https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8244

Watu Nominees Company Ltd v Kioko & 2 others (Civil Appeal 893 of 2025) [2026] KEHC 8244 (KLR) (Civ) (11 June 2026) (Judgment) Neutral citation: [2026] KEHC 8244 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Law Courts) Civil Civil Appeal 893 of 2025 BW Murunga, J June 11, 2026 Between Watu Nominees Company Limited Appellant and Titus John Kioko 1st Respondent Paul Karomo Kinyanjui 2nd Respondent James Wambugu Kihara 3rd Respondent (Being an appeal against the Judgment of Hon. Justine Asiago SRM delivered on 7th August 2025 in Nairobi Milimani SCCC No. E5194 of 2024) Judgment 1.This appeal arises from the Judgment of the Small Claim’s Court at Milimani by Hon. Justine Asiago SRM delivered on the 7th August, 2025 in SCCC No. E5194 of 2024. The suit before the trial court was instituted by Titus John Kioko (hereinafter “the 1st Respondent”) as Plaintiff against Watu Nominees Company Limited (hereinafter “the Appellant”) as 1st Defendant and Paul Karomo Kinyanjui as 2nd Defendant and James Wambugu Kihara as 3rd Defendant, arising out of a road traffic accident that allegedly occurred on 10th May, 2024. 2.The 1st Respondent averred that the Appellant was the registered and/or beneficial owner of motor vehicle KTWC 839Y as per the Copy of Records that is found in the Record of Appeal at page 16. 3.The 2nd and 3rd Respondents were alleged by the 1st Respondent to be the driver and beneficial owners of the same motor vehicle registration number KTWC 839Y 4.The Appellant denies that they owned the motor vehicle KTWC 839Y and indicated that they were a mere financiers of the motor vehicler. They also indicated for clarity that they had entered into an Asset Finance Loan Agreement with the 3rd Respondent. 5.According to the Appellant, the principal loan was disbursed directly towards the purchase of the motor vehicle KTWC 839Y and therefore its only interest was purely as security for the due performamve of the loan by the 3rd Respondent. This also implied that there was no vicarious liability attaching to the Appellant. 6.The said 2nd and 3rd Respondents did not enter appearance and default judgment was entered against them. 7.The Appellant and 1st Respondents consented to proceed by way of written subimissions on 9th July 2025 and the Judgment was reserved for 7th August 2025. 8.The learned trial magistrate delivered the subject judgment in favour of the 1st Respondent. In the judgment, the learned Magistrate held the Appellant and the 2nd and 3rd Respondents liable to the extent of 100% jointly and severally for causing the accident. 9.The learned trial Magistrate in the reasoned decision stated that the Appellant was vicariously liable for the accident and had not exculpated themselves from the blameworthiness by having been the only duly registered owners. 10.Being aggrieved by the said Judgment, the Appellant filed the present appeal vide a Memorandum of Appeal dated 15th February 2024, raising the following grounds of appeal principally challenging:i.Whether the entirety of the evidence presented at the trial court was considered, andii.Whether the Appellant’s interest in the motor vehicle KTWC 839Y was not simply a financier interestiii.Whether the Appellant was vicariously liable for the actions of the 2nd and 3rd Respondent.iv.Who should bear the costs of the appeal. 11.The Appellant duly filed their written submissions which were dated 14th December, 2025 while the Respondent's similarly filed written submissions that were dated 30th October, 2025. Appellant’s Submissions 12.On the issue of liability, the Appellant submits that the trial court erred in apportioning 100% liability against the Appellant but this error, the Appellant insists, is based on the vicarious liability angle. The Appellant contends that the Court failed to appreciate the six documents that were filed and relied on by the Appellant. These documents were:a.Loan Agreementb.Guarantee Agreementc.Security Agreementd.Invoice from Car & Generale.Delivery notef.Loan Statement 13.The Appellant places considerable reliance on the clause in the Loan Agreemmnent at paragraph 1.1 that stated that the Loan amount was not used as part of the purchase of the vehicle. 14.The secured creditor status of the Appellant was also brought to the attention of the trial Court through the Security Ahreement. 15.The Appellant went ahead to explain how the motor vehicle was in the name of the Appellant which is traced to clause 1.4 of the Loan Agreement. 16.The Appellant has also ndicated that there was no evidence that was adduced to show that the driver was acting for the benefit of the registered owner, to wit, the Appellant. 17.The Appellant also citred various authorities to bolster their Appeal and in particular, the decsion in HCM Anyanzwa & 2 Others v Luigi de Casper & Anohter 1981 KLR 10 in which the court held that vicarious liability depends not on ownership but the delegation of tasks or duty 18.The Appellant prays that the appeal be allowed with costs. 1st Respondent’s Submissions 19.The 1st Respondent submits that it was uncontroverted that at the time of the accident, the Appellant was the sole registered owner of the motor vehicle. 20.The 1st Respondent also postulates that it is trite law that ownership of a motor vehicle is proved through the Copy of Records which is the search that is conducted at the Registrar of Motor vehicles. They rely on the decsion of Makau J in Superforma Ltd & Another v Gladys Nchororo Mbero 2014 EKLR HCCA 133 of 2002 where the learned Judge stated thatCertificate of search (copy of record) is a prima facie proof of owenership 21.He prays that the appeal be dismissed with costs. Issues for Determination 22.From the pleadings, the Record of Appeal, and the written submissions of the parties, this Court identifies the following singular issue for determination:i.Whether the learned trial Magistrate erred in apportioning liability against the Appellant; and Analysis and Determination 23.At the outset, it is useful to restate the well-established principles governing the jurisdiction of this Court in a first appeal from the subordinate court. This Court is empowered by Section 78 of the Civil Procedure Act (Cap. 21) and Order 42 Rule 25 of the Civil Procedure Rules, 2010. As the first appellate court, it has a duty to re-evaluate the entire evidence on the record and arrive at its own independent conclusions, while giving allowance for the fact that the trial court had the benefit of seeing and hearing the witnesses. 24.The principle was settled in Selle & Another v Associated Motor Boat Co. Ltd & Others [1968] EA 123, where the Court of Appeal for East Africa held that a first appellate court should reconsider the evidence, evaluate it itself and draw its own conclusions, but that it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in that respect. This Court will therefore apply that standard in the analysis that follows. 25.The first substantive challenge raised by the Appellant is that the issue of ownership of the motor vehicle waq the primary one and which was resolved unsatisfactority by the trial Magistrate. The Magisttate had stated as follows:The 1st Respondent’s (the herein Appellant) defense was limited to the fact that they only financed the Third Party with regards to the subject motor vehicle. Section 8 of the Traffic Act provide as follows on the question of ownership…..…..The burden under section 30 of the Traffic Act in the current suit lies on the 1st Respondent to establish exception. The 1st Respondent relies on a loan agreement dated 27.7.23 between them and the third party where the third party acquired the said tricycle and was paying for it for a sum of Kshs. 8,656 per week. However the certificate of Registration indicate that the subject tricycle was registered solely in the name of the 1st Respondent and the court concludes that the said was purely meant to secure ownership as opposed to financial interests.Consequently the 1st Respondent cannot escape liability in the instances where they are the sole registered owner of the vehicle in consideration. The 1st Respondent did not provide any other evidence and the court finds them 100 percent vicariously liable for the acts of the 2nd Respondent who was the rider.’’ 26.The provision that governs motor vehicle accident claims is premised in section 5.8 of the Traffic Act which provides that:“The person in whose name a vehicle is registered shall unless the contrary is proved, be deemed to be the owner of the vehicle” 27.The words unless the contrary is proved is an invitation to the party that thinks it should not be liable to evince why they may the regisitered motor vehicle oewner but are still not liable. 28.The question that often arises and which the 1st Respondent has indicated in his submissions by citing Super Foam is whether the person who has been injured in a motor vehicle accident has the additional obligations to go searching for who is the one responsible for the accident in terms of liability if they already have secured the motor vehicle registration ownership details from the Copy of Records. 29.It is placing an addirional burden to a person that is probably innocent of any blameworthiness in an accident and whose not only had to contend with the injuries sustained in an accident but also has the additional burden to go searching for whom to apportion blame. That is akin to adding salt to injury with the judicial salt here being the additional burden to wieve through documents such as Loan Agreements that the registered owner brings to fore and pleads that they are merely the financiers. 30.In the case of Equity Bank Limited vs. Humphrey Okuku & Another (suing as the personal representatives of the Estate of Douglas Ouma Okuku – Deceased) (2019) eKLR, it was held as follows regarding the question of the liability of a financer:“I am of the considered view that the Appellant’s involvement was that of a mere financier despite having been registered as a co-owner of the subject vehicle and that it really had no control over the management and use of the said vehicle: if anything, a reading of the letter of offer shows that the first defendant was responsible for ensuring the proper use of the vehicle and any risks that arose would befall him during the duration of the agreement. It is my inference therefore that the driver of the subject vehicle was at all material times acting as an agent/employee of the 1st defendant and not the appellant. Moreover, the appellant maintained that it was not necessarily a party to the suit. In seeking to understand what is meant by the term, I cite with approval the definition offered in Investments and Mortgages Bank Limited vs Nancy Thumari & 3 others (2015) eKLR where the High Court sitting on appeal set aside a decision refusing to strike out the appellant’s name from the suit. The court borrowed its definition of a necessary party from Jan Bolden Nielsen vs Herman Phillipus Styne & 2 others (2012) wherein it held thus: “ In my view, a necessary party is a person who ought to have been joined as a party and in whose absence no effective decree can be passed in a proceeding by the court.” going by my analysis hereinabove coupled with the above definition, I am doubtful that the Appellant’s participation in the proceedings will have an impact in the outcome thereof, having already determined that there is no nexus whatsoever between itself and the driver of the subject vehicle. In these circumstances, I am well convinced that the Appellant was not a necessary party to the suit and hence the learned trial magistrate ought to have considered all relevant facts and authorities placed before him and allowed the application by dismissing the suit against it. 31.Whilst the issue of liability and what form of liability is being deemd by the trial court is important, the trial court indication of other evidence that was absent I reckon, was in reference to the sole registration of the Appellant as the sole owner unlike the case of Equity Bank Limited above where there was a co owner also registered. 32.Courts are also bound to do justice to both parties and on a case to case basis examine what is brought before the court and where deemed necessary apportion the blame accordingly. 33.In ordinary circumstances, the indemnification for the damages awarded would come from the person who was in actual pososession or who is the beneficial owner as the financier who is registered in the Copy of Records may have no actual control of the vehicle when it is on the roads. However, they assume the risk of being sued and even being found guilty as was done in this case when the public record that is availanble shows that they are the registered owner. It is incumbent upon the registered owner to demonstrate that another party was the one in control of the vehicle. In some cases, the Registered Owner would ordinarily square it off with the person who is actually responsible and seek indemnification for any loss attributed to the innocent financier or seller. 34.That indemnification is in the form of third party proceedings. A perusal of the Record of Appeal and the proceedings that were before the trial court show that there were no Directions that were taken in respect of the Third Party. It is expected that the trial Magistrate would have indicated if the liability was going to be determined simultaneosly between the Plaintiff, Defendant and Third Party or the Defendant may after entry of Judgment pursue the Third Party. 35.When the matter came up for hearing, the Record shows that the Appellant simply indicated that they had served the Third Party Notice. 36.The Appellant did not seek to be struck out of the proceedings at the trial Court for misjoinder which is another option that was open to them. 37.There are two ways to look at this matter. There is the commercial side where the court can look simply at the interests of the parties and noting that the Financier had no other interest in the motor vehicle, rule that they have a commercial relationship with the Third Party and they can get indemnified. There is also the judicial side where the court goes back to the issue of Third Party and says that the process need not be sequenced in the manner of a party being dounf culpable and then indeminity kicks in but the Court apportions aiability head on even if done directly to the Third Party. 38.In fact, a perusal at the Loan Agreement that brought up by the Appellant shows that the indemity is anrticipated from the Borrower against the Financier. 39.Clause 3.5 of the Loan Agreemnet states:Any damage, loss or injury to anything or anyone caused to or by the vehicle or by its use is at the borrowers risk. Any penalties, fines or liabilities arising in respect of the use or possession of the vehicle or the carriage of any persons are Borrowers responsibility. The Borrower agrees to indemnify the Lender in case of any claims.Clause 3.6 of the Loan Agreement states:The full risk regarding loss or damage to the vehicle whether attibutable to irresitible force, inevitable accident or any other cause is passed to the Borrower. The Lender shall not be liable for any loss or damage caused by defect in or arising out of the vehicle. The Borrower indemnifies the Lender and the Lenders’s nominee from all claims, damages., losses, penalities and fines in relation to the vehicle and the use of the vehicle. 40.Basically from the preceding paragraph above, the parties have already agreed on indeminficatiopn. They have established the relationship between them and also set clear guidelines on what should happen in case there is an accident which is that the Borrower will keep the Lender indemnified. 41.The 1st Responent is not privy to such arrangememts and to be fair they are only interested in the compnsation and not who compensates them. That is how it should be. 42.It is important to nonethelss see the contra views. In Diamond Trust Bank limited v Richard Mwangi Kamotho(2017) eKLR the Court observed inter alia that:“….The mis-directions though seemingly partly motivated by the lower court’s desire to secure justice for the 1st Respondent cannot be excused; a court of law cannot, by ignoring the law purport to achieve justice for one party through an injustice to another party…”It appears that the Court in this case was looking at injustice to the Lender but what this Court now is looking at also is what about the injustice to the 1st Respondent who was a passenger on the tuk tuk KTWC 839Y and when he climbed the tuk tuk he did dnot ask if the same was in a borrower arrangement or that the loan had been fully paid. He just wanted to get to his destination. 43.It should be noted that this was a matter in which default judgment was entered on 21st November 2024 before the Judgment reserved for 17th December 2024 was arrested by the Appellant and throw away costs paid for them to defend the suit. The third party that was joined has stayed away from the proceedings. 44.This is the same third party that the Appellant has noted in the Loan Agreement had an obligation to inform the Apellant in nase there was any accident. Clause 3.9 of the Loan Agreement produced stated that:In case of any major incident involving the vehicle or the Borrower (eg accident, fatality, injury, arrest etc) the Borrower shall immediately and no later than 48 hours after its occurance to inform the Lender by calling Watu Credit Customer Care. 45.From the Record of Appeal it is not indicated whether this 48 hours notification was made to the Appellant. A glance at the Application for setting aside the default judgment makes no mention of whether or not the Borrower breached the Loan Agreement by not notifying the Appellant. It is only mentioned that the insurance compnay had failed to take action as was expected. 46.This labyrinth of obligation by the Borrower to the Lender and whether or not they were fulfilled is not one that should be visited upon the 1st Respondent if this appellate Court can help it. The Lender has remedies already as noted, where the indemnity should be made to them as per the Load Agreement. That indemnity need not involve the 1st Respondent. 47.The trial Court apportioned liability against the Appellant and the third party in the trial Court jointly and severally on a balance of probability. There is an opportunity for the Appellant to recover all damages and costs on their indemnity. 48.In these circumstances, this Court finds that the trial Magistrate’s apportionment of 100% liability against the Appellant was well within the range of a reasonable tribunal properly directing itself on the law and facts. This Court sees no basis to interfere with that finding. Disposition 49.In conclusion, having re-evaluated the entirety of the evidence and considered the written submissions of the parties this Court finds that the Appeal is dismissed. 50.The 1st Respondent is entitled to judgment against the Appellant and the Appellant shall bear the costs of this appeal. DATED AND DELIVERED AT NAIROBI THIS 11TH DAY OF JUNE 2026.BENARD WAFULA MURUNGAJUDGEDELIVERED ON THE VIRTUAL PLATFORMIn the presence of:Calvin Otieno instructed by COL Advocates for the AppellantMusili Mbiti for the Respondent (Absent)Kevin Babu - Court Assistant