1. On 16th September 2023, the appellant and the respondent entered into what the appellant describes as an asset finance agreement. Under the agreement, the appellant provided Kes. 446,250/-, while the respondent contributed Kes. 50,000/- towards the purchase of a tricycle rickshaw (commonly referred to in Kenya as a tuk-tuk) with registration number KTWD 674A. The tuk-tuk was registered in the appellant's name. A term of the agreement was that the rickshaw would be transferred to the claimant upon full payment.
2. The agreement provided that the respondent would pay Kes. 7,027/- over 156 months, from 29th September 2023, to 16th September 2026. The agreed interest was 1.39% per month on a reducing-balance basis. The rickshaw was released to the respondent upon the execution of the contract.
3. The respondent made payments (according to him) amounting to Kes. 549,246/- (or Kes 479,609/-, according to the appellant). The payments were made with difficulty, as the respondent defaulted on some occasions. As a result of the default, the appellant purported to exercise what it considered its right under the “Asset Finance Agreement” and repossessed the rickshaw, selling it to a third party for Kes. 413,400/-. The sale of the rickshaw triggered the claim filed in the Small Claims Court on 2nd July 2025. The respondent's claim was for Kes 549,246/-, or, alternatively, the return of the tuk-tuk in the state it was in before repossession, compensation for the inconvenience caused by the loss of the asset, and costs.
4. The appellant opposed the claim. It contended that the respondent had paid only Kes 479,609/-. It averred that, following the sale of the rickshaw, the respondent still owed Kes 64,420/-, which it sought in a counterclaim.
5. After hearing the parties, the court below delivered judgment on 16th September, 2025. It found that the agreement between the parties was a hire-purchase agreement. Further, because the respondent had paid over 2/3 of the value of the rickshaw, the appellant could not purport to sell it to a third party without first seeking the leave of the court, as required by Section 15(1) of the Hire Purchase Act and Section 20 of the Consumer Protection Act. The court was emphatic that the repossession and sale of the tuk-tuk were contrary to the law and therefore void ab initio. It ordered that the respondent be refunded Kes 413,400/-, being the alleged resale price of the tuk-tuk.
6. The said decision aggrieved the appellant, who filed the instant appeal. The appeal is based on 6 grounds of appeal, to wit:
1. That the learned Adjudicator erred in law by mischaracterizing the agreement between the appellant and respondent as a hire purchase agreement.
2. That the learned Adjudicator erred in law by misapplying/wrongly relying on Section 15 of the Hire Purchase Act to declare the repossession and subsequent sale a nullity, hence proceeding to dismiss the counterclaim by reason that it was built on an illegality.
3. That the learned Adjudicator erred in law by rewriting the terms of a contract voluntarily entered into by the parties.
4. That the learned Adjudicator erred in law in finding that the Respondent had proved his case on a balance of probability.
5. That the learned Adjudicator applied the wrong and inaccurate principles and/or considered erroneous, irrelevant and/or extraneous factors in interpreting the terms of the contract between the parties.
6. That the learned Trial Adjudicator grossly misdirected himself in treating the evidence and submissions before him superficially and consequently came to a wrong conclusion on the same.
7. The appellant seeks to have the appeal allowed, for the judgment of the court below to be discharged and set aside in its entirety and for costs to be awarded to it.
8. The appeal was canvassed by way of written submissions. I will give a précis of each party’s submissions below.
9. The submissions of the appellant are dated 3rd March 2026. In the said submissions, counsel of the appellant, Messrs. Munyaga Githaiga Advocates LLP, identified issues for determination as being:
i) Whether the agreement between the parties was a hire purchase agreement,
ii) Whether repossession was justified; and
iii) Who should bear the cost of the appeal?
10. On the first issue, counsel contended that the agreement was governed by the Movable Property Security Right Act, 2017 and not the Hire Purchase Act. The basis for this contention was that the appellant never owned the tuk-tuk at any point. Further, the contract itself suggested that the seller was a separate entity from the appellant. It was contended that the court rewrote the parties' agreement. The appellant’s counsel contended that it was impermissible for the Court to do that. Support for the said contention was sought from the case of South Nyanza Sugar Co. Ltd v Leonard O. Arera [2020] KEHC 4648 (KLR).
11. The appellant argued that there was a default in the settlement of the loan, which entitled the appellant to repossess the motor vehicle. The attachment was, therefore, lawful. Such action was permitted by the Movable Property Rights Act, in particular Section 67 thereof. Counsel relied on the case of Mulusa v Cooperative Bank Kenya Ltd [2023] KEELRC 1632 (KLR) and Aliaza v Saul [2022] KECA 583 (KLR).
12. It was argued that costs follow the event. For that reason, counsel argued that the appellant be granted the costs of the appeal.
13. On its part, the respondent filed written submissions dated 23rd March 2026. The respondent identified the issues for determination as being
i) Whether the appeal had merit;
ii) Whether the repossession of the respondent’s tuk-tuk was irregular, unprocedural, and unjustified;
iii) Who should bear the costs of the suit?
14. It was contended in respect of the first issue that this court could only consider appeals from the decision of the Small Claims Court if they are in respect of a matter of law only. It was contended that all the 6 grounds were in respect of matters of trial which this court lacks jurisdiction to hear and determine.
15. Regarding the second issue, it was contended that at the time of repossession, the respondent had made a payment of Kes. 549,246/-, which exceeded the Principal sum by over Kes. 100,000/-. It was submitted that the contract was a Hire Purchase Agreement, not an Asset Finance Agreement, as alleged. Counsel submitted that since it was a Hire Purchase Agreement, Section 15 of the Hire Purchase Act governed the contract, and the appellant was thus under an obligation to file a suit before repossessing the tuk-tuk. The respondent’s Counsel argued that even if the contract wasn’t a hire purchase agreement, the provision of the Consumer Protection Act would nevertheless be binding. In support of the said contention, counsel relied on the case of Gladys Karimi Musyimi v Fahari Cars Ltd & another [2021] KEHC 5102 (KLR) for the proposition that under Section 20 of the Consumer Protection Act, repossession was unlawful as the client had already made payments exceeding two-thirds of the loan amount.
16. On cost, it was urged that costs should follow the event.
17. This is the first and only appeal. As it is an appeal from the decision of the Small Claims Court, the appeal can only be in respect of matters of law. Section 38 of the Small Claims Court states that
“(1) A person aggrieved by the decision or an order of the Court may appeal against that decision or order to the High Court on matters of law.
(2) An appeal from any decision or order referred to in subsection (1) shall be final.”
18. The duty of the High Court in such appeals is analogous to that of the Court of Appeal in respect of second appeals. In the case of Otieno, Ragot & Company Advocates v National Bank of Kenya Limited [2020] eKLR, the Court of Appeal stated as follows regarding the appeal on points of law:
“I am alive to my duty as a second appellate court to determine matters of law only unless it is shown that the courts below considered matters they should not have considered or failed to consider matters they should have considered, or, looking at the entire decision, it is perverse. (See: Stanley N. Muriithi & Another v Bernard Munene Ithiga [2016] eKLR).”
19. It appears to me that the dispositive factor in this appeal is the nature of the transaction between the parties. To determine that, the Court must look at the agreement the parties entered into. The agreement identified the vehicle as a Piaggio City Diesel 395CC three-wheeler. It set out a payment schedule showing that payments were to commence on 29th September, 2023, and that the final payment of Kes. 7,027.00 would be made on 18th September, 2026.
20. In a letter dated 16th September 2023, written by the appellant, it was stated expressly that:
“The above-named person was issued with a motorcycle under loan financing with Mogo Auto Ltd, awaiting processing of number plates from NTSA.”
21. Further, in the statement of response dated 4th August, 2025, at paragraph 3(iv) it was stated that:
“That, as per the terms of the agreement, the tuk-tuk was registered in the name of the respondent, which was to be transferred solely to that claimant’s name after full repayment of the loan.”
22. What emerges from the foregoing is that, contrary to what the appellant alleges in the appeal, the tuk-tuk was registered in its name. It remained so until the respondent repaid the loan in full. In my view, the contract looked like a hire purchase agreement, walked like a hire purchase agreement, and quacked like one. That being so, the ineluctable conclusion one must draw is that indeed it was a hire purchase agreement. The learned magistrate, rightly in my view, found it to be one such. He was also right, in my view, to look at the substance of the agreement and not its form.
23. Having found that the agreement was a hire purchase agreement, the learned magistrate rightly held that Section 15 of the Hire Purchase Act was binding. Accordingly, it was improper and unlawful for the appellant to repossess and sell the Motor Vehicle without leave of the Court. What the appellant should have done was to file a suit. It did nothing of the sort.
24. Section 15 of the Hire Purchase Act states as follows:
(1) Where goods have been let under a hire-purchase agreement, and two-thirds of the hire-purchase price has been paid, whether in pursuance of the agreement or of a judgment or otherwise, or has been tendered by or on behalf of the hirer or a guarantor, the owner shall not enforce any right to recover possession of the goods from the hirer otherwise than by suit.
(2) If an owner retakes possession of goods in contravention of subsection (1), the hire-purchase agreement, if not previously terminated, shall terminate and—
(a) the hirer shall be released from all liability under the agreement and shall be entitled to recover from the owner by suit all sums paid by the hirer under the agreement or under any security given by him in respect thereof; and
(b) guarantor shall be entitled to recover from the owner by suit all sums paid by him under the contract of guarantee or under any security given by him in respect thereof.
(3) This section does not apply where the hirer has terminated the agreement or the bailment by virtue of any right vested in him, or to the removal of goods under section 16(3)(b).
25. As is discernible from the above excerpt, Section 15 (2) (a) of the said Act provides a remedy where there has been unlawful repossession and sale; the respondent is entitled to recover what he had already paid by way of a suit. What the court below did, however, was to direct that payment of the value of the tuk-tuk be made to the respondent. The court took the resale price as the value of the tuk-tuk. This court will not quibble with the said decision.
26. I must also point out that the Consumer Protection Act has a similar provision, which would have been binding in the event that the agreement between the parties hereto was not a hire purchase agreement.
27. The upshot of the foregoing is that the appeal is completely bereft of merit. The same is for dismissal.
28. Costs follow the event as succinctly put by the Supreme Court in the nth case of Rai & 3 others v Rai & 4 others [2014] KESC 31 (KLR). That being the case, the respondent will have the costs of the appeal.
29. The appellant had deposited the decretal sum. I order that it be released to the respondent forthwith.
30. It is so ordered.
Dated and delivered in Nairobi, this 4th day of June 2026.
2. The agreement provided that the respondent would pay Kes. 7,027/- over 156 months, from 29th September 2023, to 16th September 2026. The agreed interest was 1.39% per month on a reducing-balance basis. The rickshaw was released to the respondent upon the execution of the contract.
3. The respondent made payments (according to him) amounting to Kes. 549,246/- (or Kes 479,609/-, according to the appellant). The payments were made with difficulty, as the respondent defaulted on some occasions. As a result of the default, the appellant purported to exercise what it considered its right under the “Asset Finance Agreement” and repossessed the rickshaw, selling it to a third party for Kes. 413,400/-. The sale of the rickshaw triggered the claim filed in the Small Claims Court on 2nd July 2025. The respondent's claim was for Kes 549,246/-, or, alternatively, the return of the tuk-tuk in the state it was in before repossession, compensation for the inconvenience caused by the loss of the asset, and costs.
4. The appellant opposed the claim. It contended that the respondent had paid only Kes 479,609/-. It averred that, following the sale of the rickshaw, the respondent still owed Kes 64,420/-, which it sought in a counterclaim.
5. After hearing the parties, the court below delivered judgment on 16th September, 2025. It found that the agreement between the parties was a hire-purchase agreement. Further, because the respondent had paid over 2/3 of the value of the rickshaw, the appellant could not purport to sell it to a third party without first seeking the leave of the court, as required by Section 15(1) of the Hire Purchase Act and Section 20 of the Consumer Protection Act. The court was emphatic that the repossession and sale of the tuk-tuk were contrary to the law and therefore void ab initio. It ordered that the respondent be refunded Kes 413,400/-, being the alleged resale price of the tuk-tuk.
6. The said decision aggrieved the appellant, who filed the instant appeal. The appeal is based on 6 grounds of appeal, to wit:
1. That the learned Adjudicator erred in law by mischaracterizing the agreement between the appellant and respondent as a hire purchase agreement.
2. That the learned Adjudicator erred in law by misapplying/wrongly relying on Section 15 of the Hire Purchase Act to declare the repossession and subsequent sale a nullity, hence proceeding to dismiss the counterclaim by reason that it was built on an illegality.
3. That the learned Adjudicator erred in law by rewriting the terms of a contract voluntarily entered into by the parties.
4. That the learned Adjudicator erred in law in finding that the Respondent had proved his case on a balance of probability.
5. That the learned Adjudicator applied the wrong and inaccurate principles and/or considered erroneous, irrelevant and/or extraneous factors in interpreting the terms of the contract between the parties.
6. That the learned Trial Adjudicator grossly misdirected himself in treating the evidence and submissions before him superficially and consequently came to a wrong conclusion on the same.
7. The appellant seeks to have the appeal allowed, for the judgment of the court below to be discharged and set aside in its entirety and for costs to be awarded to it.
8. The appeal was canvassed by way of written submissions. I will give a précis of each party’s submissions below.
9. The submissions of the appellant are dated 3rd March 2026. In the said submissions, counsel of the appellant, Messrs. Munyaga Githaiga Advocates LLP, identified issues for determination as being:
i) Whether the agreement between the parties was a hire purchase agreement,
ii) Whether repossession was justified; and
iii) Who should bear the cost of the appeal?
10. On the first issue, counsel contended that the agreement was governed by the Movable Property Security Right Act, 2017 and not the Hire Purchase Act. The basis for this contention was that the appellant never owned the tuk-tuk at any point. Further, the contract itself suggested that the seller was a separate entity from the appellant. It was contended that the court rewrote the parties' agreement. The appellant’s counsel contended that it was impermissible for the Court to do that. Support for the said contention was sought from the case of South Nyanza Sugar Co. Ltd v Leonard O. Arera [2020] KEHC 4648 (KLR).
11. The appellant argued that there was a default in the settlement of the loan, which entitled the appellant to repossess the motor vehicle. The attachment was, therefore, lawful. Such action was permitted by the Movable Property Rights Act, in particular Section 67 thereof. Counsel relied on the case of Mulusa v Cooperative Bank Kenya Ltd [2023] KEELRC 1632 (KLR) and Aliaza v Saul [2022] KECA 583 (KLR).
12. It was argued that costs follow the event. For that reason, counsel argued that the appellant be granted the costs of the appeal.
13. On its part, the respondent filed written submissions dated 23rd March 2026. The respondent identified the issues for determination as being
i) Whether the appeal had merit;
ii) Whether the repossession of the respondent’s tuk-tuk was irregular, unprocedural, and unjustified;
iii) Who should bear the costs of the suit?
14. It was contended in respect of the first issue that this court could only consider appeals from the decision of the Small Claims Court if they are in respect of a matter of law only. It was contended that all the 6 grounds were in respect of matters of trial which this court lacks jurisdiction to hear and determine.
15. Regarding the second issue, it was contended that at the time of repossession, the respondent had made a payment of Kes. 549,246/-, which exceeded the Principal sum by over Kes. 100,000/-. It was submitted that the contract was a Hire Purchase Agreement, not an Asset Finance Agreement, as alleged. Counsel submitted that since it was a Hire Purchase Agreement, Section 15 of the Hire Purchase Act governed the contract, and the appellant was thus under an obligation to file a suit before repossessing the tuk-tuk. The respondent’s Counsel argued that even if the contract wasn’t a hire purchase agreement, the provision of the Consumer Protection Act would nevertheless be binding. In support of the said contention, counsel relied on the case of Gladys Karimi Musyimi v Fahari Cars Ltd & another [2021] KEHC 5102 (KLR) for the proposition that under Section 20 of the Consumer Protection Act, repossession was unlawful as the client had already made payments exceeding two-thirds of the loan amount.
16. On cost, it was urged that costs should follow the event.
17. This is the first and only appeal. As it is an appeal from the decision of the Small Claims Court, the appeal can only be in respect of matters of law. Section 38 of the Small Claims Court states that
“(1) A person aggrieved by the decision or an order of the Court may appeal against that decision or order to the High Court on matters of law.
(2) An appeal from any decision or order referred to in subsection (1) shall be final.”
18. The duty of the High Court in such appeals is analogous to that of the Court of Appeal in respect of second appeals. In the case of Otieno, Ragot & Company Advocates v National Bank of Kenya Limited [2020] eKLR, the Court of Appeal stated as follows regarding the appeal on points of law:
“I am alive to my duty as a second appellate court to determine matters of law only unless it is shown that the courts below considered matters they should not have considered or failed to consider matters they should have considered, or, looking at the entire decision, it is perverse. (See: Stanley N. Muriithi & Another v Bernard Munene Ithiga [2016] eKLR).”
19. It appears to me that the dispositive factor in this appeal is the nature of the transaction between the parties. To determine that, the Court must look at the agreement the parties entered into. The agreement identified the vehicle as a Piaggio City Diesel 395CC three-wheeler. It set out a payment schedule showing that payments were to commence on 29th September, 2023, and that the final payment of Kes. 7,027.00 would be made on 18th September, 2026.
20. In a letter dated 16th September 2023, written by the appellant, it was stated expressly that:
“The above-named person was issued with a motorcycle under loan financing with Mogo Auto Ltd, awaiting processing of number plates from NTSA.”
21. Further, in the statement of response dated 4th August, 2025, at paragraph 3(iv) it was stated that:
“That, as per the terms of the agreement, the tuk-tuk was registered in the name of the respondent, which was to be transferred solely to that claimant’s name after full repayment of the loan.”
22. What emerges from the foregoing is that, contrary to what the appellant alleges in the appeal, the tuk-tuk was registered in its name. It remained so until the respondent repaid the loan in full. In my view, the contract looked like a hire purchase agreement, walked like a hire purchase agreement, and quacked like one. That being so, the ineluctable conclusion one must draw is that indeed it was a hire purchase agreement. The learned magistrate, rightly in my view, found it to be one such. He was also right, in my view, to look at the substance of the agreement and not its form.
23. Having found that the agreement was a hire purchase agreement, the learned magistrate rightly held that Section 15 of the Hire Purchase Act was binding. Accordingly, it was improper and unlawful for the appellant to repossess and sell the Motor Vehicle without leave of the Court. What the appellant should have done was to file a suit. It did nothing of the sort.
24. Section 15 of the Hire Purchase Act states as follows:
(1) Where goods have been let under a hire-purchase agreement, and two-thirds of the hire-purchase price has been paid, whether in pursuance of the agreement or of a judgment or otherwise, or has been tendered by or on behalf of the hirer or a guarantor, the owner shall not enforce any right to recover possession of the goods from the hirer otherwise than by suit.
(2) If an owner retakes possession of goods in contravention of subsection (1), the hire-purchase agreement, if not previously terminated, shall terminate and—
(a) the hirer shall be released from all liability under the agreement and shall be entitled to recover from the owner by suit all sums paid by the hirer under the agreement or under any security given by him in respect thereof; and
(b) guarantor shall be entitled to recover from the owner by suit all sums paid by him under the contract of guarantee or under any security given by him in respect thereof.
(3) This section does not apply where the hirer has terminated the agreement or the bailment by virtue of any right vested in him, or to the removal of goods under section 16(3)(b).
25. As is discernible from the above excerpt, Section 15 (2) (a) of the said Act provides a remedy where there has been unlawful repossession and sale; the respondent is entitled to recover what he had already paid by way of a suit. What the court below did, however, was to direct that payment of the value of the tuk-tuk be made to the respondent. The court took the resale price as the value of the tuk-tuk. This court will not quibble with the said decision.
26. I must also point out that the Consumer Protection Act has a similar provision, which would have been binding in the event that the agreement between the parties hereto was not a hire purchase agreement.
27. The upshot of the foregoing is that the appeal is completely bereft of merit. The same is for dismissal.
28. Costs follow the event as succinctly put by the Supreme Court in the nth case of Rai & 3 others v Rai & 4 others [2014] KESC 31 (KLR). That being the case, the respondent will have the costs of the appeal.
29. The appellant had deposited the decretal sum. I order that it be released to the respondent forthwith.
30. It is so ordered.
Dated and delivered in Nairobi, this 4th day of June 2026.