https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8027

Watu Nominees Company Ltd & another v Lagat & 3 others (Civil Appeal E001 of 2025) [2026] KEHC 8027 (KLR) (5 June 2026) (Judgment) Neutral citation: [2026] KEHC 8027 (KLR) Republic of Kenya In the High Court at Machakos Civil Appeal E001 of 2025 BM Musyoki, J June 5, 2026 Between Watu Nominees Company Limited 1st Appellant Watu Nominees Company Limited 2nd Appellant and Michael Kipngetich Lagat 1st Respondent Michael Kipngetich Lagat 2nd Respondent Ibrahim Hassan Derow 3rd Respondent Ibrahim Hassan Derow 4th Respondent (Being an appeal from judgment and decree in the Chief Magistrate’s Court at Mavoko (Hon. S. Kandie RM) civil suit E895 of 2023 dated 9-12-2024) Judgment 1.The 1st respondent was a victim of a road traffic accident which occurred on 6-07-2023 involving motor cycle registration numbers KMGF 628D and KMGJ 797S. He sued the appellant in the lower court claiming general and special damages being compensation for the injuries he sustained in the said accident. The appellant was sued in its capacity as registered or beneficial owner of motor cycle registration number KMGJ 797S (hereinafter referred to as ‘the motor cycle’) which was found to be liable for the accident. 2.During the proceedings, the appellant took out third party proceedings against the 2nd respondent claiming indemnity on grounds that, it had only financed the 2nd respondent in purchasing the motor cycle and it had no interest in it other than to act as security for due performance of the loan. The appellant also pleaded that the 2nd respondent was not under its instructions neither was he its agent or servant. 3.The proceedings do not show that interlocutory judgement was ever entered against the 2nd respondent for default of appearance neither is there indication that third party directions were taken pursuant to Order 1 Rule 22 of the Civil Procedure Rule. In this case, it must be taken that the suit which proceeded to full trial was the one between the appellant and the 1st respondent. The appellant’s suit against the 2nd respondent did not progress beyond issuance of third party notice. 4.In its judgment after full hearing, the trial court found as a matter of fact that the appellant was only a financier and that the 2nd respondent was the owner in possession and control of the motor cycle. However, despite that finding, the court held that the appellant was liable to compensate the 1st respondent because although the 2nd respondent was to blame in the circumstances, it could not enter judgment against him under law. On damages, the court awarded Kshs 2,000,000.00 for general damages, Kshs 200,000.00 for future medical expences and Kshs 138,040.00 for special damages. 5.Following the aforesaid judgment, the appellant approached this court seeking to set it aside relying on the following grounds;1.That the learned Magistrate erred in law and fact in entering judgment against the appellant despite holding that the appellant was merely a financier and the finding that the respondent was the beneficial owner of the motor cycle that caused the accident.2.The learned Magistrate erred in law and fact in failing to dismiss the claim against the appellant despite the finding that the appellant was not liable for the accident and the finding that the 2nd respondent was fully to blame for the accident. 6.This appeal was disposed of by way of written submissions. The appellant filed its submissions dated 22nd July 2025 while the 1st respondent filed his submissions dated the same date. The 2nd respondent just like in the trial court, did not participate in this appeal. Having considered the said submissions and the memorandum of appeal, it is my opinion that the only issue for determination is whether the trial court was right in entering judgment against the appellant even after finding that it was a mere financier and the 2nd respondent was to blame. 7.I have noted from the submissions of the 1st respondent that he is asking the court to revisit the issue of whether the appellant was just a financier or owner by interrogating the financing loan agreement between the appellant and the 2nd respondent. That issue is no longer alive. The trial court was clear in its mind that the appellant was just a financier and the true owner in control and possession was the 2nd respondent. The 1st respondent has not appealed that finding and it is not for this court to belabour it. A determination which that has not been appealed even if the appeal emanates from the same judgment being challenged cannot form part of the issues for determination by the appellate court. 8.For clarity, the trial court stated the following at paragraphs 11 and 18 of its judgment;‘15. The court notes that the defendant financed the motor cycle to the third party save that he had not transferred it. Therefore the beneficial owner is the third party and not the defendant………..18. Indeed, pursuant to the agreement, the defendants financed the third party who was in control of the said motor cycle. The third party was to blame in the circumstances. However, the court cannot enter judgment against a third party under the law. Pursuant to Order 1 Rile 15 the defendant is entitled to 100 per cent indemnity of the suit from the third party.’ 9.The finding of the trial Magistrate would mean that the third party was liable but the defendant would pay for his negligence. That is not what third party proceedings are meant to achieve. Third party proceedings are meant to cover a defendant who if found liable would be entitled to indemnity or contribution from a party who either contributed to arising of the cause of action or has a duty to indemnify the defendant for the actions which triggered the cause of action. The defendant must be found liable first then the issue of indemnity between him and the third party kicks in. Where the case against the defendant fails, it cannot be called upon to answer for the negligence or actions of the third party. The case still remains for the plaintiff to prove. Introduction of a third party does not offload the burden of proving the case against the defendant from the plaintiff. 10.There are plethora of authorities on the position of liability of a financier for actions of the owner in control and possession of a motor vehicle. In addition to the authorities of Consolidated Bank of Kenya Limited v Mwangi & another [2022] KEHC 3104 (KLR) and Watu Nominees Co. Ltd v Josephine Nyambeki & 3 others [2025] eKLR which have been cited by the appellant, I have considered the following cases;a.Ali Abdi Dere v Hash Hauliers Limited & another [2018] KEHC 3002 (KLR) where Justice E. Muriithi held as follows;‘For my part, I take - and respectfully agree with the decisions cited above taking - the view that a person in the position only of a financier to the acquisition of a motor vehicle and who is registered as a joint owner of the motor vehicle for the purpose of protecting his interest in the full payment of the funds that he has invested in the financing arrangement, without any interest in the operation of the motor vehicle by the purchaser of the motor vehicle, and therefore not vicariously liable for the use of the vehicle by the purchaser’s agent/driver is not a necessary party to a suit for the recovery of damages in negligence arising from alleged negligent use of the motor vehicle.’b.Consolidated Bank of Kenya Limited v Mwangi & another [2022] KEHC 3104 (KLR), in which Honourable Justice D.S. Majanja (may he rest in peace) held that;‘Ownership of a motor vehicle does not, of itself, establish liability for an accident. The plaintiff must prove that the owner is vicariously liable for the acts of the driver of the motor vehicle by showing that the driver is an employee or agent (see Jane Wairimu Turanta v Githae John Vickery and Equity Bank Limited & Munene Don ML HCCC No. 483 of 2012 [2012] eKLR). As whether the owner who has a financial interest in a motor vehicle has control over the driver, which is at the heart of this appeal, our courts have held that a financier’s only interest in the security is to secure the repayment from the owner and it is not in control of the motor vehicle for that reason.’ 10.I hold the same position as in the above authorities. It follows that the trial court fell into error in entering judgment against the appellant yet it had received and accepted evidence that the appellant was not to blame and had no control or possession of the motor cycle. The true owner had been identified through third party proceedings yet the 1st respondent chose to proceed against the appellants. 11.The inevitable conclusion from the above is that, this appeal is allowed and judgment of the trial court is consequently set aside and substituted for an order dismissing the 1st respondent’s (plaintiff in the trial court) suit against the appellant (the defendant in the trial court) with costs. The appellant shall also have the costs of this appeal. DATED SIGNED AND DELIVERED AT NAIROBI THIS 5TH DAY OF JUNE 2026.B.M. MUSYOKIJUDGE OF THE HIGH COURT.Judgment delivered in presence of Miss Otieno for the appellant and Miss Miya holding brief for Mr. Obwoge for the 1st respondent.