AGRO IRRIGATION & PUMP SERVICES LIMITED VS JOE OWAKA AGER AGRO IRRIGATION & PUMP SERVICES LIMITED VS JOE OWAKA AGER

(Being an Appeal from the Judgment in the Chief Magistrate’s Courts at Milimani, Nairobi by Hon. B.J. Ofisi dated and delivered on 28th June, 2019 in Milimani Commercial Courts Civil Case No. 7229 of 2014.)

JUDGMENT

Background

The plaintiff (hereinafter the appellant) instituted the trial suit against the defendant (hereinafter the respondent) for a claim for kshs.265,29/=; allegedly, being the balance owed to the appellant on a contract for the drilling services of a borehole at the Respondent’s property situate in the Kisames area of Kajiado county. The terms of the contract were inter alia that digging was to a depth of 250 metres for a total consideration of KShs.1,774,600/= (80% was payable on acceptance of the quotation and the balance upon completion) and the appellant did not guarantee the quantity nor quality of the water.
The appellant contends that in acceptance of the quotation the respondent remitted the deposit sum (kshs.820,000), drilling was contractually effected to the agreed depth of 250 metres where wet gravel was found but that there was no water, thereby it consulted his geologist, who advised to sink a further 30 meters but again there was no water, and suggested digging another whole. The respondent, appraised of the circumstances refused the suggestion, prompting the appellant to issue a revised invoice of kshs.1,085,296/-, less the deposit, which sums remain unpaid.
The respondent in his defence and counterclaim that he relied on the assurances of the appellant’s director and its consultant geologist, that the project would be viable and water will be available, despite the respondent’s hesitance as the location was a semi-arid area. The deposit was paid and works commenced. However, days later the works stalled over, machinery breakdown. Thereafter, the appellant failed to resume works, leaving a hole of unknown depth and no water. As such he seeks a refund of the deposit sum and damages for breach of contract.

Evidence

The appellant’s sole witness; PW1, Dinesh Davendra Halai; the director, reiterated his position and testified that the Respondent gave him the requested hydro-geological report which indicated the possibility of finding water at 250metres, but the report was not produced, on the pretext that it was the Respondent’s document.
The respondent testified in person, that indeed ‘a hole of unknown depth’ was dug, pursuant to the contract, but works were abandoned. Further, in breach of contract no casings of the hole were done.
The trial court have weighed the evidence against the relevant laws rendered its determination on the 28th June, 2019, whereby, summarily, relying on the provisos of Water Act, Cap 372, specifically, the Fourth Schedule, that;

“The plaintiff was under obligation to maintain a record of measurements of the strata passed and collect the specimens of such strata. If the plaintiff performed the contract as required by law then it would not have been difficult for it to prove that the well was indeed drilled to a depth of 250m.

...

Lastly, the plaintiff was supposed to ensure that the works were certified and a certificate of completion issued as provided for under Section 27 of the Water Act Cap.372.

...

The plaintiff did not tender a completion certificate or notice of exemption for the same. I hold that the plaintiff has failed to prove that a borehole of 250M was drilled and failed to perform its obligations in accordance with the contract.

...This clearly means that the plaintiff breached the contract and is entitled to a refund of the amount paid kshs.820,000/=

...I hold that the Defendant is entitled to award of general damages. The contract was for kshs.1,744,600/= and I hereby award general damages at kshs.924,600/= which was the balance for the contract.”

The appellant being aggrieved with the judgment instituted this appeal by way of a Memorandum of Appeal on grounds;
The learned magistrate misdirected herself on the evidence and law on matters before her consequently making a wrong and erroneous decision dismissing the plaintiff’s suit with costs and allowing the defendant’s counterclaim.
The learned magistrate erred in law and fact, and misdirected herself when she found that the requisite National Environmental Management Authority License and/or approval, approval from the Water Resources Authority and a geological survey had not been procured by the plaintiff before commencement of the works when in fact the plaintiff had procured the same and furnished the defendant for his benefit and the plaintiff could not have commenced the works without such approvals.
The learned magistrate erred in law and fact; and misdirected herself, the evidence and the applicable law on the matter when she found that the plaintiff had the onus of proving that the borehole was drilled to the contractual 250 meters when the burden fell on the defendant to prove his allegations.
The learned magistrate erred in fact and misdirected herself when she found that the plaintiff had failed to prove that the borehole was drilled to the agreed 250 meters when in fact the plaintiff had drilled the borehole to 280 meters upon the agreement of the defendant.
The learned magistrate erred in law and fact when she found that the plaintiff had breached the contract and therefore not entitled to the balance of the contractual amount when in fact the plaintiff performed it part of the contract by drilling the borehole up to 280 meters and therefore deserving the full contractual amount.
The learned magistrate erred in law and in fact in holding that the conduct of the plaintiff was oppressive and outrageous when in fact it was the plaintiff who was mistreated by the defendant when the defendant failed to honor his contractual obligations.
The learned magistrate erred in law and in fact; and misdirected herself in finding that the defendant was entitled to the refund of the deposit and general damages when the plaintiff had performed its part of the contract and deserving of the payment of the balance.
The judgement and order of 28^th June, 2019 was erroneous in law and fact and gross miscarriage of justice.

Written Submission

The appellant argued that the trial Court relied on the Court of Appeal decision in Delilah Kerubo Otiso v Ramesh Chander Ndingra [2018] eKLR where that Court appeared to consider exceptions to the general principle that courts do not normally award damages for breach of contract, when the conduct of a respondent is shown to be oppressive, high handed, outrageous, insolent or vindictive, which position was erroneous.
Further, that the trial court’s formulation of issues on failure to procure, maintain and submit drilling records to the National Environment Management Authority to confirm that it indeed drilled the borehole, and undertaking the drilling works without the permission of NEMA, was erroneous, as the said issues were not in dispute as particularised by the parties, and a court is duty bound to only pronounce judgment on the issues arising from the pleadings. They cited the authority in Galaxy Paints Co. Limited v Falcon Guards Limited [2000] 2EA 385.
The respondent in his rebuttal argued that the specialized nature of the contract, guided by statutory law, required factual and scientific evidence, to ascertain the appellant’s position, which in his view, they dismally failed.

Determination

This is a first appeal. That being the case, this court is mandated to re-evaluate and re-analyse the evidence tendered before the trial court and come to its own conclusion. See Selle & another vs Associated Motor Boats Co. Ltd. In addition, considering that this court is the first appellate court, I am alive to the principle that a court will not normally interfere with a finding of fact of the trial court unless the same is based on a misapprehension of the evidence or that the trial court is shown to have acted on wrong principles in reaching the findings. See Jabane vs Olenja [1986] KLR.
In Kiruga v Kiruga & Another [1988] KLR 348, the Court of Appeal observed that;

An appeal court cannot properly substitute its own factual finding for that of a trial court unless there is no evidence to support the finding or unless the judge can be said to be plainly wrong. An appellate court has jurisdiction to review the evidence in order to determine whether the conclusion reached upon that evidence should stand but this is a jurisdiction which should be exercised with caution.

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 shall dispense with germane issues raised as follows;

Whether the trial court erred in dismissing the appellant’s suit on alleged non-compliance with Schedule IV of the Water Act, CAP 327, which issues were neither pleaded thus not available for determination?

From the onset, the law of contract gives effect to consensual agreements entered into by particular individuals in their own interests. The position in law with regard to the binding nature of a contract executed willingly by the parties is now well settled. In National Bank of Kenya Ltd versus Pipe Plastic Samkolit (K) Ltd & another [2011] eKLR, the Court was categorical that:

“It is clear beyond para-adventure, that save for those special cases where equity might be prepared to releave a party from a bad bargain, it is ordinarily no part of equity’s function to allow a party to escape from a bad bargain.”

Further, in Pius Kimaiyo Langat versus Co-operative Bank of Kenya Ltd [2017] eKLR, after reviewing case law on the subject reiterated as follows:

“We are alive to the hallowed legal maxim that it is not the business of Courts to rewrite contracts between parties. They are bound by the terms of their contracts, unless coercion, Fraud or undue influence are pleaded and proved.”

This notwithstanding, it is not lost to me that general rule is that Courts do not enforce contracts which are in contravention with statutes. In Nairobi Civil Appeal No. 165 of 2007 D. Njogu & Company Advocates vs. National Bank of Kenya Limited (2016) eKLR the Court of Appeal stated as follows: -

“Likewise, we reiterate that any contract that contravenes a statute is illegal and the same is void ab initio and is therefore unenforceable.”

There are however exceptions to the general rule. In determining the consequences of the illegality, Courts will distinguish between those contracts that are illegal at formation and those that are illegal through performance.
In this instance the respondent herein by way of a quotation for drilling of a borehole dated 13th May, 2013, instructed the appellant, to sink a borehole; 250 metres deep in Kisamae Area of Kajiado, for a total sum of kshs.1,744,600/=, where the terms and conditions were inter alia that;

“a. We (appellant) do not guarantee quantity and quality of water

b. Terms of payment: 80% with order & balance on completion

c. In case of any variation on material prices or quantities these shall be charged on pro-rata basis

d. Authority to drill must be obtained before commencement of works”

The parties concur that the deposit sum of kshs.820,000 was remitted on the 18.11.2013 and thereafter appellant occupied the site and commenced works. The dispute arises on whether the works were done at all, and if attempted or done, to what degree? On one hand, the appellant submits that it sufficiently sank the contracted 250metres and a further 30metres, after consulting a geologist, when it became apparent that there was no water deposit. On the other hand, the respondent contends that the appellant initiated the works but its machinery broke down on the same day, with “unknown metres” sank, only for the appellant to desert the site and never return. During trial at the trial court, the respondent; as DW1; testified that the appellant did not drill to a ground level of 100 metres, in fact, that they did not reach anywhere near 200 metres or 300 metres.
It is noteworthy that as at the time of execution of the contract, the terms and operation of the contract; being for the abstraction of ground water and works thereof, was governed by the Water Act, CAP 372 (Repealed) under the Fourth Schedule, pursuant to Section 45 of the Act.
For purposes of establishment of works done Section 45; as detailed on the Fourth Schedule stipulates thus;

2. Notice of intention to construct well

(1) No person shall construct or begin to construct a well without having first given to the Authority notice of his intention to do so and shall comply with such requirements as may be imposed by the Authority.

(2) Unless otherwise exempted, a person constructing a well shall keep a record of the progress of the work, which shall include;

(a) measurements of the strata passed through and specimens of such strata;

(b) measurements of the levels at which water was struck; and

(c) measurements of the quantity of water obtained at each level, the quantity finally obtained and the rest level of the water.

Before I proceed, I needlessly state that, the question of whether the appellant received the statutory authorization, approvals or licensing through the National environment and Management to proceed with contractions, is non-issue herein. The question was not pleaded nor disputed by the respondent in its pleadings. The issue was only raised by the respondent in his submissions. Time without number, the courts have settled that submissions are not pleadings, and it is just an opportunity for parties to convince the Court to find in their favour. New issues cannot be raised in submissions. New issues raised by way of submissions are best ignored. See Republic v Chairman Public Procurement Administrative Review Board & another Ex-Parte Zapkass Consulting and Training Limited & another [2014] eKLR.
It would follow that the trial court was overzealous and misdirected itself in expressing itself on issues not pleaded, specifically, on the appellant’s authorization or licensing to undertake the construction.
The aforementioned notwithstanding, to determine whether indeed works were carried out or nor, the statutory requirement is that the appellants keep record of the progress of work including measures of strata passed through. None, was produced on record.
Further, it is required that upon cessation of works by a contractor submit the records to the Authority a complete copy of the record, together with the specimens referred to in the record. Again, this was not evidenced. In my view, the relevant records of progression up until completion and submission to the authorities, are statutorily essential to ascertain that indeed the works were done and to what extent. I needless emphasize, that this court is not interrogating whether the records were kept or submitted to NEMA, but simply the need of their production in evidence to ascertain the works done. Without their production, the appellant’s case remains at “he said, she said”, at best.
The Water Act, CAP 372 (Repealed), under the same schedule, states that; “where any borehole contractor constructs a borehole for the purposes of a well on land belonging to or occupied by any other person, the borehole contractor shall be deemed, for the purposes of this Act, to be the person constructing the well.” Simply put, all relevant records, on the progression and completion of the construction are within the statutory purview of the appellant. Without them, the appellant’s case is anchored on quicksand.
Accordingly, I find the appellant’s claim is substantially wanting of evidence, and the same cannot accrue.

Whether the trial court erred in allowing the respondent’s counterclaim for a refund of the deposit sum and general damages?

It is acknowledged by the respondent, that there was part performance of the project. In his counterclaim, he pleaded that the appellant having instituted the works, deserted the same in between and left “a hole of unknown depth with no water”. Further, during trial the respondent as DW1; testified that the appellant dug not more than 100 metres, but nothing close to 200 metres or 300 metres. An unequivocal assertion that works were done, howbeit unsatisfactory.
The question to follow would be, whether the respondent is entitled to a full reimbursement of the sum? It is trite that the failure of a main suit does not imply the success of a counterclaim. Unfortunately, and to my dissatisfaction, the evidence tendered before the trial court, was merely oral despite the complexities both oral and legal entailed herein. Justice Mativo in Hellen Wangari Wangechi v Carumera Muthini Gathua [2005] eKLR, quoted with approval Lord Brandon in Rheir Shpping Co. SA. v Edmunds [1955] IWLR 948 at 955 as follows:

“No Judge likes to decide case on the burden of proof if he can legitimately avoid having to do so. There are cases, however in which owing to the unsatisfactory state of the evidence or otherwise, deciding on the burden of proof is the only just cause to take.”

The standard of proof in cases is the legal standard to which a party who holds the burden of proof is required to prove their case. Mativo J. in the above case stated that the standard of proof determines the degree of certainty with which a fact must be proved to satisfy the court of the fact. I agree. The learned judge, further cited with approved Lord Denning in Miller v Minister of Pensions [1942] 2 ALL ER 372 as follows:

“The… (standard of proof) ...is well settled. It must carry a reasonable degree of probability… If the evidence is such that the tribunal can say ‘we think it more probable than not’ the burden is discharged, but if the probabilities are equal, it is not.”

In this instant, the respondent, solely relying on his oral evidence demanded a full refund of the deposit sum. First, the respondent is not an expert on the abstraction of ground water and works thereof. Secondly, his metric approximation of the lengths sunk on the well are presumptuous at best. In my view, the respondent having acknowledgement part-performance of the contract, a comparative assessment report on the works done was imperative in proving his case. A difference of the works contracted over the works done, would have been a probable compensation, if only a comparative assessment was done. It is further peculiar, that the respondent remained silent prior to the institution of the trial suit, despite his vigorous arguments of the unsatisfactory nature works done, not even a demand letter was evidenced to have been served upon the appellant.
Consequently, as is the appellant’s claim, the respondent’s counterclaim for a full refund, is anchored on quicksand. This court would be capriciously acting on whims, wanting of material evidence, in entertaining the respondent’s assertions. Even the courts of equity would pronounce that “equity does not aid the indolent”. A refund is therefore set aside and disallowed.
As to the general damages for breach of contract, I have hereinabove expressed my dissatisfaction on the premise that both the claim and the counterclaim was substantially anchored on oral evidence. My hands are tied. It is not clear whether there was a breach or not, and by whom. In fact, the quotation for drilling of a borehole was explicit that the appellant does not guarantee quantity and quality of water, which would include lack of water. This court as would any other, in exercising its discretion would be guided by adequate and proper evidence. Accordingly, the claim for damages is also set aside and disallowed.

Conclusion

I find that the appeal is partially meritorious, strictly to the extent held hereinabove.
The trial court’s judgement dated 28^th June, 2019, be and is hereby set-aside and the same is substituted with a determination that both the appellant’s (plaintiff) suit and the respondent’s (defendant) counter-claim are both wanting of merit and are dismissed, with no orders as to costs.
Consequently, there shall be no costs of this appeal.

Dated, Signed and Delivered at NAIROBI Virtually this ……31ST………Day of JULY, 2024.

……………………

WENDY MICHENI

JUDGE