https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11403

Frontier Haulage & Construction Company Ltd v Consolidated (MBS) Ltd & another (Civil Suit 6 of 2014) [2026] KEHC 11403 (KLR) (27 July 2026) (Judgment) Neutral citation: [2026] KEHC 11403 (KLR) Republic of Kenya In the High Court at Mombasa Civil Suit 6 of 2014 J Ngaah, J July 27, 2026 Between Frontier Haulage & Construction Company Limited Plaintiff and Consolidated (Mbs) Limited 1st Defendant Auto Hauliers Limited 2nd Defendant Judgment 1.By a plaint dated and filed on 22nd January 2014, the Plaintiff, Frontier Haulage & Construction Company Limited, sued the 1st Defendant, Consolidated (MBS) Limited, and the 2nd Defendant, Auto Hauliers Limited, seeking judgment for: (a) special damages of Kshs. 11,286,378.20; (b) general damages for negligence, breach of duty of care and/or breach of contract; (c) compensation for loss of profits; (d) an order compelling the Defendants to deliver possession of 213 drums of bitumen held at the 2nd Defendant's warehouse; (e) costs of the suit; and (f) interest on the foregoing at court rates. The Plaintiff's Case 2.The Plaintiff's case, as pleaded and as elaborated in the evidence of its sole witness, is that on or about 18th December 2012 it entered into a contract of bailment with the 1st Defendant, under which the 1st Defendant undertook to provide warehousing services for the Plaintiff's bitumen stocks, normally packed in 20-foot containers holding 110 drums per container, at agreed warehouse service charges. Under the terms of the agreement, the 1st Defendant was obliged, among other things, to ensure the safe storage of the bitumen, to insure it against risks for which the 1st Defendant would be liable, and to deliver the bitumen back to the Plaintiff from time to time as the Plaintiff required. 3.Pursuant to the agreement, the Plaintiff delivered to the 1st Defendant a total of 23,109 drums of bitumen for storage. The Plaintiff avers that the 1st Defendant delivered back only 22,295 drums, leaving a balance of 814 drums uncollected as at 3rd January 2014. 4.The Plaintiff's case is further that in the course of the parties' dealings, it discovered that the 1st Defendant was not the owner of the warehouse in which the bitumen had been stored, and that the warehouse in fact belonged to the 2nd Defendant. The Plaintiff avers that it had never consented to, nor been informed of, any arrangement transferring possession of its bitumen to the 2nd Defendant. When the Plaintiff sought to collect the outstanding 814 drums, the 2nd Defendant declined to release the same on the ground that rent had not been paid by the 1st Defendant, notwithstanding that the Plaintiff had settled all sums invoiced to it by the 1st Defendant. The Plaintiff avers that it was coerced into paying a further sum of Kshs. 836,378.20 directly to the 2nd Defendant in purported rent arrears, a sum it maintains it was never liable to pay and which, upon reconciliation, in fact amounted to an overpayment of the sums properly due under the bailment. 5.Despite this payment, the 2nd Defendant still declined to release the bitumen. When the Plaintiff's agents eventually took stock at the warehouse, only 213 drums could be accounted for, of which 30 were found damaged and heavily leaking, resulting in loss of their contents. The remaining 601 drums were, and remain, unaccounted for. 6.The Plaintiff pleads, in the alternative, that if the 1st Defendant is not found liable in negligence as a bailee for reward, then it is liable for breach of the contract of bailment, in that it failed to insure the goods, failed to return the goods, failed to ensure safe storage, damaged the goods, failed to pay rent to the 2nd Defendant, lost the goods and/or misappropriated the goods. Further, and in the further alternative, the Plaintiff pleads that the 2nd Defendant, as a sub-bailee of the Plaintiff's goods, was itself guilty of negligence and breach of the duty of care of a bailee. 7.By reason of the foregoing, the Plaintiff pleads that it suffered special damages particularised as follows: excess rent paid, Kshs. 836,378.20; 601 drums of bitumen lost, valued at Kshs. 10,000,000.00; and 30 drums damaged, valued at Kshs. 450,000.00, a total of Kshs. 11,286,378.20, in addition to general damages and compensation for loss of profit occasioned by its inability to service its orders while its stock was withheld. The 1st Defendant's Case 8.The 1st Defendant entered appearance and filed a statement of defence dated 21st May 2015, in which it admitted that 600 drums of bitumen were unaccounted for and that 30 drums were damaged, and averred that it was ready and willing to compensate the Plaintiff for both the missing and the damaged drums at the rate of Kshs. 8,000/- per drum, amounting in total to Kshs. 5,040,000/- (600 drums x Kshs. 8,000 = Kshs. 4,800,000, and 30 drums x Kshs. 8,000 = Kshs. 240,000). The 1st Defendant denied that it was liable for the balance of the Plaintiff's claim, or that it was in rent arrears to the 2nd Defendant. 9.On the basis of this admission, the Plaintiff took out a Notice of Motion dated 7th September 2016 seeking summary judgment, or in the alternative judgment on admission, against the 1st Defendant. The application was heard on 7th November 2016 and allowed, judgment on admission being entered for the Plaintiff against the 1st Defendant in the sum of Kshs. 5,040,000/-. The court directed that the balance of the Plaintiff's claim, being Kshs. 6,246,378.20, do proceed to trial by viva voce evidence. The 2nd Defendant's case and counterclaim 10.The 2nd Defendant entered appearance and filed a statement of defence and counterclaim dated 12th February 2014, in which it denied the Plaintiff's claim in its entirety and denied that it was ever a sub-bailee of, or otherwise owed any duty of care to, the Plaintiff. By way of counterclaim, the 2nd Defendant averred that the Plaintiff was indebted to it in rent arrears of Kshs. 2,640,000/- as at December 2013, accumulating at the rate of Kshs. 350,000/- per month until payment in full, and sought further the cost of repairing its warehouse floor, which it alleged had been damaged by the Plaintiff's goods. 11.The Plaintiff filed a reply to the 2nd Defendant's defence and a defence to the counterclaim, denying that it owed any rent arrears to the 2nd Defendant and reiterating that, upon reconciliation, it had in fact overpaid rent by Kshs. 836,378.20, a sum it claimed from the 1st and 2nd Defendants jointly and severally. Procedural history 12.This suit has a long and, at points, unfortunate procedural history spanning more than a decade. It was filed on 22nd January 2014 together with an application for interim orders, which was certified urgent and later compromised by consent of the Plaintiff and the 1st Defendant recorded on 3rd February 2014. The matter thereafter proceeded through pre-trial conferencing and, following prolonged non-compliance by the Defendants with the timelines set for compliance with Order 11 of the Civil Procedure Rules, the Plaintiff took out a Notice of Motion dated 7th September 2016 seeking summary judgment or, in the alternative, judgment on admission against the 1st Defendant. That application was heard on 7th November 2016 and allowed, judgment on admission being entered for the Plaintiff against the 1st Defendant in the sum of Kshs. 5,040,000/-, with the balance of the claim, Kshs. 6,246,378.20, ordered to proceed to trial by viva voce evidence. The sum decreed on admission was not satisfied, and the Plaintiff was constrained to pursue execution proceedings, including an unsuccessful attempt in 2018 to have the 1st Defendant's director show cause why he should not be committed to civil jail, which this court (differently constituted) struck out on the ground that the director was not himself the judgment debtor. 13.The suit thereafter proceeded to trial before Otieno, J., who heard the evidence of the Plaintiff's witness and received written submissions from the parties, and the matter was reserved for judgment. That judgment was, regrettably, never delivered. The record shows that the learned Judge's handwritten notes of the proceedings could not later be deciphered, and by the time the file came up for directions afresh in October 2024, the proceedings were found to be illegible. The court then directed, on 17th October 2024, that the matter proceed afresh, and it was on that basis that the file was transmitted to this court for a retrial. 14.Directions for the retrial were taken before me between February and April 2025, culminating in a hearing date of 29th July 2025 fixed by consent of all the advocates then on record. When the matter came up for hearing on that date, counsel then holding brief for the Defendants sought an adjournment on the basis that an application to cease acting for the Defendants was pending. I declined that application, having regard to the fact that the hearing date had been fixed by consent as far back as April 2025 and that the suit, by then, was over ten years old, and directed that the hearing proceed. Neither the 1st nor the 2nd Defendant attended the hearing thereafter, or called any witness. The Plaintiff proceeded to prove its case and closed its case with the testimony of one witness. The evidence 15.Hossein Zadeh Taghi, a Director of the Plaintiff, testified as PW1 and was the Plaintiff's sole witness. He adopted his witness statement dated 21st January 2014 and produced, without objection, the documents on the Plaintiff's list of documents dated 22nd January 2014 as Plaintiff's Exhibits 1 to 8, the documents on the Plaintiff's further list of documents dated 28th March 2014 as Plaintiff's Exhibits 9 to 25, and the documents on the Plaintiff's supplementary list of documents dated 3rd June 2014 as Plaintiff's Exhibits 26 to 28. 16.PW1's evidence, in summary, was consistent with the Plaintiff's pleaded case. He testified that the 1st Defendant was contractually bound to ensure the safe custody of the Plaintiff's bitumen and to insure the same, that the Plaintiff duly paid all warehouse service charges invoiced by the 1st Defendant, and that of the 23,109 drums delivered for storage, only 22,295 were returned by the 1st Defendant, and a further 213 were later released pursuant to an order of the court, 30 of which were found damaged with their contents already leaked. The remaining 601 drums were never accounted for. He further testified that the Plaintiff was compelled to pay Kshs. 836,378.20 to the 2nd Defendant, which the 2nd Defendant claimed as rent arrears owed by the 1st Defendant, notwithstanding that the Plaintiff had already discharged all sums due under its agreement with the 1st Defendant. 17.PW1 further testified that bitumen is customarily sold by the kilogram, that a single drum holds 183 kilograms of bitumen, and that the applicable price of bitumen was Kshs. 90.49 per kilogram at the material time. On this basis, the total quantity of bitumen represented by the 601 lost and 30 damaged drums (631 drums, or 115,473 kilograms) was valued at Kshs. 10,450,000/-, a figure consistent with the sum of Kshs. 10,000,000/- and Kshs. 450,000/- pleaded in the plaint for the lost and damaged drums respectively. 18.PW1 further testified, in terms consistent with the Plaintiff's reply to the 2nd Defendant's defence and counterclaim, that the Plaintiff never had any lease or tenancy with the 2nd Defendant and did not owe the 2nd Defendant any rent. 19.Pursuant to an interlocutory order made in the course of these proceedings, the 2nd Defendant released to the Plaintiff the 213 drums then held at its warehouse. Prayer (d) of the plaint has, in consequence, been overtaken by events and requires no further order. 20.Neither the 1st nor the 2nd Defendant called any evidence, or cross-examined PW1, whose testimony accordingly stands unchallenged on the record. Issues for determination 21.Having considered the pleadings, the evidence on record and the submissions filed on behalf of the Plaintiff, I am satisfied that the following issues arise for determination:(i)Whether the 1st Defendant breached the contract of bailment and/or its duty of care as a bailee for reward;(ii)Whether the 2nd Defendant, as a sub-bailee, owed the Plaintiff a duty of care and, if so, whether that duty was breached;(iii)Whether the Plaintiff has proved its claim for special damages, and if so, in what amount;(iv)Whether the Plaintiff is entitled to general damages and compensation for loss of profits;(v)Whether the 2nd Defendant's counterclaim ought to be allowed; and(vi)Who should bear the costs of the suit. Analysis and Determination: Whether the 1st Defendant breached the contract of bailment and/or its duty of care as a bailee for reward 22.It is not in dispute, indeed it is expressly admitted in the 1st Defendant's statement of defence, that the Plaintiff and the 1st Defendant entered into a contract for the warehousing of the Plaintiff's bitumen, and that the contract was one of bailment for reward, the 1st Defendant being paid warehouse service charges for the storage of the Plaintiff's goods. The nature of the relationship thereby created is well settled. In Equator Distributors v Joel Muriu & 3 Others [2018] eKLR, the Court of Appeal held as follows:“The basic rule is that the Bailee is expected to return to its owner bailed goods when the bailee's time for possession is over and he is presumed liable if the goods are not returned." 23.The evidence, which is unchallenged, establishes that the Plaintiff delivered 23,109 drums of bitumen to the 1st Defendant, and that the 1st Defendant returned only 22,295 drums directly, with a further 213 drums recovered from the 2nd Defendant's warehouse pursuant to court order, 30 of which were damaged. This leaves 601 drums wholly unaccounted for. The 1st Defendant's own statement of defence admits that 600 drums — a difference of only one drum from the Plaintiff's pleaded figure — went missing, and that 30 drums were damaged. On the totality of the evidence, and applying the standard of proof on a balance of probabilities as explained by the Court of Appeal in Palace Investment Ltd v Geoffrey Kariuki Mwenda & Another [2015] eKLR, citing Denning J in Miller v Minister of Pensions [1947] 2 All ER 372, I find that the Plaintiff has established, and the 1st Defendant has for all material purposes admitted, that the 1st Defendant failed to return the full complement of bitumen entrusted to it and thereby breached both the express terms of the contract of bailment and its duty of care as a bailee for reward. 24.In the absence of any evidence from the 1st Defendant explaining what became of the missing drums or the circumstances of the damage to the 30 drums, and having regard to the principle reaffirmed in Motex Knitwear Limited v Gopitex Knitwear Mills Limited [2009] eKLR, following the earlier decision in Autar Singh Bahra & Another v Raju Govindji, HCCC No. 548 of 1998, that where a defendant elects not to call evidence, the plaintiff's evidence stands unchallenged and the court has no alternative but to rely on it fully, I find that the Plaintiff has discharged the burden placed on it by sections 107, 108 and 109 of the Evidence Act, Chapter 80 of the Laws of Kenya, to prove the 1st Defendant's breach of contract and negligence as a bailee for reward. Whether the 2nd Defendant owed the Plaintiff a duty of care as a sub-bailee, and whether that duty was breached 25.The evidence, again unchallenged, establishes that the 2nd Defendant was the owner of the warehouse at which the Plaintiff's bitumen was in fact stored, that the 1st Defendant transferred possession of the bitumen to the 2nd Defendant's premises without the Plaintiff's knowledge or consent, and that it was the 2nd Defendant which ultimately held, and controlled access to, the Plaintiff's goods. On these facts I am satisfied that the 2nd Defendant assumed the position of a sub-bailee of the Plaintiff's goods. The legal consequence of that status was explained in Siginon Freight Limited v Air Charter Brokers Limited [2021] eKLR, where the court, citing Halsbury's Laws of England, held:“A sub-bailee is a person to whom the actual possession of goods is transferred by someone who is not himself the owner of the goods but who has a present right to possession of them as bailee of the owner. When a sub-bailee accepts possession of the goods he thereby assumes the obligations of a bailee towards the original bailor. Thus, if the sub-bailment is for reward, the sub-bailee will owe to the bailor all the duties of a bailee for reward. The bailor has a right to make a claim against the sub-bailee for breach of any of his duties either if the bailor has the right to immediate possession of the goods or if they are permanently injured or lost." 26.It is not disputed that the 2nd Defendant took possession of, and at all material times controlled, the Plaintiff's bitumen; nor is it disputed that of the goods in its custody, only 213 drums could be accounted for when the Plaintiff sought to collect them, and that the 2nd Defendant declined to release even those 213 drums until compelled to do so by order of this court, having in the meantime extracted a payment of Kshs. 836,378.20 from the Plaintiff which the evidence shows was not properly due. I find that the 2nd Defendant, as sub-bailee, owed the Plaintiff a duty to take reasonable care of the bitumen in its custody and to account for and return the same on demand, and that it breached that duty. Whether the Plaintiff has proved its claim for special damages, and in what amount 27.It is trite that special damages must be specifically pleaded and strictly proved. In John Richard Okuku Oloo v South Nyanza Sugar Co Ltd [2013] eKLR, the Court of Appeal, citing its earlier decision in Coast Bus Service Limited v Murunga & Others, Nairobi CA No. 192 of 1992, held that the degree of certainty and particularity required in pleading and proving special damages must be regulated by the character of the acts complained of and the circumstances in which they were done, and that a court should insist on no more, and no less, than what is reasonable in the circumstances. 28.The Plaintiff's special damages, as pleaded, comprised three heads: excess rent paid to the 2nd Defendant of Kshs. 836,378.20; the value of 601 drums of bitumen lost, pleaded at Kshs. 10,000,000/-; and the value of 30 drums damaged, pleaded at Kshs. 450,000/-, a total of Kshs. 11,286,378.20. I have already found that the fact of the loss of the drums, whether 600 or 601 is, in the circumstances, an immaterial distinction of one drum; and, the damage to the further 30 drums, is established and, indeed, effectively admitted by the 1st Defendant. As to value, the Plaintiff led evidence, unchallenged, that bitumen is customarily sold by the kilogram at Kshs. 90.49 per kilogram, and that each drum holds 183 kilograms, which, applied to the 631 affected drums (115,473 kilograms), produces a value of Kshs. 10,450,000/-, a figure which corresponds, for all practical purposes, to the combined sum of Kshs. 10,000,000/- and Kshs. 450,000/- originally pleaded for the lost and damaged drums. I accept this evidence and find that the Plaintiff has proved the value of the lost and damaged bitumen in the sum claimed. 29.As to the excess rent, the Plaintiff produced a statement of account reflecting the payments made by it to the 1st Defendant, which, on the Plaintiff's own reconciliation and on the unchallenged evidence of PW1, disclosed an overpayment of Kshs. 836,378.20. This sum was, on the evidence, extracted from the Plaintiff by the 2nd Defendant as a condition of releasing goods that were in any event the Plaintiff's own property and to which the 2nd Defendant, as sub-bailee, had no lawful claim of retention once the Plaintiff had discharged its obligations to the 1st Defendant. I am satisfied that this sum, too, has been proved. 30.The Plaintiff's total proved special damages therefore stand at Kshs. 11,286,378.20. Of this sum, Kshs. 5,040,000/- has already been the subject of judgment on admission entered against the 1st Defendant on 7th November 2016. What remains for determination in this judgment is the balance of Kshs. 6,246,378.20, comprising the excess rent of Kshs. 836,378.20 and the further sum of Kshs. 5,410,000/-, representing the difference between the value of the lost and damaged bitumen as proved (Kshs. 10,450,000/-) and the sum already admitted and awarded in respect of the same drums (Kshs. 5,040,000/-). I find that the Plaintiff has proved entitlement to this balance. 31.On the question of who is liable for this balance, I have already found that both the 1st Defendant, as the primary bailee under the contract of bailment, and the 2nd Defendant, as sub-bailee in actual possession and control of the goods, breached duties owed to the Plaintiff resulting in the loss and damage complained of, and that the 2nd Defendant, additionally, unlawfully extracted the excess rent. I find that the 1st and 2nd Defendants are jointly and severally liable to the Plaintiff for the balance of Kshs. 6,246,378.20. Whether the Plaintiff is entitled to general damages and compensation for loss of profits 32.The Plaintiff also sought general damages for negligence, breach of duty and/or breach of contract, and compensation for loss of profits said to have arisen from its inability to service its orders while its stock was withheld. While PW1 testified generally that the Plaintiff missed business opportunities as a result of the Defendants' conduct, no evidence, whether by way of accounts, orders lost, or any other particulars, was led to quantify this head of claim or to demonstrate its extent with any degree of certainty. In the absence of such evidence, I am unable to make any award under this head, and the Plaintiff's claim for general damages and for compensation for loss of profits is accordingly dismissed for want of proof. Whether the 2nd Defendant's counterclaim ought to be allowed 33.The 2nd Defendant's counterclaim, seeking rent arrears of Kshs. 2,640,000/- and the cost of repairing its warehouse floor, was not supported by any evidence whatsoever. The 2nd Defendant called no witness and produced no document in support of the counterclaim, and the averments contained in it accordingly remain, on the authority of Motex Knitwear Limited v Gopitex Knitwear Mills Limited (supra), mere unsubstantiated assertions. On the contrary, the unchallenged evidence of PW1 — who testified directly that the Plaintiff never had any lease with the 2nd Defendant and did not owe it any rent — supported by the statement of account produced in evidence, establishes that the Plaintiff was, if anything, in credit and not in arrears. I find that the 2nd Defendant has failed to prove its counterclaim on a balance of probabilities, and the same is dismissed. Who should bear the costs of the suit 34.Costs follow the event, and I see no reason in this case to depart from that ordinary rule. The Plaintiff has substantially succeeded in its claim against both Defendants, and the 2nd Defendant's counterclaim has failed in its entirety. Disposition 35.For the foregoing reasons, I make the following orders:(a)Judgment is entered for the Plaintiff against the 1st and 2nd Defendants, jointly and severally, in the sum of Kshs. 6,246,378.20, being the balance of special damages proved at this trial, in addition to and without prejudice to the sum of Kshs. 5,040,000/- already awarded to the Plaintiff against the 1st Defendant by way of judgment on admission entered on 7th November 2016.(b)The Plaintiff's prayer for an order compelling the delivery of the 213 drums of bitumen held at the 2nd Defendant's warehouse is spent, the same having been complied with pursuant to an order made in the course of these proceedings, and no further order is made in respect thereof.(c)The Plaintiff's claim for general damages and for compensation for loss of profits is dismissed for want of proof.(d)The 2nd Defendant's counterclaim is dismissed in its entirety.(e)The Plaintiff shall have interest on the sum in (a) above at court rates from the date of filing of this suit until payment in full.(f)The 1st and 2nd Defendants shall jointly and severally bear the costs of the suit, and the 2nd Defendant shall additionally bear the costs of its counterclaim.It is so ordered. SIGNED, DATED AND DELIVERED ON 27 JULY 2026NGAAH JAIRUSJUDGE