https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12256

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **COMMERCIAL AND TAX DIVISION** **COMM CASE NO. E475 OF 2020** **BETWEEN** **DAVID KAMAU NGURE T/A DASKEN ENTERPRISES.............................PLAINTIFF** **AND** **TOTAL KENYA LIMITED..................................................................1ST DEFENDANT** **KENYA REVENUE AUTHORITY………………………….……….2ND DEFENDANT** **JUDGMENT** **Introduction and Background** 1. In his Plaint dated 16th November 2020, the Plaintiff states that at all material times to the suit he was employed by the 1st Defendant(“Total”) as a ‘Young Dealer’ to manage and run Total’s service station known as Likoni Road Service Station in Nairobi Industrial area. The arrangement was under a Marketing License Agreement (MLA) signed by the Plaintiff and Total and he operated under his business name “*Dasken Enterprises*”. It is the Plaintiff’s case that the station and all assets on the premises including all staff employed were the “property” of Total and that as its manager his telephone number 071\*\*\*\*\*\*4 was subscribed to Total’s fuel systems platform. 1. The relationship between the parties was terminated through a Notice of 3rd December 2019. The Plaintiff’s grievance is that even after the termination, Total unlawfully and without authority or consent continued to trade and operate the station under the Plaintiff’s business name; has taken control and use of the Plaintiff’s KRA PIN Number A0\*\*\*\*\*\*15Q and email address. The Plaintiff joined the 2nd Defendant(KRA) to these proceedings and he complains that notwithstanding notifying KRA of the unauthorized access and use of the Plaintiff’s KRA by Total, KRA has not taken any action against Total. In the end the Plaintiff prays for the following: - 2. *An order directing the 1st Defendant to render an account to this Honourable Court on the filing of Value Added Tax returns in respect of Sale of petroleum and petroleum products at the Likoni Road Service station with the Kenya Revenue Authority for the years 2018-2020;* 3. *An Order directing the 1st Defendant to render an account to this Honourable Court on the filing of annual income Tax returns in respect of sale of petroleum and petroleum products at the Likoni Road service station with the Kenya Revenue Authority for the years 2017-2020* 4. *An Order directing the 1st Defendant to immediately file and settle with 2nd Defendant all V.A.T obligations and accrued penalties for the period of 1st January 2017-31st December 2020 transacted on the Plaintiff’s KRA 0-tax portal in respect of the 1st Defendant’s business under the Likoni Road Service Station;* 5. *An order directing the 1st Defendant to immediately settle with the 2nd Defendant all P.A.Y.E obligations and accrued penalties for the period of 1st January 2020-31st December 2020 in respect of the 1st Defendant’s employees under the Likoni Road Service Station;* 6. *An Order directing the 1st Defendant to immediately settle with the 2nd Defendant all annual income tax obligations and accrued penalties for the period of 1st January 2019-31st December 2019, and for the period 1st January 2020-31st December 2020 transacted on the Plaintiff’s KRA I-Tax portal in respect of the 1st Defendant’s business under the Likoni Road service station;* 7. *An Order directing the 1st Defendant to immediately settle with National Social Security Fund (NSSF) all payment obligations and accrued penalties in respect of the 1st Defendant’s employees under the Likoni Road Service Station for the period of 1st January 2020-31st December 2020;* 8. *Spent\** 9. *An Order directing the 1st Defendant to immediately relinquish the client’s passwords and access to his e-mail address**lik\*\*\*\*\*\*@gmail.com**;* 10. *An Order directing the 1st Defendant to immediately unsubscribe the Plaintiff’s telephone number 07\*\*\*\*\*\*54 from the 1st Defendant’s fuel systems platform;* 11. *An Order directing the 1st Defendant to compensate the Plaintiff for the unauthorized use of his business, KRA PIN and e-mail address assessed in the amount of Kshs.90,000/- per day from the 1st of January 2020 until the date of judgment together with interest at court rates;* 12. *An Order directing the 2nd Defendant to delete all tax liabilities incurred and assigned to the Plaintiff’s KRA PIN in furtherance of the 1st Defendant’s business and apportion such liabilities to the 1st Defendant’s KRA PIN;* 13. *Costs of the suit* 14. *Any further relief that the Honourable Court may deem fit and appropriate in the circumstances of the case.* 15. Total responded to the suit through a Statement of Defence dated 14th December 2020. It takes the position that the Plaintiff was its licensed dealer under the name and style of *Dasken* and was so licensed under the MLA. That under the terms of the MLA, an obligation was imposed on the Plaintiff to employ adequate and suitable staff for the proper operation and management of the business and the responsibility for the employee’s recruitment, training, termination, prompt payment of wages and compliance with any statutory provisions or regulations in respect to such employment. Total denies that it has access or control of the Plaintiff’s tax PIN Number or related email address and avers that the same were in control of the Plaintiff’s employees before termination of the MLA. 16. Total avers that the MLA was terminated under its terms under Article VII(ii)(i) after it discovered acts of fraud involving the "*Total Card*" system, which the Plaintiff could not adequately explain. That termination was communicated by letter dated 30th January 2020, and the station was handed over by the Plaintiff on 24th February 2020 and Total denies the termination was summary or unlawful. Total denies knowledge of any outstanding tax obligations on the station's business and it asserts that the obligation to pay taxes remained with the Plaintiff even after termination of the MLA. Total states that the Plaintiff has no cause of action against it and contends that the suit is an abuse of court process and thus prays for the suit to be dismissed with costs. 17. KRA responded through the Statement of Defence dated 18th December 2020 stating it is a stranger to the dispute and that it has no privity of contract with either the Plaintiff or Total regarding the MLA or employment relationship. That it cannot admit or deny facts about the MLA, employment, or the service station operations, as these are matters between the Plaintiff and Total. KRA asserts that access to a taxpayer's *i-Tax* portal is solely controlled by the owner, that is, the Plaintiff or authorized persons) whom the owner authorizes. That the Plaintiff granted access to Total to his *i-Tax* password and PIN under the MLA and KRA emphasizes that the Plaintiff can change his email address and password anytime he wishes, or visit any KRA office for assistance. KRA avers that its mandate is to collect revenue from all taxable persons registered under their PINs and tax liabilities cannot be deleted and they remain due and payable to the government by the registered PIN holder. That third-party arrangements like the MLA do not affect KRA's mandate or the Plaintiff's tax obligations and a tax compliance certificate cannot be issued where there are tax arrears. 18. KRA admits receiving information from the Plaintiff about alleged unauthorized use of his PIN, however, it denies failing to act, reiterating that the Plaintiff has full control to change his credentials and failure to do so is not KRA's responsibility. KRA states that this dispute is between the Plaintiff and Total and KRA should not have been joined. KRA prays for the suit to be dismissed with costs. 19. The matter was set down for hearing where the Plaintiff testified on his own behalf (PW1) and adopted his witness statement dated 16th November 2020 and he produced the Supplementary List and Bundle of Documents dated 16th July 2021(PExhibit 1), the 2nd Supplementary List and Bundle of Documents dated 2nd September 2021(PExhibit 2) and the 3rd Supplementary List and Bundle of Documents dated 19th January 2022(PExhibit 3). He also called Martin Paul Haylock(PW 2), a director at *Tandu Alarms Systems Limited* who relied on his witness statement dated 26th August 2024 and he produced the List and Bundle of Documents dated 2nd June 2023(PExhibit 4). 20. Total called its Network Regional Manager, Aquinas Mwathani (DW 1) who relied on his witness statement dated 15th December 2020 and produced the List and Bundle of Documents dated 14th December 2020(DExhibit 1-3). KRA called its Officer and Manager, Diana Malichi Musungu(DW 2) who relied on her witness statement dated 3rd January 2021. After the hearing, the parties were directed to file written submissions which are on record and together with the pleadings and evidence, I have considered and I will make relevant references to them in my analysis and determination below. **Analysis and Determination** 1. In these proceedings,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(1)** 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 the ***Evidence Act*** that proof of that fact shall lie on any particular person. 2. This court (Kimaru J., as he was then) in **William Kabogo Gitau v George Thuo & 2 Others [2010] KEHC 4124 (KLR)**held as follows as regards the standard of proof in civil cases:- *In ordinary civil cases, a case may be determined in favour of a party who persuades the court that the allegations he has pleaded in his case are more likely than not to be what took place. In percentage terms, a party who is able to establish his case to a percentage of 51% as opposed to 49% of the opposing party is said to have established his case on a balance of probabilities. He has established that it is probable than not that the allegations that he made occurred.”* 1. With the above principles in mind, I now proceed to determine this matter and from the parties’ submissions, I find that these are the abridged issues for determination: - 2. *Did Total continue to use the property of the Plaintiff after the termination of the MLA?* 3. *Did Total’s unauthorized use of the Plaintiff’s KRA PIN on invoices create tax liability on the Plaintiff’s itax platform and is Total responsible for the tax obligations and all other statutory obligations of the Plaintiff?* 4. *Whether KRA acted outside its mandate in issuing an assessment against the Plaintiff* 5. *What is the Law and is the Plaintiff’s claim merited for grant of prayers in the Plaint?* **Continued use of the Plaintiff’s property after termination of the MLA** 1. The Plaintiff submitted that following the termination of the MLA on 31st December 2019, Total continued running the Likoni Road Service Station using the Plaintiff’s business name, *Dasken Enterprises*, KRA PIN A00\*\*\*\*\*\*\*Q, telephone number, and email address, lik\*\*\*\*\*\*\*@gmail.com without his consent or authority. 2. That PW 2 confirmed that his company, *Tandu Alarm Systems Limited* fueled fleet cars on credit at Likoni Road Service Station between 31st December 2019 and July 2020, and that all invoices issued by Total bore the Plaintiff's KRA PIN. That invoices raised to other third parties and a tax withholding certificate issued by entities such as *Samura Engineering Limited* as late as 18th August 2020, bore the Plaintiff’s KRA PIN. The Plaintiff submitted that Total produced no proof of paying the Plaintiff any salary or commission after 31st December 2019, nor did they release his accumulated security deposits. 1. In response, Total submitted that the relationship between the parties was strictly governed by the MLA and the Appointment Letter and that under Clause XI on “Limitations” of the MLA, the Plaintiff is expressly defined as an “independent contractor”. That the clause explicitly states that the license does not create a fiduciary relationship, joint venture, partnership, agency, or employer-employee relationship between Total and the Plaintiff. 2. Total further submitted that under the express terms of the MLA, that is Clause vi on “Personnel”, the Plaintiff was solely responsible for recruiting and terminating station staff, paying their wages, and ensuring compliance with statutory requirements including tax and social security remittances and that the agreement expressly denies any privity of contract between Total and the station employees. That on taxes and other charges found at Clause X, it explicitly places the obligation to pay all taxes and rates to competent authorities on the Plaintiff and it further requires the Plaintiff to present evidence of fully settled taxes, bills and personnel claims upon handover. 3. Total asserts that its sole contractual role was providing working capital in the form of petroleum products and station infrastructure and that it had no responsibility for or oversight of the Plaintiff’s tax filings or auditor selection. Total submitted that the Plaintiff provided no evidence showing Total actually employed staff at the station, paid their salaries, or agreed to assume his tax liabilities during the subsistence of the agreement and that DW2 confirmed that the Plaintiff only raised tax complaints after KRA carried out an audit assessment, making his claims against Total upon contract termination baseless and “atrocious” 4. Having gone through the evidence, I find that the Plaintiff was able to demonstrate through invoices and tax withholding certificates that Total continued to issue invoices using his business name *Dasken Enterprises* and his KRA PIN A00\*\*\*\*\*\*\*Q long after the MLA was terminated on 31st December 2019 and that his PIN was being used up until 18th August 2020 (see page 117 of PExhibit 1, PExhibit 2 and PExhibit 4). PW2 testified and confirmed that between December 2019 and July 2020, his company fueled its fleet at the Likoni Road station and all invoices issued during that period bore the Plaintiff's KRA PIN and not Total's. 5. DW 1 confirmed that as per the MLA, the Plaintiff was to run the station using is business name and PIN. He admitted that after termination of the MLA, Total appointed a caretaker to run the station after the Plaintiff left, that all assets, petroleum products, and sales proceeds, paid into Total's *Citibank* account remained Total's property and that the Plaintiff’s PIN remained in use. Whereas DW 1 stated that it is the Plaintiff’s employees left at the station who were using his PIN after he had left, he stated that handover was done on 24th February 2020 and he could not therefore explain why Total continued issuing invoices under the Plaintiff's PIN after termination and handover nor could he show that the Plaintiff benefited in any way. Total's position that the employees were the Plaintiff's is contradicted by the fact that Total paid their salaries after the termination (see pgs. 195-200 of PEXhibit 1). 6. It is therefore my finding that the Plaintiff has proved, on a balance of probabilities, that Total unlawfully continued to use his business name and KRA PIN after termination of the MLA. **Did this unauthorized use create tax liability, and is Total Responsible** 1. Whereas Total is correct to submit that the Article IV(x) of the MLA placed the obligation to pay taxes on the Plaintiff, this obligation was only during the subsistence of the agreement, however, after termination, the Plaintiff had no authority over the station, no access to the *i-Tax* portal, and no benefit from the transactions. 2. Total continued generating sales using the Plaintiff's PIN, creating VAT, PAYE, and income tax liabilities that now appear under the Plaintiff's name. DW1 admitted that Total holds all the supporting documents including bank statements, audited books of accounts, invoices and receipts, sales and purchase ledgers sought by KRA to verify the subject transactions. The Plaintiff has been locked out of his *i-Tax* portal and cannot even file returns to dispute the assessments and DW2 confirmed that the Plaintiff cannot get a tax clearance certificate unless the arrears are paid and that changing his password does not cure the fact that invoices were issued under his PIN. 1. It is therefore my finding that Total created the tax liabilities by its own actions after termination and must be ordered to account for and settle them and that the Plaintiff is not the beneficial owner of those transactions. **Did KRA act outside its mandate?** 1. I answer this issue in the negative because under the ***Tax Procedures Act***, taxes are assessed against the registered PIN holder, in this case, the Plaintiff and KRA is not privy to the MLA and cannot apportion liabilities unilaterally. However, DW2 admitted that KRA was notified by the Plaintiff of the unauthorized use but she could not confirm whether KRA investigated or took action against Total. KRA merely advised the Plaintiff to have Total cancel the withholding certificates and to change his password which DW2 conceded would not stop Total from issuing invoices under the PIN and that it does not cancel or remove the withholding certificates. 2. In the end, I find that KRA acted lawfully, but the Plaintiff is entitled to an order directing KRA to delete and/or apportion the liabilities after Total settles or accounts for them. **Is the Plaintiff’s claim merited?** 1. From the above findings, I conclude that under **section 107** of the ***Evidence Act,*** the Plaintiff has discharged his burden by producing invoices, ledgers, and witness testimony showing Total's continued use of his PIN. I am in agreement with the Plaintiff’s submission that the *contra proferentem* rule applies since the MLA was drafted by Total and any ambiguity must be construed against Total (see **The National Bank of Commerce Ltd v Nabro Ltd & Anor** **[2008] 1 EA 432** and **Eunice Kamau v AAR Insurance (K) Limited [2017] KEELRC 1671 (KLR)**]. 2. The Plaintiff's right to privacy and property under **Articles 31 and 40** of the ***Constitution*** respectively were violated. Total's continued use of his personal data without consent after termination is a clear breach of **section 30** of the ***Data Protection Act*** and that withdrawal of any consent was communicated, yet Total ignored it. Total profited from the Likoni Road station using the Plaintiff's credentials while the Plaintiff incurred tax liabilities and suffered reputational and economic harm including the inability to obtain a tax clearance certificate. 3. As such, I find that Total should render a full account of all VAT, PAYE and income tax returns filed using the Plaintiff's PIN from 1st January 2020 to 18th August 2020 and it should settle all tax liabilities, penalties, and interest arising from those transactions with KRA. As the parties admitted that the MLA provided for damages of Kshs.90,000.00/= a day if the Plaintiff fails to hand over the station after termination, then this clause applies symmetrically to Total under the *contra proferentem* rule. The Plaintiff is therefore entitled to rely on it for Total's unauthorized use of his property for 230 days from 31st December 2019 to 18th August 2020. Total is also to relinquish control of the Plaintiff's email and unsubscribing his phone number and pay the costs of this suit. 1. The Plaintiff is further entitled to an order directing KRA to accept the settlement made by Total and to delete/apportion the liabilities from the Plaintiff's PIN to Total's PIN upon proof of settlement. The claim against KRA is dismissed since it acted within its statutory mandate but with no order as to costs against the Plaintiff and that this will be borne by Total. **Conclusion and Disposition** 1. In the foregoing, I now issue the final orders:- 2. **An Order be and is hereby issued directing the 1st Defendant to render a full and detailed account to this Court, within thirty (30) days from the date hereof, of all Value Added Tax (VAT) returns filed with the Kenya Revenue Authority in respect of the sale of petroleum and petroleum products at the Likoni Road Service Station for the years 2017 - 2020, which returns were filed using the Plaintiff's KRA PIN A00\*\*\*\*\*\*\*Q.** 3. **An Order be and is hereby issued directing the 1st Defendant to render a full and detailed account to this Court, within thirty (30) days from the date hereof, of all annual income tax returns filed with the Kenya Revenue Authority in respect of the sale of petroleum and petroleum products at the Likoni Road Service Station for the years 2017 - 2020, which returns were filed using the Plaintiff's KRA PIN A00\*\*\*\*\*\*\*Q.** 4. **An Order be and is hereby issued directing the 1st Defendant to immediately file and settle with the 2nd Defendant all Value Added Tax (VAT) obligations and accrued penalties for the period of 1st January 2017 to 31st December 2020 transacted on the Plaintiff's KRA i-Tax portal in respect of the 1st Defendant's business under the Likoni Road Service Station, within ninety (90) days from the date hereof.** 5. **An Order be and is hereby issued directing the 1st Defendant to immediately settle with the 2nd Defendant all Pay As You Earn (PAYE) obligations and accrued penalties for the period of 1st January 2020 to 31st December 2020 in respect of the 1st Defendant's employees under the Likoni Road Service Station, within ninety (90) days from the date hereof.** 6. **An Order be and is hereby issued directing the 1st Defendant to immediately settle with the 2nd Defendant all annual income tax obligations and accrued penalties for the period of 1st January 2019 to 31st December 2019, and for the period of 1st January 2020 to 31st December 2020, transacted on the Plaintiff's KRA i-Tax portal in respect of the 1st Defendant's business under the Likoni Road Service Station, within ninety (90) days from the date hereof.** 7. **An Order be and is hereby issued directing the 1st Defendant to immediately settle with the National Social Security Fund (NSSF) all payment obligations and accrued penalties in respect of the 1st Defendant's employees under the Likoni Road Service Station for the period of 1st January 2020 to 31st December 2020, within ninety (90) days from the date hereof.** 8. **An Order be and is hereby issued directing the 1st Defendant to immediately relinquish all passwords and access to the Plaintiff's email address likoni\*\*\*\*\*\*\*@gmail.com, and to provide written confirmation to the Plaintiff's Advocates of compliance within seven (7) days from the date hereof.** 9. **An Order be and is hereby issued directing the 1st Defendant to immediately unsubscribe the Plaintiff's telephone number 071\*\*\*\*\*\*4 from the 1st Defendant's fuel systems platform, and to provide written confirmation to the Plaintiff's Advocates of compliance within Fourteen (14) days from the date hereof.** 10. **An Order be and is hereby issued directing the 1st Defendant to compensate the Plaintiff for the unauthorized use of his business name, KRA PIN, and email address, assessed at the rate of Kshs.90,000.00/- per day from 1st January 2020 to 18th August 2020 (a total of 230 days), amounting to Kshs.20,700,000.00/= together with interest at court rates from the date of judgment until full payment.** 11. **An Order directing the 2nd Defendant to, upon proof of settlement by the 1st Defendant of all tax liabilities, penalties and interest as set out above, delete, expunge, or apportion all tax liabilities incurred and assigned to the Plaintiff's KRA PIN A00\*\*\*\*\*\*Q in furtherance of the 1st Defendant's business and apportion such liabilities to the 1st Defendant's KRA PIN, within thirty (30) days of receiving proof of such settlement.** 12. **The 1st Defendant shall bear the costs of this suit payable to the Plaintiff and the 2nd Defendant.** **DATED SIGNED and DELIVERED virtually at MACHAKOS this 27th Day of July, 2026** **............................................................................** **J.W.W. MONGARE** **JUDGE** **In the Presence of:** Mr. Maina for the Plaintiff. Mr. Mwethigwa for the 1st Defendant. N/A for the 2nd Defendant. Amos/Godfrey- Court Assistant