Eastern Produce Kenya Ltd v Rongai Workshop & Transporters Ltd [2023] KEHC 24810 (KLR)

Eastern Produce Kenya Ltd v Rongai Workshop & Transporters Ltd (Civil Appeal 125 of 2018) [2023] KEHC 24810 (KLR) (7 November 2023) (Judgment)

Neutral citation: [2023] KEHC 24810 (KLR)

Republic of Kenya

In the High Court at Nakuru

Civil Appeal 125 of 2018

SM Mohochi, J

November 7, 2023

Between

Eastern Produce Kenya Ltd

Appellant

and

Rongai Workshop & Transporters Ltd

Respondent

(Being an Appeal from the judgment of Hon. E. K. Munyi SRM delivered on 8th August, 2018 at Nakuru in Civil Suit No. 691 of 2014)

Judgment

Background 1. This appeal stems from the subordinate’s court case Civil Suit No. 691 of 2014 filed vide Plaint dated 2nd September, 2010. The claim in the subordinate court arose from a theft incident that occurred on or around 20th September, 2005.

2. On 19th September, 2010 the Respondent motor vehicle registration number KTW 808/ZE left Rongai, loaded with a tea consignment, for delivery in Mombasa and on the said 20th September, 2005 the vehicle was found abandoned near Kibwezi at around 7. 00am. The crew were missing together with the consignment.

3. The Appellant’s insurer paid the sum of Kshs. 2,633,273 and filed the subsequent suit to recover the sums under the doctrine of subrogation.

4. The appellant relied on the proceedings in Criminal Case No. 2277 of 2005 Republic vs David Matia Muli. The accused who was the driver of the Respondent was charged with the offence of conspiracy to steal.

5. The Respondent’s denied the claim vide defence dated 18th October, 2010. The Respondent admitted to being common carriers for reward but denied involvement in the theft, or that it did not put in place proper security measures or that there was breach of contract on its part that it complied with the terms of the agreement dated 1st January, 2005.

6. On a without prejudice basis the Respondent contended that if indeed there was theft, the same was as a result of highway theft and circumstances that could not be avoided. That it took reasonable steps to help trace the tea consignment.

The Appeal 7. The Appellant being dissatisfied with that judgement lodged the present appeal vide Memorandum of Appeal dated 31st August, 2018. The Appeal is based on the following grounds.a.The Learned Trial Magistrate erred in fact and in law in dismissing the suit as against the Defendant whereas there was immense evidence against the Defendant.b.The Learned Trial Magistrate erred in fact and in law in failing to appreciate the evidence tendered with regard to breach in terms and conditions of the contract on the part of the Defendant.c.The Learned Trial Magistrate erred in fact and in law in totally failing to appreciate the law on bailment and that the Defendant was a bailee duly mandated to ensure the goods are delivered as agreed, which they clearly failed to do.d.The Learned Trial Magistrate erred in law and in fact in failing to appreciate that the Plaintiff clearly proved negligence on the part of the Defendant.e.The Learned Trial Magistrate erred in fact and in law in failing to appreciate that the law of subrogation was applicable in this matter and a party in not mandated to plead law in its pleadings.f.The Learned Trial Magistrate erred in law and in fact in failing to appreciate that the Plaintiff’s insured were entitled to recover their outlay under the doctrine of subrogation.g.The Learned magistrate erred in law and in fact in finding that the contract was frustrated by theft but failed to recognize that the Defendant and its agents were fully responsible for theft and actually participated in it, clearly breaching the contract.h.The Learned Trial Magistrate erred in in law and in fact in disregarding the evidence and submissions by the Plaintiff and completely relying on the submissions and authorities of the Defendant which were misleading and not binding in any way.i.The Learned Trial Magistrate erred in law and in fact in by failing to appreciate that the Plaintiff had proved its case on a balance of probabilities which was uncontroverted by the Defendant.

8. The Appellant thus seeks that the Appeal be allowed and the Judgement delivered on 8th August, 2018 dismissing the case be set aside and the same be allowed with costs to the Appellant.

9. The Appeal was disposed of by way of written submissions. The Appellant filed its submissions on 4th of August, 2022 and the Respondent filed its submissions on 3rd February, 2023.

Submissions Appellant’s submissions 10. The Appellant in support of its appeal submitted on two issues; firstly, that the trial magistrate did not interpret the contract correctly based on the evidence presented before her

11. It was the Appellant’s contention that the law governing the contract between the parties dated 1st January, 2005 was the law on bailment and that according to the terms of the agreement the Respondent had a duty to protect the Appellant’s goods from water and theft. That according to the contract the Respondent had a responsibility to deliver the tea to Mombasa but failed to and are vicariously liable for the actions of its agents.

12. In support of his submissions, it relied on the following authorities; Signon Freight Limited vs Air Charter Brokers Limited (2021) eKLR;

Equator Distributors vs Joel Muriu & 3 others (2018) eKLR;

Swan Carriers Limited v Eastern Produce Limited (2017) eKLR; and

Eveready Transport Company (K) LTd vs Proost Paper (E.A.) LT (2005) eKLR

13. The second issue was that the Appellant’s insured was entitled to recover under the doctrine of subrogation. The Appellant submitted that its issued ICEA Insurance paid the Appellant’s was entitled to recover the loss and remedies. In this regard the Appellant relied on the following authorities; Leslie John Wilkins vs Buseki Enterprises Limited (2015) eKLR; and

Swan Carriers Limited vs Eastern Produce Limited (2017) eKLR

Respondent’s submissions 14. The Respondent in the submissions dated 2nd February, 2022 opposing the Appeal summitted and reminded court of its duty as a fist Appellate court.

15. The Respondent submitted that the element of negligence and breach of contract had not been proved by the Appellant accordingly in terms of the provision of the Evidence Act and relied on the following authorities. Treadsetter s Tyres Ltd vs John Wekesa Wepukulu (2010) eKLR

Dharmagma Patel & Another vs T A (a minor suing through the mother and next friend HH) (2014) eKLR

Roy Transporters Ltd vs Kenya Tea Development Authority (2007) eKLR

Express Kenya Limited vs Manju Patel (2001) eKLR

16. The Respondent also submitted that the law of subrogation was not applicable since the Appellant had not specifically pleaded that the suit was a subrogation claim or produced evidence to the effect. That the Appellant did not also produce a policy document between itself and the insured and that since the Appellant has already been paid by the Insurance, it is not entitled to double compensation and relied on the following authorities; Securicor Guards (K) Limited vs Mohamed Saleem & another (2019) eKLR

Chania Transport Company Limited & Another v A to Z Transporters Limited (2020) eKLR

Egypt Air Corporation vs Suffish International Food Processors (U) Ltd & Another (1999) 1 EA 69

Suffish International Food Processors (U) Ltd & Another vs Egypt Air Corporation (2003)1 EA 330

Gabriel Mwashuma vs Mohammed Sajjad & another (2015) eKLR

17. It was also the Respondents contention that the Appellant the subordinate’s court case was not properly before court and relied on; Kenya Commercial Bank Ltd vs stage coach management (2014) eKLR

East African Portland Cement Company, CFC Stanbic Limited v Peter Ivindah Muliro (2019) eKLR

Duty of the Court 18. This is a first Appeal and this court has a duty to evaluate the evidence presented at the trial court afresh together with the with the judgement and make its own independent conclusions. While at it the court has to bear in mind that it did not have the opportunity to see or hear the witnesses as the trial court had the advantage. This duty was stated in Selle vs. Associated Motor Boat Co. Ltd. [1965] E.A. 123.

19. Similarly, in Abok James Odera t/a A.J Odera & Associates v John Patrick Machira t/a Machira & Co. Advocates [2013] e KLR, the court stated:“This being a first appeal, we are reminded of our primary role as a first appellate court namely, to re-evaluate, re-assess and reanalyze the extracts on the record and then determine whether the conclusions reached by the learned trial Judge are to stand or not and give reasons either way”

20. PW 1 was one David Kemise Kirui the Respondent’s Finance Administration Manager told the trial court that in the transport Agreement dated 1st January, 2005, between the Appellant and the Respondent, the main objective was to prevent water damage and theft PW1 blamed the Respondent for the loss and blamed the Respondent for not safeguarding the tea and placed reliance on clause 1 (e) of the agreement which he felt was violated. On cross-examination, he stated that the insurance paid but the Respondent is still liable since the Appellant suffered damage. That the Respondent knew of the theft when the Appellant informed it. That the Respondent failed to track the truck and the Respondent’s employees were not honest. The driver was charged and the turn boy was a witness the Appellant sufferer damage He indicated on re-examination that there was no evidence that the tea was stolen but the Respondent is liable for loss.

21. PW2 was one Wycliff Malala Mulunga investigator from Ivespot Investigations testified that they had been hired by ICEA to trace the tea for recovery. That there was a criminal case against the driver of the Respondent but was discharged under section 87(a) of the CPC for lack of evidence. He produced his investigation report dated 13th March, 2007 together with the fee note paid as well as the proceedings in Cr Case No. 2277 of 2005. On cross-examination he stated that he had no receipt to show they obtained court proceedings and that he did not mention in their report that they visited court.

22. PW3 was one Peter Kimani from ICEA. He claimed that they(ICEA) were claiming subrogation rights from the Respondent. Claimed they employed investigators to investigate the loss and adjusters to ascertain the value of the goods lost which was Kshs. 1,906,297. He claimed that they paid Kshs. 18,936 to the investigators and insured the sum of Kshs. 1,906,297 and through their advocates on record filed the instant case to claim the sum of Kshs. 2. 633,273 as all the costs incurred. On cross examination, he admitted that he had been in court when PW2 was giving evidence and stated that he did not have the policy document though was aware that Goods of their insured were transported by a third party. He further stated that according to clause 1(h) (2) of the insured is that they would reject the claim if the transporters were negligent. He stated the they had subrogation rights and paid the premiums. On reexamination the driver claimed to have been hijacked but there was no robbery and clause 1(h) affects accidents and breakdowns. There was no breakdown.

23. DW1 was one Vanesa Jane Evans, the Managing Director adopted her witness statement. On cross examination, she admitted to being a prosecution witness in the criminal case. She admitted that she was to keep the tea under control of theft and despite transporting thousands and thousands of tea that was the first occasion of thefts. That they did not compensate the Appellant for the loss.

24. Now therefore, having considered the rival submissions and the record of Appeal it is my considered view that the following are the issues for determinationa.Was there breach of contract?b.Should the Appellant have pleaded subrogation and was the failure to plead the claim under subrogation fatal?

Was there a breach of contract? 25. PW1 testified that the Respondent was in breach of the Agreement since the goods were to be delivered and they were never delivered. The Appellant submitted that the Trial Magistrate wrongly interpreted the contract since she failed to note that nature of engagement was on bailment. The Respondent on the other hand contends that it is not to blame since it took all measures to ensure that the goods reach the destination but for reasons beyond them the goods never made it to the destination. The Respondent attributed it to highway gangs and risks inherent and associated with carriage of goods. In hers statement she stated that it is impossible to be 100% secure while on the road.

26. Looking at the decision in Securicor (Kenya) Limited (supra) the court quoted with approval the English case of Morris v. C.W. Martin & Sons Limited (1965) 2 ALL E.R. 725 wherein Lord Denning M.R. puts it as follows: -"When a principal has in his charge the goods or belongings of another in such circumstances that he is under a duty to take all reasonable precautions to protect them from theft or depredation, then, if he entrusts that duty to a servant or agent , he is answerable for the manner in which that servant or agent carries out his duty. (emphasis mine) If the servant or agent is careless so that they are stolen by a stranger, the master is liable. So also, if the servant or agent himself steals them or makes away with them."

27. Clause 1(e) states:1. The Transporter shall during the continuance of this Agreement at their own costs: -(e)Maintain to the complete satisfaction of the Company the said vehicles and all parts thereof and keep the same clean and in good and proper condition and repair and fit for transportations of tea with particular emphasis being placed on protection against water damage and control of theft

28. Now therefore with regard to Clause 1(e) was there a breach in the terms of contract of contract? The engagement was under a defined contract which detailed their terms of engagements. The Respondent “was control theft”. Therefore, the Respondent had a duty of care to the Appellant.

29. The Learned Magistrate in the judgment stated“………there is no allegation or evidence that the terms of the agreement was not complied with :

30. I respectfully disagree with that pronouncement. The terms were express. The Respondent was to control theft. The Respondent was expected to deliver the goods. How the goods got to the destination safely was the Respondent’s responsibility.

31. It is admitted that the goods were never delivered as the same got lost as the truck that was to deliver was found abandoned by the road at Kibwezi. DW1 gave a chronology of events as told by her driver and turn man, from her hired investigator and what she could gather on her own. The investigations carried out could not trace the missing goods. Giving a chronology of events of how the goods presumably got lost and what measures were taken to recover the goods does not absolve the Respondent of its duty. Following up on the theft was equally its responsibility.

32. The bone of contention is what measures were put in place to cotol the theft. Besides locking the container, what other measures were put in place to secure the goods of the Appellant? Did the Respondent take out security? To this I am persuaded by the decision in Khetshi Dharamshi Co. Ltd v P. N. Mashru Ltd [2006] eKLR where the court held that;“the defendant considered that it was involved in a risky operation, as a common carrier, why did it not take out an insurance cover, to protect itself if it should lose goods belonging to a party such as the plaintiff? The defence witness claimed that it was unnecessary for the defendant to take insurance cover; for it was the responsibility of the plaintiff to insure its goods. It cannot, with respect, be the law that a transporter or bailee has the freedom to be negligent, with no duty to insure against losses which its negligence may cause to others, but it is only for those others to so insure their goods that they may be free of the wrongful act of the defendant. The duty of care rests as much on the plaintiff as on the defendant, and the Court cannot accord the defendant the cover of impunity, while the plaintiff takes all the trouble to secure its interests against the consequences of such impunity.In my finding, the defendant in this case did cause loss to the plaintiff through negligence. The defendant must pay recompense in that regard.

33. Further, looking at the decision in Royal Insurance Company of East Africa & another v Superfreighters Ltd & 4 others [2003] eKLR the court stated"Having already found that the 34 bags were lost while in the possession of the transporter and the transporter having failed to explain the loss, I think this Court is justified to invoke the rule of evidence (which is sometimes, erroneously though, said to be as a maxim or principle of law) expressed in Latin as res ipsa loquitor. In the absence of any explanation as to how the loss occurred, the Court must presume that it was as a result of the Transporter’s negligence for goods in the possession of a bailee do not just disappear in thin air without some intervening human act or omission."

34. Learned counsel for the Respondent submitted that the Appellant would be claiming double compensation from its insurance. I pose this question, since the Appellant made private arrangements on unfortunate eventualities on its end, does the payment absolve the Respondent from its duty? I think not. The Respondent in my opinion did very little to secure the goods while on transit. Reasonable care was not exercised to transport the Appellant’s goods to safety. A prudent transporter would have provided tracking, radio calls or even escort service for the vehicle carrying the goods.

35. I am guided by the decision in Khetshi Dharamshi Co. Ltd v P. N. Mashru Ltd [2006] eKLR where Justice Ojwang JB cited with authority the decision in Chhatrisha & Co. Ltd. v. Puranchand & Sons [1959] E.A. 746 in which the appellant company had stored metal sheets in the respondent’s godown, and then they went missing. The Court’s decision, in the words of Gould, J A (pp.754-755) reads:“In the present case the respondents as bailees have failed to produce goods bailed to them and no explanation as to what has happened to them has been forthcoming. There are undoubtedly possible explanations for their loss which would not be covered by the exemption clause contained in the letter of October 31, 1956, and the respondents have therefore failed to bring themselves within its protection ………“In my view……. the learned Judge was correct in holding that, upon a basis of bailment, the respondents were liable for the value of the sheets which are unaccounted for……..”

36. It is my considered view that failure to deliver was a fundamental breach of duty which goes to the root of the contract thereby occasioning a breach of contract. The Respondent was liable for the loss incurred by the Appellant when its goods were stolen while on transit.

Should the Appellant have pleaded subrogation and was the failure to plead the claim under subrogation fatal? 37. The Appellant has faulted the trial for failing to appreciate that the law of subrogation was applicable and that there was entitlement to recover their outlay under doctrine of subrogation. The Appellant contended that the law does not provide that subrogation ought not to be pleaded in pleadings.

38. The principle of the doctrine of insurance was well definced In Kenya Power & Lighting Company Limited v Julius Wambale & Another (2019) eKLR where Githua J held;‘‘The parameters within which the principle of subrogation applies are now well settled. The doctrine applies where there is a contract of insurance and following crystallization of the risk insured, the insurer had compensated its insured for financial loss occasioned thereby usually by a third party. Under this doctrine, the insurer is in law entitled to step into the shoes of the insured and enjoy all the rights, privileges and remedies accruing to the insured including the right to seek indemnity from a third party. The action must however be instituted in the name of the insured with his consent and must relate to the subject of the contract of insurance.’’

39. The principle applies where there is an insurance contract. Once the insurer settles the insured’s claim, then the insurer is entitled to recover the loss by seeking compensation from the party that occasioned the loss. The insurer is put in the position of the insured and is entitled to claim compensation from the party. The Appellant was entitled to claim under the doctrine of subrogation. However, was the suit a subrogation claim.

40. There is evidence presented in this court indicating that ICEA Insurance paid the investigator, the owner of the tea, the adjusters and the receipts were presented in court.

41. I am however guided by the decision in the case of MOMBASA HCC. NO. 79 OF 2012 Gabriel Mwashuma -vs- Mohammed Sajjad Milly Glass Works Limited viz:“The plaintiff for the first time while testifying relied on a letter written by the Allianz Private Health Insurance dated 18th November 2011 by which letter the Insurance Company sought to be reimbursed under the principle of subrogation the amount it expended in the treatment of the Plaintiff. That subrogation right was not all pleaded and neither was it specifically proved. For that reason, that claim must and does fail. In this regard I am persuaded by a decision Kwazulu-Natal High Court in South Africa, namely Nkosi-vs-mbatha (AR20/10) (2010) ZAKZPHC 38 where the court stated:“However, the plaintiff said it for the first time under cross-examination that she was proceeding against the Defendant on behalf of the insurer for the recovery of the costs of repairs the insurer paid to her. It does not appear from the Plaintiff’s pleadings that she was so suing. I am of the view that a subrogation claim is something which must clearly be proved and specifically pleaded. Nor had any mention been made in the Plaintiff’ pleadings that her motor vehicle was insured and that after collision the insurer fully indemnified the Plaintiff for the loss she had suffered. Nor did the Plaintiff plead that the amount to be recovered from the defendant would be paid over to the insurer. The object of pleadings is to define the issues between the parties and the parties must be kept strictly to their pleas where any departure could cause prejudice. See Robinson -v- Randfontein Estates GM Co. LTD 1925 and 173 at 178 as per Rose-Innes CJ. The party is therefore not allowed to direct the attention of the other party to one issue and at the trial attempt to canvass another Nyandeni v. Natal Motor Industries ltd 1974(2) SA 274(D). In the request for further particulars the Plaintiff was specifically asked whether her motor vehicle was at the time of the collision insured, and whether she had personally paid for the repairs. The Plaintiff refused to answer the questions posed to her on grounds that the information resisted was not required for pleading. In my view, the Plaintiff had thereby misled the defendant as to the time and correct state of events and as to the nature of her claim.”

42. The Appellant contends that it had filed the suit against the Respondent under the doctrine of subrogation for the ICEA Lion Insurance Company which had insured its goods. The Plaint does not mention that the Appellant was claiming for damages on behalf of his insurance company. The issue of claiming on behalf of its insurance came up when the witnesses were testifying more particularly PW3.

43. A subrogation claim is something which must clearly and be specifically pleaded. Failure to plead subrogation changes the entire claim altogether.

44. Even if PW3 witness was elaborate and produced statements of payment, it could not have cured the material damage of not being particular on what was being pleaded. Had the Appellant Pleaded subrogation then the claim on subrogation would have likely succeeded.

45. The omission was fatal to the claim and for the above reasons the Appeal fails with costs to the Respondent

It is so ordered.

DATED, SIGNED AND DELIVERED AT NAKURU ON THIS 7TH DAY OF NOVEMBER, 2023. MOHOCHI, S.M..................................JUDGEI certify that this is a true copy of the originalSignedDEPUTY REGISTRAR