https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9119

Brits Freight Ltd v National Oil Corporation of Kenya (Civil Case 123 of 2019 & Civil Suit 160 of 2019 (Consolidated)) [2026] KEHC 9119 (KLR) (Civ) (29 June 2026) (Judgment) Neutral citation: [2026] KEHC 9119 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Law Courts) Civil Civil Case 123 of 2019 & Civil Suit 160 of 2019 (Consolidated) LP Kassan, J June 29, 2026 Between Brits Freight Limited Plaintiff and National Oil Corporation Of Kenya Defendant As consolidated with Civil Suit 160 of 2019 Between Brits Freight Limited Plaintiff and National Oil Corporation of Kenya Defendant Judgment 1.Brits Freight Ltd (hereafter the Plaintiff) filed suit in HCCC No. 123 of 2019 by way of plaint dated 13.06.2019 as against National Oil Corporation Ltd (hereafter the Defendant) seeking inter alia a declaration that the termination of the transport agreement was unprocedural, unfair and not in accordance with the terms of the agreement; that the termination amounted to breach of contract; that an award of damages for breach of contract; compensation for loss of earnings factoring in the remainder of the term of the contract; costs of the suit and interest thereof from the date of filing of the suit to until payment. 2.The Defendant filed a statement of defence and counterclaim dated 22.07.2019 denying the key averments in the plaint meanwhile sought inter alia in its counter-claim, an order compelling the Plaintiff to pay it the sum of Kshs. 40,926,019.07/- being the loss suffered by it for the Plaintiff’s breach of contract for petroleum products transport services dated 21.11.2017; cost of the suit; and interest on the above. 3.In response, the Plaintiff filed a defence to the Defendant’s counterclaim dated 20.09.2024, to wit, the aforestated formed the basis of pleadings in HCCC No. 123 of 2019. 4.The Plaintiff equally filed suit in HCCC No. 160 of 2019 by way of plaint dated 24.07.2019 as against The Defendant, seeking inter alia a declaration that the decision by the Defendant to withhold money owed and payable to the Plaintiff pursuant to the transport agreement was unprocedural, unfair and not in accordance with the terms of the transport agreement; that the decision to withhold the Plaintiff’s money without following the provisions of the transport agreement amounted to breach of contract; an award of damages for breach of contract; an order that the Defendant should forthwith release or pay the Plaintiff Kshs. 35,794,853.65/- which it had withheld with interest from the date the same fell due; and costs of this suit and interest thereof from the date of filing suit until paid in full. 5.The Defendant thereafter filed a motion seeking among other orders to consolidate HCCC No. 123 of 2019 and HCCC No. 160 of 2019. On 22.02.2021, the motion seeking consolidation of the matters was allowed, essentially consolidating the matters for hearing and disposal. 6.During the trial, Patrick Kibanya testified as PW1. Identifying himself as the managing director of the Plaintiff, he proceeded to adopt his witness statement as his evidence -in - chief and produced the bundle of documents appearing in the Plaintiff’s list of documents as PExh.1-16. The gist of his evidence was that on 21.11.2017, his company entered into a “transport contract” with the Defendant to act as transporter of its products. That on 14.12.2018, his company received a letter from the Defendant in which it was alleged that some of the Plaintiff’s drivers were involved in malpractices in respect of one consignee known as Geothermal Development Company (GDC) who were at the time the Defendant’s client. 7.That later, on 14.01.2019, the Plaintiff was shocked to receive a letter from the Defendant terminating the “transport contract” pursuant to Clause 16.2 thereof. It was his evidence further that none of the scenarios listed under Clause 16.2 have been proved against the Plaintiffs therefore the Defendant’s action was premature, unfair, unprocedural, illegal and contrary to the express provisions of the contract. That the Defendant's actions were contrary to the express provisions of Clauses 15.1 & 16.4 on the need for impartial investigations. 8.On behalf of the Defendant, Laban Kitanui Serem testified as DW1. He identified himself as the Ag. Manager, Inventory & Stock Control for the Defendant. He proceeded to adopt his witness statement as his evidence- in -chief meanwhile adduced into evidence the documents appearing in the Defendants list of documents and further list of documents as DExh.1 – 9. All in support of the averment in the Defendant’s defence and counterclaim. He confirmed there being a “Transport Contract” between the parties hereto. The kernel of his evidence was that it was an express term of the “Transport Contract” that Plaintiff would defend, indemnify and hold the Defendant harmless from and against any damages, claim, penalty, interest, costs or cause of action in connection with the Plaintiff’s obligation under contract as captured in Clauses 7.1.15, 8.1 & 8.2. 9.He further stated that the agreement provided that the Defendant was entitled to deduct from payments due to the Plaintiff any such amounts incurred due to loss of product and other losses incurred by the Defendant in the course of implementation of the contract, attributable to the Plaintiff. That the malpractice by the Plaintiff’s personnel towards loss of petroleum products while in transit was in clear breach of the Plaintiff obligations under contract, to wit, the same occasioned loss and damage to the Defendant wherein the Plaintiff would be fully liable per Clause 8.1. 10.He went on to state that having incurred significant loss, the Defendant was well within its right to terminate the contract for breach pursuant to Clause 16.2 and equally within its right to hold on to monies due to the Plaintiff on the backdrop of the transport invoices. He iterated that pursuant to Clause 16.2, the Defendant had a right to terminate the contract in the event the Plaintiff was involved in fraud, theft or any malpractice. 11.The respective counsel had the opportunity to cross-examine and re-examine the respective witness. At the close of the trial parties filed submissions, of which, the Court has duly considered alongside the authorities relied in support thereof 12.At the risk of repetition, the Court has considered the pleadings, evidence as well as the submissions of the respective parties. The overarching question for determination is whether on a balance of probabilities, the respective parties have proved their claims. And if so, whether the relief(s) as correspondingly sought in the plaint and counterclaim ought to be granted. Pertinent to the determination of issues before this Court are the pleadings, which formed the basis of the parties’ respective cases before the trial Court. See Court of Appeal in Wareham t/a A.F. Wareham & 2 Others v Kenya Post Office Savings Bank [2004] 2 KLR 91. 13.It is undisputed that the parties hereto entered and or executed a “Transport Contract”, on 21.11.2017 (PExh.1). The gist of the “Transport Contract” was to the effect that the Plaintiff being in the business of transportation, the Defendant was contracted as a transporter to transport for and on behalf of the Defendant, petroleum products in quantities requested by the Defendant from time to time from various destinations as advised by the Defendant from time to time and on terms and conditions set out in the “Transport Contract”. Evidently, the contract was voluntarily and duly executed by the respective parties to the matter. 14.Notably, Clause 3.1 of the said “Transport Contract” encapsulated the fact that the parties having jointly drafted the said contract, in the event an ambiguity or question of intent or interpretation arose, the contract would be construed as if drafted jointly by the parties and no presumption or burden of proof would arise favouring or disfavouring any party by virtue of the authorship of any of the provisions of the contract. In essence, the contract was executed on equal footing by the respective parties. 15.As can be garnered from the Plaintiff’s pleadings and evidence, the gist of its contention is that notwithstanding the concerns raised by the Defendant in its letter dated 14.12.2018 alleging that some of the Plaintiff’s drivers were involved malpractice in respect of certain consignments in favour of Geothermal Development Company (GDC), the Plaintiff promptly notified investigative authorities and co-operated with the Defendant. Therefore, the latter’s action of unilaterally terminating the “Transport Contract” pursuant to Clause 16.2, was in clear breach thus occasioning it loss. 16.The Plaintiff contends that the instances captured in Clause 16.2 ought to have been demonstrated in incontrovertible levels whereas the Clause was ambiguous as to who was to arrive at a final determination that either of the instances had been incontrovertibly demonstrated. That by unilaterally terminating the agreement the Defendant acted as judge, jury and executioner in the matter, to wit, the process of proof encapsulated in Clause 16.2 could only be dispensed with through the cause of natural justice. 17.Denying the Plaintiff’s claim in totality, it can be gathered from the Defendant’s counterclaim, that by dint of Clauses 7.1.15, 7.1.18. 7.1.19, 8.1 & 8.2, given the Plaintiff’s action of suspending certain employees in its service having been involved in fraud and causation of loss of petroleum products, the malpractice by the Plaintiff’s personnel was in clear breach of the Plaintiff’s obligation under the contract. And as a consequence, the Defendant incurred significant losses in the sum of Kshs. 40,926,019.07/-, of which, it claims as against the Plaintiff. That in any event, on account of the colossal loss, the Defendant was well within its rights to take prudent action to terminate the contract for breach as per Clause 16.2. 18.With the above in reserve, the Court is therefore called upon to determine whether there was breach and whether any of the parties hereto is entitled to the reliefs sought for in their pleadings. The Court proposes to contemporaneously address the Plaintiff’s and Defendant’s claims. 19.To the foregoing end, the applicable law as to the burden of proof is spelt out in Section 107, 108 and 109 of the Evidence Act. 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.” 20.Both the Plaintiff’s and Defendant’s claim stand or fall on proof of breach of contract. The role of the court in adjudicating a dispute arising between contracting parties is well settled within our jurisdiction. In the oft-cited decision of National Bank of Kenya Ltd vs Pipeplastic Samkolit (K) Ltd & Another [2001] eKLR, the Court held that; -“A court of law cannot re-write a contract between the parties whereas its role is limited to interpretation of the same. This is because contracting parties are free to specify the terms and conditions of their agreement, and that when parties do contract, the court does not have the right or ability to substitute its judgment for that of the parties.” 21.That said, at the centre of the dispute were the Defendant’s letters dated 14.12.2018 & 13.11.18 (PExh.2&3) (highlighting the undelivered products by the Plaintiff’s trucks to GDC), the letter dated 07.01.2019 (PExh.6) (intimating the Defendant’s willingness to co-operate with authorities with regard to investigations and simultaneously notifying the Plaintiff that the Defendant will continue to hold on to monies due to the Plaintiff until investigations are concluded and absolve it from culpability) and the letter dated 14.01.2019 (PExh.10), (terminating the “Transport Contract”). 22.I find it useful to quote in extenso for the benefit of the parties and the Court the contents of the letter dated 14.01.2019. It stated in part as follows-;“Please refer to the above contract between National Oil and yourselves.Subject to Clause 16.2 of the Contract for Petroleum Products Transportation Services, we hereby terminate the contract effective from the date of this letter.…….” (sic) 23.Central the the said termination letter was Clause 16.2 of the “Transport Contract” (PExh.1) that provided as follows-;Termination16.1Either party may at any time terminate this Contract by giving to the other thirty (30) days’ notice in writing.16.2Notwithstanding the foregoing and without any prejudice to any remedy that National Oil may have against the Transport for breach or non-performance under any terms of this contract, National Oil may without incurring any liability terminate this contract forthwith at anytime without notice on advising the transporter in writing to the effect in any of the following events; -16.2.1If the transporter makes any breach of the transporter obligation herein contained;16.2.2If the transporter fails to provide any or all of the services within the period(s) specified in the contract, or within any extension thereof granted by National Oil;16.2.3If the transporter does not remedy a failure in the performance of its obligations under the contract within seven (7) days after being notified or within any further period as national oil may have subsequently specified in writing.16.2.4.If the transporter fails to perform any obligation(s) under the contract.16.2.5……16. 2.6……16.2.7if the transporter and or any of its vehicle(s) shall be involved in fraud, theft or any malpractice against national oil or any of its customers.16.2.8……16.2.9If the transporters conduct of transportation agreed herein, consistently falls below the standard of expected of the transporter conducting such business.162.10 .……16.2.11……16.3…..16. 4Termination of this contract for whatever reasons shall not affect the accrued rights of the parties arising out of this contract as at the date of termination and in particular but without limitation, the right to recover damages against the other and all provisions which are expressed to survive this contract shall remain in force and effect. (sic) 24.On whether there was breach of contract by the Defendant, it necessitates reminder that like legislation, the contracts must be read in their entirety and not selectively, in order to garner the intention of the contracting parties. Firstly, it is not in dispute that in the course of the contractual undertaking as between the parties herein, the Defendant lodged a protest (PExh.2 & 3) to the Plaintiff as to the fact that there were a certain number (thirteen (13) to be precise) of undelivered products to one of its consignees - (GDC). Secondly, in acknowledgment of the said protest, vide letters dated 21.11.2018 & 27.12.2018, (PExh.4 & 5) the Plaintiff informed the Defendant that it had since lodged a complaint with investigative authorities at Kilimani Police Station, to wit, the matter was being handled by the Directorate of Criminal Investigations (DCI) and Special Crime Prevention Unit (SCPU) through investigations meanwhile suspended the drivers whose trucks were purportedly involved. 25.Fourthly, as earlier captured verbatim, Clause 16.2 of the “Transport Contract” (PExh.1) provided that the Defendant would without incurring any liability terminate the contract at any time with notice to the transporter in writing if any of events in Clause 16.2.1 – 16.2.11 had occurred. The relevant events to the disputation herein as captured earlier in this judgment where were the Plaintiff -; ; failed to perform any obligation(s) under the cobreached any of its obligations under the contractntract; and where the Plaintiff’s vehicle(s) shall be involved in fraud, theft or any malpractice against national oil or any of its customers. 26.Fifthly, Clause 7 of the “Transport Contract” set out the Plaintiff’s obligations as transporter during operations. Specifically, Clause 7.1.1, obligated the Plaintiff to employ drivers who exemplified among other attributes honesty, competence and experiences. 27.Sixthly, Clause 8 of the “Transport Contract” provided for the ‘consignment product” being transported. Clause 8.1 lay responsibility upon the Plaintiff for the care, safety and protection of the consignment, to wit, the latter would indemnify and keep indemnified the Defendant from and against all claims for total or partial loss, damage, shortage, leakage, deviation, mis-delivery, delay or detention or from any cause whatsoever, as at when, the Plaintiff collects the consignment from the Defendant until the same is discharged at the consignee’s premises. 28.Meanwhile, Clause 8.2 provided that should the product be lost, stolen, reduced in quantity during transit or as a result of acts of negligence caused by the Plaintiff and or its personnel during a delivery, the Plaintiff would reimburse the Defendant for the associated loss of value in accordance with the prevailing retail price list. 29.Further, Clause 8.3 concerned “signing of documentation” with respect of consignments loaded by the Plaintiff’s driver and received by consignee. It provided that should any of the Plaintiff vehicles under contract be involved in fraud against the Defendant or its customer, the latter shall forthwith terminate the contract without notice. The latter Clause equally provided that whether or not the Plaintiff’s vehicle is involved in any fraud shall be determined by the Defendant and such determination by the Defendant would be final without any appeal whatsoever. 30.Applying my mind to the above set of facts and witness evidence, it is apparent that the Defendant lodged its complaint concerning non-delivery of the thirteen (13) consignment as captured in (PExh.2 & 3). Meanwhile went on to highlight four (4) of the Plaintiff’s driver’s being Christopher Michuki, Peter Thwara Wanjiru, Stephen Chege & Stanley Murimi having purportedly returned forged delivery notes. 31.The Plaintiff acknowledged the said complaint by stating that it had suspended the drivers involved. Notably, going by DExh.7 (Copy of Charge Sheets) it can be gathered that Peter Thwara Wanjiru and Stephen Chege, impliedly being drivers of the Defendant, (see Para. 4 of PExh.4) were consequently charged with the offence of conspiracy to commit a felony contrary to Section 393 of the Criminal Procedure Code (CPC). PW1 in his oral evidence equally confirmed that there was an ongoing criminal case on the matter. 32.My reading and digestion of Clauses 16.2.1, 16.2.4, 16.2.7 as read alongside Clauses 7.1.1, 8.2 & 8.3, given the protest by the Defendant, the latter was within its rights to eventually terminate the contract as between it and the Plaintiff. While the Plaintiff has made heavy weather of the fact that Clause 16.2 was ambiguous as to whom had to incontrovertibly demonstrate the setout circumstance in Clauses 16.2.1, 16.2.4, 16.2.7, my understanding of Clause 8.3, incontrovertibly settles that such determination as to whether the Plaintiff’s vehicles were involved in any fraud rested with the Defendant and such determination would be final without any appeal whatsoever. By protesting that certain consignments had not reached the consignee and the subsequent charges being preferred as against Peter Thwara Wanjiru and Stephen Chege, there was an imputation of fraud against the Plaintiff’s drivers. 33.While I appreciate that there has yet to be a finding by a criminal Court adjudging the Plaintiff’s driver guilty beyond reasonable doubt for the offences they were charged with, the intent of the contracting parties was that should such fraudulent imputation such as theft, loss and non-delivery of a consignment to a consignee, the Defendant reserved the right to terminate the contract.It is worth noting that the standard required here is that of a balance of probability and not beyond reasonable doubt. This Judgment was adjourned severally so as to get updates on the status of the criminal case but no results were forthcoming nor was there any certainty on the date of possible outcome. The contract was clear on termination- there was no need for a conclusion of a criminal case before termination of a contract and besides, the use of the words “malpractice”, vehicles getting “involved in crime” in the contract do not necessarily require conclusion of formal criminal trials for the defendant to be justified in terminating the contract unilaterally. The goods were in the hands of the plaintiff and no amount of explanation can shift this duty either to the Defendant who did not have control of transportation or third parties. 34.The Plaintiff has contended through its submissions that Clause 4.10 ousted of the Defendant the unilateral ability to terminate the contract, given its failure to install electronic GPS monitoring gadgets on the Plaintiff’s trucks. My reading of the aforestated Clause, the same essentially concerned efficiency and ease of management of the Plaintiff’s trucks. Suffice to say, reading of the contract, upon loading of the consignment, the duty of care was upon the Plaintiff’s drivers to ensure the consignment reached the consignee. Thus, in any event of the Defendant’s failure to comply with Clause 4.10, the same did not vitiate the said duty of care vested upon the Plaintiff’s drivers. The circumstances under this case is different from theft by third parties. The people who were allegedly involved in malpractice were directly under the control of the Plaintiff- and not the Defendant. The installation of a car track was to a large extent expected to guard theft by third parties and this can be manifested by the fact that the suspects who are the Plaintiff’s drivers were arrested and charged and not that the perpetrators of this criminal act are third parties who are yet to be arrested. The purpose of installation of a tracking system is generally to arrest those who were involved in a crime and not before the crime. Under the circumstances here, tracking would not have assisted Plaintiff much because after all, its drivers / perpetrators of the theft were arrested and charged (the core reason for tracking). Consequently, I believe I have considerably addressed myself to the question whether the Defendant was in breach of the “Transport Contract” by terminating the same as it did. 35.As held in the case of Wareham t/a A.F. Wareham & Others (supra), if the evidence tendered by a plaintiff does not support the pleaded facts, the plaintiff being the party bearing the burden of proof should fail. See also Karugi & Another v Kabiya & 3 Others (supra). In the result, the Court finds that the Plaintiff has failed to prove the Defendant’s breach of the “Transport Contract” on a balance of probabilities. The Plaintiff’s suit must fail and is hereby dismissed. 36.Moving on to the Defendant’s counter-claim as against the Plaintiff on breach of the “Transport Contract” and claim for the sum of Kshs. 40,926,019.07/- being the loss it suffered. Here, I need not belabor on the purport of Clauses 8.1, 8.2 & 8.3 of the “Transport Contract” and PExh.2 & 3 upon which the Defendant’s counter-claim is predicated on. It is evident that the disputation leading hereto was premised of purported theft, loss, fraud and or non-delivery of the Defendant’s consignment to its consignee. Tangibly, by DExh.7 it is equally apparent that certain persons have since been arraigned before a criminal Court to face the charge of Conspiracy to commit a felony contrary to Section 393 of the CPC. 37.Indubitably, the aforestated Clauses obligated of the Plaintiff to ensure that the consignments under its care, by dint of transportation, reached the consignee. By failing to do so, the Plaintiff was in breach of the contractual agreement as executed. And as such must be faulted. 38.However, on whether the Defendant is entitled to the sum of Kshs. 40,926,019.07/- claimed as loss? It was not merely enough for the Defendant to anchor the latter claim by solely relying on PExh.1 and PExh. 2 & 3 (adduced by the Defendant as DExh.5 & 4 respectively) to justify loss. Patently, the “Transport Contract” provided for obligations on both the Plaintiff and Defendant whereas the loss imputed in the DExh.5 & 4 was premised on purportedly forged delivery notes, to wit, suspects have since been arraigned in Court to face charges as earlier captured in this judgment. 39.Thus, in my view, until criminal culpability is found as against the persons charged, the Defendant’s claims on loss to the tune of Kshs. 40,926,019.07/- appears premature in the circumstance. To wit, it would be unjustified at this juncture to find that the Defendant is entitled to the aforestated sum as loss incurred on basis on the evidence before this Court and on the backdrop of the Plaintiff’s breach. 40.In a claim premised on breach of contract, it is since settled that an injured party is entitled to damages in respect of actual loss suffered as a result of the breach. Here, I reasonably believe that the Defendant has not justifiable demonstrated that the loss to the tune of Kshs. 40,926,019.07/- either by evincing a judgment convicting the suspects or documentary/witness evidence to the effect that the thirteen (13) consignments as captured in PExh.2 & 3 were actually never received by the consignee.The issue that remains to be resolved is on the amount withheld by the Defendant. The Defendant withheld some amount due to the Plaintiff after the breach of the contract (by the Plaintiff). This Court has already agreed with the Defendant that there was a breach and so the action of withholding this amount was justifiable. This action is supported by the contract that gave powers to the Defendant to withhold the said amount. Courts rarely interfere with agreements by parties. There is an ongoing criminal case that supports the Defendant’s case against the Plaintiff’s workers- and the plaintiff indeed supports it as per the evidence on record. It appears that the Plaintiff and the defendant are on the same side; - that is against the alleged thieves who used to work with the plaintiff. To order for the release of the withheld amount will be tantamount to going against parties’ wishes who are in agreement that there was theft that occurred. The contract did not provide clearly on what happens when the defendant withholds the payment due to fraud although it is my suspicion that this is pegged on the determination of the pending criminal case. Having said this, I maintain the status quo in terms of the funds being withheld by the Defendant. 41.I would have given an award for normal damages for the breach of contract but the withholding of the funds herein and the impending criminal case precludes me from doing so. -“Every breach of a contract entitles the injured party to damages for the loss he or she has suffered. Damages for breach of contract are designed to compensate for the damage, loss or injury the claimant has suffered through that breach. A claimant who has not, in fact, suffered any loss by reason of that breach, is nevertheless entitled to a verdict but the damages recoverable will be purely nominal”. 42.Therefore, in the light of the foregoing, the plaintiff’s claim and the defendant’s counter claim are dismissed. Each party shall bear own costs. 43.Orders Accordingly. DATED, DELIVERED VIRTUALLY AND SIGNED ON THIS 29 TH DAY OF JUNE 2026 HON. L P. KASSAN JUDGE