Matu v Rubis Energy Ltd (Civil Appeal E210 of 2025) [2026] KEHC 9993 (KLR) (Commercial and Tax) (9 July 2026) (Judgment)

Matu v Rubis Energy Ltd (Civil Appeal E210 of 2025) [2026] KEHC 9993 (KLR) (Commercial and Tax) (9 July 2026) (Judgment) Neutral citation: [2026] KEHC 9993 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Civil Appeal E210 of 2025 F Gikonyo, J July 9, 2026 Between Simon Githua Matu Appellant and Rubis Energy Limited Respondent (Being an appeal from the Judgment of the Energy and Petroleum Tribunal at Nairobi dated 26.2.2025 in Energy & Petroleum Tribunal Case No. E003 of 2025) Judgment 1.This appeal emanates from the Judgment of the Energy and Petroleum Tribunal at Nairobi dated 26.2.2025 in Energy & Petroleum Tribunal Case No. E003 of 2025. 2.The appellant filed the memorandum of appeal dated 15.7.2025. 3.Conversely, the respondent filed the memorandum of cross appeal dated 4.9.2025. 4.The appellant raised 15 grounds of appeal. Condensed and rephrased, that the Tribunal erred in the following ways: -1.Shifting the burden of proof in respect of the alleged failure to maintain the contractual minimum fuel stock to it.2.Relying on the respondent's evidence on the appellant’s fuel stock while disregarding the appellant's documentary evidence demonstrating compliance with Clause 1(f) of the contract.3.Failing to find that the respondent, having condoned any alleged previous breaches of the minimum stock requirement, was estopped from relying on them to justify the Appellant's eviction.4.Failing to find that the appellant's eviction on 29th January 2021 constituted a breach of the contract and consequently failing to award damages for breach of contract.5.Holding that Clause 9 of the contract was ambiguous, thereby rewriting the parties' agreement and misinterpreting the contractual interest payable on the security deposit.6.Failing to correctly compute the amount payable under Clause 9 of the contract.7.Accepting the respondent's customer account statement and alleged deductions from the security deposit without sufficient supporting evidence. 5.The respondent raised six grounds in the cross-appeal, contending that the Tribunal erred in the following respects: -1.awarding the appellant the sum of Kshs. 3,445,290.07 despite holding that the appellant had breached the terms of the agreement which called for immediate termination of the agreement.2.holding that the appellant was entitled to a refund of Kshs. 1,000,000 for undelivered stock, despite it having failed to prove actual receipt of the said sum by the respondent as required under section 107 of the Evidence Act.3.effectively reversing the burden of proof and requiring the respondent to disprove the RTGS receipt of the alleged Kshs. 1,000,000, instead of insisting that the appellant provide strict proof of these special damages.4.misconstruing Clause 9 of the Dealership Licence Agreement to mean that the security deposit accrued interest at 4% per annum compounded quarterly from the year 2013, thereby rewriting the contract and disregarding commercial reasonableness and the parties' true intention that interest applied only upon termination.5.awarding the appellant a balance of Kshs. 2,445,290.07 as security deposit and stock value, while failing to give effect to legitimate contractual deductions and offsets applied by the respondent in accordance with the Agreement.6.awarding costs and interest to the appellant despite its express finding that it was in breach of the dealership agreement and that the respondent lawfully terminated the contract. Background 6.The appellant and the respondent, through its predecessor, Kenol Kobil entered into a dealership license agreement dated 4.8.2013 for the Kenol Nyayo Stadium Service Station (now Rubis Nyayo Stadium Service Station) for sale of fuel, lubricant, among other products. 7.A dispute ensued after the respondent issued letters to the appellant raising concerns about low stock levels and stockouts. It subsequently terminated the agreement through a letter dated 29.1.2021. The reasons given for termination were the placement of small orders, failing to maintain the minimum stocks of three days, late placement of orders when the station was low on stock and inadequate capital to cover sales at the station. 8.The respondent’s termination of the agreement triggered the appellant’s claim against the respondent before the Energy and Petroleum Tribunal. The Tribunal delivered the judgment dated 26.5.2025, the subject of this appeal. Directions of the court 9.The appeal was canvassed through written submissions. The appellant filed primary and supplementary written submissions dated 12.9.2025. The respondent filed written submissions dated 22.10.2025. Appellant’s submissions 10.The appellant urged the court to allow its appeal, set aside the Tribunal’s judgment delivered on 26.6.2025 and in its place award him: -i.Kshs. 136,808.00 being the security deposit of Kshs. 4,000,000.00 at 4 % p.m. compounded quarterly for the contract period which ran from 21.8.2023 to 29.1.2021 in terms of Clause 9 of the subject contract dated 21.8.2023.ii.Kshs. 1,738,182.30 being the admitted appellant’s existing stock before his eviction and termination of the contract by the respondent on 29th January 2021.iii.Kshs. 1,000,000.00 being the amount paid for the undelivered stock.iv.Kshs. 14,860,900 being estimated loss of profit following breach of the contract by the defendant.v.Exemplary damages for pain and suffering.vi.Interest on (i) to (v) compounded at 14% from the time the said payments were due until payment in full. 11.The appellant relied on Serah Njeri Mwobi v John Kimani Njoroge [2013] KECA 501 (KLR) to the effect that party may be estopped (legally barred) from asserting a right or claim in future if their prior tolerance or silence led the other party to believe the conduct was acceptable and Micro-City Computers Limited & another v National Social Security Fund Board of Trustees & another (Civil Appeal 49 & 59 of 2020 (Consolidated)) [2024] KECA 444 (KLR) (12 April 2024) (Judgment); that a claim of expected profits is legally admissible on proof of the breach of contract by the erring party; 12.The appellant also relied on C.Y.O. Owayo v George Hannington Zephania Aduda T/A Aduda Auctioneers & Another [2007] KEHC 1390 (KLR); to assert that an irregular, unlawful and/or illegal eviction entitles the tenant to special, general and exemplary damages and Mukika Chai Dzombo Daniel Lewa Ndzombo v Coast Development Authority [2015] KEHC 4501 (KLR); that courts should not rewrite contracts for parties. 13.The appellant further relied on Patrick Omutere v Accurate Steel Mills Limited [2019] KEHC 499 (KLR) on the burden of proof in civil claims. Respondent’s submissions 14.The respondent urged the court to allow its cross-appeal and to set aside the Tribunal’s awards of Kshs. 1,000,000/- undelivered stock and Kshs. 2,445,290.07 as balance of the security deposit. 15.The respondent also urged the court to uphold the Tribunal’s finding that the termination of the dealership agreement was lawful. 16.The respondent further urged the court to reverse the Tribunal’s award of costs and interest to the plaintiff and instead award them to it. 17.On the principle that courts cannot rewrite contracts, the respondent relied on Mulusa v Co-operative Bank of Kenya Ltd [2023] KEELRC 1632 (KLR), National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another [2001] eKLR and Five Forty Aviation Limited v Erwan Lande [2019] eKLR. 18.The respondent also relied on Moses Kamande Nyambura v Francis Munyua Ngugi [2018] KEELC 3622 (KLR), for the proposition that the court must give effect to the terms as agreed, provided they were entered into freely and lawfully. It relied on Swift Capital Limited v Chandi [2023] KEHC 22502 (KLR) to assert that courts will not enforce unconscionable or oppressive bargains. 19.The respondent argued that the doctrine of estoppel cannot be relied upon by the appellant in the circumstances as it made no representations that it was willing to waive its right to enforce the terms of schedule 5 or clause 6(b) of the agreement. It relied on Kenindia Assurance Company Limited v New Nyanza Wholesalers Limited [2017] eKLR to argue that for estoppel to arise, there must be a clear representation by one party, intended to be relied upon, and actual reliance by the other party to his detriment. Analysis and Determination 20.I have considered the memoranda of appeal and cross appeal, the submissions and authorities cited. Jurisdiction and Duty of court 21.Section 37 (3) of the Energy Act provides that any person aggrieved by a decision of the Tribunal may, within thirty days from the date of the decision or order, appeal to the High Court. 22.The Tribunal shall have original civil jurisdiction on any dispute between a licensee and a third party or between licensees. Therefore, an appeal to this court is a first appeal. 23.A first appeal re-evaluates the evidence on record to ensure that the trial court’s decision is based on evidence and settled principles. Timsales Ltd v Wilson Libuywa 2008 KEHC 460 (KLR) and Selle & Another v Associated Motor Boat Co. Ltd. & Others [1968] EA 123. Issues 24.The appeal and cross-appeal put forth the broader issues for determination to be about: -i.Application of burden and standard of proof; andii.Exercise of discretion in awarding the substantive reliefs sought, damages, costs, and interest. Termination of the Dealership License Agreement of 14.8.2013 25.The issue here is whether the respondent’s termination of the subject agreement was lawfully and validly done. 26.According to the appellant, at the date of termination, 29.1.2021, he had maintained the minimum fuel load requirement as per clause 1 (f) of the Agreement. He asserted that on 28.1.2021, he had placed an order for more fuel. 27.He also emphasized on the respondent’s admission that the appellant had in possession Kshs.1,738,182.30 (over 12,000 litres of fuel) worth of existing stock prior to eviction and termination. 28.He submitted that there was insufficient proof that the respondent paid the security deposit plus interest and existing stock as at termination and eviction. 29.He argued that the respondent’s customer account statement was insufficient without support of bank transfers, cheques, deposit slips/receipts, RTGS or any form of payment evidence. 30.The respondent submitted that the Tribunal rightly found that the appellant was in breach of the agreement and the termination was lawful and justified. It insisted that the appellant repeatedly breached the agreement by failing to ensure adequate stock of fuel, lubricants and LPG and that it wrote to him on five separate occasions cautioning him of his breach. 31.The respondent asserted that at the date of termination, the appellant has stock outs in multiple product categories including LPG cylinders and accessories as can be seen from the appellant’s stock inventory. It added that the appellant had placed a late order and did not have stock that would last for at least 3 days. 32.The respondent was of the firm view that it therefore terminated the contract as the appellant consistently placed late orders contrary to Clause 2(d) of Schedule 5, failed to maintain the required minimum three-day stock levels and had inadequate working capital evidenced by a dishonoured cheque of 28th February 2020. 33.It was the respondent’s submission that it never made any representation, express or implied, that it was willing to waive its right to enforce the terms of Schedule 5 or Clause 6(b) of the Agreement. 34.The Tribunal found that the appellant had breached the terms of the agreement which called for its termination and that the respondent had valid grounds to terminate the agreement. 35.The Tribunal found that the plaintiff had not provided sufficient evidence to prove that minimum stock levels were being maintained and that the respondent failed to deliver the products as required when he placed orders. 36.The Tribunal also noted that the email correspondences produced by the plaintiff were unclear. It also considered the respondent’s letters of 8.12.2020 and 18.12.2020 complaining of low stock levels at the station. 37.I have read the dealership agreement dated 21.8.2013. It defines minimum load as 10,000 litres. Clause 5 of the agreement specifies the minimum load to be maintained for various products, thus: -Gasoline – 100,000 litresDiesel – 70,000 litresTotal – 170,000 litresLubricants 1,000 litresLPG – 3,800 Kgs 38.The clause further states that if the Licensee fails to achieve the above stated target, the company would be irrevocably and unconditionally authorised to enter into and take over possession of the service station. 39.Clause 6 of the agreement provides for termination. Para. (a) states that the license may be terminated by the company giving the licensee one month’s notice in the event of failing to perform or observe any of its obligations other than those specified in the 5th schedule. Para (b) states that the company may terminate the license forthwith if the licensee is in breach of any obligations in the fifth schedule. 40.The Fifth Schedule concerns the provisions relating to the supply and purchase of fuel and lubricants. Para. 1 (c) states that the licensee shall at all times maintain an adequate stock and pay for them upon or before delivery. 41.From the foregoing, it is evident that the 12,000 litres of fuel that was in stock at the date of termination was below the minimum load to be maintained as per clause 5. 42.The appellant did not deny that the respondent had severally complained about the failure to maintain minimum stock levels. Instead, the appellant faulted the respondent for condoning his previous breaches of contract. 43.The respondent explained that it issued the cautioning letters and provided the appellant with the opportunity to remedy the defaults in good faith and in good commercial practice. It did not forego its rights to terminate the contract. 44.Thus, in my considered view, the argument that the respondent ought to have terminated the contract immediately upon the first breach is not persuasive and runs counter to good commercial practice amongst merchants of honour. The right to terminate is elective and where the defaulting party persists in breach, the other party is entitled to invoke the termination clause. 45.Accordingly, I concur with the Tribunal’s finding that that the appellant had breached the terms of the agreement which called for its termination and that the respondent had valid grounds to terminate the agreement. Security deposit and interest 46.The respondent challenged the Tribunal’s award of Kshs. 1,000,000 as undelivered stock and Kshs. 2,445,290.07 as balance of the security deposit. 47.The applicant faulted the Tribunal for adopting the respondent’s calculation of 4% simple interest. He further faulted the Tribunal for finding that there was ambiguity in the expression “compounded quarterly”. According to him, compounded quarterly means compounded every quarter of a year, that is, three months. 48.The appellant contended that the security deposit is calculated at 4% per month compounded quarterly as per clause 9 as opposed to 4% simple interest. 49.The appellant contended that the respondent wrongfully computed the security deposit at the time of termination to Kshs.5,123,035.48 presupposing that security deposit was to be computed at 4% p.a. simple interest as opposed to 4% p.m., compounded quarterly as provided for under Clause 9. 50.The appellant asserted that as per its calculation, it is entitled to Kshs. 136,808,000 refund security deposit which was not pegged on whether the agreement was breached by either part. 51.The respondent submitted that the appellant’s computation of Kshs. 136,808,000 from a security deposit of Kshs. 4,000,000 is not only absurd and misleading, but also based on a gross misapplication of Clause 9 of the Agreement. 52.The respondent asserted that the clause expressly required that any refund be conditional upon full settlement of obligations and discharge of all liabilities. That it further provided that interest would be “at rates to be decided by the company from time to time.” It thus argued that it was therefore, contrary to both the wording and intent of the clause for the appellant to unilaterally compound interest at 4% per month from 2013 up to termination in 2021. 53.The respondent added that if the appellant’s interpretation were to be sustained, the agreement would in effect become unconscionable, unfair, and oppressive to the respondent. 54.Clause 9 of the subject agreement provided that the appellant would deposit with the company a security deposit of Kshs. 4,000,000/- at the time of signing the agreement. 55.The clause also states that at the time of termination of this Licence and upon payment by the licensee of all money then owing to the Company and discharge of all the licensees obligations hereunder, the amount of the deposit or the balance thereof will be repaid to the Licensee together with interest at rates to be decided by the Company from time to time and which currently stands at 4 % p.m. compounded quarterly. 56.My understanding of Clause 9 is that the company became obliged to pay the deposit to the appellant upon payment of all money owed to it and discharge of all obligations. 57.The clause does not provide an express timeline for payment of the security deposit. 58.Therefore, as required by law, the company ought to have paid the appellant back the security deposit within a reasonable time according to the circumstances of the case. 59.The clause provides for an interest rate of 4 % p.m. compounded quarterly. However, it does not specify when the interest on the security deposit accrues. 60.The appellant and the respondent took divergent positions as to when the interest on the security deposit accrued. The appellant argued that the interest accrued from the date of the contract while the respondent argued that it accrued from the date of termination. The appellant also contended that the interest was to be calculated per month and compounded quarterly. He faulted the Tribunal for finding that p.m. was not defined in the agreement. 61.According to the Tribunal: -“ 26....A reading of the clause states that the deposit shall be paid and interest thereof. However, the clause is ambiguous on the interest part. The Plaintiff states that the term p.m. directly means per month. The agreement does not provide a definite definition of what the clause means. Further, by the term compounded quarterly does make the clause ambiguous. 27.The Defendant provided a document at page 53 to page 55 showing how it calculated the interests. A look at the interest on security shows that the interest was being calculated at an annual interest of 4% compounded quarterly. As at 31st January 2016, the security plus interest rate was Kshs. 4,403,617.29. If you calculate the interest from August 2013 to January 2016, at an annual interest rate of 4%, using the formulae provided by the Plaintiff but an annual interest compounded quarterly and not monthly, it will provide a figure of 4,403,840 which is closely similar to the Defendant’s figure depending on decimal points. Therefore, it can be inferred that it was the intention of both parties that the 4% interest was annual but compounded monthly. The document also shows varied interest sum showing that it was being compounded from the year 2013. 28.The argument by the Defendant that the interest applied upon termination is therefore not the case. Therefore, the interest should be calculated from the time the contract was executed, being the 14th August 2013 to the date of handover after termination, being the 17th of February 2021. There are seven and a half years between 14th August 2013 to 17th February 2021. By applying the compound interest formulae, the total security plus interest is Kshs. 5,391,396.68. However, the calculations by the Defendant had their deductions in the statements and had a total figure of 5,123,035.48.” 62.I agree with the Tribunal that there was ambiguity in Clause 9 of the agreement about interest. The clause is open to more than one interpretation or may be understood in multiple ways. Hence, the diverging interpretations. 63.As to the time of repayment, the clause explicitly provides that repayment of the deposit is contingent upon termination of the licence and the licensee having paid all monies due and discharged all its obligations under the agreement. 64.The clause also explicitly provides that interest is calculated at the rate of 4 % p.m. compounded quarterly. The abbreviation p.m. is not defined in the agreement. 65.Section 60 of the Evidence Act provides that the court shall take judicial notice of the meaning of English words and all matters of general or local notoriety. 66.In commercial practice, p.m. is a widely recognized abbreviation for per month especially in the context of an interest clause. 67.While the agreement does not define the abbreviation p.m., the court is satisfied that the abbreviation bears the ordinary commercial meaning of per month. 68.What happened in this case is that the respondent terminated the agreement and evicted the appellant on 29.1.2021. It eventually deducted the monies due from the appellant from the security deposit plus interest thereon calculated at 4% per annum from the date of termination. 69.There is no clear indication that the parties intended to have the interest accrue on the security deposit from the date of the contract. The better interpretation is that the interest accrued from the date of termination as suggested by the respondent. This is especially considering that the rate of 4% per month compounded quarterly is an exceptionally high rate. 70.Thus, in my considered view, the Tribunal erred by finding that the interest accrued from the date of the agreement. As correctly submitted by both the appellant and the respondent, courts should not rewrite contracts for the parties. This principle is well crystallized and affirmed in case law in cases without number except I am content to cite National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another [supra].Kshs. 2,445,290.07 balance of security deposit 71.From the respondent’s calculations, the security deposit plus interest at 4% per annum from the date of termination was Kshs. 5,123,035.48. Upon deduction of the appellant’s obligations, there was credit balance of Kshs. 2,445,290.07. 72.As earlier noted, the contractual interest rate on the security deposit was 4% per month compounded quarterly. 73.The compound interest at 4% per month compounded quarterly on Kshs. 4,000,000/- from 29.1.2021 to 17.2.2021 is Kshs. 100,566.31. the total security deposit plus interest owed was Kshs. 4,100,566.31. 74.The respondent stated that it deducted the amount of Kshs. 3,405,190.00 owed by the convenience store, Nixen Company Limited. 75.The Tribunal held that the respondent had no basis to deduct the amount as it did not show any association between the appellant and the convenience store or any agreement that the business was tied to the license agreement. 76.I find no reason to disturb that finding.Claim for Kshs. 1,000,000 undelivered fuel stock 28.1.2021 78.The respondent faulted the Tribunal for awarding the appellant refund of Kshs. 1,000,000 for undelivered stock despite him not proving actual receipt of it. It again faulted the Tribunal for shifting the burden of disproving the RTGS receipt. 79.The Tribunal found that: -“ 24.The plaintiff submitted an RTGS application form showing a request for transfer of one million to the Defendant. The Defendant stated that this was not adequate, and the Plaintiff needed to provide a receipt. The RTGS forms show it was received and accepted by the Bank. There is no proof by the Defendant that the amount was never received at its end. As such, it is our determination that the Plaintiff had already made an order and paid by the time the fuel station was taken away from him.” 80.The RTGS advice produced by the appellant constitutes evidence that a transfer of funds was initiated. However, the RTGS advice alone is not conclusive proof that the respondent received the funds. It was the appellant’s burden to prove that the funds were actually deposited into the respondent’s account. 81.Therefore, I find that the Tribunal erred by shifting the burden of proof to the respondent in this regard. 82.Accordingly, the award of a refund of Kshs. 1,000,000 stands to be set aside. Loss of business profits 83.According to the appellant, the damages sought comprised of the estimated net profit for the 2020/2021 financial year. He asserted that where profits are the direct benefit of a contract, their loss due to breach is recoverable. 84.On the other hand, the respondent argued that Tribunal rightly found that the claim for loss of profits for the financial year 2020/2021 was legally untenable, as the same would amount to rewarding the appellant for his own breach of contractual terms. 85.The respondent also submitted that the remedy for loss of profits is only available where parties have proven the same with certainty and where parties had anticipated the same at the time of entering into the contract. 86.In my considered view, having concluded that the appellant was in breach of the contract and that the termination by the respondent was valid, there is no proper legal basis for the award of loss of profits in the circumstances. Costs 87.The respondent argued that the Tribunal erred both in law and in fact in awarding costs to the appellant despite its own categorical finding that he was in breach. 88.The appellant argued that the Tribunal was right to award it costs since he was partially successful. 89.Costs is a matter of discretion. 90.In Jasbir Singh Rai & 3 others v Tarlochan Singh Rai & 4 others SC Petition No 4 of 2012: [2014] eKLR, the Supreme Court held that costs follow the event and that the court has the discretion in awarding such costs. 91.The court will only interfere on matters of discretion where the finding was so perverse, or the Tribunal considered matters they should not have considered or failed to consider matters they should have considered. United India Insurance Co. Ltd & 2 Others v East African Underwriters (Kenya) Ltd [1985] eKLR 92.Costs follow the event. The appellant’s case before the Tribunal was partially successful. Therefore, there was no basis to award the appellant the costs and interest to the plaintiff. Conclusion 93.In conclusion, I make the following orders: -1.The appeal is allowed to the extent that the Tribunal's finding on the computation of contractual interest is set aside.2.The respondent’s cross-appeal is partially successful to the extent that the award of Kshs. 1,000,000/- and costs and interests to the appellant is set aside.3.The Tribunal’s finding that the termination was lawful is upheld.4.It is declared that, under Clause 9 of the Licence Agreement, the refundable security deposit attracts contractual interest at the rate of 4% per month compounded quarterly from 29.1.2021 until the date the refundable balance is paid, subject to the lawful deductions upheld by the Tribunal.5.The matter is referred to the Deputy Registrar for the taking of accounts and computation of the amount due to the appellant in accordance with this judgment.6.Each party to bear its costs of the suit before the Tribunal and the costs of the appeal and cross appeal as they were all partially successful. DATED, SIGNED AND DELIVERED THROUGH MICROSOFT TEAMS ONLINE APPLICATION THIS 9TH DAY OF JULY, 2026-----------------F. GIKONYO MJUDGEIn the presence of: -Makhoha for AppellantMwangi for Ochola for RespondentCA- Ivan/Aggrey