South Nyanza Sugar Co. Ltd v Suleiman Odhiambo Oile [2020] KEHC 5077 (KLR) | Breach Of Contract | Esheria

South Nyanza Sugar Co. Ltd v Suleiman Odhiambo Oile [2020] KEHC 5077 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MIGORI

[Coram: A. C. Mrima, J.]

CIVIL APPEAL NO. 20 OF 2019

BETWEEN

SOUTH NYANZA SUGAR CO. LTD......APPELLANT

AND

SULEIMAN ODHIAMBO OILE..........RESPONDENT

(Being an appeal from the judgment and decree by Hon. R. O. Odenyo, Senior Principal Magistrate in Migori Chief Magistrate's Civil Suit No. 575  of 2005 delivered on 19/12/2018)

JUDGMENT

1. Suleiman Odhiambo Oile, the Respondent herein, filed Migori Chief Magistrate’s Court Civil Suit No. 575 of 2005 (hereinafter referred to as ‘the suit’) against South Nyanza Sugar Co. Ltd, the Appellant herein. The Respondent claimed that by a Growers Cane Farming and Supply Contract entered into on 12/03/1997 (hereinafter referred to as 'the Contract') the Appellant contracted the Respondent to grow and sell to it sugarcane at the Respondent’s parcel of land Plot No. 875 Field No. 216 in Manyatta Sub-Location measuring 0. 3 Hectare within Migori County.

2. The Respondent pleaded that the Contract was for a period of five years or until one plant crop and two ratoon crops of the sugarcane were harvested from the subject parcel of land whichever event occurred first. The contract was company-developed since the Appellant rendered various services and supplied inputs to the Respondent towards the development of the cane crop.

3. The Respondent further pleaded that he discharged his part of the contract until the plant crop was ready for harvesting but instead the Appellant for no apparent reason refused and/or failed to harvest the first ratoon crop. The plant crop dried up. The Respondent posited that he suffered loss of the plant crop, first and second ratoon crops.

4. Aggrieved by the alleged breach of the contract the Respondent filed the suit. He sought for compensation for the loss.

5. The Appellant entered appearance and filed a Statement of Defence dated 18/10/2005. The Appellant denied the contract as well the alleged breach thereof. It put the Respondent into strict proof thereof. The Appellant further pleaded that the Respondent suffered no loss and if at all he suffered any such loss then the Respondent was the author of his own misfortune in that he failed to properly maintain the sugar cane crops to the required standards or at all to warrant the same being harvested and milled as the same was uneconomical. The Appellant prayed for the dismissal of the suit with costs.

6. The suit was finally settled down for hearing where both parties were represented by Counsels. The Appellant was the sole witness who testified and adopted his Statement as part of his testimony. He also produced the documents in his List of Documents as exhibits. The Respondent called its Senior Field Supervisor, George Ochieng (DW1), as its sole witness who adopted his statement and produced the documents as exhibits.

7. The trial court rendered its judgment on 19/12/2018. The suit was allowed. The court awarded the net value of the plant crop, the first and second ratoon crops at Kshs. 83, 912/= with interest and costs.

8. The Appellant was aggrieved by the judgment and lodged an appeal. In praying that the appeal be allowed and appropriate compensation be awarded proposed 12 grounds in the Memorandum of Appeal dated 18/01/2019 and evenly filed in Court.

9. Directions were taken and the appeal was disposed of by way of written submissions. Both parties duly complied.

10. In its submissions the Appellant contended that the award made by the court was not pleaded and proved. It was also submitted that the suit was not proved. Further, it was submitted that even if the suit was proved court erred by not subjecting the unsubstantiated earnings to appropriate statutory and contractual deductions. The Appellant submitted that the court further erred by not taking into account the doctrine of mitigation of loss. The issue of when interest ought to run from was also hotly argued. The Appellant referred to several decisions in support of the appeal.

11. The Respondent opposed the appeal. He submitted that the suit was competent and that the court rightfully awarded him proceeds for the three crops. He relied on several decisions as well in opposition to the appeal.

12. As the first appellate Court, this Court is to revisit the evidence on record, evaluate it and reach its own conclusion in the matter. (See the case of Selle & Ano. vs. Associated Motor Boat Co. Ltd (1968) EA 123). This Court nevertheless appreciates that an appellate Court will not ordinarily interfere with findings of fact by the trial Court unless they were based on no evidence at all, or on a misapprehension of it or the Court is shown demonstrably to have acted on wrong principles in reaching the findings.  This was the holding in Mwanasokoni – versus- Kenya Bus Service Ltd. (1982-88) 1 KAR 278and Kiruga –versus- Kiruga & Another (1988) KLR 348).

13. I have carefully perused and understood the contents of the pleadings, proceedings, judgment, grounds of appeal, submissions and the decisions referred to by the parties.

14. As to whether the claim was properly pleaded, I recall the Court of Appeal in John Richard Okuku vs. South Nyanza Sugar Co. Ltd (2013) eKLRwhere the Court had the following to say on pleadings in sugar disputes: -

In case before the trial magistrate the appellant, as plaintiff, pleaded in the plaint acreage of the parcel of; and which was 0. 2 hectare (paragraph 3 of plaint), average cane proceeds per acre was given as 135 tonnes and the price per tonne was pleaded as Kshs. 1553/=.  The trial magistrate was not unpersuaded by this pleading but dismissed the suit after holding that there was no breach of contract.

The learned judge in first appeal found that there was a valid contract between the appellant and the respondent and that the respondent had breached the same. The learned judge faulted the trial magistrate holding that the appellant had not specifically pleaded the claim nor proved it.

We have shown that the pleading on special damages suffered by the appellant was clear and sufficient enough and the learned judge was clearly in error to dismiss the appeal on the ground that the appellant had not specifically pleaded for the same to the required standard nor offered sufficient proof.

Having found that the learned judge erred in his findings this appeal has merit and is accordingly allowed.  The orders of the High Court and those of the subordinate court are hereby set aside and we substitute thereof an order entering judgment for the appellant/plaintiff as prayed at prayer (a) in the plaint.   We also award interest from the date of filling suit.

15. All the essentials pointed out by the Court of Appeal are present in the suit. I therefore find and hold that the Respondent sufficiently pleaded the claim. The ground hence fails.

16. On whether there was breach of the contract, I have carefully gone through the analysis by the trial court and I fully agree with it. There is no dispute that there was a contract between the parties. DW1 admitted as such in his testimony before court. The Respondent further testified that he maintained the plant crop until it matured, but the Appellant failed to harvest it.

17. The Appellant alluded to the contrary. DW1 relied on his statement which he adopted as part of his evidence. The statement contended that the Respondent sold the plant crop to a jaggery.

18. The issue of selling the plant crop to a jaggery was not part of the Appellant’s pleadings. The Appellant took the position that the Respondent was guilty of not exercising good crop husbandry hence breached the contract. Therefore, the issue of selling the plant crop to a jaggery was never an issue to the Appellant. The issue was only raised at the trial on the adoption of the statement.

19. I must reiterate the position that a statement of a litigant or a witness is not a pleading. It is also not part of the Court’s evidential record until it is properly produced and adopted by the Court as such. The issue of the Respondent selling the plant crop to a jaggery ought to have been pleaded in the statement of defence and proved at trial. That was not the case in the suit. The alleged issue of selling the plant crop to a jaggery was hence a non-issue. (See the Supreme Court ruling in Raila Amolo Odinga & Another vs. IEBC & 2 others (2017) eKLR and the Court of Appeal in The Independent Electoral and Boundaries Commission & Ano. vs. Stephen Mutinda Mule & 3 others (2014) eKLR).

20. The foregone hence yields that the Respondent’s claim was not sufficiently opposed. There was evidence on how the Respondent took care of the plant crop until maturity.

21. The failure on the Appellant to harvest the mature plant crop cane was hence in blatant breach of the Sugar Act, 2001(now repealed), which was the then prevailing law and under which the contract was entered. (See Migori High Court Civil Appeal No. 86 of 2016 Elena Olola vs. South Nyanza Sugar Co. Ltd (2018) eKLR, Migori High Court Civil Appeal No. 41 of 2016 Jane Adhiambo Atinda vs. South Nyanza Sugar Co. Ltd (2017) eKLR among others).

22. There was evidence on the preponderance of probability to the effect that the Appellant was in breach of the contract. The trial court rightly so held.

23. On the resultant remedy, I have dealt with the issue on several other occasions. In Migori High Court Civil Appeal No. 10 of 2016 South Nyanza Sugar Co. Ltd vs. Joseph O. Onyango (2017) eKLR I found that once a farmer proves that the Miller failed to harvest the plant crop at maturity then the farmer is entitled to the proceeds of the plant crop as well as the ratoon crops subject to the pleadings. Equally, when a Miller fails to harvest the first ratoon crop then the farmer is entitled to compensation for the first and second ratoon crops subject to the contract and the pleadings.

24. In this case the Respondent led evidence that the Appellant failed to harvest the plant crop. The trial court found that the Appellant was in breach of the contract. Resulting thereof it naturally yielded that the development of the ratoon crops was compromised by the non-harvest of the plant crop. The Respondent was therefore entitled to the proceeds of the three cane crops yields since the pleadings claimed as such.

25. On the question of mitigation of loss, I certainly affirm the position that disputes based on breach of contracts are subject to the principles of remoteness, causation and mitigation. I further agree with the Court of Appeal in several decisions that a party alleging breach of contract must take steps to mitigate loss (See African Highland Produce Limited vs. John Kisorio (2001) eKLR).

26. The question which now arises is how should a Defendant handle the issue of mitigation of loss in a suit where the Plaintiff did not plead how it/he/she mitigated the loss? That question is factual. To me, the burden rests upon the Defendant to demonstrate how the Plaintiff ought to have mitigated the loss. Such approach must first find its basis in the pleadings. By doing so the Plaintiff would be put in sufficient notice and be accorded an opportunity to challenge the evidence on mitigation of loss if need be. That is the essence of a fair trial in Article 50(1) of the Constitution.

27. A defendant should not raise the issue of mitigation of loss on appeal at the first instance. By doing so, the issue becomes a non-issue. The issue must be pleaded and proved. (See the Supreme Court ruling in Raila Amolo Odinga & Another vs. IEBC & 2 others (2017) eKLR and the Court of Appeal in The Independent Electoral and Boundaries Commission & Ano. vs. Stephen Mutinda Mule & 3 others (2014) eKLR).

28. I have consciously taken the foregone position on the understanding that contracts are between parties and each contract must be independently scrutinized as there may be some instances where the principle of mitigation of loss may reasonably not be applicable in a dispute more so depending on the terms of such a contract. I have also previously held that the manner in which the standard sugar contracts are drafted leave no room to the farmer to do anything in mitigating losses even in cases of breach. In this case for instance Clause 2(b)(iii) of the contract gave the Appellant the sole power and discretion to extend the contract period without reference to the Appellant. (See Migori High Court Civil Appeal No. 10 of 2016 case (supra).

29. The foregone has been echoed by some Courts. Majanja, J. in Kisii High Court Civil Appeal No. 60 of 2017 South Nyanza Sugar Co. Ltd vs. Donald Ochieng Mideny (2018) eKLR rendered himself on the issue after considering several past decisions including some by yours truly and held that: -

15. Mitigation of damages is not a question of law, but one of fact dependent on the circumstances of each particular case, the burden of proof being on the defendant (See African Highland Produce Limited vs. Kisorio (1999) LLR 1461 (CAK). Since the appellant did not contest the respondent’s claim, it did not show how the respondent could mitigate the loss.

16. The appellant’s arguments in support of the appeal were attractive but at the end of the day the respondent’s case before the trial court was not contested and for this reason, I dismiss the appeal……

30. In this case, and as said, the issue of mitigation of loss was not pleaded by the Appellant in the statement of defence. Instead, the Appellant denied breach. The Appellant only pleaded in the alternative that the Respondent failed to exercise diligence in growing the cane. The Appellant unfortunately did not lead any evidence on the issue of mitigation of loss or at all. The Appellant only raised the issue for the first time in its Memorandum of Appeal. The issue of mitigation of loss was not an issue of law but of fact. It had to trace its genesis from the Appellant’s pleadings. One therefore wonders how the Respondent was expected to deal with a non-issue.

31. The trial court rightly found that there was no dispute on the size of the land. It so relied on a Survey Report which was produced in evidence as an exhibit. The court was also rightly guided by the KESREF Report which was an independent report on cane yields. The Appellant produced its cane prices schedule.

32. Based on the information contained therein and in view of the contract provision on when the plant crop, first and the second ratoon crops would have been harvested, the court made the right assessment. Contrary to the submissions by the Appellant, the said sums were subjected to both the statutory and contractual deductions.

33. On the issue of interest, the Court in John Richard Okuku Oloo (supra) settled the same. It held that interest must run from the date of filing the suit and as such the trial court did not err in making that order. I must add that the Court of Appeal was alive to the fact that the lower court case had been filed in 1998 when it rendered its judgment in 2013 after a period of 15 years. The simple reason thereto is that it is well settled in law and has been so held over time that interest starts running from filing of suit in special damages claims like in this case.

34. The Respondent was denied the use of his money for all that period and the interest remain the sole consolation. Further, if the trial court was to otherwise find that interest ought to begin running from any other date then that was a factual issue which ought to have been pleaded and proved and the Respondent given an opportunity to respond. The argument comes too late in the day and is for rejection.

35. The upshot is that none of the grounds of appeal is successful. The appeal is hereby dismissed with costs.

Orders accordingly.

DELIVERED, DATED and SIGNED at MIGORI this 11th day of June 2020.

A. C. MRIMA

JUDGE

Judgment delivered electronically through: -

1. okongowadangaomigori@gmail.com for the firm of Messrs. Okong’o Wandago & Company Advocates for the Appellant.

2.  kerario@gmail.com for the firm of Messrs. Kerario Marwa & Company Advocates for the Respondent.

3. Parties are at liberty to obtain hard copies of the judgment from the     Registry upon payment of the requisite charges.

A. C. MRIMA

JUDGE