https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11559

Dhanji t/a KAK Enterprises v Valji t/a Shivnya Enterprises (Civil Appeal E106 of 2025) [2026] KEHC 11559 (KLR) (Commercial and Tax) (23 July 2026) (Judgment) Neutral citation: [2026] KEHC 11559 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Civil Appeal E106 of 2025 F Gikonyo, J July 23, 2026 Between Patel Kanji Dhanji t/a KAK Enterprises Appellant and Hirani Nathalal Valji t/a Shivnya Enterprises Respondent Judgment 1.This is an appeal from the judgment of the Chief Magistrate’s Court at Milimani in MCCC No. E7794 of 2020 delivered by Senior Principal Magistrate, Hon. Bernard Kasavuli on 28.2.2025. 2.The respondent’s case before the trial court was that in June, July and August 2020 he delivered construction materials worth Kshs. 13,858,384/- out of which the appellant made a partial payment of Kshs. 1,150,000/- leaving a balance of Kshs. 12,708,294. 3.The appellant counterclaimed for Kshs. 304,000/-. His case was that he only received two deliveries from the respondent, amounting to Kshs. 846,000/- and that he paid Kshs. 1,150,000/- resulting in overpayment of Kshs. 304,000/-. Grounds of Appeal 4.Aggrieved, the appellant instituted this appeal through a memorandum of appeal dated 26.3.2025, contending that the learned magistrate erred in the following respects: -1.misdirecting himself and ignoring the appellant's testimony, evidence and submissions in arriving at the judgement, to the appellant's prejudice.2.failing, completely, in his duty to analyze the respondent's case based on the evidence produced in court, before arriving at the determination that it had proved its case on a balance of probabilities.3.exhibiting bias when he, on the one hand, found that some of the delivery notes had not been signed by the appellant and on the other hand finding that the very same delivery notes proved delivery of goods to the appellant.4.exhibiting bias when he used a KRA ledger to prove that goods had been delivered to the Appellant.5.exhibiting bias when he, on the one hand, found that the business relationship between the parties herein was based on mutual understanding and on the other hand failing to 'believe' that the appellant had issued to the respondent, post-dated cheques in anticipation of future orders.6.failing to find that the appellant was entitled to the counterclaim of Kshs. 304,000.00. Directions 5.The appeal was canvassed through written submissions. The appellant and the respondent filed written submissions dated 8.12.2025 and 16.3.2026 respectively. Appellant’s case 6.The appellant submitted that the trial court erred by failing to consider his evidence and testimony. He underlined that there was no dispute that the payment for the goods was received by the respondent. He, however, asserted that he did not receive any other goods than those whose delivery notes were duly signed. He produced the two delivery notes signed in acknowledgement of receipt. 7.The appellant contended that the rest of the delivery notes produced by the respondent were not backed by evidence. He pointed out that the respondent only stated that he was certain that his driver delivered the goods. 8.The appellant asserted that the respondent ought to have called the driver as a witness to confirm delivery. He also ought to have convinced the court why some delivery notes were signed and others not. 9.The appellant therefore argued that the trial court ignored section 107 of the Evidence act that placed the legal burden of proof on the party seeking aid of the law. He relied on Kanyungu Njogu v Daniel Kimani Maingi [2000] eKLR on the court’s mandate to decide a case on a balance of probabilities. 10.The appellant also contended that the trial court was biased for finding that there was proof of delivery when it had noted that some delivery notes were unsigned. He relied on section 36 of the Sale of Goods Act that provides that a buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them. 11.The appellant further submitted that the trial court erred by relying on the Kenya Revenue Authority (KRA) Value Added Tax (VAT) ledger to find that the goods had been delivered. He asserted that the leger entry only shows that the respondent submitted a declaration to KRA that a probable taxable supply occurred, not delivery. 12.The appellant contended that since the trial court appreciated that the parties’ business relationship was based on mutual understanding from their conduct, it would not fail to believe that the post-dated cheques were issued in anticipation of future orders. 13.The appellant submitted that his counterclaim remains uncontroverted and that he proved his case on a balance of probabilities. He thus urged the court to allow his appeal with costs and set aside the trial court’s judgment. Response 14.The respondent asserted that the trial court properly analyzed and evaluated the evidence and found that he had proven his claim on a balance of probabilities. 15.The respondent submitted that the delivery notes, invoices, value added tax (VAT) ledger and claim for VAT refund together with the cheques for Kshs. 2,700,000/- constitute probable evidence that he made the deliveries. 16.The respondent relied on sections 107 and 108 of the Evidence Act on burden of proof. He also relied on Selle v Associated Motor Boat Company Ltd [1968] EA 123 and Peter v Sunday Post Limited [1985] EA 424 on the duty of the first appellate court. 17.The respondent further relied on Mbogo and another v Shah [1968] EA 93 on the principle that guides the appellate court’s interference with the exercise of judicial discretion by a lower court. Analysis and Determination Duty of court 18.A first appeal re-evaluates the evidence on record to ensure that the trial court’s decision is based on evidence and settled principles. Selle & Another v Associated Motor Boat Co. Ltd. & Others [1968] EA 123 and Peters v Sunday Post Ltd [1958] EA 424 19.I have considered the memorandum of appeal, the parties’ respective submissions and authorities cited. 20.The issue before the court is whether the trial court erred by failing to consider the appellant’s evidence? Unsigned delivery notes 21.The appellant’s major contention was about the trial court’s acceptance of the unsigned delivery notes as proof that the goods were delivered. 22.The respondent produced all the delivery notes, invoices and ETR receipts for the goods worth Kshs. 13,858,384/-. He explained that some of the delivery notes were not signed because he trusted the appellant who was well known to him. He also explained that most of the goods were drop shipments, delivered from the manufacturers directly to various construction sites where the appellant was not present to sign the delivery notes. 23.The respondent further elaborated that the delivery notes were in three and he retained the 3rd carbon copy which had feint or illegible confirmation of receipt. 24.The respondent further produced the appellant’s KRA VAT ledger obtained from the KRA offices. 25.The trial court at para. 9 expressed his satisfaction of the explanation offered by the respondent as to why other delivery notes were not signed. He also considered the nature of delivery and the mutual understanding of the parties. He held that it was highly probable that the parties had such an arrangement. 26.The trial court observed that the appellant’s VAT ledger showed that he made claims using the invoices issued by the respondent. He reasoned that for him to have raised the claim with KRA in his returns, he was indeed supplied with the goods. He concluded that the appellant’s defence was a sham since he did not adduce evidence to show that he paid the plaintiff the amount raised in the invoices used to claim VAT refund from KRA. 27.The record shows that in addition to the unsigned delivery notes and invoices, the respondent produced the appellant’s VAT leger which contained claims using the invoices issued by the respondent. 28.The trial court was entitled to treat the VAT ledger as corroborative evidence to support the claim that the goods were delivered. 29.Although some of the delivery notes were unsigned, the trial court did not solely rely on them. The trial court considered the evidence wholly, including the appellant’s witness statements and his VAT ledger which reflected the disputed purchases. 30.Therefore, the trial court cannot be faulted for concluding that, in the circumstances, the respondent proved on a balance of probabilities that the goods were delivered. Post dated cheques 31.According to the appellant, the post-dated cheques were issued in anticipation of future orders. 32.The respondent pointed out that the post-dated cheques were issued by the appellant several months after the alleged overpayment. Therefore, he contended that if the appellant truly overpaid him by Kshs. 304,000/-, there would have been no reason for him to issue further cheques in his favour. 33.The trial court did not believe that the postdated cheques were issued in anticipation of future orders as in his written statement, the appellant indicated that he would only pay upon delivery of the goods. 34.The trial court also concluded that the appellant’s counterclaim was an afterthought as the appellant’s evidence was that he would only pay for what had been supplied. 35.I have read the appellant’s witness statement. The appellant indicated that the business would make payments on account in advance before placing an order and after an order had been placed as the case would be. 36.There was however no evidence to prove payments in advance by the appellant. 37.The appellant bore the onus of proof of the counter-claim. Upon the overall impression of the evidence, the trial court’s ultimate finding that the appellant’s counterclaim was not proven was correct. If the appellant truly thought that he had overpaid the respondent, he would not have issued further post-dated cheques. Rather, he would have demanded reimbursement. Therefore, the trial court’s finding that the counterclaim was an afterthought was well founded as the counterclaim was not supported by evidence. Disposition 38.In the upshot, the appeal is dismissed with costs to the respondent. DATED, SIGNED AND DELIVERED THROUGH MICROSOFT TEAMS ONLINE APPLICATION THIS 23RD DAY OF JULY, 2026-----------------F. GIKONYO MJUDGEIn the presence of: -Ms Adongo for Ochuro for respondentMaraga for AppellantCA- Aggrey