JANEVAMS LIMITED vs CALTEX KENYA LIMITED [2003] KEHC 660 (KLR)
Full Case Text
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
MILIMALI COMMERCIAL COURTS
CIVIL CASE NO. 3325 OF 1994
JANEVAMS LIMITED ……………………………………….. PLAINTIFF
V E R S U S
CALTEX KENYA LIMITED ……………………….…….… DEFENDANT
JUDGEMENT
In a plaint dated 14th September 1994 and filed on the same day, the
plaintiff Janevams Limited sued the Defendant Caltex Kenya Limited
seeking judgement against the same Defendant as follows:-
“(a) A sum of Kshs. 1,978,225. 80 together with interest
thereon at bank rate from 15 th July 1991 u ntil
payment in full;
(b) Damages for breach of contract;
(c) Costs of this suit;
(d) Such other or further relief as this Honourable
Court may deem fit to grant.”
The same judgment is sought according to the plaint on the basis that
the Defendant breached Operations agreement entered into between the
Defendant and the Plaintiff’s company and removed the Plaintiff company
from the Operations of a Service Station contrary to the terms of the
agreement and without any proper reasons, and in so removing the Plaintiff,
the Defendant detained and remained with the Plaintiff’s several equipment
(properties) including documents to facilitate collection of debts by plaintiff
despite demands that it releases the same properties to the Plaintiff. Further
the Plaintiff alleges in the same plaint that in so removing it from the station,
it failed to refund to the Plaintiff interest earned from the deposit earlier on
paid to the Defendant which was KSh.491,450.
The Defendant company in its statement of Defence stated in what I
do briefly summarise, that the suit offended provisions of Section 6 of the
Civil Procedure Act as there were a civil case No.200 of 1991 and Civil
Appeal No.116 of 1991 on the same subject which had not been finalised;
that the agreement or license was lawfully terminated and KSh.491,449/55
being the credit balance due to the Plaintiff was refunded; that the Defendant
is a stranger to the allegations in the plaint that equipment and machinery
were installed by the Plaintiff at the suit premises; that the termination of the
operations agreement was lawful as the plaintiff did not achieve the
minimum target; that it denies having taken Plaintiff’s tools of trade,
machines, equipment and trade debts and it denies each and every allegation
in the plaint.
The Plaintiff called five witnesses whereas the Defendant did not call
any witness in the case.
PW.1 Joseph Matu Mathondu was the Director of the Plaintiff
Company. His evidence was in a summary form that in August 1986 his
company was appointed by the Defendant as Defendant’s dealer in a Petrol
Station on Waiyaki Way near A.B.C. Complex in Nairobi. He executed a
dealer’s agreement Exh.1 and was promised that on satisfying the
Defendant, he would be offered operations agreement. The same operations
agreement was offered and was dated 1st June 1987 Exh.2. By that
agreement, exh.2, he was confirmed as a dealer at the service station. He
operated the station from August 1986 to 1989 without any problem, and
without any warning from the Defendant and there was no public complaint
during that period. On 5. 7.1990, he got a letter from Defendant – Exh. 3
asking him to improve the performance. The letter was from the Marketing
Manager and it revised the targets. The targets had declined because the
road was under repair and hence, the flow of motor vehicles to the station
was affected. On 20th August 1990, he was given conditions to meet the
targets within three months. He was also given a letter to that effect – exh.4.
He stated that he achieved the targets, i.e.both targets given in a letter dated
5. 7.1990 and the one given in a letter dated 20. 8.1990. However, despite his
achieving the targets given, he received a Notice dated 21. 12. 1990 – Exh.5
which was terminating his dealership. The reason given in the same notice
for terminating his dealership is that since 1986 he had never operated to the
Defendant’s satisfaction. He maintains that this is not true because
according to the agreement, if he did not operate to the Defendant’s
satisfaction he was to be fined but he had never been fined at all which to
him meant that he had operated the station to the Defendant’s satisfaction.
On one occasion on 3rd December 1990, he ran out of product but that was
because he had paid for the products on 30th November 1990, but by the time
the Defendant’s staff checked his products on 3rd December 1990, the
Defendant had not delivered the same products paid for on 30th November
1990. That was one example when the Defendant found him out of products
and that was in the morning when the checking took place whereas products
were delivered by the Defendant in the afternoon of the same day. He
produced Exh.6 & 7 as evidence of what happened. Another example was
that on 14th December 1990 he paid for products which were never delivered
till 17. 12. 1990 afternoon whereas Defendant carried out a check in the
morning of that same 17. 12. 1990 before Defendant delivered products. He
produced Exh.8 & 9 as evidence of the same. He complained to the
company on their conduct vide a letter dated 31. 12. 1990, Exh.10. he had
also complained about flooding next to the station which was interfering
with accessibility to the station especially by small vehicles. After the notice
of 21. 12. 1990, the Plaintiff did not move out of the station but he was
evicted. He filed application for injunction in court but that was rejected and
he was evicted on 15. 2.1991, by two employees of the Defendant company
Mr. Murila and Sam Gakiria who were accompanied by auctioneers and 20
guards. He was evicted and Sam Gakiria who used to supervise the station
took over the running of the station as a dealer. Actioneer took all personal
belongings, chairs, tables but left at the station a number of important
equipment and properties of the Plaintiff which are as per the plaint and their
values were also given in the plaint. The same values, according to this
witness were obtained from the dealers and were the values at the time he
got the quotations and the invoices. The equipment retained by the
Defendant were Wheel Balancing Machine, Tyre Change Machine, Trolley
Jack, Wheel Aligner, Welding machine and Spraying machine. If he had
those machines, he would have employed himself elsewhere after he was
removed from the service station. There was a vehicle he was repairing at
an agreed amount of KSh.38,000/-. As he was removed from the station he
could not repair it and he lost that money. He also failed to do engine
overhaul work for another customer who pulled his vehicle away and
demanded KSh.96,000. He had to pay the same. This was all because he
was removed from the station. He identified Proforma invoices he got from
Avon Rubber company Kenya Ltd. for the equipment and machines, that
were retained by the Defendant. He also identified one invoice he obtained
from East African Oxygen in respect of Oxygen Acetylene Cylinder’ which
were on lease from the same East African Oxygen. He claimed further that
he was prevented from pulling down a garage he had constructed and which
had an estimated value of KSh.35,000/-, and there was a Volks Wagen
vehicle door also at the garage which he could not get access to as he was
removed. He paid the owner of that vehicle door KSh.20,000/-. There were
other motor vehicle accessories in the shelves such as condensers, bulbs, and
reflectors of Peugeot vehicle which were valued at KSh.8,000/- and which
he did not take with him as he left the station. He used to give credit to his
customers. As a result of his being removed from the station, he could not
recover KSh.104,000/- from some of the customers. Lastly, the Defendant
paid him his deposit plus the value of the product that was at the station
when he was removed. The total he was paid was KSh.491,449/55 but this
was paid after 3 ½ years – i.e. in June 1994. He needed interest on that
money and he asked for interest at the rate of 35% because he used to
operate the business on overdraft from the bank. He stated at the end of his
evidence in Chief that he was claiming KSh.1,978,225. 80 and interest on
that amount which he did demand and was not paid by the Defendant. On
the question as to whether there were any cases pending by the time this case
was being heard he said that the Plaintiff had withdrawn the case that was
pending and this was done with the consent of the Defendant so that there
were no cases pending as at the time this case was heard. The Plaintiff’s
profits from the station were KSh.30,000 per month from the garage side
and KSh.30,000/- from the Petrol Station side.
In cross-examination he agreed that under the agreement, the
Defendant could have terminated the agreement by one month’s notice but
with reasons. On being shown clause 8 of exhibit 2 and clause 3 of the same
exhibit, he admitted that there were times when Defendant could summarily
terminate the license. He also agreed that Defendant gave Plaintiff one
month’s notice – Exh. 5. Following the notice he filed an application in the
High Court H.C.C.C. No.200 of 1991, but the application for temporary
injunction was dismissed. He appealed vide Civil Appeal No.116 of 1991
but that appeal was later withdrawn and Defendant paid Plaintiff’s deposit as
well as value of fuel in 1994, but he agreed that he was paid his money in
1994 whereas he withdrew the cases in 1998 so that payment of his money
had nothing to do with the withdrawal of the suits that were then pending.
On the claim for interest of KSh.560,530/80 the Plaintiff claimed, he said he
had letter from the bank on the same but he had not produced the same in the
court. He did not demand his deposit between 1991 and 1994, as the cases
were still pending and Defendant maintained that he was not a licensee
whereas he maintained that he was a licensee. Plaintiff was a licensee upto
15th February 1991, but on 15th February 1991 the Plaintiff ceased to be a
licensee of the Defendant as it was evicted from the Defendant’s premises.
He wrote to Defendant demanding the money in February 1994. The letter
of demand was dated 25th April 1994 and was written by Kimundi &
Company Advocates on behalf of the Plaintiff company and it was written 3
½ years after the Plaintiff had been removed from the station. The same
letter included claim for Volvo repairs whereas the Plaintiff’s claim was not
for Volvo repairs. Plaintiff’s claim was for Prime Chemicals vehicle and not
for Volvo repairs. He admitted that what was stated in paragraph 9 of the
plaint was not correct as the Plaintiff was not making any claim for Volvo
repairs. He did not produce any documents in respect by East African
Oxygen Ltd., stated at paragraph 5 (I) of the plaint. Although the receipt of
payment in respect of Prime Chemicals says he paid on 25. 5.92, that is not
so as he paid the amount of KSh.91,613/- by installments and did not pay it
at once as indicated in the receipt. He said he did not make any complaint to
the police about Plaintiff properties detained by the Defendant because he
was dealing with a company. On the day of eviction he made a complaint to
the police that the Plaintiff was being evicted without a court order. He
admitted that he had not shown the court documents to show that the
properties he was claiming were his and he admitted plaintiff’s items were
old and had been used for many years. Shown MFI.D2 he accepted that the
auctioneers took the items recorded in that document only and that he later
collected all the items that the auctioneers took away from the same
auctioneer Rossam Enterprises. He stated that his assets were only tools in
the workshop and machineries which the Plaintiff was demanding and not
the motor vehicle. The items the plaintiff is claiming, he said were not in the
garage. They were outside in the greasing bay and auctioneers never took
them. Shown the Affidavit, he signed in his appeal to the Court of Appeal
earlier on, the stated that what was in the Affidavit to the effect that the
equipment belonging to him were few was correct. The debtors that had not
paid a total of KSh.104,500/- were Plaintiff’s customers and not customers
of the Defendant, but he agreed that those who paid their debts did so after
Plaintiff left the station and he had not sued the few customers who had not
paid the outstanding debts. One customer, the Nation Newspapers refused to
pay as copies of LPOs were not available. It owed KSh.67,000/-. There
were documents taken by the auctioneers and got misplaced by the same
auctioneers. He did not make any complaints about the same because at that
time the important matters were the money and the properties detained by
the Defendant. The amount of KSh.491,450 Plaintiff was claiming was
made up of KSh.100,000/- the Plaintiff paid to Defendant as deposit and
KSh.391,450/- which was the value of the products namely, Premium and
Regular Petrol as well as lubricants which had been paid for and were
properties of the Plaintiff. He admitted that his first formal letter of demand
was dated 25th April 1994. He had no tax returns to show he was getting a
total profit of KSh.720,000/- per year, but he insisted, he used to make that
money as profit. He had no audit report for the business although last audit
report was made for 1988 but he did not have that report either. He admitted
that he had no documents to show that the properties he was claiming
belonged to the Plaintiff as he also had no audit report that would have
shown that the properties belonged to the Plaintiff.
In re-examination, he said he was claiming either the same goods or
the value of the goods and that was why he produced Proforma Invoices. He
first demanded the release of the accessories in February 1994. In respect of
the Prime Chemicals, the Plaintiff’s claim was engine part which got lost.
That was engine that was taken to the station for repairs and which had been
partly repaired but at the time Plaintiff was evicted, the spare parts got lost
and the owner demanded the replacement of the engine and the Plaintiff paid
the same money to the owner by installments. The witness did not make any
reports about the detained equipment because Defendant said the same
would be paid for. The witness then described in details where equipment
taken by the auctioneers and those that he claimed from the Defendant were
before the Plaintiff was evicted from the station. He stated that the list of
debts was prepared a week after the Plaintiff was evicted. He did not sue the
four auctioneers who had not paid a total of KSh.104,000/- as he did not
have the original documents with him. They were misplaced when papers
were taken by auctioneers. He ended his evidence by saying that the garage
equipment belong to Plaintiff.
Samuel Gakiria Kingori, was PW.2. He worked for Defendant from
1986 to 1991. He was then Sales Representative in charge of Retail and
Consumer Customers. Plaintiff was one of the Defendant’s dealers at a
Petrol Station along Waiyaki Way. In the years 1990 to 1991 he was incharge
of Nairobi Central and Plaintiff was one of the Petrol Stations he was
in-charge of. He was aware that Plaintiff’s dealership was terminated in
February 1991. According to this witness the Plaintiff performed well and
that was the reason why the Plaintiff was given operations license and also
that was why Plaintiff was not penalised for failing to achieve the target as
he never failed to achieve the target set by the Defendant and revised by the
same Defendant. He said it was not true that the Plaintiff did not meet the
target. On 15. 2.1991 he was called by his boss Baraka and one Murila and
was directed to go and evict the Plaintiff from the Petrol Station. He went
with Auctioneer Rossam to evict the Plaintiff. PW.1 was not at the station at
that time of eviction. They evicted the Plaintiff and collected the goods in
full packets and loaded them in a vehicle and the key was given to Murila.
He gave to the court, the names of the Defendant’s items that were at the
Petrol Station. Murila gave the keys to this witness who did not become a
dealer but was running the station for the Defendant. They were using some
of the Plaintiff’s equipment which had remained there. These were
equipments such as wheel alignment machine, wheel balancing machines,
acetylene gas, spraying machines, loan mower, Garage chain, two doors of a
vehicle, some cases, some vehicles. None of these were released to the
Plaintiff during this witness’s stay at the station. When he took over, there
were fuel products which were valued and which he took over. He left the
station in June 1991 and a Mr. Singh took over and at that time the
accessories and equipment of the Plaintiff were still there. In cross
examination, this witness stated that he was the one supervising the dealers
work on the ground so that if the dealer was not achieving its target, he
would tell the Defendant. He was the man placed between the Defendant
and the Plaintiff. He attended meetings which decided on the targets for the
dealers but he was not in the meeting referred to in a letter dated 5th July
1990. The Plaintiff was achieving the targets set for it. He was present
when the Plaintiff was being evicted and he told Mr. Murila that it was not
proper to evict the Plaintiff. The eviction was peaceful and there was no
fight and security was not called. He did not see well what the auctioneers
took away from the station. He stated that he was the one running the
service station after Plaintiff had been evicted. Wheel balancing machine
was inside the office and it was operational. Tyre changer was outside the
office. Trolley jack was in use sometimes outside and sometimes in the
office, wheel balancing was there and welding machine was in the shed.
Lawn Mower was in the shed, spraying machine was in the shed while
acetylene cylinder and BMW door were in the garage. The Plaintiff never
collected the same properties while the witness was still running the station.
Although he signed operations agreement with Defendant, he was not
running the service station on his own. He remained an employee of the
Defendant and was running to station on behalf of the Defendant and he
signed the dealer’s agreement only as a proxy. He admitted that he signed
an affidavit on 17th May 1991 which affidavit had annexed to it several
documents like ledger cards, and documents not in the letter-heads of the
Defendant but he said that he did not know the contents of the same affidavit
as the Defendant’s advocate gave him only the last page to sign and he
signed it without knowing the contents of what he signed. He said what was
contained in that affidavit was false. After running the service station he
went back to the Defendant company and fell sick. He was admitted to
hospital. When he returned from the hospital he found allegation being
made that he had misappropriated Defendant’s funds and he was summarily
dismissed. There is a case in court on that dismissal. He was not charged
with any offence in a court of law. He ended his examination in chief by
saying he did not know whether Defendant advertised for the vehicles that
were left by the Plaintiff at the service station. In re-examination he mainly
confirmed that he did not read the contents of the affidavit he had signed
earlier in the case; that he was not a signatory to the accounts of the station
when he was running it after taking over from the Plaintiff and he never
benefited financially from the station and that he was still in the Defendant’s
payroll at the time he was running the station. He had not been required to
pay the defendant which the dealers are required to pay. The station was
earlier on achieving the targets set for it by the Defendant and only failed to
do so when the adjacent road was under reconstruction and also because the
same the company revised the target. He added that he objected to Mr.
Murila against the eviction of the Plaintiff and felt it was not fair because the
road was closed and so no sales could be made as no vehicles could access
the service station. Indeed the Plaintiff was never penalised for failure to
meet the target as would have happed under the normal circumstances. The
items he took over from the Plaintiff were not recorded in the Defendant’s
document MFI.D9 and lastly that the items left at the service station which
belonged to the Plaintiff were items necessary for the running of a service
station.
Joseph Waimeri Gathui worked for the Plaintiff as Pump attendant
from 1986. He was the Plaintiff’s third witness. He was later promoted to
the position of a clerk and was doing accounting work as well as banking.
He was also dealing with suppliers. When Plaintiff acquired the service
station, this witness was there. He confirmed that the items claimed to have
been left there were then at the service station. They belonged to Muthondu
PW.1 and they were Wheel balancing machine, Trolley Jack, cash paying
machine, welding machine, cylinder of Oxygen, Tyre changer, wheel
aligner. In the office there were metal safe and balancing machine, three
brooms and water horse pipe. All the items belonged to PW.1. Things in
the garage were brought within six months of the Plaintiff taking over.
Defendant had properties such as building, fuel tanks and others. The debt
list Exh.19 was written by this witness and he says it is in his handwriting.
He prepared the list on 14. 2.1991. When eviction was taking place he
carried with him the Debtors book. Some of the Debtors were people who
had taken fuel and sum were people whose vehicles were repaired. He took
the list to PW.1 and he did not know if the debts were recovered or not. The
auctioneer who removed them took some items but never took the items
which were left behind by the Plaintiff which he has mentioned above.
After the eviction of the Plaintiff, this witness returned to the Petrol Station
and was employed by the Defendant as pump attendant in April the same
year. The same equipments were still there and when he left the service
station in December 1991, the same equipments were still there. He
produced the Debtors list he prepared as Exh.19. In cross-examination, he
was shown Defence document which was marked for identification as D4
and he agreed that though it looked like Exh.19, there were however some
differences and it was not a copy of MFI.D4 and he could not be sure under
what circumstances he prepared MFI.D4 but both Exh.19 and MFI.D4 were
prepared by him. He could however not remember the total amount that was
owed to the Plaintiff. He agreed that according to Exh.19,, the amount owed
to Plaintiff by Debtors was KSh.343,176/- whereas according to MFI.D4 the
amount owed to Plaintiff was KSh.451,883/-. He said he took the amount of
KSh.451,883/- from the entries in Exh.19 and it is the debt as on 14. 2.1991.
He became involved with the Plaintiff’s properties when he became a clerk
and that was six months after Plaintiff employed him. He however could not
remember when Plaintiff took the items to the Petrol Station but they were
there although he got involved with them when he became a clerk. When he
was working there soon after the Plaintiff’s removal PW.2 was paying the
workers but he cannot remember if all that time he was dealing with PW.2
only. He could not remember when the garage shed was built. Shown
Exh.19 (list of debtors) he admitted that these debtors were customers and
they could look for them if they delayed in payments.
In re-examination he said that he obtained information which he used
in preparing Exh.19 and MFI.D4 from Debtor’s book. He first entered that
information into Exh.19 but later transferred the information into MFI.D4
and ignored exh.19. When he was working at the Petrol Station before
working with Plaintiff, the items he called Plaintiff’s items were not there.
The same items were owned by PW.1 who also owned the Petrol Station
before he was evicted. He concluded his evidence by saying that he knew
the debtors in Exh.19 and the same debtors could be traced even by
telephone numbers but he had no records which could be used in tracing
them.
Charles Gichuru Mbuthia sells chemicals under the name Prime
Chemicals. He was PW.4 in the case. He used to buy Petrol from Plaintiff
in 1991 and 1992. They used to repair his vehicles. He took his vehicle
KUD 369 to the Plaintiff for repairs. That was towards the end of 1991. It
was not repaired for a long time and when he went to take it back he noticed
the engine was missing. He went for the vehicle in early 1992. He reported
the matter to the Petrol Station. He demanded another engine. They got
another engine for KSh.91,613/- from Sharmas. He bought the same engine
but Plaintiff paid i.e. refunded to him the amount by installments and he
gave a receipt for the total payment on 25. 5.92. The money was paid by
three or four installments. He produced the Invoice No.3901 as Exh. 11(a)
and Receipt as Exh. 11(b)
In cross-examination he said that he took the vehicle to Plaintiff
towards the end of 1991 and went to collect the vehicle in February 1992 as
he had been sick for a month. The vehicle was at the Plaintiff’s workshop at
Caltex Petrol Station in Westlands opposite Army Barracks and that was
where he took the vehicle. He was adamant that he collected the vehicle in
February 1992 but he had no receipt for the money he paid to Sharmas. He
said the amount of KSh.91,612/- included the cost of labour in fixing the
engine and this was not the value of the engine alone. He admitted that there
could be confusion on dates as he was sick. In re-examination he said he
could not remember when he took the vehicle from PW.1, but PW.1 was not
there when he took the vehicle there and PW.1 was not there when he went
to check the vehicle and he was not there when this witness took the vehicle
away. The amount of KSh.91,613/- included cost of labour as well.
The last Plaintiff’s witness was Patrick Gakuru Kanoga. He worked
at Avon Rubber Company (Kenya) Ltd as General Manager. In 1993
Plaintiff sought Proforma Invoices in respect of Garage equipment from
their firm. The equipment for which Proforma invoices were required by the
Plaintiff were Tyre changer, wheel balance, a jack and wheel aligner. He
issued the required proforma invoices as they deal with the same garage
equipment. He identified the same proforma invoices and the prices quoted
in the same proforma invoices which prices were prices prevailing between
1990 to 1995. The Plaintiff did not purchase the same equipment and the
same invoices were prepared by a former colleague of the witness who had
left the company but who was in the witnesses’ department. He produced
the proforma invoices as Exhibits 12, 13, 14, and 15.
In cross examination, he said Avon Rubber Products were not the only
suppliers of the equipment. They had other competitors. He agreed that
there are other models of the same equipment and prices vary with the
models. The prices of the same equipment might have been different in
1986 but the difference margin was small. According to the witness, VAT
may make a difference but that difference would be known as the VAT
would range from 15% to 18% of the price. He ended his evidence by
stating that prices are not the same as every competitor fixes his own price
depending on where the equipment is imported from - as some come from
China while some come from Europe.
The above was the evidence adduced in the entire case. I do not
pretend to have recorded everything that was given in evidence here, but I
have endeavored to record the above which I do feel reflect the salient
aspects of what the witnesses did state in evidence, both in chief and in
cross-examination as well as in re-examination including references to the
exhibits that were produced.
I have considered the pleadings, the evidence as well as the able
submissions that were made by the learned counsels.
I do not think, the first four issues in the agreed statement of issues
dated 12th January 1995 and filed on 23rd January 1995 are any longer
issues. No reference was made on the same and record shows that HCCC
No.200 of 1991 which gives rise to these issues was in fact withdrawn
before the commencement of the hearing of this suit. Civil Appeal No.116
of 1991 was also withdrawn and consequently the questions as to whether
the suit is bad in law and is an abuse of the court process and ought to be
struck out are no longer available.
I will in considering the entire case start with what is put down as
issue No.8 in the statement of issues i.e. whether the termination of the
agreement of 1st June 1994 and subsequent taking over of the service station
was lawful or justifiable. I do feel this issue is not properly written down as
there as no agreement of 1st June 1994. The agreement which the Plaintiff
alleges existed was one of 1st June 1987. The Defendant is not disputing that
allegation and so I will consider whether the termination of agreement of 1st
June 1987 and subsequent taking over of the service station was lawful and
justifiable. There is no dispute as I have observed above that the Plaintiff
was at first a dealer at the Defendant’s Service Station situate along Waiyaki
Way in Nairobi and particularly at Westlands opposite the former
Department of Defence Baracks and near ABC Complex – particularly on
L.R. No.990/14. A letter addressed to Mr. Muthondu PW.1 dated 6. 8.86
from the Defendant and which was at the end of it signed by both Muthondu
PW.1 and Mathews Nyangor for the Defendant offered the same PW.1
licence to occupy the service station from 6th August 1986 till 7th February
1987. It also stated that that period of six months license of occupation
could be extended for such further period as was to be agreed upon. That
license could be terminated at any time by the Defendant by giving the same
Mr. Muthondu seven days notice. In that letter of offer (which was
accepted), the Defendant clearly spelt out the sales targets which the same
Mr. Muthondu was to reach and at the end of it was states as follows:-
“Operations Agreement
Subject to your conducting the Service Station to
our satisfaction during the term of this license, you
will be offered an operation’s Agre ement upon
such terms as we shall consider fit and upon
execution thereof by you this license will
automatically determine.”
As I have indicated herein above, that license was given to Muthondu PW.1
and was duly accepted by the same PW.1. The same Muthondu is the
Director of the Plaintiff herein. He produced the same letter as Exh.1 and it
was not disputed that he was a dealer of the station during the licence. I am
conscious of the legal position that Muthondu PW.1 and Plaintiff Janevams
Ltd. are separate and different personalities but in this case, it does not
appear that the same difference was pronounced, neither is there any
allegation that Muthondu himself considered Janevams Ltd, the Plaintiff as
significantly different from him to the extent that his business was affected
by the introduction of the Plaintiff at the stage of entering into operation
agreement with the Defendant. I do find that the Defendant was at all times
aware that the same PW.1 he offered dealers licence was later the director of
the Plaintiff company and the Defendant felt comfortable with that situation.
Be that as it may on 10th July 1987, the Plaintiff and the Defendant
signed operator’s agreement drawn between the two and dated 1st June 1987.
Clause 3 of the same agreement states as follows:
“3. The licence shall commence on the 1 st day of
June 1987 and shall, subject as stated in
Clause 8, continue until terminated by either
party giving to the other one month’s written
notice to that effect expiring at any time.”
Clause 8 states as follows:
“8. The licence may be terminated by Caltex
forthwith on the happening of any of the
following events:
(a) If the operator shall fail to perform any of
the obligations on the part of the operator
herein contained.
(b) If the operator s hall be convicted of any
offence against the laws for the time being
in force regulating the sale, storage or use
of petroleum products.
(c) If the operator shall commit an act of
bankruptcy or, being a company, shall
enter into liquidation whether voluntary or
compulsory, or make any arrangement or
composition with the operators creditors
or suffer execution to be levied upon the
goods of the operator.”
Thus, according to the agreement that was entered into between the Plaintiff
and the Defendant, the agreement could only be terminated if the Plaintiff
failed to perform any obligation in the agreement, or if the operator was
convicted of any offence related to the sale, storage and use of the products
or if the Plaintiff committed an act of bankruptcy, otherwise the agreement
would continue and would only be terminated by one party giving the other
party one month’s written notice. My understanding of clauses 3 and 8 of
the agreement is that if the Plaintiff committed any of the acts mentioned in
Clause 8, then Defendant would terminate the agreement without notice. If
however, the plaintiff did not commit any of the acts specified in clause 8,
then the agreement could be terminated by either party giving one month’s
notice in writing. It seems to me that under that clause no reason needs to be
given. It is however clear to me that the Defendant had to elect under which
clause to proceed in case it wanted to terminate the agreement. The Plaintiff
however had no choice but to proceed under clause 3 in case it wanted to
terminate the agreement.
On 5th July 1990, the Defendant, in a letter dated the same date
revised the targets and warned the Plaintiff that if the same revised targets
were not met, then the Plaintiffs’ dealership would be cancelled. A copy of
that letter Exh.3 indicates that the Plaintiff was supposed to sign a copy of
the same letter to confirm that he read it and understood the contents and to
undertake in that copy to voluntarily surrender the service station back to
Defendant if the targets were not met but there is no evidence that it did so
although there is evidence that the Plaintiff did write to explain his position
and that letter to the Defendant was dated 24th July 1990. Reacting to that
letter the Defendant wrote Exh.4, a letter dated 20th August 1990, in which
the Defendant gave Plaintiff three months from 1st August 1990 to improve
the performance. Apparently the Defendant felt there was no improvement
and so vide a letter dated 21st December 1990 produced as Exh.5 the
Defendant gave the Plaintiff one month’s Notice terminating the agreement.
The letter states as follows:
“21 December 1990
Janevams S/Station
P.O. Box 53504
Nairobi.
Dear Sir,
TERMINATION OF DEALERSHIP
We refer to our letters dated 5 th July 1990 and 20
August 1990 regarding poor performance and we
regret that despite the various verbal warnings by
our Marketing Staff your Service Station
performance still remains below the expected
level.
You have constantly run out of products
particularly on Monday due to low stocks carried
during weekends. You recall that on Monday 10 th
December 1990 you were completely out of stock
of Premium Petrol while regular Gasoline was
only being served through one pump as the other
one was dry. Since you acquired dealership of
Janevams S/Station in 1986 you have never
operated it to our satisfaction and we are now
totally convinced that you are not the right dealer
for the Petrol Station. We have given you ample
time to improve on your performance but no
improvement is being noted. As a result we are
giving you one month notice to vacate the service
Station. Our company representative will come to
your service station on 21 January 1991 and you
will be required to hand over all company
equipment and premises. The tanks wil l be dipped
and you will be given a credit note for any stock
balances taken over. Full cartons of company
branded tubes will also be taken over if you so
wish. Any damage to company equipment or loss
caused by you over negligence will be charged to
your A/C at replacement cost.
Kindly sign and return one copy of this letter as an
acceptance of the above notice.
Yours very truly,
Caltex Oil (K) Ltd.
WS TIFFANI – MANAGER DIRECTOR”
By Signed
M. BARAKA – MARKETING MANAGER.”
This was the letter of termination of the agreement between the Plaintiff and
the Defendant. Was it written pursuant to Clause 3 of the agreement? That
clause does not require reasons to be given for termination of the agreement.
In any case, the Defendant has not specifically stated that that notice was
issued pursuant to that clause. It gives reasons that the Plaintiff has not
operated the service station to the satisfaction of the Defendant. It could
only have been under clause 8 of the agreement. That clause however does
not provide for one month’s notice. However, in the confused state of
affairs as was created here by the conduct of the Defendant in failing to state
under what clause of the agreement it was proceeding and as the notice
clearly gives reasons for termination of the agreement, I can only see it
proceeding under clause 8 and particularly under clause 8(a) which allows
the Defendant to terminate the agreement if the operator fails to perform any
of the obligations on the part of the Plaintiff as contained in the agreement.
When one reads the notice against the backdrop of the exchanges in the
letters of 5th July 1990, Exh.3, letter dated 20th August 1990, letter from
Plaintiff dated 24th July 1990 in reply to the letter of 5th July 1990, then one
sees that the main complaint that necessitated the termination was the
alleged Plaintiff’s inability to meet the targets set out by the Defendant.
That in effect meant that the termination letter was issued on the basis that
the Plaintiff did not comply with clause 5(b) of the agreement which states
as follows:
“(b) Subject as hereinafter stated, the operator
shall purchase from Caltex in each calendar
month the minimum quantities of petroleum
products specified in column 2of the second
schedule provided always that Caltex may at
its sole discretion –
(i) alter such minimum quantities from
time to time by giving to the operator
seven days notice in writing of any
such alterations;
(ii) in any one or more calendar month or
months waive the obligation of the
operator to pur chase the said
minimum quantities but any such
waiver shall not affect the obligation
of the operator in respect of any
calendar month subsequent to the
waiver.”
It is clear to me that the Defendant’s notice proceeded under an allegation
that the Plaintiff had not satisfied this clause in his operation of the subject
service station and therefore fell under clause 8 (a) and hence the notice.
Was the notice valid? i.e. were there good reasons for termination of
the agreement under that clause. Put another way, Is there evidence that the
Plaintiff breached clause 5(b) of the agreement? PW.1 in his evidence
maintains that his company, the Plaintiff had never failed to meet the targets
set for the Plaintiff except when the adjacent road and which is in effect the
road of access to the station was under construction and it became difficult
for vehicles to access the station. He also says, as concerns the allegation
that the station tanks were dry particularly on Mondays, that he used to order
for fuel in good time but the Defendant delayed in the delivery of petrol. He
has said in his evidence and in a letter Exh.10 and another one of 24th July
1990 that it was the Defendant to blame for the Plaintiff’s predicament as far
as shortage of fuel was concerned and has given instances when the same
omission took place. These allegations have not been refuted as the
Defendant never called any witnesses in its Defence. The allegations remain
as they were made even in July 1990 and I have not been shown any letter
refuting the same by the Defendant.
Further, the Defendant in its letter terminating the agreement says that
since the plaintiff acquired the dealership of Janevams S/Station in 1986 the
Plaintiff had never operated it to the Defendant’s satisfaction. Can that be
true? I doubt it. From what I have stated above and from the records
available as exhibits, the dealership was offered to PWI, as notice says in
1986, specifically it was on 6th August 1986. In that letter offering
dealership, there is a claim at the end which is headed ‘operations
agreement, it states as follows:-
“Operations Agreement
Subject to you conducting the service station to our
satisfaction during the term of this licence, you
will be offered an Operations Agreement upon
such terms a s we shall consider fit and upon
execution thereof by you this licence will
automatically determine.”
Thus the plaintiff could only be offered Operations agent if it
conducted the service station to the satisfaction of the Defendant during the
term of the licence. The licence was given on 6th August 1986 and was to
last for only six months unless extended. It was extended from time to time
till 1st June 1987 and on that day operations agreement was offered to the
Plaintiff. The operations agreement was to be offered to the Plaintiff
(according to the dealers licence I have quoted above) only if the operator(or
dealer) conducted the service station to the Defendant’s satisfaction. It goes
without saying that the act of the Defendant offering the Plaintiff operations
licence on 1. 6.87 was in itself a clear evidence that the condition in the
dealers licence had been satisfied, i.e. that the Plaintiff had conducted the
service station to the Defendant’s satisfaction for otherwise the Defendant
had no business offering the operators licence to the plaintiff. I therefore
find that the Defendant cannot be serious in its termination letter when it
says that since the Plaintiff acquired dealership for the service station in
1986 the plaintiff had never operated it to the Defendant’s satisfaction. That
cannot be true. In any event, if that were true then one is bound to wonder
where the Defendant was all these over four clear years since the Plaintiff
took over the station and why it never took action earlier on. I do find that I
am not satisfied that the Defendant’s Notice of termination, was given upon
valid reasons. I come to that conclusion because no evidence has been
adduced by the Defendant to support the alleged reasons for termination of
the agreement and some of the reasons appear to me as I have stated above
clearly untenable. Thus my answer to issue No.8 of the statements of issue
is that the termination of the agreement of 1st June 1987 and subsequent
taking over of the service station was not lawful and or justifiable.
I will now consider what the Defendant, having been found to be in
breach of the agreement, is liable to pay to the Plaintiff (if any). The
Plaintiff in its plaint is seeking judgment against the Defendant for a sum of
KSh.1,978,224/80 which is total amount of money in respect of the value of
equipment (KSh.1,154,292. 00), loss of money to Debtors which it said it
could not successfully recover as its documents for proving the same debts
were lost during the taking over of the station, (KShs.245,243. 00),
accessories (KSh.18,160/-_ and interest earned from the deposit of
KSh.491,450/- which interest the plaintiff says amounts to KSh.560,530. 80.
All these prayers are lumped together as prayer No.1 in the prayers for
judgment and all amount to KSh.1,978,225/80. It is also seeking damages
for breach of contract, costs and such other or further relief as the court may
deem fit.
The Defendant states as regards these claims that it did refund to the
Plaintiff the amount of KSh.491,449/55 which was credit balance of the
Plaintiff’s trading account with Defendant. As regards the claim for
equipment and accessories, it says that it is a stranger to the same and puts
the Plaintiff to strict proof of the same but it denies having taken over the
Plaintiff’s tools, and trade debts, machinery and equipment as alleged. All
these matters are covered by issues Numbers 5, 6, 7, 9, 10, 11, 12, and 13 of
the statement of issues filed by the parties. I do feel however that I need to
consider each special claim separately and I will consider them before I
consider the prayer for damages for breach of contract which though not
specifically stated, I do understand to be general damages for breach of
contract.
First, I will consider the claim for interest on KSh.491,450/-. At
paragraph 8 of the plaint the Plaintiff states as follows:
“At the time the Plaintiff was thrown out of the
premises it had a deposit account Number 100335
with the Defendant which as at 31 st March 1994
stood at KSh.491,450/ - and an interest of
KSh.560,530/80 calculated from 1 st February 1991
and last applied in June 1994 at 35% per annum.”
The Defendant’s response to this allegation is at paragraph 4 of the statement
of Defence and is as follows:
“Save that upon lawful terminat ion of the said
licence by the Defendant the Defendant refunded
the Plaintiff the sum of KSh.491,449/55 being the
credit balance of the Plaintiff’s trading account
with the Defendant the allegations contained in
paragraphs 5 and 8 of the plaint are denied in
toto.”
Thus it is not in dispute, that the Plaintiff did pay to the Defendant a sum of
KSh.491,450/- as deposit which was refundable. I have not seen this aspect
in the agreement itself, but as both parties agree that it was payable and was
actually paid, I do accept that it was payable. The Plaintiff says it was to be
refunded immediately on the determination of the agreement and claims that
as that was not done, it was entitled to interest on the same. The Plaintiff
was evicted from the service station on 15th February 1991. The deposit was
not refunded on that day neither is there any evidence that it was offered to
the plaintiff. PW.1 says the same deposit was paid to the Plaintiff in June
1994, some three years and four months later. In cross-examination, it
would appear that the Defendant is claiming that the payment was delayed
because there were court cases which were initiated by the Plaintiff. It is
however not suggested that this money was ever offered to the Plaintiff and
was rejected by the Plaintiff. The Defendant has not availed any evidence or
any legal proposition that necessitated this delay in the payment being made.
In my mind, as the Defendant has given what it called one month’s notice to
the Plaintiff of its intention to take over the station, it should have been
prepared to refund this deposit on the very day of taking over the station as it
knew all along for over a month that it was going to take over the station.
This was money for business. Its delay in being released to the Plaintiff
meant loss to the Plaintiff and the only way to compensate that loss is to
award interest on it for the period it delayed with the Defendant so that the
Plaintiff is reinstated to the position it would have been had the money been
paid in time and used for business. The Defendant has not challenged the
rate that the Plaintiff alleges was applicable at the relevant time and has in
fact not challenged the quantum claimed of KSh.560,530/80. It will be
awarded as claimed.
The next claim I do now consider is the claim for equipment and
accessories that were allegedly taken over by the Defendant. These are all
claimed at paragraph 10 and their value is also given in the same paragraph.
They are wheel balancing machine, Tyre changer, trolley jack, wheel
aligner, welding machine, Lawn mower, car spraying machine, garage
shade, oxygen acetylene cylinder, B.M.W two doors, fixed metal safe, car
repair tools, complete assembly of rear left light, two folks plus three
brooms and horse pipe. The amounts claimed for each is also included in
the plaint at the same paragraph No.10. The first aspect, I need to consider
is whether it has been proved that these equipment and accessories were
indeed at the service station and were left there when the Plaintiff was
evicted. The next matter I will consider is whether their alleged valued has
been strictly proved as is required in law for their loss is claimed as special
damages and must be strictly proved according to the law. PW.1 says
Plaintiff had certain items which he was not allowed by the Defendant to
take with him at the time he was evicted. He said in part of his evidence as
follows:
“Auctioneers took all my personal belongings’
chairs, tables, etc but they left the most important
aspects and those were motor vehicle repair tools
and machines which are the subject of my case. I
was not allowed to take them. I am not asking for
items such as accessories in the second schedule of
the operations agreement. The machines I claim
are:
(a) Wheel balancing m achine;
(b) Welding machines as per list.
I have given the value of the same in the plaint.
The value of the machines, I was refused to take
are as in the plaint. I got the value from the
dealers and the values are as at the time I got
quotations and invoic es:
(a) Wheel balancing machine
(b) Tyre changer machine
(c) Trolley jack
(d) Wheel aligner
(e) Welding machine
(f) Car spraying machine.”
He then proceeded to give evidence about a vehicle, he was to repair, at an
agreed amount of KSh.38,000/- and another vehicle which was for engine
overhaul for which he had to pay KSh.96,000/- as the overhaul was not done
and the owner had to buy a new engine. The Defendant has not adduced any
evidence to rebut the Plaintiff’s evidence that the same equipment and
accessories were at the service station. The Plaintiff says through PW.1 that
he was not allowed to take them with him i.e. he was refused access to them
and that again has not been rebutted. I have no alternative but to accept
evidence of PW.1 that the same equipment, machines and accessories were at
the service station prior to the Plaintiff’s eviction. In any case PW.2 who
took over the station from the Plaintiff and who was prior to taking over the
station working with Defendant company as supervisor of the same station
among others, PW.3 who was earlier on working at the station before
Plaintiff took it and who continued working there for the Plaintiff, both
support PW.1 that the same machines, equipment and accessories were at the
station; that they were in possession of the Plaintiff while at the station and
that the Plaintiff did not take them with it when it was evicted from the
station. Plaintiff is the one who took them to the station. I do find on the
evidence before me which I accept that the equipment and machines listed at
paragraph 6 of the plaint namely wheel balancing machine, Tyre changer, a
trolley jack, wheel aligner, welding machine, lawn mower, car spraying
machine, garage shade, oxygen acetylene cylinder, brooms, horse pipe, and
forks were at the service station, under the control of the Plaintiff who took
them there. I also find that the Defendant did not allow the Plaintiff
opportunity to take away the same equipment. I did not have sufficient
evidence on the existence of car repair tools the which tools the Plaintiff
claims to have left there. I do not think it is enough to just state that car
repair tools were left behind without specifying which tools were left behind.
Each car repair tool has a name and generalities cannot suffice. Further I was
not told in evidence to my satisfaction as to where the metal safe was in
particular and it was never described to satisfy me that such a safe existed
when the Plaintiff left the subject premises. I therefore do find that no
satisfactory proof has been adduced to satisfy me as to their existence. I do
reject them. Lastly no evidence was adduced on the existence of what is
stated at on paragraph 10 on accessories as complete assembly of rear left
light. I do reject that claim also.
As I have stated above, the next matter I need to consider is whether
the value of the equipment and accessories I have found were at the premises,
and belonged to the Plaintiff and which it was not allowed to take away have
been proved as required by law i.e. has been strictly proved. The Plaintiff did
not produce receipts for the equipment in question, it has alleged certain
values to each of them. It has not stated specifically when each of the same
equipment and accessories were bought. It has not availed the detailed
account of how much he paid for the materials and construction of the garage
shade. PW.1 in his evidence identified proforma invoices. These were
proforma invoices in respect of wheel balance valued at 468,460/-. The
invoice was dated 22nd December 1993, invoices for automatic Tyre changer
which showed an amount of KSh.225,000. It was also dated the same date
22nd December 1993. Invoice for KSh.175,000/- in respect of the value of
Trolley jack and Invoice for wheel aligner valued at KSh.75,000/-. The last
two invoices were both dated 22nd December 1993 also. These four
equipments were the ones in respect of which the Plaintiff made some effort
to prove their values. But even the same proof was only in respect of new
ones as on 22nd December 1993 and thus did not reflect their true values as on
the date the Plaintiff was evicted from the service station. In any case as no
evidence was availed as to when they were purchased and thus as to how
long they had been at the service station, it cannot be said that these values in
the proforma invoices did reflect the true values. Further no attempt was
made to prove how far they had depreciated since they were purchased. In
cross-examination, PW.5 agreed that there were different models of the same
equipment and that value added tax element could also have made some
difference in the value of the same equipment and that there were other
suppliers who were competing with Avon Rubber company (Kenya) Ltd and
could have different values for the same equipment. With all these in mind,
and doing the best I can, I will reduce the value given in the invoices, i.e. in
Exh. 12, 13, 14, and 15 by 25% in an attempt to arrive at a value which
would reflect all the above. Thus I do allow an amount of KSh.351,345/- for
Wheel Balance, I allow KSh.168,750/- as the value of tyre changer. For
Trolley jack, I accept the amount of KSh.131,250/- and finally on that, I do
allow KSh.562,250/- for wheel aligner. These were the only equipment
whose values were to an extent availed in accordance with the legal
requirements. PW.1 indicated that he had received some other proforma
invoices from Car and General in respect of the values of spraying machine,
welding machine, and proforma invoice from East African Oxygen. These
proforma invoices were marked for identification as MFI.16, 17 and 18 but
the records do not show that they were produced as exhibits in the case. In
fact MFI.18 which was meant to be proforma invoice for Oxygen Acetylene
Cylinder was an invoice for compact set and it was not explained as to
whether that was a cylinder. Be that as it may proforma invoices for the
other equipment in this category were not produced as exhibits and I cannot
assess any value for the same equipment. I had earlier stated the law that
these were special damages and needed to be proved strictly. This had not
been done in respect of welding machine, lawn mower, car spraying machine,
and oxygen acetylene cylinder. No attempt was made to prove the values of
two forks, three brooms and horse pipe. There was no proof of the value of
B.M.W. two doors alleged to have been left in the service station as well. In
fact the witness PW.1 talked of V.W. vehicle doors and not B.M.W. As to
Garage shade all that PW.1 has said is as follows:
“I had constr ucted a garage, I would have pulled
that one down and would have taken away the
materials and CI sheets then. The estimate of the
garage is KSh.35,000/ - i.e. Garage shade.”
That evidence cannot be anywhere near proving the value of the alleged
Garage Shade. I cannot rely on it to say the shade was valued at
KSh.35,000/- and award the same amount as indeed there was nothing like
valuation report produced or receipt for materials and for labour charged to
prove the alleged estimated value of the garage.
What I have stated above leave only the claims for loss alleged to
have been incurred by the Plaintiff in respect of its inability to recover what
Plaintiff states at paragraph 9 of the plaint as “Volvo repairs settlement made
to the Defendant company on the Plaintiff’s behalf” plus claim for what is
stated as “Garage Work in progress as at February 1991, stores of car
accessories and East African Oxygen Head Deposit. The total claim under
that heading is KSh.245,243/-. The claim in respect of garage work in
progress was stated to be KSh.38,000/-. The only evidence in support of
that claim is by PW.1 who says:
“There was a vehicle I was to repair and the
agreed amount was KSh.38,000/ -. I had bought all
the necessary spare parts for that vehicle. As I
was ejected out of the place, I could not repair the
vehicle and I was not able to get that money.”
He never stated what vehicle it was. Surely vehicles in Kenya are normally
registered and they have registration numbers. He did not state what spare
parts he had bought for the same vehicle. He did not produce any receipts
for the same alleged spare parts nor did he state whose vehicle that was and
whether any agreement existed for the same repair at KSh.38,000/-. He did
not state where the spare parts went to and what was the labour charge and
the cost of materials. If he had bought spare parts and remained with the
same then he could sell them to recover the costs of materials for the repair
of the same vehicle and thus would have lost only in respect of labour which
had not been spent as yet and is in any event unknown. It is not possible to
allow this claim. I reject it. There is also a claim for stores of car
accessories sold by Defendant company for which an amount of KSh.8,000/-
is claimed. No evidence was given to support this claim and also no
evidence was adduced to support claim for East African Oxygen Head
Deposit and how the same claim came about.
I will now consider the claim for KSh.91,613/- and the claim for
uncollected debts. On claim for KSh.91,613/- PW.1 says that claim is based
on the allegation that there was a customer who had taken his vehicle to the
service station for the overhaul of engine. Plaintiff could not complete the
work (presumably because the Plaintiff was evicted from the station before
he could complete the work). The owner took away his vehicle and had it
repaired on their own and then claimed the cost of the same repair. Plaintiff
paid owner KSh.96,000/- and got a receipt for the same from the owner. It
thus claims that amount as, according to plaintiff, that was a loss arising
directly from the eviction of the Plaintiff by the Defendant. There are two
matters that make it difficult to understand and appreciate this claim. These
are first whether this claim arose directly from eviction of the Plaintiff by the
Defendant and secondly (even if I feel it was not remote) whether this claim
is supported and proved in the light of the evidence adduced by PW.4.
Overhauling motor vehicle engine is a major repair of a vehicle which
should normally be done in a fully fledged garage. I do accept that there are
minor repairs that can be done at a Petrol Station. I have looked at the
operations agreement and I cannot see where such heavy repairs were
allowed to be carried out at the subject garage. Further, it is not clear that
this was a loss that could be anticipated by the Defendant. However, as I
have stated above, the Defendant never adduced any evidence challenging
the Plaintiff’s evidence and so I will not reject this claim on the two
arguments I have raised hereinabove. On the evidence adduced before me
there were several disturbing aspects. First PW.1, the Director of the
Plaintiff did not state when the relevant motor vehicle was taken to the
service station and how long the vehicle was to be there before the owner
could collect it already repaired. He does not state when the engine got lost.
All he said was that there was another customer who wanted to overhaul
engine of his vehicle. That customer was Prime Chemicals. He could not
complete work and the owner pulled his vehicle away and repaired it on
their own and demanded the expenses incurred of KSh.96,000/- which he
paid vide Exh. 11(a) and 11(b) (which receipts show KSh.91,613/- as the
amount that was paid). The undisputed evidence however is that the
Plaintiff was evicted from the subject service station on 15th February 1991.
PW.1 says so in evidence and that is not challenged at all. In the plaint, the
Plaintiff is rather vague and talks of having been removed in the month of
February 1991 but that vagueness is made clear when evidence clearly said
the eviction was on 15th February 1991. The evidence of PW.4 Charles
Gichuru Mbuthia is that he used to buy petrol from Plaintiff in 1991 and
1992 and the Plaintiff used to repair their vehicles. At the end of 1991 he
took his vehicle to the station and it was not repaired for a long time. He
went and took it back but found the engine was not there. It had not been
repaired for about three months and he went for the vehicle in early 1992.
When he found the engine missing Mr. Muthondu PW.1 was there and
Plaintiff’s workers were there. He repeated that evidence in cross
examination and added that he took away the vehicle in February 1992 and
said by 8. 3.92 when the invoice was made out he had identified the engine.
In re-examination he said he could not remember the actual dates and that
when he took the vehicle away Muthondu PW.1 was not there. Three
observations come to mind. First is that PW.4 is not a reliable witness. He
clearly changed his evidence in cross-examination and abandoned his earlier
stand on dates some of which were specific and also changed his evidence as
to whether when he took away the vehicle Muthondu was there or not.
Second is that if his evidence in chief is to be believed then whatever date he
picked his vehicle plaintiff was still operating the petrol station and cannot
say that the vehicle was not repaired because of eviction. Third is that he
took away his vehicle because the Plaintiff failed to repair it after three
months and that was clearly not the mistake of the Defendant. The other
aspect one sees in the matter is that there is no evidence as to who took the
engine which necessitated the replacement of the same with a new engine
and made it impossible any longer to overhaul the old engine. If PW.4’s
evidence is to go by then he took the car for repair (note he has not said for
overhaul of engine specifically) and it was not repaired within the time
agreed. When he went to pick it, engine was not there and the Plaintiff’s
workers were there (even if one accepts his later version in cross
examination that Muthondu was not there). One question that needed to be
answered by the Plaintiff (i.e. assuming PW.4 forgot the correct dates and
he went to collect the vehicle after eviction), did the Plaintiff have that
vehicle at the station with its engine intact (i.e. the engine that was to be
overhauled)? There is no evidence on that. The next question is – If PW.4
found Plaintiff’s workers there when he went to collect the vehicle, then
what did they tell him about the lost engine. In any case, if the engine was
still there for overhauling then why hold Plaintiff liable for a new engine. I
am not satisfied that the Defendant was in any way involved in the loss (if
any) of the alleged engine as the evidence before me does not point to the
Defendant even within the required standard, of probability. I will not allow
that amount of KSh.91,613 as there is no proper basis for the claim.
The last claim in that category is the claim for uncollected debts
which amounts to KSh.104,330/-. The evidence adduced in court on this
was as follows:
I used to give credit to customers for petrol, diesel
and upto the time of eviction the amount due was
about KSh.450,000/ -, most of the customers paid
me but four took advantage and did not pay. The
amount I could not recover is KSh.104,000/ - from
four customers. Given another one month and I
would have recovered that money from the
debtors.”
He then referred to MFI.19. In cross-examination, he said that the four
customers who had not paid him were Plaintiff’s customers and not those of
Caltex. He said further though some of those four such as Nation
Newspapers could not pay Plaintiff KSh.67,000/- because the Plaintiff had
no copies of L.P.O. as the same copies could not be traced. He felt the
auctioneers had taken some documents and the copies could also have been
taken by the auctioneers, but he did not make any complaint about that to the
Defendant. There is no proper evidence as to why the Plaintiff could not sue
the four debtors to recover its money. PW.1 said a letter was written to the
four alleged debtors but no copies of such letters were exhibited. In any case
the claim that the auctioneers took away the necessary documents that would
have enabled Plaintiff sue the four debtors for the recovery of the same
amount owed cannot stand as against the Defendant because although
auctioneers were agents of the Defendant, there is nothing to show they had
taken the same documents. Debtors list prepared on 14. 2.1991 – a date
before the eviction was still intact, and in his evidence PW.1 said:
“Auctioneers took all my personal belonging,
chairs, tables, etc but they left the most im portant
aspects as those were motor vehicles, repair tools
and machines which are the subject of my case."
In cross examination, he was much more specific as to what the auctioneers
took away and their fate. He said:
“I now see this document MFI.D2. Ac cording to
this document, auctioneers took 2 tools Boxes, one
desk, one executive chair, two metal chairs, two
arm chairs, one Frig., Two wheel spares, 2
wooden chairs, assorted engine parts, and drive
shaft, one jerrican, one cabinet (wooden), one
secreta rial desk, six car doors, seven cans of
distilled water, six crates of soda, nine crates of
empty bottles, one typewriter IBM. Those were the
items taken by auctioneers. I later collected all of
them from the auctioneer.”
The above makes it clear that even by the evidence of PW.1 alone, there is
nothing to show that documents (let alone documents such as LPOs) were
taken by auctioneers. The above also makes it clear that whatever the
auctioneers took (even if he were to be shown to have taken such
documents), were all recovered by the Plaintiff. Where is the basis of this
claim? Why could not the |Plaintiff sue his debtors even after he left the
station for they remained its debtors whether or not it was still operating the
station? The answer to that question is in my humble opinion – no reason
whatsoever or at least no acceptable reason has been adduced. That claim
cannot stand.
The sum total of all the above as concerns prayer 1 of the plaint, is
that I do award KSh.560,530/- claimed as interest on KSh.491,450/- as at
31st March 1994. I award a total of KSh.706,595 in respect of value of
wheel balance, tyre changer, trolley jack and wheel aligner. Thus total
allowed under prayer 1 of the plaint shall be KSh.1,267,125/-. The rest of
the claims under that prayer are rejected.
I now proceed to consider the claim for damages for breach of
contract. The agreement provided as I have stated above that it could,
without any reason be terminated by either party giving to the other one
month’s notice (Clause 3 of the agreement says so.) PW.1 said in evidence
in chief that the Plaintiff was making a profit of KSh.30,000/- per month on
the garage side and KSh.30,000/- per month on the petrol station side. Thus
in a month he alleged that he was making a profit of KSh.60,000/- per
month. He did not produce any evidence on the same. He agreed in crossexamination
that he did not have tax returns showing that he was paying tax
on that profit (which is KSh.720,000/- per year) and he agreed that there was
no audit report to indicate that Plaintiff was making that profit. Last audit
report for the Plaintiff’s business was in 1988 but that was also not availed
to the court. It is thus difficult to arrive at a proper figure in respect of
general damages. I do agree that the purpose of the award of general
damages is to enable one to be as much as possible in the same position as
he would have been had the breach not taken place. Here, without such vital
evidence one is at a loss as to what was his position before the breach.
However, the Plaintiff must have suffered some loss resulting from the
eviction which did not even proceed after a court order. I was not told
whether it did relocate elsewhere its garage business, but whatever happened
there must have been some elements of suffering by the Plaintiff as a result
of what happened. Doing the best I can in the circumstances, I will award
KSh.50,000/- as general damages.
The Plaintiff in its submissions by its learned counsel has stated that
the Plaintiff has sued the Defendant for and I quote:
(a) Release of the equipment, accessories, and the
machinery detailed at paragraph 6 of the plaint.
(b) Release of funds held by the Defendant in deposit
together with interest thereon at commercial rates
and damages for unla wful detention and loss of
use thereof.
(c) Damages for conversion and unlawful detention of
the equipment, accessories and machinery together
with interest.
(d) Compensation for being prevented from collecting
debts.
(e) Damages for loss of use of the said equipme nt.
(f) Exemplary damages.
(g) Costs and interest thereon.”
I have reproduced the above because, the claim before me as per plaint
(which claim I have also reproduced hereinabove) is in every way different
from what the Plaintiff now claims in its submissions unless the plaint the
Plaintiff is referring to is a different one from what I have in the file. I have
not been shown that other plaint, neither have I been referred to an amended
plaint. In the plaint before me there are certainly no prayers for release of
accessories, nor for damages for conversion and unlawful detention of
equipment, accessories and machinery together with interest; no prayer for
damages for loss of use, and finally no prayer for exemplary damages. In
law a party must stick by its pleadings and prayers in its plaint. It cannot on
the convenience of circumstances seek to have court’s judgment for matters
it did not plead and prayed for. I am aware that there are situations where
courts can make awards on matters that have been made issues during the
hearing, but those are matters that both parties were aware of and canvassed
during the hearing and during the submissions. In this case the Plaintiff in
its plaint clearly opted for the value of the equipment taken and did not in its
pleadings seek their return nor damages for conversion and unlawful
detention. It had to stick by those pleading and either succeed or fail but not
change midstream to seek another judgment without amending the plaint and
pleading the same. In fact Plaintiff is clear in its Reply to Defence where it
talks of value of the equipment as alternative claim. I have seen and perused
the authorities that were submitted. Most of them were on the matters that
were not pleaded and they were not of much help to me.
Finally, although during cross examination of witnesses, the
Defendant’s counsel did show to the various Plaintiff’s witnesses various
documents which were then marked for identification, these documents were
eventually not produced as exhibits as defence never called witnesses in the
case. I have not referred to the same as evidence as indeed they were not
exhibits and were not eventually of any value to the court. This judgment is
therefore not in any way tainted by the same documents.
In conclusion, judgment is entered for Plaintiff against Defendant in the sum
of KSh.1,267,125/- being value of the equipment, plus interest on
KSh.491,450/- and also for KSh.50,000/- being general damages for breach
of contract. Total amount awarded in KSh.1,317,125/-. Interest on both
awards shall be at court rates from the date the suit was filed. The Plaintiff
will have costs of the suit. Judgement accordingly.
Dated and Delivered at Mombasa this 4th Day of March, 2003.
J.W. ONYANGO OTIENO
JUDGE