[2024] KEHC 15948 (KLR)

Grainden Millers Limited v Ngaku (Commercial Appeal E127 of 2023) [2024] KEHC 15948 (KLR) (Commercial and Tax) (13 December 2024) (Judgment)

Neutral citation: [2024] KEHC 15948 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Commercial Appeal E127 of 2023

MN Mwangi, J

December 13, 2024

Between

Grainden Millers Limited

Appellant

and

Swaleh Said Ngaku

Respondent

(Being an Appeal from the judgment of the Small Claims Court of Kenya at Nairobi delivered by Honourable J. W. Munene, on 8th June 2023 in Milimani SCCC No. E4120 of 2022)

Judgment

1. The claimant (now appellant) filed a claim in the lower Court vide a statement of claim dated 5th July 2022, seeking judgment against the respondent for Kshs.538,126. 00, compensation, and costs of the claim. The appellant’s case was that it contracted the respondent to work as a Depot Manager at its Mariakani Depot in Mombasa County. The appellant alleged that the respondent sold flour on credit, contrary to company policy, and falsified Reports to hide the resulting deficits. The appellant also claimed that as at 9th April 2022, the Mariakani Depot reportedly had a deficit of Kshs.538,126. 00, which included missing flour bales worth Kshs.454,220. 00, unauthorized trips totaling Kshs.20,000. 00, 18 bales of flour sold at a lower price causing a deficit of Kshs.23,400. 00, and unpaid customer balances of Kshs.40,506. 00.

2. In opposition to the statement of claim, the respondent filed a Response to Statement of Claim dated 2nd January 2023. He contended that he was on leave during the period when the alleged sale of flour on credit or at a lower price occurred. Further, that he was not involved in the alleged unauthorized trips as he was on leave. The respondent averred that the Depot Administrator was in charge of the Depot at the time the flour bales are said to have gone missing, been sold at a lower price, or sold on credit. He contended that he did not instruct the Depot Administrator to take unauthorized trips, sell flour bales on credit or at a lower price, or falsify documents.

3. The respondent stated that his role as a Depot Manager was limited to confirming that the daily sales matched the records. That his role extended also to approving reports, whereas the Accountant was responsible for receiving sales’ proceeds. He further stated that he was on leave during the alleged incidents of the missing stock and falsified records, and that he was absent during the stock-taking exercise on 9th April 2022. The respondent asserted that the appellant was not entitled to costs of the claim since no demand letter was served on him prior to the institution of the claim herein.

4. In a judgment delivered on 8th June 2023, the Small Claims Court dismissed the appellant’s claim with costs to the respondent on the ground that the appellant did not prove its case on a balance of probabilities. Aggrieved by the aforesaid judgment, the appellant filed a Memorandum of Appeal dated 15th June 2023 raising the following grounds of appeal –i.That the Honourable Adjudicator erred in law in arriving at the conclusion that the appellant failed to discharge their (sic) burden of proof according to Section 107 of the Evidence Act in the matter;ii.That the Honourable Adjudicator erred in law when she proceeded to make her determination based on misapprehension of the evidence as was rendered by the appellant during the trial and in the submissions;iii.That the Honourable Adjudicator erred in law when she proceeded to make her determination whereas the orders of 9th September 2022 had not been set aside and or vacated;iv.That the Honourable Adjudicator erred in law when she acted on wrong principles regarding compliance with time frames according to the Small Claims Act when she disregarded non-compliance by the respondent with the Court’s directions as to when to file and serve their (sic) documents; andv.That the learned Adjudicator erred in law by weighing the respondent's case in isolation from the appellant’s case and precluded herself from addressing vital issues raised by the appellant in their (sic) submissions.

5. The appellants’ prayer is for the instant appeal to be allowed with costs, for the judgment of the learned Adjudicator Honourable J. W. Munene delivered on 8th June 2023 to be set aside, and for the Court herein to hold that the respondent is not entitled to the award granted by the Trial Court.

6. The instant appeal was canvassed by way of written submissions. The appellant’s submissions were filed by the law firm of Mundui Murai Advocates on 9th May 2024, but the respondent neither filed any written submissions nor did he make any oral submissions in opposition to this appeal, despite being given several opportunities by this Court to do so.

7. Mr. Wanjohi, learned Counsel for the appellant cited the provisions of Section 107 of the Evidence Act and the case of William Kabogo Gitau v George Thuo & 2 others [2010] I KLE 526, and submitted that the appellant proved its case to the required standard. He argued that the appellant demonstrated that the respondent had been employed as the Depot Manager through a duly executed contract, and showed the appellant’s involvement in sales and marketing, and by producing a transaction detail account dated 9th April 2022, which indicated that the Mariakani Depot had a deficit of Kshs.538,126. 00.

8. Counsel referred to the case of Isca Adhiambo Okayo v Kenya Women’s Finance Trust KSM [2016] eKLR, and submitted that the respondent's claim of being sick was not supported by sufficient evidence, such as treatment or discharge notes. He contended that the respondent’s leave form lacked the necessary signature or company stamp, and that he failed to meet company policy requirements for approval. Mr. Wanjohi submitted that judgment before the Trial Court was initially delivered on 19th October 2022, but on 31st January 2023 the Trial Court allowed the respondent’s application to set aside the said judgment and directed the respondent to file his response, documents, and statements within three days.

9. He further submitted that in utter disobedience of the aforesaid orders, the respondent filed his response and documents after the deadline set by the Court. He argued that the appellant pointed out this failure in its submissions and also highlighted that the respondent did not pay the Kshs.10,000/= throw away costs as ordered by the Court, but the Trial Court did not address these issues. Mr. Wanjohi relied on the case of Samuel M.N. Mweru & others v National Land Commission & 2 others [2020] eKLR, and asserted that in view of the foregoing, the Trial Court should not have upheld the judgment delivered on 19th October 2022.

Analysis And Determination. 10. This being a first appeal, I have the duty to re-evaluate and assess the evidence adduced before the Trial Court, and make my own conclusions. I must however bear in mind that a Trial Court, unlike the appellate Court, had the advantage of observing the demeanour of the witnesses and heard their evidence first hand.This was stated by the Court in the case of Peters v Sunday Post Limited [1985] EA 424 as hereunder -It is a strong thing for an appellate court to differ from the findings on a question of fact, of the judge who had the advantage of seeing and hearing the witnesses…But the jurisdiction to review the evidence should be exercised with caution: it is not enough that the appellate court might have come to a different conclusion…

11. An appellate Court will only interfere with a lower Court's judgment if the same is founded on wrong principles or if the said Court misapprehended the evidence, as was held by the Court of Appeal in the case of Mkube v Nyamuro [1983] LLR, 403-415 at 403 that -“A Court on appeal will not normally interfere with the finding of fact by a Trial court unless it is based on no evidence, or on a misapprehension of the evidence, or the judge is shown demonstrably to have acted on wrong principles in reaching his conclusion.”

12. Upon re-examining the entire Record of Appeal and giving due consideration to the submissions by the appellant’s Counsel, the issues that arise for determination are -i.Whether the Trial Court disregarded the strictness of time frames as provided for in the Small Claims Court Act; andii.Whether the appellant proved its case before the Trial Court on a balance of probabilities.Whether the Trial Court disregarded the strictness of time frames as provided for in the Small Claims Court Act.

13. The appellant submitted that judgment before the Trial Court was initially delivered on 19th October 2022, but then it was set aside on 31st January 2023. The Court then directed the respondent to file his response to the claim, and also to file his documents, and statements within three days and pay Kshs.10,000/= in throw away costs to the appellant. The appellant claimed that the respondent failed to comply with the said orders as he filed his response and documents after the elapse of the three days, and he did not pay the throw away costs. The appellant asserted that despite pointing this out in its submissions, the Trial Court did not address the said issues. The appellant contended that the Trial Court should not have condoned the respondent's non-compliance and should have instead upheld the judgment delivered on 19th October 2022.

14. It is trite law that submissions are not pleadings because they are merely parties’ marketing language to try and persuade the Court to rule in their favour. That was the Court of Appeal’s holding in the case of Daniel Toroitich Arap Moi v Mwangi Stephen Muriithi & another [2014] where it held that -Submissions cannot take the place of evidence. The 1st Respondent had failed to prove his claim by evidence. What appeared in submissions could not come to his aid. Such a course only militates against the law and we are unable to countenance it. Submissions are generally parties’ “marketing language”, each side endeavouring to convince the Court that its case is the better one. Submissions, we reiterate, do not constitute evidence at all. Indeed there are many cases decided without hearing submissions but based only on evidence presented.

15. Upon perusal of the proceedings before the Trial Court, this Court notes that the issues mentioned in paragraph 13 of this ruling, were raised for the first time in the appellant’s submissions filed before the Trial Court, as such, they were not properly raised before the said Court for the respondent to respond to, and for the Trial Court to give a determination on the same. Since the said issues were neither raised before the Trial Court nor addressed by the Trial Court, this Court finds that they cannot be raised at the appellate stage, since at this stage the Court is required to consider the pleadings filed, and the evidence adduced alongside the Trial Court’s findings, and determine whether the Trial Court in its decision.

16. Due to the fact that the said issues were raised for the first time in the appellant’s submissions filed before the Trial Court, this Court finds that the Trial Court did not err by failing to address them.Whether the appellant proved its case before the Trial Court on a balance of probabilities.

17. The standard of proof in civil cases is on a balance of probabilities. The Court of Appeal in the case of Miller v Minister of Pensions [1947] 2ALL. ER 372 held that -That degree is well settled. It must carry a reasonable degree of probability, but not so high as is required in a criminal case. If the evidence is such that the tribunal can say ‘we think it more probable than not. Thus, proof on a balance or prepondence of probabilities means a win however narrow. A draw is not enough. So, in any case in which the tribunal cannot decide one way or the other which evidence to accept, where both parties’ explanations are equally unconvincing, the party bearing the burden of proof will lose, because the requisite standard will not have been attained.

18. The appellant stated that it contracted the respondent to work as a Depot Manager at its Mariakani Depot in Mombasa County, a fact which is not disputed. The appellant however alleges that the respondent sold flour on credit, contrary to company policy, and falsified reports to hide the resulting deficits. Thus, as 9th April 2022, the Mariakani Depot had a deficit of Kshs.538,126. 00, which included missing flour bales worth Kshs.454,220. 00 unauthorized trips totaling Kshs.20,000/=, 18 bales of flour sold at a lower price causing a deficit of Kshs.23,400/=, and unpaid customer balances of Kshs.40,506. 00.

19. In response, the respondent claimed that he was on leave during the period when the alleged sale of flour on credit or at a lower price occurred, and when the alleged unauthorized trips were taken. In support of this averment, the respondent produced a leave application form duly filled and executed by him. The respondent stated that during the time when he was on leave, the Depot Administrator was in charge of the Depot. The respondent denied having instructed the Depot Administrator to take unauthorized trips, sell flour bales on credit or at a lower price, or falsify documents. He further stated that his role as the Depot Manager was limited to confirming that daily sales matched the records and approving reports, while the Accountant was responsible for receiving sales’ proceeds.

20. The appellant produced a copy of the respondent’s contract with it and upon perusal of the same, I note that Clause 5 of the contract provided that the respondent’s duties and tasks as a Depot Manager would be documented in his Terms of Reference. This Court also notes that the appellant produced a copy of the Depot Manager’s job description which provides that the Depot Manager’s duties included inter alia, overseeing daily operations and Depot performance, developing strategies to expand the customer base and boost business growth and profitability, managing budgets on a daily, weekly, and monthly basis, ensuring Depot security and facility maintenance, managing staff performance and addressing disciplinary issues to meet KPIs, reviewing and implementing operational improvements, preparing and verifying reports for supervisors, analyzing market share and conducting price comparisons with competitors, ensuring timely collections and payment compliance with the Finance Department, reconciling daily transactions with the finance department, attending sales meetings, and fulfilling other assigned duties.

21. From the above responsibilities of the Depot Manager, it is evident that the respondent could be assigned to do sales of products by his immediate Supervisor, thus being responsible for sales. Nevertheless, even if the respondent was not handling sales, he was still in charge of overseeing daily operations, managing budgets on a daily, weekly, and monthly basis, managing staff performance, ensuring timely collections and payment compliance with the Finance Department, reconciling daily transactions with the finance department, and attending sales’ meetings. That in effect means that if at all there were staff who sold flour on credit contrary to company policy, and falsified reports to hide the resultant deficits, the respondent ought to have been the first one to know and bring it up with his immediate Supervisor and/or subject the said staff to disciplinary action.

22. In his defence, the respondent claimed that he was on leave during the period in question. He produced a leave application form dated 23rd March 2022 duly filled and executed by him and also executed by the person taking over his responsibilities during the time he was expected to be away. Upon perusal of the said leave application form, there is no evidence of its approval since the approval section and the section that was to be filled by the Human Resource/Administration department was not filled. Since the respondent alleged that he was on leave during the period in question and he wanted the Court to believe the said assertion, he had the duty of discharging the burden of proof in that aspect, under the provisions of Sections 108, 109 & 112 of the Evidence Act which states that –Section 108The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.Section 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 that fact shall lie on any particular person.Section 112In civil proceedings, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disproving that fact is upon him.

23. This Court finds that the respondent bore the burden of proving that he was on leave during the period in question. He however did not discharge the said burden as the leave application form produced in support of his averment has no evidence of approval by the appellant’s relevant officers. This Court is as such not persuaded by the narrative that the respondent was on leave during the period in question, and that the Depot Administrator was in charge of the Depot during that time.

24. In the circumstances, it is my finding that the Trial Court erred in finding that the respondent had satisfactorily demonstrated that he was on leave during the period in question. Further, I am of considered view that the WhatsApp extracts showing communication between the respondent and one HR, Grace Lucy Maina to whom the respondent sent photos of himself on a hospital bed with a drip line are of no probative value. This is because the respondent did not demonstrate what the said HR, Grace Lucy Maina’s relationship was, with the appellant. Further, the communication seems to have taken place on 3rd February 2023 which is outside the period in question. In addition, the attached document is not legible enough for this Court to make out its contents and thereafter determine its relevance to this suit.

25. I conclude by noting that the respondent failed to demonstrate that he was on leave during the period in question and that the Depot Administrator was in charge of the Depot during that time. Therefore, the appellant discharged its burden of proof by establishing that if at all there were staff who sold flour on credit contrary to company policy, and falsified reports to hide the resultant deficit, the respondent ought to have been the first to know, and he should have taken up the issue with his immediate Supervisor and/or subjected the said staff to disciplinary action.

26. In the premise, I find that the Trial Court erred in finding that the appellant had not proved its case on a balance of probabilities.

27. The upshot is that the instant appeal is merited. It is hereby allowed as prayed. Costs of the lower Court case and this appeal are awarded to the appellant.

It is so ordered.

DELIVERED, DATED AND SIGNED AT NAIROBI ON THIS 13TH DAY OF DECEMBER 2024. JUDGMENT DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORMNJOKI MWANGIJUDGEIn the presence of:Ms Kandie holding brief for Mr. Wanjohi for the appellantNo appearance for the respondentMs B. Wokabi - Court Assistant.