Chege v Ekeza Savings and Credit Cooperative Society Limited & another (Tribunal Case 409 of 2020) [2023] KECPT 1047 (KLR) (30 November 2023) (Judgment)

Key Facts

Transaction Type

Issues

• The first issue concerned the Claimant's request for a permanent injunction to restrain the Respondent and others from auctioning his motor vehicle registration number KBX 224J, which was used as security for an unpaid loan. The Tribunal held that a permanent injunction cannot be granted while the loan remains unsettled, as the vehicle's auction is necessary to recover the debt. The Claimant's argument that the vehicle was damaged during impoundment failed due to lack of evidence and inability to apportion damages.
• The second issue addressed the Claimant's damages claim. Special damages of Kshs. 180,000/= for lost income (Kshs. 3,000/=-per-day) and general damages for wrongful impoundment were denied. The Tribunal ruled the impoundment procedure was lawful based on prior rulings, and the Claimant failed to prove his daily income or provide evidence of the vehicle's damage. No damages were awarded.

Holdings

• The Tribunal dismissed the claimant's entire case with no order as to costs. The claimant's testimony and evidence were uncontroverted but insufficient to meet the legal standards for the prayers sought, and the Respondent's non-appearance did not alter the outcome.
• The Tribunal denied the claimant's request for a permanent injunction to prevent auctioning of the motor vehicle registration number KBX 224J because the claimant still owes a loan balance to the Respondent and there was insufficient evidence to justify discharging the vehicle as collateral. The Tribunal noted that the loan account remains unsettled, and thus the vehicle cannot be permanently protected from auction.
• The Tribunal rejected the claim for general damages related to the alleged illegal impoundment of the motor vehicle. A prior ruling on 19th August 2021 confirmed the impoundment procedure was proper, and the Respondent's failure to contest the claim did not justify awarding damages for wrongful impoundment.
• The Tribunal dismissed the claim for special damages (Kshs. 180,000/=) because the claimant failed to provide evidence proving the alleged daily income loss of Kshs. 3,000/=. Special damages require both pleading and proof, which the claimant did not establish.

Contract Value

Legal Principles

• The court applied the principle that a permanent injunction is granted based on the merits of the case after evaluating evidence, referencing Kenya Power & Lighting Co. Limited v Sheriff Molana Habib [2018] eKLR. It concluded that the claimant's ongoing debt precluded an injunction to block auctioning the vehicle.
• The court emphasized that special damages must not only be pleaded but also proven, and the claimant's failure to provide evidence for his Kshs. 3,000/day income loss resulted in the rejection of this claim.

Precedent Name

Key Disputed Contract Clauses

• The dispute centered on the contractual clause allowing the Respondent to use the motor vehicle logbook as collateral for the loan. The Claimant argued the Respondent failed to communicate alternative repayment methods during the 2017 operational shutdown, while the Respondent maintained the collateral clause permitted impoundment and auctioning of the vehicle to recover the unpaid loan balance.
• The court analyzed whether the Respondent followed proper procedures under the loan agreement for repossession. The Claimant claimed the impoundment was unlawful and caused vehicle damage, while the Respondent asserted compliance with contractual terms and legal processes for debt recovery.

Judge Name

• M Chesikaw
• B Sawa
• J. Mwatsama
• Po Aol
• Bm Kimemia
• P. Gichuki
• F Lotuiya

Passage Text

• The general damages prayed are pegged on the alleged illegal and wrongful impounding of the motor vehicle... this prayer fails as well.
• On the first prayer of injunction... We cannot therefore grant a permanent injunction where there is still a loan account to be settled between the Respondents and the Claimants.
• The subject motor vehicle can only be auctioned to cover the loans in which the motor vehicle was given up to secure. The question, therefore, before this tribunal is whether the subject loan has been fully settled to warrant us to forbid the Respondent from ever auctioning the motor vehicle on the loan again.

Damages / Relief Type

• Injunction to prevent auctioning of motor vehicle KBX 224J
• Interest on special and general damages
• Cost of the suit
• Special damages of Kshs. 180,000/=
• Other relief as court may deem fit
• General damages for illegal impounding