https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12790

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **COMMERCIAL AND TAX DIVISION** **COMM CASE NO. E984 OF 2021** **BETWEEN** **MOBITEL EXPRESS LIMITED..................................................................PLAINTIFF** **AND** **SAFARICOM LIMITED.........................................................................DEFENDANT** **JUDGMENT** **Introduction and Background** 1. The Plaintiff(“Mobitel”) commenced this suit by way of the Plaint dated 22nd December, 2021 seeking for judgment against the Defendant(“Safaricom”) for: 2. *An order of specific performance compelling the Respondent to perform and abide by the contractual obligation contained in Clause 22.2 (d) of the Safaricom Dealer Agreement herein.* 3. *A declaration that the purported termination notice issued by the Defendant to the Plaintiff dated 2nd December, 2021 is in breach of the provisions of Clause 22.2 (d) of the Safaricom Dealer Agreement and thus irregular and unlawful.* 4. *An order in the nature of a permanent injunction restraining the Defendant, its servants, employees, agents and/or by whomsoever from implementing and/or effecting the purported termination of the Plaintiff’s Safaricom Dealer Agreement 1 with itself vide the letter dated 2nd December, 2021* 5. *The Defendant do compensate the Plaintiff for any revenue lost for the period parties have been in negotiations herein.* 6. *General damages for breach of contract.* 7. *Any other or further orders and/or reliefs that this Honourable Court may deem fit or just or appropriate to grant the Plaintiff.* 8. *The Defendant do bear the costs of this suit.* 9. Mobitel’s case is that it entered into a dealership agreement with Safaricom which agreement was subsequently extended through the Notice of Extension dated 26th July 2021. However, on 7th December 2021, it received a Notice of Termination dated 2nd December, 2021 from Safaricom terminating the agreement and Mobitel avers that the effect of the said termination meant a loss of the investment in its business and loss of livelihood and employment for its employees. In addition, that it meant that effective 31st December 2021, Safaricom would close and/or shut Mobitel’s access to Safaricom’s dealers’ portal, which it did. 10. Mobitel asserts that Safaricom’s said decision was made in blatant disregard to its right to a fair hearing and/or fair administrative action for the reason that Safaricom’s agent and/or employee, who was mandated to audit Mobitel’s business, failed to turn up and/or visit most of its shops on several occasions. As such, the audit leading to Safaricom’s action to terminate the agreement was based on false information. That Mobitel’s appeal and/or request for an explanation as to the said decision was futile and that despite Mobitel’s efforts to arrange a meeting between its Direct Sales Agents (DSAs) and Safaricom’s agent, Safaricom remained adamant to terminate the Agreement which it eventually did. 11. Mobitel claims that Safaricom contravened Clauses 22.1 and 22.2(d) of the Agreement which provided for an amicable settlement of any dispute arising from the Agreement or in connection with the Agreement and that parties do continue to perform their subsisting obligations pending final determination of a dispute. 12. Safaricom responded to the suit through its Statement of Defence dated 7th September 2023. Its position is that there was no contract to breach because the Agreement had already lapsed and its action was not as a "termination" but as a "non-renewal" of an expired agreement. Safaricom states that the initial Agreement, which ran from 1st August 2019, was only extended for a short period of three months until 1st November 2021 and after this date, the Agreement expired and no new Agreement was signed, therefore, there was no subsisting contract to terminate or breach after that date. 1. Safaricom insists that the letter it sent on 2nd December 2021 was a "Notice of Non-Renewal," not a "Notice of Termination” and that this is an important distinction because the Agreement had already lapsed and it was simply informing Mobitel that it would not be entering into a new one. That the decision not to renew the Agreement was based on an assessment of Mobitel’s performance and Safaricom claims Mobitel failed to maintain and operate the requisite Dealer Operating Standards (DOSA) compliant outlets which is a requirement under the lapsed Agreement Safaricom refutes Mobitel’s claim that the DOSA audit was flawed and it states that its agents assessed Mobitel’s equipment and transmitted correct information which information showed Mobitel did not meet the required DOSA standards, which justified the non-renewal. Safaricom denies all allegations of breach of contract, including the claims of arbitrary decision-making, disregard for dispute resolution mechanisms and bad faith and it put Mobitel to strict proof on all these allegations. 2. When the matter was set down for hearing, Mobitel presented its director, Ismael Ibrahim Durow (PW 1) who relied on his witness statement dated 22nd December 2021 and produced the List and Bundle of Documents of the same date (PExhibit 1-14). On its part, Safaricom presented its Legal Counsel, Cerere Kihoro (DW 1) who relied on his witness statement dated 14th March 2025 and he produced the List and Bundle of Documents of the same date (DExhibit 1-6). After the hearing, the parties were directed to file written submissions which are on record and since they reflect the parties’ positions I have summarized above, I will not rehash the same but I will make relevant references in my analysis and determination below. **Analysis and Determination** 1. As this are civil proceedings, I am cognizant that the standard of proof is that of a “balance of probabilities.” This means that the Court will assess the oral, documentary and real evidence advanced by each party and decide which case is more probable. To put it another way, on the evidence, which occurrence of the event was more likely to happen than not (see **Mumbi M'Nabea v David M.Wachira [2016] KECA 773 (KLR)].** Further, **section 107(1)** of the ***Evidence Act (Chapter 80 of the Laws of Kenya)*** provides as follows: *“Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.”* 1. The above provision provides for the legal burden of proof. However, **section 109** of the same ***Act*** provides for the evidentiary burden of proof and states as follows:- *“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.”* 1. This position was re-affirmed by the Court of Appeal in **Maria Ciabaitaru M’mairanyi & Others v Blue Shield Insurance Company Limited -Civil Appeal No. 101 of 2000 [2005] 1 EA 280** where it was held that: *“Whereas under section 107 of the Evidence Act, (which deals with the evidentiary burden of proof), the burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue, section 109 of the same Act recognises that the burden of proof as to any particular fact may be cast on the person who wishes the Court to believe in its existence.”* 1. With the above principles in mind, I now proceed to determine this matter and from the parties’ submissions, I find that these are the abridged issues for determination: 2. *Whether the parties were in a subsisting contractual relationship as at 2nd December 2021* 3. *Whether Safaricom lawfully exercised its discretion to terminate Mobitel’s dealership or whether the Agreement was not renewed* 4. *Whether Safaricom breached the Agreement* 5. *Whether Mobitel is entitled to the reliefs sought in the suit* **The parties’ relationship as at 2nd December 2021** 1. Mobitel submits that that a valid and enforceable contractual relationship remained fully in force on 2nd December 2021 since although the formal extension lapsed on 1st November 2021, both parties continued operating normally throughout November 2021. Mobitel claims that it continued distributing products and offering merchant services and Safaricom’s letter of 2nd December 2021, explicitly acknowledged that Mobitel earned commissions for work done post-expiry. That by benefiting from these services, a holding-over relationship was established under the existing contract terms. 2. It points out that Clause 3.1(b) explicitly provides that provisions apply retrospectively to cover periods between technical contract expiry and formal renewal execution to prevent a contractual vacuum during negotiations. Relying on the case of **Ali Abdi Mohamed v Kenya Shell & Company Limited [2017] KECA 590 (KLR)** Mobitel submits that an enforceable contract can exist by conduct even without formal written words. That Safaricom is estopped from denying the existence of a contract while simultaneously enforcing operational standards and benefiting from Mobitel's performance. 3. Mobitel contends that Safaricom’s defense of non-renewal upon expiration failed and that by citing performance failure under DOSA in its 2nd December 2021 letter, Safaricom exercised a contractual termination right, proving a dispute existed under an active contract. On its part, Safaricom submits that the Agreement expired by effluxion of time on 1st November 2021 and was lawfully not renewed. Citing **National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another [2001] KECA 362 (KLR)** and **Langat v Co-operative Bank of Kenya Ltd [2017] KECA 152 (KLR)**, Safaricom emphasizes that courts cannot rewrite contracts and that Clause 3.1(a) of the Agreement explicitly limits the Agreement to two years, reserving any extension or new agreement to Safaricom's sole discretion. 4. That following the expiration of the 3-month extension on 1st November 2021, Safaricom issued a Notice of Non-Renewal on 2nd December 2021 and that this positive act refutes Mobitel’s claim of an implied renewal by conduct. It asserts that extension could only occur by way of written notice under Clause 3.1(a). It further submits that under Clause 6.4.1, Mobitel was contractually required to maintain at least 3 DOSA-compliant outlets and Safaricom’s auditor Isaac Okello audited Mobitel’s four outlets in Eastleigh, Dandora and Pangani between 20th to 25th August 2021, where three outlets failed the weighted DOSA scale. Safaricom submits that Mobitel’s claim that the audit never happened is a false afterthought as Mobitel’s own appeal letter dated 7th December 2021, acknowledged the auditor's physical visit. 5. In any event, Safaricom submits that regardless of audit outcomes, non-renewal remained Safaricom's sole prerogative and that it did not issue a termination notice under Clause 19, rendering Mobitel’s allegations of wrongful termination baseless. 6. I have gone through the pleadings, evidence and submissions. Clause 3.1(a) of the Agreement expressly states that the Agreement *"….shall remain in force for a period of two (2) years…."* and that *"Any issuance of a new Agreement for another term or extension shall be at the sole discretion of Safaricom."* The parties do not dispute that the Notice of Extension dated 26th July 2021 extended the Agreement for a further period of three (3) months, from 1st August 2021 to 1st November 2021 and Mobitel, through PW 1, signed and accepted this extension. The evidence is clear that Safaricom did not issue a new agreement or further extension beyond 1st November 2021 as the Defendant's Notice of Non-Renewal dated 2nd December 2021 explicitly states "*We write to advise that, we will not be renewing the Dealer Agreement which lapsed on 31st October 2021.*" 7. From the above, I find Mobitel’s argument for an implied contract weak. In **Ali Abid Mohammed(supra)***,* the Court of Appeal found that a contract could be inferred from conduct where there was a clear course of dealing. However, in the present case, the parties had a written agreement with a fixed term and a temporary "holding over" period, as submitted by Mobitel, after expiry does not automatically create a new contract on the same terms. It merely deals with the winding down of the relationship and PW 1 confirmed that the Agreement dated 9th October 2019 was the operative agreement and that Safaricom extended the contract only up to 1st November 2021. 8. The existence of Clause 3.1(b) on retrospective application actually supports Safaricom's position that it is a mechanism for formalizing a renewal and not for implying a contract in the absence of one. The same provides that: ***Retrospective Application of the Agreement*** *In the event the Dealer is signing this Agreement for a Term immediately following an expired term, (save for where the expired term and the new Term are separated by a period of time for other reasons other than expiry) then the provisions of this Agreement will apply retrospectively to cover the period following the expiry of that dealer agreement to the execution of this Agreement* 1. My simple interpretation of the above clause is that it assumes that a new agreement is executed by the parties. In this case, no new agreement was executed and Safaricom expressly declined to renew and Mobitel cannot rely on a provision meant to formalize a renewal to imply a contract where none exists. I therefore find that the parties were not in a subsisting contractual relationship as at 2nd December 2021 and that the Agreement lapsed by effluxion of time on 1st November 2021. Safaricom’s letter of 2nd December 2021 was a Notice of Non-Renewal and not a termination and Mobitel’s argument that a new implied contract was created is rejected. **Termination or non-renewal of the Agreement** 1. Mobitel submits that the decision to "terminate" the Agreement was unlawful because it was based on a flawed DOSA audit. It claims the auditor failed to show up for meetings and did not inspect all their shops, leading to a decision based on false information. It relies on the UK Supreme Court’s decision in **Braganza v BP Shipping Limited [2015] UKSC 17** case to submit that even where a contract grants sole discretion, such power must be exercised honestly, in good faith and not arbitrarily 2. On its part, Safaricom submits that the decision not to renew was based on a valid DOSA audit conducted between 20th and 25th August 2021 and that the results showed that three of four outlets failed to meet the required standards. Safaricom notified Mobitel of the audit by way of email dated 14th July 2021 and attached the DOSA template. That Mobitel’s own appeal letter confirms that the auditor came to its shops and Safaricom relies on Clause 6.4.1 of the Agreement, which requires dealers to maintain at least three DOSA-compliant outlets. 3. Safaricom’s evidence(DExhibit 5) shows that Mobitel was notified of the audit via email on 14th July 2021. The DOSA assessment forms are dated between 20th and 25th August 2021 and the auditor is identified as Isaac Okello. Mobitel’s own appeal letter dated 7th December 2021(PEexhibit 5) states "*We would like to report that during the last Dealer Operating Standards (DOSA) audit the ASM- ISAAC OKELLO came to our shops and requested that we avail the DSA's so that he could meet them physically."* PW 1 also admitted in his testimony that indeed, the auditor visited Mobitel’s shops and I find that this admission fatally undermines Mobitel’s claim that the audit did not happen 4. The DOSA assessment forms(DExhibit 6) show that the four sites had 31%, 8%, 44%, and 89% compliance and only one site passed. Mobitel did not provided any evidence, such as an alternative audit or contemporaneous notes, to challenge the accuracy of these results. Mobitel’s claims that the auditor failed to show up for meetings and did not inspect all shops are baseless as there is no documentary evidence of these alleged failed meetings or attempts to reschedule them. Indeed, the Agreement, at Clause 5.2(c), requires communication with the Dealer Manager to be in writing and no such written communication was produced. 5. As stated, Mobitel relied on the **Braganza(supra)** decision to argue that Safaricom's discretion was not exercised reasonably. However, in **Braganza(supra)**, the employer's decision was based on a flawed investigation where the investigators failed to consider a relevant possibility that the deceased had gone on deck for a work-related reason. In this case, Safaricom conducted a structured audit with clear criteria (DOSA), notified Mobitel and based its decision on the results. There is no evidence of irrationality or bad faith and I find that Safaricom's decision was commercially rational as it declined to renew a contract with a dealer who failed to meet performance standards. 6. Further, Clause 3.1(a) of the Agreement expressly reserves to Safaricom the "sole discretion" to issue a new agreement or extension. The Plaintiff accepted this term when it signed the Agreement and as the Court of Appeal held in **National Bank of Kenya Ltd(supra)**parties are bound by the terms of their contract and the court cannot rewrite the contract for them. 7. For the above reasons, I find that I find that Safaricom lawfully exercised its discretion not to renew the Agreement. The decision was based on a valid DOSA audit, which Mobitel failed to successfully challenge and it cannot now claim that the decision was arbitrary simply because it is unfavorable to them. **Breach of the Agreement** 1. Mobitel alleges breach of Clause 22.2(d) of the Agreement, which provides that *"pending final settlement or determination of a dispute, the Parties shall continue to perform their subsisting obligations hereunder."* Mobitel claimed that Safaricom breached this clause by refusing to continue trading while the dispute was being resolved. On its part, Safaricom states that there was no dispute as contemplated by the Agreement because the Plaintiff did not issue a formal notice of dispute. More importantly, that Clause 22.2(d) only applies to subsisting obligations and that once the Agreement expired on 1st November 2021, there were no subsisting obligations for Safaricom to continue trading. That the only subsisting obligations were those expressly stated to survive termination or expiry, such as the payment of commissions for work already done. 2. I am in agreement with Safaricom that Mobitel did not issue a formal notice of dispute under the Agreement before or after the expiry date. Its appeal letter of 7th December 2021 was an appeal and not a formal dispute notice and the Agreement, at Clauses 1.5 and 23.1, requires formal notices to be in writing and addressed to specific addresses. As stated by Safaricom, Clause 22.2(d) only applies to subsisting obligations and since the Agreement had lapsed on 1st November 2021, there was no subsisting obligation to continue trading indefinitely. I therefore agree that this provision is meant to preserve the contractual relationship during a dispute while the contract is still valid, not to extend a contract that has already expired. 3. If Mobitel’s argument were accepted, any dealer who received a notice of non-renewal could unilaterally manufacture a "dispute" and force Safaricom to continue trading indefinitely by relying on Clause 22.2(d). This would effectively nullify Safaricom's express contractual right under Clause 3.1(a) to decide whether to renew an agreement and I find that this cannot have been the intention of the parties. Safaricom’s Non-Renewal Notice dated 2nd December 2021 expressly stated that Mobitel would be paid "*commissions due for the period worked after the expiry of the dealer Agreement*." Mobitel has not claimed non-payment of commissions in this suit, which suggests that Safaricom fulfilled its remaining obligations and it has not pointed to any other clause that was breached. The termination/non-renewal was expressly permitted by Clause 3.1(a) and was not arbitrary or capricious as discussed above. 4. I therefore find that Safaricom did not breach the Agreement and Mobitel’s reliance on Clause 22.2(d) is a misapplication of the clause as there was no valid dispute to trigger the clause and the clause does not serve to extend an expired contract. **Reliefs sought by Mobitel** 1. Having found that the Agreement lapsed and was not breached, I hold that Mobitel is not entitled to any of the reliefs sought and it has failed to prove its case on a balance of probabilities. **Conclusion and Disposition** 1. The upshot is that the Plaintiff’s suit is hereby dismissed in its entirety with costs to the Defendant **DATED SIGNED and DELIVERED virtually this 7th DAY OF AUGUST 2026** **............................................................................** **J.W.W. MONGARE** **JUDGE** **IN THE PRESENCE OF** 1. Mr. Angwenyi for the Plaintiff. 2. Mr. Samuel Ochieng holding brief for Mr. Isaac Kiche for the Defendant. 3. Amos- Court Assistant