Nyakwana v Ongaro (Civil Appeal 7 of 2014) [2015] KEHC 8440 (KLR) (24 April 2015) (Judgment)
Evans Otieno Nyakwana v Cleophas Bwana Ongaro [2015] eKLR
Neutral citation:
[2015] KEHC 8440 (KLR)
Republic of Kenya
Civil Appeal 7 of 2014
DAS Majanja, J
April 24, 2015
Between
Evans Otieno Nyakwana
Appellant
and
Cleophas Bwana Ongaro
Respondent
(Being an appeal from the Judgment and Decree of Hon. P. K. Rugut, Ag SRM in Rongo Senior Resident Magistrates Court Civil Case No. 53 of 2012 dated 18th March 2014)
Judgment
1.According to the plaint filed in the subordinate court, the appellant averred that on 8th December 2010, the respondent obtained a friendly loan in the sum of Kshs. 130,000/- to be paid on or before 5th January 2011 in consideration for the use of his motor vehicle registration no. KAP XXXX (“the motor vehicle”) pending payment of the money. The agreement was evidenced by a written note signed by the respondent. As a result of the default the defendant claimed the sum of Kshs. 130,000/-.
2.The respondent filed a defence and counterclaim in which he denied that he obtained a friendly loan and that the agreement dated 5th January 2011 was obtained fraudulently after he was induced and coerced to sign a fake document acknowledging that he owes the appellant Kshs. 130,000/-. In addition, he filed a counterclaim claiming release of the motor vehicle.
3.The appellant, an advocate, testified that on 8th December 2010 he advanced the respondent Kshs. 130,000/- which was to be repaid on or before 5th January 2011 and in consideration, the respondent handed over the motor vehicle as security. He denied that the agreement was a forgery.
4.The respondent testified that the appellant was his advocate and that on 7th December 2010, the appellant rang him and asked to borrow his motor vehicle. He testified that the appellant borrowed his car and never returned it. The respondent denied that he borrowed Kshs. 130,000/-. He also denied ever signing any document to acknowledge that he had borrowed money from the appellant. He stated that he only saw the document when the suit was filed. He stated that he complained to the Law Society of Kenya about the appellant but his complaint was not resolved. He therefore elected to file a counterclaim to recover his vehicle.
5.After hearing the appellant and the respondent, the learned magistrate framed three issues for trial as follows;
6.On the first issue that learned magistrate found that the agreement was not enforceable in law as it did not contain an admission of the debt and that it was not attested. On the second issue, the learned magistrate found that having failed to traverse the particulars of fraud, the appellant had in effect admitted the allegations of fraud. On the final issue, the learned magistrate held that there was no basis for holding the respondent’s vehicle. As a result the appellant’s claim was dismissed and the respondent’s counterclaim allowed.
7.The appellant contests the decision on the following grounds set out in the memorandum of appeal.
8.The duty of the court as the first appellate court is to review the evidence and reach an independent conclusion as to whether the uphold the decision of the subordinate court bearing in mind that it neither heard or saw the witnesses testify (see Selle v Associated Motor Boat Co. [1968] EA 123).
9.Before I deal with the substantive issues raised by the evidence, I will consider the technical issue as to whether the failure to file a defence to the counterclaim amounted to an admission of the counterclaim. The learned magistrate relied on the case of Mount Elgon Hardware v United Millers LimitedKSM CA Civil Appeal No. 1996[1996]eKLR where the Court of Appeal dismissed an appeal on the ground that;
10.Unfortunately, the court’s attention was not drawn to the subsequent Court of Appeal decision in Joash M. Nyabicha v Kenya Tea Development Authority KSM CA No. 302 of 2010 [2013]eKLR in which it distinguished the Mount Elgon Hardware Case and held as follows;
11.I therefore agree with counsel for the appellant that as there was a joinder of issues on the pleadings filed by the appellant and respondent, the learned magistrate erred in finding that the counterclaim was admitted.
12.The learned magistrate considered the evidence and in her judgment framed three issues for consideration. The first issue is whether there was a contract between the parties. The learned magistrate relied on section 3 of the Law of Contract Act (Chapter 23 of the Laws of Kenya) to hold that the contract was unenforceable. The relevant part of section 3 of the Act provides as follows;
13.The document relied upon by the appellant stated as follows;Friendly Loan AgreementI Cleophas Bwana Ongaro do hereby acknowledge receipt of Ksh 130,000/= (One hundred and thirty thousand shillings) only being a friendly loan from Evans Odero Nyakwana payable on or before 5th January 2011.In the meantime, I have allowed him to use my motor vehicle Registration number KAP XXXX Toyota Station Wagon.Signed8/12/2010
14.The document was simply an acknowledgment of debt and was sufficient to consummate the parties’ understanding of their oral agreement. It falls within the provisions of section 3(1) of the Law of Contract Act as it is a memorandum or note signed by the person charged with repayment of the debt. It was not required to be attested or signed by both parties as it was not a contract for the disposition of an interest in land within the contemplation of section 3(3) of the Act.
15.The respondent’s defence was that the vehicle was obtained fraudulently and that he was induced to sign a fake document. The learned magistrate held that it was the appellant’s to prove that the disputed signature was that of the respondent. As a general proposition the legal burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue. That is the purport of section 107(1) of the Evidence Act (Chapter 80 of the Laws of Kenya), which provides:107. (1)Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.
16.Furthermore, the evidential burden that is cast upon any party the burden of proving any particular fact which he desires the court to believe in its existence. That is captured in sections109 and 112 of the Act as follows:109.The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.112.In civil proceedings, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disproving that fact is upon him.
17.The Court of Appeal in Jennifer Nyambura Kamau Humphrey Mbaka Nandi[2013]eKLR considered the applicability of these provisions as follows;
18.In this case, it is the respondent who filed the defence and counterclaim and alleged that the document relied upon by the plaintiff was a forgery. It was therefore incumbent upon him to prove this fact by marshalling the necessary evidence to support his case. The burden of proof to prove fraud lay on the respondent. As regards the standard of proof, I would do no better than quote Central Bank of Kenya Ltd v Trust Bank Ltd & 4 OthersNAI Civil Appeal No. 215 of 1996(UR) where the Court of Appeal, in considering the standard of proof required where fraud is alleged, stated that;
19.The particulars of fraud pleaded by the respondent were as follows;
20.I have considered the counterclaim and it is at variance with the testimony of DW 1 who stated that he had never seen the acknowledgment of the debt. He could therefore not plead that he was induced to sign the document or forced to sign a blank piece of paper. Put another way, either there was an acknowledgment of debt in form of a note or there wasn’t, and the appellant cannot plead that he was induced to sign it while at the same time asserting that there no acknowledgement in the first place. Furthermore, the respondent did not testify as to the circumstances he was induced or tricked into signing the document. I am afraid that the evidence falls far short of the kind required to invalidate the document on the basis of fraud. I therefore find and hold that the document was a valid acknowledgement of the debt of Kshs. 130,000/-.
21.That leaves the issue under what circumstances the appellant obtained and held the vehicle. Mr Ojala, counsel for the respondent, submitted that the appellant could not exercise the right of lien as the lien could only be exercised on account of services rendered. He argued that as services were not rendered, the vehicle could not be held as security. Mr Okoth, submitted that the vehicle was not kept as a lien for services rendered but as a lien for the money the appellant lent the respondent.
22.In my view, I find that the terms upon which the respondent gave the appellant his vehicle are clear in the acknowledgment which stated that, “In the meantime, I have allowed him to use my motor vehicle Registration number KAP XXXX Toyota Station Wagon.” It was clearly the intention of the respondent to give the appellant the vehicle to use pending payment of the debt. DW 1 stated that he merely lent the appellant the vehicle to drive the vehicle to Homa Bay but he did not take any steps to recover the vehicle until the counterclaim was filed in response to the appellant’s claim. The fact that he allowed the appellant to use the vehicle is consistent with what was set out in the acknowledgment that he borrowed money and allowed the appellant to use the motor vehicle.
23.The appellant’s argument is that he had a lien on the respondent’s vehicle. The learned magistrate held that since there was no advocate-client relationship between the parties the “lien by an Attorney” was inapplicable and the appellant could not hold the vehicle. The appellant argues that the magistrate took a restrictive view of a lien and limited it to attorney’s lien when in fact a lien, according to the Oxford Advanced Learner’s Dictionary (7thEd) means, “the right to keep somebody’s property until a debt is paid.” to apply as the definition of the word “lien” and thereby arrived at an erroneous conclusion.
24.The classic definition of a lien is to be found in the case of Hammonds v Barclay (1802) 2 East 227, 235 where Grose J., described it as, “a right in one man to retain that which is in his possession belonging to another, till certain demands of him, the person in possession are satisfied.” A lien does not grant the holder the power to sell the goods to discharge the debt or reduce the debt owed. The right of a lien may be terminated when an action is taken that is inconsistent with the possessory lien or when the owner tenders the outstanding amount.
25.The nature and extent of the lien depends on the circumstances under which it is created whether by express terms of an agreement or implied terms which may arise from custom and usage. In this case, the terms under which lien was created were set out in the acknowledgement which allowed the appellant to use the vehicle as the debt was being paid. It follows that since the appellant has elected to sue for the debt, the lien is lost. It was an action inconsistent with the terms of the lien. The respondent would have recovered his vehicle by simply paying the debt and when the appellant took the step of suing the respondent there was no further justification for holding the vehicle. The appellant cannot have the vehicle and judgment for the debt.
26.Mr Okoth argued that although the judgment was signed, it was not dated and that it is not known when it was signed and the decree that was filed was only drawn by the appellant. He submitted that the judgment was a nullity for failure to comply with the mandatory provisions of Order 21 rule 3(1) of the Civil Procedure Rules which require that a judgment shall be pronounced by a judge who wrote it shall be dated and signed by him in open court at the time of pronouncing it.
27.According to the record the judgment delivered on 18th March 2014 after notice was issued to the parties. In Magana Holdings Ltd v Lilian Njeri Mungai & AnotherNRB CA Civil Appeal No. 143 of 1996(UR) the Court of Appeal noted that where from the record of the court concerned the date of the judgment or ruling is clearly discernible, holding that the ruling or judgment is undated was undue restriction of the provisions of Order 21 rule 3 (1) of the Rules. In this case there is no dispute that the judgment was delivered hence I hold that the omission was not fatal to the extent of invalidating the substance of the judgment. To hold otherwise would undermine the overriding objective and impose undue and substantial costs on the parties who would have to undergo a re-trial.
28.Before I conclude this judgment, I would like to point out during the proceedings both the appellant and respondent testified twice in respect of the claim and counterclaim. This was wholly unnecessary and a waste of the court’s time as the purpose of incorporating the claim and counterclaim in one suit is to have the matter heard as one suit in order to save time for the court and parties.
29.As a result of my findings, I allow the appeal, set aside the judgment and decree of the subordinate court to the following extent;a.Judgment be and is hereby entered for the appellant against the respondent for the sum of Kshs 130,000/- which shall accrue interest from the date of filing suit until payment in full.b.The counterclaim is allowed and the appellant shall return motor vehicle KAP XXXX to respondent forthwith.c.The parties shall bear their own costs in the subordinate court and in this appeal.
DATED AND DELIVERED AT HOMA BAY THIS 24TH DAY OF APRIL 2015.D.S. MAJANJAJUDGEMr Okoth instructed by G. S. Okoth and Company Advocates for the appellant.Mr Ojala instructed by P. R. Ojala and Company Advocates for the respondent.