https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12705

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT MURANG'A** **CIVIL APPEAL NO. 9 OF 2020** **PERMINUS MAINA MWANGI................................................APPELLANT** **-VERSUS-** **MARTIN KINYUA GUCHUA………………………....................RESPONDENT** **JUDGEMENT** **(Being an appeal from the judgement and decree of the Chief Magistrate’s Court at Murang’a (Hon.E. MuruikiNyagah) delivered on 7th July,2020 in Civil Case No.240 of 2017- Martin Kinyua Guchua v Perminus Maina Mwangi & Vision Dealers)** **Introduction;** 1. This is an appeal arising from the judgment and decree of the Honourable Trial Magistrate delivered on 7th July,2020in Civil Case No. 240 of 2017 at Murang’a. 2. The appeal arises from a contractual dispute between the parties concerning the sale and possession of a motor vehicle. The central question before the trial court was whether, after the parties entered into agreements relating to the sale of the vehicle, the appellant was entitled to repossess the motor vehicle while retaining the monies paid by the respondent, or whether the respondent was entitled to restitution of the sums proved to have been paid. 3. The appellant was the registered owner of the motor vehicle. However, the vehicle had been acquired through financing and the logbook remained in the custody of the financier pending settlement of the outstanding facility. 4. The respondent entered into an agreement with the appellant dated 2nd December 2016 for the purchase of the motor vehicle. Following the agreement, the respondent took possession and control of the vehicle and commenced making payments towards the agreed purchase price. 5. Although the vehicle was not transferred into the respondent's name due to the financier's interest, the respondent assumed responsibilities associated with possession and use of the vehicle. He obtained comprehensive insurance cover in his name and undertook maintenance and improvement of the motor vehicle. 6. A dispute subsequently arose between the parties regarding completion of the transaction and the obligations arising from the financing arrangement. The parties thereafter entered into a further agreement dated 7th March 2017 in an attempt to resolve their differences. 7. The respondent's case before the trial court was that under the agreement dated 7th March 2017, the appellant undertook to refund him Kshs.100,000 by 31 May 2017, but failed to honour that obligation. The respondent further contended that having paid substantial sums towards the purchase of the motor vehicle and having lost possession thereof, it would be unjust for the appellant to retain both the vehicle and the monies paid. 8. The appellant's position was that the respondent had failed to complete payment under the original sale arrangement and that the repossession of the vehicle was therefore lawful. He argued that the respondent was not entitled to a refund because he was the party in breach. 9. Upon hearing the matter, the learned trial magistrate found that the appellant had failed to honour his obligations under the agreement dated 7th March 2017 and that the respondent was entitled to restitution of the monies proved to have been paid. 10. Aggrieved by that decision, the appellant preferred the present appeal. **Background and Proceedings Before the Trial Court;** 1. The evidence before the trial court was that the appellant owned a motor vehicle which had been purchased through financing from a financial institution. Due to the outstanding financing arrangement, the logbook remained with the financier and ownership had not been transferred. 2. The appellant thereafter entered into a sale agreement with the respondent dated 2nd December 2016. Under that arrangement, the respondent took possession of the motor vehicle and began making payments towards the purchase price. 3. The respondent testified that he paid a total sum of Kshs.626,095 towards the transaction. He further testified that he incurred expenses in maintaining and improving the vehicle and obtained comprehensive insurance cover in his name. 4. The parties subsequently disagreed over the outstanding obligations relating to the motor vehicle. Following negotiations, they executed a further agreement dated 7th March 2017. 5. Under that agreement, the appellant undertook to refund the respondent the sum of Kshs.100,000 by 31st May 2017. 6. It was the respondent's evidence that despite this agreement, the appellant failed to refund the agreed sum and instead repossessed the motor vehicle. 1. The respondent therefore instituted proceedings seeking recovery of the monies paid, contending that the appellant could not retain the benefit of the payments after taking back possession of the vehicle. 2. The appellant denied liability and maintained that the respondent had breached the original agreement and was therefore not entitled to restitution. 1. After evaluating the evidence, the learned trial magistrate found in favour of the respondent and ordered the appellant to refund the monies proved to have been paid, together with costs. **Grounds of Appeal;** 1. The appellant's grounds of appeal, though numerous, may be summarised as follows: 2. That the learned trial magistrate erred in law and fact in finding that the appellant breached the agreements entered into between the parties. 3. That the learned trial magistrate failed to appreciate that the respondent was himself in breach by failing to complete payment for the motor vehicle. 4. That the learned trial magistrate erred by failing to give effect to the agreement dated 7th March 2017, which constituted the parties' final agreement. 5. That the learned trial magistrate erred in ordering a refund of monies paid despite the respondent's alleged default. 6. That the judgment was against the weight of the evidence. 1. The appellant therefore urged this Court to allow the appeal, set aside the judgment and decree of the trial court and dismiss the respondent's claim. **Respondent's Submissions;** 1. The respondent opposed the appeal and supported the findings of the learned trial magistrate. It was submitted that the trial court correctly found that the appellant had breached the agreement dated 7th March 2017 by failing to honour his obligation to refund the agreed sum of Kshs.100,000 within the stipulated period. 2. Counsel for the respondent submitted that the evidence before the trial court established that the parties entered into two related agreements. The first agreement dated 2nd December 2016 was a sale agreement under which the respondent took possession of the motor vehicle and commenced making payments towards the purchase price. 3. The respondent submitted that although the motor vehicle was not transferred into his name due to the financier's interest in the vehicle, the contractual arrangement between the parties remained valid. He argued that he had substantially performed his obligations by making payments towards the purchase price, taking responsibility for the vehicle, obtaining comprehensive insurance cover and incurring expenses towards its maintenance and improvement. 4. It was further submitted that the agreement dated 2nd December 2016 did not capture all the terms agreed upon by the parties, particularly the financing arrangement affecting the motor vehicle and the obligations that would arise upon default. 1. On the agreement dated 7th March 2017, the respondent submitted that the appellant could not rely on selected provisions of the agreement while disregarding his own obligations. The appellant had expressly undertaken to refund Kshs.100,000 by 31st May 2017, yet admitted that he failed to do so. 2. The respondent contended that the appellant's interpretation of the agreement would result in an unjust outcome whereby the appellant retained both possession of the motor vehicle and the substantial sums already paid by the respondent. 3. On the issue of unconscionability, the respondent submitted that although parties are generally bound by their agreements, contractual freedom is not absolute. Reliance was placed on **National Bank of Kenya Ltd v PipeplasticSamkolit (K) Ltd & Another [2001] eKLR** and **Pius Kimaiyo Langat v Co-operative Bank of Kenya Ltd [2017] eKLR** on the sanctity of contracts, while urging that equitable principles must be applied to prevent injustice. 4. The respondent further relied on **Lloyds Bank Ltd v Bundy [1975] QB 326** for the principle that equity may intervene where enforcement of contractual rights would result in an unconscionable advantage being obtained by one party over another. 5. It was submitted that the order made by the trial court was not an award of damages but an order for restitution. The respondent argued that the purpose of the order was to restore the monies proved to have been paid and to prevent the appellant from being unjustly enriched. 6. Reliance was placed on **Chase International Investment Corporation & Another v Laxman Keshra & Others [1978] KLR 143** and section 3(1) of the Judicature Act in support of the court's equitable jurisdiction. 7. On proof of the amount refunded, the respondent submitted that he produced documentary evidence demonstrating the payments made towards the purchase of the motor vehicle. It was argued that the learned trial magistrate only awarded amounts that were proved. 8. Finally, the respondent submitted that the appeal merely invited this Court to re-evaluate factual matters already determined by the trial court without demonstrating any error warranting interference. Reliance was placed on **Selle & Another v Associated Motor Boat Co. Ltd [1968] EA 123**, **Peters v Sunday Post Ltd [1958] EA 424**, and **Timsales Ltd v Wilson Libuywa**. 9. The respondent urged this Court to dismiss the appeal in its entirety and uphold the judgment and decree of the trial court with costs. **Duty of the First Appellate Court;** 1. This being a first appeal, the duty of this Court is to reconsider and re-evaluate the evidence placed before the trial court and draw its own independent conclusions, while bearing in mind that it neither saw nor heard the witnesses testify. 2. **In Selle & Another vs. Associated Motor Boat Co Ltd & Others [1968] EA,**The court therein held that the appellate court was not bound by the findings of fact of the trial court but that in re-considering and re-evaluating the evidence so as to draw its own conclusions, it always had to bear in mind that it neither saw nor heard the witnesses and thus make due allowance in that respect. This principle was enunciated thus*:"...this court is not bound necessarily to accept the findings of fact by the court below. An appeal to this 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 allowance in this respect..."* 1. Similarly, in **Okeno v Republic [1972] EA 32**, the Court held that a first appellate court must subject the entire evidence to a fresh and exhaustive examination and reach its own decision. 2. However, an appellate court will not interfere with findings of fact merely because it may have reached a different conclusion. Interference is only justified where the trial court acted on wrong principles, failed to consider relevant evidence, considered irrelevant matters, or where the findings are plainly unsupported by the evidence. 3. This principle was restated in **Peters v Sunday Post Ltd [1958] EA 424**, where the Court held that an appellate court will not ordinarily interfere with findings of fact by a trial court unless it is satisfied that the conclusion reached was clearly wrong. **Issues for Determination;** 1. Having considered the record of appeal, the judgment of the trial court, the grounds of appeal and the submissions of the parties, the following issues arise for determination: 1. Whether the learned trial magistrate erred in finding that the appellant was in breach of the agreements entered into between the parties. 2. Whether the agreement dated 7th March 2017 was enforceable and whether the appellant was entitled to rely on it to justify repossession of the motor vehicle without restitution. 3. Whether the respondent was entitled to the refund of monies proved to have been paid. d) Whether there exists any basis for this Court to interfere with the judgment and decree of the trial court. **Analysis and Determination;** **Whether the learned trial magistrate erred in finding that the appellant was in breach of the agreements entered into between the parties.** 1. The appellant's principal complaint is that the learned trial magistrate erred in finding that he was in breach of the agreements entered into between the parties. His argument is that the respondent was the party who failed to complete payment for the motor vehicle and that the appellant was therefore entitled to repossess the vehicle. 2. The respondent's position is that although there may have been disagreements arising from the initial sale arrangement, the parties subsequently entered into a further agreement dated 7th March 2017 which regulated their respective obligations. The appellant expressly undertook to refund the sum of Kshs.100,000 by 31st May 2017, but failed to do so. 3. The first question for determination is therefore whether the appellant's failure to perform his obligation under the agreement dated 7th March 2017 amounted to a breach. 4. It is a fundamental principle of contract law that parties are bound by the agreements they voluntarily enter into. The Court of Appeal in **National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another [2001] Eklr** affirmed that courts do not rewrite contracts for parties and that the role of the court is to give effect to the intention of the parties as expressed in their agreement. 5. However, contractual obligations are not considered in isolation. A contract creates reciprocal rights and obligations, and a party seeking to enforce contractual rights must equally demonstrate compliance with the obligations imposed upon him. 6. In the present case, the evidence established that the parties had a continuing contractual relationship arising from the sale of the motor vehicle. The initial agreement dated 2nd December 2016 resulted in the respondent taking possession of the vehicle and making payments towards the purchase price. 7. The fact that the motor vehicle was not transferred into the respondent's name does not, in itself, negate the existence of contractual obligations between the parties. The evidence was clear that the delay in transfer arose from the financier's interest in the vehicle, as the logbook remained in the custody of the financier pending settlement of the outstanding facility. 8. The respondent's conduct after the agreement was consistent with a purchaser who had assumed obligations under the transaction. He took possession of the vehicle, made payments towards the purchase price, continued to deposit monthly instalments to the loan account foe settlement of the loan, obtained comprehensive insurance cover in his name and incurred expenses in maintaining the vehicle. 9. A dispute subsequently arose between the parties, resulting in the agreement dated 7th March 2017. That agreement was not disputed by the appellant. It constituted a further arrangement through which the parties sought to resolve their outstanding issues. 10. Under that agreement, the appellant undertook to refund the respondent the sum of Kshs.100,000 by 31st May,2017. During the hearing, the appellant admitted that he did not make the refund within the agreed period. 11. In my view, that admission was significant. The appellant cannot rely on the agreement dated 7th March 2017 as justification for repossessing the motor vehicle while simultaneously failing to perform an obligation expressly imposed upon him by the same agreement. 12. A party cannot approbate and reprobate by accepting the benefit of an agreement while avoiding the corresponding obligations arising from it. 13. In **Kenya Breweries Ltd & Another v Kiambu General Transport Agency Ltd [2000] eKLR**, the Court of Appeal emphasised that contractual obligations must be considered within the context of the entire agreement and that parties must be held to the obligations they have undertaken. 14. The appellant argued that the respondent's earlier failure to complete payment entitled him to repossess the motor vehicle. However, the issue before the trial court was not simply whether the respondent had defaulted under the initial arrangement. The court was required to consider the parties' subsequent agreement and the legal consequences of the appellant's failure to comply with it. 1. Having independently reconsidered the evidence, I find that the learned trial magistrate correctly appreciated the contractual relationship between the parties. The appellant's admitted failure to refund the agreed amount constituted a failure to perform his contractual obligation under the March 2017 agreement. 1. The finding of breach was therefore not against the evidence and there is no basis for this Court to interfere with it. **Whether the agreement dated 7th March 2017 was enforceable and whether the appellant was entitled to rely on it to justify repossession of the motor vehicle without restitution.** 1. The appellant's argument is that the agreement dated 7th March 2017 represented the final agreement between the parties and ought to have been enforced according to its terms. The respondent, however, argued that the appellant could not rely upon the agreement in a manner that allowed him to retain both the vehicle and the payments already made. 2. This issue requires the Court to balance two competing principles: the sanctity of contracts and the equitable jurisdiction of the court to prevent injustice. 3. As already stated, the starting point is that parties are bound by their agreements. In **National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another (supra)**, the Court of Appeal held that a court of law cannot rewrite a contract between parties. 4. Likewise, in **Pius Kimaiyo Langat v Co-operative Bank of Kenya Ltd [2017] eKLR**, the Court of Appeal reaffirmed that courts must give effect to the intention of parties as expressed in their contractual documents. 5. Applying those principles, I do not find that the agreement dated **7 March 2017** was invalid merely because its terms may have operated harshly against the respondent. There was no evidence before the trial court of fraud, coercion, duress or undue influence in the execution of the agreement. 6. The issue, therefore, is not whether the agreement was valid. The issue is whether the appellant was entitled to rely on it selectively in order to obtain a benefit beyond what equity would permit. 7. The respondent's claim was not that he had acquired legal ownership of the motor vehicle. Indeed, the evidence was that the logbook remained with the financier and ownership had not been transferred. 1. Rather, the respondent's claim arose from the contractual payments he had made and the consequences of the failure of the transaction. His argument was that having taken back possession of the vehicle, the appellant could not retain the monies paid towards the transaction without accounting for them. 2. Equity recognises that contractual rights must not be exercised in a manner that results in unfair advantage or unjust enrichment. 3. Section 3(1) of the Judicature Act preserves the application of equitable principles in Kenya. The court is therefore entitled to consider whether strict enforcement of contractual rights would produce an unjust outcome. 4. In **Lloyds Bank Ltd v Bundy [1975] QB 326**, Lord Denning observed that equity may intervene where one party has taken unfair advantage of another in circumstances where enforcement of the transaction would be unconscionable. While persuasive, the principle reflects the broader equitable jurisdiction to prevent injustice. 5. Similarly, in **Chase International Investment Corporation & Another v Laxman Keshra & Others [1978] KLR 143**, the Court recognised the role of equity in preventing unfair outcomes where strict enforcement of legal rights would result in injustice. 6. In the circumstances of this case, the trial court did not set aside the agreement dated 7th March 2017 or rewrite its terms. Rather, it considered the effect of the appellant's interpretation of the agreement. 7. If the appellant's argument were accepted, the result would be that he retained possession of the motor vehicle while also retaining the substantial sums paid by the respondent towards its purchase and settlement of the loan. 1. Such a result would confer a benefit upon the appellant without corresponding accountability and would leave the respondent without either the vehicle or the financial consideration he had paid. 1. The law does not permit a party to retain a benefit where, in the circumstances, retention would be unjust. 2. I therefore find that although the agreement dated 7th March 2017 remained a valid agreement, the appellant was not entitled to invoke it in a manner that permitted him to retain both the motor vehicle and the respondent's payments without restitution. **Whether the respondent was entitled to restitution of the monies proved to have been paid.** 1. The appellant challenged the order of the trial court directing him to refund the monies paid by the respondent. It was submitted that since the respondent had failed to complete payment for the motor vehicle, he was not entitled to recover any sums paid. 2. The respondent, on the other hand, submitted that the refund ordered by the trial court was proper because he had proved the payments made towards the transaction and had lost possession of the motor vehicle after the appellant repossessed it. 3. Having found that the appellant failed to honour his obligation under the agreement dated 7th March 2017, the next question is whether the remedy granted by the trial court was legally justified. 1. In my view, it is important to properly characterise the order made by the learned trial magistrate. The court did not award damages for loss of bargain or compensate the respondent for the value of the motor vehicle. Neither did it confer ownership rights upon the respondent. 1. The order was one of restitution. It was intended to restore to the respondent the monies he had paid pursuant to a transaction whose intended outcome was not achieved. 1. Restitution is founded on the principle that the law should not permit one party to retain a benefit where, in the circumstances, it would be unjust to do so. It seeks to reverse unjust enrichment rather than compensate for loss. 2. In **Chase International Investment Corporation & Another v Laxman Keshra & Others [1978] KLR 143**, the Court recognised the importance of equitable principles in preventing unjust outcomes and ensuring that a party does not retain an unfair advantage. 3. The respondent's claim before the trial court was not dependent on proof that he was the registered owner of the motor vehicle. Indeed, the evidence was that ownership had not passed because the logbook remained with Equity Bank the financier. 1. The respondent's entitlement arose from the contractual payments he had made and the appellant's subsequent repossession of the motor vehicle. The respondent had demonstrated that he paid substantial sums towards the purchase price in terms of settlement of the loan to the financier, took possession of the vehicle, insured it comprehensively in his name and incurred expenses associated with its maintenance and improvements. According to the evidence on record, he was committed in his repayments until the same was suddenly interrupted by the appellant. 2. The appellant, having taken back possession of the motor vehicle, could not in fairness retain the benefit of those payments without accounting for them. 3. The alternative position advanced by the appellant would result in an inequitable outcome. The appellant would retain the motor vehicle, while also retaining the monies paid by the respondent. The respondent, on the other hand, would lose both the vehicle and the financial contribution he had made towards its acquisition. 4. Such a result would amount to unjust enrichment and would offend basic equitable principles. 5. The trial court therefore correctly appreciated that the appropriate remedy was restoration of the sums proved to have been paid. 6. The respondent was still required to prove the amount claimed. The law is settled that monetary claims must be supported by evidence. In **Hahn v Singh [1985] KLR 716**, the Court held that special damages must be specifically pleaded and strictly proved. 1. In this matter, the learned trial magistrate considered the documentary evidence presented by the respondent and awarded only the amount that had been proved. The appellant has not demonstrated that the award was based on speculation or unsupported evidence. 2. I therefore find that the order for restitution was properly made and this ground of appeal fails. **Whether there exists any basis for this Court to interfere with the judgment and decree of the trial court.** 1. The final issue is whether the appellant has demonstrated any error of law or fact warranting interference with the judgment of the trial court. 2. As a first appellate court, this Court has undertaken an independent review of the evidence. However, the appellate jurisdiction must be exercised with restraint. 3. In **Selle & Another v Associated Motor Boat Co. Ltd [1968] EA 123**, the Court held that although a first appellate court must reconsider and evaluate the evidence, it must bear in mind that the trial court had the advantage of hearing and observing the witnesses. 4. Similarly, in **Peters v Sunday Post Ltd [1958] EA 424**, the Court stated that an appellate court will not interfere with findings of fact unless it is satisfied that the trial court acted upon wrong principles or that the findings were plainly unsupported by the evidence. 5. The appellant's complaint essentially invites this Court to substitute the trial court's evaluation of the evidence with its own conclusion. However, no misdirection, failure to consider relevant evidence, or application of an incorrect legal principle has been demonstrated. 1. The learned trial magistrate considered the evidence relating to both agreements entered into between the parties. The court appreciated that the vehicle had not been transferred into the respondent's name but correctly found that this did not extinguish the respondent's contractual rights. 2. The court further considered the payments made by the respondent, the appellant's failure to refund the agreed sum under the March 2017 agreement and the consequences of the appellant retaining both the vehicle and the respondent's money. 3. In my view, the findings of the trial court were supported by the evidence and were based on a proper application of contractual and equitable principles. 4. The appellant has therefore failed to demonstrate any basis upon which this Court should interfere with the judgment and decree of the subordinate court. **Determination;** 1. Having reconsidered the evidence and the applicable law, this Court finds that the dispute between the parties was not a question of ownership of the motor vehicle. The respondent never acquired registered ownership because the vehicle remained subject to the financier's interest. 2. The respondent's claim was contractual. He had paid substantial sums towards the transaction, assumed possession and responsibilities relating to the motor vehicle, and demonstrated performance consistent with the parties' agreement. 3. The appellant was entitled to protect his interests under the financing arrangement and contractual agreements. However, he was not entitled to repossess the motor vehicle and at the same time retain the benefit of the payments made by the respondent without restitution. 4. The learned trial magistrate therefore did not rewrite the parties' contract or disregard the principle of contractual freedom. The court merely ensured that the appellant did not obtain an unjust benefit from the failed transaction. 5. The order for refund was consequently a proper exercise of the court's equitable jurisdiction and was supported by the evidence. 6. The appeal is accordingly without merit. **Final Orders** Consequently, the Court makes the following orders: The appeal is hereby dismissed. It is so ordered. **Delivered, Dated and Signed on This 30th Day of July2026 at Eldoret High Court** **………………………………** **J. M. CHIGITI (SC)** **JUDGE**