1. Through an application dated 9 th April, 2025, the Applicant/2 nd Defendant seeks orders thus;
1) Spent.
2) That this honourable court be pleased to order that the 2 nd Defendant be removed from this suit for misjoinder.
3) Costs of this application be provided for.
2. The substratum of the application is that the 2 nd Defendant entered into a Higher Purchase agreement with the 1 st Defendant for purchase of a Motor Vehicle Reg. No. KDK 683B (Accident vehicle) which was sold on 10 th November, 2022.
3. The 2 nd Defendant also entered into a hire purchase agreement with the 1 st Defendant for purchase of motor vehicle Reg. No. KDD 902F of which the 1 st Defendant had the subject motor vehicle insured.
4. Following an accident that involved the Accident Vehicle the Plaintiff/ Respondent filed a claim to avoid the policy of insurance of the Accident Vehicle where the Applicant is enjoined as a party.
5. The instant application is hence brought on the basis that the matter be taken up by the 1 st Defendant so that the insurance settles the claim, and, the 2 nd Defendant/Applicant be removed from the suit.
6. The application is supported by an affidavit deposed by Nicholus Ngoli Inyangala, the Operations Manager of the 2 nd Defendant who deposes that the 1 st Defendant has been in possession of Motor Vehicle Reg. No. KDK 683B and has insured it and at the time of the accident, on 25 th August, 2023, the 1 st Defendant had not completed payment of the full purchase price. Therefore, the 2 nd Defendant’s only interest is the balance of the purchase price of the vehicle in order to transfer ownership documents to the 1 st Defendant.
7. That at the time of the accident the 1 st Defendant had both beneficial ownership and possession of the motor vehicle hence any suit arising subject to the motor vehicle should be taken up by the 1 st Defendant. And, if the suit is sustained against the 2 nd Defendant, it will be undergoing loss.
8. In response the Respondent/Plaintiff filed grounds of opposition urging that the 2 nd Defendant retained an insurable interest in the motor vehicle Reg. No. KDK 683B by virtue of the unpaid balance of the purchase price as the Defendants are jointly insured. That it is in the interest of justice for the court to resolve issues of the Plaintiff’s liability to insure the Defendants in one trial.
9. The 1 st Defendant did not participate in the application.
10. The application was canvassed through written submissions. The Applicant/2 nd Defendant urges that grounds of opposition filed only address points of law but do not respond to the issues raised in the supporting affidavit which means that the Respondent have no claim against the Applicant. Reliance in that regard is placed on the case of Kennedy Otieno Odiyo & 12 Others v Kenya Electricity Generating Company Limited [2010] eKLR; Daniel Kibet Mutai & 9 Others v Attorney General [2019] eKLR and ARJ Capital Limited v Njeru & 3 Others (ELC E041 of 2022) [2024] KEELC 323 (KLR).
11. That the 2 nd Defendant has not admitted that it has an insurable interest but it had interest in the balance of purchase price from the insured, 1 st Defendant which renders the application unchallenged.
12. That the 2 nd Defendant has been misjoined in the suit because for it only acted as a financer and is only holding the log book as security to ensure full payment. Reliance is placed on Order 1 Rule 3 of the Civil Procedure Rules, 2010. That Section 8 of the Traffic Act contemplates existence of actual possession or beneficial ownership of a motor vehicle which can exist independent of registration. Reliance is placed on the case of Securicor Kenya Limited v Kyumba Holdings Limited [2005] 1 KLR 743 where it was held that;
“It was apparent, therefore, that though the Appellant remained the registered owner of the motor vehicle its actual possession had passed to a third party. In view of this finding, the trial judge cannot be right under Section 8 of the Traffic Act when she states that the true owner of the motor vehicle was the Appellant.”
13. And, in Nancy Ayemba Ngaira v Abdi Ali MSA HCCA No. 107 of 2008 (2010) eKLR where it was held that;
“There is no doubt that the registration certificate obtained from the Registrar of motor vehicles will show the name of the registered owner of a motor vehicle. But the indication thus shown on the certificate is not final proof that the sole owner is the person whose name is shown. Section 8 of the Traffic Act is fully cognizant of the fact that a different person, or different other persons, may be the de facto owners of the motor vehicle – and so the Act has an opening for any evidence in proof of such differing ownership to be given. And in judicial practice, concepts have arisen to describe such alternative forms of ownership: actual ownership; beneficial ownership; possessory ownership. A person who enjoys any of such other categories of ownership, may for practical purposes, be much more relevant than the person whose name appears in the certificate of registration; and in the instant case at the trial level, it had been pleaded that there was such alternative kind of ownership. Indeed, the evidence adduced in the form of the Police Abstract, showed on a balance of probabilities, that 1st defendant was one of the owners of the matatu in question.”
14. That Clause 6 of the Hire Purchase Agreement provides that in event of any liability or claim arising during the subsistence of their agreement in respect of the subject motor vehicle, the hirer/purchaser shall be 100% accountable.
15. Finally, reliance is placed on the case of Apex International Limited & Anglo-Leasing & Finance International Limited v Kenya Anti-Corruption Commission [2012] eKLR where Emukule J quoted the Supreme Court of Nigeria case of Goodwill and Trust Investment Ltd & Another v Will and Bus Ltd where it was held that;
“It is trite law that to be competent and have jurisdiction over a matter, proper parties must be identified before the action can succeed, the parties to it must be shown to be proper parties whom rights and obligations arising from the cause of action attach. The question of proper parties is a very important issue which would affect the jurisdiction of the suit in limine. When proper parties are not before the court the court lacks jurisdiction to hear the suit, and, “where the court purports to exercise jurisdiction which it does not have, the proceedings before it, and its judgment will amount to a nullity no matter how well reason”.
16. The Plaintiff/Respondent submits that under Order 1 Rule 3 of the Civil Procedure Rules all persons may be joined as Defendants against whom any right of relief is alleged to exist. That the Private Motor Insurance Policy Schedule notes that the Defendants are insured hence a basis to maintain the suit against the 2nd Defendant. That the Hire Purchase Agreement at paragraph 5 states that the motor vehicle remains the property of the 2 nd Defendant until all payments are made.
17. That the Plaintiff is apprehensive that the 2 nd Defendant may lodge a claim for compensation given that it is that owner of the motor vehicle considering that the driver of the motor vehicle deliberately hit pedestrians and damaged the motor vehicle.
18. I have considered the application, the supporting affidavit and annexures thereto and grounds of opposition, and rival submissions.
19. What can be discerned from the facts presented is that the Applicant/2 nd Defendant was a financier of the 1 st Defendant in the matter who retained registered/legal ownership of the Accident Vehicle (KDK 638B) as the 1 st Defendant had not completed payment for the same. Therefore, the claim against the Applicant was brought because he is still the registered owner of the motor vehicle.
20. Order 1 Rule 3 of the Civil Procedure Rules, 2010 provides;
All persons may be joined as defendants against whom any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist, whether jointly, severally or in the alternative, where, if separate suits were brought against such persons any common question of law or fact would arise.
21. Joinder of parties in a matter depends on what interest the Party has in that particular matter so that there is no conflicting outcome. The 1 st Defendant and the Applicant entered into a Hire Purchase Agreement which is dated 10 th November, 2022. Clause 5 states that;
“The said motor vehicle shall remain the property of the owners/vendors until all payments in full of aforesaid amount of this agreement shall have been made to the owner by the hirer/purchaser.”
22. Clause 6 provides that;
“In event of any liability, claim, arising during the subsistency of this agreement in respect of the said motor vehicle, the Hirer/Purchaser shall be 100% liable and accountable and do hereby guarantee the owners/vendors that this condition shall be faithfully implied with in the event of any eventuality. This covenant shall be pleased as defence to any claim against owners/vendors may be required to answer.”
23. Looking at the Private Motor Insurance Policy Schedule, the policy number was 22/05/NIA/COMP/PC/0157 and the Insured were Calvin Owiti/Darson Trading Ltd, the 1 st and 2 nd Defendants respectively.
24. The Plaintiff in the matter, the insurer of the Defendants seeks to avoid the insurance policy issued, the argument put forth being that it was not for the benefit of the Defendants (Applicant and 1 st Defendant) and any other person, in respect of the accident vehicle.
25. Clearly, it is the 1 st Defendant who is being accused of not using the accident motor vehicle for the purpose for which it was insured. It is well demonstrated by the 2 nd Defendant/ Applicant that their only interest in the matter is to have their outstanding balance paid by the 1 st Defendant. They will simply be protecting their interest in the Hire Purchase Agreement as a financier. The relationship is between the 2 nd Defendant and 1 st Defendant.
26. The Respondent speculates that 2 nd Defendant may bring a claim against them; an order cannot be granted to protect what has not occurred.
27. In the interest of justice, it will not be just to have the case against the 2 nd Defendant proceed. For the 2 nd Defendant/Applicant only holds security interest but not insurable interest. He can therefore not claim against the Respondent as speculated.
28. For reasons given, the application has merit. Therefore, I allow the application. The Applicant/2 nd Defendant shall be removed from the suit for misjoinder.
29. The Respondent is condemned to pay Costs, to be taxed.
HCCC E002 OF 2024 (RUL.) Page 2 of 2
1) Spent.
2) That this honourable court be pleased to order that the 2 nd Defendant be removed from this suit for misjoinder.
3) Costs of this application be provided for.
2. The substratum of the application is that the 2 nd Defendant entered into a Higher Purchase agreement with the 1 st Defendant for purchase of a Motor Vehicle Reg. No. KDK 683B (Accident vehicle) which was sold on 10 th November, 2022.
3. The 2 nd Defendant also entered into a hire purchase agreement with the 1 st Defendant for purchase of motor vehicle Reg. No. KDD 902F of which the 1 st Defendant had the subject motor vehicle insured.
4. Following an accident that involved the Accident Vehicle the Plaintiff/ Respondent filed a claim to avoid the policy of insurance of the Accident Vehicle where the Applicant is enjoined as a party.
5. The instant application is hence brought on the basis that the matter be taken up by the 1 st Defendant so that the insurance settles the claim, and, the 2 nd Defendant/Applicant be removed from the suit.
6. The application is supported by an affidavit deposed by Nicholus Ngoli Inyangala, the Operations Manager of the 2 nd Defendant who deposes that the 1 st Defendant has been in possession of Motor Vehicle Reg. No. KDK 683B and has insured it and at the time of the accident, on 25 th August, 2023, the 1 st Defendant had not completed payment of the full purchase price. Therefore, the 2 nd Defendant’s only interest is the balance of the purchase price of the vehicle in order to transfer ownership documents to the 1 st Defendant.
7. That at the time of the accident the 1 st Defendant had both beneficial ownership and possession of the motor vehicle hence any suit arising subject to the motor vehicle should be taken up by the 1 st Defendant. And, if the suit is sustained against the 2 nd Defendant, it will be undergoing loss.
8. In response the Respondent/Plaintiff filed grounds of opposition urging that the 2 nd Defendant retained an insurable interest in the motor vehicle Reg. No. KDK 683B by virtue of the unpaid balance of the purchase price as the Defendants are jointly insured. That it is in the interest of justice for the court to resolve issues of the Plaintiff’s liability to insure the Defendants in one trial.
9. The 1 st Defendant did not participate in the application.
10. The application was canvassed through written submissions. The Applicant/2 nd Defendant urges that grounds of opposition filed only address points of law but do not respond to the issues raised in the supporting affidavit which means that the Respondent have no claim against the Applicant. Reliance in that regard is placed on the case of Kennedy Otieno Odiyo & 12 Others v Kenya Electricity Generating Company Limited [2010] eKLR; Daniel Kibet Mutai & 9 Others v Attorney General [2019] eKLR and ARJ Capital Limited v Njeru & 3 Others (ELC E041 of 2022) [2024] KEELC 323 (KLR).
11. That the 2 nd Defendant has not admitted that it has an insurable interest but it had interest in the balance of purchase price from the insured, 1 st Defendant which renders the application unchallenged.
12. That the 2 nd Defendant has been misjoined in the suit because for it only acted as a financer and is only holding the log book as security to ensure full payment. Reliance is placed on Order 1 Rule 3 of the Civil Procedure Rules, 2010. That Section 8 of the Traffic Act contemplates existence of actual possession or beneficial ownership of a motor vehicle which can exist independent of registration. Reliance is placed on the case of Securicor Kenya Limited v Kyumba Holdings Limited [2005] 1 KLR 743 where it was held that;
“It was apparent, therefore, that though the Appellant remained the registered owner of the motor vehicle its actual possession had passed to a third party. In view of this finding, the trial judge cannot be right under Section 8 of the Traffic Act when she states that the true owner of the motor vehicle was the Appellant.”
13. And, in Nancy Ayemba Ngaira v Abdi Ali MSA HCCA No. 107 of 2008 (2010) eKLR where it was held that;
“There is no doubt that the registration certificate obtained from the Registrar of motor vehicles will show the name of the registered owner of a motor vehicle. But the indication thus shown on the certificate is not final proof that the sole owner is the person whose name is shown. Section 8 of the Traffic Act is fully cognizant of the fact that a different person, or different other persons, may be the de facto owners of the motor vehicle – and so the Act has an opening for any evidence in proof of such differing ownership to be given. And in judicial practice, concepts have arisen to describe such alternative forms of ownership: actual ownership; beneficial ownership; possessory ownership. A person who enjoys any of such other categories of ownership, may for practical purposes, be much more relevant than the person whose name appears in the certificate of registration; and in the instant case at the trial level, it had been pleaded that there was such alternative kind of ownership. Indeed, the evidence adduced in the form of the Police Abstract, showed on a balance of probabilities, that 1st defendant was one of the owners of the matatu in question.”
14. That Clause 6 of the Hire Purchase Agreement provides that in event of any liability or claim arising during the subsistence of their agreement in respect of the subject motor vehicle, the hirer/purchaser shall be 100% accountable.
15. Finally, reliance is placed on the case of Apex International Limited & Anglo-Leasing & Finance International Limited v Kenya Anti-Corruption Commission [2012] eKLR where Emukule J quoted the Supreme Court of Nigeria case of Goodwill and Trust Investment Ltd & Another v Will and Bus Ltd where it was held that;
“It is trite law that to be competent and have jurisdiction over a matter, proper parties must be identified before the action can succeed, the parties to it must be shown to be proper parties whom rights and obligations arising from the cause of action attach. The question of proper parties is a very important issue which would affect the jurisdiction of the suit in limine. When proper parties are not before the court the court lacks jurisdiction to hear the suit, and, “where the court purports to exercise jurisdiction which it does not have, the proceedings before it, and its judgment will amount to a nullity no matter how well reason”.
16. The Plaintiff/Respondent submits that under Order 1 Rule 3 of the Civil Procedure Rules all persons may be joined as Defendants against whom any right of relief is alleged to exist. That the Private Motor Insurance Policy Schedule notes that the Defendants are insured hence a basis to maintain the suit against the 2nd Defendant. That the Hire Purchase Agreement at paragraph 5 states that the motor vehicle remains the property of the 2 nd Defendant until all payments are made.
17. That the Plaintiff is apprehensive that the 2 nd Defendant may lodge a claim for compensation given that it is that owner of the motor vehicle considering that the driver of the motor vehicle deliberately hit pedestrians and damaged the motor vehicle.
18. I have considered the application, the supporting affidavit and annexures thereto and grounds of opposition, and rival submissions.
19. What can be discerned from the facts presented is that the Applicant/2 nd Defendant was a financier of the 1 st Defendant in the matter who retained registered/legal ownership of the Accident Vehicle (KDK 638B) as the 1 st Defendant had not completed payment for the same. Therefore, the claim against the Applicant was brought because he is still the registered owner of the motor vehicle.
20. Order 1 Rule 3 of the Civil Procedure Rules, 2010 provides;
All persons may be joined as defendants against whom any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist, whether jointly, severally or in the alternative, where, if separate suits were brought against such persons any common question of law or fact would arise.
21. Joinder of parties in a matter depends on what interest the Party has in that particular matter so that there is no conflicting outcome. The 1 st Defendant and the Applicant entered into a Hire Purchase Agreement which is dated 10 th November, 2022. Clause 5 states that;
“The said motor vehicle shall remain the property of the owners/vendors until all payments in full of aforesaid amount of this agreement shall have been made to the owner by the hirer/purchaser.”
22. Clause 6 provides that;
“In event of any liability, claim, arising during the subsistency of this agreement in respect of the said motor vehicle, the Hirer/Purchaser shall be 100% liable and accountable and do hereby guarantee the owners/vendors that this condition shall be faithfully implied with in the event of any eventuality. This covenant shall be pleased as defence to any claim against owners/vendors may be required to answer.”
23. Looking at the Private Motor Insurance Policy Schedule, the policy number was 22/05/NIA/COMP/PC/0157 and the Insured were Calvin Owiti/Darson Trading Ltd, the 1 st and 2 nd Defendants respectively.
24. The Plaintiff in the matter, the insurer of the Defendants seeks to avoid the insurance policy issued, the argument put forth being that it was not for the benefit of the Defendants (Applicant and 1 st Defendant) and any other person, in respect of the accident vehicle.
25. Clearly, it is the 1 st Defendant who is being accused of not using the accident motor vehicle for the purpose for which it was insured. It is well demonstrated by the 2 nd Defendant/ Applicant that their only interest in the matter is to have their outstanding balance paid by the 1 st Defendant. They will simply be protecting their interest in the Hire Purchase Agreement as a financier. The relationship is between the 2 nd Defendant and 1 st Defendant.
26. The Respondent speculates that 2 nd Defendant may bring a claim against them; an order cannot be granted to protect what has not occurred.
27. In the interest of justice, it will not be just to have the case against the 2 nd Defendant proceed. For the 2 nd Defendant/Applicant only holds security interest but not insurable interest. He can therefore not claim against the Respondent as speculated.
28. For reasons given, the application has merit. Therefore, I allow the application. The Applicant/2 nd Defendant shall be removed from the suit for misjoinder.
29. The Respondent is condemned to pay Costs, to be taxed.
HCCC E002 OF 2024 (RUL.) Page 2 of 2