Ukwala Supermarket Eldoret v Jaideep Shah & Kamal Shah [2019] KEHC 3062 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT ELDORET

CIVIL CASE NO. 7 OF 2016

UKWALA SUPERMARKET ELDORET .............................. PLAINTIFF

VERSUS

JAIDEEP SHAH ...............................................................1ST DEFENDANT

KAMAL SHAH ............................................................... 2ND DEFENDANT

JUDGMENT

PLAINTIFF’S CASE

1. PW1 was Anilkumar Haria a businessman operating Ukwala Supermarket Eldoret since 1999.  On 28th August 2012, he entered into contract with Jaideep Shah and Kumal Shah for the sale of business “Ukwala C” to them.

2. It was agreed that they were to take up the business within two months including furniture, fixtures and business exclusive of stock. The agreed price was Kshs. 20,000,000 and a monthly rent of Kshs. 750,000/-.

3. The defendants paid a deposit of Kshs.5,000,000 and the balance of Kshs. 15,000,000 was payable within 12 months.  The defendants were to take up the branch by the end of October but they did not do so.

4. On inquiry as to why they did not take up the business premises, they were informed that the defendants wanted to cancel the deal.  The plaintiff later sold out the property together with the furniture and fixtures at Kshs. 5. 8 million.  Part of the furniture sold is what the plaintiff had sold to the defendants.

5. The plaintiff prays for general damages for breach of contract and resultant loss of business, special damages of Kshs. 16,805, 307, Kshs. 9,250,000 for furniture and fixtures and Kshs. 5,250,000 for loss of rent for 7 months and Kshs. 2,355,337 as cost of laying off staff.

6. He further testified that in 2013, he was sued by the defendant vide Eldoret CMCC No. 660 of 2013 claiming the deposit paid of Kshs. 5,000,000, that they claimed that the plaintiff refused or neglected to supply the furniture as agreed.

7. He produced a tabulation of the payment for employee lay off as Pexhibit 2, summary of Ukwala C sales for the year 2012 as Pexhbits 3 and November sales as Pexhibit 4.

8. On cross examination, he stated that he entered into an agreement for the sale of furniture’s and fixtures at an agreed consideration of KShs.20,000,000 and that he was paid a deposit of Kshs. 5,000,000.

9. That they agreed on leasing the premises at a monthly rent of 750,000 plus VAT.  He was to give vacant possession by 31st October 2012 with a two months non-payment or rent grace period.

10. 15 Million was to be paid within 12 months and the amount would be due upon handing over the premises.  He moved out in end of October, 2012 but did not have notifications in writing to the defendants that he had moved out and the premises were available for their occupation.

11.  On being questioned about an official search in respect of Eldoret Municipality/Block 6/238 he agreed it was in the names of Eldoret Mattresses Limited and as of 15th February 2013, he had already transferred the property to them.  Further that he would have paid the employees even if the defendants would have taken up the premises.  Employee’s payment was not part of their agreement.

12. In Eldoret CMCC NO. 660 of 2013 his defence and counterclaim was for Kshs. 20,000,000 which he had not been paid.  The counterclaim had no claim for loss of business and payment to the employees.

13. Lastly, that he sold the furniture and fixtures voluntarily at 5,800,000.  He never involved the defendants in the agreement neither did he inform them of the sale.

14.  On re-examination, he reiterated that had the defendants not bought the business, he would have not closed the business and layed off his staff.

15.  That the agreement did not require that he inform the defendants when the premise is vacant.

DEFENDANTS CASE

16.  DW1 Jaideep Shah on his part testified that he knows Kamal Shah who is the second defendant who was also present in court and would testify on his behalf.

17.  He stated that on 28th August 2012 they entered into an agreement with the plaintiff for the rent of premises and the purchase of the furniture’s and fixtures at “Ukwala C”.

18.  The furniture’s and fittings were to cost Kshs. 20,000,000.  A deposit of Kshs. 5,000,000 was made and an acknowledgment from Guardian Bank produced as Dexhibit.

19.  They had to pay balance within 12 months also; there was a grace period of September and October without paying rent.  The two months grace period was to enable them set up the business but the plaintiff still continued with the business beyond 11/9/2012 till December 2012.

20. In December 2013, they sold the premises to Eldoret Mattresses Limited who were given possession in February 2013.  The property was transferred to Eldoret Mattresses Ltd on 15th February 2013. The search was produced as Dexhbit 2.

21.  The plaintiffs were in business during all that period and laying off their staff was their unilateral decision and defendants were never part of the deliberations.

22.  12 months had not lapsed prior to selling the business to a 3rd party prompting them to file Eldoret CMCC No. 660 of 2013 seeking for the refund of Kshs. 5,000,000.  He produced a demand letter as Dexhibit 3 and the agreement dated 28th August 2012 as Dexhibit 4.

23. On cross examination, he stated that he had to take possession as from 1st September 2012.  They demanded possession verbally.  The plaintiffs were the ones in breach of contract as they did not hand to them the premises.

24. They lost hope in getting into the building when the plaintiff sold it and they had not said they were no longer interested in the premises.  On re-examination, he stated that he was interested in honoring the agreement and that is why he paid a deposit of Kshs. 5,000,000.  The plaintiff operated Ukwala Supermarket till December, 2012.

25. In the submissions, the plaintiff stated that the agreement itself does not state the date possession was to be taken by the defendant hence the misunderstanding in the implementation.

26. That owing to the nature of business that was being carried in the premises, it was impractical for the plaintiffs to give vacant possession in two days.

27. Negotiations for sale of the premises or even an outright sale would have been of no adverse impact on the defendants as their interest as lessees could be noted and secured within the said sale.

28. The defendants on their part submitted that at no time did the plaintiff give them vacant possession but sold the building together with the fixtures and fittings to a third party in December 2012.  According to the defendant the plaintiff was in breach of the agreement.

29. They were in occupation since they entered into the agreement until December when they sold the premises to the third party.  The furniture and fittings were to be paid for within a span of 12 months but the plaintiff sold them before the time lapsed.

30. The claim for loss of business is not founded because it was not part of the agreement as the defendants were not buying the business.

31. That the plaintiff admitted having been paid Kshs. 5,000,000 as deposit for purchase of furniture and fittings but to date he has never refunded the money.  That the plaintiff has failed to proof its case on a balance of probabilities as required by the law.  It is the plaintiff who was in breach of the contract.

32.  The main issues for determination are;-

(a)  Whether there is a breach of the contract as between the plaintiff and the defendant, and if so, who was in breach of it?

(b)  Whether the defendants’ counterclaim is established to the required standard in law.

33.  It is of paramount importance to go back to the sale agreement and examine what the parties agreed to be bound by.  In the case of Attorney General of Belize et al vs Belize Telecom Ltd & Another 92009), 1WLR 1980 at page 1993, citing Lord Person in Trollope Colls Ltd vs North West Metropolitan Regional Hospital Board (1973) 1 WLR 601 at 609, it was held as that:-

“The court does not make a contract for the parties.  The court will not even improve the contract which the parties have made for themselves. If the express terms are perfectly clear and from ambiguity, there is no choice to be made between different meanings.  The clear terms must be applied even if the court thinks some other terms could have been more suitable.”

The terms of the contract in this suit is not disputed by the parties. What is disputed is the conduct of the parties in relation to the terms, which goes to answering the question of which party breached the contract.  The contract was entered into on 28th August 2012.  The defendants were to take up the premises within two months which means they were to move in, in November.  The defendants purchased furniture, fixtures and business, exclusive of the stock.  The agreed price was Kshs. 20,000,000/-. They paid 5,000,000/- deposit and the balance of 15,000,000/- was to be paid within 12 months.  The rent for the premises was 750,000/-, payable after a grace period of 2 months.

The established facts which led to this suit are that defendant never took up the premises in November 2012 and never paid any rent and the amount in balance which is 15,000,000/-.  The plaintiff therefore sold the said premises to Eldoret Mattresses Limited in February 2013 for 5. 8 million.

In deciding the correct position of the facts I have considered that the plaintiff is the one that was in occupation of the premises at the time of the contract.  They were operating Ukwala Supermarket in the premises. They therefore had the obligation of inviting the defendant upon moving out to take up the premises, in November 2012. They never did so and even thereafter never communicated to them officially about the condition of the premises.  The defendant claims that the plaintiff continued doing business upto December and they could not have taken possession.  On balance of probabilities, I do find that the defendant’s claim reflects the correct position.  Before the 12 months had lapsed by which the defendants were to have cleared the balance of 15,000,000/- the plaintiff had already sold the premises to Eldoret Mattresses Limited.  No claim or demand had been made to the defendants of which they had failed to meet in relation to the contract.  They were not given notice about the said sale.  Part of furniture and fixtures they had bought were sold to Eldoret Mattresses Limited.  Certainly, these facts shows the plaintiff was in breach of the contract.  Failure to take over the premises by the defendant would not have entitled the plaintiff to sell the premises.  The premises was rented by the defendants and the plaintiff’s problem would have been payment of rent from the month of November.  Such payment was never demanded.  The plaintiff never made any claim to the defendant till the defendant went to court and filed suit claiming the refund of paid 5,000,000/- in civil suit No. 660 of 2013.  The said suit was filed on 8th October 2013.  It is in the said suit that the plaintiff herein made a counter-claim, claiming for 20 million which allegedly they had not been paid.  It is clear the counter claim, and this particular suit by the plaintiff was an afterthought and a crafted attempt to deny the defendant his claim of refund of 5 million, and the exaggerated and unjustified claim of loss of business, special damages, amount for loss of furniture and fixtures, rent for 7 months and cost for laying off staff, was just meant to intimidate and scare the defendant from pursuing his entitled claim.  The plaintiff sold the fixtures and furnitures twice; the business was not sold as the stock was to be taken to another supermarket; the premises was sold before 7 months of which rent is claimed had lapsed and staff had to be layed off as the defendant was not to take them up.  The claims given the terms of contract and facts had no basis for being laid.  Even the initial counterclaim by the plaintiff of 20,000,000/- was not deserved as the balance which had remained was of 15,000,000/-.

Given the foregoing considerations, it is explicit that it is the plaintiff that was in breach of the contract.  Their case therefore fails in its entirety. It is accordingly dismissed. On the other hand the defendant have been able to establish the counterclaim on balance of probabilities and it is allowed as prayed.  Cost of the suit goes to the defendant.  Interest will be at court rates.

S. M GITHINJI

JUDGE

DATED, SIGNEDandDELIVEREDatELDORETthis 1stday of October, 2019.

In the presence of:-

Mr. Kipkurui holding brief for Mr. Owala for Plaintiff/Respondent

Mrs Ndambuki holding brief for Mr. Babu for defendant/Applicant

Ms Abigael - Court clerk

Mr. Kipkurui:

We apply for 30 days stay and for certified copies of proceedings and judgment for the purpose of appeal.

Court:

Application is granted.

SIGNED

S.M GITHINJI

JUDGE

1/10/2019