ARN Security Consultants and Training Services Limited v Enashipai Resort and Spa [2023] KEHC 26429 (KLR)

ARN Security Consultants and Training Services Limited v Enashipai Resort and Spa (Civil Appeal 79 of 2019) [2023] KEHC 26429 (KLR) (4 December 2023) (Judgment)

Neutral citation: [2023] KEHC 26429 (KLR)

Republic of Kenya

In the High Court at Naivasha

Civil Appeal 79 of 2019

FROO Olel, J

December 4, 2023

Between

ARN Security Consultants and Training Services Limited

Appellant

and

Enashipai Resort And Spa

Respondent

(Appeal From Judgement Of The Chief Magistrate’s Court At Naivasha (chief Magistrate K Bidali) Dated 20Th November 2019 In Chief Magistrate Civil Suit No.252 Of 2014)

Judgment

A. Introduction 1. This appeal arises from the judgment/decree dated 20th November 2019 issued in Naivasha chief Magistrate court civil suit No 252 of 2014 delivered by Hon K. Bidali (C.M) where he dismissed the suit filed by the appellant on grounds that the appellant had not discharged the burden of proof to show that there was an agreement that the dog handling services would be invoiced and charged separately from guard services. The appellant/plaintiff being dissatisfied with the said Judgment preferred this appeal and raised the following ground of appeal;a.That the learned trial magistrate erred in law and in fact in finding that there was no meeting of minds between the appellant and respondent with respect to billing for dog services under the oral contract for provision of security services despite clear evidence proving that the appellant had to hire dogs to fulfill its contractual obligations.b.That the learned magistrate erred in law and in fact in finding that the appellant failed to prove that dog services were charged separately despite clear evidence showing- that the invoices the appellant submitted for payment were for guard services only.c.That the learned trial magistrate misdirected himself by failing to consider the doctrine of estoppel given that the respondent did not object the appellant’s invoice for dog services.d.That the learned trial magistrate erred in law and in fact in finding that the Appellant’s understanding of the oral contract departed in material way from the respondent’s understanding of the oral contract despite clear evidence showing that the respondent’s witness was not a party to the discussions, the basis of the contract.e.That the learned trial magistrate erred in law and in fact in failing to make a finding that the respondent was entitled to give a reasonable notice period prior to terminating the contract.f.In view of the circumstances set out herein above, the learned trial magistrate totally misdirected himself in delivering judgement in favour of the respondent by failing to consider and appreciate the evidence tendered on behalf of the appellant.

B. Brief Facts 2. The appellant company filed a suit before the trial court seeking a relief of Kshs.1,564, 216. 49/=, being the amount demanded for security services rendered to the respondent and which remained unpaid as at the date of the termination of the said contract. The appellant company further sought for damages for breach of contract, interest and cost of the suit. PW1 Antony Rebo Ngure, the appellants Managing Director opted to rely on his witness statement filed in court. Further he did testify that initially they were engaged by the respondent to offer security services, while still trading as Holiday Inn -Naivasha and that later the Respondent changed their business name to Enashipai Resort in April 2011. The services they provided were guarding services and dog handling services.

3. It was his evidence that they drafted the security contract but it was not signed, even though they continued to provide the services from 1. 04. 2011 to 7. 07. 2012, when they received a termination letter instructing them to vacate the guarded premises. The Respondents action shocked him and he thought that the misunderstanding arose due to the ongoing construction within the hotel premises, but thereafter they were not allowed back in on site. As at the time of termination of the contract, there were pending invoices which had not been paid and were under discussion.

4. PW1 also recounted the long and good business relationship which he had cultivated with the respondent’s directors and thus did not push for the contract to be signed. However, he produced all the correspondences exchanged and invoices as Exhibits and prayed to be awarded the sums sought in the amended plaint as they had offered security services including guard dog services, which the respondents acknowledged in the termination letter.

5. On cross examination, PW1 did confirm that the agreement was oral, and that in April 2011, he had forwarded the contract to be signed by the respondent’s directors but they never returned it, nor could he force them to sign the same. During the said contract period, he sent invoices for one service rendered and they were all paid, but he never sent a single invoice in respect of dog services nor did he have document in court to show that there were outstanding amounts. He raised the invoice for dog services after termination of the contract and his claim was not an afterthought. In reexamination PW1 reiterated that he had not sent invoices for guard dog services as they had not finished negotiating and he trusted the respondents. The claim for guard dog services was not an afterthought and he was entitled to claim the same.

6. PW2 Nicholas Imana, the appellant’s security manager adopted his witness statement and stated that he previously worked with the appellant company as a dog trainer and trainer to the guards. They would transport the dogs over 20 kilometers every evening and return them to their premises in the morning. Each dog had a handler and one would be stationed at the lake bar, while the other was stationed at the Generator house. The charged Ksh 38,000/= for each dog and its handler and the same would be used to cater for various costs that go into providing the service such as training, subsistence, transporting the dogs, housing and veterinary services. Further invoicing for the dog handling services would normally be issued separately from the normal guard service invoice. On cross examination PW2 reiterated that the rate charged for dog handling services was Ksh.38,000 per month and that it was the accounts department which raised the invoices and not him.

7. The Respondent called one witness James Kagema Mwangi, who introduced himself as a director of the respondent company. He adopted his witness statement and further testified that there was a business relationship between the parties’ herein and the respondent would send invoices for security services offered. DW1 was not familiar with the specifics but the first invoices sent indicated guards and number of dogs, this continued until April 2012, when the contract was terminated and all invoices settled. At no time did they under pay the respondent and prayed that this suit be dismissed.

8. On cross examination DW1 confirmed that, there was a verbal contract entered into around 2010 between the parties herein, but the specific discussions relating to the guarding services contract, were held between PW1 and the respondent’s late chairperson, but all the discussions were made known and available to them (directors). The respondent offered guards during the day and night and two dogs were provided at night. Further the invoices provided only talked about the guards only but as far as he was concern, their agreement was all inclusive for all services and never engaged on a different charge for guard dogs services, hence his response on email. In reexamination DW1 stated that details in the contract were never availed to him nor was a notice period provided for upon termination.

C.Appellants Submissions 9. The Appellant pointed out that this being the first appeal, it was settled law that a first appeal is by way of a retrial thus the appellate court was obligated to reevaluate and consider all the evidence placed before the trial court. Reliance was placed in the case of Charles Mwirigi Miriti v Thananga Tea Growers Sacco Ltd & another [2014], Mursal & Another v Manese [2022] KEHC 282 (KLR).

10. The appellant rehashed the facts and stated that the first issue for determination was if there existed a valid contract between the parties. It was not disputed that the parties had a commercial relationship based on an oral contract, which was admitted by all the parties in their evidence and such a contract could be inferred from the conduct of the parties. Reliance was placed on the case of Rusu Investments Ltd v Kaisugu Limited [2021] eKLR & William Muthee Muthami versus Bank of Baroda [2014] eKLR to buttress this point.

11. Further reliance was placed In the case of Frankline Matata Mwagona v Boniface Kalama [2019] e KLR where Judge R Nyakundi made reference to the law of contract by Edwin G.H Treit London, sweet & Maxwell 2009, where the learned author dealt with the said doctrine by observing as follows;“That under the law of contracts it is general acceptable that terms of any agreement will not be reduced into writing save where the law expressly provides for such contracts to be written form. The law applicable on all contracts whether oral or written to be ascertained from the agreement must be fulfil the following conditions;a.The intention of the partiesb.Sufficient offer and acceptancec.Capacityd.Lawful subject mattere.Mutuality of obligationf.consideration

12. It was submitted that there existed a valid and enforceable contract with clear terms and conditions well known and accepted by the parties to the said agreement and consequently the trial court had erred in finding that there was no meeting of minds especially with regard charges applicable to guard dog services.

13. The appellant further submitted that they did specifically amend the plaint and pleaded for special damages of Ksh.1,564,261. 49/= being the unpaid invoices for provision of dog services (Ksh.1,155,735. 84/=) and balance of unsettled invoices for the supply of guards (Ksh.408,480. 65/=).It was not disputed that the respondent was aware that the appellant had made provision of security guard dogs and deployed handlers on the premises in question. Further the correspondences exchanged between the parties before and after termination of the contract clearly demonstrate that the parties clearly understood that the invoices for supply of guard dogs and dog handler was separate and were payable. Therefore, the narrative being propagated by the respondent of ‘all-inclusive invoices’ was not only a fiction but also a figment of the Respondent’s imagination.

14. The respondent therefore was estopped in law from denying that the appellant was entitled to be paid for guard dog services in light of the correspondences exchanged. Reliance was placed in the case of Civil appeal No. 314 of 2009 Serah Njeri Mwobi V John Kimani Njoroge [2013] eKLR to buttress the point. On unsettled invoices relating to guard services at the time of termination of services the outstanding sum stood at Ksh.625,488. 65/=, which amount was clearly captured in the statement of accounts sent to the respondent. Out of the said sum on Ksh. 217,008/= had been settled leaving undisputed balance of Ksh.408,480. 65/= as being the amount due and owing. This sum was not contested, and the trial court was wrong not to award the same.

15. The final issue raised by the appellant was that they were entitled to damages for insufficient notice. The respondent did abruptly terminate their contract and opted to unilaterally pay the respondent an equivalent of seven (7) days contract sum in lieu of notice. It was expected that a party wishing to end a contractual relationship must give the other reasonable notice, which the respondent failed to do. The appellant prayed that they be awarded three (3) months’ notice as compensation. Reliance was placed in the case of Civil Appeal No., 205 & 239 of 2008 Kileleshwa Service Station Ltd v Kenya Shell Ltd[2012] eKLR, Harilal & Co. & another v the Standard Bank Ltd [1967] EA 512.

16. The appellant therefore did pray that the judgment of the primary court dismissing the suit be set aside and this court does find that the appellant was entitled to be paid both special and General damages in the following manner;a.Special damages (total unsettled invoice)- Kshs 1,526,216. 69b.General damages (3 months in lieu of pay)Less 7 days paid (1,395,000. 22- 108,503. 91) – 1,286,546. 31TOTAL 2,848,762. 80/=

Respondents Submissions 17. The Respondent opposed this appeal and averred that by virtue of section 107 of the Evidence Act the onus of proving this claim laid on the claimant/plaintiff, especially where such a claim was denied by the defendant. The appellant had failed to establish the existence and/or prove of their claim against the respondent and could not shift the burden of establishing such evidence to the respondent. Secondly with regard to the claim for unspecified damages for alleged breach of contract, it was trite law that a party cannot sue for general damages allegedly arising out of a breach of contract, as damages based on breach of contract were specific or liquidated and must be specifically pleaded and proved. Reliance was placed in the case of Muriungi Kanoru Jeremiah v Stephen Ungu M’mwirabua [2015] eKLR & Kenya Women Microfinance Ltd v Martha Wangari Kamau [2021] eKLR .

18. The respondent did file further submissions where they reiterated that the appellant had failed to offer any credible proof in support of their claim that “dog handling services” were at any time intended to be a separate and distinct service from the provisions of services offered by the appellants to the respondent between April 2011 to June 2012. The court further was urged to note that during the aforestated period, the appellants never invoiced for the alleged dog services for more that one year and the issue only came up after termination of the security services. The existence of “consensus ad idem” between the parties was thus not proved. The Court was urged to dismiss the appeal with costs, on the basis that it was no merited.

Determination 19. A first appeal is a valuable right of the parties and unless restricted by law, the whole case therein is open for rehearing both on the question of fact and law. The judgment of the appellate court must therefore reflect its conscious application of mind and record the findings supported by reasons, on all issues arising along with the contentions put forth and pressed by the parties for decision of the appellate court. While reversing a finding of fact the appellate court must come into close quarters with the reasoning assigned by the trial court and then assign its own reasons for arriving at a different finding. This would satisfy the court hearing a further appeal that the appellate court had discharged the duty expected of it. See Santosh Hazari Vs Purushottam Tiwari ( Deceased) by L.Rs (2001) 3 SCC 179.

20. A first appellate court is also the final court of fact and litigants are entitled to full fair independent consideration of the evidence. The parties share a right to be heard both on issues of fact and issues of law, and the court must address itself to all issues raised and give reasons thereof. While considering the entire scope of section 78 of the civil procedure Act a court of first appeal can appreciate the entire evidence and come to a different conclusion. See Kurian Chacko Vs Varkey Ouseph AIR 1969 Keral 316

21. Therefore, this court is under a duty to delve at some length into factual details and revisit the facts as present in the trial court, analyse the same, evaluate it and arrive at its own independent conclusions, but always remembering, and giving allowance for it, that the trial court had the advantage of hearing the parties.

22. The appellant raised Six (6) grounds of Appeal which can be safely be reduced to a determination as to whether the appellant was entitled to be paid for supply of guard dogs and dog handlers to secure respondents’ hotel premises. Secondly if the respondent settled the all the security services invoices and/or if there was an unpaid balance and finally if the respondent was entitled to damages for insufficient notice period.

23. In this case there is no doubt that there existed a commercial relationship between the appellant and the respondent particularly to provide security services at the respondent’s hotel premises. Both PW1, PW2 and DW1 in their evidence did confirm the fact that indeed the appellant did provide security guard services and they also posted two (2) guard dogs and dog handlers during the period of contract under review. The contract though not reduced into writing was based on an oral contract and all key elements for such a contract to be sustained being; intention of the parties, sufficient offer and acceptance, capacity, lawful subject matter, mutuality of obligation and consideration were all fulfilled.

24. While the appellant maintains that they were entitled to bill and be paid for the guard dog services rendered, the respondent on the other hand took the view that the monthly security bills which they had been paying was all inclusive and the appellant was not entitled to bill separately for the guard Dog services after termination of the said contract. This question based on a balance of probabilities must be determined by reviewing the pleadings filed, conduct of the parties during the contract period and documentary evidence provided by both parties at trial.

25. The Question then is what amounts to proof on a balance of probabilities. Kimaru J in William Kabogo Gitau v George Thuo & 2 others [2010] 1 klr 526 stated that;“In ordinary civil cases, a case may be determined in favour of a party who persuades the court that the allegations he has pleaded in his case are more likely than not to be what took place. In percentage terms, a party who is able to establish his case to a percentage of 51% as opposed to 49% of the opposite party is said to have established his case on a balance of probabilities. He has established that it is probable than not that the allegation that he made has occurred.

26. I also refer to Palace Investments Ltd v Geofrey Kariuki Mwendwa & Another [2015] Eklr , Where the judges of Appeal referred to “Denning J in Miller v Minister of Pensions [1947] 2 ALL ER 372 discussing the burden of proof had this to say;“That degree is well settled, it must carry a reasonable degree of probability, but not so high as is required in a criminal case. If the evidence is such that the tribunal can say; we think it is more probable than not; the burden is discharged, but if the probability are equal it is not. This burden on a balance of preponderance of probabilities means a win, however narrow. A draw is not enough. So in any case in which a tribunal cannot decide one way or the other which evidence to accept, where the parties…..are equally (un)convincing, the party bearing the burden of proof will loose because the requisite standard will not have been obtained.”

27. The evidence before the trial court clearly established that the appellant provided both security guard services and guard dog services at the respondents’ premises, but only billed for security guard services. The contract had been ongoing for three (3) years, but the guard dog services were incorporated one year before the said contract was terminated.

28. The appellant by their letter dated 4th July 2012 did clearly raise the issue of payment for guard dog services. Specifically in the said letter by PW1 to DW1 he did raise this issue by stating that “we‘ve been providing dog services to your establishment for the last one year, this as you know has not been invoiced, and accumulatively the same would translate to Ksh.1,136,800/=(one million, one hundred thirty six thousand eight hundred only) as at the end of June 2012. Currently we feel it’s a higher time, we agree on the way forward. Our verbal understanding was that we provide the dogs for two or three months as you buy your own….”

29. The contention that the appellant raised this issue after termination of the contract as an afterthought is thus not true as it was raised before termination of the said contract. Further DW1 in cross examination did acknowledge that the invoices received and settled were for guard services only and not for the guard dog services rendered. On his email dated 08th August 2012 to PW1 he did clearly state that “we will not be making payments at this stage for the dogs and increments”. The question which then arises is that at what stage did they intend to pay for the guard dog services, yet the services had been terminated.

30. Where services have been offered, they must be paid for at some point. The appellant incurred various costs that go into providing the dog service such as training, subsistence, transporting the dogs, housing and veterinary services and invoicing for the dog handling services would normally be issued separately from the normal guard service invoice sent. I do agree with the appellants that the respondent by their conduct are estopped from asserting something contrary to their pervious action. Guard dog services were rendered at the request of the respondents and a safe inference can be drawn that they must be paid for in the normal cause of business. The respondent’s allegation that the appellant is not entitled to bill for the guard dog services is plainly dishonest and in equity they cannot in all honest turn they back on their obligation to pay for the same. The trial magistrate thus fell in clear error not to uphold the same.

31. The appellants had also claimed a sum of Ksh.408,480. 65 being the balance of the amount owned / unsettled invoices relating to security guard services. The initial amount due under this head was Ksh.625,488. 65/=, which was invoiced out of which the appellant only paid a sum of Kshs.217,008/=. This claim was not contested by the respondent and further they did not offer any evidence to controvert this claim. Unfortunately, the trial magistrate fell in error by not considering the same in his judgment and also by failing to grant the same.

32. The appellant also made a claim for general damages for breach of contract. Specifically, they claimed that arising from trade usage, the respondent should have given them three (3) months’ notice before terminating the security services contract. Instead, the respondent had only paid them for seven (7) days in lieu of notice. The appellant therefore sought a sum of Ksh.1, 286,546. 31/= on account of lack of notice. The respondent on the other hand submitted that no claim of damages are recoverable in a claim based on alleged breach of contract and therefore this claim was not sustainable in law.

33. The position in law is clear that no damages are awardable for breach of contract, where the same is not provided for in the said contract. The appellant did not specifically plead for damages in lieu of notice period in the amended plaint and though he sort for the same in his witness statement, such a claim is not awardable as general damages. The amount sought is a liquidated sum and the same falls under the category of special damages as the amounts sought are specific and known.

Disposition 34. In the upshot, I do find that this appeal has merit. The judgment /decree of Honourable K. Badili (C.M) dated 20th November 2019 and issued in Naivasha CMCC No 252 of 2014 is hereby wholly set aside and the same is substituted with judgment being entered in favour of the appellant for the sum of Kshs.1,564,216. 49/= plus costs and interest.

35. The interest on the said judgment sum of Kshs.1,564,216. 49/= shall be calculated at court rates from the day the suit was filed until payment in full.

36. The appellant is awarded costs of this appeal which is assessed at Ksh.200,000/= all inclusive.

37. It is so ordered.

JUDGEMENT WRITTEN, DATED AND SIGNED AT MACHAKOS THIS 4TH DAY OF DECEMBER 2023. FRANCIS RAYOLA OLELJUDGEDelivered on the virtual platform, Teams this 4th day of December, 2023. In the presence of;Mr. Wachira for AppellantMr. Kimeni for RespondentSusan Court Assistant