[2022] KEHC 13700 (KLR)

Wanjiru v Niyibizi & another (Civil Appeal 748 of 2019) [2022] KEHC 13700 (KLR) (Civ) (7 October 2022) (Judgment)

Neutral citation: [2022] KEHC 13700 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal 748 of 2019

JK Sergon, J

October 7, 2022

Between

Anthony Warui Wanjiru

Appellant

and

David Niyibizi

1st Respondent

National Transport Safety Authority

2nd Respondent

(Being an appeal from the judgment and decree of Honourable D.O. Mbeja (Mr.) (Senior Resident Magistrate) delivered on 9th December, 2019 in Milimani CMCC no. 6621 OF 2014)

Judgment

1. The 1st respondent who was the plaintiff in Civil Suit No. 6621 of 2014 before the Chief Magistrate’s Court at Milimani Commercial Courts instituted a suit against the appellant, the 2nd respondent and one Isaiah Mwaniki t/a Motorscope Kenya (the 3rd defendant) by way of the plaint dated November 6, 2014 and amended on 8th December, 2014 and sought for reliefs in the nature of a declaratory order to the effect that the respondent is the legitimate owner of the motor vehicle Toyota Noah registration number KBX 823A (“the subject motor vehicle”); permanent and mandatory injunctions against the 2nd respondent in respect to the subject motor vehicle; and costs and interest thereon.

2. The 1st respondent pleaded in the amended plaint that on January 30, 2014 he entered into an agreement with the appellant through the 3rd defendant for the purchase of the subject motor vehicle for a consideration of Kshs 1,150,000/=.

3. The 1st respondent pleaded in the amended plaint that he paid the purchase price upon executing the sale agreement, following which the appellant released possession of the subject motor vehicle to him and further surrendered the relevant sale and transfer documents to him for purposes of registration of the transfer.

4. It was pleaded in the amended plaint that when the 1st respondent visited the offices of the 2nd respondent sometime in June 2014 to register the transfer, he learned that the appellant had registered a caveat prohibiting any further registration of the subject motor vehicle under the claim that the original logbook was lost, and that a move by the 1st respondent to lift the caveat to enable transfer of ownership bore no fruit, and hence the suit.

5. Upon service of summons, the appellant entered appearance and filed the statement of defence and counterclaim dated May 18, 2015 to deny the 1st respondent’s claim.

6. In the statement of defence, the appellant denied entering into an agreement for sale of the subject motor vehicle with the 1st respondent and further denied the existence of an agency relationship with the 3rd defendant.

7. In the statement of defence, the appellant further denied receiving any monies towards the purchase of the subject motor vehicle or signing any transfer documents to that effect, but admitted to lodging a caveat on the subject motor vehicle.

8. In the counterclaim, the appellant pleaded that upon purchasing the subject motor vehicle, he undertook steps to have the logbook registered in his name.

9. In the counterclaim, the appellant further pleaded that upon registration, he appointed A Plus Motors (“the agents”) for the purpose of selling the subject motor vehicle and therefore handed copies of the relevant documents and the original logbook to one Charles Maina with instructions for delivery of the said documents to the agents.

10. The appellant pleaded in the counterclaim that unbeknownst to him, Charles Maina (brother to the appellant) removed the subject motor vehicle from the custody of the agents and handed it over to the 3rd defendant, thereby causing him to lodge a caveat with the 2nd respondent.

11. The appellant further pleaded in the counterclaim that the 3rd defendant was a stranger to him and therefore had no authority to transact on his behalf.

12. It is the averment by the appellant through the counterclaim that the 1st respondent therefore did not purchase the subject motor vehicle in good faith and was not an innocent purchaser for value.

13. Consequently, the appellant by way of the counterclaim soughtinter alia, for a declaration to the effect that he is the legitimate owner of the subject motor vehicle and for the sum of Kshs 1,150,000/= being the proceeds from the purported sale of the subject motor vehicle.

14. The 1st respondent rejoined with a reply to defence and defence to counterclaim, where he denied the averments made in the counterclaim.

15. Prior to the hearing, the suit against the 3rd defendant was withdrawn.

16. At the trial, the 1st respondent testified and called the 3rd defendant as a witness, whereas the appellant testified.

17. Upon filing of submissions, the trial court delivered judgment on December 9, 2019 in favour of the 1st respondent and against the appellant and the 2nd respondent as prayed in the amended plaint. Consequently, the trial court dismissed the counterclaim with costs.

18. The aforesaid decision has precipitated the appeal presently before this court, with the appellant filing the memorandum of appeal dated December 19, 2019 featuring a total of 20 grounds.

19. The appeal was disposed of through the filing of written submissions.

20. By way of the submissions, the appellant argues that the trial court erred in finding that the 3rd defendant acted as a factor agent and hence the 1st respondent could not be blamed for presuming that the 3rd defendant had the authority to sell the subject motor vehicle, in the absence of any evidence to that effect.

21. The appellant further argues that at the time of transacting, the 1st respondent knew or ought to have known that the subject motor vehicle did not belong to the 3rd defendant since the documents in place demonstrated ownership by the appellant and hence could not be deemed to be an innocent purchaser for value.

22. It is the submission by the appellant that the trial court ought to have found in accordance with the proviso of Section 23(1) of the Sale of Goods Act (“the Act”) which stipulates the following:“Subject to the provisions of this Act, where goods are sold by a person who is not the owner thereof, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell.”

23. The appellant also faulted the trial court for finding that there was privity of contract and an intention to create legal relations with the 3rd defendant when the evidence tendered proved otherwise.

24. The appellant equally faulted the trial court for not taking into consideration his submissions, otherwise it would have likely arrived at a different finding.

25. On his part, the 1st respondent contends that going by the past relations between the appellant and the 3rd defendant, it was implied that the latter had authority to transact on behalf of the former, and that it was therefore apparent to the 1st respondent that the 3rd defendant was acting as an agent of the appellant.

26. The 1st respondent further contends that he is a bonafide purchaser for value, while placing reliance on the case of Katende v Haridah & Company Advocates(2008) 2EA where the court defined a bona fide purchaser for value as one who, among others, purchased the property in question in good faith and at a consideration, without knowledge of any fraud/irregularity.

27. It is therefore the submission by the 1st respondent that notwithstanding any apparent dispute between the appellant and his brother, Charles Maina, nothing ought to defeat his interests in the subject motor vehicle.

28. For all the foregoing reasons, the 1st respondent urges this court to dismiss the appeal with costs, and to uphold the decision by the trial court.

29. On its part, the 2nd respondent did not file any documents or participate at the hearing of the appeal.

30. I have considered the rival submissions on record alongside the relevant authorities cited. As is the legal requirement for a court sitting on a first appeal, I have re-evaluated the material and evidence which was placed before the trial court. It is clear that the appeal lies against the decision by the trial court to grant the reliefs sought in the amended plaint and as a consequence, to dismiss the counterclaim. I will therefore tackle the 20 grounds of appeal contemporaneously.

31. In his testimony before the trial court, the 1st respondent adopted his signed witness statement and stated that he purchased the subject motor vehicle at a showroom in Karen area, at a consideration of Kshs 1,150,000/= and that upon payment of the purchase price, he was provided with copies of the documents bearing the appellant’s details, as well as the original logbook for purposes of undertaking a transfer.

32. The 1st respondent stated in his evidence that he was however unable to register the transfer owing to the caveat later lodged by the appellant but that he was in possession of the subject motor vehicle at all material times, together with the relevant documents.

33. In cross-examination, the 1st respondent testified that he identified the subject motor vehicle sometime in January, 2014 and subsequently signed the agreement.

34. The 1st respondent testified that he had never met the appellant in person prior to the case but was told that the appellant worked together with the 3rd defendant, the latter being the one who showed him around the showroom and assisted in the transaction process.

35. It is the evidence by the 1st respondent that he made payments towards the subject motor vehicle to the 3rd defendant, whom he believed had authority to sell it on behalf of the appellant.

36. It is also the evidence by the 1st respondent that the appellant has not asked for the return of the subject motor vehicle.

37. Isaiah Mwaniki Mwangi who was PW2 and previously the 3rd defendant, gave evidence that he received the subject motor vehicle from Charles Maina, brother to the appellant, several months prior to its sale to the 1st respondent.

38. The witness gave evidence that he had known the appellant previously through his brother and that he had previously done car dealings with them in respect to various other motor vehicles, some of which he had already sold at the time of giving his testimony.

39. The witness testified that following the sale of the subject motor vehicle, the appellant lodged a complaint with the police but that he was not arrested.

40. In cross-examination, PW2 stated that he would do the car dealings through the appellant’s brother, though he previously dealt directly with the appellant.

41. In re-examination, it was the evidence of the 3rd defendant that his dealership is licensed to sell and buy motor vehicles on behalf of clients and hence they directly deal with the respective purchasers.

42. The 3rd defendant also gave evidence that it was custom for him to deal with Charles Maina and not the appellant.

43. On his part, the appellant adopted his signed witness statement as his evidence-in-chief before proceeding to testify that he did not appoint Charles Maina as his agent but that he merely worked for him.

44. The appellant testified that he never received any proceeds relating to the subject motor vehicle and that he did not fill in the details contained in the material agreement.

45. In cross-examination, the appellant gave evidence that Charles Maina who is his brother, had previously engaged with him on the basis of trust and that the appellant would assign him with the responsibility of delivering various documents.

46. The appellant gave evidence that he could not confirm whether or not he received consideration in respect to the subject motor vehicle since he tends to receive funds through direct deposit with his bank.

47. It is the testimony of the appellant that he does not ordinarily engage with buyers directly but through car dealerships.

48. In re-examination, the appellant stated that at the time of lodging the caveat, he had no idea as to the whereabouts of the subject motor vehicle or his original logbook.

49. In his judgment, the learned trial magistrate reasoned that notwithstanding the provisions of Section 23(1) of the Act(supra), Section 24 creates an exception as follows:“When the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller’s defect of title.”

50. The learned trial magistrate reasoned that the 1st respondent approached the 3rd defendant with the belief that he had authority to sell the motor vehicles on display, including the subject motor vehicle and that going by the testimony provided, it was not necessary for the motor vehicles on sale to be registered in the name of the car dealership.

51. It was the reasoning by the learned trial magistrate that car dealerships operate as factor agents of the car owners, having possession and control of the motor vehicles on sale, and hence the 1st respondent in the present instance cannot be faulted for assuming that the 3rd defendant had authority to sell the subject motor vehicle.

52. Upon my re-examination of the pleadings, evidence and material tendered at the trial, it is not in dispute that the subject motor vehicle was at all material times registered in the name of the appellant. It is also apparent that the appellant had previously sold other motor vehicles.

53. Upon my further re-examination of the pleadings and evidence, I concur with the reasoning adopted by the learned trial magistrate that the 1st respondent had brought credible evidence to show that he genuinely believed that he was dealing with an agent of the appellant, since the 3rd defendant who also testified as a witness, had not only showcased the subject motor vehicle, but had documentation and the original logbook bearing the details of the appellant and which he explained away by saying that he had obtained from the appellant’s brother, Charles Maina.

54. I also considered the evidence by the 3rd defendant that it was not necessary for the motor vehicles to be registered in the dealership’s name and that he genuinely believed that Charles Maina who had delivered the relevant documents to him was doing so on behalf of the appellant and upon his instructions.

55. Upon my study of the record, I observed that whereas the appellant denied having signed the authority to sell, he did not call any credible evidence to demonstrate that the writing and signature borne therein are a forgery. Similarly, I observed that the appellant portrayed a lack of certainty as to whether he truly received the sum of Kshs 1,150,000/= through his bank, being the proceeds of the sale of the subject motor vehicle.

56. In my view, while it is apparent that there could have been a betrayal of trust between the appellant and his brother Charles, I find the version of events stated by the 1st respondent and the 3rd defendant to be more probable.

57. I therefore agree with the reasoning and finding by the learned trial magistrate that the 3rd defendant being a car dealer likely acted as a factor agent in the sense that he sold the subject motor vehicle to the 1st respondent by being in possession thereof and that consequently, he received or expected to receive a commission therefrom.

58. In view of the foregoing circumstances, I am satisfied that the 1st respondent brought credible evidence to show that he was a bona fide innocent purchaser, and I will borrow from the case of Weston Gitonga & 10 others v Peter Rugu Gikanga & another [2017] eKLR also cited in the judgment by the learned trial magistrate, where the court defined this category of purchaser in the manner hereunder:“Black’s law Dictionary 8th Edition defines “bona fide purchaser” as:“One who buys something for value without notice of another’s claim to the property and without actual or constructive notice of any defects in or infirmities, claims or equities against the seller’s title; one who has in good faith paid valuable consideration for property without notice of prior adverse claims.” ”

59. From my study of the record, I have also not come across anything to indicate that the learned trial magistrate ignored or overlooked the evidence and submissions presented by the appellant.

60. In view of the foregoing circumstances, I find that the appeal lacks merit and the same is consequently dismissed with costs to the 1st respondent.

DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOFT TEAMS AT NAIROBI THIS 7TH DAY OF OCTOBER, 2022. .......................J. K. SERGONJUDGEIn the presence of:……………………………. for the Appellant……………………………. for the 1st Respondent……………………………. for the 2nd Respondent