1. The dispute before this Court centres on customs duties and statutory liabilities arising from the clearance of imported goods. The Plaintiff operated a clearing and forwarding business prior to the year 2016. It was duly licensed by the Kenya Revenue Authority (KRA) as a customs agent. The license carried strict statutory conditions. The Plaintiff assumed personal liability for customs duties in the event of default by importers.
Background Facts
2. The Plaintiff acted as a customs agent between February and June, 2016. It facilitated the clearance of imported goods through the Port of Mombasa. The goods were cleared under three distinct customs entries as follows:
Date Customs Entry No.
(1.) On 11th February, 2016 2016MSA 5880559
(2.) On 28th February, 2016 2016MSA 6035300
(3.) On 9th June, 2016 2016MSA 6020832
3. The Plaintiff facilitated this clearance process. To enable clearance of the imports, the Defendant secured the payment of the duty due on the imports vide customs bonds PSCB03006/2016 E.NO. 2016MSA 6035300, PSCB03019/16 E.NO. 2016MSA 6020832, and PSCB00672/16 E.NO. 2016MSA 5880559. The Defendant purportedly secured customs bonds for these consignments. The execution of these bonds constituted an undertaking. The Defendant was required to provide proof of tax exemption. Alternatively, the Defendant was required to settle the accrued customs duties within a prescribed statutory period.
4. The Defendant failed to settle the taxes due. The Defendant also failed to procure the cancellation of the executed customs bonds. This failure triggered severe regulatory action. KRA moved against the Plaintiff to recover the unpaid duties. KRA cancelled the Plaintiff’s customs agent license. KRA subsequently issued agency notices to various commercial banks. These notices froze the Plaintiff’s bank accounts. They crippled the Plaintiff’s business operations. The initial customs liability stood at Kshs. 34,585,439.00. This amount later escalated to Kshs. 48,166,769.00.
The Plaintiff’s Case
5. The Plaintiff approached this Court seeking relief. The suit is anchored on the Amended Plaint. The pleading is dated 13th June, 2022. The Plaintiff asserts that the cleared goods belonged to the Defendant. The goods were imported for the Defendant's direct benefit.
6. The Plaintiff claims it performed its obligations properly. It acted under the legitimate expectation that the Defendant would discharge its statutory duties. The Defendant was expected to cancel the customs bonds. The Defendant was expected to furnish KRA with the requisite exemption documentation. The Plaintiff alleges that the Defendant was fully aware of the consequences of default. The Defendant knew the Plaintiff would bear personal liability.
7. The Plaintiff pleads negligence. It alleges that the Defendant unlawfully failed to settle the taxes due. This failure exposed the Plaintiff to severe regulatory sanctions. The cancellation of the customs license deprived the Plaintiff of its sole source of income. The freezing of bank accounts caused immense financial embarrassment. The Plaintiff claims to have suffered massive financial loss. It claims severe reputational damage. It cites an absolute inability to trade since the year 2016.
8. The Plaintiff seeks several reliefs as follows:
(a) An order compelling the defendant to cancel the customs bond or pay taxes amounting to Kshs. 48,166,769.00 together with accrued interest as demanded by KRA.
(b) Compensation for loss of business opportunity of Kshs. 50,000,000.00.
(c) General damages.
(d) Cost of this suit.
(e) Interest on items (a) and (b).
(f) An order compelling the Interested Party to waive all accrued penalties as at the date of judgment of this suit and reinstate the Customs Tax Agency licence previously issued to the Plaintiff.
(g) Any other relief or further relief as this Honourable court may deem fit.
The Defendant's Case
9. The Defendant entered an appearance. It filed a Statement of Defence. The defence is dated 11th December, 2019. The Defendant totally denies the Plaintiff's claim. It denies ever appointing the Plaintiff as its customs clearing agent.
10. The Defendant denies issuing the alleged customs bonds. It disassociates itself from the importation process. It maintains that the Plaintiff acted unilaterally. The Defendant asserts that the Plaintiff failed to provide strict proof of the alleged agency relationship. The Defendant denies executing the specific customs bonds relied upon by the Plaintiff.
11. The Defendant disclaims any liability for the KRA taxes. It denies responsibility for the cancellation of the Plaintiff’s license. It denies responsibility for the agency notices. The Defendant maintains it owes no duty of care to the Plaintiff. It asserts that any loss suffered by the Plaintiff is a direct consequence of the Plaintiff's own unlawful actions. The Defendant prays for the dismissal of the suit with costs.
The Interested Party's Case
12. The Interested Party is the Kenya Revenue Authority. It is a statutory body. It is mandated to assess, collect, and account for government revenue. Its actions are strictly governed by the East African Community Customs Management Act (EACCMA), 2004.
13. The Interested Party defends its regulatory actions. It relies on the strict liability provisions of the EACCMA. The law deems a clearing agent to be the owner of the goods for tax recovery purposes. The Interested Party maintains that the suspension of the license was lawful. The issuance of agency notices was within its statutory mandate. It submits that it cannot be compelled to waive validly accrued taxes and penalties without statutory justification.
14. The Plaintiff and the Defendant called a witness each. The Interested Party opted not to participate during the trial. It chose to file final submissions instead.
Summary of Final Submissions
15. The Court directed the parties to file written submissions. The Plaintiff submitted that an agency relationship existed. The relationship was purportedly formed through ratification. The Plaintiff argued that the Defendant accepted the cleared goods. The Defendant did not raise objections prior to this suit. The Plaintiff relied on these actions to prove agency. The Plaintiff maintained its entitlement to the sum of Kshs. 50,000,000.00. It argued this figure reflects the lost turnover since the year 2016.
16. The Defendant submitted at the outset that the suit was filed outside the limitation period provided by Section 4(2) of the Limitation of Actions Act. That the suit was defective for want of a verifying affidavit accompanying the Plaint, sworn by an officer authorized under seal of the company as required by Order 4 rule 1(4) of the Civil Procedure Rules. On Merit it submitted that privity of contract was absent. No written contract existed between the parties. The Defendant highlighted a fatal admission made by the Plaintiff's witness during cross-examination. The witness admitted lacking written authorization. The Defendant argued that the claim for special damages was entirely speculative. It submitted that special damages were neither specifically pleaded nor strictly proved.
17. The Interested Party submitted on statutory compliance. It relied on Section 145 and Section 147 of the EACCMA. It argued that its actions against the Plaintiff were legally protected. It submitted that the Court cannot injunct the lawful collection of taxes.
Issues for Determination
18. The Court has reviewed the pleadings. It has considered the witness testimonies. It has evaluated the documentary evidence. It has read the written submissions. The Court frames five distinct issues for determination:
(a) Whether the suit was defeated by the statute of limitation.
(b) Whether the suit was defeated by failure to attach a Verifying Affidavit.
(c) Whether a valid agency relationship existed between the Plaintiff and the Defendant.
(d) Whether the Interested Party acted lawfully under the East African Community Customs Management Act, 2004.
(e) Whether the Plaintiff has proved its case to the requisite standard to be entitled to the reliefs sought, including the claim for special damages.
Analysis
19. The Defendant challenges the Plaintiff’s suit in a twin pronged approach. At the very onset it raises what would constitute preliminary objections to the suit based on limitation and also validity of the Plaint.
(a) Whether the suit was defeated by the statute of limitation.
20. The Defendant avers that the suit is based on a claim of negligence and was filed outside the three-year limitation period provided by Section 4 (2) of the Limitation of Actions Act.
21. The Court has perused the Plaint and noted that at paragraph 21 it pleads particulars of negligence against the Defendant. The Plaintiff frames its claim as one seeking damages arising out of negligence.
22. During cross examination, PW1 owned up that the last customs entry was done on 9th June, 2016. That this suit was consequently filed on 2nd October, 2019. That this was after expiry of three years. He maintained in re examination that he filed the case after three years after receiving a letter from KRA on 29th January, 2019. In that letter KRA was demanding Kshs. 45,166,767/= from the Plaintiff.
23. To this Court, the filing of this case after expiry of the three years offends the mandatory provisions of Section 4(2) of the Limitations Act which states as follows:
“4. Actions of contract and tort and certain other actions
(1) The following actions may not be brought after the end of six years from the date on which the cause of action accrued—
(a)actions founded on contract;
(b)actions to enforce a recognizance;
(c)actions to enforce an award;
(d)actions to recover a sum recoverable by virtue of a written law, other than a penalty or forfeiture or sum by way of penalty or forfeiture;
(e)actions, including actions claiming equitable relief, for which no other period of limitation is provided by this Act or by any other written law.
(2) An action founded on tort may not be brought after the end of three years from the date on which the cause of action accrued:”
24. The Court cannot exercise any discretion in extending time. The letter from KRA did not extend time. The suit was filed well outside the time frames set by the law and cannot be resuscitated at this point in time. The same is struck out.
(b) Whether the suit was defeated by failure to attach a Verifying Affidavit.
25. Ideally once a suit is struck out for failing to beat the limitation period, the Court need not determine the other issues. However, this being a Court of Record, it is bound to consider the merits of the other issues. This is for the completeness of the record in the event the matter was to proceed on Appeal.
26. The Court notes that Joseph Muigai Mburu swore the Verifying Affidavit that accompanied the Plaint. He testified that he was the Managing Director of the Plaintiff. The objection as to his authority to swear the Verifying Affidavit is not well taken. It is overruled.
(c) Whether a valid agency relationship existed between
the Plaintiff and the Defendant.
27. The foundation of the Plaintiff's case is agency. The Plaintiff claims it cleared goods for the Defendant. The law places the burden of proof squarely on the Plaintiff. He who alleges must prove. This is codified in Section 107 of the Evidence Act (Cap 80) Laws of Kenya. The section mandates that whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.
28. The Court of Appeal settled this principle in the case of Ndolo v Ndolo [1996] KECA 209 (KLR). The Court held that the burden of proof lies upon the party who would fail if no evidence at all were given on either side. The Plaintiff must therefore establish the agency relationship.
29. Agency is a consensual relationship. It requires the mutual assent of both the principal and the agent. The Defendant denies executing any contract. The Plaintiff concedes the absence of a written contract. The Plaintiff however relies on the doctrine of ratification.
30. The law on the creation of agency is well established. It was masterfully articulated in the persuasive authority of Garnac Grain Co Inc v H M F Faure & Fairclough Ltd [1967] 2 All ER 353. The House of Lords held:
"The relationship of principal and agent can only be established by the consent of the principal and the agent. They will be held to have consented if they have agreed to what amounts in law to such a relationship, even if they do not recognize it themselves and even if they have professed to disclaim it. The consent must however have been given by each of them, either expressly or by implication from their words and conduct."
31. The Plaintiff must prove this consent. The Plaintiff tendered the evidence of PW1. PW1 testified that documents were received from a representative of the Defendant. PW1 stated that the Defendant executed a customs bond. The customs bond was handed to the Plaintiff. The Plaintiff used it to clear the goods. The customs entries indeed bear the names of both the Plaintiff and the Defendant.
32. The case presented a significant twist during the trial. This twist emerged during the cross-examination of PW1. PW1 made a startling admission. PW1 admitted on oath that the Plaintiff did not possess any written authorization from the Defendant.
“I do not have a written document from the defendant authorising us to clear the goods”
33. Furthermore, PW1 admitted that the Plaintiff did not actually know who the importer of the goods was at the material time.
34. The exact witness statement of PW1 is on record. It reads:
"Around the year 2016, through an intermediary, we cleared the goods of China Road and Bridge Corporation.......we did not know the importer of the goods until much later after undertaking our investigation and pushing KRA to give us the accompanying documents".
35. The statement and admission are fatal to the Plaintiff's case. It destroys the very foundation of consensual agency. An agent cannot act for a principal whose identity is entirely unknown to the agent at the time of the transaction. There can be no meeting of minds. There can be no implied consent. There can be no ratification where the alleged agent did not profess to act for the specific principal at the time of the act. The Court agrees with the Defendant. There was no authorization. The Plaintiff acted without proper instruction. The Plaintiff breached basic commercial due diligence. The Plaintiff has failed to prove the existence of an agency relationship on a balance of probabilities. The Court follows the decision in Industrial & Commercial Development Corporation (ICDC) v Patheon Limited [2015] KECA 96 (KLR).
(d) Whether the Interested Party acted lawfully under the East African Community Customs Management Act, 2004.
36. The fourth issue touches on the actions of the Interested Party. KRA cancelled the Plaintiff's license. KRA issued agency notices against the Plaintiff's bank accounts. The Plaintiff seeks an order compelling KRA to reinstate the license and waive penalties.
37. Customs operations are strictly regulated. The East African Community Customs Management Act, 2004 provides the statutory framework. Section 147 of the EACCMA is explicit. It establishes the personal liability of a customs agent. The section reads:
"A duly authorised agent who performs any act on behalf of the owner of any goods shall, for the purposes of this Act, be deemed to be the owner of such goods, and shall, accordingly, be personally liable for the payment of any duties to which the goods are liable and for the performance of all acts in respect of the goods which the owner is required to perform under this Act".
38. The Plaintiff presented itself to KRA as the clearing agent for the entries. It assumed this strict statutory liability. The taxes accrued. The customs bonds were not discharged. The liability crystallized directly against the Plaintiff.
39. KRA reacted by suspending the Plaintiff's license. This action is securely anchored in Section 145(3) of the EACCMA. The provision reads:
"The Commissioner may refuse to issue a licence or may by order, suspend, revoke or refuse to renew, any such licence on the ground that the applicant or holder has been found guilty of an offence under the Customs laws or has been convicted of an offence involving dishonesty or fraud, or for any other reason that the Commissioner may deem fit".
40. The Interested Party acted within the four corners of the law. The Plaintiff triggered the liability by clearing goods without proper due diligence. The Court cannot fault the Interested Party. The Court cannot issue prerogative orders to injunct a lawful statutory tax recovery process. The prayer to compel KRA to reinstate the license and waive penalties must inevitably fail.
(e) Whether the Plaintiff has proved its case to the requisite standard to be entitled to the reliefs sought, including the claim for special damages.
41. The final issue addresses the monetary reliefs sought. The Plaintiff seeks general damages. The Plaintiff also seeks a specific sum of Kshs. 50,000,000.00. This sum is claimed as compensation for the loss of business opportunity. The Plaintiff argues the business was established in the year 1988. It claims a minimum annual turnover of Kshs. 5,000,000.00. It projects this over the years since 2016.
42. The Court has already found that no agency relationship existed. The Defendant breached no duty of care. The Defendant is not liable for negligence. The claim for general damages therefore collapses. General damages cannot be awarded in a vacuum. Liability must first be established.
43. The claim for Kshs. 50,000,000.00 is a claim for special damages. The law on special damages is rigid. Special damages must be specifically pleaded. They must be strictly proved. The Court of Appeal in Kenya settled this law in the locus classicus case of Hahn v Singh [1985] KECA 129 (KLR). The Court held:
"Special damages must not only be specifically pleaded but also strictly proved. The degree of certainty and particularity of proof required depends on the circumstances and the nature of the acts themselves."
44. This principle was further reaffirmed in David Bagine vs Martin Bundi [1997] KECA 201 (KLR). A party claiming loss of earnings or business opportunity must produce concrete documentary evidence. Audited accounts, tax returns, and bank statements are mandatory.
45. The Plaintiff failed this legal test. The Plaintiff pleaded the sum of Kshs. 50,000,000.00. However, the Plaintiff adduced absolutely no evidence to support this figure. No audited accounts were produced. No verifiable business records were tendered. The projection of Kshs. 5,000,000.00 per year is purely speculative. The Court cannot rely on mathematical conjectures from the bar. The claim for special damages fails entirely.
46. The Plaintiff engineered its own misfortune. It cleared high-value consignments without confirming the identity of the importer. It relied on documents brought by unknown persons. It failed to secure written authorization. It blindly bore the statutory risk under the EACCMA. The Defendant cannot be held liable for the Plaintiff's systemic administrative failures. Consequently, the suit lacks merit. The Plaintiff's claims are dismissed in their entirety.
47. As to costs they ordinarily follow the event. They lie at the discretion of this Court. No argument was presented that the Defendant acted in a manner that was undeserving of an award of costs, during the trial. The Court awards the costs of the suit to the successful Defendant.
48. As we conclude, the Court cannot but wonder why the Plaintiff remained obstinate that it cleared the Defendant’s goods while the Defendant maintains that no such goods were cleared. Wouldn’t going back to KRA and saying look, our purported Principal has denied that we cleared its good, so relieve us of any obligations arising therefrom. The Defendant’s evidence was that the construction contracts for SGR were exempt from customs duty. If that be the case, then were any taxes due for the subject consignments? As this was not an issue before this Court, the parties can continue to ponder the same.
Determination
49. The Court is persuaded that the suit was filed outside the limitation period. On the other hand, the Court is not persuaded that the Plaintiff has proved its case to the required standard and makes the following orders:
(a) The Plaintiff’s suit is HEREBY struck out in its entirety for lack of merit.
(b) The costs of the suit are awarded to the Defendant.
50. It is so ordered.
DATED, SIGNED AND DELIVERED AT MILIMANI THIS 16TH DAY OF SEPTEMBER, 2026
NJOROGE BENJAMIN K.
JUDGE
In the presence of:
Miss Metto holding brief for Mr. Mutembei for the Plaintiff.
Mr. Masila for the Defendant.
Mr. Wainaina for the Interested Party.
Mr. John Paul - Court Assistant.
Background Facts
2. The Plaintiff acted as a customs agent between February and June, 2016. It facilitated the clearance of imported goods through the Port of Mombasa. The goods were cleared under three distinct customs entries as follows:
Date Customs Entry No.
(1.) On 11th February, 2016 2016MSA 5880559
(2.) On 28th February, 2016 2016MSA 6035300
(3.) On 9th June, 2016 2016MSA 6020832
3. The Plaintiff facilitated this clearance process. To enable clearance of the imports, the Defendant secured the payment of the duty due on the imports vide customs bonds PSCB03006/2016 E.NO. 2016MSA 6035300, PSCB03019/16 E.NO. 2016MSA 6020832, and PSCB00672/16 E.NO. 2016MSA 5880559. The Defendant purportedly secured customs bonds for these consignments. The execution of these bonds constituted an undertaking. The Defendant was required to provide proof of tax exemption. Alternatively, the Defendant was required to settle the accrued customs duties within a prescribed statutory period.
4. The Defendant failed to settle the taxes due. The Defendant also failed to procure the cancellation of the executed customs bonds. This failure triggered severe regulatory action. KRA moved against the Plaintiff to recover the unpaid duties. KRA cancelled the Plaintiff’s customs agent license. KRA subsequently issued agency notices to various commercial banks. These notices froze the Plaintiff’s bank accounts. They crippled the Plaintiff’s business operations. The initial customs liability stood at Kshs. 34,585,439.00. This amount later escalated to Kshs. 48,166,769.00.
The Plaintiff’s Case
5. The Plaintiff approached this Court seeking relief. The suit is anchored on the Amended Plaint. The pleading is dated 13th June, 2022. The Plaintiff asserts that the cleared goods belonged to the Defendant. The goods were imported for the Defendant's direct benefit.
6. The Plaintiff claims it performed its obligations properly. It acted under the legitimate expectation that the Defendant would discharge its statutory duties. The Defendant was expected to cancel the customs bonds. The Defendant was expected to furnish KRA with the requisite exemption documentation. The Plaintiff alleges that the Defendant was fully aware of the consequences of default. The Defendant knew the Plaintiff would bear personal liability.
7. The Plaintiff pleads negligence. It alleges that the Defendant unlawfully failed to settle the taxes due. This failure exposed the Plaintiff to severe regulatory sanctions. The cancellation of the customs license deprived the Plaintiff of its sole source of income. The freezing of bank accounts caused immense financial embarrassment. The Plaintiff claims to have suffered massive financial loss. It claims severe reputational damage. It cites an absolute inability to trade since the year 2016.
8. The Plaintiff seeks several reliefs as follows:
(a) An order compelling the defendant to cancel the customs bond or pay taxes amounting to Kshs. 48,166,769.00 together with accrued interest as demanded by KRA.
(b) Compensation for loss of business opportunity of Kshs. 50,000,000.00.
(c) General damages.
(d) Cost of this suit.
(e) Interest on items (a) and (b).
(f) An order compelling the Interested Party to waive all accrued penalties as at the date of judgment of this suit and reinstate the Customs Tax Agency licence previously issued to the Plaintiff.
(g) Any other relief or further relief as this Honourable court may deem fit.
The Defendant's Case
9. The Defendant entered an appearance. It filed a Statement of Defence. The defence is dated 11th December, 2019. The Defendant totally denies the Plaintiff's claim. It denies ever appointing the Plaintiff as its customs clearing agent.
10. The Defendant denies issuing the alleged customs bonds. It disassociates itself from the importation process. It maintains that the Plaintiff acted unilaterally. The Defendant asserts that the Plaintiff failed to provide strict proof of the alleged agency relationship. The Defendant denies executing the specific customs bonds relied upon by the Plaintiff.
11. The Defendant disclaims any liability for the KRA taxes. It denies responsibility for the cancellation of the Plaintiff’s license. It denies responsibility for the agency notices. The Defendant maintains it owes no duty of care to the Plaintiff. It asserts that any loss suffered by the Plaintiff is a direct consequence of the Plaintiff's own unlawful actions. The Defendant prays for the dismissal of the suit with costs.
The Interested Party's Case
12. The Interested Party is the Kenya Revenue Authority. It is a statutory body. It is mandated to assess, collect, and account for government revenue. Its actions are strictly governed by the East African Community Customs Management Act (EACCMA), 2004.
13. The Interested Party defends its regulatory actions. It relies on the strict liability provisions of the EACCMA. The law deems a clearing agent to be the owner of the goods for tax recovery purposes. The Interested Party maintains that the suspension of the license was lawful. The issuance of agency notices was within its statutory mandate. It submits that it cannot be compelled to waive validly accrued taxes and penalties without statutory justification.
14. The Plaintiff and the Defendant called a witness each. The Interested Party opted not to participate during the trial. It chose to file final submissions instead.
Summary of Final Submissions
15. The Court directed the parties to file written submissions. The Plaintiff submitted that an agency relationship existed. The relationship was purportedly formed through ratification. The Plaintiff argued that the Defendant accepted the cleared goods. The Defendant did not raise objections prior to this suit. The Plaintiff relied on these actions to prove agency. The Plaintiff maintained its entitlement to the sum of Kshs. 50,000,000.00. It argued this figure reflects the lost turnover since the year 2016.
16. The Defendant submitted at the outset that the suit was filed outside the limitation period provided by Section 4(2) of the Limitation of Actions Act. That the suit was defective for want of a verifying affidavit accompanying the Plaint, sworn by an officer authorized under seal of the company as required by Order 4 rule 1(4) of the Civil Procedure Rules. On Merit it submitted that privity of contract was absent. No written contract existed between the parties. The Defendant highlighted a fatal admission made by the Plaintiff's witness during cross-examination. The witness admitted lacking written authorization. The Defendant argued that the claim for special damages was entirely speculative. It submitted that special damages were neither specifically pleaded nor strictly proved.
17. The Interested Party submitted on statutory compliance. It relied on Section 145 and Section 147 of the EACCMA. It argued that its actions against the Plaintiff were legally protected. It submitted that the Court cannot injunct the lawful collection of taxes.
Issues for Determination
18. The Court has reviewed the pleadings. It has considered the witness testimonies. It has evaluated the documentary evidence. It has read the written submissions. The Court frames five distinct issues for determination:
(a) Whether the suit was defeated by the statute of limitation.
(b) Whether the suit was defeated by failure to attach a Verifying Affidavit.
(c) Whether a valid agency relationship existed between the Plaintiff and the Defendant.
(d) Whether the Interested Party acted lawfully under the East African Community Customs Management Act, 2004.
(e) Whether the Plaintiff has proved its case to the requisite standard to be entitled to the reliefs sought, including the claim for special damages.
Analysis
19. The Defendant challenges the Plaintiff’s suit in a twin pronged approach. At the very onset it raises what would constitute preliminary objections to the suit based on limitation and also validity of the Plaint.
(a) Whether the suit was defeated by the statute of limitation.
20. The Defendant avers that the suit is based on a claim of negligence and was filed outside the three-year limitation period provided by Section 4 (2) of the Limitation of Actions Act.
21. The Court has perused the Plaint and noted that at paragraph 21 it pleads particulars of negligence against the Defendant. The Plaintiff frames its claim as one seeking damages arising out of negligence.
22. During cross examination, PW1 owned up that the last customs entry was done on 9th June, 2016. That this suit was consequently filed on 2nd October, 2019. That this was after expiry of three years. He maintained in re examination that he filed the case after three years after receiving a letter from KRA on 29th January, 2019. In that letter KRA was demanding Kshs. 45,166,767/= from the Plaintiff.
23. To this Court, the filing of this case after expiry of the three years offends the mandatory provisions of Section 4(2) of the Limitations Act which states as follows:
“4. Actions of contract and tort and certain other actions
(1) The following actions may not be brought after the end of six years from the date on which the cause of action accrued—
(a)actions founded on contract;
(b)actions to enforce a recognizance;
(c)actions to enforce an award;
(d)actions to recover a sum recoverable by virtue of a written law, other than a penalty or forfeiture or sum by way of penalty or forfeiture;
(e)actions, including actions claiming equitable relief, for which no other period of limitation is provided by this Act or by any other written law.
(2) An action founded on tort may not be brought after the end of three years from the date on which the cause of action accrued:”
24. The Court cannot exercise any discretion in extending time. The letter from KRA did not extend time. The suit was filed well outside the time frames set by the law and cannot be resuscitated at this point in time. The same is struck out.
(b) Whether the suit was defeated by failure to attach a Verifying Affidavit.
25. Ideally once a suit is struck out for failing to beat the limitation period, the Court need not determine the other issues. However, this being a Court of Record, it is bound to consider the merits of the other issues. This is for the completeness of the record in the event the matter was to proceed on Appeal.
26. The Court notes that Joseph Muigai Mburu swore the Verifying Affidavit that accompanied the Plaint. He testified that he was the Managing Director of the Plaintiff. The objection as to his authority to swear the Verifying Affidavit is not well taken. It is overruled.
(c) Whether a valid agency relationship existed between
the Plaintiff and the Defendant.
27. The foundation of the Plaintiff's case is agency. The Plaintiff claims it cleared goods for the Defendant. The law places the burden of proof squarely on the Plaintiff. He who alleges must prove. This is codified in Section 107 of the Evidence Act (Cap 80) Laws of Kenya. The section mandates that whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.
28. The Court of Appeal settled this principle in the case of Ndolo v Ndolo [1996] KECA 209 (KLR). The Court held that the burden of proof lies upon the party who would fail if no evidence at all were given on either side. The Plaintiff must therefore establish the agency relationship.
29. Agency is a consensual relationship. It requires the mutual assent of both the principal and the agent. The Defendant denies executing any contract. The Plaintiff concedes the absence of a written contract. The Plaintiff however relies on the doctrine of ratification.
30. The law on the creation of agency is well established. It was masterfully articulated in the persuasive authority of Garnac Grain Co Inc v H M F Faure & Fairclough Ltd [1967] 2 All ER 353. The House of Lords held:
"The relationship of principal and agent can only be established by the consent of the principal and the agent. They will be held to have consented if they have agreed to what amounts in law to such a relationship, even if they do not recognize it themselves and even if they have professed to disclaim it. The consent must however have been given by each of them, either expressly or by implication from their words and conduct."
31. The Plaintiff must prove this consent. The Plaintiff tendered the evidence of PW1. PW1 testified that documents were received from a representative of the Defendant. PW1 stated that the Defendant executed a customs bond. The customs bond was handed to the Plaintiff. The Plaintiff used it to clear the goods. The customs entries indeed bear the names of both the Plaintiff and the Defendant.
32. The case presented a significant twist during the trial. This twist emerged during the cross-examination of PW1. PW1 made a startling admission. PW1 admitted on oath that the Plaintiff did not possess any written authorization from the Defendant.
“I do not have a written document from the defendant authorising us to clear the goods”
33. Furthermore, PW1 admitted that the Plaintiff did not actually know who the importer of the goods was at the material time.
34. The exact witness statement of PW1 is on record. It reads:
"Around the year 2016, through an intermediary, we cleared the goods of China Road and Bridge Corporation.......we did not know the importer of the goods until much later after undertaking our investigation and pushing KRA to give us the accompanying documents".
35. The statement and admission are fatal to the Plaintiff's case. It destroys the very foundation of consensual agency. An agent cannot act for a principal whose identity is entirely unknown to the agent at the time of the transaction. There can be no meeting of minds. There can be no implied consent. There can be no ratification where the alleged agent did not profess to act for the specific principal at the time of the act. The Court agrees with the Defendant. There was no authorization. The Plaintiff acted without proper instruction. The Plaintiff breached basic commercial due diligence. The Plaintiff has failed to prove the existence of an agency relationship on a balance of probabilities. The Court follows the decision in Industrial & Commercial Development Corporation (ICDC) v Patheon Limited [2015] KECA 96 (KLR).
(d) Whether the Interested Party acted lawfully under the East African Community Customs Management Act, 2004.
36. The fourth issue touches on the actions of the Interested Party. KRA cancelled the Plaintiff's license. KRA issued agency notices against the Plaintiff's bank accounts. The Plaintiff seeks an order compelling KRA to reinstate the license and waive penalties.
37. Customs operations are strictly regulated. The East African Community Customs Management Act, 2004 provides the statutory framework. Section 147 of the EACCMA is explicit. It establishes the personal liability of a customs agent. The section reads:
"A duly authorised agent who performs any act on behalf of the owner of any goods shall, for the purposes of this Act, be deemed to be the owner of such goods, and shall, accordingly, be personally liable for the payment of any duties to which the goods are liable and for the performance of all acts in respect of the goods which the owner is required to perform under this Act".
38. The Plaintiff presented itself to KRA as the clearing agent for the entries. It assumed this strict statutory liability. The taxes accrued. The customs bonds were not discharged. The liability crystallized directly against the Plaintiff.
39. KRA reacted by suspending the Plaintiff's license. This action is securely anchored in Section 145(3) of the EACCMA. The provision reads:
"The Commissioner may refuse to issue a licence or may by order, suspend, revoke or refuse to renew, any such licence on the ground that the applicant or holder has been found guilty of an offence under the Customs laws or has been convicted of an offence involving dishonesty or fraud, or for any other reason that the Commissioner may deem fit".
40. The Interested Party acted within the four corners of the law. The Plaintiff triggered the liability by clearing goods without proper due diligence. The Court cannot fault the Interested Party. The Court cannot issue prerogative orders to injunct a lawful statutory tax recovery process. The prayer to compel KRA to reinstate the license and waive penalties must inevitably fail.
(e) Whether the Plaintiff has proved its case to the requisite standard to be entitled to the reliefs sought, including the claim for special damages.
41. The final issue addresses the monetary reliefs sought. The Plaintiff seeks general damages. The Plaintiff also seeks a specific sum of Kshs. 50,000,000.00. This sum is claimed as compensation for the loss of business opportunity. The Plaintiff argues the business was established in the year 1988. It claims a minimum annual turnover of Kshs. 5,000,000.00. It projects this over the years since 2016.
42. The Court has already found that no agency relationship existed. The Defendant breached no duty of care. The Defendant is not liable for negligence. The claim for general damages therefore collapses. General damages cannot be awarded in a vacuum. Liability must first be established.
43. The claim for Kshs. 50,000,000.00 is a claim for special damages. The law on special damages is rigid. Special damages must be specifically pleaded. They must be strictly proved. The Court of Appeal in Kenya settled this law in the locus classicus case of Hahn v Singh [1985] KECA 129 (KLR). The Court held:
"Special damages must not only be specifically pleaded but also strictly proved. The degree of certainty and particularity of proof required depends on the circumstances and the nature of the acts themselves."
44. This principle was further reaffirmed in David Bagine vs Martin Bundi [1997] KECA 201 (KLR). A party claiming loss of earnings or business opportunity must produce concrete documentary evidence. Audited accounts, tax returns, and bank statements are mandatory.
45. The Plaintiff failed this legal test. The Plaintiff pleaded the sum of Kshs. 50,000,000.00. However, the Plaintiff adduced absolutely no evidence to support this figure. No audited accounts were produced. No verifiable business records were tendered. The projection of Kshs. 5,000,000.00 per year is purely speculative. The Court cannot rely on mathematical conjectures from the bar. The claim for special damages fails entirely.
46. The Plaintiff engineered its own misfortune. It cleared high-value consignments without confirming the identity of the importer. It relied on documents brought by unknown persons. It failed to secure written authorization. It blindly bore the statutory risk under the EACCMA. The Defendant cannot be held liable for the Plaintiff's systemic administrative failures. Consequently, the suit lacks merit. The Plaintiff's claims are dismissed in their entirety.
47. As to costs they ordinarily follow the event. They lie at the discretion of this Court. No argument was presented that the Defendant acted in a manner that was undeserving of an award of costs, during the trial. The Court awards the costs of the suit to the successful Defendant.
48. As we conclude, the Court cannot but wonder why the Plaintiff remained obstinate that it cleared the Defendant’s goods while the Defendant maintains that no such goods were cleared. Wouldn’t going back to KRA and saying look, our purported Principal has denied that we cleared its good, so relieve us of any obligations arising therefrom. The Defendant’s evidence was that the construction contracts for SGR were exempt from customs duty. If that be the case, then were any taxes due for the subject consignments? As this was not an issue before this Court, the parties can continue to ponder the same.
Determination
49. The Court is persuaded that the suit was filed outside the limitation period. On the other hand, the Court is not persuaded that the Plaintiff has proved its case to the required standard and makes the following orders:
(a) The Plaintiff’s suit is HEREBY struck out in its entirety for lack of merit.
(b) The costs of the suit are awarded to the Defendant.
50. It is so ordered.
DATED, SIGNED AND DELIVERED AT MILIMANI THIS 16TH DAY OF SEPTEMBER, 2026
NJOROGE BENJAMIN K.
JUDGE
In the presence of:
Miss Metto holding brief for Mr. Mutembei for the Plaintiff.
Mr. Masila for the Defendant.
Mr. Wainaina for the Interested Party.
Mr. John Paul - Court Assistant.