(Being an appeal from the judgment Hon. C.A. Okumu, (Resident Magistrate/Adjudicator) delivered on 9th August 2024 in Nairobi SCC COMM No. E2926 of 2023)
Background
1. The Appellant instituted proceedings before the Small Claims Court seeking recovery of Kshs. 287,407.77, being the outstanding loan balance as at 10th April 2023, together with interest.
2. The Appellant’s case was that the Respondent was its customer and had obtained a loan facility of Kshs. 500,000. The facility was secured by, inter alia , a chattels mortgage over motor vehicle registration number KBE 232V, including a blank transfer and original logbook.
3. The Appellant contended that the Respondent defaulted in the loan repayment thereby prompting the repossession of the motor vehicle which was subsequently valued and sold by way of public bidding at a forced sale value of Kshs. 200,000, and the proceeds applied towards settling the outstanding debt.
4. The proceeds were however insufficient to extinguish the debt, leaving a balance which formed the subject of the claim.
5. The Respondent filed a statement of defence but did not call any witnesses and did not adduce evidence at the trial.
6. The matter proceeded to hearing where the Appellant called one witness and produced documentary evidence to support its case.
7. The trial court dismissed the Appellant’s claim on the basis that no valuation report was produced before the court to establish the value of the security and the amount recovered from the sale, thereby rendering the court unable to make a definitive finding.
The Appeal
8. Aggrieved by the trial court’s decision, the Appellant filed the instant appeal and listed the following grounds of appeal in the Memorandum of Appeal: -
a) That the Honourable Learned Magistrate/Adjudicator erred in law in failing to consider all the evidence presented by the Appellant as part of its exhibits in court, thereby arriving at a wrong decision not supported by law.
b) That the Honourable Learned Magistrate/Adjudicator erred in law by failing to take into account the evidence filed on record by the Appellant, specifically the valuation report, minutes of the tender committee, memorandum of sale of the subject vehicle and the notification of the sale of the vehicle, thereby denying the Appellant a fair hearing.
c) That the Honourable Learned Magistrate erred in failing to take into account the valuation report undertaken in respect of the subject motor vehicle excluded crucial evidence presented by the Appellant thereby arriving at an unfair decision not supported by the evidence in law.
d) That the Honourable Learned Magistrate consequently erred in law by failing to take into consideration the totality of the evidence adduced on record and the Appellant’s written submissions, thereby arriving at the wrong finding not supported by the evidence on the record and the law.
9. The appeal was canvassed by way of written submissions which I have considered. The Respondent had however not filed any submissions as at the time this judgment was being prepared/written.
Appellant’s Submissions
10. On failure to consider material evidence, the Appellant contended that the trial court erred in finding that no valuation report or evidence of sale had been produced. It was submitted that the Appellant had placed the following documents before the court indicating a valuation report dated 14th September 2022 showing the Market Value of Kshs. 290,000 and Forced Sale Value of Kshs. 200,000:
i) minutes of tender opening showing the process of sale;
ii) a memorandum of sale dated 30th September 2022 confirming sale at Kshs. 200,000; and
iii) bank statements and loan account records evidencing receipt and application of the sale proceeds and the outstanding balance.
11. It was therefore argued that the trial court’s conclusion was contrary to the evidence on record.
12. On burden of proof, the Appellant submitted that it discharged its burden of proof on a balance of probabilities by producing documentary and oral evidence.
13. It was further contended that the Respondent did not adduce any evidence to rebut the Appellant’s case as the Respondent’s defence remained mere allegations that were not supported by evidence.
14. Reliance was placed on several authorities including Kenya Akiba Micro Financing Ltd vs. Ezekiel Chebii & 14 Others [2012] eKLR and Mary Njeri Murigi vs. Peter Macharia & Another [2016] eKLR for the principle that unchallenged evidence remains true and uncontroverted.
15. On the alleged misdirection by the trial court, the Appellant contended that the trial court based its decision on incorrect factual assumptions, including that no valuation or evidence of sale was produced.
16. The Appellant noted that the trial court further erred in stating that the Respondent filed submissions, whereas none were filed.
17. It was submitted that the Appellant’s evidence was not only unchallenged but was corroborated by documentary exhibits. According to the Appellant, the failure by the trial court to consider such evidence amounted to an error of law.
18. It was the Appellant’s case that the evidence clearly demonstrated that the motor vehicle was sold and the proceeds applied, leaving an outstanding balance. The Appellant added that the trial court’s decision was not supported by the evidence and was therefore erroneous.
19. The Appellant urged the Court to allow the appeal, set aside the judgment of the trial court, and substitute it with an order allowing its claim with costs.
Issues for Determination
20. From the grounds of appeal and submissions, the following issues arise for determination:
a) Whether the trial court failed to consider material evidence placed before it.
b) Whether the Appellant discharged its burden of proof on a balance of probabilities.
c) Whether the trial court erred in law and fact in dismissing the Appellant’s claim.
Analysis and Determination
21. As a first appellate court, this Court is obligated to re-evaluate the evidence on record afresh with a view to arriving at its own independent conclusions while bearing in mind the fact that it neither heard nor saw the witnesses testify. (See Selle vs. Associated Motor Boat Co. Ltd & Others [1968] EA 123 . )
22. A perusal of the record reveals that the Appellant produced a valuation report showing a market value of Kshs. 290,000 and forced sale value of Kshs. 200,000). The Appellant also produced minutes of tender, memorandum of sale and bank statements showing application of the proceeds of sale. The trial court nonetheless held that no valuation report or proof of sale had been produced.
23. I find that the trial court’s finding is plainly inconsistent with the record and that the failure to consider documentary exhibits amounts to a misdirection in law.
24. The legal burden of proof is governed by Sections 107–109 of the Evidence Act which provides that: -
“Whoever desires any court to give judgment as to any legal right… dependent on the existence of facts which he asserts must prove that those facts exist.”
25. As I have already stated in this judgment, the Appellant produced the Loan Agreement, evidence of default, repossession and sale documents and account statements the outstanding balance.
26. The Respondent, on the other hand, filed a defence but did not testify or challenge the Appellant’s evidence.
27. In Kenya Akiba Micro Financing Ltd vs. Ezekiel Chebii & 14 Others [2012] eKLR , the Court held that where evidence is not controverted, the same is deemed admitted.
28. Similarly, in Mary Njeri Murigi vs. Peter Macharia & Another [2016] eKLR the court observed that since the evidence of the plaintiff was uncontroverted and therefore remained unchallenged, the court had no reason to disbelieve it.
29. Guided by the decisions in the above cited cases, I find that the Appellant discharged its burden on a balance of probabilities.
30. I further note that the dismissal was premised on alleged absence of valuation report and lack of proof of sale. The record however shows otherwise. I find that this amounts to a factual error and a legal misdirection.
31. In Mbogo vs. Shah [1968] EA 93 , it was held that an appellate court will interfere with the trial court’s decision where the judge misdirected himself in some matter and as a result arrived at a wrong decision.
32. I further note that the Respondent offered no rebuttal evidence and that the trial court therefore erred in rejecting unchallenged, documented evidence. It is my further finding that the trial court’s judgment was not supported by the evidence or the law.
33. I am satisfied that evidence was presented to show that the loan existed, default occurred, security was lawfully repossessed and sold, sale proceeds applied and a balance remained due. The Appellant’s claim before the Small Claims Court was therefore proved on a balance of probabilities.
34. Consequently, I find that the appeal is merited and I therefore allow it in the following terms: -
a) The judgment of the Small Claims Court delivered on 9th August 2024 is hereby set aside.
b) It is substituted with an order allowing the Appellant’s claim for Kshs. 287,407.77.
c) The said sum shall attract interest at court rates from the date of filing suit until payment in full.
d) The Appellant shall have costs of the suit in the lower court and of this appeal.
Dated
Background
1. The Appellant instituted proceedings before the Small Claims Court seeking recovery of Kshs. 287,407.77, being the outstanding loan balance as at 10th April 2023, together with interest.
2. The Appellant’s case was that the Respondent was its customer and had obtained a loan facility of Kshs. 500,000. The facility was secured by, inter alia , a chattels mortgage over motor vehicle registration number KBE 232V, including a blank transfer and original logbook.
3. The Appellant contended that the Respondent defaulted in the loan repayment thereby prompting the repossession of the motor vehicle which was subsequently valued and sold by way of public bidding at a forced sale value of Kshs. 200,000, and the proceeds applied towards settling the outstanding debt.
4. The proceeds were however insufficient to extinguish the debt, leaving a balance which formed the subject of the claim.
5. The Respondent filed a statement of defence but did not call any witnesses and did not adduce evidence at the trial.
6. The matter proceeded to hearing where the Appellant called one witness and produced documentary evidence to support its case.
7. The trial court dismissed the Appellant’s claim on the basis that no valuation report was produced before the court to establish the value of the security and the amount recovered from the sale, thereby rendering the court unable to make a definitive finding.
The Appeal
8. Aggrieved by the trial court’s decision, the Appellant filed the instant appeal and listed the following grounds of appeal in the Memorandum of Appeal: -
a) That the Honourable Learned Magistrate/Adjudicator erred in law in failing to consider all the evidence presented by the Appellant as part of its exhibits in court, thereby arriving at a wrong decision not supported by law.
b) That the Honourable Learned Magistrate/Adjudicator erred in law by failing to take into account the evidence filed on record by the Appellant, specifically the valuation report, minutes of the tender committee, memorandum of sale of the subject vehicle and the notification of the sale of the vehicle, thereby denying the Appellant a fair hearing.
c) That the Honourable Learned Magistrate erred in failing to take into account the valuation report undertaken in respect of the subject motor vehicle excluded crucial evidence presented by the Appellant thereby arriving at an unfair decision not supported by the evidence in law.
d) That the Honourable Learned Magistrate consequently erred in law by failing to take into consideration the totality of the evidence adduced on record and the Appellant’s written submissions, thereby arriving at the wrong finding not supported by the evidence on the record and the law.
9. The appeal was canvassed by way of written submissions which I have considered. The Respondent had however not filed any submissions as at the time this judgment was being prepared/written.
Appellant’s Submissions
10. On failure to consider material evidence, the Appellant contended that the trial court erred in finding that no valuation report or evidence of sale had been produced. It was submitted that the Appellant had placed the following documents before the court indicating a valuation report dated 14th September 2022 showing the Market Value of Kshs. 290,000 and Forced Sale Value of Kshs. 200,000:
i) minutes of tender opening showing the process of sale;
ii) a memorandum of sale dated 30th September 2022 confirming sale at Kshs. 200,000; and
iii) bank statements and loan account records evidencing receipt and application of the sale proceeds and the outstanding balance.
11. It was therefore argued that the trial court’s conclusion was contrary to the evidence on record.
12. On burden of proof, the Appellant submitted that it discharged its burden of proof on a balance of probabilities by producing documentary and oral evidence.
13. It was further contended that the Respondent did not adduce any evidence to rebut the Appellant’s case as the Respondent’s defence remained mere allegations that were not supported by evidence.
14. Reliance was placed on several authorities including Kenya Akiba Micro Financing Ltd vs. Ezekiel Chebii & 14 Others [2012] eKLR and Mary Njeri Murigi vs. Peter Macharia & Another [2016] eKLR for the principle that unchallenged evidence remains true and uncontroverted.
15. On the alleged misdirection by the trial court, the Appellant contended that the trial court based its decision on incorrect factual assumptions, including that no valuation or evidence of sale was produced.
16. The Appellant noted that the trial court further erred in stating that the Respondent filed submissions, whereas none were filed.
17. It was submitted that the Appellant’s evidence was not only unchallenged but was corroborated by documentary exhibits. According to the Appellant, the failure by the trial court to consider such evidence amounted to an error of law.
18. It was the Appellant’s case that the evidence clearly demonstrated that the motor vehicle was sold and the proceeds applied, leaving an outstanding balance. The Appellant added that the trial court’s decision was not supported by the evidence and was therefore erroneous.
19. The Appellant urged the Court to allow the appeal, set aside the judgment of the trial court, and substitute it with an order allowing its claim with costs.
Issues for Determination
20. From the grounds of appeal and submissions, the following issues arise for determination:
a) Whether the trial court failed to consider material evidence placed before it.
b) Whether the Appellant discharged its burden of proof on a balance of probabilities.
c) Whether the trial court erred in law and fact in dismissing the Appellant’s claim.
Analysis and Determination
21. As a first appellate court, this Court is obligated to re-evaluate the evidence on record afresh with a view to arriving at its own independent conclusions while bearing in mind the fact that it neither heard nor saw the witnesses testify. (See Selle vs. Associated Motor Boat Co. Ltd & Others [1968] EA 123 . )
22. A perusal of the record reveals that the Appellant produced a valuation report showing a market value of Kshs. 290,000 and forced sale value of Kshs. 200,000). The Appellant also produced minutes of tender, memorandum of sale and bank statements showing application of the proceeds of sale. The trial court nonetheless held that no valuation report or proof of sale had been produced.
23. I find that the trial court’s finding is plainly inconsistent with the record and that the failure to consider documentary exhibits amounts to a misdirection in law.
24. The legal burden of proof is governed by Sections 107–109 of the Evidence Act which provides that: -
“Whoever desires any court to give judgment as to any legal right… dependent on the existence of facts which he asserts must prove that those facts exist.”
25. As I have already stated in this judgment, the Appellant produced the Loan Agreement, evidence of default, repossession and sale documents and account statements the outstanding balance.
26. The Respondent, on the other hand, filed a defence but did not testify or challenge the Appellant’s evidence.
27. In Kenya Akiba Micro Financing Ltd vs. Ezekiel Chebii & 14 Others [2012] eKLR , the Court held that where evidence is not controverted, the same is deemed admitted.
28. Similarly, in Mary Njeri Murigi vs. Peter Macharia & Another [2016] eKLR the court observed that since the evidence of the plaintiff was uncontroverted and therefore remained unchallenged, the court had no reason to disbelieve it.
29. Guided by the decisions in the above cited cases, I find that the Appellant discharged its burden on a balance of probabilities.
30. I further note that the dismissal was premised on alleged absence of valuation report and lack of proof of sale. The record however shows otherwise. I find that this amounts to a factual error and a legal misdirection.
31. In Mbogo vs. Shah [1968] EA 93 , it was held that an appellate court will interfere with the trial court’s decision where the judge misdirected himself in some matter and as a result arrived at a wrong decision.
32. I further note that the Respondent offered no rebuttal evidence and that the trial court therefore erred in rejecting unchallenged, documented evidence. It is my further finding that the trial court’s judgment was not supported by the evidence or the law.
33. I am satisfied that evidence was presented to show that the loan existed, default occurred, security was lawfully repossessed and sold, sale proceeds applied and a balance remained due. The Appellant’s claim before the Small Claims Court was therefore proved on a balance of probabilities.
34. Consequently, I find that the appeal is merited and I therefore allow it in the following terms: -
a) The judgment of the Small Claims Court delivered on 9th August 2024 is hereby set aside.
b) It is substituted with an order allowing the Appellant’s claim for Kshs. 287,407.77.
c) The said sum shall attract interest at court rates from the date of filing suit until payment in full.
d) The Appellant shall have costs of the suit in the lower court and of this appeal.
Dated