Getrio Insurance Brokers Ltd v Kenya Agricultural Research Institute [2017] KEHC 5416 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL & TAX DIVISION

CIVIL CASE NO. 366 OF 2013

GETRIO INSURANCE BROKERS LTD ……………………..PLAINTIFF

VERSUS

KENYA AGRICULTURAL RESEARCH INSTITUTE…….DEFENDANT

J U D G E M E N T

1. The Plaintiff filed this suit vide a Plaint dated and filed on the 22nd August 2013, seeking orders of :

a)A declaration that the Plaintiff is entitled to damages for breach of the agreement dated 1st October 2012.

b)Kshs. 14,007,324. 20.

c)Interest on (b) above at court rates until payment in full.

d)Costs of the suit.

Upon service of the Summons to enter appearance, the Defendant filed its Statement of Defence on 23rd September 2013, denying the claim.

2. The brief background facts of the case are that, on the 1st day of October 2012, the Plaintiff and the Defendant entered into a contract (hereinafter “the Contract”), for provision of Insurance brokerage services in respect of Medical insurance.  Under clause 5 thereof, the contract was for a period of one year, commencing 1st October 2012 and ending 30th September 2013.  However, it was renewable for a further period of one year subject to the satisfactory performance of the contract by the Plaintiff.  The Plaintiff avers that it performed its contractual obligations satisfactory and the same was acknowledged by the Defendant. However, on 30th September 2013, the Defendant purportedly and unilaterally terminated the contract notwithstanding the clear provision of clause 5 thereof.  That as a result of termination, the Plaintiff was denied an insurance commission of Kshs. 14,007,324. 30, which it earned, following the insurance covers it placed with First Assurance Co. Ltd, hence the claim for  the same, alongside the claim for declaration that it is entitled to damages for breach of contract, costs and interest as prayed for in the Plaint.

3. The Defendant denied the claims arguing that clause 5 of the Agreement cannot be applied in isolation of the other terms and conditions in the contract.  That the special conditions of contract were to be construed as part of the Contract as per clause 1.  Similarly, clause 2 of the Contract provided that the contract would be renewed depending on the performance of the Plaintiff.  The medical cover was to be provided and issued by First Assurance Company Ltd.  All payments were to be made to and in the name of the First Assurance Co. Ltd as per clause 3.  The Plaintiff was to ensure that, the underwriter issues a policy in respect of the Medical insurance provided to the Defendant’s employees, and provide such cards, badges, or identity cards to all employees of the Defendant for access to medical services, as per clause 6.  That, clause 8 provided that, the Plaintiff shall ensure that the underwriter discharges all obligations under the policy, and the Chief Administrative Officer of the Defendant was the contact person and the Administrator of the contract.

4. The Defendant further averred that, the renewal of the contract was neither automatic nor guaranteed. That, the Plaintiff did not perform its contractual obligation satisfactorily, and at no time did the Defendant acknowledge satisfactory performance as alleged. Equally, the Defendant was under no obligation to notify the Plaintiff of the reasons for non-renewal of the contract, in particular that it was due to non-performance.  That if such acknowledgment was given, then, it was given by unauthorized persons, and/or was intended by the author to answer to the Plaintiffs’ request for the use of the same for various tenders.  Thus, the letter dated 30th July 2013, did not amount to termination of the contract, that the contract was for one year expiring on 30th September 2013, and the same would end on effluxion of time.

5. In the alternative and without prejudice, the Defendant argued that the Plaintiff is guilty of several breaches of the Contract, as tabulated under paragraph 12 of the Statement of Defence. It was in compliance with the procurement law and regulations that, the Contract was not renewed.

6. The Defendant leveled accusations against the Plaintiff for breach of contract. In   particular by  failing to:

· Secure insurance of the insurance policy, by the underwriter;

·  Ensure the signing of a service level Agreement between the parties inclusive of the underwriter;

· To provide and complete staff education within the agreed timeline;

· To address complaints from the Defendant’s staff;

·   Provide adequate medical cover limits, and the same being too low.

7. The Defendant denied being privy to any agreement on commission due and payable to the Plaintiff by either the underwriter or knowledge of the Plaintiff’s expectation of the same.  It argued that in any case, claims by the Plaintiff for payment of commission are without legal basis, as the same is not provided for in the Contract.  The claim of Kshs. 14,007,324. 30 was denied.

8. At the hearing of the case, the Plaintiff called one witness who relied on the witness statement of Charles Kimenyi Macharia dated 21st August 2017, and filed on 27th August 2015, referred to the bundle of documents date 22nd August 2013, and 21st August 2015, filed on the 27th August 2015. The Defendant called one witness, Benjamin Gitamo Onyancha who relied on the Statement of Defence dated 23rd September 2013, a list of documents filed alongside and a supplementary list of documents filed on 15th February 2016.

9. The parties agreed by consent to file separate list of issues for determination. The Plaintiff narrowed the issues for determination to five, namely:

· Whether the contract was renewable, and if yes, whether the said renewal was at the sole discretion of the defendant;

·  Whether the Plaintiff performed the services satisfactorily;

· Whether by terminating the contract unilaterally, the Defendant breached the contract;

·  If the Defendant is in breach of the contract, what damages are payable to the Plaintiff; and

·   Who meets the costs of the suit?

10.  The Defendant identified the following condensed issues for determination:

·  Whether the agreement was for one year or two years.

·  Whether the Defendant or the Plaintiff breached the Agreement.

·  Whether the agreement was subject to extension for one more year.

·  Whether the Defendant was privy to the agreement on commission payable to the Plaintiff and if not, can the

Defendant be held liable for the same.

· Whether the letters produced by the Plaintiff amount to confirmation of satisfactory performance of obligation under the contract.

· Whether, the Defendant’s letter dated 30th July 2013, constitute termination of the Agreement.

·  Whether the parties agreed on the criteria to evaluate performance of the Plaintiff.

11. I have considered the issues identified by the Parties for determination and I draw the following issues therefrom:

·  What was the duration of the contract, and was it subject to renewal.  If so, for how long and on what terms.

·  What were the terms and conditions of the contract in relation to the termination thereof and whether the Defendant unilaterally terminated the contract, if so, what were the natural and probable consequences of the same.

·  Was a commission payable, if so, how much and by who?

·  Did the Defendants acknowledge the Plaintiff’s performance as being satisfactory?

·    Whether the Plaintiff has proved the case on the balance of probabilities for the Court to grant, any or all the prayers in the plaint.

12.   From the pleadings, I find that, there is no dispute that, the Parties herein entered into a contract dated 1st October 2012, whereby the Plaintiff was contracted to provide Insurance brokerage services, for a contract sum of Kenya Shillings One hundred forty million, seven hundred, three thousand, six hundred and twelve only (Kshs.140,703,612), inclusive of Tax.  The contract clearly stipulates, that it is for a period is one (1) year, commencing 1st October 2012 to 30th September 2013.  It was lawfully executed as evidenced by the signatures on page 4, thereof of the authorized agents of the respective parties. However, a dispute has arisen as to the duration of the contract and the termination thereof. The duration of the Agreement is provided for under clause 5 of the Agreement, which states that:

“The Agreement shall be for a period of one year, (from 1st October 2012 to 30th September 2013) renewable subject to satisfactory performance of services, for another period of one yearon the same terms and conditions excepting the renewal provision”.  [Emphasis mine].

13.   That clause is clear that the duration of the contract is one year. It could only be renewed on satisfactory performance thereof by the Plaintiff. I shall revert to the issue of performance later. The Plaintiff has however, faulted the manner in which the contract was terminated.  The Plaintiff’s counsel submitted that the operative word in that clause is “shall”. The Agreement could not therefore be terminated at the whims, discretion or prerogative of one Party to the detriment of the other, except where the Plaintiff’s performance was unsatisfactory. The Plaintiff further argued that the contract was not renewable at the discretion of the Defendant only, as the Defendant modified clauses 5 of the Agreement vide the contract covering period of 1st October 2013 to 30th September 2014, to read, “….. and may be renewed only by mutual consent of both parties in writing”. The Plaintiff maintained that the only condition to consider before renewal of the contract was “the performance” of the contract by the Plaintiff. Reliance was placed on the extract from the book entitled: Keating on Construction of Contracts 9th Edition, to submit that ordinary English words are prima facie assumed to mean what they naturally mean and that:

“The Court will adopt the ordinary meaning and decide as a matter of fact, whether the facts of the case are within the ordinary meaning or not ……”.

14.   The case of Kairu vs. Shaw and Others (1986-1989) EA 221, was citedto state that,the Court of Appeal held that, when interpreting a contract, the Court ought to give effect to the intention of the Parties as far as possible; and avoid deviating interpretations, however easy or possible they may appear to be. Thus, the Defendant cannot introduce oral evidence to argue that, it had the sole discretion to terminate the contract unilaterally. The Plaintiff further relied on the case of Nakana Trading Co. Ltd. Vs. Coffee Marketing Board (1990 – 1994) EA 448 and argued that the contract being a subject of a tender process could only be terminated subject to the provision of Regulation 32 of the Public Procurement and Disposal Regulation 2006. That, Clause 5 herein was subject to the said provision and under Regulation 32 (2), the Defendant was supposed to obtain approval from its Tender Committee clearly stating  inter alia the reasons, contractual grounds, and cost for or of terminating the contract, prior to terminating the contract.

15.   The Defendant however refuted the Plaintiff’s argument and submitted that it did not unilaterally terminate the contract.  That the letter dated 30th July 2013, sent to the Plaintiff was  mere information that the contract would  not be extended and did not amount to termination of the Agreement as alleged by the Plaintiff.  That the provisions relating to termination of, the contract are stipulated under clauses 3:11, 3:12 and 3:13 of the Agreement executed by the Parties and a plain reading thereof reveals that, the Defendant did not avail itself of any of those provisions when it wrote the letter dated 30th June 2013.  That non-renewal of the contract is distinct from termination thereof. The Defendant further submitted that, pursuant to the provisions of clause 3. 7 of the contract, the extension of the contract for a longer period was at the sole discretion of the Defendant.  The clause states:

“Delivery of service will initially be for a period of one year, may be extended for a longer period depending on the performance of the broker/ insurance company”.

16.   The Defendant argued that, indeed the parties had entered into earlier contract dated 26th September 2011, which contains  a provision as to the renewal of the Agreement and it stated that:

“The agreement shall be for one year from 1st October 2011 to 30th September 2012, and renewal, subject to the satisfactory performance of services, for another period of one year, on the same terms and conditions except the renewal provision”.

That the earlier contract, came to an end after one year but was not renewed, instead a fresh tender was advertised and the Plaintiff bid for it and was successful.  The Defendant therefore wondered why, at that time, the Plaintiff did not raise the issue of non-renewal and/or file a suit then as herein.  The Defendant submitted that, the Plaintiff merely filed this suit when the Defendant advertised for fresh bid and locked out the insurance brokers.  That the Defendant does not owe the Plaintiff a legal obligation to use its insurance brokerage services. The Defendant maintained that it did not terminate the contract. The case of Osteria Cream Limited vs. Junction Ltd (TJL) (2011) eKLR was relied on.

17. I have considered the elaborate submissions above, and the terms and conditions of the contract executed by the Parties which is the subject matter of this suit, and I find that, a plain reading of clause 5 of that contract does not make provision for the Defendant to consult the Plaintiff before renewing the contract. The only consideration was whether the Plaintiff had satisfactorily performed its contractual obligations. Indeed, it is the Defendants who invited Tenders vide Tender No. KARI/HQTS/710/2012-13, for Provision of Insurance Brokerage Services for medial cover for KARI Staff.  It is also the Defendant, the Procuring entity that accepted the tender by the Plaintiff, for provision of the said services.  It is therefore not surprising that, the renewal of the contract was subject to satisfactory performance of the same by the Plaintiff.  Thus, the Procuring Entity was under no legal duty to consult the Plaintiff before renewing the contract.

18.   The next question is this; did the Defendant give the Plaintiff a notice of non-renewal of the contract? Does the same notice amount to a notice to terminate the contract?  The answers to these questions lie in the content of the letter dated 30th July 2013.  I have read through the entire letter and find that, it makes reference to the contract herein “No. KARI/TO1/2012-13”, and states:

“We are writing inform you that the contract will not be extended upon the completion of the service contract”.As such, kindly be informed that KARI will not extent or renew the contract.  Please note that you will continue to provide the brokerage services until 30th September 2013, as stipulated in the contract”.

19.   In my considered opinion whatever meaning or interpretation one may assign to the contents of this letter, the words therein are “Res ipsa Loquitor”. The key words are “the contract will not be extended”, and “will not extend or renew the contract”.Do these words amount to termination of the Contract? My answer is NO. To the contrary, the letter allows the Plaintiff/Tenderer to continue to service the subsisting contract up to 30th September 2013.  If indeed this letter amounted to termination of the contract, then the Plaintiff would not complete the subsisting Contract. I therefore uphold the submissions by the Defendant that the letter dated 30th July 2013 did not amount to termination of the contract.  Similarly as rightfully submitted, the Defendant did not invoke any of the contractual provisions under clauses 3:11, 3:12 and 2. 13 which provides for the termination of the contract.  Even if the Defendant was to invoke the said provisions, I don’t see anywhere there under where they were to consult the Plaintiff before they could terminate the contract.  All that the Defendant was required to do was to terminate the contract strictly in accordance with the terms and conditions of the said clauses, which are not applicable herein.

20. In conclusion I hold that, the contract entered into by the parties herein, on 1st October 2012 was for a period of one year, ending 30th September 2013.  It was subject to renewal for a further period of one year.  That renewal was subject to the Plaintiff rendering satisfactory contracted services. The Defendant was not legally bound to consult the Plaintiff before renewal thereof.  I also find that, the contract was not renewed as the Defendant wrote a letter to the Plaintiff notifying it that the contract would not be renewed upon the expiry of the first initial period of one year as aforesaid.  That letter dated 30th July 2013, was not a termination of the contract, but a notification of non-renewal of the same.  That the termination of the contract was founded on clauses 3. 11, 3. 12 and 3. 13 of the contract, which clauses do not arise herein. If the basis of the prayer 12 (a) is that the letter of 30th July, 2013, then it does not amount to a breach of the Agreement, as it did not terminate any contract between the parties.

21.   I shall now turn to prayer 12(b) where the Plaintiff is seeking for a sum of Kshs. 14,007,324. 30.  I am not quite sure whether this amount of money is claimed as a commission earned, or loss arising out of the alleged breach of contract.  However, I  note that under paragraph 7 of the Plaint:

“The plaintiff avers that as a result of the Defendant’s breach of the Agreement, the plaintiff has been denied a legitimate commercial expectation to earn Insurance commission of Kshs. 14,007,324. 30, and the plaintiff holds the Defendant liable for breach”.

22. The key words in my considered opinion are “legitimate commercial expectations to earn insurance commission”. Further, under paragraph 9 of the Plaint, it is averred that:

“The Plaintiff’s further claim against the Defendant is for the payment of Kshs. 14,007,324. 30 being the Insurance commission that the plaintiff would have earned had the Defendant performed the contract by renewing it for a further period of one year from 1st October, 2013”. (Emphasis mine)

23. It is clear from the pleading that the sum of Kshs. 14,007,324. 30 claimed is the amount the Plaintiff would have earned as commission if the contract was renewed.  The question is this:   Is the plaintiff entitled to that sum of money, and if so, who is liable to pay it. The Plaintiff submitted that, the Defendant did not state in the letter dated 30th July 2013, the reasons why the contract was terminated. But, in the letter dated 5th August 2013, the reasons advanced for termination of the contract were that the renewal clause was neither compulsory nor automatic.  That the Defendant does not state therein that the Plaintiff’s performance was unsatisfactory.  To the contrary, the Defendant issued a letter dated 16th May 2013, by Mr. Phillip Yego, Officer in charge of the defendant’s procurement unit of commendation and recommendation to the Plaintiff. In another letter dated 30th July 2013, the Defendant’s director applauds the Plaintiff for the good work for over two years.  Further letters issued to that effect are dated 29th March 2012, and 12th June 2012.  Therefore, according to the Plaintiff these letters are evidence of Plaintiff’s satisfactory performance and so the issues listed under paragraphs 12 of the Plaintiff’s submissions, merely amount to an attempt to paint the Plaintiff as a non performer.  The Plaintiff submitted that these issues should have been raised in the pleadings.  The Plaintiff further submitted that, if the performance was not satisfactory, the Defendant would have gone ahead and liquidated the performance security submitted to it by the Plaintiff.

24. The Plaintiff cited the case of Kilimanjaro Construction vs. The East African Power & Lighting Co. ltd, 1985 KLR where it was held that; where a contract contains a termination clause, the termination must be in accordance with the terms of that clause. The Plaintiff further submitted that, it had secured business for the underwriter from the Defendant and thus earned the resultant commission.  That the effect of the breach of the contract by the defendant is that, the Plaintiff was denied a commission which it would have earned had the Defendant not breached the contract.  That the Defendant need not and is not required to be privy to the agreement between the Underwriter and the Plaintiff on payment of commission.  The commission payable was 10% as evidenced by the earnings for the year 1st October 2012 to 30th September 2013.

25. That the law is established that where there is breach of contract, the innocent party is entitled to damages as held in the case of Kilimanjaro Construction(supra). Finally, the Plaintiff relied on the rule in Hadley vs. Baxendate (1854) of Ex Ch 341 which set down the principles that govern the assessment of damages for breach of contract. That damages will be awarded for the loss that arises from natural or contemplated cause, that puts the innocent party at good position, as would have been if the contract was performed.

26. However, the Defendant vehemently denied the alleged breach of contract and/or liability to pay the commission claimed.  The Defendant submitted that, the obligation of the Plaintiff was spelt out under clause 10 and the Defendant’s under clause 11 of the Agreement.  The Defendant is not supposed to pay any commission.  The obligation to pay lies squarely at the feet of the underwriter, and only crystallized if the Plaintiffs services were utilized.  Be it as it were, it is incumbent upon the Plaintiff to prove that it suffered loss/damage pursuant to non renewal of the contract.  Therefore, the claim by the Plaintiff for commission amounts to unjust enrichment, as the Plaintiff did not give any brokerage services. The Defendant wondered why the Plaintiff expects a colossal sum of Kshs. 14,007,324. 30 to be paid where no services are offered and has not offered any evidence to prove that it suffered any actual or pecuniary loss and on which the Court can base its assessment of the damages.  The Defendant argued that, the Plaintiff’s claim arises purely due to the disappointment resulting from the non renewal of the contract.

27.  I have gone through the contract executed by the parties on 1st October 2012; there are no express provisions for payment of commission.  The commission was payable upon provision of services, thus the sum sought is anticipatory.  The Plaintiff lays claim on the same on the basis that the contract was terminated and  avers in the submissions that:

“The effect of breach of the Contract by the Defendant is that the Plaintiff was denied a commission which it would have earned had the Defendant not breached the Contract”.

28. At paragraph 43 of the submissions, the Plaintiff submits:

“It is enough for the Plaintiff to demonstrate that as a result of the Defendant’s breach of contract, the Plaintiff was unable to place insurance covers with the underwriter and therefore has been denied a legitimate expectation to earn insurance commission from the underwriter”.

29. Similarly at paragraph 38 of  the submissions, the Plaintiff avers as follows:

“In the light of the foregoing, the Plaintiff submits that the defendant breached the contract by purporting to unilaterally terminate it without valid or justifiable reasons”.

30. The averments above clearly place the claim for the commission sum stated above on breach of the contract based on termination thereof. At paragraph 45 of the Plaintiff’s submission it is stated:

“The breath herein was caused by the Defendant’s unlawful termination of the contract. Had the contract been performed by the Defendant as per the terms of the contract, the Plaintiff would have earned an insurance commission of Kshs.14,007,324.

31.    Finally, under  paragraph 46 of the Plaintiff’s submissions it is stated that:

“As result of the breach on the part of the Defendant, the Plaintiff lost a reasonable expectation to earn insurance commission of Kshs 14,007,324/-. The Defendant is therefore liable to pay to the Plaintiff damages equivalent to the said Insurance commission.

32. This brings me back to the question as to whether the contract was terminated.  The Defendant maintains that there was no termination thereof. I have considered the rival submissions by the Parties on this issue.  As per the Court’s earlier finding above, if the Plaintiff is relying on the letter dated 30th July 2012, to support the termination of the contract, then there was no termination thereof.  That letter was to give the Plaintiff notification of non-renewal of the contract, not termination thereof.  I am unable to find any other factual evidence that the Defendant either in writing or otherwise communicated to the Plaintiff, that they were terminating the contract.  As already observed, the subsisting contract was fully performed.  There was no breach thereof.  The 2nd year of contract did not material, as the contract was not renewed, so where is the breach!

33. It is however, evident that upon failure to renew the contract, for reasons well known to the Defendant and which they did not communicate to the Plaintiff, the Defendant went ahead and dealt with the underwriter directly, allegedly to save money as they did not require the services of an Insurance broker.  Be that as it may, the conduct of the Defendant to unilaterally decline to renew the contract without advancing reasons to the Plaintiff is literally bad commercial behavior.  Courtesy requires that the Defendant behave with the Commercial decency and notify the other party why they have decided not to have any further dealings with them.  The Defendant’s submissions that, they did not owe the Plaintiff any legal duty to give reasons for the non-renewal of the contract, smacks of arrogance and neither does it  exempt the Defendant from living within the professional  trade practice and customs of doing commercial business.  If they did not owe the Plaintiff a legal duty, they at least owed it a moral duty to inform it of the reasons for non-renewal of the contract.  They had previously dealt with the Plaintiff and that is all the reasons why they should have had the courtesy and decorum to advance reasons for non-renewal of the contract.

34. That leads me to the issue of the letters the Defendants wrote as “Reference” for the Plaintiff’s dated; 29th March 2012 , 12th June 2012, 16th May 2013, and 30th July 2013. They are all positive and clearly indicate that the Defendant had no complaints against the Plaintiff’s performance of the contract.  The logical conclusion therefore is that, the performance was satisfactory. Therefore the Defendants allegations that, the recommendation was given by unauthorized persons is a mere after thought.  In the same vein, the alleged issues raised under paragraph 12 of the Defendant’s statement of defence, are to say the very least, unfounded and pleaded in bad faith.  If the Plaintiff did not perform the contract as alleged, then why didn’t the Defendants notify it, that the non-renewal of the contract was due to non-performance and/or poor performance? Even more, why didn’t they terminate the Plaintiff’s services and instead allowed the contract to run for the whole year?. But even more, some of the allegations of non performance lie at the feet of the underwriter; the Plaintiff was merely a broker.  Interestingly, the Defendants awarded the contract to the same underwriter for the contract period of 1st October 2013 to 20th September 2014 albeit directly.  I therefore find that, the issue of poor or non performance of the contract by the Plaintiff as allegedly by the Defendant is a red herring.

35. The other issue raised by the Defendant is the renewal of the first contract which the parties had prior to the subject contract.  The Defendant submitted that, although that contract, dated 26th September 2011 had a similar provision for renewal, when the period of one year ended, the same was not renewed.  It was re-advertised for tendering and the Plaintiff’s bid was found to be the best and that is how it was awarded the current subject contract.  Apparently, the Plaintiff did not file a suit for non-renewal of that contract, as done here.  It seems to me that, had this particular subject contract herein been re-advertised for tendering after the first year, without renewal, the Plaintiff would not have complained or sued as they have done.  Most likely they would have participated in the fresh tender process as they did with the last contract.  As to whether they would complain, if they did not win after re-advertisement is a different kettle of fish.  My observation therefore, is that, the Plaintiff’s grievances are based more on the fact that, it was locked out of participation in the contract for the year 30th September 2013 to 1st October 2014 and the Defendant went directly to deal with  underwriter.  The Defendant submitted that, it is not under any obligation to use the services of the Plaintiff or any other insurance broker.  Quite True.  However, dealing directly with an underwriter introduced by an Insurance broker, is as already stated, shrewd business practice.

36. The final issue is whether the Plaintiff is entitled to damages, as prayed under paragraph 1 of the Plaint.  That claim is not quite clear to me.  The Plaintiff states that the court order:

“A declaration that the Plaintiff is entitled to damages against the Defendant for a breach of the agreement dated 1st October 2012”.

37.  The first question to answer is whether there was a breach.  The second issue is whether, if there was a breach, the Plaintiff is entitled to damages. The Plaintiff submitted that, the contract was terminated when the Defendant’s failed to renew the contract, and failed to give reasons for the same. The Defendant as already stated, vehemently denies that, failure to renew the contract amounted to termination of the contract.  I have already ruled that the letter written to the Plaintiff notifying it of non renewal of the contract does not amount to “termination of Contract”.  Assuming the Court were to arrive at the conclusion that the subject letter amounts to termination of contract, the next question would be whether the Defendant is entitled to damages for breach of contract.

38. The legal principles that guide award of damages for breach of contract were laid down in the case of Provincial Insurance Company of East Africa Limited vs. Mordekai Mwanga Nandwa Civil Appeal No. 179 of 1995,which cited Dharashi vs. Karsan 1974, EA 41. The law is that damages awarded should be such as may fairly and reasonably be considered either as arising naturally, or in contemplation of the parties. Thus, the Plaintiff would be paid compensation for the commission he would have received had the contract been performed and no more. In this case, the Plaintiff would have earned Kshs.14,007,324. 30. But what is loss:  It has been defined as pecuniary kind, loss of property, or use of the property or means of acquiring the property. Thus it is not and does not include damages for disappointment of mind, vexatious cause by lawful or humiliating manner in which the Defendant ended the contract. If however, the Plaintiff were to prove actual loss arising out of the breach, then nominal damages may be awarded, see Hadley’s Baxendale 158 EA 145. However, in this particular matter, I did not find any evidence by the Plaintiff that they suffered actual loss by the non renewal of the contract.

39. The Plaintiff submitted that, it is enough to demonstrate that as a result of the Defendant’s breach of the contract, the Plaintiff was unable to place insurance covers. The Defendant submitted that in the Kilimanjaro Construction case, the Court held that where there is an unlawful breach; the Plaintiff is entitled to damages as herein where the breach was caused by Defendant’s termination of the contract.  However, I have already ruled that there was no termination of the contract. If that then is the basis for seeking general damages then that claim fails.

40.     The upshot of this I find that, the Plaintiff has not proved on the balance of probability, that it suffered loss as claimed, and/or is entitled to any of the prayers sought for in the Plaint. I therefore dismiss the suit with costs to the

Defendants.

41.  Ordered accordingly.

Dated, signed and delivered on this 17th day of March 2017 at Nairobi.

G. L. Nzioka

JUDGE

In Open Court in the presence of:

Mr. Kiprono for the Plaintiff

Ms. Feksi for Mburugu for the Defendant

Teresia Court Assistant