice had indeed been received by the Respondent and acted upon. The Respondent's reaction to the notice was to generate and forward an invoice indicating the amount allegedly due before termination could be effected. 32.Further, DW1's witness statement acknowledged that the Appellant's Advocates had written to the Respondent seeking termination and requesting account statements. The Respondent subsequently responded through correspondence dated 22nd March 2024 by providing loan schedules and repayment information. 33.The law regarding admissions is settled. In Choitram v Nazari (1984) KLR 327 the court held that admissions constitute the best evidence against the maker unless satisfactorily explained away. The court held as follows, “For the purpose of Order XII Rule 6, admissions can be express or implied either in the pleadings or otherwise, e.g in correspondence. Admissions have to be plain and obvious, as plain as a pikestaff and clearly readable because they may result in judgment being entered. They must be obvious on the face of them without requiring a magnifying glass to ascertain their meaning. Much depends upon the language used. The admission must leave no room for doubt.” 34.In Shah v Padamshi [1984] KLR 531, where the Court of Appeal held that “once a notice is shown to have been dispatched in the prescribed manner, and the surrounding circumstances demonstrate that the intended recipient became aware of its contents, the court may infer effective service notwithstanding the recipient's denial of actual receipt.” The court emphasized that service is a question of fact to be determined from the entirety of the evidence and the conduct of the parties. 35.Similarly, in the same case, the Court of Appeal recognized that proof of service or receipt of a notice is not confined to direct evidence of acknowledgment. The court held that receipt may be inferred from the circumstances of the case and the conduct of the parties where the evidence demonstrates that the communication reached the intended recipient. This principle accords with the position that a party who acts upon, responds to, or otherwise demonstrates awareness of a notice cannot subsequently deny its receipt. 36.The Respondent's conduct in responding to the notice, providing statements and furnishing repayment schedules can only be interpreted as acknowledgment that the termination notice had been received. 37.This court therefore finds that the learned trial magistrate fell into error by concluding that service had not been proved despite clear admissions and documentary evidence demonstrating receipt. Issue 2: Whether the learned trial magistrate properly evaluated the evidence on record 38.The Appellant's principal complaint is that the trial court failed to consider material evidence before arriving at its decision. 39.Having carefully reviewed the judgment, this court finds merit in that complaint. The learned magistrate narrowed the dispute to the singular question of proof of service and failed to interrogate the substance of the evidence placed before her. The judgment did not evaluate the following; DW1's admission regarding receipt of the termination notice, The Respondent's correspondence dated 22nd March 2024, the legal effect of the Respondent furnishing loan schedules after receiving the notice, Whether the Appellant complied with Clause 9 of the agreement, and whether the Respondent complied with its obligations under the contract. 40.A trial court is under a duty to evaluate all evidence before it and explain why it accepts or rejects particular evidence. In Kenya Ports Authority v Kuston (Kenya) Limited, the court emphasized that judicial determination must be founded upon a proper evaluation of all evidence placed before the court. 41.Likewise, in line with the case relied upon by the Appellant, in Abdul Hameed Saif v Ali Mohamed Sholan, it was held that an appellate court is entitled to interfere where a trial court fails to take into account material evidence. 42.The omission by the learned magistrate was significant because it resulted in a determination that was inconsistent with the evidence on record. Furthermore, the issue of service was not framed as a contested issue by the parties during trial. The Respondent's own evidence acknowledged receipt. The learned magistrate therefore introduced and determined the suit on an issue that had effectively been settled by the evidence. 43.In doing so, she failed to address the real controversy between the parties, namely whether the contractual requirements for termination had been satisfied and whether either party had breached the agreement. Issue 3: Whether the Asset Financing Agreement was validly terminated 44.Clause 9 of the Asset Financing Agreement provided the mechanism through which either party could terminate the agreement. The evidence demonstrates that; The Appellant issued termination notices through his Advocates, the Respondent acknowledged receipt thereof, the Respondent responded by furnishing repayment figures, the Appellant paid the prescribed amendment fee, the parties engaged in correspondence regarding settlement of the account. 45.The Court of Appeal in National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another held that a “court of law cannot rewrite a contract between parties and that parties are bound by the terms of their bargain unless vitiating factors such as fraud, coercion, or undue influenceare pleaded and proved. Accordingly, where parties have freely agreed on their respective rights and obligations, the duty of the court is to enforce the contract as written and not to substitute its own view of what the agreement ought to have been.” 46.Applying that principle, once the Appellant invoked Clause 9 in the manner contemplated under the agreement and the Respondent acknowledged the notice and engaged the Appellant on settlement figures, the Respondent could not subsequently deny receipt of the notice. 47.The Respondent's actions amounted to recognition of the termination process contemplated under the agreement. The learned magistrate therefore erred by failing to consider whether the parties' conduct demonstrated compliance with Clause 9 and instead focusing exclusively on an alleged lack of proof of service. Issue 4: Whether the Appellant discharged the burden of proof on a balance of probabilities 48.Sections 107 and 108 of the Evidence Act place the burden of proof upon the party who asserts a fact. However, proof in civil matters is on a balance of probabilities. In Karugi & Another v Kabiya & 3 Others, the court held that the burden is discharged where evidence demonstrates that a party's version is more probable than not. The Appellant produced: The Asset Financing Agreement, the termination notices, Evidence of payment, Correspondence exchanged between advocates, Evidence showing the Respondent's response to the termination request. 49.Against that evidence stands the Respondent's own admission acknowledging receipt of the termination notice. When the entire evidence is viewed holistically, it overwhelmingly points to the conclusion that the termination notice was issued, received and acted upon. 50.The learned magistrate therefore misapplied Sections 107 and 108 of the Evidence Act by finding that the Appellant had failed to discharge the burden of proof. This court finds that the Appellant proved his case on a balance of probabilities. Issue 5: Whether the Appellant is entitled to the reliefs sought 51.Having found that the termination notice was duly served and received, the Respondent acknowledged the notice, the trial court failed to evaluate material evidence, the Appellant discharged the burden of proof, it follows that the dismissal of the Appellant's suit cannot stand. 52.The Respondent's continued retention of the motor vehicle documents and insistence that no termination notice had been served was unsupported by the evidence on record. The Appellant is therefore entitled to the reliefs flowing from the valid termination of the agreement and such consequential orders as were sought in the Plaint. D. Disposition 53.This court finds that the Appellant duly served and the Respondent acknowledged the termination notice issued pursuant to Clause 9 of the Asset Financing Agreement dated 10th February 2023. The court further finds that the learned trial magistrate erred in law and fact by failing to properly evaluate the oral and documentary evidence on record, including the Respondent’s acknowledgment of the termination notice and termination process. Consequently, the court finds that the Appellant validly terminated the Agreement in compliance with Clause 9 thereof.In the circumstances, the courts the following orders;i.The appeal is hereby allowed.ii.The Judgment and Decree of Hon. Maureen Nyigei (SPM) delivered on 27th October 2025 in Kisumu CMCC No. E288 of 2024 are hereby set aside.iii.The Respondent shall produce and release to the Appellant the original logbook and release letter in respect of Motor Vehicle Registration No. KCW 395C within thirty (30) days of this Judgment.It is so ordered.iv.In default of compliance with order (iii) above, the Deputy Registrar of this court is authorized to execute all documents necessary to transfer Motor Vehicle Registration No. KCW 395C to the Appellant, and the National Transport and Safety Authority (NTSA) shall effect the transfer without requiring production of the original logbook or release letter.v.A permanent injunction is hereby issued restraining the Respondent, its servants, agents, employees, assigns, or any person acting under its authority from attaching, repossessing, selling, disposing of, transferring, advertising for sale, alienating, or otherwise dealing with Motor Vehicle Registration No. KCW 395C.vi.The Appellant shall have the costs of the suit before the trial court and cost of this Appeal, together with interest thereon at court rates from the date of taxation until payment in full. SIGNED BY/FOR: HON. JUSTICE ABDI M. HASSANKISUMU HIGH COURTHIGH COURT CIVIL DATE: 2026-07-09 10:58:49