https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8502

NIC Bank Ltd v Kioi t/a Kakamega Elite Senior School (Commercial Appeal E036 of 2022) [2026] KEHC 8502 (KLR) (Commercial & Admiralty) (11 June 2026) (Judgment) Neutral citation: [2026] KEHC 8502 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Admiralty Commercial Appeal E036 of 2022 PM Mulwa, J June 11, 2026 Between Nic Bank Limited Appellant and Joseph Kioi t/a Kakamega Elite Senior School Respondent (Being an Appeal from the Judgment delivered on 27th January 2023 by the Hon. E. M. Kagoni in CMCC No. 787 of 2015) Judgment 1.The Appellant sued the Respondent vide the plaint dated 2nd February 2015 seeking judgment for Kshs. 1,501,468.18, interest thereon at 30% with effect from 19th April 2013 until payment in full, costs and interest thereon. 2.The appellant's case in the trial court was that pursuant to a Hire Purchase Agreement dated 17th May 2008 and varied on 24th September 2008 between the Appellant and the Defendant, the Appellant/plaintiff financed the Respondent/defendant a sum of Kshs 1,971,000/= towards the purchase of motor vehicle registration number KBB 398X. The Defendant breached the terms of the Hire Purchase Agreement and fell into arrears. The Plaintiff repossessed the vehicle and sold it, and a sum of Kshs. 80,000/= was credited to the Defendant’s Account. The Plaintiff claimed the amount due from the Defendant. 3.The trial court, having heard the opportunity to hear the witnesses, dismissed the Plaintiff’s claim with costs. 4.The Appellant, aggrieved by the trial court's decision, filed the Memorandum of Appeal dated 24th February 2023, citing the following grounds:i.That the Learned Magistrate erred in law and in fact in finding that the Appellant’s case against the Respondent was time-barred.ii.That the Learned Magistrate misdirected himself on the facts of the matter and based his findings on partial consideration of the court’s record and/or evidence tendered in determining that the matter was time-barred.iii.That the Learned Magistrate erred in law and in fact and misdirected himself in finding that the auction price for the repossessed Motor Vehicle was not justified.iv.That the Learned Magistrate erred in law and in fact in finding that the Appellant had not proven its claim as against the Respondent and therefore the Respondent was not indebted to it.v.That in all the circumstances of the case, the finding of the Learned Magistrate is totally insupportable in law.vi.That in all the circumstances of the case, the Learned Magistrate failed to do justice. 5.The appeal was heard by way of written submissions. The Appellant filed submissions dated 12th January 2024, while the Respondent filed submissions dated 29th October 2025. 6.The Appellant submits that the parties entered into a Hire Purchase Agreement under which it financed the Respondent’s purchase of motor vehicle KBB 398X. Upon the Respondent’s default in repayment, the Appellant terminated the agreement, repossessed and sold the vehicle, and thereafter sought recovery of the outstanding sum of Kshs 1,501,468.18 together with contractual interest. 7.The Appellant contends that the Respondent failed to specifically plead limitation as required under Order 2 Rule 4 of the Civil Procedure Rules and only raised the issue in submissions. Although the trial court was entitled to raise the question of limitation suo motu, the Appellant argues that the court failed to consider letters dated 15th May 2013 and 9th July 2013 in which the Respondent acknowledged the debt. According to the Appellant, those acknowledgements revived the cause of action and gave rise to a fresh limitation period under sections 23 and 24 of the Limitation of Actions Act. 8.The Appellant further submits that the trial court improperly determined the matter on an un-pleaded issue contrary to the principles in David Sironga Ole Tukai v Francis Arap Muge & 2 Others and ought to have considered the documents already on record showing acknowledgement of the debt. 9.The Appellant submits that the existence of the loan facility and the Respondent’s default were not disputed. It contends that the trial court erred in finding that no statement of account had been produced, yet a statement showing arrears had been filed and remained unchallenged. The Appellant further argues that the Respondent never pleaded or proved any challenge to the legality of the repossession, auction process, or auction price, notwithstanding the evidence tendered by the Appellant, including the auction report. It is therefore the Appellant’s position that the evidence established the Respondent’s indebtedness in the sum of Kshs. 1,435,132.82, and that the appeal should be allowed with the judgment of the lower court set aside. 10.The Respondent supports the trial court’s dismissal of the suit, arguing that the Appellant failed to prove the existence and breach of the alleged Hire Purchase Agreement, the loss suffered, and the Respondent’s liability. The Respondent further contends that the evidence relating to the repossession and sale of motor vehicle KBB 398X was inconsistent and unreliable, with discrepancies in the vehicle description, registration numbers, and sale documents, thereby casting doubt on whether a lawful sale occurred. 11.It is also submitted that the claim, being one for special damages, was neither sufficiently pleaded nor strictly proved as required by law. Additionally, the Respondent argues that the suit abated upon the death of the party and no substitution was effected within the prescribed period. Consequently, the Respondent maintains that the appeal lacks merit and should be dismissed with costs. Analysis and determination 12.This being a first appeal, this Court is obligated to re-evaluate, re-analyze, and reconsider the evidence on record and draw its own conclusions while bearing in mind that it neither saw nor heard the witnesses testify. (See Selle & Another v Associated Motor Boat Co. Ltd & Others [1968] EA 123). 13.Having considered the record of appeal, the judgment of the trial court, the grounds of appeal and the rival submissions, the issues that arise for determination are:i.Whether the trial court erred in finding that the suit was statute-barred;ii.Whether the Appellant proved its claim on a balance of probabilities; andiii.What orders should issue as to costs? Whether the suit was statute-barred 14.The learned trial magistrate found that the suit was time-barred. That the appellant refused, declined, omitted, or failed to state the date when the default occurred or when the debt was acknowledged. The Appellant faults that finding on the basis that the Respondent acknowledged the debt through letters dated 15th May 2013 and 9th July 2013, thereby reviving the limitation period. 15.Section 4(1)(a) of the Limitation of Actions Act provides that actions founded on contract may not be brought after the expiry of six years from the date on which the cause of action accrued. 16.However, Sections 23 and 24 of the Limitation of Actions Act provide that where there is an acknowledgement of a debt or part payment thereof, a fresh limitation period begins to run from the date of the acknowledgement or payment. 17.Section 23(3) specifically provides:“Where a right of action has accrued to recover a debt, or other liquidated pecuniary claim, and the person liable acknowledges the claim or makes any payment in respect of it, the right accrues on and not before the date of the acknowledgement or the last payment.” 18.From the record, the Appellant relied on letters dated 15th May 2013 and 9th July 2013, allegedly authored by the Respondent, acknowledging the debt. Those documents formed part of the Appellant’s evidence and were not challenged as forgeries. The trial court, while entitled to raise the issue of limitation suo moto because limitation goes to jurisdiction, failed to evaluate the legal effect of those letters. 19.The law is settled that limitation affects jurisdiction. In Owners of Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] KLR 1, the Court of Appeal held that jurisdiction is everything, and without it a court must down its tools. However, before concluding that it lacked jurisdiction on account of limitation, the trial court was under a duty to consider whether the limitation period had been extended or revived under the provisions of the Limitation of Actions Act. 20.Having considered the letters relied upon by the Appellant, I am satisfied that they constituted acknowledgements of indebtedness within the meaning of Section 23 of the Act. Consequently, a fresh limitation period began to run from the date of the acknowledgements, and the suit filed on 2nd February 2015 was not statute-barred. 21.The learned magistrate, therefore, fell into error in dismissing the suit based on limitation. Whether the Appellant proved its claim 22.The burden of proof lay squarely upon the Appellant pursuant to Sections 107 and 109 of the Evidence Act, which place the obligation upon he who alleges to prove. The Appellant was therefore required to establish the existence of the Hire Purchase Agreement, the Respondent's default, the repossession and sale of the motor vehicle, and the amount allegedly outstanding. 23.Upon re-evaluating the record, I note that the existence of the hire purchase relationship between the parties was not seriously disputed. The Appellant produced the Hire Purchase Agreement, evidence of disbursement of the facility, records relating to the Respondent's default, repossession documents and statements of account. The real controversy concerned the repossession and disposal of the motor vehicle and the computation of the alleged deficiency balance. 24.The Respondent challenged both the repossession and sale process and in particular questioned the auction price at which the motor vehicle was allegedly sold. 25.A review of the evidence reveals material inconsistencies in the Appellant's documentation. The valuation report refers to motor vehicle registration number KBB 398X described as a 40-seater bus. However, the auction advertisements produced in evidence describe the vehicle as a 33-seater bus bearing the same registration number. More significantly, the letter allegedly confirming the sale refers to motor vehicle registration number KBB 398H. No explanation was offered for these glaring discrepancies. 26.Further, although the Appellant pleaded that the vehicle was sold to the highest bidder following repossession, no auction proceedings, bid documents, memorandum of sale, purchaser details, transfer documents or other evidence capable of demonstrating the manner in which the auction was conducted were tendered before the trial court. 27.The trial court carefully considered the evidence of PW1, who admitted that according to the valuation certificate dated 27th November 2011, the motor vehicle had a market value of Kshs. 1,120,000/= and a forced sale value of Kshs. 895,000/=. Notwithstanding those valuations, the vehicle was allegedly sold for Kshs. 80,000/=. The trial court correctly observed that no satisfactory explanation was offered for the substantial disparity between the valuation and the eventual sale price. 28.In the absence of cogent evidence explaining how the sale price of Kshs. 80,000/= was arrived at this Court cannot simply accept the Appellant's computation of the alleged deficiency balance. 29.It is trite that a chargee, mortgagee or financier exercising a statutory or contractual power of sale is under a duty to act in good faith and to take reasonable steps to obtain the best price reasonably obtainable at the time of sale. Given the enormous disparity between the valuation and the alleged sale price, coupled with the absence of evidence explaining the auction process, the Court is unable to conclude that the sale was conducted in a manner that achieved the best price reasonably obtainable. 30.In the circumstances, I find that the Appellant failed to satisfactorily prove the repossession, sale, and resultant deficiency claimed against the Respondent. Consequently, the claim was not proved on a balance of probabilities, and the trial court cannot be faulted for dismissing the suit. 31.Consequently, I find that the appeal fails. The judgment of the trial court dismissing the Appellant's suit is hereby upheld. 32.As costs follow the event and there is no reason to depart from that principle, the Appellant shall bear the costs of this appeal. 33.Accordingly, the appeal is dismissed with costs to the Respondent. It is so ordered. JUDGMENT DELIVERED VIRTUALLY, DATED AND SIGNED AT NAIROBI THIS 11TH DAY OF JUNE 2026.P.M. MULWAJUDGEIn the presence of:Ms. Mbiro h/b for Ms. Mburu for AppellantMs. Gachuiri for RespondentCourt Assistant: Lispa