Eunice Awuor Barrack v Kifedha Limited & 1 other

3. The appellant complained before the lower court that the said attachment was wrongful and in breach of the loan contract; and that as a result thereof, she suffered loss, damage and embarrassment. Accordingly, she prayed for the following reliefs before the lower court: (a) A declaration that the respondents’ actions were illegal and deprived the plaintiff her proprietary rights. (b) An order compelling the respondents to release Motor Vehicle Registration No. KCZ 353G, Mazda Bongo to her. (c) General damages. (d) Costs of this suit. (e) Any other relief that the Court may be pleased to grant in the circumstances. 4. The 1st respondent denied the appellants allegations vide his Statement of Defence. In particular, it denied that the appellant made some remittances of Kshs. 36,667/= on various dates between 30th May 2022. It asserted that the attachment of the suit motor vehicle was preceded by default and breach of the loan agreement by the appellant. Further and/or in the alternative and without prejudice to the foregoing, the 1st respondent averred that if distress, loss, damage or embarrassment was suffered by the appellant then she is wholly to blame therefor for having breached the loan agreement in the first place. Accordingly, the 1st respondent asked the lower court to dismiss the suit with costs. 5. Upon hearing the parties, the learned magistrate dismissed the appellant’s case with costs in a judgment delivered on 17th September 2024. In his finding, the appellant had approached the court with unclean hands in so far as she was in default of the loan agreement. 6. Being dissatisfied and aggrieved by the decision of the lower court, the appellant filed the instant appeal on the following grounds: 7. (a) That the learned magistrate erred in law and fact by failing to consider and note that the statutory notice of proclamation was never issued to the appellant in time. (b) That the learned magistrate failed to note and consider that the appellant had been faithfully paying the monthly payments of Kshs. 36,667/= from the time the loan was advanced until sometime on or about 13th January 2023 when she encountered some financial constraints, of which the 1st respondent was notified. (c) That the learned magistrate erred in law and fact by failing to consider that the appellant, having been notified of the arrears required by the 1st respondent in the sum of Kshs. 73,998/=, made commitments to pay; and therefore the learned magistrate arrived at a wrong conclusion by failing to note the same. (d) That the learned magistrate failed to consider that the attached motor vehicle was the sole source of income for the appellant. (e) That the learned magistrate misdirected himself on the applicable law and principles in his evaluation of the evidence adduced and thereby arrived at a wrong decision in his judgment. In the premises, the appellant prayed that the appeal be allowed and that the judgment of the lower court be set aside. The appellant also prayed that the costs of the appeal and of the lower court suit be awarded to her. https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/6712/eng@2026-04-24 2

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8. The appeal was canvassed by way of written submissions, pursuant to the directions given herein on 28th January 2025. The appellant relied on her written submissions dated 10th April 2025. She conceded that she had a contract with the 1st respondent whereby she was lent Kshs. 400,000/= only at an interest rate of 5% per month; and that by way of collateral she offered her motor vehicle Registration No. KCZ 353G Mazda Bongo as security. 9. The appellant also conceded that the 1st respondent upon learning that the appellant was not servicing her loan as agreed, sent a text message reminding her of the overdue instalments. She admitted that she was in default that upon receiving notice in that regard from the 1st respondent, she immediately paid some money amounting to Kshs. 13,998/= as a commitment and indication that she was willing to pay the overdue sums. She submitted that the 1st respondent received the money and never gave any indication of its intention to attach the suit motor vehicle. 10. The appellant was aggrieved that, upon the appellant's commitment as signified by the immediate payment of Kshs. 13,998/=, the 1st respondent proceeded to instruct the 2nd respondent to attach the suit motor vehicle. She further complained that the 2nd respondent never followed due diligence but pounced on the appellant's driver and confiscated the said motor vehicle without any proclamation. She submitted that, though she had defaulted, she had the intention of clearing the loan advanced to her; and added that upon attachment she paid the 1st respondent Kshs. 100,000/= in reduction of the said loan. She explained that failure on her part to service the loan as agreed was not intentional; but due to the circumstances then prevailing as well as inexplicable amounts loaded on her account by the 1st respondent by way of interest. 11. In the submission of the appellant, the respondents ought to have given her time to renegotiate terms and regularize her account before seizing the collateral. She contended that the relationship between her and the 1st respondent had hitherto been cordial and that it was a breach of trust for the respondents to ambush her by prematurely attaching the suit motor vehicle. She therefore urged the Court to allow her appeal and grant the orders sought, noting that the 2nd respondent opted not to defend the lower court suit or this appeal. 12. The 1st respondent relied on its written submissions dated 21st March 2025 and pointed out that the appellant voluntarily entered into a loan agreement with it on 23rd April 2022; and that the loan amount of Kshs. 400,000/= was duly disbursed to the appellant on 30th April 2022. The collateral to secure the loan was motor vehicle registration number KCZ 353G. The respondent submitted that, after receiving the loan, the appellant only made partial repayments thereby accumulating arrears over several months. 13. The 1st respondent contended that, as the wronged party, it was within its right to repossess the suit motor vehicle to recover the balance of the loan as well as the unpaid arrears. In the 1st respondent’s view, the trial court agreed as much and held that the appellant was in breach of the loan agreement. On the basis of the foregoing, the 1st respondent proposed a single issue for determination, namely, whether motor vehicle registration number KCZ 353G was lawfully repossessed by the 1st respondent through its agent, the 2nd respondent. 14. This being a first appeal, it is the duty of the Court to re-evaluate the evidence adduced before the lower court with a view of coming to its own findings and conclusions thereon; while giving due consideration for the fact that it did not have the advantage of seeing or hearing the witnesses. This https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/6712/eng@2026-04-24 3

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is in line with Selle & Another vs. Associated Motor Boat Co. Ltd & Others [1968] EA 123 wherein it was held that: “ ...this court is not bound necessarily to accept the findings of fact by the court below. An appeal to this court ... is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect..." 15. I have given careful consideration to the evidence placed before the lower court in the light of the Grounds of Appeal filed herein, as well as the written submissions filed herein by learned counsel. The appellant testified before the lower court on 3rd July 2024. She adopted her witness statement dated 7th March 2023. It was her evidence that she approached the 1st respondent for a loan and was granted a loan of Kshs. 400,000/= and offered her car Registration No. KCZ 353G Mazda Bongo as security for the loan. 16. The appellant conceded that, although she paid some of the instalments when due, she fell into arrears afterwards. She further conceded that the 1st respondent served her with a notice of arrears dated 13th January 2023 of about Kshs. 73,999 and that she managed to pay only Kshs. 13,998/=. A week later, the 1st respondent sent the 2nd respondent to seize the motor vehicle which she used to generate income; and although she thereafter paid Kshs. 100,000/= to the 1st respondent, the motor vehicle was not released. She consequently filed the lower court suit for, inter alia, an order compelling the respondents to release the suit motor vehicle. The appellant produced several documents in support of her case. 17. The respondents relied on the testimony of Peter Mwangi, the 1st respondent’s recovery manager. He similarly adopted his witness statement dated 13th May 2024 and confirmed that he appellant was given a loan by the 1st respondent which she did not repay as agreed. DW1 further stated that the appellant was duly served with notice that her account was in arrears; and that she paid Kshs. 13,998 on 13th January 2024 and Kshs. 100,000/= on 17th April 2024, by which time the arrears stood at Kshs. 547,258 excluding interest and the auctioneer’s fees; among other charges. DW1 posited that the 1st respondent had the right to sell the motor vehicle to recover the sums due from the appellant. 18. From the evidence presented before the lower court, there was no dispute that there was a binding contract between the appellant and the respondent by which she was granted a loan of Kshs. 400,000/ =. She voluntarily offered her motor vehicle Registration No. KCZ 353G as security. That she failed to service the loan as per the agreed terms was also not in dispute. The appellant was however of the posturing that the attachment was either unwarranted or premature given the relationship and level of trust between the parties. In the circumstances, the issues for determination are: (a) The legality of the attachment and intended sale of the appellant’s motor vehicle. (b) What orders ought to be made on costs. A. On the legality of the repossession and intended sale of the appellant’s Motor Vehicle Registration No. KBU 286K: 19. Needless to say that it is the contractual documents that determine the terms of engagement between the parties; and that the Court can do no more than to interpret the said terms to ascertain the expressed intention of the parties when they made the contract, with a view of giving it effect. In the persuasive https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/6712/eng@2026-04-24 4

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case of RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (UK Production) [2010] UKSC 14, these principles were discussed as follows: “ The general principles are not in doubt. Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations.” 20. I have therefore looked at the agreement for its full tenor and effect. It is notable that the Contract consisted of the Loan Application Form, the Terms and Conditions, the Statutory Declaration and the Endorsement Letter. From a careful perusal thereof, it is manifest that the repayments were to be effected by way of monthly instalments on a specific date of the month; failing which the situation would be treated as an act of default. This was provided for in Clause 2 of the Terms and Conditions of the loan. It states: Default be deemed to have occurred if the borrower fails to remit monthly installments on their due date. 21. It was also a term of the loan agreement that in the event of default, the 1st respondent would be at liberty to seize and sell the security. This was provided for in Clause 1 of the Terms and Conditions of the loan agreement as follows: “ The borrower has provided the collateral described above specifically to secure the loan and in the event of default, the Lender will exercise its right to realize the collateral and recover any unpaid portion of the loan plus all Costs…” 22. There is no doubt therefore that an act of default occurred when the appellant failed to remit a number of the instalments when due. An act of default activated penalties and other charges which were expressly provided for in Clause 7 of the Terms and Conditions as follows: “ Interest on outstanding dues of 0.3% shall be charged on an unpaid installment amount from the fourth day of lateness in payment of the due installment, on a daily basis until full payment of the amount due…” 23. Therefore, the learned magistrate cannot be faulted for holding that the appellant was in default. Having found that the appellant was in default, there can be no denying, in the circumstances, the 1st respondent’s right to attachment and sale of the suit motor vehicle had crystallized. The submissions of the appellant about trust and business relationship between her and the 1st respondent and therefore her expectation for leniency are all irrelevant in the face of the explicit terms and conditions of the loan agreement. 24. In Fidelity Commercial Bank Limited v Kenya Grange Vehicle Industries Limited [2017] eKLR the Court held: “ …where the intention of the parties has in fact been reduced to writing, under the so called parole evidence rule, it is generally not permissible to adduce extrinsic evidence, whether oral or written, either to show the intention, or to contradict, vary or add to the terms of the document, including implied terms. Courts adopt the objective theory of contract interpretation, and profess to have the overriding aim of giving effect to the expressed https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/6712/eng@2026-04-24 5

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intentions of the parties when construing a contract. This is what sometimes is called the principle of four corners of an instrument, which insists that a document’s meaning should be derived from the document itself, without reference to anything outside of the document (extrinsic evidence), such as the circumstances surrounding its writing or the history of the party or parties signing it…” 25. Moreover, an enduring principle is that parties to arm’s length contracts are bound by the terms of their bargains; and the Court cannot interfere unless valid cause be shown for such interference. (see National Bank of Kenya Ltd vs. Pipeplastic Samkolit (K) Ltd & Another [2002] 2 EA 495). I am therefore in agreement with the position taken in Jitegemee Credit Scheme v Naomi Wanjiru Njoroge [2020] eKLR where the court held: “ From these terms of the contract and the Respondent's admission of indebtedness, it cannot be logically and reasonably said that the attachment ofmotor vehicle ofKAT 035C was unlawful in the circumstances. The Appellant exercised its legalright ofattachment as contracted with the Respondent in the contract and specifically asper Clause 9 ofthe said contract. The Court cannot rewrite the terms of the Contract by parties, they are duly bound by terms of the Contract, voluntarily entered into and the contract was duly executed byparties as the individual Loan agreement confirms. The said contract was duly executed by parties and validity of the contract was not raised as depicted by pleadings and proceedings on record. 26. In the light of the foregoing, it is my finding that the learned magistrate came to the correct conclusion in finding that the attachment of the appellant’s motor vehicle by the respondents was perfectly lawful. Therefore, the appeal is for dismissal. B. What orders ought to be made on costs? 27. The proviso to Section 27(1) of the Civil Procedure Act, Chapter 21 of the Laws of Kenya is explicit that costs follow the event. Nevertheless, it is also trite that costs are awardable at the discretion of the Court. In Jasbir Singh Rai & 3 others v Tarlochan Singh Rai & 4 others [2014] eKLR the Supreme Court set out the factors that a court must consider when exercising its discretion to either award or deny costs as follows: “ (14) So the basic rule on attribution of costs is: costs follow the event. But it is well recognized that this principle is not to be used to penalize the losing party; rather, it is for compensating the successful party for the trouble taken in prosecuting or defending the suit. In Justice Kuloba’s words [Judicial Hints on Civil Procedure, at p.94]: “[T]he object of ordering a party to pay costs is to reimburse the successful party for amounts expended on the case. It must not be made merely as a penal measure…Costs are a means by which a successful litigant is recouped for expenses to which he has been put in fighting an action. … (22) Although there is eminent good sense in the basic rule of costs – that costs follow the event – it is not an invariable rule and, indeed, the ultimate factor on award or non-award of costs is the judicial discretion. It follows, therefore, that costs do not, in law, constitute an unchanging consequence of legal https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/6712/eng@2026-04-24 6

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proceedings – a position well illustrated by the considered opinions of this Court in other cases. The relevant question in this particular matter must be, whether or not the circumstances merit an award of costs to the applicant…” 28. Therefore, while the law gives the court the discretion to award costs or not and to what extent, this Court must evaluate whether the particular circumstances of this case justify an award of costs. Having given due consideration to the circumstances of each party as disclosed by the evidence presented before the lower court, it is hereby ordered that each party shall bear own costs of this appeal as well as costs of the lower court matter. 29. In the result, the appeal fails and is hereby dismissed with an order that each party shall bear their own costs of this appeal as well as costs of the lower court suit. It is so ordered. DATED, SIGNED AND DELIVERED VIRTUALLY THIS 24TH DAY OF APRIL, 2026 ........................... OLGA SEWE JUDGE https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/6712/eng@2026-04-24 7

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