A. THE PLEADINGS.
1. A brief history of the matter before the court is that by a plaint dated 28th October, 2021, the Plaintiff, a limited liability company duly incorporated in Kenya, instituted this suit against the Defendant, also a limited liability company operating various educational institutions, including Regis School, Runda 3, arising from a catering services agreement entered into on 4th January, 2021.
2. The Plaintiff avers in the plaint that under the said agreement, it was engaged by the Defendant to provide catering services at the Defendant’s institution, with specific terms governing payment, termination and conduct of the parties. In particular, it is pleaded that the Defendant was obligated under Clause 6 of the agreement to settle all invoices within fifteen (15) days of issuance by direct bank transfer.
3. It is further pleaded that Clause 15 of the agreement provided for termination of the contract either by sixty (60) days’ written notice or at the end of the academic term, whichever was earlier, and also required a thirty (30) days’ notice to cure any breach. Clause 17 further prohibited either party from directly or indirectly soliciting or hiring the other party’s employees during the subsistence of the agreement.
4. The Plaintiff contends that during the course of the contract, it rendered catering services and issued invoices to the Defendant, which the Defendant failed and/or refused to settle despite demand and notification of breach. The Plaintiff avers that the outstanding invoices as at the time of filing suit amounted to Ksh.12,613,050/- and continued to accrue interest.
5. It is further pleaded that on or about 18th October, 2021, the Defendant unlawfully and unilaterally terminated the agreement without issuing the contractual notice required under Clause 15, and further locked the Plaintiff out of its premises, thereby denying it access to its equipment and operations.
6. The Plaintiff further pleads that the termination was motivated by its demand for payment of outstanding invoices, and that the Defendant has since engaged some of the Plaintiff’s employees in breach of Clause 17 of the agreement.
7. As a result of the alleged breaches, the Plaintiff claims to have suffered loss and damage, including unpaid invoices, loss of use of its equipment, continued accrual of charges for equipment hire and loss relating to perishable goods allegedly left at the premises, totalling approximately Ksh.24,072,145/-.
8. The Plaintiff therefore seeks various reliefs from the court, including a permanent injunction restraining the Defendant from using its equipment and/or employees, payment of the claimed sum together with interest, a mandatory injunction for the release of its equipment allegedly retained by the Defendant, daily charges for use of equipment, as well as punitive and aggravated damages, costs of the suit and interest.
9. The Plaintiff's claim is resisted and to that end, the Defendant filed an amended defence and counterclaim dated 14th October, 2022, denying each and every material allegation contained in the plaint except where expressly admitted.
10. The Defendant acknowledges the existence of the catering services agreement between the parties but avers that both parties were under a strict obligation to perform their respective duties in accordance with the terms of the contract, given the sensitive nature of catering services within a school environment.
11. The Defendant contends that the Plaintiff failed to perform its contractual obligations properly, alleging that the Plaintiff repeatedly delayed in the provision of meals, thereby disrupting school operations, and further that the food supplied was of poor quality and caused health challenges among students and staff.
12. In response to the Plaintiff’s allegations regarding non-payment, the Defendant avers that any delay in settlement of invoices was occasioned by financial constraints arising during the COVID-19 pandemic, which adversely affected the school’s income.
13. The Defendant further denies the Plaintiff’s allegations relating to wrongful termination and states that it was the Plaintiff who, on the material day, abandoned its duties and failed to provide meals to students and staff, thereby necessitating urgent intervention by the Defendant to avoid disruption of school operations.
14. The Defendant disputes the sum claimed by the Plaintiff and avers that the correct outstanding amount is Ksh.8,934,980/-, with the debt allegedly admitted as Ksh.7,404,050/-, and therefore puts the Plaintiff to strict proof of the alleged sums.
15. The Defendant further states that the Plaintiff’s actions endangered the continued operation of the school and created an imminent crisis, thereby compelling the Defendant to take over catering services in order to safeguard the welfare of students and staff.
16. It is further pleaded that some of the invoices relied upon by the Plaintiff relate to Gems Cambridge International School, which is a separate entity from the Defendant, and therefore those sums are wrongly attributed.
17. The Defendant also avers that efforts were made to resolve the dispute amicably, including attempts to negotiate settlement and even offers to facilitate immediate provision of meals, but the Plaintiff allegedly declined and instead proceeded with litigation.
18. The Defendant contends that despite ongoing partial payments being made in good faith during the pendency of the suit, the Plaintiff instituted proceedings prematurely and in bad faith, with the effect of inflating costs and interest.
19. The Defendant further avers that the dispute ought to have been resolved through arbitration in accordance with Clause 20 of the contract, and therefore raises an objection to the jurisdiction of the court.
20. The Defendant denies that the Plaintiff is entitled to any of the reliefs sought in the plaint and prays that the suit be dismissed with costs.
21. By way of counterclaim, the Defendant reiterates the preceding averments in its defence and claims against the Plaintiff general damages arising from alleged breach of contract, disruption of school operations, exposure of the Defendant to crisis and uncertainty, and the institution of what it terms unnecessary litigation.
22. The Defendant therefore prays for judgement against the Plaintiff for general damages, interest at court rates from the date of filing the defence and counterclaim until payment in full, costs of the suit and counterclaim, and any other or further relief that the court may deem fit to grant.
23. By a notice dated 11th April, 2022, the Plaintiff, pursuant to Order 25 Rule 1 of the Civil Procedure Rules, gave notice of partial withdrawal of its claim. The Plaintiff specifically withdrew the prayer seeking a permanent injunction restraining the Defendant from using the Plaintiff’s equipment and/or employees in the provision of catering services at Regis School, Runda.
24. The Plaintiff further withdrew the claim for payment of Kshs.237,690/- per day being the alleged cost of hire of its equipment for catering services.
25. In addition, the Plaintiff withdrew the prayer for a mandatory injunction compelling the Defendant to release all equipment and/or items of trade allegedly unlawfully held by the Defendant.
26. The Plaintiff also withdrew the claim for punitive and aggravated damages, thereby narrowing the remaining issues in dispute to the other reliefs initially sought in the plaint.
B. THE PLAINTIFF’S CASE.
27. The Plaintiff called Zena Mutheu Hassan (PW1) as its witness. The witness adopted the contents of her statement dated 28th October, 2021 and confirmed that she is a director of the Plaintiff Company, well acquainted with the facts of the dispute and duly authorised to testify on its behalf.
28. PW1 stated that at the request and instance of the Defendant, the Plaintiff entered into a written agreement dated 4th January, 2021 to provide catering services at Regis School, Runda. She explained that the agreement governed the entire contractual relationship between the parties and set out the respective obligations, including the provision of meals to students and staff of the Defendant’s institution.
29. PW1 told the court that under Clause 6(c) of the Agreement, the Plaintiff charged Ksh.150/- per staff member per day for meals, and Ksh.250/- per student per day, and on average catered for between 90 to 150 staff members and between 850 to 1,200 students daily. She stated that she fully performed her obligations under the contract and regularly raised invoices in accordance with the agreement, which required the Defendant to settle payments within fifteen (15) days of invoicing.
30. She further told the court that she was aware that judgment on admission was entered in the sum of Ksh.8,934,950/- on 19th May, 2023, but confirmed that no payment had been received in respect thereof. She nonetheless maintained her claim for the full outstanding sum of Ksh.12,613,050/-.
31. PW1 also testified that she was claiming additional loss of earnings for the unexpired term of the contract, which she calculated would have amounted to Ksh.14,987,950/-. She explained that had the contract run its full course, she would have earned approximately Ksh.11,309,050/- in further invoices, bringing the total anticipated earnings to Ksh.23,922,900/-, from which she deducted the amount covered by the judgement on admission.
32. The witness further stated that in October, 2021 she was serving approximately 834 students at a rate of Ksh.250/- per student, and 150 staff members at Ksh.150/- per staff member, resulting in a daily revenue of approximately Ksh.231,000/-. She explained that there were about 49 days remaining under the contract period for which she also sought compensation.
33. The witness testified that under Clause 6 of the agreement, the Defendant was under a strict obligation to pay all invoices raised by the Plaintiff within five (5) days of issuance through direct bank transfer into the Plaintiff’s designated account, the details of which were expressly provided in the agreement. She stated that timely payment was fundamental to the performance of the contract.
34. PW1 further stated that Clause 17 of the agreement contained a non-solicitation provision which prohibited both parties from directly or indirectly engaging, hiring, or soliciting each other’s employees during the subsistence of the contract. According to her, this clause was intended to protect the workforce and ensure stability in service delivery.
35. The witness also relied on Clause 15 of the agreement, which provided that termination of the contract could only be effected upon issuance of sixty (60) days’ written notice or at the end of the academic term, whichever was earlier. She further stated that the clause required a thirty (30) days’ notice to cure any alleged breach before termination could lawfully be effected.
36. The witness testified that during the course of performance, the Defendant failed and/or refused to settle invoices issued by the Plaintiff despite repeated demands and notices of breach. She stated that the outstanding amount owed by the Defendant stood at Ksh.12,613,050/-, which continued to accrue interest, and that the Defendant remained in persistent default of its payment obligations.
37. The witness further stated that on or about 18th October, 2021, the Defendant unlawfully and unilaterally terminated the agreement without issuing the contractual notice required under Clause 15. She testified that the Defendant also locked the Plaintiff out of its premises at the school, thereby preventing the Plaintiff from accessing its facilities and continuing performance of its obligations.
38. PW1 added that in her view, the termination was not justified under the terms of the agreement and was instead triggered by the Plaintiff’s insistence on payment of the outstanding invoices. She maintained that the Defendant had no lawful basis to terminate the agreement in the absence of proper notice and in the absence of any breach attributable to the Plaintiff.
39. The witness further testified that following the termination and lockout, the Defendant proceeded to engage some of the Plaintiff’s employees in violation of Clause 17 of the agreement. She stated that this conduct amounted to a breach of contract and interfered with the Plaintiff’s business operations and staffing arrangements.
40. PW1 also stated that the Defendant unlawfully detained the Plaintiff’s equipment and tools of trade, thereby preventing the Plaintiff from utilising them in other business engagements. She further indicated that the reasonable market rate for hiring similar equipment was Ksh.237,690/- per day, which formed part of the Plaintiff’s claim for loss of use.
41. The witness further testified that at the time of the alleged unlawful termination, the Plaintiff had stored perishable goods at the Defendant’s premises valued at approximately Ksh.149,245/-, which she stated subsequently deteriorated and were lost as a result of the lockout.
42. PW1 concluded that the Defendant’s actions caused the Plaintiff significant financial loss, operational disruption, and reputational harm, and that the Plaintiff continued to suffer losses as suppliers were threatening legal action due to unpaid obligations arising from the dispute.
43. She therefore urged the court to grant orders compelling the Defendant to release the Plaintiff’s equipment and restraining the Defendant from further engaging the Plaintiff’s employees in breach of the Agreement, and confirmed that her statement was made in support of the Plaintiff’s case.
44. The witness produced the following documents in support of the Plaintiff’s case:
- Agreement for provision of services dated 4th January, 2021.
- Email correspondence between the Plaintiff and the Defendant on outstanding invoices.
- Copies of invoices.
- List of the Plaintiff’s employees allegedly engaged by the Defendant.
- List of the Plaintiff’s equipment allegedly retained by the Defendant.
- Documents on cost of hire of catering equipment and approximate cost of perishable goods.
45. Upon being cross examined, PW1 told the court that the termination of the agreement occurred on 18th October, 2021, although she stated that she could not precisely recall the date of eviction, noting that a demand letter was later issued on 21st October, 2021. She confirmed that the contract commenced on 3rd January, 2021 and was intended to run for one year, expiring on 4th January, 2022, and therefore asserted that termination occurred approximately three months before the expiry of the contract period.
46. PW1 testified that the Defendant’s obligations were to provide food services at the school and that the eviction of the Plaintiff’s staff took place on 21st October, 2021. She stated that on that date, the Plaintiff’s employees had begun preparing food, but conceded that no meals were ultimately prepared following the eviction. She maintained that her claim for Ksh.12,613,050/- was consistent with the demand letter issued.
47. The witness further told the court that her projected monthly profit was approximately Ksh.1,000,000/-, and confirmed that the Plaintiff did not make any purchases for the school after termination. She stated that the Plaintiff had staff who remained engaged, and continued to incur staff-related costs such as medical and transit insurance, and confirmed that the Plaintiff did not work for the Defendant between October and December, 2021.
48. PW1 admitted that she did not produce documentary proof of payment of staff salaries by the Plaintiff. She acknowledged that the school had admitted owing her approximately Ksh.8,000,000/- but stated that no proposal on mode of payment was agreed, alleging that the Defendant failed to engage her and had locked her out of the premises and her equipment.
49. PW1 further testified that although she was later invited to collect the Plaintiff’s items, she initially faced resistance and ultimately had to obtain a court order and the assistance of police officers before retrieving the equipment. She stated that she eventually collected all the items on 11th November, 2021 after exchange of correspondence via email.
50. PW1 also confirmed that the Plaintiff received partial payments, including Ksh.1,000,000/- on the date of termination and a further Ksh.500,000/- after about four months, and acknowledged that her affidavit indicated total payments of Ksh.1,300,000/-.
51. PW1 further testified that some invoices in the Plaintiff’s bundle of documents were addressed to Regis School while others referred to Gems Cambridge International School, and conceded that invoices relating to Gems Cambridge were not included in the total claim. She stated that the disputed period covered mid-October to December, 2021 and part of January, 2022 although she maintained that she was not working for the school during that period due to termination and eviction.
52. She further confirmed that Clause 20 of the agreement provided for arbitration, but stated that she was not given an opportunity to pursue arbitration before the institution of the suit.
53. On re-examination, PW1 reiterated that the invoices forming the claim were properly addressed to Regis School and confirmed that the total outstanding sum claimed was Ksh.12,613,050/-. She stated that invoices relating to Gems Cambridge were distinct. She also confirmed that the Defendant had made partial payments totalling Ksh.1,300,000/-, which was to be deducted from the sums due. She further relied on Clause 2 of the Agreement confirming a 12-month contractual term and Clause 15 requiring 60 days’ written notice for termination. She maintained that had the contract run its full course, she would have been entitled to the agreed revenue irrespective of whether she physically worked during the remaining period.
C. THE DEFENDANT’S CASE.
54. The Defendant called Terence Ndanyi (DW1) as its witness. The witness adopted the contents of his witness statement dated 14th October, 2022, and gave evidence in support of the Defendant’s case regarding the events surrounding termination of the catering services contract.
55. DW1 testified that on the material day, the situation at the school became urgent as it was already past 8:30 a.m. and students were due for breakfast. He stated that in order to ensure that students and staff did not miss meals, the school was compelled to purchase food items and take over preparation of meals within the school kitchen.
56. He further stated that at that point, the catering company staff were not actively performing their duties, and the school therefore instructed them to vacate the premises while school staff assumed control of the kitchen operations to prepare meals for students and staff.
57. DW1 testified that after the Plaintiff’s staff vacated the premises, some of them later returned and indicated that they were casual employees and expressed willingness to be directly engaged by the school.
58. He further stated that through the Defendant’s advocates, the school subsequently invited the Plaintiff to collect its equipment and other items that had been left at the premises. He also stated that the Defendant extended an invitation for negotiations to settle the outstanding amounts owed, but the Plaintiff allegedly did not respond to these overtures.
59. DW1 concluded that instead of engaging in the proposed settlement discussions or arbitration as provided for under the contract, the Plaintiff proceeded to file the present suit, thereby disregarding the contractual dispute resolution mechanism.
60. When he testified before the court, DW1 stated that in October, 2021 the Defendant was experiencing cash flow challenges and therefore made payments to the Plaintiff in instalments. He stated that on or about 19th October, 2021, following discussions with the Plaintiff’s representative, the Defendant agreed to pay Ksh.1,000,000/-, which was duly paid. He further testified that the following day was a public holiday and the payment may not have immediately reflected, and that by 21st October, 2021, the Plaintiff had ceased providing services, prompting the Defendant to ask the Plaintiff’s staff to leave the premises so that alternative arrangements could be made to feed the students.
61. DW1 stated that at that point, the Defendant owed the Plaintiff approximately Ksh.8,934,980/- and that the Defendant subsequently made further payments amounting to Ksh.1,300,000/- in instalments, including Ksh.300,000/- in November, 2021, Ksh.500,000/- in April 2022 and Ksh.500,000/- in May 2022. He testified that after these payments, the outstanding balance stood at approximately Ksh.7,634,980/-, and maintained that this was the correct amount due as opposed to the higher sums claimed by the Plaintiff.
62. The witness further stated that the contract was due to expire on 3rd January, 2022 and that only about two months remained at the time of the dispute, contending that the Plaintiff was not entitled to claim for the unexpired term. He also testified that services had effectively stopped being provided from around 19th October, 2021, and therefore any claims beyond that period were unjustified.
63. The witness produced the following documents in support of the Defendant’s case:
- Agreement for provision of services dated 4th January, 2021.
- Reconciliation statement for services delivered.
- Bundle of payment deposit slips.
- Letter dated 25th October, 2021 in response to the Plaintiff’s demand letter.
- Inventory of items collected by the Plaintiff.
- Email correspondence on collection of equipment.
- Registration certificate for Gems National Academy.
- Registration certificate for Regis School.
64. On cross-examination, DW1 confirmed that he was the Chief Finance Officer of the Defendant and acknowledged the existence of the agreement between the parties, which commenced on 4th January, 2021 for a 12-month term unless extended by mutual consent. He conceded that the contract was not formally extended and that no valid termination letter complying with Clause 15 was issued. He also admitted that the Defendant did not issue the mandatory 60-day termination notice, although he stated that emails and communications were used instead.
65. DW1 further conceded that Clause 6 required invoices to be paid within 15 days, but acknowledged that this was not complied with. He also admitted that the Defendant had no documentary proof supporting its allegations of COVID-19-related financial difficulty beyond his oral testimony. He confirmed receiving multiple emails from the Plaintiff demanding payment and indicating growing arrears, including emails showing outstanding amounts of Ksh.9.9000,000/- and Ksh.9,438,000/- but admitted that no written responses were issued to many of them.
66. The witness further acknowledged that although the Defendant alleged the Plaintiff absconded duty, there was no documentary evidence of such allegation in their records, and that their advocates’ response letter of 25th October, 2021 denied liability but did not properly address termination under the contract. He also admitted that approximately Ksh.4,000,000/- was paid through an objector on behalf of the Defendant, though he could not fully explain the arrangement.
67. DW1 conceded that no formal termination letter was issued under Clause 15 and that there was no written notice excluding the Plaintiff from the remaining contract period. He also acknowledged that the contract was intended to run for 12 months and that about two months remained at the time of the dispute, though he maintained that schools typically close in November and December, which in his view affected performance expectations.
68. On re-examination, DW1 reiterated that schools close in November and December and referred to correspondence suggesting ongoing discussions between the parties. He maintained that the Plaintiff had ceased providing services by 21st October, 2021 in an emergency situation and that payments were made subsequently, including Ksh.300,000/-, Ksh.500,000/- and another Ksh.500,000/-, which he stated were acknowledged by the Plaintiff.
69. The witness further stated that the Plaintiff’s demand for Ksh.12,613,050/- mirrored its invoices and demand letter, although earlier communications reflected lower outstanding figures. He confirmed that the Defendant had admitted owing approximately Ksh.9,934,980/- and maintained that the Plaintiff’s claim for over Ksh.24,000,000/- was exaggerated and without basis.
D. THE PLAINTIFF’S SUBMISSIONS.
70. In the Plaintiff’s submissions, it is contended that the suit arises from a claim for damages for breach of a catering services agreement dated 4th January, 2021 between the Plaintiff and the Defendant for the provision of catering services at Regis School, Runda.
71. The Plaintiff submits that by its statement of claim dated 28th October, 2021, it seeks recovery of Ksh.24,072,145/- together with interest and costs arising from the Defendant’s alleged breach of contract. It is further submitted that by a notice dated 11th April, 2022, the Plaintiff withdrew several reliefs originally sought in the plaint, including prayers for permanent and mandatory injunctions, payment for hire of equipment and punitive and aggravated damages.
72. The Plaintiff notes that the Defendant filed an amended defence and counterclaim dated 14th October, 2022 denying liability and alleging that any delay in payment was occasioned by the COVID-19 pandemic, while also contending that the Plaintiff breached the agreement by failing to provide meals to students and staff. The Plaintiff further points out that on 19th May 2023, the court entered judgement on admission in the sum of Ksh.8,934,980/- together with interest and costs, leaving for determination the balance claim of Ksh.14,987,950/-.
73. It is submitted that pursuant to the agreement dated 4th January 2021, the Plaintiff was engaged by the Defendant to provide catering services for a term of twelve months ending on 4th January, 2022. According to the Plaintiff, the Defendant prematurely terminated the contract on or about 18th October, 2021, approximately three months before expiry.
74. The Plaintiff has framed the issues for determination as being whether the Defendant breached the contract, whether the Defendant was prevented from performing the contract by force majeure, the amount outstanding at the date of termination, whether the Plaintiff is entitled to damages for wasted expenditure amounting to Ksh.11,309,050/- and whether the Defendant is entitled to damages in its counterclaim.
75. On the issue of breach of contract, the Plaintiff submits that the Defendant fundamentally breached clause 6(c) of the agreement which required all invoices to be settled within fifteen days from the invoice date by direct transfer into the Plaintiff’s account. The Plaintiff relies on the testimony of PW1 and invoices appearing at pages 25 to 37 of the Plaintiff’s bundle to demonstrate persistent non-payment by the Defendant.
76. The Plaintiff also relies on a series of emails dated 6th July, 2021, 10th September, 2021 and 18th October, 2021 in which the Plaintiff repeatedly demanded settlement of outstanding invoices and explained that the non-payment was negatively affecting its operations, including payments to suppliers, staff salaries, statutory obligations and servicing of bank loans.
77. The Plaintiff emphasizes that despite the repeated notices, the Defendant neither remedied the breach nor provided any meaningful response.
78. The Plaintiff further submits that clause 15(b) of the agreement entitled the Plaintiff to issue notices requiring the Defendant to cure breaches of contract and that the Plaintiff had duly exercised this right through the emails produced in evidence. It is argued that the Defendant’s conduct of persistently failing to pay invoices within the contractual timelines amounted to a repudiatory breach that went to the root of the contract. The Plaintiff submits that DW1 admitted during cross-examination that invoices were not paid within the stipulated fifteen days and further admitted receiving the Plaintiff’s emails but failed to respond to them.
79. The Plaintiff further contends that the Defendant unlawfully terminated the contract without issuing the mandatory sixty days’ written notice required under clause 15(a) of the agreement. Clause 15(a), according to the Plaintiff, permitted either party to terminate the agreement by giving sixty days’ written notice or at the end of the academic term, whichever came earlier. The Plaintiff submits that PW1’s evidence that the Defendant locked out and evicted the Plaintiff from the premises on 21st October, 2021 without lawful notice remained substantially uncontroverted. The Plaintiff argues that the Defendant’s conduct clearly demonstrated an intention not to perform the contract and therefore amounted to repudiation.
80. The Plaintiff also submits that the Defendant breached clause 17 of the agreement by engaging some of the Plaintiff’s employees after termination of the contract. Clause 17 prohibited either party from directly or indirectly engaging or soliciting employees or agents of the other party during the term of the agreement and for one year after termination without written consent and payment of a fee equivalent to 15% of the annual salary and benefits. The Plaintiff contends that after locking out the Plaintiff, the Defendant unlawfully engaged some of the Plaintiff’s workers in contravention of this clause.
81. On the Defendant’s reliance on force majeure, the Plaintiff submits that clause 16(a) of the agreement expressly excluded obligations “to make pay
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1. A brief history of the matter before the court is that by a plaint dated 28th October, 2021, the Plaintiff, a limited liability company duly incorporated in Kenya, instituted this suit against the Defendant, also a limited liability company operating various educational institutions, including Regis School, Runda 3, arising from a catering services agreement entered into on 4th January, 2021.
2. The Plaintiff avers in the plaint that under the said agreement, it was engaged by the Defendant to provide catering services at the Defendant’s institution, with specific terms governing payment, termination and conduct of the parties. In particular, it is pleaded that the Defendant was obligated under Clause 6 of the agreement to settle all invoices within fifteen (15) days of issuance by direct bank transfer.
3. It is further pleaded that Clause 15 of the agreement provided for termination of the contract either by sixty (60) days’ written notice or at the end of the academic term, whichever was earlier, and also required a thirty (30) days’ notice to cure any breach. Clause 17 further prohibited either party from directly or indirectly soliciting or hiring the other party’s employees during the subsistence of the agreement.
4. The Plaintiff contends that during the course of the contract, it rendered catering services and issued invoices to the Defendant, which the Defendant failed and/or refused to settle despite demand and notification of breach. The Plaintiff avers that the outstanding invoices as at the time of filing suit amounted to Ksh.12,613,050/- and continued to accrue interest.
5. It is further pleaded that on or about 18th October, 2021, the Defendant unlawfully and unilaterally terminated the agreement without issuing the contractual notice required under Clause 15, and further locked the Plaintiff out of its premises, thereby denying it access to its equipment and operations.
6. The Plaintiff further pleads that the termination was motivated by its demand for payment of outstanding invoices, and that the Defendant has since engaged some of the Plaintiff’s employees in breach of Clause 17 of the agreement.
7. As a result of the alleged breaches, the Plaintiff claims to have suffered loss and damage, including unpaid invoices, loss of use of its equipment, continued accrual of charges for equipment hire and loss relating to perishable goods allegedly left at the premises, totalling approximately Ksh.24,072,145/-.
8. The Plaintiff therefore seeks various reliefs from the court, including a permanent injunction restraining the Defendant from using its equipment and/or employees, payment of the claimed sum together with interest, a mandatory injunction for the release of its equipment allegedly retained by the Defendant, daily charges for use of equipment, as well as punitive and aggravated damages, costs of the suit and interest.
9. The Plaintiff's claim is resisted and to that end, the Defendant filed an amended defence and counterclaim dated 14th October, 2022, denying each and every material allegation contained in the plaint except where expressly admitted.
10. The Defendant acknowledges the existence of the catering services agreement between the parties but avers that both parties were under a strict obligation to perform their respective duties in accordance with the terms of the contract, given the sensitive nature of catering services within a school environment.
11. The Defendant contends that the Plaintiff failed to perform its contractual obligations properly, alleging that the Plaintiff repeatedly delayed in the provision of meals, thereby disrupting school operations, and further that the food supplied was of poor quality and caused health challenges among students and staff.
12. In response to the Plaintiff’s allegations regarding non-payment, the Defendant avers that any delay in settlement of invoices was occasioned by financial constraints arising during the COVID-19 pandemic, which adversely affected the school’s income.
13. The Defendant further denies the Plaintiff’s allegations relating to wrongful termination and states that it was the Plaintiff who, on the material day, abandoned its duties and failed to provide meals to students and staff, thereby necessitating urgent intervention by the Defendant to avoid disruption of school operations.
14. The Defendant disputes the sum claimed by the Plaintiff and avers that the correct outstanding amount is Ksh.8,934,980/-, with the debt allegedly admitted as Ksh.7,404,050/-, and therefore puts the Plaintiff to strict proof of the alleged sums.
15. The Defendant further states that the Plaintiff’s actions endangered the continued operation of the school and created an imminent crisis, thereby compelling the Defendant to take over catering services in order to safeguard the welfare of students and staff.
16. It is further pleaded that some of the invoices relied upon by the Plaintiff relate to Gems Cambridge International School, which is a separate entity from the Defendant, and therefore those sums are wrongly attributed.
17. The Defendant also avers that efforts were made to resolve the dispute amicably, including attempts to negotiate settlement and even offers to facilitate immediate provision of meals, but the Plaintiff allegedly declined and instead proceeded with litigation.
18. The Defendant contends that despite ongoing partial payments being made in good faith during the pendency of the suit, the Plaintiff instituted proceedings prematurely and in bad faith, with the effect of inflating costs and interest.
19. The Defendant further avers that the dispute ought to have been resolved through arbitration in accordance with Clause 20 of the contract, and therefore raises an objection to the jurisdiction of the court.
20. The Defendant denies that the Plaintiff is entitled to any of the reliefs sought in the plaint and prays that the suit be dismissed with costs.
21. By way of counterclaim, the Defendant reiterates the preceding averments in its defence and claims against the Plaintiff general damages arising from alleged breach of contract, disruption of school operations, exposure of the Defendant to crisis and uncertainty, and the institution of what it terms unnecessary litigation.
22. The Defendant therefore prays for judgement against the Plaintiff for general damages, interest at court rates from the date of filing the defence and counterclaim until payment in full, costs of the suit and counterclaim, and any other or further relief that the court may deem fit to grant.
23. By a notice dated 11th April, 2022, the Plaintiff, pursuant to Order 25 Rule 1 of the Civil Procedure Rules, gave notice of partial withdrawal of its claim. The Plaintiff specifically withdrew the prayer seeking a permanent injunction restraining the Defendant from using the Plaintiff’s equipment and/or employees in the provision of catering services at Regis School, Runda.
24. The Plaintiff further withdrew the claim for payment of Kshs.237,690/- per day being the alleged cost of hire of its equipment for catering services.
25. In addition, the Plaintiff withdrew the prayer for a mandatory injunction compelling the Defendant to release all equipment and/or items of trade allegedly unlawfully held by the Defendant.
26. The Plaintiff also withdrew the claim for punitive and aggravated damages, thereby narrowing the remaining issues in dispute to the other reliefs initially sought in the plaint.
B. THE PLAINTIFF’S CASE.
27. The Plaintiff called Zena Mutheu Hassan (PW1) as its witness. The witness adopted the contents of her statement dated 28th October, 2021 and confirmed that she is a director of the Plaintiff Company, well acquainted with the facts of the dispute and duly authorised to testify on its behalf.
28. PW1 stated that at the request and instance of the Defendant, the Plaintiff entered into a written agreement dated 4th January, 2021 to provide catering services at Regis School, Runda. She explained that the agreement governed the entire contractual relationship between the parties and set out the respective obligations, including the provision of meals to students and staff of the Defendant’s institution.
29. PW1 told the court that under Clause 6(c) of the Agreement, the Plaintiff charged Ksh.150/- per staff member per day for meals, and Ksh.250/- per student per day, and on average catered for between 90 to 150 staff members and between 850 to 1,200 students daily. She stated that she fully performed her obligations under the contract and regularly raised invoices in accordance with the agreement, which required the Defendant to settle payments within fifteen (15) days of invoicing.
30. She further told the court that she was aware that judgment on admission was entered in the sum of Ksh.8,934,950/- on 19th May, 2023, but confirmed that no payment had been received in respect thereof. She nonetheless maintained her claim for the full outstanding sum of Ksh.12,613,050/-.
31. PW1 also testified that she was claiming additional loss of earnings for the unexpired term of the contract, which she calculated would have amounted to Ksh.14,987,950/-. She explained that had the contract run its full course, she would have earned approximately Ksh.11,309,050/- in further invoices, bringing the total anticipated earnings to Ksh.23,922,900/-, from which she deducted the amount covered by the judgement on admission.
32. The witness further stated that in October, 2021 she was serving approximately 834 students at a rate of Ksh.250/- per student, and 150 staff members at Ksh.150/- per staff member, resulting in a daily revenue of approximately Ksh.231,000/-. She explained that there were about 49 days remaining under the contract period for which she also sought compensation.
33. The witness testified that under Clause 6 of the agreement, the Defendant was under a strict obligation to pay all invoices raised by the Plaintiff within five (5) days of issuance through direct bank transfer into the Plaintiff’s designated account, the details of which were expressly provided in the agreement. She stated that timely payment was fundamental to the performance of the contract.
34. PW1 further stated that Clause 17 of the agreement contained a non-solicitation provision which prohibited both parties from directly or indirectly engaging, hiring, or soliciting each other’s employees during the subsistence of the contract. According to her, this clause was intended to protect the workforce and ensure stability in service delivery.
35. The witness also relied on Clause 15 of the agreement, which provided that termination of the contract could only be effected upon issuance of sixty (60) days’ written notice or at the end of the academic term, whichever was earlier. She further stated that the clause required a thirty (30) days’ notice to cure any alleged breach before termination could lawfully be effected.
36. The witness testified that during the course of performance, the Defendant failed and/or refused to settle invoices issued by the Plaintiff despite repeated demands and notices of breach. She stated that the outstanding amount owed by the Defendant stood at Ksh.12,613,050/-, which continued to accrue interest, and that the Defendant remained in persistent default of its payment obligations.
37. The witness further stated that on or about 18th October, 2021, the Defendant unlawfully and unilaterally terminated the agreement without issuing the contractual notice required under Clause 15. She testified that the Defendant also locked the Plaintiff out of its premises at the school, thereby preventing the Plaintiff from accessing its facilities and continuing performance of its obligations.
38. PW1 added that in her view, the termination was not justified under the terms of the agreement and was instead triggered by the Plaintiff’s insistence on payment of the outstanding invoices. She maintained that the Defendant had no lawful basis to terminate the agreement in the absence of proper notice and in the absence of any breach attributable to the Plaintiff.
39. The witness further testified that following the termination and lockout, the Defendant proceeded to engage some of the Plaintiff’s employees in violation of Clause 17 of the agreement. She stated that this conduct amounted to a breach of contract and interfered with the Plaintiff’s business operations and staffing arrangements.
40. PW1 also stated that the Defendant unlawfully detained the Plaintiff’s equipment and tools of trade, thereby preventing the Plaintiff from utilising them in other business engagements. She further indicated that the reasonable market rate for hiring similar equipment was Ksh.237,690/- per day, which formed part of the Plaintiff’s claim for loss of use.
41. The witness further testified that at the time of the alleged unlawful termination, the Plaintiff had stored perishable goods at the Defendant’s premises valued at approximately Ksh.149,245/-, which she stated subsequently deteriorated and were lost as a result of the lockout.
42. PW1 concluded that the Defendant’s actions caused the Plaintiff significant financial loss, operational disruption, and reputational harm, and that the Plaintiff continued to suffer losses as suppliers were threatening legal action due to unpaid obligations arising from the dispute.
43. She therefore urged the court to grant orders compelling the Defendant to release the Plaintiff’s equipment and restraining the Defendant from further engaging the Plaintiff’s employees in breach of the Agreement, and confirmed that her statement was made in support of the Plaintiff’s case.
44. The witness produced the following documents in support of the Plaintiff’s case:
- Agreement for provision of services dated 4th January, 2021.
- Email correspondence between the Plaintiff and the Defendant on outstanding invoices.
- Copies of invoices.
- List of the Plaintiff’s employees allegedly engaged by the Defendant.
- List of the Plaintiff’s equipment allegedly retained by the Defendant.
- Documents on cost of hire of catering equipment and approximate cost of perishable goods.
45. Upon being cross examined, PW1 told the court that the termination of the agreement occurred on 18th October, 2021, although she stated that she could not precisely recall the date of eviction, noting that a demand letter was later issued on 21st October, 2021. She confirmed that the contract commenced on 3rd January, 2021 and was intended to run for one year, expiring on 4th January, 2022, and therefore asserted that termination occurred approximately three months before the expiry of the contract period.
46. PW1 testified that the Defendant’s obligations were to provide food services at the school and that the eviction of the Plaintiff’s staff took place on 21st October, 2021. She stated that on that date, the Plaintiff’s employees had begun preparing food, but conceded that no meals were ultimately prepared following the eviction. She maintained that her claim for Ksh.12,613,050/- was consistent with the demand letter issued.
47. The witness further told the court that her projected monthly profit was approximately Ksh.1,000,000/-, and confirmed that the Plaintiff did not make any purchases for the school after termination. She stated that the Plaintiff had staff who remained engaged, and continued to incur staff-related costs such as medical and transit insurance, and confirmed that the Plaintiff did not work for the Defendant between October and December, 2021.
48. PW1 admitted that she did not produce documentary proof of payment of staff salaries by the Plaintiff. She acknowledged that the school had admitted owing her approximately Ksh.8,000,000/- but stated that no proposal on mode of payment was agreed, alleging that the Defendant failed to engage her and had locked her out of the premises and her equipment.
49. PW1 further testified that although she was later invited to collect the Plaintiff’s items, she initially faced resistance and ultimately had to obtain a court order and the assistance of police officers before retrieving the equipment. She stated that she eventually collected all the items on 11th November, 2021 after exchange of correspondence via email.
50. PW1 also confirmed that the Plaintiff received partial payments, including Ksh.1,000,000/- on the date of termination and a further Ksh.500,000/- after about four months, and acknowledged that her affidavit indicated total payments of Ksh.1,300,000/-.
51. PW1 further testified that some invoices in the Plaintiff’s bundle of documents were addressed to Regis School while others referred to Gems Cambridge International School, and conceded that invoices relating to Gems Cambridge were not included in the total claim. She stated that the disputed period covered mid-October to December, 2021 and part of January, 2022 although she maintained that she was not working for the school during that period due to termination and eviction.
52. She further confirmed that Clause 20 of the agreement provided for arbitration, but stated that she was not given an opportunity to pursue arbitration before the institution of the suit.
53. On re-examination, PW1 reiterated that the invoices forming the claim were properly addressed to Regis School and confirmed that the total outstanding sum claimed was Ksh.12,613,050/-. She stated that invoices relating to Gems Cambridge were distinct. She also confirmed that the Defendant had made partial payments totalling Ksh.1,300,000/-, which was to be deducted from the sums due. She further relied on Clause 2 of the Agreement confirming a 12-month contractual term and Clause 15 requiring 60 days’ written notice for termination. She maintained that had the contract run its full course, she would have been entitled to the agreed revenue irrespective of whether she physically worked during the remaining period.
C. THE DEFENDANT’S CASE.
54. The Defendant called Terence Ndanyi (DW1) as its witness. The witness adopted the contents of his witness statement dated 14th October, 2022, and gave evidence in support of the Defendant’s case regarding the events surrounding termination of the catering services contract.
55. DW1 testified that on the material day, the situation at the school became urgent as it was already past 8:30 a.m. and students were due for breakfast. He stated that in order to ensure that students and staff did not miss meals, the school was compelled to purchase food items and take over preparation of meals within the school kitchen.
56. He further stated that at that point, the catering company staff were not actively performing their duties, and the school therefore instructed them to vacate the premises while school staff assumed control of the kitchen operations to prepare meals for students and staff.
57. DW1 testified that after the Plaintiff’s staff vacated the premises, some of them later returned and indicated that they were casual employees and expressed willingness to be directly engaged by the school.
58. He further stated that through the Defendant’s advocates, the school subsequently invited the Plaintiff to collect its equipment and other items that had been left at the premises. He also stated that the Defendant extended an invitation for negotiations to settle the outstanding amounts owed, but the Plaintiff allegedly did not respond to these overtures.
59. DW1 concluded that instead of engaging in the proposed settlement discussions or arbitration as provided for under the contract, the Plaintiff proceeded to file the present suit, thereby disregarding the contractual dispute resolution mechanism.
60. When he testified before the court, DW1 stated that in October, 2021 the Defendant was experiencing cash flow challenges and therefore made payments to the Plaintiff in instalments. He stated that on or about 19th October, 2021, following discussions with the Plaintiff’s representative, the Defendant agreed to pay Ksh.1,000,000/-, which was duly paid. He further testified that the following day was a public holiday and the payment may not have immediately reflected, and that by 21st October, 2021, the Plaintiff had ceased providing services, prompting the Defendant to ask the Plaintiff’s staff to leave the premises so that alternative arrangements could be made to feed the students.
61. DW1 stated that at that point, the Defendant owed the Plaintiff approximately Ksh.8,934,980/- and that the Defendant subsequently made further payments amounting to Ksh.1,300,000/- in instalments, including Ksh.300,000/- in November, 2021, Ksh.500,000/- in April 2022 and Ksh.500,000/- in May 2022. He testified that after these payments, the outstanding balance stood at approximately Ksh.7,634,980/-, and maintained that this was the correct amount due as opposed to the higher sums claimed by the Plaintiff.
62. The witness further stated that the contract was due to expire on 3rd January, 2022 and that only about two months remained at the time of the dispute, contending that the Plaintiff was not entitled to claim for the unexpired term. He also testified that services had effectively stopped being provided from around 19th October, 2021, and therefore any claims beyond that period were unjustified.
63. The witness produced the following documents in support of the Defendant’s case:
- Agreement for provision of services dated 4th January, 2021.
- Reconciliation statement for services delivered.
- Bundle of payment deposit slips.
- Letter dated 25th October, 2021 in response to the Plaintiff’s demand letter.
- Inventory of items collected by the Plaintiff.
- Email correspondence on collection of equipment.
- Registration certificate for Gems National Academy.
- Registration certificate for Regis School.
64. On cross-examination, DW1 confirmed that he was the Chief Finance Officer of the Defendant and acknowledged the existence of the agreement between the parties, which commenced on 4th January, 2021 for a 12-month term unless extended by mutual consent. He conceded that the contract was not formally extended and that no valid termination letter complying with Clause 15 was issued. He also admitted that the Defendant did not issue the mandatory 60-day termination notice, although he stated that emails and communications were used instead.
65. DW1 further conceded that Clause 6 required invoices to be paid within 15 days, but acknowledged that this was not complied with. He also admitted that the Defendant had no documentary proof supporting its allegations of COVID-19-related financial difficulty beyond his oral testimony. He confirmed receiving multiple emails from the Plaintiff demanding payment and indicating growing arrears, including emails showing outstanding amounts of Ksh.9.9000,000/- and Ksh.9,438,000/- but admitted that no written responses were issued to many of them.
66. The witness further acknowledged that although the Defendant alleged the Plaintiff absconded duty, there was no documentary evidence of such allegation in their records, and that their advocates’ response letter of 25th October, 2021 denied liability but did not properly address termination under the contract. He also admitted that approximately Ksh.4,000,000/- was paid through an objector on behalf of the Defendant, though he could not fully explain the arrangement.
67. DW1 conceded that no formal termination letter was issued under Clause 15 and that there was no written notice excluding the Plaintiff from the remaining contract period. He also acknowledged that the contract was intended to run for 12 months and that about two months remained at the time of the dispute, though he maintained that schools typically close in November and December, which in his view affected performance expectations.
68. On re-examination, DW1 reiterated that schools close in November and December and referred to correspondence suggesting ongoing discussions between the parties. He maintained that the Plaintiff had ceased providing services by 21st October, 2021 in an emergency situation and that payments were made subsequently, including Ksh.300,000/-, Ksh.500,000/- and another Ksh.500,000/-, which he stated were acknowledged by the Plaintiff.
69. The witness further stated that the Plaintiff’s demand for Ksh.12,613,050/- mirrored its invoices and demand letter, although earlier communications reflected lower outstanding figures. He confirmed that the Defendant had admitted owing approximately Ksh.9,934,980/- and maintained that the Plaintiff’s claim for over Ksh.24,000,000/- was exaggerated and without basis.
D. THE PLAINTIFF’S SUBMISSIONS.
70. In the Plaintiff’s submissions, it is contended that the suit arises from a claim for damages for breach of a catering services agreement dated 4th January, 2021 between the Plaintiff and the Defendant for the provision of catering services at Regis School, Runda.
71. The Plaintiff submits that by its statement of claim dated 28th October, 2021, it seeks recovery of Ksh.24,072,145/- together with interest and costs arising from the Defendant’s alleged breach of contract. It is further submitted that by a notice dated 11th April, 2022, the Plaintiff withdrew several reliefs originally sought in the plaint, including prayers for permanent and mandatory injunctions, payment for hire of equipment and punitive and aggravated damages.
72. The Plaintiff notes that the Defendant filed an amended defence and counterclaim dated 14th October, 2022 denying liability and alleging that any delay in payment was occasioned by the COVID-19 pandemic, while also contending that the Plaintiff breached the agreement by failing to provide meals to students and staff. The Plaintiff further points out that on 19th May 2023, the court entered judgement on admission in the sum of Ksh.8,934,980/- together with interest and costs, leaving for determination the balance claim of Ksh.14,987,950/-.
73. It is submitted that pursuant to the agreement dated 4th January 2021, the Plaintiff was engaged by the Defendant to provide catering services for a term of twelve months ending on 4th January, 2022. According to the Plaintiff, the Defendant prematurely terminated the contract on or about 18th October, 2021, approximately three months before expiry.
74. The Plaintiff has framed the issues for determination as being whether the Defendant breached the contract, whether the Defendant was prevented from performing the contract by force majeure, the amount outstanding at the date of termination, whether the Plaintiff is entitled to damages for wasted expenditure amounting to Ksh.11,309,050/- and whether the Defendant is entitled to damages in its counterclaim.
75. On the issue of breach of contract, the Plaintiff submits that the Defendant fundamentally breached clause 6(c) of the agreement which required all invoices to be settled within fifteen days from the invoice date by direct transfer into the Plaintiff’s account. The Plaintiff relies on the testimony of PW1 and invoices appearing at pages 25 to 37 of the Plaintiff’s bundle to demonstrate persistent non-payment by the Defendant.
76. The Plaintiff also relies on a series of emails dated 6th July, 2021, 10th September, 2021 and 18th October, 2021 in which the Plaintiff repeatedly demanded settlement of outstanding invoices and explained that the non-payment was negatively affecting its operations, including payments to suppliers, staff salaries, statutory obligations and servicing of bank loans.
77. The Plaintiff emphasizes that despite the repeated notices, the Defendant neither remedied the breach nor provided any meaningful response.
78. The Plaintiff further submits that clause 15(b) of the agreement entitled the Plaintiff to issue notices requiring the Defendant to cure breaches of contract and that the Plaintiff had duly exercised this right through the emails produced in evidence. It is argued that the Defendant’s conduct of persistently failing to pay invoices within the contractual timelines amounted to a repudiatory breach that went to the root of the contract. The Plaintiff submits that DW1 admitted during cross-examination that invoices were not paid within the stipulated fifteen days and further admitted receiving the Plaintiff’s emails but failed to respond to them.
79. The Plaintiff further contends that the Defendant unlawfully terminated the contract without issuing the mandatory sixty days’ written notice required under clause 15(a) of the agreement. Clause 15(a), according to the Plaintiff, permitted either party to terminate the agreement by giving sixty days’ written notice or at the end of the academic term, whichever came earlier. The Plaintiff submits that PW1’s evidence that the Defendant locked out and evicted the Plaintiff from the premises on 21st October, 2021 without lawful notice remained substantially uncontroverted. The Plaintiff argues that the Defendant’s conduct clearly demonstrated an intention not to perform the contract and therefore amounted to repudiation.
80. The Plaintiff also submits that the Defendant breached clause 17 of the agreement by engaging some of the Plaintiff’s employees after termination of the contract. Clause 17 prohibited either party from directly or indirectly engaging or soliciting employees or agents of the other party during the term of the agreement and for one year after termination without written consent and payment of a fee equivalent to 15% of the annual salary and benefits. The Plaintiff contends that after locking out the Plaintiff, the Defendant unlawfully engaged some of the Plaintiff’s workers in contravention of this clause.
81. On the Defendant’s reliance on force majeure, the Plaintiff submits that clause 16(a) of the agreement expressly excluded obligations “to make pay
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