Transmara Sugar Company Limited v Otondi [2022] KEHC 13325 (KLR)

Transmara Sugar Company Limited v Otondi (Civil Appeal 55 of 2019) [2022] KEHC 13325 (KLR) (3 October 2022) (Judgment)

Neutral citation: [2022] KEHC 13325 (KLR)

Republic of Kenya

In the High Court at Migori

Civil Appeal 55 of 2019

RPV Wendoh, J

October 3, 2022

Between

Transmara Sugar Company Limited

Appellant

and

Florence Mbera Otondi

Respondent

(An Appeal from the Judgement and Decree of Hon. S. Ouko Resident Magistrate (RM) dated and delivered on 19/12/2018 in Migori CMCC No. 1498 of 2017)

Judgment

1This is an appeal by Transmara Sugar Company Limited against the judgement and decree of the Hon S Ouko (RM) dated and delivered on December 19, 2018. The appellant is represented by the firm of Oyagi, Ong’uti, Magiya & Co Advocates while the respondent is represented by the firm of Odingo & Co Advocates.

2By a plaint dated May 14, 2016, the respondent (formerly the plaintiff) sued the appellant (formerly the defendant) for general damages of the three (3) cycles, sugar cane crop, costs of the suit, interest and any other relief. The respondent pleaded that on June 14, 2011, she entered into a written agreement with the appellant to harvest and purchase the sugarcane existing in her farm plot No 1920B measuring 0. 6 hectares situated at Mogenda area, Nyamondo sub - location. S M Borabu location, South district within Kisii county.

3It was also pleaded that the respondent became a member of Transmara Out Growers Co Ltd (TOCOL) upon signing the requisite membership forms for the purposes of growing the sugarcane on his land and sell if the same to the appellant. It was the respondent’s case that at the time of the agreement, there was already existing sugarcane on the plot; that the respondent self - developed the sugarcane without the appellant’s assistance; that the appellant without any reason refused and/or ignored to harvest the sugar cane which at the time of filing the suit had dried in the plot thus affecting the preparations of the 1st and 2nd ratoons; that 2 months after the sugarcane matured, the respondent notified the appellant in vain and demanded to know why it could not harvest and transport the contractual sugar cane on the said plots; that the actions of the appellant amounted to a breach of contract hence the respondent suffered damages.

4Further to the foregoing, it was the respondent’s case that pursuant to the Kenya sugar cane research foundation report, his sugarcane on the said plot measuring 0. 6 hectares and could have weighed an average of 57 tonnes and the price per tonne by the time the sugar cane matured was Kshs 4,300/=; that the appellant was in breach of the contract hence the respondent claims general damages. It was also averred that the respondent tried to initiate arbitration proceedings but it was in vain.

5The appellant filed a statement of defence dated January 10, 2017 and generally denied the contents in the respondent’s plaint. The appellant also denied ever being invited to an arbitration committee for purposes of resolving the dispute and further denied being issued with a demand notice in respect to breach of contract.

6The suit was set down for hearing with the respondent testified as PW1 on October 24, 2018. The defence case was set down for hearing on November 14, 2018, but the appellant was not present in court and the defence closed its case. The trial court rendered its judgement on December 19, 2018 in favour of the respondent and awarded a sum of Kshs 735, 300/= together with costs and interest of the suit at court rates from the date of judgement.

7Being dissatisfied with the judgement and decree, the appellant filed a memorandum of appeal dated February 4, 2019 and preferred fifteen (15) grounds of appeal which can be summarized into the following four (4) grounds as follows: -a.That the learned trial magistrate applied unknown principles of law in arriving at the judgement awarding the plaintiff an outrageous amount in compensation for a cane that never was;b.That the trial court ignored all the defence evidence filed on record and all principles of good law that guide the administration of justice in order to appease the plaintiff;c.That by the learned magistrate ignoring all the law, facts and evidence tendered in the defence documents, caused gross injustice to the appellant;d.That the learned magistrate failed to cumulatively and/or exhaustively do justice and fairness to the appellant thus arriving at an unfair and prejudicial decision without being heard.

8The appellant prayed: -a.That the court be pleased to allow the appeal and set aside the entire judgement and decree/orders dated December 19, 2018 in CMCC No 1498 of 2016;b.The costs of the appeal and the trial court be borne by the respondent.c.Such other order or relief that the court may deem necessary, just and expedient.

9The appeal was canvassed by way of written submissions and both parties filed their respective submissions.

10The appellant submitted that the trial court rewrote the contract instead of interpreting it; that the contract at clause 10 (c) placed the duty to harvest the cane on the respondent but the court chose to set aside the contract and relied on the Sugar Act 2001 to rewrite the contract by stating that it is the miller who had the duty to harvest and transport the cane.

11On the damages awarded to the respondent, the appellant submitted that the court erred in awarding compensation for the three crop cycles at Kshs 4,300 for all the cycles instead of Kshs 3,500/= for the plant crop and Kshs 3,100 for the ratoons. Further, the appellant submitted that the respondent was entitled to Kshs 262,334/= as damages taking into account the statutory charges if indeed the duty to harvest fell on the appellant.

12In rebuttal, the respondent submitted that the evidence that the sugar cane was 5 months old remains unchallenged. The duty of harvesting the cane fell on the miller as per the provisions in section 29 of the Sugar Act. On the breach of contract, the respondent submitted that general damages in the instant suit are applicable and referred to the Court of Appeal case Kisumu civil appeal No 278 of 2010John Richard Okuku Oloo v South Nyanza Sugar Co Ltdwhere the judges held that a claim for special damages must be specifically pleaded and added that the degree and certainty must necessarily depend on the circumstances and nature of the act complained of. On the statutory deductions, it was submitted that the appellant did not plead and give evidence on the statutory deductions. The respondent urged the court to dismiss the appeal with costs and uphold the lower court’s judgement.

13I have carefully considered the pleadings, proceedings in the trial court, the judgement, grounds of appeal and the rival positions taken by both parties. I am of the view the following issues are for consideration: -i.Who has the duty to harvest, weigh and transport the cane?ii.Whether the respondent was entitled to the damages.

14It is a common principle that this being the first appellate court, the court has a duty to re-evaluate and analyse all the evidence tendered in the lower court and arrive at its own conclusions but bearing in mind that it neither saw nor heard the witnesses testify. It has to establish whether the decision of the lower court was well founded. See the decision in Selle &another v Associated Motor Boat Co Ltd (1968) EA 123.

15On the duty to harvest, weight and transport the cane, the appellant faulted the trial magistrate for rewriting the terms of the contract. The appellant submitted that clause 10 (c) of the contract placed the duty to harvest on the respondent. It reads as follows: -Offer for delivery on maturity and deliver to the miller all such cane as derived from his contracted cane field and no other using the miller’s transport or the cane farmer’s appointed transporter approved in advance by the miller.

16There is no ambiguity on who was responsible to transport the cane. That responsibility solely fell on the farmer (respondent). The parties signed the instant contract on May 14, 2011 when the Sugar ActNo 10 of 2011 was in force. The Sugar Act was specifically enacted by parliament to provide for the development, regulation and promotion of the sugar industry in Kenya. However, it was repealed by the enactment of the Crops Act No 16 of 2013 which became operational as from August 1, 2014.

17Section 29 of the Crops Act provides for the sugar industry agreements. The agreements under this section, should conform to the guidelines set out in the second schedule of the act, which provides the general scope of sugar agreements and further outlines the roles of the parties in the sugar industry. Section 6 (a) of the second schedule provides among others that the role of the miller is to: -harvest, weigh at the farm gate, transport and mill the sugar-cane supplied from the growers’ fields and nucleus estates efficiently and make payments to the sugar-cane growers as specified in the agreement;”

18The question then is what is the place of statutes where parties enter into a contract which contravene the statute? Are parties still bound by that Act by virtue of the doctrine of privity of contract? In Patel v Singh (1987) eKLR the parties appealed to the Court of Appeal against the decision of Aganyanya J (as he was then) in which he held that the agreement for the advance of Kenyan money on the indian currency in India was contrary to section 3 (1) of the Exchange Actwas illegal and unenforceable in Kenya. The three-judge bench upheld the decision of the learned judge of the Superior Court.Nyarangi JA quoting with approval the findings in Archbolds (Freightage) Ltd v S Spanglett Ltd (1961) 1 QB 374, at page 388 Devlin L.J (as he then was) in which the issue of illegality, was held as follows:-The effect of illegality upon a contract may be threefold. If at the time of making the contract there is an intent to perform it in an unlawful way, the contract, although it remains alive, is unenforceable at the suit of the party having that intent; if the intent is held in common, it is not enforceable at all. Another effect of illegality is to prevent a plaintiff from recovering under a contract if in order to prove his rights under it he has to rely upon his own illegal act; he may not do that even though he can show that at the time of making the contract he had no intent to break the law and that at the time of performance he did not know what he was doing was illegal. The third effect of illegality is to avoid the contract ab inito and that arises if the making of the contract is expressly or impliedly prohibited by statue or is otherwise contrary to public policy.”

19Apaloo JA went on to further add: -But whether it was known to the parties or not, section 3 of the Exchange Control Act forbids the transaction entered in to by the parties under pain of criminal section. The upshot, of this, was that the appellant sought the aid of the court to enforce a contract made illegal by statute. Well settled principles of the common law preclude this court from assisting him. Although I am in disagreement with the learned judge holding that on the facts, a loan contract was not established, I think the alternative ground on which he founded his conclusion, namely, that the contract was unenforceable on the ground of illegality, seems to me plainly right. I am accordingly in respectful agreement with my learned brothers that this appeal fails and should be dismissed.”

20Further, a different bench of the Court of Appeal in Njogu & Company Advocates v National Bank of Kenya Limited (2016) eKLR held: -…any contract that contravenes a statute is illegal and the same is void, ab initio and is therefore unenforceable. The logical conclusion of this finding would be that the contract between the appellant and the respondent regarding the payment of legal fees is unenforceable.”

21It is clear from the above decisions that contracts which are founded upon illegality and contravene public policy, are void ab initio. The court cannot aid parties to enforce illegalities. The drafters of the Sugar Act, intended to protect farmers who after investing their resources in planting the sugar cane, are left with it in their forms if the miller refuses to harvest. Since the farmers would not have capacity to acquire the heavy machinery and manpower required to harvest the cane, the sole responsibility to harvest the sugarcane was placed on the millers. A contract which is drafted contrary to the provisions of any statute would be against public policy.

22Mrima J in Transmara Sugar C Ltd & Another v Ben Kangwaya Ayiemba &another (2020) eKLR held that: -…courts must protect the public from deceit and help maintain standards of commercial morality. Where a dominant party for instance in a standard form agreement uses its obvious advantage to create a situation where it remains to fully benefit from the agreement in every manner and in total disregard to the weaker recipient party’s position whatsoever, public interest demands that the dominant party be estopped from enjoying such benefit.”

23Therefore, clause 10 (c) of the agreement dated June 14, 2011 is null and void. It contravened the provisions of the Sugar Act and is unenforceable. The duty to harvest, weigh and transport the sugar rests with the appellant and the trial court correctly found that it was the appellant’s responsibility to harvest, weigh and transport the sugarcane.

24On whether the respondent was entitled to the damages, section 107 (1) of the Evidence Act cap 80 Laws of Kenya provides that: -Whoever desires any court to give judgement as to any legal right or liability dependant on the existence of facts, which he asserts must prove that those facts exist.”

25However, there is evidential proof which is provided for in sections 109 and 112 of the Evidence Act as follows: - 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 the fact shall lie on any particular person.

112. In civil proceedings, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disproving the fact is upon him.”

26The case of Anne Wambui Ndiritu v Joseph Kiprono Ropkoi &another (2004) eKLR dealt with the aforementioned provisions and held that:-As a general proposition under section 107 (1) of the Evidence Act, cap 80, the legal burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue. There is however the evidential burden that is cast upon any party the burden of proving any particular fact which he desires the court to believe in its existence which is captured in sections 109 and 112 of the Act.”

27The court in the case of Evans Nyakwana v Cleophas Bwana Ongaro (2015) eKLR held that:-As a general preposition the legal burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue. That is the purport of section 107 (i) of the Evidence Act, chapter 80 Laws of Kenya. Furthermore, the evidential burden…is cast upon any party, the burden of proving any particular fact which he desires the court to believe in its existence. That is captured in section 109 and 112 of law that proof of that fact shall lie on any particular person…The appellant did not discharge that burden and as section 108 of the Evidence Act provides the burden lies in that person who would fail if no evidence at all were given by either side.”

28The court record indicates that the respondent testified in support of her case on September 26, 2018. The appellant failed to appear in court on November 14, 2018 for the defence hearing, a date mutually agreed upon by both parties. The effect of a party not presenting its case apart from filing a defence was discussed in the case of Janet Kaphiphe Ouma &another v Marie Stopes International (Kenya)HCCC No 68 of 2007 the court held:-In this matter, apart from filing its statement of defence the defendant did not adduce any evidence in support of assertions made therein. The evidence of the 1st plaintiff and that of the witness remain uncontroverted and the statement in the defence therefore remains mere allegations…section 107 and 108 of the Evidence Act are clear that he who asserts or pleads must support the same by way of evidence.”

29In the case of Motex Knitwear Limited v Gopitex Knitwear Mills Limited Nairobi (2009) e KLR Lesiit, J citing the case of Autar Singh Bahra and another v Raju Govindji,HCCC No 548 of 1998 held that:Although the defendant has denied liability in an amended defence and counterclaim, no witness was called to give evidence on his behalf. That means that not only does the evidence rendered by the 1st plaintiff’s case stand unchallenged but also that the claims made by the defendant in his defence and counterclaim are unsubstantiated. In the circumstances, the counter-claim must fail."

30In North End Trading Company Limited (Carrying on the Business under the registered name of Kenya Refuse Handlers Limited v City Council of Nairobi(2019) eKLR it was held:-It is my view, that a party to a case having filed his pleadings should call evidence where the matter is considered to proceed by way of evidence. It is trite law that where a party fails to call evidence in support of its case, the party’s pleading are not to be taken as evidence, but the same remain mere statements of fact which are of no probative value since the same remain unsubstantiated pleadings which have not been subjected to the required test of cross-examination. A defence in which no evidence is adduced to support it cannot be used to challenge the plaintiff’s case. The failure to call evidence means that the evidence adduced by the plaintiff remain uncontroverted and therefore unchallenged. In such a situation the plaintiff is taken to have proved its case on a balance of probability in absence of the defendant’s evidence. In the instant case the plaintiff gave evidence, which was not challenged, proved documents in support of her claim. I find the plaintiff’s evidence to be credible and I am satisfied the plaintiff pleaded and proved her claim for special damages.”

31In the absence of a rebuttal of the respondent’s evidence by the appellant in the trial court, by adducing of evidence in support of its case, the respondent’s case remained unchallenged. Even a reading of the defence shows that it was a mere denial. The learned trial magistrate reached a correct finding when she held: -The defendant filed a defense but failed to testify in court. There was therefore nothing on record to controvert the plaintiff’s claim.”

32In the end, I find that the respondent’s case was not challenged. The appellant cannot, at this stage, attempt to argue its case through submissions. The decision of the trial magistrate of December 19, 2018 was founded on correct principles and in accordance with the law.

33The foregone position is that the appeal lacks merit and the same is dismissed with costs to the respondent.

DATED, DELIVERED AND SIGNED AT MIGORI THIS 3RDDAY OF OCTOBER 2022R. WENDOHJUDGEJudgment delivered in the presence of;Ms. Akoya for the Appellant.No appearance for the Respondent.Nyauke Court Assistant.