Cooperative Bank of Kenya Ltd v Kiteme

installment of Kshs. 60,434.35. The Respondent claried that the present dispute related solely to the subject motor vehicle. 3. Without prior warning, the Appellant bank issued a Proclamation of Attachment dated 20th May 2021 claiming arrears of Kshs. 455,029 which account the Respondent sought to regularize, including exploring the possibility of a loan takeover by NGARO Credit Limited and identifying a private purchaser willing to buy the subject motor vehicle at Kshs. 2,400,000, but these eorts were rejected by the Appellant bank. Thereafter, the auctioneers were instructed to repossess the subject motor vehicle on 27th May 2021. 4. The Respondent stated that, by 15th June 2021, he had cleared all arrears, auctioneer’s charges and storage charges, having paid more than 85% of the hire purchase amount, whereupon he demanded release of the subject motor vehicle of which the Appellant declined. The subject motor vehicle was subsequently sold to a third party, one George Njuguna Kamau, on 22nd September 2021 at Kshs. 1,520,000, a price that was below the market value and without conducting any valuation. The Respondent claimed that leave of the High Court was not obtained prior to the sale, contrary to the stipulations of Section 20 of the Consumer Protection Act. 5. The Respondent produced documentary evidence, including the logbook search, hire purchase documents, correspondence, bank statements, auctioneer’s notices, and the letter conrming sale to the third party. 6. During cross-examination, it emerged that the Respondent had cleared the arrears by 15th June 2021, with the auctioneer’s fees having been deducted directly from his account without an invoice. Upon re-examination, the Respondent maintained that the bank statements conrmed full payment of the arrears. 7. The Appellant bank’s witness, William Chege (DW1), stated that the Appellant had lawfully exercised its statutory power of sale following default by the Respondent. The witness produced the letter of oer, the hire purchase agreement, statements of account, demand letters, advertisements, and correspondence relating to the sale of the subject motor vehicle. 8. On cross-examination, it was conceded that there were two separate hire purchase agreements, and that the Respondent had paid Kshs. 718,000 directly to the dealer. No valuation was undertaken prior to the auction, and the advertisements produced did not disclose the newspapers in which they were placed. The witness was uncertain as to the procedure applicable where a hirer had paid more than two-thirds of the loan. 9. The trial magistrate, upon considering the matter, found that the Respondent had paid Kshs. 2,453,177.88, an amount exceeding two-thirds of the nanced sum of Kshs. 2,232,000, thereby invoking the protection set out under Section 20 of the Consumer Protection Act. In so nding, the court held that the repossession and sale conducted by the Appellant without leave of the High Court was unlawful, and that the Appellant’s conduct was further aggravated by the absence of a valuation and proper advertisement of sale. 10. The court further analyzed the hire period and held that, although the hire charges lawfully earned during the Respondent’s possession of the subject motor vehicle were not refundable, the Appellant unlawfully received an excess sum of Kshs. 1,777,541.28, amounting to unjust enrichment. The court further found that the Respondent was entitled to exemplary damages due to the Appellant’s misconduct. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1760/eng@2026-09-25 2

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11. The court concluded that: a. The repossession of motor vehicle registration number KCQ 372B Toyota Harrier by the Appellant was unlawful and in violation of Section 20 of the Consumer Protection Act, 2012. b. The continued withholding of the motor vehicle after clearance of arrears on 15th June 2021 was unlawful. c. The claim for damages for loss of use was unproven and was dismissed. d. The sale of the motor vehicle to George Njuguna Kamau was illegal, null and void. 12. In the result, Judgment was entered against the Appellant bank for Kshs. 1,777,541.28, less Kshs. 56,000; Exemplary damages of Kshs. 300,000; Interest was awarded at 14% per annum from the date of ling suit until payment in full. Costs of the suit were awarded to the Respondent. 13. Aggrieved by the Judgment and decree of the trial Magistrate, the Appellant led an appeal to the High Court in which it contended that the trial court was in error in law and fact in nding that: the repossession and sale of the subject motor vehicle violated Section 20 of the Consumer Protection Act, 2012; that the court wrongly held that the Appellant bank was required to obtain leave of the High Court prior to repossession and sale of the subject motor vehicle; that the award of compensation and exemplary damages was unsupported by the pleadings and evidence which amounted to an unjustied departure from the pleaded case; that the trial court was wrong in awarding interest from the date of ling suit on general and exemplary damages; and that the entire Judgment was against the weight of evidence, thereby occasioning a miscarriage of justice. 14. Upon re-evaluating the entire record, evidence, and submissions as required of a rst appellate court, the High Court found that the trial court rightly concluded that the Respondent had paid more than two-thirds of the hire purchase price, thereby invoking the protection specied under Section 20 of the Consumer Protection Act, 2012; that, once the statutory threshold was met, repossession or sale of the hired goods required leave of the High Court, regardless of any contractual provisions to the contrary. 15. The appellate court rejected the Appellant’s argument that Section 20 of the Act was inapplicable, after nding that a hire purchase agreement constitutes a consumer agreement involving future performance within the meaning of the Act. It further held that no contractual right of consolidation or repossession could override the statutory protection aorded to the consumer. The High Court also upheld the nding that the Appellant failed to value the subject motor vehicle or demonstrate that the sale was advertised in a newspaper of national circulation prior to the sale, reinforcing the conclusion that the sale process was unlawful, opaque, and prejudicial to the Respondent. 16. On remedies, the High Court agreed that, while hire charges earned during the lawful hire period were not refundable; and that the Appellant had unjustly enriched itself by receiving sums beyond its legal entitlement after the illegal repossession. The court therefore upheld the claim for refund of Kshs. 1,777,541.28, subject to the deductions specied in the Judgment. 17. The rst appellate court also found that the award of exemplary damages was justied given the Appellant bank’s deliberate disregard of statutory safeguards, being failure to obtain leave of the High Court prior to repossession and sale of the subject motor vehicle at an undervalue without valuation. It held that the trial court acted within its jurisdiction under Section 84(3) of the Consumer Protection Act. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1760/eng@2026-09-25 3

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18. Finally, the High Court found no basis to interfere with the trial court’s exercise of discretion on interest and costs, holding that the Judgment was sound in law, supported by evidence, and consistent with consumer protection principles. Consequently, the appeal was dismissed, and the trial court’s Judgment substantially upheld. 20. Aggrieved, the Appellant bank has led an appeal to this Court on the grounds that: the learned Judge was in error in law in failing to determine two (2) out of the four (4) issues isolated for his determination, so that the Judgment was incomplete and unlawful; in nding that the Appellant bank did not have a right to combine and consolidate the Respondent’s accounts; in nding that the defence premised on the right to combine and consolidate accounts was not pleaded by the Appellant bank; in shifting the burden of proving that the Respondent had paid more than 85% of the agreed amount to the Appellant bank, and in nding that the Respondent had proven that he had paid more than 85% of the agreed amount; in ordering a refund, even of funds not received by the Appellant bank, in complete deance of the principle of unjust enrichment; in granting interest, and in sustaining the award of exemplary damages when the facts did not demonstrate any exceptional circumstances; and in breach of the Appellant bank’s right to a fair hearing, in taxing the costs of the appeal and crossappeal without invitation, and without hearing the parties on that issue. 21. When the appeal came up for hearing on a virtual platform, learned counsel Mr. Kongere appeared for the Appellant bank while learned counsel Mr. Mwanzia appeared for the Respondent. 22. In their written submissions, counsel for the Appellant submitted that the courts below were in error in nding that the repossession and sale of the subject motor vehicle violated Section 20 of the Consumer Protection Act, 2012; that the Respondent failed to prove that he had paid more than two-thirds of the secured amount under the hire purchase agreement, and that the courts improperly shifted the burden of proof to the Appellant contrary to principles of evidence. 23. It was further submitted that Section 20 of the Consumer Protection Act was inapplicable to the circumstances of the case, as the agreement being one of hire purchase was governed by the Hire Purchase Act (Cap 507), and was therefore not a future performance agreement as contemplated under the Consumer Protection Act. It was argued that the Appellant was contractually entitled to consolidate accounts and repossess the subject motor vehicle without leave of the court. Reliance was placed on Barclays Bank of Kenya Ltd vs Kepha Nyabera & 191 Others [2013] eKLR where this Court armed that courts cannot rewrite contracts freely entered into by parties. 24. Counsel further submitted that the award of refund of Kshs. 1,777,541.28 was legally unsustainable and amounted to unjust enrichment of the Respondent, as it included sums that were never received by the Appellant, in particular monies paid directly to the motor vehicle dealer. In support, reliance was placed on the case of Kana vs Mwangi [2023] KEHC 9019 (KLR) for the proposition that a party can only recover what has actually been received by the opposing party. 25. On exemplary damages, it was argued that the courts below acted without jurisdiction and beyond the pleadings, contrary to settled law that courts cannot grant reliefs not specically pleaded. Reliance was placed on the case of Godfrey Julius Ndumba Mbogori & Another vs Nairobi City County[2018] eKLR for the proposition that courts should exercise restraint in the award of punitive damages. 26. The award of interest as from the date of ling suit was also challenged. It was submitted that interest on general or exemplary damages should ordinarily run from the date of judgment, and not from the date of ling suit. 27. In response by way of written submissions, counsel for the Respondent submitted that both the trial court and the High Court correctly found that the repossession and sale of the subject motor https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1760/eng@2026-09-25 4

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vehicle was unlawful on account of failure to comply with the requirements of Section 20 of the Consumer Protection Act, 2012 after the Respondent had paid more than two-thirds of the secured amount; that the evidence on record conclusively demonstrated that the Respondent paid Kshs. 2,453,177.88, amounting to over 85% of the nanced sum of Kshs. 2,232,000, thereby invoking the statutory protection against repossession without leave of the High Court; that the Appellant neither rebutted this evidence nor produced its own records to controvert the Respondent’s bank statements; and that the courts below correctly applied Section 112 of the Evidence Act on facts especially within the Appellant’s knowledge. 28. On the issue of consolidation of accounts, counsel submitted that the defence was unsupported by evidence and contradicted by the Appellant’s own witness, who admitted that the hire purchase facilities were separate and distinct. It was argued that, in any event, there is no common law right of consolidation of a loan account and a hire purchase facility during the subsistence of a banker– customer relationship. In support of this principle, reliance was placed on the cases of National Westminster Bank Ltd vs Halesowen Presswork & Assemblies Ltd [1972] AC 785, as well as Barclays Bank of Kenya Ltd vs Kepha Nyabera & 191 Others (supra) which armed that contractual and common law rights of set-o or consolidation cannot override clear legal principles or statutory protections. 29. Counsel further submitted that the courts below properly exercised their discretion in awarding exemplary damages, arguing that the Appellant’s conduct was high-handed, deliberate, and in blatant disregard of statutory and constitutional protections aorded to consumers; that the refusal to release the subject motor vehicle after clearance of arrears, failure to obtain leave of the court, and undertaking of the sale without prior valuation constituted exceptional circumstances justifying punitive damages. 30. On the scope of appellate interference with the decisions of the courts below, counsel urged us to exercise restraint, this being a second appeal limited to matters of law only, having regard to the concurrent ndings of fact. 31. This Court’s mandate on 2nd appeal is limited to points of law. Section 72 (1) of the Civil Procedure Act provides that: 72. 32. Second appeal from the High Court (1) Except where otherwise expressly provided in this Act or by any other law for the time being in force, an appeal shall lie to the Court of Appeal from every decree passed in appeal by the High Court, on any of the following grounds, namely— a. the decision being contrary to law or to some usage having the force of law; b. the decision having failed to determine some material issue of law or usage having the force of law; c. a substantial error or defect in the procedure provided by this Act or by any other law for the time being in force, which may possibly have produced error or defect in the decision of the case upon the merits. In the case of Stanley N.Muriithi & another vs Bernard Munene Ithiga [2016] eKLR, this Court held that: We are conscious of our limited jurisdiction when dealing with a second appeal. Our reading of Section 72(1) of the Civil Procedure Act, Chapter 21, Laws of Kenya, which provides https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1760/eng@2026-09-25 5

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for the circumstances when a second appeal shall lie from the appellate decrees of the High Court, indicates that the appeal must be on matters of law.” 33. In the same vein, this Court held in Kenya Breweries Ltd vs Godfrey Odoyo [2010] eKLR that: In a second appeal however, such as this one before us, we have to resist the temptation of delving into matters of facts. This Court, on second appeal, connes itself to matters of law unless it is shown that the two 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. In the case of Stephen Muriungi and another vs. Republic (198288) 1 KAR 360, Chesoni Acting JA (as he then was) said at page 366: We would agree with the view expressed in the English case of Martin v Glywed Distributors Ltd (t/a MBS Fastenings) 1983 ICR that where a right of appeal is conned to questions of law only, an appellate court has loyalty to accept the ndings of fact of the lower court (s) and resist the temptation to treat ndings of fact as holdings of law or mixed ndings of fact and law, and, it should not interfere with the decisions of the trial or rst appellate court unless it is apparent that, on the evidence, no reasonable tribunal could have reached that conclusion, which would be the same as holding the decision is bad in law.” 34. In view of the above cited principles, and having considered the record of appeal and submissions, the issues that arise for determination are, whether the learned Judge was in error in law: i. in considering the Respondent’s cross-appeal, which was incompetent; ii. in nding that Section 20 of the Consumer Protection Act, 2012 applied to the Asset Finance hire purchase agreement; iii. in nding that the Appellant had no right to consolidate the Respondent’s accounts and in holding that the defence based on consolidation of accounts had not been pleaded or proved; iv. in upholding the nding that the repossession and subsequent sale of the subject motor vehicle was unlawful; and v. in upholding the award of Kshs. 1,777,541.28, exemplary damages, interest and costs in favour of the Respondent. 35. Beginning with the rst issue of whether the learned Judge was in error in allowing the Respondent's cross-appeal. The Appellant submitted that the cross- appeal was led out of time without leave of the court, and that the learned Judge neither determined its competence nor assigned reasons for allowing it; that, further, the learned Judge enhanced the Respondent's award without any legal basis. The Respondent, for his part, maintained that the cross-appeal properly invited the High Court to revisit those aspects of the trial court's Judgment upon the nding that repossession and sale of the motor vehicle was unlawful, and that therefore the High Court was entitled to grant the appropriate consequential relief. 36. In its written submissions before the High Court, counsel questioned the competence of the cross appeal, arguing that there was considerable doubt whether a right to le a cross-appeal lay to the High https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1760/eng@2026-09-25 6

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Court. Reliance was placed on the case of Haji Noor Mohamed vs Jelani Mohamed Mudhar [2020] eKLR, while at the same time acknowledging that in the contrary decision of Christine Aloo vs Mary Atieno Ouma [2021] eKLR where it was concluded that a party had the right to le a cross -appeal. It was further submitted that the cross-appeal, having been led on 16th June 2023, fell outside the thirty-day period prescribed under Section 79G of the Civil Procedure Act and ought to have been struck out. In the alternative, counsel argued that the cross-appeal lacked merit and urged the court to dismiss it with costs. The record shows that the learned Judge did not expressly address or determine the objections raised by the Appellant. 37. It is well settled that a court is obliged to determine all material issues arising from the pleadings and the parties' submissions. In the case of Galaxy Paints Co. Ltd vs Falcon Guards Ltd [2000] EA 385, this Court held that the issues for determination arise from the pleadings, and that a court must pronounce itself on those issues. The same principle was rearmed in M N M vs D N M K & 13 Others[2017] KECA 172 (KLR). 38. Having said that, the omission, however, does not necessarily dispose of the appeal. The question remains whether the Respondent was entitled to le a cross-appeal and whether it was, in law, incompetent by reason of the delay in its ling. 39. In addressing the issues, Order 42 Rule 32 of the Civil Procedure Rules expressly recognises the existence of cross-appeals by providing that an appellate court may exercise its powers in favour of a respondent “although such respondent may not have led any appeal or cross-appeal.” Although the rule does not prescribe the procedure or timeline for ling a cross-appeal, it clearly infers that such a procedure is available in appeals before the High Court. As such, there was no bar to the ling of a cross appeal in the High Court as contemplated in the case of Christine Aloo vs Mary Atieno Ouma (supra). 40. Equally, Section 79G of the Civil Procedure Act regulates the ling of appeals from subordinate courts, but is silent on the time within which a cross- appeal should be lodged. In the absence of an express statutory timeline, the guiding consideration is whether the cross-appeal was led within a reasonable time, and whether the delay occasioned prejudice to the opposing party. In the persuasive case of Africa Hope Society vs Omondi & Another (Civil Appeal E002 of 2025) [2026] KEHC 2089 (KLR), the High Court observed that, in the absence of a prescribed timeline, a cross-appeal should be led within a reasonable time. 41. In the present case, the delay was relatively short, amounting to approximately three weeks beyond the thirty-day period applicable to ordinary appeals. More importantly, the cross-appeal was led well before the appeal was heard. The Appellant responded fully to it, raised both procedural and substantive objections, and suered no identiable prejudice arising from the delay. Indeed, the Appellant addressed the cross-appeal comprehensively in its written submissions before the High Court. 42. The Supreme Court in Nicholas Kiptoo Arap Korir Salat vs IEBC & 7 Others [2014] eKLR underscored that procedural rules exist to facilitate the administration of justice and that the court, in considering delay, must have regard to its length, the explanation oered, the prejudice to the opposite party and the broader interests of justice. Similarly, in Murai vs Wainaina (No. 4) [1982] KLR 38,the Court appreciated that procedural lapses should not deprive a litigant of the opportunity to have a dispute determined on its merits. 43. Viewed against those principles, we are satised that the Respondent was entitled to lodge a cross appeal, and that the delay in ling the cross-appeal did not render it incompetent. Although the learned Judge ought to have addressed the Appellant's objection and given reasons for allowing or rejecting it, the Appellant has not demonstrated that the delay occasioned any prejudice or resulted in a miscarriage https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1760/eng@2026-09-25 7

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of justice. In those circumstances, there is no basis for interfering with the learned Judge's decision to entertain the cross-appeal. 44. The next issue is whether the courts below rightly found that Section 20 of the Consumer Protection Act, 2012 applied to the Asset Finance Hire Purchase Agreement and whether the Respondent paid more than two-thirds of the hire purchase price, thereby invoking the specied statutory protections. 45. Section 20 is clear and unambiguous. It species: (1) where a consumer under a future performance agreement has paid two- thirds or more of his or her payment obligation as xed by the agreement, any provision in the agreement, or in any security agreement incidental to the agreement, under which the supplier may retake possession of or resell the goods or services upon default in payment by the consumer is not enforceable except by leave obtained from the High Court. (2) Upon an application for leave under subsection (1), the court may, in its discretion, grant leave to the supplier or refuse leave or grant leave upon such terms and conditions as the court considers advisable”. 46. In other words, the provision is unequivocal that, where a consumer has paid two-thirds or more of the nanced amount specied in the agreement between the parties to the supplier, any provision in the agreement for possession or resale the goods or services in the event of default by the consumer is not enforceable except with leave of the High Court. 47. In discerning this issue, a consideration of the genesis of the parties’ arrangement is necessary. The record shows that the Respondent approached the Appellant, a licensed banking institution, for nancial accommodation to enable him acquire the subject motor vehicle. A Letter of oer issued by the Appellant bank dated 24th April 2018 specied that the Appellant approved a Hire Purchase Finance Facility for the purchase of the subject motor vehicle. The terms in part read: Purchase price of the unit(s) being nance Kshs. 2,950,000.00 Downpayment to be made by the applicant Kshs 718,000.00 Net amount to be nanced by the bank Kshs. 2,232,000.00 Maximum period of nance to be 48 months …” 48. Thereafter, the Appellant as “Owners” of the subject motor vehicle entered into an Asset Finance Hire Purchase Agreement dated 25th April 2018, with the Respondent as “Hirer”, which spelt out the terms of the arrangement. 49. In order for the safeguards under Section 20 of the Consumer Protection Act to be invoked, the provision is clear that certain denitive preconditions required to be satised. Firstly, a consideration of whether the Appellant tted the description of a supplier under the Act. Section 2 of the Consumer Protection Act, provided that a “lender” means “a supplier who is or may become a party to a credit agreement and who extends or may extend credit or lends or may lend money to the borrower.” In this case, under the Asset Finance Hire Purchase Agreement, not only did the Appellant extend facilities to the Respondent as lender, the Agreement species that it was the Owner of the subject motor vehicle. Since the Act expressly denes a lender as a supplier, the Appellant having nanced the purchase of the subject motor vehicle cannot circumvent the requirements of the Consumer Protection Act. In terms of the Agreement, the Appellant falls squarely within the denition of a supplier under the Act. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1760/eng@2026-09-25 8

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50. Secondly, it required to be shown that the agreement was a future performance agreement. Under Section 2, a “future performance agreement” means a consumer agreement in respect of which delivery, performance or payment in full is not made when the parties enter into the agreement…”. So that, for Section 20 to be applicable it was necessary for the parties’ agreement to specify that performance or payments would be made in the future, In the instant case, the Agreement was provided for the advance to the Respondent of nance or credit facilities to enable acquisition of the subject motor vehicle. It was also specied that repayment was through 48 monthly instalments. This entailed payments to be made in the future, thereby satisfying the requirement of future performance. 51. Third, the provision applied to agreements that permitted the supplier to repossess the goods upon default. In this regard, the Agreement allowed for repossession or retaking of the subject motor vehicle in the event of default. Clause 5 of the Agreement provided in signicant part that:, If the Hirer or any guarantor of the Hirer obligations: a. Shall default in the punctual payment of any of the instalments or of any sum of money payable to the owners or any part or b. … … the Owners may immediately terminate the hiring and they shall without previous notice or demand… become entitled to the immediate possession of the said Vehicle(s)/Equipment and to retake and resume possession of the same and the Hirer shall no longer be in possession of the Vehicle (s)/Equipment without the consent of the Owners.” 52. In eect, Clause 5 reserved the contractual right in favour of the Appellant bank to repossess the motor vehicle in the event of default. Upon default in the payment of instalments or breach of any of the terms thereof, the Appellant was entitled to terminate the agreement, repossess the motor vehicles and exercise the remedies available under the contract, including recovering any outstanding balance remaining after realization of the vehicles. 53. Fourth, for the safeguards under Section 20 to be invoked, it had to be demonstrated that the borrower had paid two-thirds or more of the payment obligation xed by the agreement. 54. Upon considering the evidence, the trial court stated: By the terms of the Hire Purchase Agreement between the bank and the client, the bank was entitled to have received and indeed did receive this Kshs. 2,175,636 during the 36 months the vehicle was on hire and this sum actually was more than 2/3 of the loan sum of Kshs 2, 232,000 advanced to the client.” 55. In rejecting the Respondent’s claim that he had met the two-thirds threshold, the Appellant submitted that the Respondent had not proved the payment of more than two-thirds of the secured amount, and that the courts below improperly shifted the burden of proof to the Appellant and erroneously relied on gures that included monies allegedly paid directly to the motor vehicle dealer. 56. In rebuttal, the Respondent submitted that the evidence on record conclusively demonstrated that he had paid Kshs. 2,453,177.88 against the nanced amount of Kshs. 2,232,000. As proof, the Respondent produced bank statements and documentary evidence conrming the repayments. It was further asserted that the Appellant failed to rebut that evidence despite being the custodian of the nance accounts. Reliance was placed on Section 112 of the Evidence Act to argue that the evidential burden shifted to the Appellant to controvert the repayments made by the Respondent. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1760/eng@2026-09-25 9

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57. Upon analysing the evidence adduced, the trial court found that the Respondent had paid Kshs. 2,453,177.88, which amount exceeded two-thirds of the nanced sum of Kshs. 2,232,000, thereby attracting the protection under Section 20 of the Consumer Protection Act, 2012. The High Court also re- evaluated the evidence, and armed that nding pursuant to holding that the Appellant had failed to dislodge the Respondent’s evidence on repayment. But these being concurrent ndings of fact by the two courts below, we are hesitant to interfere. 58. But having said that, the Appellant’s main contestations in this regard are that the two thirds payment was not met because the monies were paid directly to the motor vehicle dealer rather than to the bank, and also in view of the outstanding amount following consolidation of the Respondent’s accounts. In addressing these issues, our reevaluation of the record shows that the Appellant has sought to infuse additional evidence into their written submissions that was not before the trial court or the High Court. For instance, the Appellant’s witness statement at paragraph 14 and the written submissions at paragraph 31 asserted that, “… having exercised the right of consolidation and assuming that no interest accrued on the amounts advance, the Respondent would have had to pay Kshs. 6,303,457.59. 59. Going by the Respondent’s assertion that he had repaid Kshs 2,033,952.82 by the time of repossession, there would have been no violation of section 20 of Cap 501.” However, our scrutiny of the Letter of oer, and the bank statement adduced by the Appellant’s witness (which incidentally mirrored the statements produced by the Respondent) strictly attest to a nancing of Kshs. 2,232,000. No other statements relating to other nancings were produced, and neither was there any evidence that an alleged consolidation of accounts had occurred. In the absence of evidence to the contrary, the courts below were entitled to accept the Respondent’s documentary evidence as sucient proof of repayment of the nanced sum. 60. Furthermore, the Appellant’s witness acknowledged during cross- examination that the Respondent had paid Kshs. 718,000 directly to the dealer. The concession substantially weakens the Appellant's submission that such payments ought not to have been considered in determining the amount repaid under the hire purchase arrangement. Yet if the Appellant intended to demonstrate that those payments were contractually irrelevant, it was incumbent upon its witness to explain, by reference to the contractual documents and the loan accounts. No such explanation was oered. 61. Given the observations above, it is patently clear that neither the Appellant bank as nancier and custodian of the relevant accounts who is better placed to adduce such evidence, nor did its witness adduce any evidence disproving the Respondent’s gures. What becomes clear is that the Appellant sought to ll in gaps in the evidence through its submissions, and thereafter invite this Court to adopt a position that was not supported by the evidence. An appellate court determines an appeal on the basis of the record and not on submissions of counsel. As this Court observed in the case of Daniel Toroitich arap Moi vs Mwangi Stephen Muriithi & Another [2014] eKLR,submissions, however persuasive, are not evidence and cannot take the place of evidence on record. 62. In summary, since there is no question that the Asset Finance Hire Purchase Agreement was a future performance agreement, and it was demonstrated that two- thirds of the nanced sum was paid, it becomes clear beyond any doubt that though the Agreement which provided for repossession in the event of default, was unenforceable unless leave of the High Court was rst heard and obtained, and the Respondent was entitled to seek the protection aorded by Section 20 of the Consumer Protection Act. 63. As concerns the Appellant’s argument that the Agreement in question was a Hire Purchase Agreement and that, therefore, the Consumer Protection Act was inapplicable to the facts of this case, we reiterate that Section 20 is clear on the nature of the agreements capable of being governed by the provision, https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1760/eng@2026-09-25 10

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these being future performance agreements, and as we have since found, the Asset Finance Hire Purchase Agreement met such criteria. 64. That said, it cannot go unnoticed that, in any event, the Appellant bank’s argument that the Agreement was a hire purchase agreement subject to the Hire Purchase Act (Cap 507) does not assist the Appellant as Section 15 (1) of the Hire Purchase Act contains similar safeguards to Section 20 of the Consumer Protection Act,and would have applied pari materia to the facts of this case. It states: Where goods have been let under a hire-purchase agreement and two- thirds of the hirepurchase 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.” 65. Accordingly, it follows that, once the statutory threshold was attained, the Appellant bank could not lawfully repossess, seize, or dispose of the goods without rst obtaining leave of the High Court. Having repossessed and subsequently sold the subject motor vehicle, we nd that the Appellant bank contravened and violated the edicts of Section 20 of the Consumer Protection Act, 2012, and we are satised that both the trial court and the High Court were right in so nding. 66. Turning to the question as to whether the Appellant rightly consolidated the Respondent’s accounts, the Appellant argued that the Respondent maintained two facilities, and that it had the contractual right to combine and consolidate those accounts upon default. The Respondent’s case was that the facilities extended concerned two separate and distinct hire purchase agreements. 67. In so far as a banker’s right of consolidation and set o is concerned, as a general rule, a bank may combine two or more accounts maintained by the same customer in order to satisfy payment obligations. However, the banker’s right to combine accounts is not absolute. One important limitation concerns the nature and designation of the accounts. The signicance of an account’s designation was particularly evident where one of the accounts is a loan account in the case of Bradford Old Bank Ltd vs Sutclie [1918] 2 KB 833 (CA), where Pickford LJ held that the fact that one of the accounts had been expressly designated as a loan account clearly demonstrated “that the accounts were to be kept distinct by arrangement” between the customer and the bank. 68. The distinction between current accounts and loan or other non-current accounts was further explained by Buckley J In Re E.J. Morel (1934) Ltd [1962] Ch. 21, where the learned Judge observed: There is an important dierence between a case where a customer has several current accounts, and a case where a customer has an account which is not a current account, and one or more current accounts in the bank. In the rst case where all the accounts are current, the banker can combine those accounts in whatever way he chooses, treating them all as being one account of his relationship with his customer. In the other case the accounts are of a dierent character, and the banker is not free to combine them in that way.” 69. In the present case, it is not disputed that the Respondent entered into two separate hire purchase agreements with the Appellant, each relating to a distinct motor vehicle and facility. The Asset nance Hire Purchase Agreements in question did not expressly provide for consolidation with other accounts. Indeed, the Appellant’s witness conceded during cross-examination that the facilities were separate and distinct with no express contractual clause conferring a right of consolidation. It becomes evident that the Appellant failed to establish a lawful or contractual basis for consolidating the Respondent’s accounts or for repossession of the motor vehicle on account of obligations arising from a separate facility. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1760/eng@2026-09-25 11

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70. On whether the learned Judge rightly upheld the nding that the repossession and subsequent sale of the motor vehicle were unlawful, as already found above, the Respondent proved that he had paid more than two-thirds of the nanced amount under the hire purchase agreement. The consequence of that nding is that the protections envisaged under Section 20 of the Consumer Protection Act became available to him. Once that statutory threshold was attained, the Appellant could only repossess and sell the subject motor vehicle upon obtaining leave of the High Court so to do. The requirement is expressed in mandatory and not discretionary terms. 71. The record is unequivocal that the Appellant did not obtain leave before repossessing and disposing of the motor vehicle. The Appellant’s witness conceded during cross-examination that no valuation was undertaken prior to the sale. It was also not satisfactorily demonstrated that the vehicle was advertised before disposal. These were concurrent ndings of fact by both the trial court and the High Court. In the result the only conclusion that can be reached is that the repossession and sale of the subject motor vehicle was undertaken by the Appellant in contravention of Section 20 of the Consumer Protection Act, 2012 which was contrary to the requirements of the law, and therefore invalid and a nullity. 72. Turning now to the awards of Kshs. 1,777,541.28, exemplary damages, interest and costs in favour of the Respondent. The Appellant has claimed that the award of Kshs.1,777,541.28 was erroneous as it allegedly included sums not received by the Appellant and resulted in unjust enrichment of the Respondent. It further argued that the award of exemplary damages was unsupported by the pleadings and evidence and that the award of interest from the date of ling suit was contrary to established principles governing damages. 73. The Respondent argued that the refund represented monies unlawfully retained by the Appellant following the illegal repossession and sale of the subject motor vehicle; that the exemplary damages awarded were justied on account of the Appellant’s deliberate disregard of the extant statutory safeguards; and that the awards of interest and costs were matters within the discretion of the trial court, which discretion was properly exercised. 74. The trial court found that although the Appellant was entitled to retain hire charges lawfully earned during the subsistence of the hire purchase agreement, it had received and retained sums beyond what it was legally entitled to after unlawfully repossessing and selling the vehicle. Upon evaluating the evidence, the court calculated the excess amount retained at Kshs. 1,777,541.28, subject to deductions specied in the Judgment. 75. Regarding exemplary damages, the applicable principles are well settled. Exemplary damages are awarded only in exceptional circumstances where the defendant's conduct is oppressive, arbitrary, unconstitutional, or calculated to procure a benet exceeding any compensation payable. See Godfrey Julius Ndumba Mbogori & Another vs Nairobi City County NRB CA Civil Appeal No. 55 of 2012 [2018] eKLR. 76. The record shows that the Appellant repossessed and sold the subject motor vehicle without obtaining leave of the High Court as required by statute. It failed to undertake a valuation before sale and continued withholding the vehicle after the arrears were cleared, and proceeded to dispose of it notwithstanding the statutory protections available to the Respondent. Given the clear breaches of the law, we cannot fault the courts below for concluding that such conduct warranted an award of exemplary damages. This being an exercise of discretion by the trial court for which no rationale has been proered showing improper exercise, we have no basis on which to interfere with the award of Kshs. 300,000 as exemplary damages. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1760/eng@2026-09-25 12

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77. As regards the award of interest, Section 26 of the Civil Procedure Act vests the court with discretion to determine the rate and commencement date of interest. An appellate court will not interfere with that discretion unless it is shown that the court acted on wrong principles or misdirected itself. No such misdirection has been demonstrated in the present appeal. Likewise, the award of costs having adhered to the general principle that costs follow the event, and no sucient reason has been shown to justify interference, we decline to interfere with the exercise of that discretion. 78. Accordingly, we are satised that the learned Judge did not fall into error in law in upholding the award of Kshs. 1,777,541.28, exemplary damages, interest and costs in favour of the Respondent. This ground of appeal consequently fails. 79. In sum, there is no merit in the appeal which we hereby dismiss with costs to the Respondent. It is so ordered. DATED AND DELIVERED AT MOMBASA THIS 25TH DAY OF SEPTEMBER, 2026. A. K. MURGOR ........................... JUDGE OF APPEAL DR. K. I. LAIBUTA CArb, FCIArb. ........................... JUDGE OF APPEAL G. W. NGENYE-MACHARIA ........................... JUDGE OF APPEAL I certify that this is the true copy of the original Signed DEPUTY REGISTRAR. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1760/eng@2026-09-25 13

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