https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11978

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT THIKA** **CIVIL APPEAL NO. E029 OF 2024** **KINORO DAIRIES CO. LTD. …………………….………............... 1ST APPELLANT** **TWAWEZA DAIRIES CO. LTD ….……………………………..…… 2ND APPELLANT** **JACOB RENATO MUTHURI ………….………………….……..… 3RD APPELLANT** **VERSUS** **INTACT LTD. …………………………..…….………………… 1ST RESPONDENT** **KINORO DAIRIES F.C.S. LTD. …………………...…………….. 2ND RESPONDENT** ***(Being an Appeal from the Judgment/ Decree of Hon. Christine Asuna Okello (PM) delivered on 19th September 2024 in Ruiru MCCOMMSU No. E013 of 2023)*** **J U D G M E N T** **Introduction** 1. This appeal arises from the Judgment of the Magistrate’s Court at Ruiru (***C.A. Okello, PM***) delivered on 19th September 2024 in Ruiru MCCOMMSU No. E013 of 2023. **Factual History** 1. Between 2nd September and 14th November 2022, the 1st respondent supplied animal feed valued at Kshs. 2,163,600/- to the 1st and 2nd appellants and 2nd respondent, with the 3rd appellant allegedly acting as their agent. Upon receipt, the appellants issued ‘goods received notes’ (GRNs). The 2nd respondent paid Kshs.175,750/- while the 2nd appellant issued a cheque for Kshs.511,400/- which was later dishonoured, leading to a penalty of Kshs.702/-. 2. Owing to the foregoing, the 1st respondent filed an amended plaint dated 24th November 2023 in ***Ruiru MCCOMMSU No. E013 of 2023*** for relief in the nature of special damages of Kshs. 1,988,552/-, interest on the same from November 2022 and costs of the suit. 3. The 1st and 2nd appellants filed their defence dated 14th November 2023 denying the claim in toto and averring that they were merely acting as the 2nd respondent’s agents as it was the 2nd respondent who was supplied with the farm feeds. In the alternative, they averred that it was the 2nd respondent’s duty to pay, including the dishonoured cheque, which, in any case, was issued on behalf of the 2nd respondent. The 3rd appellant filed his defence dated 22nd January 2024 denying the claim on similar grounds as those advanced by the 1st and 2nd appellants. 4. During hearing, **PW1, Patrick Mugambi**, testified that the 1st respondent would prepare farm feed, distribute it to Kinoro Njiri Co. Ltd. as well as to the 2nd appellant and receive payment from either the 1st and 2nd appellants, while the 3rd appellant would sign all the cheques. 5. **PW2, Margaret Njeri Gikuyu**, the 1st respondent’s director, reiterated the claim, adding that upon delivery of the farm feed, the 1st and 2nd appellants would issue them with a GRN, while the 2nd respondent and 3rd appellant made payments. She, however, stated that she was a stranger to the off-taker agreement between the 2nd respondent and the 3rd appellant. 6. **DW1, Jacob Muturi Reneto**, the chairman of the 1st appellant and 2nd respondent and a director in the 1st and 2nd appellants, testified that deliveries were made to, and all payments were made by, the 2nd respondent. It was his case that the 2nd appellant was not supplied with any feeds and payments were made under the express request of the 2nd respondent. In his view, the 2nd respondent was liable for the outstanding debt. 7. By a Judgment delivered on 19th September 2024, the trial Magistrate held that, as per the GRN produced, and not opposed by the appellants, the 1st respondent established that it supplied farm feeds to the ‘defendant’, without specifying which of the defendants. As for the 3rd appellant, the trial court took the view that he was directly connected to the 1st and 2nd appellants and 2nd respondent by virtue of the positions he held therein. 8. The learned trial Magistrate also held that the 1st respondent proved the amount paid, the dishonoured cheque together with the penalties arising therefrom, and the outstanding debt. Accordingly, the court upheld the 1st respondent’s claim. **The Appeal** 1. Disgruntled, the appellants filed a Memorandum of Appeal dated 11th October 2024 raising various grounds of appeal, that the Learned Trial Magistrate erred in law and fact: 2. *By entering Judgment against the appellants despite the fact that the 2nd, 3rd and 4th respondents were district (sic) parties with legal capacity to be sued and the appellants were just agents.* 3. *By allowing the 1st respondent’s claim as against the weight of the evidence tendered.* 4. *By failing to appreciate the evidence tendered by the appellants.* 5. *By failing to consider the appellants’ submissions despite them being properly filed.* 6. Accordingly, they sought that the appeal be allowed, the trial court’s Judgment be set aside and costs of the appeal. **The Appellants’ Submissions** 1. In support of their appeal, the appellants filed their submissions dated 1st September 2025 raising various issues for determination: *whether the 1st respondent proved the existence of a contract with the appellants and the 2nd respondent; whether the 1st respondent established its claim of Kshs. 1,988,552/-; and whether the Judgment of the lower court ought to be set aside.* 2. In their view, the 1st respondent did not adduce any contracts, invoices or guarantees linking the appellants to the outstanding debt. They cited ***Wareham t/a A.F. Wareham & 2 Others vs Kenya Post Office Savings Bank [2004] eKLR*** to urge that the 1st respondent had the obligation of proving its case. In this respect, they challenged the trial court's ascription of liability based on mere association. Likewise, they submitted that the trial court erred in awarding special damages, as there was no evidence to support the same, as held in ***Coast Bus Service Ltd. vs Murunga & Others [1992] eKLR***. In like manner, they averred that the award for interest and costs was equally in error. 3. With respect to the award of interest for the period prior to judgment, they submitted that as per ***Prema Lata vs Peter Musa Mbiyu [1965] EA 592***, such interest is at the court’s discretion and must be reasonable. In their view, the 1st respondent laid no basis for such an award, and therefore, the trial court erred in awarding the same. 4. In the end, they urged this Court to set aside the impugned Judgment on the grounds set out above. **The 1st Respondent’s Submissions** 1. The 1st respondent opposed the appeal vide their submissions dated 6th October 2025 raising two issues for determination: *whether the subordinate court erred in fact and law in finding the appellants and the 2nd respondent jointly and severally liable; and whether the 1st respondent proved its case within the required standard for civil cases*. 2. The 1st respondent contended that it supplied farm feed to the 1st and 2nd appellants, who were all along represented by the 3rd appellant, noting that the GRNs and invoices and unpaid cheques were not disputed. Furthermore, it urged, the 1st and 2nd appellants failed to establish an agency relationship between themselves and the 2nd respondent. The 1st respondent contended that at best, the nature of the relationship between the 1st and 2nd appellants and the respondent was an in-house issue that had little bearing on their obligations to the 1st respondent. In this regard, they cited ***Techard Steam & Power Ltd. vs Mather & Platt; (K) Ltd. [2013] eKLR***. 3. In the 1st respondent’s view, it had established its case on a balance of probabilities, and, therefore, the trial court correctly upheld its claim. 4. The 2nd respondent did not participate in this appeal. **Analysis and Determination** 1. The duty of a first appellate court is set out in ***Selle v. Associated Motor Boat Co. [1968] EA 123***: ***“An appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled. Briefly put they are that this Court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular this Court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally (Abdul Hameed Saif –vs- Ali Mohamed Sholan (1955), 22 E. A. C. A. 270).”*** 1. I have considered the appeal in light of the evidence on record and written submissions filed on behalf of the parties herein. I find that the appeal raises four issues for consideration: *whether the 1st respondent proved the existence of a contract with the appellants and 2nd respondent; whether the 1st respondent proved its claim of Kshs. 1,988,552/-; who was liable for the outstanding arrears; and whether the trial court erred in awarding interest to run from November 2022.* 2. It is a truism that for a contract to be said to have existed, the party claiming it existed must establish the existence of an offer, acceptance and consideration. See ***William Muthee Muthami vs Bank of Baroda [2014] eKLR and Lagat vs Co-operative Bank of Kenya Ltd. (Civil Appeal 48 of 2015) [2017] KECA 152 (KLR)***. The Court of Appeal in the ***Lagat Case*** went on to hold that a contract will be construed to have existed based on the conduct of the parties and what was communicated between them by words. 3. Notwithstanding that some of the invoices are partially illegible, the record shows that the 1st respondent produced copies of invoices, and the appellants did not oppose the production of or contest the contents of the same. Furthermore, the GRNs indicate that the 1st respondent supplied animal feed to the 1st and 2nd appellants. What is more, the 1st respondent adduced several cheques drawn by the 2nd respondent in favour of the 1st respondent. There being no contradictory evidence, and the 2nd respondent having failed to participate in the proceedings, I find that the 1st respondent proved that there existed a contract between itself and the 1st and 2nd appellants and the 2nd respondent, and I uphold this finding by the trial court. 4. Moving on to the issue of whether the 1st respondent proved its claim, the invoices and GRNs produced correspond to the 1st respondent’s statement of accounts. In point of fact, the appellants’ witness admitted that goods were delivered to the 2nd respondent and cheques drawn against the goods so supplied. Notably, looking at the proceedings and evidence from the appellants, and as rightly pointed out by the 1st respondent, there was no challenge to the invoices, statement of accounts or GRNs. Neither did the appellants mount any opposition to the 1st respondent’s tabulation, their main contention being that the 2nd respondent was liable for the arrears. 5. In light of the foregoing, I am in agreement with the trial court that the 1st respondent proved its claim that it supplied farm feed to the 1st and 2nd appellants and the 2nd respondent. It further proved that arrears emanated from the said supply. 6. As to who was liable for the outstanding arrears, it was the appellants’ case that the goods were supplied to the 2nd respondent whilst they merely acted as agents to pay for the same. I have anxiously perused the appellants’ documents produced before the trial court, and they make no mention of a principal-agent relationship for purposes of offsetting the 2nd respondent’s debts. The letters relied upon are unsigned, refer to unattached minutes, and at best disclose internal financial arrangements between the 1st and 2nd appellants, and the 2nd respondent. 7. In fact, the letter dated 26th February 2022 merely requests the 2nd appellant to offset the 2nd respondent’s dues to its suppliers and LPOs against payments due for milk. It further indicates that the payments would be done on a need basis and for goods delivered and receipted at the 2nd respondent. However, some of the animal feed was received by the 2nd appellant, and it is not clear what invoices, if any, the 2nd appellant paid on behalf of the 2nd respondent. Such an arrangement does not, without more, create an agency relationship enforceable against a third-party supplier. 8. Arguendo, the 1st and 2nd appellants were agents of the 2nd respondent; there was no evidence adduced that it was disclosed to the 1st respondent. The legal consequence of an undisclosed principal is that the agent remains personally liable. In ***Anthony Francis Wareheim t/a Wareheim & 2 Others vs Kenya Post Office Savings Bank, Civil Application Nos. Nai 5 & 48 of 2002*** cited in ***City Council of Nairobi vs Wilfred Kamau Githua t/a Githua Associates & Another [2016] KECA 649 (KLR)***, the Court of Appeal held that where the principal is disclosed, the agent ought not be sued. The converse proposition must therefore apply. 9. Having established supply of the goods, the 1st respondent discharged its evidential burden. Accordingly, the evidential burden of proof shifted to the 1st and 2nd appellants to prove that they were acting as agents, which they failed to do. 10. With respect to the 3rd appellant, however, I am not satisfied that the 1st respondent made its case against him. Beyond signing the cheques and being the director and chairman of the 1st and 2nd appellants and the 2nd respondent, there was no evidential or legal basis to justify the imposition of personal liability to him. This accords with the settled principle that a company is a separate legal entity from its directors. See ***Salomon vs Salomon & Co. Ltd. (1897) AC 22***. 11. The upshot of the foregoing is that, having failed to demonstrate how and why the 3rd appellant was liable to pay the outstanding arrears to the 1st respondent, the trial court erred in its finding in this regard. 12. With respect to the claim for the award of interest from November 2022, under Section 26(1) of the Civil Procedure Act, the award of interest in a money-decree is an issue within the court’s discretion. It is also settled that discretion must be exercised judiciously, not capriciously. The general principle is that an award of interest on special damages is from the date the suit was filed. See ***Shariff Salim & Another vs Malundu Kikava [1989] eKLR; ICEA Lion General Insurance Co. Ltd. vs Noble Merchants Shipping Ltd. & Another (Civil Appeal 133 of 2019) [2023] KECA 1061 (KLR)***. 13. The Court of Appeal in ***Trans-National Bank Ltd. & 3 Others vs Kangwana & 5 Others (Civil Appeal 94 of 2019) [2025] KECA 1590 (KLR)*** clarified that pre-suit interest must be founded on contract, statute, or trade usage, and must be both pleaded and proved. In the present case, no such basis was established. The trial court therefore fell into error in awarding pre-suit interest absent any justification. This ground of appeal must therefore succeed. **ORDERS** 1. In the end, I make the following orders: 1. ***The Judgment dated 19th September 2024 is upheld save that the claim against the 3rd appellant is hereby set aside.*** 2. ***The interest on the outstanding arrears shall run from the date the suit was filed until payment in full.*** 3. ***Parties shall bear their own costs.*** It is so ordered. ***Dated, Signed and Delivered*** *at* ***Nairobi this 30th day of July 2026.*** **DAVID MBURU** **JUDGE** **In the presence of:** *Mr. Mukolwe for the Appellants* *Mr. Chiuri for the Respondents* *Kalondu - Court Assistant*