Sagrick Kenya Limited v Kibirigwa Farmers Cooperative Society [2024] KEHC 2953 (KLR)

Sagrick Kenya Limited v Kibirigwa Farmers Cooperative Society (Civil Suit 1119 of 2001) [2024] KEHC 2953 (KLR) (Commercial and Tax) (1 March 2024) (Judgment)

Neutral citation: [2024] KEHC 2953 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Commercial and Tax

Civil Suit 1119 of 2001

MN Mwangi, J

March 1, 2024

Between

Sagrick Kenya Limited

Plaintiff

and

Kibirigwa Farmers Cooperative Society

Defendant

Judgment

1. The plaint in respect of this suit was amended on 17/10/2001. It is the plaintiff’s case that on or about 17/5/2001, it sold and supplied chemicals at an agreed price of Kshs.520,400. 00 to the defendant at its request. Due to the supply of the said goods, the plaintiff claims Kshs.520,400/- from the defendant, being sums owing from the defendant in respect of the goods sold and delivered to it.

2. The plaintiff averred that the aforesaid sale of goods was a commercial transaction duly facilitated by a bank funding facility at the rate of 30% per annum. He as such claims for interest on the principal sum of Kshs.520,400/-. at 30% per annum from 17/5/2001 until payment in full.

3. The plaintiff prays for judgement against the defendant for-(1)Kshs.520,400/-; and(2)Interest on (1) above at 30% per annum from 17/5/2001 until payment in full.

4. The plaintiff called one witness, Simon Thiong’o, the Managing Director of the plaintiff. He relied on his witness statement dated 31/1/2022 and produced the plaintiff’s bundle of documents as plaintiff exhibits 1 to 8.

5. PW1 testified that he received a letter dated 7/5/2001 signed by the Secretary/Manager, the Chairman and the Treasurer of the defendant requesting him to deliver the chemicals in issue, and that the purchase order would be issued later.

6. He testified that as per the aforementioned letter, he delivered the chemicals on 15/5/2001 and a delivery note and a goods receipt note was issued by the defendant’s Store Manager.

7. It was PW1’s evidence that he approached Barclays Bank for a loan in order to buy the chemicals and that he was to repay the loan within 60 days as the defendant had assured him that it would pay the amount owing within the said duration of time. He stated in his evidence that the defendant never complained about the quality of the chemicals or their price.

8. He stated that the bank was charging an interest rate of 30% on the loan and he therefore claimed for 30% interest at commercial rates on the amount Kshs.520,400/-.

9. On the day when PW1 testified, he was not cross-examined as the defendant’s Counsel was not present during the hearing. This Court was however satisfied that the defendant was physically served with a hearing notice and an affidavit of service was duly filed in Court.

Defendant’s case. 10. In its amended statement of defence and counterclaim dated 17/10/2001, the defendant contended that it is affiliated to Kirinyaga District Co-operative Union Limited (K.D.C.U Limited) and all its Local Purchase Orders (LPOs) must be approved by K.D.C.U internal Audit Section in order for it to be valid. That the Local Purchase Orders which were to be placed with the plaintiff for the supply of the goods stated in the plaint were never approved by K.D.C.U as the prices quoted by the plaintiff were exaggerated compared to those prevailing in the market.

11. The defendant contended that after the cancellation of the aforesaid LPOs by K.D.C.U, it did not order or agree to purchase the goods or any part thereof nor did any other person do so on its behalf or with its authority.

12. Further, that the goods mentioned in the plaint were never delivered by the plaintiff to the defendant at the defendant’s request and the person who purportedly received the goods on behalf of the defendant had no authority to do so and any receipt which might have been issued to the plaintiff is invalid.

13. The defendant averred that the plaintiff colluded with some officials and employees of the defendant in the alleged delivery and receipt of the goods mentioned in the plaint.

14. In the defendant’s counterclaim, it claimed that when the goods were delivered, they wrote to the plaintiff requesting it to collect the goods as the same could not be accepted. The defendant claimed storage charges of Kshs.500/- per day from 21/6/2001 until collection of the goods.

15. Based on the foregoing, the defendant prays for the plaintiff’s suit to be dismissed with costs and an order for storage charges to be granted as prayed.

16. As earlier stated, save for filing its amended statement of defence dated 17/10/2001, the defendant did not participate in the hearing of the case. As such, the contestations remain mere averments, which do not controvert the plaintiff’s evidence.

Analysis and Determination. 17. The plaintiff canvassed its case through written submissions dated 24/11/2024 which I have duly considered. The defendant did not file any submissions.

18. Having analyzed the pleadings, the plaintiff’s evidence and submissions filed in this matter, the first issue for determination is whether there was a contract between the parties and whether it was breached.

19. Mr. Odhiambo, learned Counsel for the plaintiff submitted that a contract of sale existed between the parties herein as the defendant requested in writing for goods that were delivered at an agreed cost of Kshs.520,400/-. Counsel stated that the plaintiff established that he delivered the chemicals with no complaints being raised until the filing of the subject suit.

20. In a letter dated 7/5/2001, found in the plaintiff’s bundle of documents, the defendant wrote to the plaintiff stating the following:“You are hereby informed that you deliver the chemicals. The order will come later. Attached are the quantities.”

21. The letter was signed by the defendant’s Secretary/Manager, its Vice -Chairman and the Treasurer.

22. Consequently, a delivery note dated 16/5/2001 listing the goods delivered was issued by the plaintiff and stamped by the defendant. Further a goods receipt note dated 17/5/2001 was issued by the defendant and executed by the defendant’s Store Manager.

23. It is the finding of this Court that the documents relied on by the plaintiff are sufficient evidence that the defendant ordered for chemicals from the plaintiff and the same were delivered. It is also evident that the defendant has not paid any consideration for the goods delivered twenty-two (22) years ago.

24. The defendant’s defence was that the goods were never delivered to it at its request and that any receipt of the goods was done without its authority. The said allegations were however not supported by any evidence. The plaintiff’s sworn evidence therefore remains unchallenged.

25. In the case of Isaac Mugweru Kiraba t/a Isamu Refri- Electricals v Net Plan East Africa Limited [2018] eKLR, it was held thus:“In my view, and in the absence of any evidence of rejection of the goods either at the time of delivery or even within a reasonable period after delivery, property in the supplied and delivered goods passed to the Defendant once the goods were accepted and the delivery notes stamped and signed. The Defendant then had to pay for the delivered goods at the agreed prices being the local purchase order prices.”

26. I concur with the finding in the above case. In this case, the plaintiff delivered the chemicals and they were received with no complaint whatsoever, until this suit was filed. The plaintiff has established that a sale of goods contract existed and that the defendant is in breach of it by failing to pay the purchase price. The plaintiff is therefore entitled to the purchase price of Kshs.520,400/-.

27. The second issue for determination is whether the plaintiff is entitled to 30% interest as claimed. The plaintiff submitted that it is entitled morally and in common law, subject to this Court’s discretion, to interest at commercial rates. The plaintiff believes 30% per annum is fair. He claims that he took out a loan to honour the contract which loan attracted an interest of 30% per annum which interest he prayed to be granted by this Court.

28. In the case of Stephen Musumba t/a Zapata Agencies v Principal Secretary Ministry of Agriculture & Irrigation & another (Civil Appeal E018 of 2020) [2022] KEHC 3359 (KLR) (Civ) (31 May 2022), the Court held as follows-“The appellant was made to wait for the outstanding balance for twenty (20) years. Being a commercial transaction, the appellant has been prejudiced by being deprived of the use of his money. He ought to be compensated for his trouble. I am guided by the case of Omega Enterprises Kenya Limited v Eldoret Sirikwa Hotel Limited & others Civil Appeal No 235 of 2001, where the Court of Appeal thus:“There is no doubt that if a party is deprived of the use of his money he must be compensated therefore by an award of interest thereon from the date he was so deprived.".

29. I am persuaded by the holding in the above case, and I agree that the plaintiff is entitled to interest due to the prejudice he has suffered in waiting for payment for twenty-two (22) years. The plaintiff claims interest at 30% per annum as that was the alleged interest from the loan he procured from Barclays Bank in order to supply the goods in the contract. I however note that the plaintiff did not produce evidence of the said loan in order to prove that it was issued with a loan at an interest rate of 30% per annum. In this Court’s view, it would be unconscionable to grant such an order in the absence of evidence as it would confer unjust enrichment on the plaintiff.

30. In the result, I enter judgment for the plaintiff as against the defendant as follows-a.The plaintiff is awarded the principal sum of Kshs.520,400/-;b.Interest is hereby awarded to the plaintiff on (a) above at Court rates from 17/5/2001 until payment in full; andc.Costs of the suit awarded to the plaintiff.It is so ordered.

DATED, SIGNED AND DELIVERED AT NAIROBI ON THIS 1ST DAY MARCH, 2024. JUDGMENT DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORM.NJOKI MWANGIJUDGEIn the presence of:No appearance for the plaintiffNo appearance for the defendantMs B. Wokabi – Court Assistant.