Case ID:171495

Henry Chama Chama v Sammy Traders Limited [2021] eKLR

Case Metadata

Case Number:

Civil Appeal 121 of 2019

Parties:

Henry Chama Chama v Sammy Traders Limited

Date Delivered:

09 Feb 2021

Case Class:

Civil

Court:

High Court at Kisumu

Case Action:

Judgment

Judge(s):

Fred Andago Ochieng

Citation:

Henry Chama Chama v Sammy Traders Limited [2021] eKLR

Case History:

[Being an appeal from the Judgment of the Hon. L. Akoth Resident Magistrate at Kisumu Law Courts dated 7th October 2019 in the Kisumu CMCC No. 409 of 2015]

Court Division:

Civil

County:

Kisumu

History Docket No:

CMCC 409 of 2015

History Magistrate:

Hon. L. Akoth - RM

History County:

Kisumu

Case Outcome:

Appeal dismissed

Disclaimer:

The information contained in the above segment is not part of the judicial opinion delivered by the Court. The metadata has been prepared by Kenya Law as a guide in understanding the subject of the judicial opinion. Kenya Law makes no warranties as to the comprehensiveness or accuracy of the information

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT KISUMU

CIVIL APPEAL NO. 121 OF 2019

HENRY CHAMA CHAMA................................................................................APPELLANT

VERSUS

SAMMY TRADERS LIMITED.....................................................................RESPONDENT

[

Being an appeal from the Judgment of the Hon. L. Akoth Resident Magistrate at Kisumu

Law Courts dated 7

th

October 2019 in the Kisumu CMCC NO. 409 OF 2015

]

JUDGMENT

By an Amended Plaint dated 14

th

July 2016, the Plaintiff,

HENRY CHAMA CHAMA

, sued the Defendant,

SAMMY TRADERS LIMITED

, for the following reliefs;

“(a) Specific Performance or refund of deposited

sum;

Refund of Kshs 1,970,000/=.

(b) General and Exemplary Damages.

(c) The costs of the suit.

(d) Interest on (b) and (c) above.

(e) Any other remedy the Honourable court

deem fit and just to grant.”

1.

The claim arose from a Contract dated 7

th

October 2014.

2.

Pursuant to the contract in issue, the Plaintiff purchased a

TOYOTA PRADO

, Registration Number

KBZ 603B

, from the Defendant.

3.

The agreed Purchase Price was Kshs 3,600,000/=.

4.

It is common ground that the Plaintiff paid a deposit of Kshs 1,200,000/=. The said deposit was made up of

Kshs 200,000/= cash, and Kshs 1,000,000/= being the value of the Plaintiff’s vehicle Registration Number

KAR 119W

, which the Plaintiff traded-in with the Defendant.

5.

It is further common ground that the Plaintiff was supposed to pay the balance of the Purchase Price, through monthly payments of Kshs 200,000/=.

6.

It was the Plaintiff’s case that in November 2014 he encountered difficulties, which made it difficult for him to remit the agreed monthly instalments. In those circumstances, the Plaintiff asserts that he negotiated with the Defendant, and that the said Defendant agreed to reduce the monthly instalments to Kshs 50,000/=.

7.

However, the Defendant categorically denied the assertion concerning the alleged agreement to reduce the quantum of the monthly instalments.

8.

The Defendant repossessed the Prado and sold it. The Plaintiff asserted that the repossession was carried out without any Notice to him; and also that the sale of that vehicle was done without due regard to his rights.

9.

In answer to the claim, the Defendant asserted that if there was any breach of the contract between the parties, the person who was in breach is the Plaintiff.

10.

When the case came up for trial, each of the parties had one witness.

11.

Being the first appellate court, I have a duty to evaluate all the evidence on record.

12.

PW1, HENRY CHAMA

, is the Plaintiff. He testified having purchased a Prado vehicle from the Defendant. The Sale Agreement is dated 7

th

October 2014.

13.

Whilst the Purchase Price was Kshs 3,600,000/=,

PW1

testified that he paid the deposit of Kshs 1,200,000/=, which left a balance of Kshs 2,200,000/=.

14.

PW1

said that in the month of November 2014, he encountered difficulties, and was unable to remit the agreed monthly instalments of Kshs 200,000/=.

15.

He testified that he re-negotiated with the Defendant, so that he could pay instalments of Kshs 50,000/= monthly.

16.

By 2

nd

February 2015,

PW1

says that he had paid

Kshs 165,000/=. However, the Defendant then demanded Kshs 635,000/=, which would bring the instalments to Kshs 800,000/=.

17.

When

PW1

was unable to meet the Defendant’s said demand, the Defendant had the Prado repossessed and sold-off.

18.

After the Prado was sold-off, the Defendant handed over to the Plaintiff, the sum of Kshs 300,000/=.

19.

The Plaintiff asked the trial court to compel the Defendant to refund him the sum of Kshs 1,670,000/=, excluding the sum of Kshs 300,000/= which he had already received.

20.

During cross-examination,

PW1

said that he did not have any evidence to show that the Defendant had agreed to reduce the monthly instalments from Kshs 200,000/= to Kshs 50,000/=.

21.

DW1, ANDREW KIPKULEI

, was a Manager at

SAMMY TRADERS

.

22.

He corroborated the testimony of

PW1

concerning the Purchase Price for the Prado, as well as the deposit of

Kshs 1,200,000/=.

23.

DW1

explained that the balance of Kshs 2,400,000/= was payable by the Defendant over a period of 12 Months, hence the monthly instalments of Kshs 200,000/=.

24.

DW1

said that it is only after the Plaintiff had defaulted that the Defendant instructed an auctioneer to repossess the Prado.

25.

The Prado was then auctioned for Kshs 2,100,000/=, and the Agreement for that sale was produced as an exhibit in court.

26.

According to

DW1

, the Plaintiff remitted payments amounting to Kshs 300,000/= after the Prado had been auctioned. It is that amount which the Defendant remitted back to the Plaintiff.

27.

Both witnesses referred to the agreement between the parties herein as being a Hire Purchase Agreement.

28.

However, the said Agreement was not registered pursuant to

Section 5

of the

Hire Purchase Act

.

29.

The learned trial magistrate held as follows;

“20. Having analyzed the provisions of

the Hire Purchase Act, against the

conduct of the plaintiff, it would be

unjust that the plaintiff claims that

the agreement is not enforceable on

the basis that the terms therein are

hire purchase in nature and

therefore ought to have been

registered.”

30.

The trial court noted that the Plaintiff had, by his conduct, attempted to meet his part of the bargain. Having made that observation, the trial court said;

“In the circumstances, it will be

unjust and unequitable to raise

an objection by the plaintiff, that

the contract is enforceable based

solely on the fact that it was not

registered under Section 5 of the

Hire Purchase Act.”

31.

Finally, the trial court held that the contract was enforceable between the parties, thus rendering legal and justified the action taken by the Defendant.

32.

Pursuant to

Section 3 (1)

of the

Hire Purchase Act

;

“This Act applies to and in respect

of all hire-purchase agreements

entered into after the commencement

of this Act under which the hire-

purchase price does not exceed the

sum of four million shillings other

than a hire purchase agreement in

which the hirer is a body corporate

wherever incorporated; but that

monetary limitation does not apply

so as to affect the definition of

‘hire-purchase business’

in Section

2 (1).”

33.

As the Purchase Price in this instance was

Kshs 3,600,000/=, the agreement ought to have been registered.

34.

It is the Appellant’s submission that the consequence of non-registration of the agreement between the Appellant and the Respondent would be that it is illegal and therefore unenforceable.

35.

The Appellant cited the decision in

IMPERIAL BANK OF KENYA V KARIUKI CONSTRUCTION COMPANY LIMIED & 2 OTHERS HCCC NO. 51 OF 2012

, in which Havelock J. held as follows;

“In my view, the said Agreement

having not been so registered as

required by the Hire Purchase Act,

the same cannot be enforced against

the first Defendant. Furthermore, as

per Section 5 (4) (a) supra, the

Plaintiff had no right to repossess

the said motor vehicle registration No.

KAZ 917L and sell the same.”

36.

Section 5 (4)

of the

Hire Purchase Act

provides as follows;

“Unless a hire-purchase agreement has

been registered under subsection (2) –

(a) no person shall be entitled to

enforce the agreement against

the hirer or to enforce the

contract of guarantee relating

to the agreement, and the owner

shall not be entitled to enforce

any right to recover the goods

from the hirer; and

(b) no security given to the hirer in

respect of money payable under

the agreement, or given by a

guarantor in respect of money

payable under a contract of

guarantee relating to the

agreement, shall be enforceable

against the hirer or the guarantor

by any holder thereof.”

37.

In the case of

IMPERIAL BANK OF KENYA Vs KARIUKI CONSTRUCTION COMPANY LIMTED

(above-cited), the court held that the hire-purchase agreement was not enforceable against the 1

st

Defendant, who was the hirer.

38.

The court dismissed the Plaintiff’s claim against the 1

st

Defendant;

“under the terms of the Hire Purchase

Agreement ………”

39.

However, the court went ahead to order as follows:

“c. The Plaintiff’s claim as against

the first Defendant, as regards

its overdrawn account is allowed

and judgement is entered in the

Plaintiff’s favour in the mount of

Kshs 1,393,768.03 together with

interest thereon at the rate of

18% per annum from 1

st

March 2011

until payment in full.”

40.

In the light of the said findings, it is clear that the contract between the Hirer and the Owner was not illegal. The non-registration of the hire-purchase agreement did not render the agreement illegal: it only rendered it unenforceable in the specific terms as stipulated in

Section 5 (4)

of the

Hire Purchase Act

.

41.

That would explain why, in that case, the Plaintiff’s claim against the 2

nd

and 3

rd

Defendants was dismissed; and the reason is that those 2 Defendants were guarantors.

42.

In the case of

TAAWAWA SUPERMARKET LIMITED Vs FINA BANK LIMITED, CIVIL APPEAL NO. 118 OF 2002

the Court of Appeal said the following, concerning a hire-purchase agreement that had not been registered;

“We may add that failure to register

did not render the agreement void or

the result that the company would be

refunded all the money it paid under

the agreement. It retained its validity

as a contract inter se and was

enforceable as such.”

43.

The Court of Appeal went on to carefully examine the evidence on record and then made the following observation;

“There was provision in clause 7 of

the agreement, for repossession of

the vehicle in the event of breach,

and the bank properly invoked that

clause.”

44.

In the case before me, I find that pursuant to

Clause 5

of the

Agreement

, the Respondent had a right to repossess the vehicle, when the Plaintiff fell into arrears. Therefore, as the contract between the Appellant and the Respondent was valid and thus enforceable inter se, the Respondent’s action of repossessing the vehicle was lawful.

45.

I find that the trial court made the correct decision to dismiss the Plaintiff’s case, in the circumstances.

46.

Before concluding the judgment, I wish to adopt the following words of the Court of Appeal in

DAVID SIRONGA OLE TUKAI Vs FRANCIS ARAP MUGE & 2 OTHERS, CIVIL APPEAL NO. 76 OF 2014

;

“But perhaps the move compelling

argument against the approach taken by

the learned Judge lies in the provisions

of our Judicature Act, Cap. 8 of Laws of

Kenya, regarding the application of

statutes and the doctrines of equity.

Section 3 (1) thereof embodies what has

been called the hierarchy of norms, and

provides for how the jurisdiction of the

courts in Kenya shall be exercised. The

section creates a deliberate and

hierarchical sequence of laws, starting

with the Constitution, followed by

Statutes and next the substance of the

common law, the doctrines of equity and

the statutes of general application in

force in England on the 12

th

August 1897.

………….

section 3 (1) (c) makes it clear that the

substance of common law and the

doctrines of equity apply only in so far

as the statute does not apply. In other

words, the Judicature Act does not allow

a court of law to ignore an express

statutory provision under the guise of

applying the doctrines of equity.”

47.

To the extent that the trial court appeared to base its judgment upon the consideration of what it deemed to be

“unjust and unequitable”

, the decision would have been unsustainable.

48.

However, as already demonstrated above, the actions of the Respondent were lawful, and therefore enforceable inter se.

49.

In the result, the appeal lacks merit, and is therefore dismissed. The costs of the appeal are awarded to the Respondent.

DATED, SIGNED

and

DELIVERED

at

KISUMU

This 9

th

day of February 2021

FRED A. OCHIENG

JUDGE