Davis & Shirtlift Limited v George Philliph Investments Ltd. t/a Rock Motel & 2 others [2024] KEELC 851 (KLR) | Breach Of Contract | Esheria

Davis & Shirtlift Limited v George Philliph Investments Ltd. t/a Rock Motel & 2 others [2024] KEELC 851 (KLR)

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Davis & Shirtlift Limited v George Philliph Investments Ltd. t/a Rock Motel & 2 others (Environment and Land Appeal E012 of 2023) [2024] KEELC 851 (KLR) (22 February 2024) (Judgment)

Neutral citation: [2024] KEELC 851 (KLR)

Republic of Kenya

In the Environment and Land Court at Kisumu

Environment and Land Appeal E012 of 2023

SO Okong'o, J

February 22, 2024

Between

Davis & Shirtlift Limited

Appellant

and

George Philliph Investments Ltd. t/a Rock Motel

1st Respondent

Itikon Africa Limited

2nd Respondent

Harish K. Patel

3rd Respondent

(Being an appeal from the judgment and decree of Hon. C.L.Yalwala (SPM) delivered on 23rd March 2022 in Maseno SPMELC No. 18 of 2018))

Judgment

Background 1. The 1st Respondent filed a suit against the appellant and the 2nd and 3rd Respondents before this court on or about 4th April 2014. In its amended plaint dated 7th May 2014, the 1st Respondent averred that in September 2012, it engaged the 2nd and 3rd Respondents to construct a swimming pool and a spa within its property known as Rock Motel/Resort, Kisumu at a consideration of Kshs. 2,500,000/-. The 1st Respondent averred that it engaged the services of the 2nd and 3rd Respondents for that assignment on the recommendation of the Appellant who also undertook to supervise the construction work by the 2nd and 3rd Respondents.

2. The 1st Respondent averred that pursuant to the said agreement, it paid to the 2nd and 3rd Respondents a total sum of Kshs. 1,200,000/- in September and October 2012 as part payment of the agreed contract sum. The 1st Respondent averred that the construction work commenced and the Appellant’s employees visited the construction site from time to time in the performance of their supervisory role for which they were paid. The 1st Respondent averred that the 2nd and 3rd Respondents abandoned the construction work midway and the Appellant failed to provide the progress report on the project. The 1st Respondent averred that it consulted the Ministry of Lands, Housing and Urban Development engineers who inspected the swimming pool and declared it defective for poor workmanship. The 1st Respondent averred that the said engineers from the Ministry of Lands, Housing and Urban Development recommended that the swimming pool be demolished and constructed fresh at a cost of Kshs. 2,692,850/-. The 1st Respondent averred that it had suffered loss and damage for which it held the Appellant and the 2nd and 3rd Respondents liable. The 1st Respondent sought judgment against the Appellant and 2nd and 3rd Respondents jointly and severally for; Kshs. 1,300,000/- being a refund of the payment made to the 2nd and 3rd Respondents, Kshs. 2,692,850/- being the cost of a new swimming pool, general damages for breach of contract and loss of business, and cost of the suit.

3. The Appellant filed a defence on 28th May 2014 in which he denied the 1st Respondent’s claim in its entirety. The Appellant averred that the 1st Respondent approached it for advice on the construction of a swimming pool. The Appellant averred that it informed the 1st Respondent that it was not involved in the business of constructing swimming pools and that it could recommend to the 1st Respondent companies which were carrying out the business. The Appellant averred that it recommended several companies to the 1st Respondent from which the 1st Respondent picked the 2nd and 3rd Respondents for the assignment. The Appellant averred that its role was limited to the recommendation that was sought by the 1st Respondent and that it was up to the 1st Respondent to enter contracts with the said companies for the construction of the swimming pool. The Appellant averred it was not involved at any time in the construction of the said swimming pool. The Appellant averred that the 1st Respondent requested it to act as a consultant for the project but it declined the invitation due to lack of technical capacity to do so.

4. The Appellant denied that it was involved in the supervision of the project and averred that it was engaged by the 1st Respondent after the construction of the swimming pool to assess the pool and give recommendations on its performance. The Appellant averred that it undertook the assignment and was paid for the same by the 1st Respondent. The Appellant averred that that was the only contract that it had with the 1st Respondent. The Appellant urged the court to dismiss the 1st Respondent’s suit.

5. The 2nd and 3rd Respondents filed separate statements of defence on 26th June 2014. The 2nd Respondent averred that it was a stranger to the 1st Respondent's claim and the alleged loss that was suffered by the 1st Respondent. The 3rd Respondent also denied the 1st Respondent’s claim. The 3rd Respondent averred that it was a stranger to the claim and the loss allegedly suffered by the 1st Respondent. The 3rd Respondent admitted receiving a total sum of Kshs. 1,200,000/- from George Joshua Ongonga Okungu. The 3rd Respondent averred that the said payment was in settlement of a debt that was owed to him by the said George Joshua Ongonga Okungu. The 3rd Respondent urged the court to dismiss the 1st Respondent’s suit with costs.

6. The suit was transferred to the Senior Principal Magistrate’s Court at Maseno on 13th March 2018 where it was given new case number Maseno SPMC ELC No. 18 of 2018 (hereinafter referred to only as “the lower court”). The lower court heard the suit and delivered a judgment on 23rd March 2022. The lower court entered judgment for the 1st Respondent against the Appellant and the 2nd and 3rd Respondents jointly and severally for Kshs. 1,200,000/- being a refund of the payment made to the 2nd and 3rd Respondents by the 1st Respondent and Kshs. 2,692,850/- being the cost of constructing a new swimming pool. The court also awarded the 1st Respondent interest on the said amounts and costs of the suit.

7. The lower court relied on the Appellant’s Daily Work Sheet dated 8th January 2014 and a receipt for Kshs. 5000/- paid to the Appellant by the 1st Respondent on 6th January 2014 and made a finding that the Appellant had provided inspection services during the construction of the 1st Respondent’s swimming pool although there was no written contract between the parties. The lower court further found that the 2nd and 3rd Respondents who were engaged by the 1st Respondent to construct the swimming pool and the Appellant who was to supervise them were in breach of the contracts that they entered into with the 1st Respondent the swimming pool having been found and condemned as defective by the Ministry of Lands, Housing and Urban Development engineers. The court found further that the 1st Respondent was entitled to the sum of Kshs. 1,200,000/- that was paid to the 3rd Defendant by the 1st Respondent as part payment of the contract sum. The lower court further found that the 1st Respondent was entitled to the claimed sum of Kshs. 2,692,850/- to enable it to construct a new swimming pool. The court found the 1st Respondent’s claim for damages not proved.

The appeal 8. The Appellant was dissatisfied with the judgment of the lower court and preferred the present appeal against the same. In its memorandum of appeal dated 6th March 2023, the Appellant challenged the lower court’s decision on the following grounds; 1. That the learned magistrate erred in law and fact in finding that there was a contract between the Appellant and the 1st Respondent for the provision of the supervision services for the construction of the swimming pool.

2. That the learned magistrate erred in law and fact in entering judgment against the Appellant jointly and severally with the 2nd and 3rd Respondents and awarding damages for the sum of Kshs. 1,200,000/- to the 1st Respondent despite the admission that this sum was only paid to the 2nd and 3rd Respondents.

3. That the learned magistrate erred in law and fact in entering judgment for the 1st Respondent against the Appellant jointly and severally with the 2nd and 3rd Respondents for damages in the sum of Kshs. 2,692,850/-while there was no contract between the Appellant and the 1st Respondent for the construction of the swimming pool.

4. That the learned magistrate erred in law and fact in entering judgment against the Appellant for costs and interest.

5. The Appellant urged the court to allow the appeal and set aside the lower court judgment. The Appellant prayed in the alternative that the court makes such orders as it deems just.

The submissions 9. The Appellant filed its submissions on 4th August 2023 while the 1st Respondent filed its submissions on 25th January 2024. The 2nd and 3rd Respondents did not participate in the appeal. The Appellant submitted that the lower court erred in finding that there was a contract between the Appellant and the 1st Respondent and in entering judgment for the 1st Respondent against the Appellant jointly and severally with the 2nd and 3rd Respondents. The Appellant submitted that the burden of proof rested with the 1st Respondent and that the lower court’s finding aforesaid was not based on the evidence on record. The Appellant submitted that the 1st Respondent did not establish the existence of the elements of a valid contract in respect of the alleged supervision contract that it claimed to have entered into with the Appellant. The Appellant submitted that; there was no evidence that the Appellant had offered to render supervisory services to the 1st Respondent during the construction of the swimming pool, that it rendered such services and was paid for the same. The Appellant submitted that it made it clear to the 1st Respondent at the onset of the project that it was not involved in the construction of swimming pools and associated civil works and that the Appellant never departed from that position. The Appellant submitted that based on the said erroneous finding, the lower court entered judgment against the Appellant jointly and severally with the 2nd and 3rd Respondents. The Appellant submitted that there was no basis for entering judgment against it for Kshs. 1,200,000/- which was paid by the 1st Respondent to the 2nd and 3rd Respondents. The Appellant submitted that the said amount could only be recovered from the 2nd and 3rd Respondents. Concerning the sum of Kshs. 2,692,850/-, the Appellant submitted that the contract for the construction of the swimming pool was between the 1st Respondent and the 2nd and 3rd Respondents. The Appellant submitted that it could not be held liable for the defects in the said swimming pool resulting from poor workmanship by the 2nd and 3rd Respondents. The Appellant urged the court to allow the appeal as prayed. The Appellant cited several authorities that I have considered.

10. In its submissions, the 1st Respondent supported the lower court judgment. The 1st Respondent submitted that the lower court finding that there was a contract between the Appellant and the 1st Respondent for the provision of supervisory services was supported by evidence. The 1st Respondent submitted that although the contract was oral, the same was established at the trial. The 1st Respondent submitted further that there was no misdirection on the part of the lower court in entering judgment against the Appellant and the 2nd and 3rd Respondents jointly and severally. The 1st Respondent submitted that the sums of Kshs. 1,200,000/- and Kshs. 2,692,850/- awarded to the 1st Respondent were damages and the court should be slow in interfering with such award. On the issue of costs, the 1st Respondent submitted that the same was at the discretion of the court and as such there was no need for this court to interfere with the exercise of that discretion. The 1st Respondent urged the court to dismiss the appeal. The 1st Respondent also relied on several decisions that I have considered.

Analysis and determination 11. I have considered the pleadings and the proceedings of the lower court, the judgment of the court, the grounds of appeal put forward by the Appellant, and the submissions by the advocates for the parties. As correctly submitted by the 1st Respondent, this being a first appeal, this court has to consider and re-evaluate the evidence on record and draw its conclusions on the issues that were raised for determination before the lower court. However, the court has to bear in mind that it did not have the advantage of seeing and hearing the witnesses who testified before the lower court. In Kenya Ports Authority v Kuston (Kenya) Limited [2009] 2EA 212 the Court of Appeal stated that:On a first appeal from the High Court, the Court of Appeal should reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in that respect. Secondly that the responsibility of the court is to rule on the evidence on record and not to introduce extraneous matters not dealt with by the parties in the evidence.” See also, Verani t/a Kisumu Beach Resort v Phoenix of East Africa Assurance Co. Ltd [2004] 2 KLR 269, Selle v Associated Motor Boat Co. Ltd. [1968] E.A 123 and Abok James Odera t/a Odera & Associates v John Patrick Machira t/a Machira & Co. Advocates [2013]eKLR on the duty of the first appellate court.

12. The court will also not interfere with the findings of fact by the trial court unless they were not based on evidence at all or they were based on a misapprehension of the evidence, or where it is demonstrated that the court acted on wrong principles in reaching its conclusion. See, Peter v Sunday Post Ltd. [1958] E.A 424 and Makube v Nyamuro[1983] KLR 403.

13. From the Appellant’s grounds of appeal, the issues arising for determination in this appeal in summary are; whether the lower court erred in its finding and holding that there was a contract between the Appellant and the 1st Respondent for the supervision of the construction of a swimming pool at the 1st Respondent’s hotel premises, whether the lower court erred in entering judgment for the 1st Respondent against the Appellant jointly and severally with the 2nd and 3rd Respondents for Kshs. 1,200,000/- being a refund of the payment that was made to the 2nd and 3rd Respondent by the 1st Respondent and Kshs. 2,692, 850/- being the cost of a new swimming pool together with interest and costs of the suit. I will consider these issues together.

14. Upon review of the evidence that was before the lower court, I find the findings of the lower court and its judgment against the Appellant difficult to support. The alleged agreement between the 1st Respondent and the Appellant for the supervision of the construction of the said swimming pool was oral and was said to have been entered into in August 2012 or thereabouts. To establish the alleged agreement, the 1st Respondent produced before the lower court, a copy of a page of the 1st Respondent’s Visitors Book for 8th January 2014, a copy of the Appellant’s Daily Work Sheet for 8th January 2014 and a copy of the Appellant’s receipt issued to the 1st Respondent for Kshs. 5,000/- dated 6th January 2014. In its judgment, the lower court stated that upon perusal of the said Daily Work Sheet and receipt, it was satisfied that the Appellant provided inspection services to the 1st Respondent and did make recommendations to it concerning the swimming pool and was paid for the same. The lower court found based on the foregoing that there was a contract between the Appellant and the 1st Respondent. I am of the view that the lower court misconstrued the evidence that was before it and arrived at an erroneous finding. The Appellant placed evidence before the lower court in the form of a letter to the 1st Respondent dated 11th April 2012 in which the Appellant stated expressly that “We wish to bring to your attention that Davis & Shirtlift Ltd. does not engage in swimming pool construction services and other associated civil works.” How could the 1st Respondent have engaged the Appellant to supervise experts in the field of swimming pool construction in which field the Appellant had expressly stated that it had no expertise? Again, how could the Appellant have assumed such a huge responsibility at a fee of Kshs. 5000/- while the contract sum was Kshs. 2,500,000/-? In my view, the lower court ignored without giving any reason the Appellant’s contention which was supported by documentary evidence on record that it was called upon by the 1st Respondent after the construction of the swimming pool had been completed to inspect the pool and make recommendations. The receipt dated 6th October 2014 for Kshs. 5000/- shows that the 1st Respondent paid the said amount as a deposit for the Appellant to visit its premises. The payment was not for any services rendered. A copy of the Visitors Book shows that three employees of the Appellant visited the 1st Respondent’s premises to inspect the swimming pool. The Daily Work Sheet dated 8th January 2014 shows that the said employees inspected “the already constructed pool” and made recommendations on where the pump house could be built. The team also noted anomalies in the swimming pool that included cracks in the deep-end floor. The employees of the Appellant informed the 1st Respondent that they would consider the said defects when they reached the office and would make appropriate recommendations. According to the report by the Ministry of Public Works, Housing and Urban Development Directorate of Public Works engineers, they visited the said swimming pool on 14th and 16th January 2014 a few days after the Appellant’s employees. They also inspected the swimming pool whose construction had been completed and made recommendations. There is no doubt that the inspection that was done by the Appellant of the swimming pool was done after the construction of the said pool had been completed, and the recommendation that the Appellant was to make was on how the defects that had been noted could be remedied. There was completely no credible evidence before the lower court on which it could find that the Appellant had supervised the construction of the said swimming pool and was paid for the same. All the evidence before the court pointed to the Appellant’s engagement at the end of the construction work. For the foregoing reasons, it is my finding that the lower court erred in its finding that there was a contract between the Appellant and the 1st Respondent for the supervision of the construction of the swimming pool at its hotel premises.

15. The foregoing erroneous finding led to the entry of an erroneous judgment against the Appellant. In the absence of a contract between the Appellant and the 1st Respondent for the supervision of the constriction of the swimming pool, there was no basis upon which the Appellant could be liable to the 1st Respondent for Kshs. 1,200,000/- being a refund of the payment that was made to the 2nd and 3rd Respondents by the 1st Respondent and Kshs. 2,692, 850/- being the cost of a new swimming pool. In any event, the Appellant could not be liable to refund to the 1st Respondent the sum of Kshs. 1,200,000/- that was paid to the 2nd and 3rd Respondents. The refund could only be made by the 2nd and 3rd Respondents who received it. I did not also appreciate the reason behind the award of Kshs. 2,692, 850/- to the 1st Respondent. The 1st Respondent was to pay a total sum of Kshs. 2,500,000/- for the construction of the swimming pool. It only paid Kshs. 1,200,000/- less than half of the contract price and got a defective swimming pool for it. The court found that there was a breach of contract by the contractors who constructed the said swimming pool and ordered that the 1st Respondent get a refund of Kshs. 1,200,000/- that it paid to the said contractors for the work. This was fair in that it was putting the 1st Respondent back in the same state in which it was before the breached contract. After getting a refund of the payment made for the defective work, what was Kshs. 2,692, 850/- for? Why should the 1st Respondent get a refund of Kshs. 1,200,000/- for the payment made for the defective work on the swimming pool and an additional sum of Kshs. 2,692, 850/- for a new swimming pool while it did not even complete the payment for the defective pool?

16. Due to the foregoing, it is my finding that the 1st Respondent’s case in the lower court against the Appellant was not proved to the required standard. The lower court therefore erred in entering judgment for the 1st Respondent against the Appellant.

Conclusion 17. In the final analysis, I find merit in the Appellant’s appeal. The appeal is allowed. The judgment of the lower court delivered on 23rd March 2022 is set aside as against the Appellant and substituted with an order dismissing the 1st Respondent’s suit in the lower court as against the Appellant. The Appellant shall have the costs of the Appeal and the lower court suit to be paid by the 1st Respondent.

DELIVERED AND DATED AT KISUMU ON THIS 22ND DAY OF FEBRUARY 2024S. OKONG’OJUDGEJudgment delivered virtually through Microsoft Teams Video Conferencing Platform in the presence of:Ms. Wamuyu for the AppellantMr. Odero h/b for Mr. Wasuna for the 1st RespondentMs. J. Omondi-Court Assistant