Zenith Asteel Fabricators Ltd v Ndungu t/a Kenline Consultants (Small Claims Appeal E087 of 2026) [2026] KEHC 10781 (KLR) (Civ) (16 July 2026) (Judgment)

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **CIVIL APPELLATE DIVISION** **HCCSCA E087 OF 2026** **ZENITH ASTEEL FABRICATORS LTD…………………………..…........APPELLANT** **-VERSUS-** **KENNETH MWAURA NDUNGU T/A** **KENLINE CONSULTANTS……………..........……….........................RESPONDENT** ***(Being an appeal from the judgment and decree of HON CAROLINE K. IRERI (RM) delivered*** ***on*** ***10.06.2024 in*** ***SCCOMM No. E 2299 of 2024)*** **JUDGMENT** **Background** 1. This appeal emanates from the judgment delivered on **10th June, 2024** (as referenced in the appeal)in **SCCOMM No. E 2299 of 2024**. 2. The suit related to breach of contract between the parties and the trial court found that the appellant was in breach and that the contract never commenced as the drawings submitted to the respondent, were never approved. The trial court ordered the appellant to refund Kshs.805,504/- to the respondent. 3. Being aggrieved, the appellant being lodged this appeal. **The Appeal** 1. The appeal is premised on the following grounds: 2. ***THAT the Learned Trial Magistrate erred in law and in fact in finding that there was no valid contract between the Appellant and the Respondent notwithstanding the Respondent's evidence to the contrary.*** 3. ***THAT the Learned Trial Magistrate erred in law and in fact in relying on the unexecuted Letter of Offer dated 20 December 2023 produced by the Claimant, while disregarding the duly executed Letter of Offer dated 15 January 2024 that established a contractual relationship between the Appellant and the Respondent.*** 4. ***THAT the Learned Trial Magistrate erred in law and in fact in holding that the Respondent was entitled to a refund of the deposit, despite the express provision of the duly executed contract dated 15 January 2024 stating that all payments to the Appellant were non-refundable even in the event of job cancellation by the Client.*** 5. ***THAT the Learned Trial Magistrate erred in law and in fact by failing to recognize that the Respondent was bound by the doctrine of estoppel and was not entitled to a refund of the deposit having agreed to the terms of the Agreement dated 15 January 2024 that all payments made to the Appellant were non-refundable.*** 6. ***THAT the Learned Trial Magistrate erred in law and in fact by failing to properly and adequately consider the Appellant's Defence, evidence and submissions.*** 7. ***THAT wholesomely, the Learned Trial Magistrate failed to properly apply her judicial mind to the facts before her and failed to hold the scales of justice evenly in the circumstances.*** ***The Appellant thus prays for ORDERS THAT:*** 1. ***The appeal be allowed.*** 2. ***The Judgement and Decree of the Small Claims Court at Nairobi delivered on 10 June 2024 by the Hon. Caroline Ireri in SCCOMM Cause No. E2299 of 2024 be set aside.*** 3. ***Costs of the appeal be awarded to the appellant.*** 4. ***Such further or other orders be made as are just in the circumstances of this Appeal.*** **Parties’ Submissions** 1. The appellant submits that the is only one valid contract dated 15th January,2024 and which provided for non-refund even in case the contract was cancelled and they therefore had no obligation to refund the deposit of Ks.805,504/-. They submit that the non-refundable deposit paid to the Appellant did not constitute unjust enrichment as it was an express provision of the contract. 2. The respondent submitted that the Appellant unilaterally reduced panel dimensions frustrating the respondent and that is the reason the contract was terminated, no performance had commenced as the conditions precedent to activate the contract had not taken place and as such there was no valid contract. The Respondents agrees with the decision of the trial court and submits that the actions of the Appellant aren’t in good faith and seeks for dismissal of the appeal. **Analysis and Determination** 1. Upon review of the memorandum of appeal and submissions by the respective parties before this court it is evident that the appeal is essentially on the existence of a valid contract and if the appellant should refund Kshs.805,504/- to the respondent, for breach of contract. 2. The main issue arising for determination can be summarized as follows: 3. ***Was there a valid contract between the parties?*** 4. There are three letters of offer in the proceedings, an unsigned letter of offer dated 20th December, 2023, a signed letter dated 15th January, 2024 and another dated 29th January, 2024. 5. The appellant submits that only the contract dated 15th January, 2024 is valid as the one for 20th December,2023 is unsigned and the one dated 29th January,2024, although executed, is not binding as the respondent did not pay the further consideration. 6. A perusal of the contracts confirms the existence of a non-refund clause in the event of cancellation by the client. 7. The appeal is properly before this court as per Section 38 of the Act which provides:- ***A person aggrieved by the decision or an order of the court may appeal against that decision or order to the high Court on matters of law***. 1. The legal position is that the burden of proof in civil cases rests with the plaintiff at all material times, while the standard of proof is held on a balance of probabilities. In **Wareham t/a A.F. Wareham & 2 Others v Kenya Post Office Savings Bank [2004] 2 KLR 91**, the Court of Appeal stated in this regard that: ***“We have carefully considered the judgment of the superior court, the grounds of appeal raised against it and the submissions before us on those matters. Having done so we are impelled to state unequivocally that in our adversarial system of litigation, cases are tried and determined on the basis of the pleadings made and the issues of fact or law framed by the parties or Court on the basis of those pleadings pursuant to the provisions of Order XIV of the Civil Procedure Rules. And the burden of proof is on the Plaintiff and the degree thereof is on a balance of probabilities. In discharging that burden, the only evidence to be adduced is evidence of existence or non-existence of the facts in issue or facts relevant to the issue. It follows from those principles that only evidence of facts pleaded is to be admitted and if the evidence does not support the facts pleaded, the party with the burden of proof should fail.”*** *(Emphasis added).* 1. Upon perusing the record and proceedings, it is clear that parties were still in negotiation hence the changes and multiple contracts. To give effect to the contract, parties had to fulfill some duties; the Claimant/Respondent had to approve the drawings, which were to be provided by the Appellant before the contract could commence and no work commenced before the contract was cancelled. 2. Before performance of any conditions preceding a transaction, main obligations between parties do not accrue and where the conditions are not fulfilled, parties are discharged from their obligation. 3. Chitty on Contracts (32nd edn.) sets out the general effect of agreements subject to contingent conditions precedent at paragraph 2-159 as follows: ***“Where an agreement is subject to a contingent condition precedent, there is, before the occurrence of the condition, no duty on either party to render the principal performance promised by him …, But an agreement subject to such a condition may impose some degree of obligation on the parties or on one of them. Whether it has this effect, and if so what degree of obligation is imposed, depends on the true construction of the term specifying condition.”*** 1. At paragraph 2-161, the restricted right to withdraw from such contracts is elucidated as follows: ***“A second possibility is that, before the event occurs, the main obligations have not accrued; but that, so long as the event can still occur, one (or both) of the parties cannot withdraw …. However, if it becomes clear that the condition has not occurred, or that it can no longer occur, within the time specified in the contract, the parties will be under no further obligations under the contract. In such a case, the effect of the non-occurrence of the condition is that the parties are “no longer bound” by the contract, or that the contract is “discharged”. What the parties have called a “condition precedent” can thus operate as, or have the effect of, a condition subsequent.”*** 1. Without the Respondent approving the drawings, the parties were not bound by the contract and therefore the same cannot be applied, there was no completion, there was no agreement. 2. Concerning is the manner of drafting of the non-refund clause which reads, ***“All payments as per payment terms made to ZSF is non-refundable. This clause still applies in the event that the job is cancelled by the client.***“ The wording is pre-emptive of a breach and is punitive towards the Respondent, occasioning financial loss to them whilst retaining profit for self. 3. The framing of this clause implies the intent to perform in an unlawful way or frustration or even non-performance while retaining profit and the court should not be made an instrument of enforcing illegal, punitive and oppressive terms. 4. ***In*MAPISINVESTMENT (K) LTD V KENYA RAILWAYS CORPORATION [2005] 2 KLR 410**this Court cited with approval **Lindley L.J** in **SCOTT V BROWN, DOERING, MCNAB & CO** **(3) [1892] 2 QB 724, at 728**as follows: **“Ex turpi causa non oritur action. This old and well known legal maxim is founded in good sense, and expresses a clear and well recognized legal principle, which is not confined to indictable offences. No court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal, if the illegality is duly brought to the notice of the court, and if the person invoking the aid of the court is himself implicated in the illegality . It matters not whether the defendant has pleaded the illegality or whether he has not. If the evidence adduced by the plaintiff proves the illegality the court ought not to assist him.”** 1. Earlier in **PATEL V SINGH** **(No 2) [1987] KLR 585** at **588**, this Court, relying on the words of **Devlin L.J** (as he then was), in **ARCHBOLDS (FREIGHTAGE) LTD V S. SPANGLETT LTD [1961] I QB 374**at**388**reiterated: **“The effect of illegality upon a contract may be threefold. If at the time of making the contract there is an intent to perform it in an unlawful way, the contract, although it remains alive, is unenforceable at the suit of the party having that intent; if the intent is held in common, it is not enforceable at all. Another effect of illegality is to prevent a plaintiff from recovering under a contract if in order to prove his rights under it he has to rely upon his own illegal act; he may not do that even though he can show that at the time of making the contract he had no intent to break the law and that as the time of performance he did not know what he was doing was illegal. The third effect of illegality is to avoid the contract ab initio and that arises if the making of the contract is expressly or impliedly prohibited by statute or is otherwise contrary to public policy.” (Emphasis added).** 1. On the issue of unjust enrichment, which is an equitable principle, it relates to unjust retention of benefit or profit to the loss of another, which is the effect the clause on non-refund of the deposit notwithstanding non-performance and or cancellation by the Appellant. Its only remedy is restitution. 2. In **Madhupaper International Limited & another v Kenya Commercial Bank Limited & 2 others (? 1263 of 1992) [2003] KEHC 725 (KLR) (23 January 2003),**the court listed some grounds for restitution stating; ***“At the moment I sample the following:*** 1. ***non-voluntary conferment of a benefit, such as through mistake or on account of compulsion, necessity, or in ignorance, or due to an unequal condition between the payer and payee;*** 2. ***voluntary conferment of benefit for total failure of consideration;*** 3. ***benefit conferred in consequence of a wrongful act, such as where a trustee benefits from a breach of trust;*** 4. ***ultra vires demand;*** 5. ***abuse of a power entrusted to the defendant by Parliament or by a contractual instrument such as a debenture or other agreement;*** 6. ***illegitimate use of self-help sanctions;*** 7. ***vindication of equitable title to property.*** 8. The court further stated; ***“Broadly founded upon the aim of equity to do justice between parties, the doctrine of unjust enrichment and the remedy of restitution to counter unjust benefit proceed upon the realization that to allow a defendant to retain such a benefit would result in his being unjustly enriched at the plaintiff’s expense, and this, subject to certain defined limits, will not be tolerated by the law, and owing to the importance and aim of this doctrine in every advanced and civilized system of justice.”*** 1. Clearly, the Appellant retaining the deposit without fulfilling their conditions precedent and or doing any work would confer upon them unjust benefit at the expense of the Respondent. With the non-performance of the conditions precedent, I agree with the trial court; there was no valid contract between the Appellant and Respondent. 2. In the absence of a valid contract, the Appellant cannot be allowed to retain the deposit paid to them by the Respondent herein and ought to refund the amount of Kshs.805,504/=. 3. Flowing from the foregoing, the appeal herein lacks merit and is hereby **dismissed with costs.** **Dated, signed and delivered at Nairobi this 16th day of July 2026.** **DAVID MBURU** **JUDGE** In the presence of: