NUTCRACKER v AIR KENYA AVIATION LTD [2004] KEHC 36 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI (MILIMANI COMMERCIAL COURTS)

Civil Case 448 of 2003

NUTCRACKER......................................... PLAINTIFF

VERSUS

AIR KENYA AVIATION LTD...................DEFENDANT

RULING

This is an application for summary judgment. It is made by wayof a Notice of Motion dated 1st October, 2003 and filed in court on 6thOctober, 2003, under Order XXXV rules 1, 2, 3, 8, Order XXII rule 6(presumably of the Civil Procedure Rules) and the inherent powers ofthis court. By the application, the plaintiff/applicant seeks an orderthat partial judgment be summarily entered against the defendant forthe sum of Kshs.821,172/= and that the costs of this application beprovided for. The application is based on the grounds that the defendant isjustly and truly indebted to the plaintiff for goods supplied at thedefendant's own instance and request; that the defense is abare/mere denial and raised no triable issues; and that thedefendant's defence is merely calculated to delay justice and frustratethe plaintiff's bona fideattempt of recovering what is justly and fairlyowed to it. The application is supported by the annexed affidavit ofSUMAN KUMAR BHASIN, a director of the plaintiff company.

In a replying affidavit sworn on 15th October, 2003 and filed incourt on the same day, the Catering Manager of the defendantcompany, Mr. Henry Lasoi opposes the application. He avers thatwhereas from the plaintiff's plaint the goods allegedly supplied to thedefendant were supplied from October, 2003, yet the supportingaffidavit indicates that the goods were ordered from April, 2002. Healso avers that that there are no delivery notes to show that indeedthe alleged goods were delivered to the defendant, and that from theplaintiffs exhibits it is apparent that the local purchase orders havedifferent sums compared to the invoices. He further stated that inApril, 2003 the Ministry of Health visited the defendant's premisesand inspected the products supplied by the plaintiff and the results ofThe inspections were that the products contravened the requirementsof the Public Health Act. The letter from DCDM Consulting (E.A.)Limited annexed in the plaintiff's bundle of exhibits, he says, is ageneral letter from the defendant's financial advisors/auditors whichdoes not admit the debt herein. He concludes by stating that there isno outstanding debt payable to the defendant, and that thedefendant's defence raises triable issues.

While canvassing this application before the court, Mr. Gitau forthe applicant started by stating that the plaintiff seeks summaryjudgment under Order XXXV for Kshs.821,172/= on the groundsstated, and that under Order XII rule 6 there has been an admissionby the defendant that the amount is owing. He further said that as ofMay, 2003 the amount owing was Kshs. 1,021,172/=, but on 6th May,2003 a sum of Kshs.200,000/= was received thereby reducing theamount owing to Kshs.821,172/=. By a letter dated 26th June, 2003,the plaintiff's advocates demanded the payment of this sum, andthereafter consultants employed by the defendants wrote to theplaintiff's advocates on or about 16th July, 2003, indicating that theywere in the process of preparing a detailed analysis of the financialPosition of the business following which proposals would besubmitted to creditors for the settlement or compromise of their debts.

Mr. Gitau referred to paragraph 7 of the defence in which thedefendant alleges that the goods supplied were defective andwondered how the defendants could have continued orderingdefective goods for a whole year from 24th July, 2002 to 6th May,2003. In any event a letter from the Ministry of Health does not statethat the goods were unfit for human consumption. Instead, a letterfrom the Institute of Nuclear Science of the University of Nairobi aswell as a letter from the Ministry of Health both cleared the productsas fit for human consumption. Mr. Gitau submitted that there was notriable issue in respect of this amount and prayed that summaryjudgment be entered accordingly.

Mr. Mutua for the defendant/respondent opposed theapplication and relied on the two affidavits sworn by Mr. Henry Lasoion 15th October, 2003 and 3rd November, 2003. He submitted thatthe import of those two affidavits is that the defendant in its defenceraises pertinent triable issues which cannot be addressed by way ofsummary procedure. The first such issue is that the defendant's caseis that the goods in issue were not delivered as the affidavit in supportOf application has not exhibited any delivery notes. The applicantsinvoices bear only the respondent's stamp which cannot amount toevidence of delivery. He contended that the stamp merely depictedthe receipt of the invoices themselves, in the way of receipt of anyother documents, but that it was not evidence of delivery of thegoods. However, Mr. Mutua continued, even if the court were toaccept the applicant's version that the stamping of invoices wasevidence of delivery, then an issue will arise as the whether allinvoices were so stamped. If that be so, then one invoice i.e.No.2738 was not stamped, and given the disparity between theparties, there is an issue as to whether there was an agreed mode ofdelivery, and if so whether it was by stamping of invoices.

The other issue, according to Mr. Mutua, is the apparentdisparity between the dates of the orders and the dates of the allegeddelivery. He gave an example of the plaintiff's exhibit 1 at page 4,which is an L.P.O. dated 30th April, 2002, and yet the invoice insupport of the allegation that goods were supplied is dated 16thDecember, 2002. According to Mr. Mutua, there was an eight monthsdelay before the invoice was raised, and this cannot be evidencethat goods were delivered.

The next issue, Mr. Mutua continued, is that the L.P.O.'sexhibited vis-à-vis the invoices do not correspond. Here he gave anillustration of the plaintiff's exhibit 1 at page 1 in which the total valueof the goods ordered is Kshs.859,625/=, but in the invoices in supportwhich are at pages 2 and 3, the value of the goods supplied isKshs.603,396/= only. Secondly, the L.P.O. at page 4 is for goodsworth Kshs. 1,820,000/= and to support the supply of those goods,were referred to page 6 of the exhibit and the value therein amountsto Kshs.149,500/=.

Mr. Mutua also contended that the goods supplied weredefective as not being in conformity with the Ministry of Healthrequirements, and therefore the plaintiffs are not entitled to payment.He submitted that if the Ministry of Health has made a decision thatthe goods do not comply with the requirements of Cap.244, thisraises a triable issue as to whether this would entitle the defendantsto refuse to pay for the goods supplied, and such a matter cannot bedetermined by affidavit evidence.

Lastly, counsel said that the last issue raised by the defendant'spleadings was whether the two claims for Kshs.821, 172/= and one forKshs. 1,362,000/= can be separated for the court to give partialjudgment for part of the claim, and he answered the question bysaying that the two amounts are inseparable. The letter at page 15 ofexhibit 1 does not amount to an admission as it is not very clear andunequivocal. He said that Mr. Gitau had described that letter as aresponse to the plaintiffs demand letter at page 14, and observedthat the demand letter has three different amounts i.e.Kshs.797,336/=, Kshs.873,000/= and the total of Kshs. 1,670,336/=,and none of these amounts appears in the plaint, nor does the totalcorrespond with the total in the plaint. He thereupon concluded bystating that this cannot be an appropriate case for summaryjudgment. He referred the court to some three authorities.

In reply, Mr. Gitau stated that the defendants have not deniedthe invoices, all of which were brought to their attention, and if thedefendants had paid against delivery notes, they should have showedany of those notes. Furthermore, the invoices are stamped'received'. Received what? The disparity in the date of ordering andthat of receipt is explained by the fact that the order was placed forsupplies for a period of nine months. Therefore, even though theorder was dated 30th April, 2002, it was adequate authority for thesupply of goods up to January, 2003, and goods could be supplied at any time within the life of the order.

As for the value of the goods requisitioned not tallying with theamounts in the invoices, the explanation was simple - the plaintiffwas seeking to recover the value of goods which it delivered, notthose which had been ordered. The amount owing is clearlyillustrated in paragraph 4 of Mr. Bhasin's affidavit under oath, and thishad not been controverted. Paragraph 6 gives credit for what waspaid. The goods were not rejected by either the defendants or theMinistry of Health, but instead were consumed. Finally, Mr. Gitausubmitted that the court can enter judgment for the amount which theplaintiff establishes, and in this case, the amount the plaintiff claims iscapable of being ascertained and evidence has been adduced as tohow it is arrived at. There is no triable issue about that sum, heurged, and that therefore summary judgment should be entered inrespect thereof.

After hearing the submissions of counsel, I am left to answerthe question as to whether this is a fit and proper case for enteringsummary judgment. The object of Order XXXV of the CivilProcedure Rules is to enable the plaintiff with a liquidated claim, inwhich the defendant has no reasonable defence, to a quick judgmentwithout being subjected to a lengthy unnecessary trial. A party whoopposes an application for summary judgment ought to placeevidence either by affidavit, or by oral evidence or otherwise that heshould have leave to defend the suit. In the instant case, many of theissues which counsel for the plaintiff identified as triable issuescannot pass the test. However, it is also trite law that even onetriable issue entitles a defendant to leave to defendant.

Starting form the periphery, it may be observed that he claimsprings from goods said to have been sold and delivered. One of theissues raised by counsel for the defendant was that the goods weredefective as not being in conformity with the Ministry of Healthrequirements. In their letter dated 25th April, 2003, the Ministry ofHealth were very clear. Paragraph 2 of their letter states -

You  are  hereby notified  that  the product is  notproperly labeled thus contravening the Public Health

Act Cap. 242 (Laws of Kenya)'The next paragraph sets out the information to be contained inthe labeling and then the letter concludes by stating -

'The office does hereby allow you the use of theproduct already ordered but further supply shouldconform to the above requirements.'

Since the defendant was allowed the use of the product alreadyordered, and the claim herein is for goods sold and delivered, Idon't think that the concerns of the Ministry of Health canexonerate the defendant from liability to pay for that which hadalready been delivered . And in an earlier letter dated 17th March,2003, the same Ministry had cleared the product as fit for humanconsumption after testing it for radioactivity. I don't think that thisraises a triable issue in respect of the defendant's liability to payfor the goods supplied. In any event, on 6th May, 2003, long afterthe two letters from the Ministry of Health, the defendants paidKshs.200,000/= on account. I don't think it is open to them toallege that the goods were defective while at the same time theyare making part payment thereof.

Counsel for the defendants placed a heavy premium on thediscrepancies in the dates and figures on the LPOs and invoices.One such discrepancy, or perceived discrepancy, was in relationto page 4 of the documents in the plaintiff's exhibit 'SK B 1 inwhich goods were ordered on 30 April, 2002 and delivered on16thDecember, 2002 as per invoice No.2833 at page 5 and 8month delay. As a matter of fact there was no delay, A closelook at the order dated 30thApril, 2002 at page 4 shows that itwas split into two-

(i)    Supply of 250 cartons CRAWFORD Biscuits for Juneto September and

(ii)   Supply  of 450  cartons  CRAWFORD  Biscuits  for October to January, 2003. Even though the order was dated 30th April, 2002, it is obviousthat it covered supplies for 9 months down the road.   In thecircumstances, there was no delay in delivery.

Another perceived discrepancy was with regard to the orderdated 24th July, 2002 at page 1 of the exhibit in which the goodsordered were worth Kshs.859,625/= but the invoices for thosegoods were for Kshs.603,396/=. A similar phenomenon wasobserved at page 4 in which goods worth Kshs. 1,820,000/= wereordered but the invoice for the goods supplied was forKshs. 149,500/=. If these observations are correct at all, theanswer thereto is that even if goods are ordered in bulk, thesupplier does not invoice on the basis of the quantity ordered, butthe quantity supplied.

That brings me to the crux of this application which issummary judgment for the sum of Kshs.821,172/=: Paragraph 3of the plaint states -

The plaintiff's claim against the defendant is forKshs.821,172/= being the balance of the amountdue for goods sold and delivered to the defendantin Nairobi from October, 2002. 'The supporting affidavit of SUMAN KUMAR BHASIN is very clearas to how this sum is computed.  The breakdown of the totalclaim is to be found in paragraph 4 of the affidavit and it showsthat the total amount of the claim was initially the sum ofKshs.1,021,172/= for the period from 30th April, 2002 to 6th May,2003.  However, the defendant was given credit for the sum ofKshs.200,000/= paid on 6th May, 2003 leaving a balance ofKshs.821,172/= which is the subject matter of this summaryjudgment application.

Counsel for the defendant raised several issues about thisclaim.   In the first place, the plaint states that the amount inquestion is the balance of the amount due for goods sold anddelivered to the defendant from October, 2002. But thesupporting affidavit is different. It tabulates sums allegedly duefrom as early as April, 2002. He then poses the question - whichis the relevant period?

Secondly, in paragraph 3 of the supporting affidavit, Mr.Bhasin avers -

'That in the normal course of business, thedefendant would make an order, collectthe food products and endorse the plaintiff's

invoices reflecting the amount due.'A perusal of the invoices from which the figure of Kshs.821,172/=is made out shows that they are date stamped by the defendantand endorsed 'RECEIVED'. One such invoice No.2738 dated 8thNovember, 2002, however, is not date stamped and endorsedlike the others. It is for the sum of Kshs.311,700/=. There is noexplanation as to why it is not stamped like the others, and suchan explanation is called for in order that it may qualify forpayment.   If it does not pass for payment, then the amountclaimed in the application for summary judgment would be muchless.

Another point raised by counsel for the defendant arises outof the disparity in the figures stated in the letter of demand and inthe plaint.  The two are clearly different.  In the letter of demandat page 14 of the plaintiff's exhibit 'SKB 1', the advocates for theplaintiff wrote on 20th June, 2003 stating, inter alia -We have been instructed by our above namedclient to demand payment from you of the sum ofKshs.797,336. 00 being value of goods delivered and afurther Kshs.873,000. 00 in respect of branded goodsimported on your behalf.

Take notice that unless we receive payment of thesum of Kshs.1,670,336. 00 above within 10 daysfrom the date of this letter our instructionsare to immediately file suit against you'

In the plaint dated about a month later on 23rd July, 2003 andfiled in court on 25th July, 2003, the plaintiffs claim against thedefendant is for Kshs.821,172/= being the balance of the amountdue  for  goods  sold  and  delivered,  an  additional  sum  ofKshs. 1,362,000/= being the value of branded goods imported onthe defendant's behalf, and the total is Kshs.2,183,172/=.

In the course of the restructuring of the defendantcompany, their consultants wrote to the plaintiff's advocate on16th July, 2003, and implicitly acknowledges the plaintiff's ascreditors but very cleverly avoids stating the amount of themoney owed. The question arises, which is the correct figure ofthe debt, given the disparity between the figures in the letter ofdemand and the plaint, and given that one of the invoices is notendorsed in the same way as the others?

In the case of NATIONAL INDUSTRIAL CREDIT BANK VRAPHAEL  OBONYO  OKELLO,Milimani  Courts,  Civil  Suit

No. 1186 of 2000, Justice Ringera says-

"It is well settled that the procedure for summaryjudgment is to be resorted to in respect ofliquidated demands only where it is plain andobvious that the defendant is truly and justlyindebted to the plaintiff and there are no bonafide triable issues raised by the proposeddefence or the defence already filed..."I have no doubt in my mind that the subject matter of the applicationbefore the court is a liquidated demand. I equally have no doubt thatthe defendant is truly and justly indebted to the plaintiff. However, Iam not equally certain as to the amount of indebtedness, given thatthe figures in the demand letter and those in the plaint are notcongruent, and given further that one invoice is not endorsed. Oralevidence will no doubt be necessary to establish the correct figuresas well as the validity of the un-endorsed invoice. Only after suchevidence has been weighed would the court be in a position toascertain, on a balance of probability, the actual figure to be awarded.The true amount of the indebtedness is therefore a triable issue,which also invokes the greater issue as to whether there was anagreed mode of delivery, and whether Invoice No.2738 is compliantwith such an agreed procedure.

It is an elementary rule of law that even one triable issueentitles a litigant to leave to defend. In INSURANCE COMPANY OFE.A. LTD. V. ASTRA INSURANCE BROKERS, Milimani Civil CaseNo.1464 of 2001, Justice Mwera was confronted with an applicationwhere the sum claimed was in his own words, " was not fixed orascertained.  It is shifting from time to time even from the plaintiffsown letters to the defendant... In such a fluid state... a trial is thebetter form to resolve the dispute... Then a sum certain shall fall to bedetermined..."

I associate myself with those sentiments and I accordinglyadopt and apply them to this application.  The upshot is that theprayer for summary judgment fails at this stage.  I find it fairer andmore proper for this suit to go for trial. It is so ordered.Costs in the cause.

Dated and delivered at Nairobi this 27th day of February 2004

L. NJAGI

JUDGE