Taawawa Supermarket Limited v Fina Bank Ltd [2010] KECA 95 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that companies don't get Hire Purchase Act protection and that defaulting hirers can't rely on verbal promises to escape written contracts.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the agreement executed by the parties was a 'Hire Purchase Agreement'
- 2.Whether section 3(1) of the Hire Purchase Act applied to the agreement, given the hirer was a body corporate
- 3.Whether the agreement was registrable under section 5(1) of the Hire Purchase Act and the consequence of non-registration
- 4.Whether the bank was in breach of the written agreement or of the alleged further oral agreement, including whether repossession and sale were lawful and whether fraud was proved
Key legal issues
#Whether the hire purchase agreement with a corporate hirer fell within the Hire Purchase Act
The Act does not apply to hire purchase agreements where the hirer is a body corporate; the monetary threshold applies only to individual hirers.
Section 3(1) was capable of two constructions. Applying first principles, the court saw no reason why an individual hirer would be limited by a monetary threshold while a corporate hirer would not. It concluded Parliament intended to exclude purchases by co-operative societies and registered companies from the Act entirely. Consequently the agreement, endorsed as 'outside the Hire Purchase Act' and involving a corporate hirer, was not governed by the Act.
Whether non-registration under section 5(1) rendered the agreement unenforceable
Registration under section 5(1) is required only for agreements to which the Act applies; in any event, failure to register does not void an otherwise valid contract between the parties.
The court held that logic dictates section 5 applies only to agreements within the Act, so the registration issue did not arise here, and the superior court's contrary finding was set aside. Relying on Walsh v Lonsdale, Clarke v Sondhi and Meralli v Parker, the court added that even non-registration would not void the agreement; it would remain valid and enforceable inter se and the hirer would not be entitled to a refund of sums paid.
Whether the bank breached the agreement or an alleged oral agreement in repossessing and selling the vehicle
The company was in breach and admitted it; the bank properly exercised its contractual right of repossession under clause 7; no oral agreement varied the written agreement and no fraud was proved.
The company admitted default after September 1999 and numerous demand notices were served. Clause 7 provided for repossession on breach and the bank invoked it. The letter of 7th March 2000 did not alter the written agreement and its terms were not complied with by the company. Payments stood at roughly 52% of the hire purchase price, below two-thirds, and fraud was not proved on a balance of probability.
Legal principles established
#- The hire purchase agreements of body corporates are excluded from the operation of the Hire Purchase Act (Cap 507), the monetary threshold applying only to individual hirers
- Section 5(1) of the Hire Purchase Act requiring registration applies only to hire purchase agreements to which the Act applies; parties cannot by their own statement remove from the Act an agreement that is within it
- Failure to register an agreement otherwise within the Act does not render the agreement void; it remains valid and enforceable as a contract between the parties
- An alleged oral agreement cannot supersede a written hire purchase agreement whose terms govern the relationship
- A first appellate court may interfere with findings of fact of the trial court only where they are based on no evidence, on a misapprehension of the evidence, or where the judge acted on wrong principles
Court orders
#- 1.The appeal is dismissed with costs to the respondent
- 2.The superior court's finding that registration of the hire purchase agreement was necessary is set aside
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Milimani Commercial Court, Nairobi
- H.C.C.C. No. 544 of 2000
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Appellate Jurisdiction Act (first appeal against the decision of the superior court)
Relief refused
#Declaration that repossession of the vehicle was illegal and/or unlawful and release of the vehicle
The company admitted default; the bank properly invoked clause 7 of the agreement; no credible evidence of an oral agreement overriding the written agreement and no fraud proved
Refund of Shs.2,527,720 plus interest at bank rate
The company had paid only about 52% of the hire purchase price and failed to prove its case on a balance of probability
Damages and costs of the suit
The suit was dismissed and the appeal had no merit
Costs
The appeal was dismissed with costs to the respondent.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
the intention of Parliament was to exclude purchases made by co-operative societies and registered companies from the operation of the Act, and not merely to remove the monetary threshold for corporations.
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
We find no credible evidence that there was another oral agreement which could override the written agreement, and even if there was, in law it would not supersede the written hire-purchase agreement.
findings of fact made by the trial court may be interfered with if they are based on no evidence at all or on a misapprehension of the evidence or the Judge is shown demonstrably to have acted on wrong principles in reaching the findings.
The upshot is that this appeal has no merit and we order that it be and is hereby dismissed with costs.
Issues in the judgment
#The citation for Walsh v Lonsdale appears in the judgment as '[1982] 21 Ch. C.9', which is internally inconsistent with the well-known dating of that case, but is reproduced here as printed.
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (3)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Nirestein & another v Taga & 3 others (Environment and Land Case E003 of 2024) [2025] KEELC 8105 (KLR)[2025] KEELC 8105 (KLR)20 Nov 2025followed
- Muchanga Investments Ltd v Habenga Holdings Ltd & 9 others [2016] KEELC 1247 (KLR)[2016] KEELC 1247 (KLR)24 Mar 2016applied
- Josphat Munke Ole Mpoe v David Waiganjo Koinange & CFC Stanbic Bank Limited (Cause 190 of 2015) [2015] KEELRC 113 (KLR)[2015] KEELRC 113 (KLR)9 Dec 2015
Cite this brief
#Cite this brief
Caselaw, "Taawawa Supermarket Limited v Fina Bank Ltd [2010] KECA 95 (KLR)", Case Analysis (2010). Civil Appeal No. 118 of 2002. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2010/95/eng@2010-10-22
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.