https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9554

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI COMMERCIAL AND TAX DIVISION CORAM: F. MUGAMBI, J COMM CASE NO. E049 OF 2018 BETWEEN INTER TROPICAL TIMBER TRADING LTD ..……….. PLAINTIFF AND KENYA POWER AND LIGHTING CO LTD ..……….. DEFENDANT JUDGMENT Introduction and Background 1. The Plaintiff instituted this suit by way of a Plaint dated 11th July, 2018 which was subsequently amended severally resting with the Further Amended Plaint filed in court on 13th October 2022. They seek the following reliefs: i. A declaration that the actions of the Defendant in cancelling the Plaintiff tender awarded dated 11th June 2012 amount to breach of contract. HCCOMM NO. E049 OF 2018 JUDGMENT Page 1 ii. Special damages of Kenya shillings two hundred and eighty-four million eight hundred and ninety-two thousand and five hundred Kshs. 284,892,500.00/= iii. General Damages. iv. Interest on (d) and (e) above. v. Costs of the suit. vi. Any other or further relief the Court may deem fit to grant. 2. The Plaintiff's case is that following a successful tender, it was on 11th June 2012 awarded a contract by the Defendant for the supply of 29,500 treated power distribution wood poles valued at Kshs. 410,640,000.00, to be delivered to the Defendant's stores at Ukunda, Malindi, and Voi. The parties thereafter executed a contract dated 18th June 2012 ("the Contract"). 3. The Plaintiff further states that following the award of the Contract, it invested substantially in setting up the necessary infrastructure to fulfil its contractual obligations, including establishing wood treatment plants at Mwea and Eldoret, procuring transportation trucks, sourcing raw HCCOMM NO. E049 OF 2018 JUDGMENT Page 2 materials, and hiring adequate staff. To finance these investments, the Plaintiff borrowed heavily from various financial institutions, with the facilities secured by the personal guarantees of its directors and their matrimonial properties. 4. The Plaintiff claims that the Defendant unilaterally altered the delivery locations from those initially agreed upon, suspended deliveries on multiple occasions, and never issued formal communication on when the Plaintiff was required to resume supplies. That on 24th January 2017, the Defendant wrote to the Plaintiff alleging that the Contract had expired and declined to accept any further deliveries. The Plaintiff contends that these actions constituted breach of contract. It further argues that by its conduct, the Defendant was estopped both at law and in equity from relying on the strict contractual timelines. The Plaintiff also filed a Response to the Statement of Defence dated 27th September 2018 reiterating these positions. 5. In response, the Defendant filed a Statement of Defence dated 10th August 2018, subsequently amended in December 2019 and again on 7th HCCOMM NO. E049 OF 2018 JUDGMENT Page 3 November 2022. While admitting the existence of the Contract, the Defendant denied knowledge of the Plaintiff's loans and the establishment of a wood treatment plant in Eldoret. The Defendant confirmed that in July 2013, it relocated the delivery point from the Coast region to Nyeri on account of capacity constraints at the Malindi, Ukunda and Voi stores. This relocation, it contends, was advantageous to the Plaintiff given that Nyeri was approximately 95 kilometres from the Plaintiff's own stores. The Defendant further avers that notwithstanding the numerous extensions of time granted to the Plaintiff, the Plaintiff consistently failed to meet its delivery obligations under the Contract. 6. The Defendant contends that the email of 4th May 2016, which suspended supplies, was of no contractual consequence to the Plaintiff, as the Contract had already expired, the last extension having been granted on 14th April 2015 and running only until 1st November 2015. It further avers that at the time of the suspension, the Plaintiff had persistently defaulted on its delivery obligations despite repeatedly requesting and HCCOMM NO. E049 OF 2018 JUDGMENT Page 4 being granted extensions of the delivery period. The Defendant maintains that the Plaintiff was at all material times aware that the Contract had expired well before the termination letter of 24th January 2017 was issued. Having been afforded numerous opportunities to perform and consistently failing to do so, the Defendant submits that the Plaintiff has no valid claim and accordingly prays that the suit be dismissed with costs. 7. At the hearing, the Plaintiff called its director, Geoffrey Nganga Kariuki (PW 1) who relied on is witness statements dated 11th July 2018, 10th August 2020 and 17th August 2020. He produced the Lists and Bundles of Documents dated 11th July 2018 (PExhibit 1) and 27th August 2018(PExhibit 2). However, the NEMA audit report, KEBS permit, telephone extracts, WhatsApp images, performance bonds and bank guarantees were excluded from the produced documents and the Plaintiff was granted leave to file further witness statements to the produce the said documents. This was not done and the documents were admitted with their evidentiary weight being left to the court. PW 1 also produced a Further HCCOMM NO. E049 OF 2018 JUDGMENT Page 5 Supplementary List of Documents dated 19th August 2020 (PExhibit 3) and the Further Second List of Documents dated 21st June 2023(PExhibit 4). 8. The Defendant called Haroun Otieno, its Supply Chain Officer, as its sole witness. He relied on his witness statement dated 20th August 2020 and produced documents marked DExhibit. Analysis and Determination 9. Upon conclusion of the hearing, the court directed both parties to file written submissions, which are on record. As the submissions largely mirror the parties' respective positions already outlined above, I will not rehash them but will make relevant references in the analysis and determination that follows. I find that the court is being asked to determine the following abridged issues: i. Whether the Defendant was entitled to terminate the Contract ii. On whose breach was the Contract terminated? iii. Whether the Plaintiff’s claim is defeated by alleged illegality due to expiry of the contract? HCCOMM NO. E049 OF 2018 JUDGMENT Page 6 iv. As to whether the property in the goods had passed and if so, whether the Plaintiff is entitled to price? v. Whether the Plaintiff is entitled to the general damages sought? vi. Whether the Plaintiff is entitled to the reliefs sought? 10. To begin with, the parties' relationship was governed by the Contract dated 18th June 2012, which established the agreed terms of their relationship. As affirmed in National Bank of Kenya Ltd V Pipeplastic Samkolit (K) Ltd & Another, [2001] KECA 362 (KLR) , this Court's function is not to vary or rewrite that Contract but to give effect to it in accordance with the parties' original intention, absent any vitiating factors. In this regard, the constituent documents of the agreement were set out at Clause 5 of the Contract, the delivery period at Clause 6, and the validity period at Clauses 8 and 11. 11. The first issue for determination is whether the Defendant breached Clause 10 of the Contract, which required all amendments to be in writing and HCCOMM NO. E049 OF 2018 JUDGMENT Page 7 signed by both parties. The Plaintiff contended that the Defendant breached this provision by unilaterally altering delivery locations, schedules, and quantities without mutual written agreement. Relying on Kirpal Singh V Qurbanlite Limited, [1978] KECA 16 (KLR) and Justus Kantet Matteu V Kiriaine Ole Luka, [2022] KEHC 698 (KLR), the Plaintiff submitted that a party in breach cannot turn around and insist on strict performance from the innocent party. It further argued, citing P.N. Gichohu Ngugi V County Government of Laikipia & Another , [2017] KEHC 1501 (KLR), that the Defendant could not invoke its own internal inefficiencies as a justification for escaping its contractual obligations. The Defendant vehemently denied any breach of the Contract. 12. Clause 10 of the Contract expressly permitted the parties to amend its terms, and provided that: “Any amendment, change, addition, deletion or variation howsoever made to this Contract shall only be valid and effective HCCOMM NO. E049 OF 2018 JUDGMENT Page 8 where expressed in writing and signed by both parties.” 13. The first variation complained of by the Plaintiff concerns the change of delivery destinations. In this regard the record shows that by a letter dated 12th July 2013 from the Defendant referenced CONTRACT FOR SUPPLY OF POLES TO COAST STORES, the Defendant confirmed that a meeting had been held on the previous day between the parties. The said letter communicated the change of venue and asked the Plaintiff to confirm the new rate of transportation given that the new venue, the Nyeri Stores, were closer for the Plaintiff than the original stores. The Plaintiff responded in writing on 15th July 2013, in a letter referenced ACCEPTANCE OF PROPOSED CHANGE OF SUPPLY STORE, expressly confirming as follows: that ‘we wish to kindly notify you that we have accepted your proposal and the terms proposed’. 14. The position regarding variation of an agreement was explained succinctly by Gicheru JA., in Kenya Breweries Limited V Kiambu General HCCOMM NO. E049 OF 2018 JUDGMENT Page 9 Transport Agency Limited, [2000] KECA 417 (KLR) as follows: “A variation of an existing contract involves an alteration as a matter of contract of the contractual relations between the parties; hence the agreement for variation must itself possess the characteristics of a valid contract. To effect a variation therefore, the parties must be ad idem in the same sense as for the formation of a contract and the agreement for the variation must be supported by consideration. If the agreement for the variation is mere nudum pactum it would give no cause of action for breach particularly if its effect was to give a voluntary indulgence to the other party to the agreement. ..." 15. Applying this principle to the matter before me, it is evident that the change of delivery location was HCCOMM NO. E049 OF 2018 JUDGMENT Page 10 effected by an offer and acceptance in writing, therefore satisfying both the requirements of Clause 10 and the general law on variation. This was further confirmed by PW1 in his testimony, where he acknowledged that the Nyeri plant was in fact more convenient for the Plaintiff's deliveries. It follows that the change of delivery destination was a valid, mutually agreed variation and neither party can found a claim for breach on that basis. The subsequent dealings between the parties similarly reflect further variations that were lawfully made to the original Contract. 16. Beyond the change in delivery venue, the central dispute between the parties concerns the delays in delivery that ultimately led to the termination of the Contract. The Plaintiff attributed the delays in delivery entirely to the Defendant, citing the unilateral suspension of deliveries in February 2013, the relocation of delivery points to Nyeri in August 2013, the delayed issuance of purchase orders, and a further indefinite suspension in June 2016. It contended that the Defendant's continued to accept deliveries, invoices, and payments HCCOMM NO. E049 OF 2018 JUDGMENT Page 11 through to 2017 thus creating the impression that time was not of the essence. 17. The Plaintiff further argued that the Defendant's unfulfilled promises to issue formal resumption notices after the suspension of supplies, coupled with its express acknowledgment of subsisting contractual obligations in a letter dated 9th June 2016, rendered the purported termination on 24th January 2017 wrongful. 18. The Defendant, on the other hand, maintained that the termination was fully justified due to the Plaintiff's persistent failure to deliver the outstanding balance of 12,685 poles, notwithstanding multiple extensions of time and a logistically favourable delivery location at Nyeri. It rejected the estoppel argument, submitting that all prior extensions were explicit, time-bound variations culminating in a firm deadline of 1st November 2015, upon the expiry of which the Contract lapsed. Relying on Serah Njeri Mwobi V John Kimani Njoroge, , [2013] KECA 501 (KLR) the Defendant argued that promissory estoppel cannot be invoked in respect of a contract that had HCCOMM NO. E049 OF 2018 JUDGMENT Page 12 already expired. It further submitted, citing John Njue Nyaga V Nicholas Njiru Nyaga & Another, [2013] KECA 235 (KLR) and Mrao Ltd V First American Bank of Kenya Ltd & 2 Others, [2003] KECA 175 (KLR) , that the Plaintiff's failure to perform despite every facilitation afforded to it disentitled it from equitable relief. 19. A determination of whether the termination was justified necessarily requires an examination of what constitutes a breach of contract in law. In this regard, the court (Naikuni J.) in Okoba V Ajwang, [2023] KEELC 20806 (KLR) cited Lord Diplock at pg. 848 in Photo Production V Securicor Limited, (1980) AC 827 where he remarked that: “… characteristically, commercial contracts are a source of primary legal obligations upon each party to it to procure That whatever has been promised will be done...Every failure to perform a basic term of contract, is a breach of contract. The secondary obligation on the part HCCOMM NO. E049 OF 2018 JUDGMENT Page 13 of the contract on the part of the contract breaker to which it gives rise by…. common law is to pay monetary compensation to the other party for the loss sustained by him in consequence of breach.” 20. In determining whether there was a breach and by whom, I again turn to the Contract itself. The Contract clearly stipulated that deliveries were to be made in three batches over an 18-month period running from August 2012 to February 2014. These were the terms originally agreed upon. 21. The evidence before me shows that following the agreed variation of the delivery points, the Defendant placed a purchase order on 14th November 2013 for poles to be delivered to Nyeri. This period was within the 2nd third of the 18-month period. The Plaintiff wrote back on 14th August 2014, 9 months later and importantly, after the contractual period had in fact lapsed. While the Plaintiffs claimed in their response to have received the Defendants purchase order on 19th HCCOMM NO. E049 OF 2018 JUDGMENT Page 14 February 2014, there is no evidence of this at all because if that was the case, they would have known that the contractual period had already lapsed which they did not question. 22. In that same letter of 14th August 2014, the Plaintiff sought a six-month extension to supply the poles, attributing the delay to among others, the change of delivery venues. This position is difficult to sustain given that the Plaintiff had expressly accepted the variation in delivery venue on 15th July 2013 and, through PW1's own testimony, acknowledged that the new location was in fact more convenient for its operations. The Plaintiff’s letter was contradictory in itself. While confirming that it had 2,000 poles ready for immediate delivery, in the same breath the Plaintiff was requesting a six-month extension, a position that was both inconsistent and unexplained even by PW1. 23. What is significant, however, is that by its response dated 26th August 2014, the Defendant agreed to extend the delivery period by six months. The effect of this letter is that the parties once again HCCOMM NO. E049 OF 2018 JUDGMENT Page 15 varied the Contract by mutual consent and in writing, in full compliance with Clause 10. Consequently, the delivery deadline was revised to 1st March 2015. The Defendant's letter was unequivocal in this regard and stated as follows in part; we expect you to put in more effort and deliver the balance of 25,295 poles to Nyeri by latest 1st March 2015. The parties were therefore at consensus ad idem on this revised deadline, and the agreement to extend time constituted a fresh and binding term of the Contract, superseding the previously agreed delivery schedule. 24. Notwithstanding the revised deadline of 1st March 2015, the Plaintiff once again failed to deliver the outstanding poles as agreed. Instead, by a letter dated 1st April 2015, a full month after the deadline had lapsed, the Plaintiff sought yet another extension, stating that ‘the supply for the order is still ongoing but we foresee a need for extension’. This was the Plaintiff's third failure to meet an agreed delivery deadline under the Contract. I do find this position deeply inconsistent with the Plaintiff's earlier representations. It will be recalled that in its letter of 14th August 2014, the Plaintiff HCCOMM NO. E049 OF 2018 JUDGMENT Page 16 had expressly confirmed that it had 2,000 poles ready for immediate delivery. Yet, approximately seven months later, the Plaintiff was still characterizing the supply as "ongoing" with no clear timeline for completion. This significantly undermines the Plaintiff's credibility and its assertion that the delays were attributable to the Defendant's conduct. 25. Once again, this notwithstanding, by its letter dated 14th April 2015, the Defendant granted an additional six-month extension, setting a final delivery deadline of 1st November 2015. The Defendant was categorical that no further extension shall be allowed and further put the Plaintiff on notice that its performance on the contract would impact future tenders. By this point, the Plaintiff had been afforded every reasonable opportunity to fulfil its contractual obligations and had no justifiable basis for any further default. 26. It is at this juncture that the Plaintiff places reliance on an email dated 4th May 2016, sent by the Defendant to its suppliers, including the Plaintiff, with the subject SUSPENSION OF HCCOMM NO. E049 OF 2018 JUDGMENT Page 17 DELIVERY OF POLES. The Plaintiff contends that by the said email the Defendant unilaterally suspended deliveries and on that basis invokes the doctrine of promissory estoppel to preclude the Defendant from asserting that the Contract had by then expired. The doctrine of estoppel, as the Plaintiff would have this Court apply it, would operate to hold the Defendant bound by its conduct and representations notwithstanding the expiry of the contractual timelines. 27. Whether the said email is capable of founding such a plea is, however, a question that must be examined against the established legal principles governing the doctrine. In this regard, the Court of Appeal reaffirmed the applicable principles in Serah Njeri Mwobi (supra) and stated as follows: “[estoppel]…operates as a principle of law which precludes a person from asserting something contrary to what is implied by a previous action or statement of that person…It therefore follows that where one HCCOMM NO. E049 OF 2018 JUDGMENT Page 18 party by his words or conduct, made to the other party a promise or assurance which was intended or affect the legal relations between them and to be acted on, the other party has taken his word and acted upon it, the party who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relationship as if no such promise or assurance had been made by him but he must accept their legal relations subject to the qualification which he has himself introduced.” 28. Turning to the facts at hand, I do note that by the time the email in question was written, the deadline of 1st November 2015, being the last extension expressly granted by the Defendant, had already lapsed by more than six months. While the Plaintiff was among the recipients of that email, this fact alone cannot resurrect a contractual obligation that had already expired by effluxion of HCCOMM NO. E049 OF 2018 JUDGMENT Page 19 time. In his testimony, PW 1 stated that he received the email on 4th May 2016 cancelling the Contract but he admitted that a year before that email, the Plaintiff had sought an extension for 9 months to deliver the poles. More importantly, the Plaintiff had not sought a further extension and no further extension had been granted beyond that of 1st November 2015. 29. The Plaintiff cannot, in these circumstances, seek to rely on a general communication addressed to all suppliers as a basis for reviving or extending a contract that had already lapsed through its own failure to perform. The email of 4th May 2016 therefore affords the Plaintiff no legal foundation upon which to anchor its claim. 30. In any case, the extensions of time granted by the Defendant were each explicitly time-bound. By the time the Defendant issued the termination/expiry notice in January 2017, the Contract had long expired by effluxion of time due to the Plaintiff's failure to deliver the 12,865 poles by 1st November 2015. I cannot therefore blame the Defendant for choosing to terminate the Contract due to the HCCOMM NO. E049 OF 2018 JUDGMENT Page 20 Plaintiff’s inability to perform its obligations under it. PW1 himself conceded during cross-examination that a portion of the poles remained undelivered at the time the termination letter was issued. 31. Having carefully considered the evidence on record, I do find that it was the Plaintiff who was in material breach of the Contract. Despite being afforded multiple extensions of time, and ample opportunity to perform, the Plaintiff repeatedly failed to deliver the poles within the agreed timelines. The termination of the Contract was a direct consequence of the Plaintiff's own persistent failure to fulfil its contractual obligations and cannot, in any way, be attributed to any wrongful act or omission on the part of the Defendant. 32. Consequently, it would be moot to venture into whether there were any illegalities attributed to the expiry of the Contract. It bears emphasis that allowing a contract to expire by effluxion of time on account of non-performance constitutes a breach of contract and a commercial failure on the part of the defaulting party. It does not amount to a statutory illegality. HCCOMM NO. E049 OF 2018 JUDGMENT Page 21 33. The Plaintiff sought Kshs. 146,213,941.25 for the price of the undelivered poles. However, PW 1 admitted that under Clause 4 of the Contract, payment was strictly contingent upon actual supply. The governing law on the sale of specific or ascertained goods, is coded under section 19 of the Sale of Goods Act (Chapter 31 of the Laws of Kenya) as follows: “1. Where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. 2. For the purpose of ascertaining the intention of the parties, regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case.” HCCOMM NO. E049 OF 2018 JUDGMENT Page 22 34. It is thus the general rule of sale of goods that the title to goods in a deliverable state passes upon delivery or when the parties agree that the goods would pass. The parties agreed in the Contract that the property in the goods would pass upon actual delivery of the poles. Because the 12,865 poles were never delivered to the Defendant's stores, the claim for the contract price cannot stand as per the Sale of Goods Act. 35. The Plaintiff also sought general damages for idle time for the plant, machinery and staff, cost of storage, depreciation and breakages, eventual distress for rent and loss of vehicles, equipment’s and stock and cost of renewing performance bonds. In his testimony, PW1 admitted that he did not have any evidence to prove these sums and this prayer fails at this point for want of proof considering they are in the form of special damages that must be strictly pleaded and proven. In any case, these would be defeated by the finding of breach on the Plaintiff’s part. Disposition HCCOMM NO. E049 OF 2018 JUDGMENT Page 23 36. For all these reasons the Plaintiff’s suit is dismissed with costs being awarded to the Defendant. DATED, SIGNED AND DELIVERED AT NAIROBI THIS 3 RD DAY OF JULY 2026. F. MUGAMBI JUDGE Delivered in presence of: Ms Wanja h/b for Mugo - plaintiff Court Assistants: Lillian & Gloria HCCOMM NO. E049 OF 2018 JUDGMENT Page 24