[2018] KEHC 5425 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MIGORI

CIVIL APPEAL NO. 83 OF 2016

ZACHARIA ORWA ONDORO....................APPELLANT

-VERSUS-

SOUTH NYANZA SUGAR CO. LTD.........RESPONDENT

(Being an appeal from the judgment and decree by Hon. C. M. Kamau,

Resident Magistratein Rongo Senior Resident Magistrate's

Civil Suit No. 153 of 2014delivered on 11/10/2016)

JUDGMENT

1. Arising from the dismissal of Rongo Senior Resident Magistrate’s Court Civil Suit No. 153 of 2014(hereinafter referred to as ‘the suit’) the Appellant herein, Zachariah Orwa Ondoro,preferred the appeal subject of this judgment.

2. The Appellant contended that by a Growers Cane Farming and Supply Contract dated 13/01/2006 which was deemed to have commenced on 06/12/2005 (hereinafter referred to as 'the Contract') the Respondent herein, South Nyanza Sugar Co. Ltd, contracted the Appellant herein to grow and sell to it sugarcane at the appellant's parcel of land Plot No. 1460G Field No. 28 in Kabuoch, Kobita Sub-Location within Migori County.

3. It was further contended that the Contract was for a period of five years or until one plant crop and two ratoon crops of the sugarcane were harvested from the subject parcel of land whichever event occurred first. That, at the time the contract was entered the Appellant had already ploughed, furrowed and harrowed his parcel of land. The Respondent however supplied the Appellant with cane seed and fertilizers. That, the Appellant discharged his part of the contract until the cane was mature, but the Respondent failed to harvest it hence suffered loss.

4. Aggrieved by the alleged breach of the contract the Appellant filed the suit on the 12/06/2014 claiming damages for breach of contract, compensation for the loss of three crops, costs and interest at court rates from 16/12/2005.

5. The Respondent entered appearance and filed a Statement of Defence dated 16/07/2014 wherein while admitting the contract denied that it failed to harvest the plant crop and contended that the Appellant harvested the plant crop without its knowledge and did not deliver it to itself as required under the contract. The Respondent further averred that if at all the Appellant suffered any loss then the Appellant was the author of his own misfortune as he failed to properly maintain the crop to the required standard to warrant the crop to be harvested and milled. It was pleaded that the court did not have the jurisdiction over the dispute and that the suit was time-barred. The Respondent prayed for the dismissal of the suit with costs.

6. The Appellant filed a Reply to the Defence and accordingly joined issues therein.

7. The suit was finally settled down for hearing. Both parties were represented by Counsels. The Appellant was the sole witness who testified and adopted his Statement as part of his testimony. He also produced the documents in his List of Documents as exhibits. The Respondent called its Senior Field Supervisor as its sole witness and who also adopted his Statement as part of his testimony and produced its letter dated 12/03/2007 as an exhibit.

8. The trial court rendered its judgment and dismissed the suit with costs on 11/10/2016 since the Appellant failed to harvest the cane and deliver it to the Respondent as required under the contract. That is the judgment subject of this appeal.

9. The Appellant in praying that the appeal be allowed, and appropriate compensation be awarded proposed the following seven grounds in the Memorandum of Appeal dated 26/10/2016 and filed in Court on 07/11/2016:

1. The learned trial magistrate erred in law in failing to find that under the contract, the duty to harvest the sugar cane lay with the respondent / defendant being the miller.

2. The learned trial magistrate erred in law by magistrates erred in law by misconstruing and interpreting, in isolation, and also wrongly, the tenor and the effect of the provisions of clause 3. 1.2 of the contract without taking into account the meaning of those provisions entailed in clause 2 (a), 3. 5, 3. 8, 3. 10, 3. 1.3, 3. 1.4, 3. 1.5, 3. 1.7, 3. 1.9, 3. 1.12, 6. 3.11 and 13 and thereby wrongly concluded that the duty to harvest sugar cane lay on the appellant plaintiff.

3. The learned trial magistrate erred in law in ignoring the express statutory provisions of Section 6 (a) of the 2nd schedule of the Sugar Act No. 10 of 2011, which provided that the duty to harvest and transport sugar cane, inter alia, lay with the respondent (miller) and not the appellant (grower).

4. The learned magistrate erred in law in wrongly asserting that the provisions of the contract dated 6th December, 2005 (in this case clause 3. 1.2. ) ousted the provisions of the national legislation (in this case section 6(a) of the 2nd schedule of the Sugar Act No. 10 of 2001) and demonstrated thereby a fundamental lack of understanding of the law the policy of the law and of the Sugar Industry.

5. The learned trial magistrate erred in law in failing to find that clause 3. 1.2. of the contract dated 6th December, 2005 read in isolation was offensive to the statute ie the Sugar Act and thus illegal and therefore void and severable from the contract and not merely voidable as he asserted.

6. In the alternative and without prejudice to the foretasted ground 5, the trial magistrate exhibited extreme and actual bias in that having been cautioned by counsel of the effects of section 6(a) of the 2nd irrationally, prejudicially and wrongly sought to subordinate the provisions of the statute (the Sugar Act) to those of the contract dated 6th December 2005 by concluding that the parties can and did oust, by the said contract, the relevant provisions of National Legislation (the Sugar Act).

7. The learned trial magistrate erred in failing to assess the damages the court would have awarded had the suit been allowed.

10. Directions were taken, and the appeal was disposed of by way of written submissions where both parties duly complied. The Appellant challenged the finding of the trial court vigorously and more so claiming that the court wrongly interpreted Clause 3. 1.2 of the contract, did not consider the entire contract document and the custom within the sugar industry, determined the suit on an unpleaded issue by finding that the Appellant was in breach of the contract by not harvesting the plant crop and hence compromising the development of the ratoon crops and that the court failed to assess damages even after it had formed the judicial opinion in dismissing the suit. Counsel relied on various decisions of this Court and others in his quest to have the appeal allowed.

11. Th Respondent contended that the suit was rightly dismissed since the suit was not proved as the Appellant did not adduce evidence to confirm that it discharged its obligations under the contract. The issue of limitation was as well raised and relied on the persuasive decision in South Nyanza Sugar Co. Ltd vs. Dockson Aoro Owuor Migori HCCA NO. 86 of 2015 (unreported). It was also submitted that Section 29 of the repealed Sugar Act bound the parties to the contractual terms and that the Appellant was duty-bound to harvest and supply the cane to the Respondent.

12. As the first appellate Court, it is now well settled that the role of this court is to revisit the evidence on record, evaluate it and reach its own conclusion in the matter. (See the case of Selle & Ano. vs. Associated Motor Boat Co. Ltd (1968) EA 123). This court nevertheless appreciates that an appellate Court will not ordinarily interfere with findings of fact by the trial Court unless they were based on no evidence at all, or on a misapprehension of it or the Court is shown demonstrably to have acted on wrong principles in reaching the findings. This was the holding in Mwanasokoni – versus- Kenya Bus Service Ltd. (1982-88) 1 KAR 278and Kiruga –versus- Kiruga & Another (1988) KLR 348).

13. I have certainly perused and understood the contents of the pleadings, proceedings, judgment, grounds of appeal, submissions and the decisions referred to by the parties. I must acknowledge that I have in the past dealt with like appeals and settled most, if not all, of the issues raised in this appeal. I will therefore benefit from such decisions since I have not changed my position on any of the issues raised in this appeal.

14. From the judgment, the suit was unsuccessful because the Appellant failed to harvest the cane and avail it to the Respondent. The court stated that: -

‘The foundation of the plaintiff’s claim is the assertion that the defendant failed in its contractual duty to harvest the subject cane. The important of clause 3. 1.2 of the contract is that the suit’s foundation is built on quicksand. Simply put, the defendant cannot be blamed for failure to harvest or transport the cane. The defendant therefore did not breach the contract. The legal obligation to harvest and transport cane is contractually upon the plaintiff. According to the contract, after authorizing harvest, the defendant’s responsibility for the harvested cane begins once it arrives at its weighbridge.

In anticipation………

While the practice on the ground may well be that the company harvests, this practice is not sanctioned by the contract that was executed between the parties. Previously, Contracts between the defendant Sugar Company and growers stipulated that the company could harvest. The present contract does not so stipulated…….’

15. I will first deal with the fundamental ground of whether the court determined the suit on an unpleaded issue. A look at the pleadings is hence necessary. The Appellant’s claim is anchored on the allegation that the Respondent failed to harvest the cane which it had contracted him to plant upon maturity and as a result he suffered loss and was entitled to appropriate compensation. The Respondent in its defence admitted entering into the contract but denied liability. It contended that the Appellant instead prematurely harvested the cane without its knowledge and in breach of the contract.

16. On the evidence by the parties, the Appellant in his testimony reiterated the contents of his plaint. He also adopted his filed written statement which corroborated his evidence as well the documents in his filed List of Documents that included the Contract, Demand letter and a Cane Yield Production Guide.

17. The Respondent tendered evidence through its Field Supervisor, Richard Muok, whose duties included acquiring land for and cane development, supplying farm inputs, offering technical extension services and cane inspection. He also adopted his filed written statement wherein the existence of the contract was admitted but its breach denied contending that the Appellant harvested the cane before maturity (at 15 months) and sold it to a jaggery and that when he went to the field at the time when the cane was expected to be mature he found nothing to harvest. He produced a Warning Letter to that effect.

18. That was the evidence that backed the pleadings. From the pleadings it is settled that the Respondent’s position in the statement of defence is not in tandem with the evidence of its witness. The evidence is therefore for rejection. The main issue which was for determination by the trial court was whether the Appellant failed to develop the plant crop to maturity by prematurely harvesting and selling to a jaggery. As said, the suit was however determined on the alleged failure by the Appellant to harvest the cane at maturity and deliver it to the Respondent.

19. It is therefore clear that the trial court determined the suit on an issue which had not been placed before it for determination. In that case, and with tremendous respect to the trial court, the finding was without any legal basis and must be interfered with. While setting the record straight on the essence of parties being bound by their pleadings and that a court can only decide on issues that arise from the filed pleadings, the Court of Appeal in Independent Electoral and Boundaries Commission & Ano. vs. Stephen Mutinda Mule & 3 others (2014) eKLR cited with approval the decision of the Supreme Court of Nigeria in Adetoun Oladeji (NIG) vs. Nigeria Breweries PLC SC 91/2002 where Slyvester Umaru Onu, JSC stated that: -

‘….It is settled law that it is not for the courts to make a case of its own or to formulate its own from the evidence before it and thereafter proceed to give a decision based upon its own postulation quite separate from the case the parties made before it…..

It is settled law that parties are bound by their pleadings……the court below was in error when it raised the issue contrary to the pleadings of the parties.’

20. Adereji, JSC in the same case expressed himself thus on the importance and place of pleadings: -

‘…..it is now trite principle in law that parties are bound by their pleadings and that any evidence led by any of the parties which does not support the averments in the pleadings, or put in another way, which is at variance with the averments of the pleadings goes to no issue and must be disregarded……

…In fact, that parties are not allowed to depart from their pleadings is on the authorities basic as this enables parties to prepare their evidence on the issues as joined and avoid any surprises by which no opportunity is given to the other party to meet the new situation.’

21. The foregone position was restated and reaffirmed by the Supreme Court of Kenya in Raila Amolo Odinga & Another vs. IEBC & 2 others (2017) eKLR.I hence find that the Appellant rightly impugned the decision of the trial court in contending that the suit was determined on an issue which had not been set before the court for determination.

22. Having so found, it is now for this Court to ascertain whether the Appellant’s case was proved as required in law. The Appellant’s case is that he discharged his part of the contract by ensuring that the plant crop was ready for harvesting. It is not in contention that the contract was in the category of self-developed contracts since the Appellant had undertaken all the preliminary steps including ploughing, furrowing and harrowing of the land. The Respondent however supplied the Appellant with seed cane and fertilizers. The Appellant contended that he further undertook all reasonable and required care and crop husbandry on the plant crop until maturity, but the Respondent despite repeated requests to harvest the cane, failed.

23. The Respondent is however of the contrary position. It contended that the Appellant did not discharge the said duty such that the plant crop was prematurely harvested and sold to a jaggery. I have carefully perused the contract which spells out the various obligations of the parties. Clause 3 thereof stipulates the obligations of the Appellant as well as of the Respondent. The Respondent argued that when it realized that the Appellant had prematurely harvested the cane it issued a warning letter.

24. I have carefully perused the said letter. The letter was truly on the sale of the cane to a jaggery and demanded the repayment of the money expended from the services the Respondent rendered to the Appellant. The notice was to be served upon the Appellant as provided for under Clause 9. However, no such evidence was availed by the Respondent. Likewise, since 12/03/2007 when the letter was written up to 2014 when the suit was filed the Respondent did not take any step towards recovery of the said sums. The upshot is a finding that no such letter was ever served upon the Appellant as required under the contract otherwise the Appellant would have responded to it in light of the contract.

25. Be that as it may, did the Respondent adduce any other evidence in support of the position that the cane was harvested prematurely and sold to a jaggery? The record has no such evidence. Neither witnesses testified on the issues nor was any other evidence adduced. The jaggery that the cane was allegedly sold to remain in abstract. It all ended with the sole testimony of Richard Muok.

26. The analysis leads me to the only reasonable finding, which I hereby find and hold, that the Appellant was not in breach of his contractual obligations as alleged by the Respondent. Having taken the position that there was no cane to be harvested at maturity, it goes without say that the Respondent never bothered to harvest the plant crop at the alleged time of maturity.

27. Being alive to the truism that the duty to harvest the cane was not contested, I will nevertheless revisit the issue for completeness of this appeal and for purposes of settling the contrast between the contract and the Sugar Act more so given that the Appellant has substantially submitted on the issue and that the issue formed part of the impugned judgment. I have in previous decisions considered the duty to harvest the cane under such a contract. Since I still hold that position I reproduce what I partly stated in the Migori High Court Civil Appeal No. 41 of 2016 Jane Adhiambo Atinda vs. South Nyanza Sugar Co. Ltd (2017) eKLRthus: -

’18. That now brings me to the finding by the trial court that the Appellant failed to adhere to Clause 3. 1.2 of the Contract in not harvesting and delivering the cane to the Respondent. A contract document must always be considered in its entirety. The good reason for that lies in the truism that clauses in a contract tend to complement one another and one risks not getting the whole intention of the parties if a consideration or reference is put on just a portion of the document. Had the learned trial court done so, it would have come across Clause 3. 1.12 which requires the Miller (Respondent) to: -

‘Prepare the harvesting program setting out the approximate expected time of harvesting which program will be subject to changes necessitated by factors beyond the control of the Miller.’

19. A look at Clauses 3. 1.2 and 3. 1.12 of the contract places a duty upon the Respondent before the actual harvesting of the cane. That duty is for the Respondent to ‘inspect the cane and determine its maturity and to prepare the harvesting program setting out the approximate expected time of harvesting’.There is no evidence that the Respondent discharged that contractual duty in the first instance. That failure, in the face of the fact that the cane had matured, can only mean that it is the Respondent who was in breach of the contract. With tremendous respect, the finding of the learned trial Magistrate that the Appellant failed to harvest and deliver the cane to the Respondent was not only unsupported by evidence but also arrived at without a full consideration of the contract and was therefore erroneous. That finding must be interfered with.

28. Needless to say, there are several other clauses in the contract which when cumulatively taken buttress the position that the duty to harvest the cane is the Respondent’s. Further thereto, there is the Sugar Act (hereinafter referred to as ‘the Act’). This Act was the applicable law by the time the contract was entered. The Act stipulated under Section 6(a) of the Second Schedule thereof, which Schedule was a creation of Section 29 of the Act, that: -

‘The role of the miller is to -

(a) Harvest, weighat the farm gate, transport and millthe sugar cane supplied from the growers’ field and nucleus estate efficiently and make payments to the sugar cane growers as scheduled in the agreement.’(emphasis added)

29. The Actbeing an Act of Parliament went through all the stages of law-making until it became law in Kenya. The Act can only be subordinate to the Constitution and/or may in specific and clear instances be ousted by an express provision on another Act of Parliament. In this case there is an attempt by the contract to oust the provision of the Act. The contract is an agreement between the parties herein whereas the Act is an expression of the will of the people of Kenya through Parliament. The contract is hence subordinate to the statutory legislation. Any attempt by parties to an agreement to otherwise oust the provisions of an Act of Parliament can only be void and severable as far the attempt is concerned. The contract therefore offends the express provisions of the Act in respect to the duty to harvest the cane and as such it cannot stand in the face of the Act; it must give way to the Act. I hence find and hold that the duty to harvest under the contract rested with the Respondent.

30. Having found that it was the Respondent who breached the contract by not harvesting the plant crop after the Appellant had fully developed it to maturity, I must now consider if the Appellant is entitled to any remedy in law. I previously dealt with this aspect in the case of Migori High Court Civil Appeal No. 138 of 2015 South Nyanza Sugar Co. Ltd vs. Hilary M. Marwa (2017) eKLR when I expressed myself as follows: -

’15. I recall having dealt with this issue at length in Migori High Court Civil Appeal No. 92 of 2015James Maranya Mwita vs. South Nyanza Sugar Company Limited. In that case I found that there can be no award of general damages for a claim on breach of contract. However, the claimant must be put as far as possible in the same position he would have been if the breach complained of had not occurred (restitution in integrum’). The measure of such damages would naturally flow from the contract itself or as contemplated by the parties at the time the contract was made and that such damages are not at large but in the nature of special damages. I substantiated those findings with various case law. I must say that I am still of that position.’

31. In Migori High Court Civil Appeal No. 92 of 2015James Maranya Mwita vs. South Nyanza Sugar Company Limited (2017) eKLR I also dealt with how special damages ought to be ascertained in cases of contracts like the one before this Court. This is what I stated: -

“22. I am therefore of the very considered view that looking at the nature of the Contract and how the loss occurred, the above Appellant's averment was adequate to make a court assess the special damages accordingly. In affirming the position, the Court in the John Richard Okuku Oloo (supra) had the following to say:

"In case before the trial magistrate the appellant, as plaintiff, pleaded in the plaint acreage of the parcel of; and which was 0. 2 hectare (paragraph 3 of plaint), average cane proceeds per acre was given as 135 tonnes and the price per tonne was pleaded as Kshs. 1553/=. The trial magistrate was not unpersuaded by this pleading but dismissed the suit after holding that there was no breach of contract.

The learned judge in first appeal found that there was a valid contract between the appellant and the respondent and that the respondent had breached the same. The learned judge faulted the trial magistrate holding that the appellant had not specifically pleaded the claim nor proved it.

We have shown that the pleading on special damages suffered by the appellant was clear and sufficient enough and the learned judge was clearly in error to dismiss the appeal on the ground that the appellant had not specifically pleaded for the same to the required standard nor offered sufficient proof.

Having found that the learned judge erred in his findings this appeal has merit and is accordingly allowed. The orders of the High Court and those of the subordinate court are hereby set aside and we substitute thereof an order entering judgment for the appellant/plaintiff as prayed at prayer (a) in the plaint. We also award interest from the date of filling suit."

32. The Appellant particularized his claim under paragraph 7 of the Plaint based on the acreage of 1. 7 hectares, the expected yield of 135 tonnes per hectare and the price of Kshs. 2,500/= per hectare. The Respondent took the position that the price was instead Kshs. 2,000/= per tonne.

33. The acreage was provided in the contract to be 1. 7 Hectares. Apart from the denial in the statement of defence the Respondent did not impugn the contract which was produced by the consent of the parties. That being so, I find that the acreage was 1. 7 hectares as proved by the Appellant. On the price of the cane, the Appellant proposed Kshs. 2,500/- per tonne whereas the Respondent submitted for Kshs. 2,000/- per tonne. Since none of the parties relied on any settled guide I will adopt the price of Kshs. 2,000/- per tonne. Lastly, on the expected yield the Appellant relied on a document he claimed to be the Respondent’s Sugar Cane Productivity Schedule which was also produced by consent. The Respondent’s witness stated in his statement that the plant crop was expected to yield 66. 56 tonnes per hectare and 48. 76 tonnes per hectare on the ratoon crops. Since the document was not impugned and in the absence of any other such document by the Respondent, this Court will be guided by the said document.

34. According to the contract the plant crop was expected to be ready for harvesting by November 2007 at most. By that time the price was Kshs. 2,000/= per tonne and according to Schedule the expected yield was 148 tonnes per hectare. I will however be guided by what was pleaded being 135 tonnes per hectare which was a fair aggregate of such yields for two consecutive years. The expected income was therefore Kshs. 503, 200/=. Out of this amount the expenses which would have been incurred by the Respondent for harvesting and transport was Kshs. 82,215/- thereby rendering a net income of Kshs. 420,985/-. Since the variables remained constant for the ratoon crops then the total expected earnings for the two ratoon crops less the said expenses were Kshs. 841,970/-. The total earnings from the contract were Kshs. 1,262,955/= for which I hereby enter judgment for the Appellant as against the Respondent. This sum shall attract interest from the date of filing of the Plaint.

35. As I come to the end of this decision, I must deal with the issue of limitation. The Respondent contended that time began running from the time of the alleged breach, that is in 2007, when the Respondent allegedly failed to harvest the plant crop and as such the suit was to be filed by February 2012 and not in June 2014. That, the suit ought to still be dismissed hence the appeal lacks any legality.

36. I dealt with this issue in the case of Zadock N. Danda vs. South Nyanza Sugar Company Limited Migori High Court Civil Appeal No. 11 of 2017 (2018) eKLR where after analyzing various clauses of a contract similar to the one herein and the Limitation of Actions Act,Cap. 22 of the Laws of Kenya I held as follows: -

’18. …………..It is on that basis that I hold the position that the cause of action could only accrue five years from the commencement of the contract unless the Respondent confirmed extension of the contract duration. In the absence of such extension in this case, I find and hold that the cause of action herein arose as from 13/08/2008 and that the Appellant was at liberty to institute competent proceedings on breach of contract up to 12/08/2014.

19. Therefore, having filed the suit on 04/06/2014 the Appellant was well within time and as such the contention that the suit was time-barred hereby fails.

37. Going by such analogy the cause of action herein accrued at the expiry of the 5-year contract period which was in December 2010. The Appellant was hence within time to file a suit within 6 years from December 2010 that is by December 2016. Th suit filed on 12/06/2014 was hence within the statutory timelines and the ground of limitation hereby fails.

38. Following the foregone discourse, the upshot is that the following final orders do hereby issue: -

a) The appeal hereby succeeds and the finding of the learned magistrate dismissing the suit with costs be and is hereby set aside accordingly;

b) Judgment is hereby entered for the Appellant as against the Respondent for Kshs. Kshs. 1,262,955/= which amount shall attract interest at court rates from the date of filing of the Plaint;

d) The Appellant shall have costs of the suit as well as costs of the appeal.

Orders accordingly.

DELIVERED, DATED and SIGNED at MIGORI this 12th day of July 2018.

A. C. MRIMA

JUDGE

Judgment delivered in open court and in the presence of: -

Mr. Ezekiel Odukinstructed by the firm of Oduk & Co. Advocates for the Appellant.

Messrs. Otieno, Ragot & CompanyAdvocates for the Respondent.

Evelyne Nyauke –Court Assistant