Sifa Investments Limited v Master Empex Limited [2022] KEHC 13409 (KLR)

Sifa Investments Limited v Master Empex Limited (Civil Case E112 of 2021) [2022] KEHC 13409 (KLR) (20 September 2022) (Judgment)

Neutral citation: [2022] KEHC 13409 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Case E112 of 2021

OA Sewe, J

September 20, 2022

Between

Sifa Investments Limited

Plaintiff

and

Master Empex Limited

Defendant

Judgment

[1]The plaintiff, Sifa Investments Limited, is a limited liability company registered in Kenya and operating as a transport and logistics service provider. By its Plaint dated October 27, 2021, it sued the defendant on account of an agreement entered into with the defendant on or about May 8, 2021. The plaintiff’s cause of action was that it was thereby contracted by the defendant to transport goods in five containers from the Port of Mombasa to Kampala Uganda at a base contract price of US$ 12,500. It was further the contention of the plaintiff that it was a term of the agreement that it would be paid 50% of the contract price upon loading the goods at the Port of Mombasa; and that the balance was payable upon offloading the goods at their final destination in Kampala. [2]At paragraphs 7 to 9 of its Plaint, the plaintiff averred that, on May 25, 2021, upon receiving the loading papers for the goods, it raised an invoice and requested for the payment of 50% of the contract sum but was not paid; and that as a show of good faith and to maintain the business relations between the parties, it nevertheless transported and delivered the goods and offloaded the same in Kampala, Uganda, and returned to Mombasa with the 5 empty containers in full compliance with the terms of the Agreement. The plaintiff further asserted that the containers remained in its custody, taking up space and consuming security services and other charges at its expense as the defendant persisted in its breach of the terms of the Agreement as to payment.

[3]Consequently, on or around June 8, 2021, following several unheeded demands for payment via email, the defendant instructed the plaintiff to exercise a lien over the 5 empty containers to secure payment of the sums owed to it as the defendant made arrangements to settle the debt. Ultimately, it was constrained to file this suit, claiming not only the contractual sum of US$ 12,500. 00 but also storage and other charges/ expenses incurred by the plaintiff in connection with the subject contract. The particulars thereof were set out in paragraph 12 as hereunder:[a]Contract price US$ 12,500. 00[b]Lift off and lift on charges atUS$ 150. 00 per container US$ 750. 00[c]Shunting charges at US$ 150. 00per container US$ 750. 00[d]Storage charges at the rate ofUS$ 100. 00 per day per container fromJune 3, 2021 to October 1, 2021 US$ 48,000. 00[e]Storage charges at the rate ofUS$ 100. 00 per day per containerFrom June 5, 2021 to October 1, 2021 US$ 11,800. 00Total US$ 73,800. 00

[4]Accordingly, the plaintiff prayed for the following remedies against the defendant:[a]A declaration that it has a right of lien over containers numbers TCNU7597721, CIAU0229725, BSIUG692782, TCLU1812917 and TCNU8606181 for purposes of securing payment of the outstanding sums owed to it by the defendant;[b]US$ 14,000. 00 as per paragraph 12. 1, 12. 2 and 12. 3 of the Plaint;[c]US$ 59,800. 00 as per paragraphs 12. 4 and 12. 5 of the Plaint, being accumulated storage charges as at October 1, 2021;[d]Additional storage charges at the rate of US$ 100. 00 per day per container for 5 containers calculated from October 2, 2021 until payment in full or when the plaintiff ceases to be in possession of the subject containers;[e]General damages for breach of contract;[f]Costs of the suit;[g]Interest on [b], [c] and [d] above at court rates; and[h]Such other or further relief as the Court may deem fit.

[5]The court record shows that the defendant was duly served with Plaint and Summons to Enter Appearance, and that, although it entered appearance on November 23, 2021, it failed to file its Defence to the suit as required by Order 7 Rule 1 of the Civil Procedure Rules. Accordingly, upon request by the plaintiff in the prescribed form, interlocutory judgment was entered herein on March 7, 2022 in the plaintiff’s favour; whereupon the matter was fixed for formal proof on June 29, 2022 for purposes of Order 10 Rule 10 of the Civil Procedure Rules.

[6]In support of the plaintiff’s case, Shujahuddin Aboo (PW1) testified and adopted his witness statement dated October 27, 2021. He stated that, by telephone correspondence and an email dated May 17, 2021, the defendant engaged the plaintiff for purposes of transporting goods in the following 5 containers from the Port of Mombasa to Kampala, Uganda:[a]TCNU7597721[b]CIAU0229725[c]BSIUG692782[d]TCLU1812917 and[e]TCNU8606181

[7]PW1 further stated that, upon discussion and negotiation on the contract price, the parties executed an agreement dated May 19, 2021 (the Agreement) on which basis the defendant engaged the plaintiff to transport goods from the port of Mombasa to Kampala, Uganda, at a base contract price of US$ 12,500. 00. He added that it was an explicit term of the Agreement that, upon loading the goods, the defendant would pay 50% of the contract price; and the balance thereof upon delivery of the goods. PW1 testified that, although the plaintiff complied and raised an invoice for payment upon loading the goods, the defendant did not pay as agreed. At paragraphs 10 and 11 of his witness statement, PW1 explained that the defendant confirmed receipt of the invoice and promised to make payment the following day; and since the trucks were already on site for loading, the plaintiff proceeded on the assurance from the defendant that payment would be made.

[8]PW1 testified that, even upon delivery of the subject goods on May 29, 2021, the defendant had not made any payment towards settlement of the contract price, notwithstanding that by its email dated May 29, 2021 the defendant expressed its gratitude for a splendid job in the swift transport and safe delivery of the goods. PW1 exhibited documents to show that in spite of several promises to pay, the defendant utterly failed to pay the contract price, thereby precipitating the filing of this suit. PW1 also testified in respect of the sums claimed by the plaintiff at paragraph 12 of the Plaint as well as the particulars of breach of contract and loss suffered by the plaintiff. The plaintiff having obtained a Preliminary Decree in respect of the contract sum and storage charges, PW1 urged the Court to issue a declaration that the plaintiff has a right of lien over the 5 containers aforementioned. He also prayed that an award in damages for breach of contract in favour of the plaintiff together with interest and costs.

[9]In proof of the plaintiff’s case, PW1 produced as exhibits the plaintiff’s List and Bundle of Documents dated October 27, 2021. Among the documents produced by PW1 were:[a]The Agreement (the Plaintiff’s Exhibit 1)[b]Invoice No 22990 issued on May 25, 2021 (the Plaintiff’s Exhibit 2)[c]A screenshot of the correspondence exchanged by way of SMS on May 25, 2021, June 8, 2021 to July 8, 2021 between the plaintiff and the defendant (the Plaintiff’s Exhibits 3 and 4)[d]A copy of the letter from M/s Musinga & Company Advocates to the plaintiff dated July 23, 2021 (the Plaintiff’s Exhibit 6).

[10]Mr Bhagha, learned counsel for the plaintiff thereafter filed his written submissions on July 12, 2022 and proposed the following issues for determination:[a]Is the plaintiff entitled to a right of lien over the containers?[b]Is the plaintiff entitled to general damages?[c]Who should pay costs?

[11]On the basis of the evidence of PW1, counsel urged the Court to find that the plaintiff has proved that pursuant to a transport agreement dated May 19, 2021, it delivered goods to Kampala, Uganda, at the instance of the defendant; and that the defendant failed to pay for the services as agreed. He further urged the Court to find that, on the June 8, 2021, the defendant instructed the plaintiff by way of ‘SMS’, a copy whereof was produced as the Plaintiff’s Exhibit No. 3, to exercise a lien over the 5 empty containers. On that basis, counsel urged the Court to find that the plaintiff is entitled to continue exercising its right of lien over the five containers until the defendant completes payment of the subject debt. He relied on Arrow Hi-Fi (EA) Limited v City Nominees Limited [2015] eKLR in support of his submissions.

[12]On whether the plaintiff is entitled to general damages for breach of contract, Mr. Bagha submitted that, since there was dishonesty on the part of the defendant in that it severally failed to honour its promises to pay the contractual amount to the plaintiff. Counsel further urged the Court to take into account that, as a result of the defendant’s default, it suffered great financial anxiety, stress and embarrassment from inability to meet its financial obligations during the tumultuous financial period brought about by the COVID 19 global pandemic. Mr. Bagha added that, in any event, the contractual amount would have been re-invested by the plaintiff or even assisted in expansion of operations and at the very least could have attracted interest as deposits. He therefore posited that the plaintiff’s claim for general damages, over and above the contractual amount, is necessary so as to put the plaintiff in the position it would have been in were it not for the breach of the Transport Agreement by the defendant.

[13]On the basis of the uncontroverted evidence adduced by the plaintiff, I am satisfied that indeed, the plaintiff and the defendant entered into a Transport Agreement dated May 19, 2021 for the transportation/carriage of the defendant’s goods from the Port of Mombasa to and from various destinations in East and Central Africa. The Agreement encompassed the plaintiff’s clients, agents and associate companies. There is further uncontroverted evidence to prove that the plaintiff met its part of the bargain and transported goods, on the instructions of and on behalf of the defendant in the following 5 containers from the Port of Mombasa to Kampala, Uganda:[a]TCNU7597721[b]CIAU0229725[c]BSIUG692782[d]TCLU1812917 and[e]TCNU8606181

[14]A perusal of the Agreement dated May 19, 2021 further confirms that the base contract price was agreed at US$ 12,500. 00, to be paid in two tranches. Clause 7 of the Agreement is explicit that 50% of the contract sum was to be paid upon loading and the balance of 50% upon delivery. As matters stand, there is no disputing that the defendant did not honour its part of the bargain, either upon loading or on delivery. PW1 exhibited documents to show that the defendant was duly invoiced and that although it made several promises to pay the contract price, it failed to do so. The documents at pages 9 and 10 confirm that the defendant acknowledged its default and the plaintiff’s right of lien over the 5 containers.

[15]In the premises, I am satisfied that the plaintiff has demonstrated that the defendant committed a breach of the Agreement dated May 19, 2021; and that it is, consequently, entitled to all the sums set out in the Preliminary Decree. Indeed, in Photo Production v Securicor Ltd [1980] AC 827, Lord Diplock held:“Characteristically, commercial contracts are a source of primary legal obligation upon each party to it to procure that whatever has been promised will be done…Every failure to perform a primary obligation is a breach of contract.”

[16]Similarly, in Mukuru Munge v Florence Shingi Mwawana & 2 others [2016] eKLR, the Court of Appeal held:“It is axiomatic that a cause of action founded on contract accrues when breach takes place and not when damage is suffered…And a breach of contract occurs when one or both parties fail to fulfil their obligations under the terms of the contract.”

[17]As to the plaintiff’s claim for damages for breach of contract, I am well guided by the decision of the Court of Appeal in Kenya Tourist Development Corporation v Sundowner Lodge Limited [2018] eKLR, wherein it was held thus:“…as a general rule general damages are not recoverable in cases of alleged breach of contract and that has been the settled position of law in our jurisdiction, and with good reason. In Dharamshivs. Karsan[1974] EA 41, the former Court of Appeal held that general damages are not allowable in addition to quantified damages with Mustafa JA expressing the view that such an award would amount to duplication. And so it would be. See also Securicor(K) v Benson David Onyango & Anor[2008] eKLR. The same situation applies to the case at bar in that the respondent having quantified what it considered to have been the loss it suffered, and gone on to particularize the same, there would be absolutely no basis upon which the learned Judge would go ahead to award the totally different, unrelated, unclaimed and unquantified sum of Kshs. 30 million merely because he believed that the respondent “had suffered serious damages” (sic). What was suffered or was believed to have been suffered, the damage that is, to be compensated by way of damages, could only be known by the respondent and it claimed it in specific terms which, in the event, it was unable to prove. To award it anything else would be to engage in sympathetic sentimentalism as opposed to proof-based judicial determination. Beyond the non-recoverability of general damages for breach of contract, a proper consideration of the nature of the respondent’s claim ought to have led to the same conclusion that only such proven loss could be compensated by way of damages…”

[18]Hence, having particularized every aspect of its claim at paragraph 12 of the Plaint, I am not persuaded that the plaintiff is entitled to damages as an additional remedy. Indeed, the whole purpose of an award in damages for breach of contract is compensation in money for the loss of that which would have received had the contract been performed. Hence, in Gedion Mutiso Mutua v Mega Wealth International Limited [2012] eKLR, it was held that:“The principal guiding the award of general damages for breach of contract was restated in Provincial Insurance Company of East Africa Ltd v Mordekai Mwanga Nandwa [1995-1988] 2 EA 289 ...that it is quite clear that no general damages may be granted for breach of contract...That notwithstanding, the general law of contract is that where two parties have made a contract which one of them has broken the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally ie according to the usual course of things from such a breach of contract itself, or such as may be reasonably supposed to have been in contemplation of both parties at the time they made the contract, as the probable result of the breach of it. the plaintiff is to be paid compensation in money for the loss of that which he would have received had the contract been performed and no more. Loss has been defined to mean loss of a pecuniary kind, loss of property, or of the use of property or the means of acquiring property, but it does not include damages for the disappointment of mind or vexation caused by hurtful or humiliating manner in which the defendant broke the contract..."

[19]In the result, final judgment is hereby entered for the plaintiff against the defendant as hereunder:[a]Contract sum of US$ 14,000. 00 per paragraphs 12. 1, 12. 2 and 12. 3 of the Plaint;[b]Storage charges US$ 59,800. 00 per paragraphs 12. 4 and 12. 5 of the Plaint[c]A declaration that the plaintiff has a right of lien over the containers numbers TCNU7597721, CIAU0229725, BSIUG692782, TCLU1812917 and TCNU8606181 for the purposes of securing payment of the outstanding sums owed to it by the defendant;[d]Additional storage charges at the rate of US$ 100. 00 per day per container for 5 containers from October 2, 2021 until payment in full or date of handover of the containers;[e]Costs of the suit;[f]Interest on [a] [b] and [d] above at court rates.It is so ordered.

DATED SIGNED AND DELIVERED VIRTUALLY A MOMBASA THIS 20TH DAY OF SEPTEMBER 2022OLGA SEWEJUDGE