[2016] KEHC 2567 (KLR)
The court found that the defendant acted as an agent for a disclosed principal, Amani Fuels, as evidenced by the customs documentation and payment advice. The plaintiff failed to produce documentary evidence to establish a direct contractual or fiduciary relationship with the defendant. The documents presented...
Source-derived case information.
- Citation
- [2016] KEHC 2567 (KLR)
- Parties
- Plaintiff: Hass Petroleum Limited; Defendant: Christopher Oremo Obange t/a Monaki Petroleum; Interested Party: David Macharia Muriithi
- Court
- High Court
- Court Station
- High Court at Kisumu
- Jurisdiction
- Kenya
- Case Number
- Civil Suit 29 of 2013
- Procedural Posture
- Civil Suit / Judgment
- Outcome
- suit dismissed with costs to the defendant and half costs to the interested party
- Judges
- DAS Majanja
- Legal Topics
- Agency Relationships, Contractual Liability, Burden of Proof, Documentary Evidence
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Hass Petroleum Limited
Plaintiff
Christopher Oremo Obange t/a Monaki Petroleum
Defendant
David Macharia Muriithi
Interested Party
Procedural Posture
Civil Suit / Judgment
Legal Issues
- 1 Whether the defendant is liable to pay the tax demand issued by Kenya Revenue Authority for fuel not exported as intended.
- 2 Whether the defendant acted as an agent for a disclosed principal, Amani Fuels, and thus bears no personal liability.
- 3 Whether the plaintiff proved its claim against the defendant on a balance of probabilities.
Ratio Decidendi
The court found that the defendant acted as an agent for a disclosed principal, Amani Fuels, as evidenced by the customs documentation and payment advice. The plaintiff failed to produce documentary evidence to establish a direct contractual or fiduciary relationship with the defendant. The documents presented showed Amani Fuels as the consignee and the defendant as merely facilitating payment. Consequently, the plaintiff did not discharge its burden of proof to show that the defendant was personally liable for the tax demand or any damages. The suit was therefore dismissed for lack of evidence and failure to prove liability against the defendant.
Court Disposition
suit dismissed with costs to the defendant and half costs to the interested party
Orders
- The plaintiff's suit is dismissed.
- The plaintiff shall pay costs to the defendant.
Full Case Text
Judgment text and source record
33 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT
AT KISUMU
CIVIL SUIT NO. 29 OF 2013
BETWEEN
HASS PETROLEUM LIMITED.................................................................PLAINTIFF
AND
CHRISTOPHER OREMO OBANGE T/A MONAKI PETROLEUM.....DEFENDANT
AND
DAVID MACHARIA MURIITHI...............................................INTERESTED PARTY
JUDGMENT
1. The plaintiff is a dealer in petroleum products. It filed this suit against the defendant seeking, inter alia, the following reliefs:
a. This Honourable Court do order that the award of Kshs. 1,151,583/- by Kenya Revenue Authority be paid by the defendant.
b. General Damages.
c. Costs
2. According to the plaint, the defendant placed an order for fuel products with the plaintiff on 16th October 2013. The fuel was loaded on two trucks, KBS 170B/ZE 0361 and KAZ 4779/ZC 7132 from the Kenya Pipeline Depot, which is a bonded warehouse, destined for Congo through the Busia border post. Unfortunately, one of the trucks did not arrive at the border in Busia causing the plaintiff to report the matter to the police. On 21st October 2013, the plaintiff received a demand for Kshs.1,515,553/- in accordance with section 109 of East Africa Community Customs Management Act, 2004 to pay duty as the fuel intended for export had not reached the border and had probably been diverted for local use.
3. One witness, Stephen Okwengu (PW 1), testified on the plaintiff's behalf. At the material time he was working for the plaintiff in Kisumu. He confirmed the facts as set out in the plaint. According to him, the defendant fraudulently misrepresented to the plaintiff that the fuel was intended for export while he knew it was not. He contended that it was the defendant’s obligation to pay the taxes as he is the one who took delivery of the fuel and failed to export it.
4. Although the defendant did not call any witness, he had filed a defence denying the claim in its entirety. In the alternative, he contended that he had contracted with the plaintiff on behalf of Amani Fuels, a company based in Congo and well known to the plaintiff. He pleaded that he had only used his account at the Kenya Commercial Bank to facilitate payment on behalf of the Amani Fuels for the fuel consignment.
5. The interested party as owner of the motor vehicle registration number KBS 170B/ZE 0361 has been contracted to carried fuel from Kisumu. When word reached the plaintiff that the truck had not reached Busia, the plaintiff applied for an injunction impounding the truck. On 19th February 2015, Chemitei J., did order that truck to be impounded or the interested party to deposit the sum of Kshs. 1,151, 553/- in court. The said order was discharged on 29th August 2016.
6. Although PW 1 referred to documents in his testimony, he did not produce any of them to back up the plaintiff’s claim given the nature of the transaction. On this ground alone I would dismiss the claim for lack of evidence.
7. That notwithstanding, several documents were put to PW 1 in cross-examination. These documents were exhibited to an affidavit sworn by PW 1 on 30th October 2013 and were as follows:
(1) Exhibit SO-2 - A copy of Form C 17TB CUSTOMS form generated by Kenya Revnue Authority. The document showed that the consignee was AMANI FUELS C/O HASS PETROLEUEM DRC. The destination of the goods was said to be CONGO and the vessel used was TRUCK KBC170 B/ZE 0361.
(2) Exhibit SO-3 - A payment advice date 17th October 2013 showing that the defendant paid the plaintiff USD 29,707 for supply of fuel products
8. PW 1 confirmed that the documents related to this case and that the defendant was not reflected on Exhibit SO-2 as a party to the transaction and that in fact Amani Fuels in DRC was the consignee. On their face, these documents do not show that the defendant had any contractual or fiduciary relationship with the plaintiff.
9. PW1's also testified that the defendant paid for one of the consignments evidenced by Exhibit SO-3. PW 1 told the court that the defendant came to its office and ordered products on behalf of Amani Fuels which already had an account with it. When looked at alongside the defendant’s defence, Exhibit SO-3 confirms that it is probably true that the defendant paid the money on behalf of Amani Fuels for the fuel delivery.
10. The totality of this evidence is that the defendant transacted on behalf of a disclosed principal, Amani Fuels. The plaintiff failed to prove that the defendant was liable to settle or meet the demand directed to it by the Kenya Revenue Authority.
11. In short, the plaintiff has not demonstrated that it is entitled to judgment. The suit must fail and is dismissed with costs to the defendant and half costs to the interested party.
DATED and DELIVERED at KISUMU on this 6th day of October, 2016
D. S. MAJANJA
JUDGE
Mr Cheloti instructed by Garane & Associates Advocates for the plaintiff.
Mr Onyango instructed by S. M. Onyango & Associates Advocates for the defendant.
Mr Mungai instructed by Mungai J. N. & Company Advocates for the applicant/interested party.