Sinohydro Tianjin Engineering Company Limited v Kiarie & 3 others [2022] KEHC 10682 (KLR)

Sinohydro Tianjin Engineering Company Limited v Kiarie & 3 others (Civil Appeal 8 of 2020) [2022] KEHC 10682 (KLR) (Civ) (19 May 2022) (Judgment)

Neutral citation: [2022] KEHC 10682 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal 8 of 2020

CW Meoli, J

May 19, 2022

Between

Sinohydro Tianjin Engineering Company Limited

Appellant

and

Robert Njuki Kiarie

1st Respondent

Peter Waithaka Kamau

2nd Respondent

Danson Karanja Kamau

3rd Respondent

Peter Kimemia Njeri t/a Ropedda Transport Services

4th Respondent

(Being an appeal from the judgment of Hon. G.A Mmasi, SPM delivered on 12th December 2019 in Nairobi Milimani CMCC No. 6051 of 2017)

Judgment

1. This appeal emanates from the judgment delivered on 12th December 2019 in Nairobi CMCC No. 6051 of 2017. The suit was commenced by a plaint filed on 25th August 2017 and amended on 13th December 2017. The plaintiffs in that suit were Robert Njuki Kiarie, Peter Waithaka Kamau, Danson Kimemia Njeri, Peter Kimemia Njeri t/a Roppeda Transport Services (hereafter the Respondents) who were seeking payment of Kshs. 4,840,000/- from Sinohydro Tianjin Engineering Company Limited, the defendant in the lower court (hereafter the Appellant) in respect of alleged breach of a contract under which the Respondents were to supply 1000 lorries of murram material to the Appellant.

2. It was averred that on or about 25th August 2016 the Appellant entered into the agreement with the Respondents for the supply of murram material which involved the Respondents buying, loading, and hauling murram material from a borrow pit and transporting 1000 lorries thereof to the Appellant’s project site situate at Outer Ring Road, Nairobi. The contract period was 30 days effective from the date of the agreement. The Respondents averred that they supplied 560 lorry-loads of murram material, but thereafter, the Appellant had without notice or reason arbitrarily and prematurely terminated the contract before the Respondents could supply the outstanding 440 lorry trips of murram material, thereby breaching the agreement. The Respondents therefore claimed payment in respect of the outstanding 440 lorry loads of murram material valued at Kshs. 4,840,000/-.

3. The Appellant filed a statement of defence on 10th August 2018 denying the averments in the plaint and asserted that the Respondents were at fault, as they were unable to service the contract. The suit proceeded to full hearing during which evidence was adduced by both parties. In its judgment, the trial court found for and entered judgment in favour of the Respondents against the Appellant in the sums claimed.

4. Aggrieved with the outcome, the Appellant preferred this appeal challenging the finding of the lower court based on the following grounds in its memorandum of appeal: -“1. That the learned magistrate erred in law inn failing to appreciate that no liability was established against the Appellant.

2. That the learned magistrate erred in law and fact in finding in favour of the Respondent against the weight of evidence.

3. That the learned magistrate erred in law and fact in disregarding crucial evidence in arriving at her decision based on the evidence of the Respondent alone.

4. That the honorable magistrate disregarded the principles of law chiefly the principle that he who asserts must prove and thereby arrived at an erroneous decision.” (sic)

5. The appeal was canvassed by way of written submissions. Counsel for the Appellant condensed the grounds of appeal into two salient issues which from the submissions appear to relate to liability and damages. Counsel cited the case of Kenya Power and Lighting v Fridah Kageni Julius [2014] eKLR in arguing that the learned magistrate misapprehended the issues for determination. That onus was on the Respondents to prove that the Appellant breached the contract by irregularly stopping them from supplying murram material. He asserted that the burden was not discharged. He lamented, citing 107, 109 & 112 of the Evidence Act, that the trial court irregularly shifted the burden of proof upon the Appellants.

6. He further stated that even if breach of contract had been established, the measure of damages payable was not automatically commensurate with the value of 440 unsupplied lorries of murram material. Relying on the Court of Appeal decision in Kenya Tourist Development Corporation v Sundowner Lodge Limited [2018] eKLR and Speed Wall Building Technologies Ltd v County Government of Migori [2016] eKLR counsel contended that the Respondents having retained the 440 lorries of murram material, could only be entitled to nominal damages, as general damages could not be awarded for breach of contract. Counsel urged the court to allow the appeal.

7. The Respondents defended the lower court’s findings. Counsel anchored his submissions on the decision in Selle & Another v Associated Motor Boats Co. [1968] EA 123 concerning the duty of an appellate court on a first appeal. The Respondents’ counsel argued that their evidence was corroborated by documentary evidence. He contended that the Appellant’s witness’ oral testimony contradicted the written statement. He relied on the case of Eric Omuodo Ounga v Kenya Commercial Bank Limited [2017] eKLR and asserted that the Respondents had discharged the burden of proof placed on them. Citing the case of Raila Amolo Odinga & another v IEBC & 2 others [2017] eKLR and Rose Mbula Ojwang t/a Raida (2002) Caterers v Baraka Apparel EPZ Ltd counsel argued that whereas the legal burden of proof remains static throughout the trial, the evidential burden of proof does not. And that upon the Respondents adducing sufficient evidence showing that the Appellant indeed breached the agreement, the evidential burden shifted to the Appellant to rebut it, by showing that it was the Respondents who failed to perform their part of the contract. Counsel went on to assert that the Respondents’ loss was foreseeable as the Respondents had on the basis of the contract expended monies to procure the murram material from third parties. According to the Respondents, the case of Kenya Tourist Development Corporation cited by the Appellants was not applicable in this instance. He urged that the appeal be dismissed.

8. This is a first appeal. The Court of Appeal for East Africa set out the duty of the first appellate court in Selle v Associated Motor Boat Co. [1968] EA 123 in the following terms: -“An appeal from the High Court is by way of re-trial and the Court of Appeal is not bound to follow the trial judge’s finding of fact if it appears either that he failed to take account of particular circumstances or probabilities, or if the impression of the demeanour of a witness is inconsistent with the evidence generally.An appeal to this court from a trial by the High Court is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect.In particular, this court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally.”

9. An appellate court will not ordinarily interfere with a finding of fact made by a trial court unless such finding was based on no evidence, or it is demonstrated that the court below acted on wrong principles in arriving at the finding it did. See Ephantus Mwangi & Another v Duncan Mwangi Wambugu [1982 – 1988] IKAR 278).1. The court has considered the record of appeal, the pleadings, and the original record of the proceedings as well as the submissions by the respective parties. That the parties herein entered into an agreement on or about the 25th August 2016 is not in dispute. Neither is it disputed that under the said agreement the Respondents were to supply 1000 lorry-loads of murram material but only supplied 560 lorries for which they were paid. The basic issues for determination were whether the Appellants breached the contract, and if so, what damages were payable to the Respondents. Pertinent to the determination of the said issues are the pleadings, which form the basis of the parties’ respective cases before the trial court. Hence a review thereof is apposite before dealing with evidentiary matters. In Wareham t/a A.F. Wareham & 2 Others Kenya Post Office Savings Bank [2004] 2 KLR 91, the Court of Appeal stated in this regard that: -“We have carefully considered the judgment of the superior court, the grounds of appeal raised against it and the submissions before us on those matters. Having done so we are impelled to state unequivocally that in our adversarial system of litigation, cases are tried and determined on the basis of the pleadings made and the issues of fact or law framed by the parties or Court on the basis of those pleadings pursuant to the provisions of Order XIV of the Civil Procedure Rules. And the burden of proof is on the Plaintiff and the degree thereof is on a balance of probabilities. In discharging that burden, the only evidence to be adduced is evidence of existence or non-existence of the facts in issue or facts relevant to the issue. It follows from those principles that only evidence of facts pleaded is to be admitted and if the evidence does not support the facts pleaded, the party with the burden of proof should fail.”

11. The Respondents by their amended plaint averred at paragraphs 3, 4, 5, 7, 8, 9, 9b 12 and 13 that:“3. Sometimes on or about 25th August 2016, the defendant entered into an agreement with the plaintiffs for the supply of murram material which involved the plaintiffs buying, loading and hauling murram material from the borrow pit and transporting the same to the defendants project site situate at Outer Ring Road.

4. The plaintiffs affirm that the agreement was to supply the defendant with one thousand (1000) lorry trips of murram material with at the price per lorry trip being Kshs. 11,000/-.

5. it was mutually agreed that the agreement for supply of murram material will would be effective upon execution of the contract by both parties and would be terminated after one thousand (1000) trips of marram material and this one thousand (1000) lorry trips shall would be supplied finished within 30 days from the date of the execution of the contract since the date it was signed.

7. On diverse dates from the month of late August 2016 to early September 2016 the plaintiff as per agreement supplied the defendant with five hundred and sixty (560) lorries of murram @ Kshs. 11,000/= per trip and was paid for the said supply.

8. However, the defendant, without any notice to the plaintiff arbitrarily and prematurely had the contract for supply of murram terminated before the plaintiff would supply the outstanding 440 lorry trips of murram thereby breaching the agreement dated 25th day of August 2016.

9. The plaintiffs affirm that the contract for supply of murram was to be terminated after 30 days from its commencement and or on the plaintiffs supplying one thousand (1000) lorries of murram which time had not lapsed nor had the plaintiff supply the full contract amount by the time the defendant terminated the contract.9b. The plaintiffs avers that the contract was for one thousand (1000) lorry trips and they are therefore entitled to be paid for the whole contract value...12. As result of the defendant’s unwarranted termination of the contract for supply of murram, the plaintiffs have been occasioned grave loss and damage as they have to pay the supplier of the murram material.

13. The plaintiffs …claim as against the defendant is for payment of the four hundred and forty (440) lorry trips of murram at Kshs. 11,000/= each as per the terms of the contract totaling Kshs. 4,840,000. ” (sic)

12. The Appellant filed a statement of defence denying the averments in the plaint and alluded to the Respondents’ failure to fully perform their obligation under the contract, thus the termination was warranted. The pertinent paragraphs of the defence state that:“3. The contents of paragraph 4, 5, 6 and 7 of the plaint are refuted. The defendant shall rely on all the agreements and/or arrangements entered into between the parties and shall call upon the plaintiff to prove the allegations under the said paragraphs.

4. Further to paragraph 4 above, the defendant avers that all the amounts due from the defendant to the plaintiff were paid and acknowledged. The suit is founded is illegal and vexatious.

5. The defendant denies the contents of paragraph 8, 9, 9b and 10 of the amended plaint. The defendants state that the plaintiff was unable to service the contract and the termination was procedural and warranted.” (sic)

13. The Respondents’ claim was founded on alleged breach of contract. At the hearing, Robert Njuki Kiarie testified on behalf of the Respondents as PW 1 and adopting his brief written statement, had proceeded to state that:“We supplied 560 lorries which they received then they stopped the supply……….On 20/9/2016 we invoiced for 440 lorries of murram for Kshs. 4,840,000/=. They did not receive the murram and they never paid for the same………The murram we were getting from somebody’s private land and we paid for the same. In total we bought 1000 trips and stored in our yard. I urge the court to order defendant to pay Kshs 4,840,000/=. The defendant chased us away”. (sic)

14. Under cross-examination he stated:“Clause 5: the supply was to be within 30 days. Those are the condition we were to meetClause 7: Any party would terminate the contract if the other party would breach contract.Clause 9: termination of contract was to be written.In total we supplied 1000 trips. The 440 lorries I have written we were yet to deliver. The defendants never wrote any letter asking me to stop the supply of the 440 lorries. 100 were supplied. I remained with 340 lorries. I was stopped from supplying on 11/9/2016. ..The invoices do not have delivery notes signed by the defendants…….I suffered so much losses from the purchase of the murram I have no receipts in court. I never sold the 340 lorries of murram.” (sic)

15. On behalf of the Appellant Zoie Zuo Xiaohan testified as (DW 1). She identified herself as the Appellants Assistant manager and equally adopted in which she stated in part that the that the contract period lapsed before the Respondents fully performed their obligations. She proceeded to state that:“……They only delivered 560 trips. They just stopped. They did not supply the 1000 lorries. I never called them and told them to stop the supply…The Plaintiffs are the ones who breached the contract……We had to outsource elsewhere 440 of murram were never supplied...” (sic)

16. During cross-examination she said that:“.......I am aware of the contents as the contract came to me…We did not write to the Plaintiffs stopping them from delivering. The contract says termination was to be vide a written notice. There is no written notice to stop supplying. We did not stop the plaintiff from supplying…They did not supply the 440 lorries. I have nothing in court to show they did not finish…”(sic)

17. The applicable law as to the burden of proof is found in Section 107, 108 and 109 of the Evidence Act. Consequently, the duty of proving averments contained in the plaint on a balance of probabilities lay squarely on the Respondents. In Karugi & Another V. Kabiya & 3 Others [1987] KLR 347 the Court of Appeal stated that:“[T]he burden on a plaintiff to prove his case remains the same throughout the case even though that burden may become easier to discharge where the matter is not validly defended and that the burden of proof is in no way lessened because the case is heard by way of formal proof….The plaintiff must adduce evidence which, in the absence of rebuttal evidence by the defendant convinces the court that on a balance of probabilities it proves the claim.”

18. The trial court in accepting the Respondents evidence expressed itself as follows:“I have considered the pleadings, the evidence adduced as well as the submissions filed in this case and it is my view that the following are the issues for determination: 1)Whether was a contract for supply of murram between the plaintiff and the defendant?

2)Whether the plaintiff and the defendant fulfilled their part of the contract?

3)Whether the plaintiff is entitled to the award of damages and if so, what is the quantum?

4)Who should bear the costs of the suit?……Although the defendant’s manager testified in its defence and urged the court to dismiss the plaintiffs suit with costs to it, his evidence contained mere denials of the defendant rejected the murram supplied to it and that it has failed to pay for it. Further, DW1 did not know the money it has already paid the defendants for the supply of the items therein. It ought to be remembered that the plaintiffs’ evidence on oath was supported by documentary evidence which go to prove their case. I therefore take the view that in the circumstance, the doctrine of equitable estoppel would come into play to prevent the defendant from disowning the express terms of their agreement with the plaintiffs…….On whether the defendant has good cause for not paying for the goods, Section 35 of the Sale of Goods Act provides……………Thus, for the defendant having alleged that the plaintiffs never supplied the 440 lorries of murram and denied to have rejected the lorries at the site, the defendant was under the duty to prove that it the lorries of murram were not supplied to them hence the plaintiffs were in contravention with Section 16 of the Sale of Goods Act…..In the absence of any evidence to the contrary and as proof in civil cases is on a balance of probabilities, I find that there was indeed an agreement between the plaintiff and the defendant whereby the plaintiffs were to supply the defendant 1000 lorries of murram for which they supplied 560 lorries of murram for which they received payment for but the defendant repudiated the contract with no notice to them and rejected to accept the murram supplied to it by the plaintiffs thus breached the contract between them. It is clear from the evidence that the amount of money for the 440 lorries of murram still remains unpaid.Having considered the material presented before me I find that the plaintiffs have proved his case against the defendant on a balance of probabilities. Accordingly, I enter judgment for the plaintiffs as against the defendant for the 440 lorries of murram at Kshs. 11,000/- per lorry or trip as per the contract with interest at court rates.” (sic).

19. The contract between the parties P. Exh. 2 provided inter alia that:“7. Termination

This agreement shall automatically terminate upon the failure or delay of either party to perform its obligation under this agreement. 9. Notice

Any notice to be given to any party to this agreement shall be in writing and shall be served by mailing with registered post to the address of the receipt and shall be deemed to be duly received within seven (7) days of the date of the certificate of posting.”

20. The onus was on the Respondents to prove the alleged breach of contract and loss incurred. Sections 107 to 109 of the Evidence Act provide as follows:“107. (1)Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.(2)When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person. 108. The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side…. 109. The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.”

21. The Respondents’ witness (PW 1) in his evidence-in-chief asserted that the Respondents had pursuant to the contract procured 1000 lorry-loads of murram and deposited it, or some of it in a leased yard. That after delivery of only 560 lorries to the Appellants, the Appellants breached the contract by stopping further deliveries. The witness did not state the date or manner by which the contract was terminated, or stoppage communicated, stating only that the Respondents were stopped from making further supplies before they could supply the 440 lorries. No details of the person who communicated the alleged stoppage order were given, nor witness called to shed light on the matter.

22. During cross-examination, PW1 was hard-pressed to state the date of the stoppage, initially stating that it was on 11. 09. 2016, but upon being confronted with his own invoice dated 16. 09. 2016 (PExh 5) and the demand letter (P. Exh6) the latter which equally bore no date of termination answered that he was present when “they refused to take 340 lorries of murram “. The witness did not produce any delivery notes prepared in respect of any of the alleged 100-lorry consignment allegedly rejected by the Appellants at the time of alleged stoppage, as indeed the contract stipulated that deliveries be accompanied by delivery notes.

23. In his evidence-in-chief, PW1 did not tender any evidence to confirm the procurement and existence of the said 100 or 440 lorry-loads of murram lying in the yard awaiting delivery, or onboard the lorries. No photographs of the said material, evidence of prior purchase of the material or payment in respect of the alleged leased yard where the material was said to have been deposited, was tendered. That notwithstanding, during re-examination, PW1 went ahead to state that out of 440 lorry-loads, 100 of the lorries had “reached the defendants’ gate” when the Appellant stopped supply by a phone call, and he seemed to suggest that this happened on 20. 09. 2016.

24. Apart from the contradiction in the date of stoppage, this was the first reference to communication of stoppage by a phone call. However, the details of the person who made the stoppage call were not indicated. If indeed PW1 was the person who received the alleged call, one would expect him to have stated this when he was being cross-examined by the Appellant’s counsel concerning the alleged stoppage and the date thereof. At that time, the witness merely asserted to have been present when the Appellants declined to receive any more supplies. The driver or drivers of the said 100 lorries allegedly turned back at the Appellant’s gate would have been useful witnesses of the fact that the supply lorries were denied entry into the Appellant’s delivery site. None of the drivers was called as a witness.

25. The Appellants for their part maintained that the Respondents failed to supply any more murram material after the 560 lorries for which due payment had been made and that they were the ones who breached the contract. The trial court while accepting the Respondents’ evidence in its entirety went to great lengths to criticize the Appellant for failing to adduce any evidence that the Respondents failed to deliver the 440 lorries.

26. With respect, this court is of the view that the trial court misdirected itself on the matter. The onus of proving the alleged breach of contract lay with the Respondents, but they were unable to tender credible evidence on basic facts as to the prior procurement and existence of stock of 440 lorry-loads of the murram, the date and mode of communication of the alleged stoppage of supply, being the purported evidence of alleged breach, or the person who communicated the same.

27. As held in Karugi & another (supra) the burden of proof lies with the plaintiff to adduce evidence which, in the absence of rebuttal evidence by the defendant convinces the court that on a balance of probabilities it proves the claim. The Respondents’ evidence was riddled with such glaring gaps and loose ends that it seemed to give credence to the Appellant’s denials and assertions that the Respondents were unable to fully perform their obligation under the contract. Hence, the Appellant’s complaint that the trial court erroneously shifted the burden of proof upon them appears justified.

28. In the circumstances, the statement in the rial court’s judgment that “the plaintiffs’ evidence on oath was supported by documentary evidence which go to prove their case” (sic) suggests that the trial court did not correctly apprehend and weigh the evidence tendered by the Respondents. Had the court done so, it would have found that the Respondents’ evidence was not only weak, but also incredible and could not support their claims. This finding is sufficient to dispose of the appeal, but the court will now proceed to the issue of damages, for completeness.

29. It is trite that general damages are not recoverable for breach of contract. The Respondents’ claim was for losses incurred pursuant to the alleged breach of contract, and therefore one in the nature of special damages which, must not only be specifically pleaded but also strictly proved. The Court of Appeal in Kenya Tourist Development Corporation v Sundowner Lodge Limited [2018] eKLR reiterated the above position by stating inter alia that 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 Dharamshi v Karsan[1974] EA 41, the former Court of Appeal held that general damages are not allowable in addition to quantified damages…”

30. The Court of Appeal in David Bagine v Martin Bundi [1997] eKLR stated: -“It has been held time and again by this Court that special damages must be pleaded and strictly proved. We refer to the remarks by this Court in the case of Mariam Maghema Ali v Jackson M. Nyambu t/a sisera store, Civil Appeal No. 5 of 1990 (unreported) and Idi Ayub Sahbani v City Council of Nairobi [1982-88] IKAR 681 at page 684:“... special damages in addition to being pleaded, must be strictly proved as was stated by Lord Goddard C.J. in Bonham Carter v Hyde Part Hotel Limited [1948] 64 TLR 177 thus;“Plaintiffs must understand that if they bring actions for damages it is for them to prove damage, it is not enough to write down the particulars and, so to speak, throw them at the head of the court, saying, ‘this is what I have lost, I ask you to give me these damages, ‘They have to prove it.”

31. Further Chesoni, J (as he then was) in the case of Ouma v Nairobi City Council [1976] KLR 304: -“Thus, for a plaintiff to succeed on a claim for special damages he must plead it with sufficient particularity and must also prove it by evidence. As to the particularity necessary for pleading and the evidence in proof of special damage the court’s view is as laid down in the English leading case on pleading and proof of damages, Ratcliffe v Evans (1892) 2 QB 524 where Bowen L J said at pages 532, 533; -The character of the acts themselves which produce the damage, and the circumstances under which these acts are done, must regulate the degree of certainty and particularity with which the damage done ought to be stated and proved. As much certainty and particularity must be insisted on, both in pleading and proof of damage, as is reasonable, having regard to the circumstances and to the nature of the acts themselves by which the damage is done. To insist upon less would be to relax old and intelligible principles. To insist upon more would be the vainest pedantry.” (Emphasis added)See also Hahn v Singh [1985] KLR 716.

32. Once more, the onus lay with the Respondents to prove the alleged loss arising from the Appellant’s breach of contract. While PW1 claimed that the Respondents had made payments to unnamed third parties in procuring the consignment of 440 lorry-loads of murram pursuant to the contract with the Appellants, no credible evidence was tendered to firm up the claim. He admitted that he had no receipts or records to prove such payments while stating that he had not disposed of the rejected 440 lorries of murram after the termination of the contract.

33. Similarly, claims that the Respondents had deposited the said murram material in a leased yard were not supported by documentary or oral evidence by the persons from whom the said yard was leased. Indeed, the Respondents tendered no evidence that at the time of the alleged termination, they had mobilized and procured 440 lorries of murram which was stored in a yard in readiness for supply to the Appellant under the contract. The Appellant for their part insisted that the Respondents failed to supply the murram as agreed and that the contract period expired before compete performance on the Respondents’ part. It appears that the trial court did not treat the claim by the Respondents as a special damage claim which required strict proof. The court therefore failed to examine the relevant evidence in any detail and appeared to have concluded that once the breach of contract was established, the Respondents were automatically entitled to payment equivalent to the value of the undelivered 440 lorries of murram. That was a misdirection, and the award cannot stand.

34. In the result, this appeal is found to be merited and is hereby allowed. The court will therefore set aside the lower court’s judgment in its entirety and substitute therefor an order dismissing the Respondents’ suit in the lower court with costs. The Appellant is awarded the costs of the appeal.

DELIVERED AND SIGNED ELECTRONICALLY AT NAIROBI ON THIS 19TH DAY OF MAY OF MAY 2022C.MEOLIJUDGEIn the presence of:For the Appellant: Mr. KiokoFor the Respondent: N/AC/A: Carol