'
Background
1. By way of a plaint dated 7th December 2021, the Plaintiff, John Mwangemi, instituted this suit against the Defendant, KENCOM Savings and Cooperative Society Limited, seeking recovery of monies allegedly advanced to the Defendant pursuant to a loan agreement. In particular, the Plaintiff prayed for: -
a) Payment of the sum of Kshs. 50,000,000/=
b) Interest on the sum advanced from 10th September 2012, 8th November 2012, and 7th December 1012 at the rate of 2% per month to date.
c) Interest on (a) and (b) above from the date of the judgment; and
d) Costs of this claim;
e) Any other relief as this Honourable Court deems fit.
2. The Plaintiff''s case, as presented in the pleadings, is that in 2012, he advanced a total of Kshs. 60,000,000 to the Defendant in three separate tranches. This was based on a business proposal presented by Mr. Peter Mutua Maithya, a representative of the Defendant. The funds were transferred to the Defendant''s lawyers, Makhandia & Makhandia Advocates, for the Defendant''s benefit in the following three tranches: -
i. Kshs. 35,000,000.00 on 10th September 2012;
ii. Kshs. 15,000,000.00 on 8th November 2012; and
iii. Kshs. 10,000,000.00 on 7th December 2012.
3. The terms of the agreement, which the Plaintiff asserts constituted a legally binding contract, included the repayment of the principal amount with a monthly interest rate of 2%. The Plaintiff acknowledged receiving a payment of Kshs. 10,000,000 around October 2014, which reduced the principal sum to Kshs. 50,000,000.
4. The Plaintiff contended that by a letter dated 13th March 2015, the Defendant acknowledged the outstanding debt of Kshs. 50,000,000, with an additional Kshs. 9,000,000 in accrued interest as of February 2015. However, despite repeated demands, he failed to settle the debt.
5. The Plaintiffs therefore prayed for judgment against the Defendant for the outstanding principal sum of Kshs. 50,000,000.00, interest thereon at 2% per month, general damages for breach of contract, costs of the suit, and any other relief the Court may deem just.
6. The Defendant entered appearance and filed a statement of defence dated 8th February 2022 denying the claim. He admitted receipt of some funds but denied liability for the amount claimed. He further alleged that the Plaintiffs had not produced a valid and enforceable contract.
Hearing
7. At the hearing of the suit, which was conducted on 18th November 2024, the Plaintiff, John Mwangemi, testified as the sole witness. He adopted his witness statement dated 7th December 2021 as his evidence in chief, and produced documents in the list of documents of even date as his evidence in the case. The documents produced in evidence included bank transfer records, the Defendant’s acknowledgment letter dated 13th March 2015, and correspondence showing part payments of interest.
8. The Plaintiff, who told Court that he is a Consultant, testified that he advanced a total of Kshs. 60,000,000/- to the Defendant in three separate tranches through the law firm of Makhandia & Makhandia Advocates, who was then acting for the Defendant for that purpose. According to the witness, interest was agreed at the rate of 2% per month.
9. Mr. Mwangemi, however, told Court that although the agreement was in writing, he did not have a copy of the same since he had misplaced the same. It was his position that, notwithstanding the misplacement of the written agreement, the conduct of the Defendant and its officials, including part payments and express acknowledgments, sufficiently establishes the existence of a binding contract.
10. The witness produced a letter dated 13th March 2015 (page 27 of the Trial Bundle), in which the Defendant is said to have acknowledged owing the Plaintiff Kshs. 50,000,000, with Kshs. 9,000,000 in accrued interest as of February 2015.
11. The Plaintiff acknowledged that the Defendant had repaid Kshs. 10,000,000/-, only, leaving an outstanding principal of Kshs. 50,000,000/- which continues to accrue interest.
12. The witness took issue with the Defendant’s witness statement by Camelyne, alleging that only Kshs. 37,200,000/- had been received from the Plaintiff, and that the same had been fully repaid. The Plaintiff asserted that this statement by the Defendant was incorrect and that the Defendant did not, in any event, provide any evidence to substantiate repayment.
Written Submissions
13. Directions were therefore given for the Plaintiff to put in written submissions. The Plaintiff’s Counsel, Nyawira, Milima & Omotto Advocates, filed submissions dated 14th January 2025.
14. The Plaintiff submitted that the payments made to the Defendant constituted a legally binding and enforceable agreement supported by consideration. They relied on Garvey v Richards [2011] JMCA 16 and Abdulkadir Shariff Abdirahim v Awo Shariff Mohammed [2014] eKLR, for the principle that a contract may be inferred from the conduct of the parties and that acknowledgment of debt creates a binding obligation.
15. It was argued that the Defendant’s written acknowledgment of 13th March 2015, coupled with his partial repayments, proved the existence of the contract and his indebtedness. They further submitted that the Defendant’s failure to discharge the debt constituted breach of contract, entitling them to the reliefs sought.
16. On remedies, they urge the Court to award damages for breach of contract, citing Hydro Water Well (K) Ltd v Sechere & 2 Others [2021] KEHC 22, which restated the principle that damages are intended to place the injured party in the same position as if the contract had been performed.
17. On costs, the Plaintiff submitted that the same should follow the event in accordance with Section 27 of the Civil Procedure Act, relying on Republic v Rosemary Wairimu Munene ex parte Ihururu Dairy Farmers Co-op Society Ltd [2004] eKLR and Morgan Air Cargo Ltd v Evrest Enterprises Ltd [2014] eKLR.
18. In conclusion, the Plaintiff urge the Court to allow the Plaint dated 7th December 2021 as prayed, to dismiss the Defence dated 8th February 2022, and to award costs in his favour.
Analysis & Determination
19. I have carefully considered the pleadings, the oral testimony tendered by the Plaintiff, the documents produced in evidence, and the written submissions filed on behalf of the Plaintiff. Although the Defendant filed a statement of defence dated 8th February 2022 and a witness statement of one Camelyne Sheila Khamati, it did not call any witness at the hearing. Consequently, the Plaintiff’s evidence remains uncontroverted.
20. From the pleadings and submissions, the issues arising for determination are:
i. Whether there existed a legally binding and enforceable contract between the parties;
ii. Whether the Defendant breached the said contract;
iii. Whether the Plaintiffs are entitled to the reliefs sought; and
21. The applicable law as to the burden of proof is set out under Sections 107, 108 and 109 of the Evidence Act. The Court of Appeal in Mumbi M''Nabea v David M.Wachira [2016] eKLR, while discussing the standard of proof in civil liability claims, stated as follows: -
“In our jurisdiction, the standard of proof in civil liability claims is that of the balance of probabilities. This means that the Court will assess the oral, documentary and real evidence advanced by each party and decide which case is more probable. To put it another way, on the evidence, which occurrence of the event was more likely to happen than not. Section 107(1) of the Evidence Act, Cap 80 Laws of Kenya provides as follows:
“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.”
The above provision provides for the legal burden of proof. However, Section 109 of the same Act provides for the evidentiary burden of proof and states as follows:
“The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.”
The position was re-affirmed by the Court of Appeal in Maria Ciabaitaru M’mairanyi & Others v. Blue Shield Insurance Company Limited -Civil Appeal No. 101 of 2000 [2005] 1 EA 280 where it was held that:
“Whereas under section 107 of the Evidence Act, (which deals with the legal evidentiary burden of proof), the burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue, section 109 of the same Act recognizes that the burden of proof as to any particular fact may be cast on the person who wishes the Court to believe in its existence.”
22. On the standard of proof, the Court of Appeal in Palace Investments Limited v Geoffrey Kariuki Mwenda & another [2015] KECA 616 (KLR) that the standard of proof on a balance of probabilities is attained where the tribunal or a court finds it more probable than not that the fact exists, and that if the probabilities are equal, the burden is not discharged. Put differently, a narrow win suffices, but a draw is inadequate, and the party bearing the burden must fail. Quoting Denning J. in Miller –vs- Minister of Pensions [1947] 2 ALL ER 372, the Court stated that:
“That degree is well settled. It must carry a reasonable degree of probability, but not so high as is required in a criminal case. If the evidence is such that the tribunal can say: ‘We think it more probable than not’, the burden is discharged, but, if the probabilities are equal, it is not. Thus, proof on a balance or preponderance of probabilities means a win, however narrow. A draw is not enough. So, in any case in which the tribunal cannot decide one way or the other which evidence to accept, where both parties’ explanations are equally (un)convincing, the party bearing the burden of proof will lose, because the requisite standard will not have been attained.”
23. From the foregoing guiding authorities, it is evident that the duty of proving the averments in the plaint lay squarely with the Plaintiff, even though the Defendant did not call any witness.
(i) Existence of a legally binding contract
24. It is trite law that an enforceable contract may be oral, written, or implied from the conduct of the parties, provided that intention, consideration, and certainty of terms are established. In RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co KG (UK Production) [2010] UKSC 14,[45], the Supreme Court of the United Kingdom stated that: -
“The general principles are not in doubt. Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations...”
25. A contract can be implied or express. There is no requirement that to be binding, a contract be in writing. The Court of Appeal in Abdulkadir Shariff Abdirahim & Abdinarsir Abdirahim Mohammed T/A. S. Abdirahim Enterprises v Awo Shariff Mohammed T/A A. S. Mohammed Investments [2013] KECA 59 (KLR) stated that: -
“There is no general rule of law that all agreements must be in writing. The numerous advantages of a written agreement notwithstanding, all that the law requires is that certain specific agreements must be in writing or witnessed by some written note or memorandum. Section 3(1) of the Law of Contract Act is one such provision. The origin of this provision has been traced to section 4 of the Statute of Frauds, 1677, whose object was to prevent fraudulent claims based on perjured evidence and to protect guarantors, (See G. H. TREITEL, LAW OF CONTRACT, 10th edition, Sweet & Maxwell, Page 161-170). Section 3(1), therefore, applies where the defendant has guaranteed the creditor that he shall answer for the debtor’s debt should the debtor fail to pay.” [Emphasis added].
26. Further, in Ali Abid Mohammed versus Kenya Shell & Company Limited (2017) eKLR, the Court of Appeal was explicit that a contract may exist even where no words are used but where it can be inferred from the conduct of the parties that a contract has been concluded. The court stated that: -
“It therefore follows that a contract can exist where no words have been used but where it can be inferred from the conduct of the parties that a contract has been concluded. See Timoney and King v King 1920 AD 133 at 141. In the circumstances of the instant case, there existed an enforceable contract between the parties by reason of Conduct. Indeed, it was not disputed by the respondent that it supplied petroleum products to the appellant at a specific amount per liter and for a certain period of time.”
27. It therefore follows that a contract need not be in writing but can be inferred from the conduct of the parties, particularly where the conduct demonstrates the presence of the elements of a valid contract, that is, the elements of offer, acceptance, and consideration.
28. In the present case, it is the Plaintiff’s case that by way of a written agreement, he advanced a total sum of Kshs. 60,000,000.00 to the Defendant, through the Defendant’s advocates, the firm of Makhandia & Makhandia Advocates. The advances were made in three tranches: Kshs. 35,000,000.00 on 10th September 2012, Kshs. 15,000,000.00 on 8th November 2012, and Kshs. 10,000,000.00 on 7th December 2012. The Plaintiff, however, testified that he has since misplaced the agreement and could therefore not produce a copy in Court.
29. The Plaintiff nevertheless produced bank statements showing payments of Kshs. 35,000,000.00 on 10th September 2012, Kshs. 15,000,000.00 on 8th November 2012, and Kshs. 10,000,000.00 on 7th December 2012, totaling Kshs. 60,000,000.00. These payments were made to the Defendant through its advocates, Makhandia & Makhandia.
30. The Plaintiff also produced as evidence a letter dated 13th March 2015, in which the Defendant expressly acknowledged owing the Plaintiff Kshs. 50,000,000.00 with interest of Kshs. 9,000,000.00 as at February 2015.
31. It is a settled principle of law that an admission is the best evidence against the maker and that just as parties are bound by their pleadings, parties are equally bound by what they admit, which need not necessarily be in the pleadings. In Choitram & another v Nazari [1984] KECA 47 (KLR), the Court of Appeal stated as follows: -
“If upon a purposive interpretation of either clearly written or clearly implied, or both, admissions of fact the case is plain and obvious there is no room for discretion to let the matter go to trial for then nothing is to be gained by having a trial. The court may not exercise its discretion in a manner which renders nugatory an express provision of the law.
Admissions of fact under order XII rule 6 need not be on the pleadings. They may be in correspondence or documents which are admitted or they may even be oral. The rule uses the words “or otherwise” which are words of general application and are wide enough to include admissions made through letter, affidavits and other admitted documents and proved oral admissions.”
32. The Plaintiff''s submissions established that despite the absence of a formal written document, a legally binding agreement was formed. The Plaintiff provided evidence of the transfer of KShs. 60,000,000 to the Defendant''s advocates, and the Defendant''s own witness, Camelyne Sheila Khamati, admitted to receiving Kshs. 37,200,000, thereby confirming the existence of a transaction.
33. The Defendant''s subsequent partial payment of Kshs. 10,000,000, and the letter dated 13th March 2025 acknowledging the debt of Kshs. 50,000,000 further buttress the claim that a valid agreement existed between the parties. The Defendant''s conduct demonstrates a clear intention to create a legal relationship.
34. The Defendant did not call any witness to testify in support of its case. It is settled that where a party fails to call evidence in support of its case, that party''s pleadings remain mere statements of denial. The opposing party’s evidence remains uncontroverted and unchallenged. In Shaneebal Limited v County Government of Machakos (2018) eKLR, while relying on the case of Trust Bank Ltd v Paramount Universal Bank Ltd & 2 others Nairobi (Milimani) HCCS No 1243 of 2001, Odunga J (as he then was) held as follows:
“It is trite that where a party fails to call evidence in support of its case, that party''s pleadings remain mere statements of fact since in doing so the party fails to substantiate its pleadings and in the same vein the failure to adduce evidence means that the evidence adduced by the plaintiff against them is uncontroverted and therefore unchallenged.”
35. In the circumstances, I am therefore satisfied that the evidence establishes the existence of a binding contract between the parties notwithstanding the absence of the original written agreement. The conduct of the Defendant and its officials, including part payments and express acknowledgments, sufficiently establish the existence of a binding contract.
(ii) Whether there was a breach
36. A breach occurs when a party fails to perform its contractual obligations. Black’s Law Dictionary 8th Edition at Page 200 defines breach of contract as;
“Violation of a contractual obligation by failing to perform one’s own promise, by repudiating it, or by interfering with another party’s performance. A breach may be one by non-performance, or by repudiation, or both. Every breach gives rise to a claim for damages, and may give rise to other remedies. Even if the injured party sustains no pecuniary loss or is unable to show such loss with sufficient certainty, he has at least a claim for nominal damages. If a court chooses to ignore a trifling departure, there is no breach and no claim arises.”
37. In this case, the evidence by the Plaintiff unequivocally demonstrates that the Defendant failed to repay the full principal amount and the agreed-upon interest. Apart from a partial repayment of Kshs. 10,000,000/-, the Defendant failed to refund the balance of the principal sum and the agreed interest. No evidence was tendered by the Defendant to prove repayment of the sums advanced. The only evidence before me, therefore, is that the Defendant acknowledged the debt but failed to discharge it.
38. The Defendant''s acknowledgment of a principal sum of Kshs. 50,000,000/-, plus interest of Kshs. 9,000,000/- in its letter of 13th March 2015, and the lack of any subsequent evidence of repayment, as noted in the Plaintiff''s submissions, constitutes a clear breach of the terms of the agreement.
39. In the circumstances, it I the finding of this Court that the Defendant has breached the agreement by failing to repay the admitted principal sum of Kshs. 50,000,000/-and accrued monthly interest of 2% as agreed.
(iii) Whether the Plaintiff is entitled to the reliefs sought
40. Having found that a valid contract existed and that the Defendant breached it, the Plaintiff is entitled to the reliefs sought. The general principle is that damages for breach of contract are compensatory, aimed at placing the innocent party in the position they would have been had the contract been performed.
41. In Hydro Water Well (K) Limited v Sechere & 2 others (sued in their representative capacity as the officers of Chae Kenya Society & 2 others (Sued in their representative capacity as the officers of Chae Kenya Society) [2021] KEHC 22 (KLR), Mativo J (as he then was) stated as follows: -
“The principal remedy under common law for breach of contract is an award of damages, with the purpose of damages being to compensate the injured party for the loss suffered as a result of the breach, rather than (except for very limited circumstances) to punish the breaching party. This general rule, which can be traced back to Robinson v Harman (supra) is to place the claimant in the same position as if the contract had been performed, with the guiding principle being that of restitution. The compensatory nature of damages for breach of contract, and the nature of the loss for which they are designed to compensate, were explained by Lord Diplock in Photo Production Ltd v Securicor Transport Ltd…”
42. From the evidence, the Plaintiff advanced Kshs. 60,000,000.00, of which Kshs. 10,000,000.00 was repaid, leaving Kshs. 50,000,000.00 outstanding. The Defendant had agreed to pay interest at 2% per month, and indeed made part payments consistent with that rate. I therefore find that the Plaintiff is entitled to judgment for the outstanding principal sum of Kshs. 50,000,000.00 together with contractual interest at 2% per month from the date of default until payment in full.
Conclusion
43. In light of the foregoing analysis, the Court finds that the Plaintiff has proved his case on a balance of probabilities. Accordingly, judgment is entered in favour of the Plaintiffs against the Defendant in the following terms: -
i. The Defendant shall pay to the Plaintiffs the sum of Kenya Shillings Fifty Million (Kshs. 50,000,000.00) being the outstanding principal amount advanced.
ii. The said sum shall attract interest at the contractual rate of 2% per month from the date of default, namely 1st March 2015, until payment in full.
iii. The Defendant shall bear the costs of the suit, together with interest thereon at court rates from the date of taxation until payment in full
44. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
18TH SEPTEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
Ms, Koskei
h/b for Maero…………..for the Appellant
Lemiso………….…..... for the Respondent
'
Background
1. By way of a plaint dated 7th December 2021, the Plaintiff, John Mwangemi, instituted this suit against the Defendant, KENCOM Savings and Cooperative Society Limited, seeking recovery of monies allegedly advanced to the Defendant pursuant to a loan agreement. In particular, the Plaintiff prayed for: -
a) Payment of the sum of Kshs. 50,000,000/=
b) Interest on the sum advanced from 10th September 2012, 8th November 2012, and 7th December 1012 at the rate of 2% per month to date.
c) Interest on (a) and (b) above from the date of the judgment; and
d) Costs of this claim;
e) Any other relief as this Honourable Court deems fit.
2. The Plaintiff''s case, as presented in the pleadings, is that in 2012, he advanced a total of Kshs. 60,000,000 to the Defendant in three separate tranches. This was based on a business proposal presented by Mr. Peter Mutua Maithya, a representative of the Defendant. The funds were transferred to the Defendant''s lawyers, Makhandia & Makhandia Advocates, for the Defendant''s benefit in the following three tranches: -
i. Kshs. 35,000,000.00 on 10th September 2012;
ii. Kshs. 15,000,000.00 on 8th November 2012; and
iii. Kshs. 10,000,000.00 on 7th December 2012.
3. The terms of the agreement, which the Plaintiff asserts constituted a legally binding contract, included the repayment of the principal amount with a monthly interest rate of 2%. The Plaintiff acknowledged receiving a payment of Kshs. 10,000,000 around October 2014, which reduced the principal sum to Kshs. 50,000,000.
4. The Plaintiff contended that by a letter dated 13th March 2015, the Defendant acknowledged the outstanding debt of Kshs. 50,000,000, with an additional Kshs. 9,000,000 in accrued interest as of February 2015. However, despite repeated demands, he failed to settle the debt.
5. The Plaintiffs therefore prayed for judgment against the Defendant for the outstanding principal sum of Kshs. 50,000,000.00, interest thereon at 2% per month, general damages for breach of contract, costs of the suit, and any other relief the Court may deem just.
6. The Defendant entered appearance and filed a statement of defence dated 8th February 2022 denying the claim. He admitted receipt of some funds but denied liability for the amount claimed. He further alleged that the Plaintiffs had not produced a valid and enforceable contract.
Hearing
7. At the hearing of the suit, which was conducted on 18th November 2024, the Plaintiff, John Mwangemi, testified as the sole witness. He adopted his witness statement dated 7th December 2021 as his evidence in chief, and produced documents in the list of documents of even date as his evidence in the case. The documents produced in evidence included bank transfer records, the Defendant’s acknowledgment letter dated 13th March 2015, and correspondence showing part payments of interest.
8. The Plaintiff, who told Court that he is a Consultant, testified that he advanced a total of Kshs. 60,000,000/- to the Defendant in three separate tranches through the law firm of Makhandia & Makhandia Advocates, who was then acting for the Defendant for that purpose. According to the witness, interest was agreed at the rate of 2% per month.
9. Mr. Mwangemi, however, told Court that although the agreement was in writing, he did not have a copy of the same since he had misplaced the same. It was his position that, notwithstanding the misplacement of the written agreement, the conduct of the Defendant and its officials, including part payments and express acknowledgments, sufficiently establishes the existence of a binding contract.
10. The witness produced a letter dated 13th March 2015 (page 27 of the Trial Bundle), in which the Defendant is said to have acknowledged owing the Plaintiff Kshs. 50,000,000, with Kshs. 9,000,000 in accrued interest as of February 2015.
11. The Plaintiff acknowledged that the Defendant had repaid Kshs. 10,000,000/-, only, leaving an outstanding principal of Kshs. 50,000,000/- which continues to accrue interest.
12. The witness took issue with the Defendant’s witness statement by Camelyne, alleging that only Kshs. 37,200,000/- had been received from the Plaintiff, and that the same had been fully repaid. The Plaintiff asserted that this statement by the Defendant was incorrect and that the Defendant did not, in any event, provide any evidence to substantiate repayment.
Written Submissions
13. Directions were therefore given for the Plaintiff to put in written submissions. The Plaintiff’s Counsel, Nyawira, Milima & Omotto Advocates, filed submissions dated 14th January 2025.
14. The Plaintiff submitted that the payments made to the Defendant constituted a legally binding and enforceable agreement supported by consideration. They relied on Garvey v Richards [2011] JMCA 16 and Abdulkadir Shariff Abdirahim v Awo Shariff Mohammed [2014] eKLR, for the principle that a contract may be inferred from the conduct of the parties and that acknowledgment of debt creates a binding obligation.
15. It was argued that the Defendant’s written acknowledgment of 13th March 2015, coupled with his partial repayments, proved the existence of the contract and his indebtedness. They further submitted that the Defendant’s failure to discharge the debt constituted breach of contract, entitling them to the reliefs sought.
16. On remedies, they urge the Court to award damages for breach of contract, citing Hydro Water Well (K) Ltd v Sechere & 2 Others [2021] KEHC 22, which restated the principle that damages are intended to place the injured party in the same position as if the contract had been performed.
17. On costs, the Plaintiff submitted that the same should follow the event in accordance with Section 27 of the Civil Procedure Act, relying on Republic v Rosemary Wairimu Munene ex parte Ihururu Dairy Farmers Co-op Society Ltd [2004] eKLR and Morgan Air Cargo Ltd v Evrest Enterprises Ltd [2014] eKLR.
18. In conclusion, the Plaintiff urge the Court to allow the Plaint dated 7th December 2021 as prayed, to dismiss the Defence dated 8th February 2022, and to award costs in his favour.
Analysis & Determination
19. I have carefully considered the pleadings, the oral testimony tendered by the Plaintiff, the documents produced in evidence, and the written submissions filed on behalf of the Plaintiff. Although the Defendant filed a statement of defence dated 8th February 2022 and a witness statement of one Camelyne Sheila Khamati, it did not call any witness at the hearing. Consequently, the Plaintiff’s evidence remains uncontroverted.
20. From the pleadings and submissions, the issues arising for determination are:
i. Whether there existed a legally binding and enforceable contract between the parties;
ii. Whether the Defendant breached the said contract;
iii. Whether the Plaintiffs are entitled to the reliefs sought; and
21. The applicable law as to the burden of proof is set out under Sections 107, 108 and 109 of the Evidence Act. The Court of Appeal in Mumbi M''Nabea v David M.Wachira [2016] eKLR, while discussing the standard of proof in civil liability claims, stated as follows: -
“In our jurisdiction, the standard of proof in civil liability claims is that of the balance of probabilities. This means that the Court will assess the oral, documentary and real evidence advanced by each party and decide which case is more probable. To put it another way, on the evidence, which occurrence of the event was more likely to happen than not. Section 107(1) of the Evidence Act, Cap 80 Laws of Kenya provides as follows:
“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.”
The above provision provides for the legal burden of proof. However, Section 109 of the same Act provides for the evidentiary burden of proof and states as follows:
“The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.”
The position was re-affirmed by the Court of Appeal in Maria Ciabaitaru M’mairanyi & Others v. Blue Shield Insurance Company Limited -Civil Appeal No. 101 of 2000 [2005] 1 EA 280 where it was held that:
“Whereas under section 107 of the Evidence Act, (which deals with the legal evidentiary burden of proof), the burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue, section 109 of the same Act recognizes that the burden of proof as to any particular fact may be cast on the person who wishes the Court to believe in its existence.”
22. On the standard of proof, the Court of Appeal in Palace Investments Limited v Geoffrey Kariuki Mwenda & another [2015] KECA 616 (KLR) that the standard of proof on a balance of probabilities is attained where the tribunal or a court finds it more probable than not that the fact exists, and that if the probabilities are equal, the burden is not discharged. Put differently, a narrow win suffices, but a draw is inadequate, and the party bearing the burden must fail. Quoting Denning J. in Miller –vs- Minister of Pensions [1947] 2 ALL ER 372, the Court stated that:
“That degree is well settled. It must carry a reasonable degree of probability, but not so high as is required in a criminal case. If the evidence is such that the tribunal can say: ‘We think it more probable than not’, the burden is discharged, but, if the probabilities are equal, it is not. Thus, proof on a balance or preponderance of probabilities means a win, however narrow. A draw is not enough. So, in any case in which the tribunal cannot decide one way or the other which evidence to accept, where both parties’ explanations are equally (un)convincing, the party bearing the burden of proof will lose, because the requisite standard will not have been attained.”
23. From the foregoing guiding authorities, it is evident that the duty of proving the averments in the plaint lay squarely with the Plaintiff, even though the Defendant did not call any witness.
(i) Existence of a legally binding contract
24. It is trite law that an enforceable contract may be oral, written, or implied from the conduct of the parties, provided that intention, consideration, and certainty of terms are established. In RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co KG (UK Production) [2010] UKSC 14,[45], the Supreme Court of the United Kingdom stated that: -
“The general principles are not in doubt. Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations...”
25. A contract can be implied or express. There is no requirement that to be binding, a contract be in writing. The Court of Appeal in Abdulkadir Shariff Abdirahim & Abdinarsir Abdirahim Mohammed T/A. S. Abdirahim Enterprises v Awo Shariff Mohammed T/A A. S. Mohammed Investments [2013] KECA 59 (KLR) stated that: -
“There is no general rule of law that all agreements must be in writing. The numerous advantages of a written agreement notwithstanding, all that the law requires is that certain specific agreements must be in writing or witnessed by some written note or memorandum. Section 3(1) of the Law of Contract Act is one such provision. The origin of this provision has been traced to section 4 of the Statute of Frauds, 1677, whose object was to prevent fraudulent claims based on perjured evidence and to protect guarantors, (See G. H. TREITEL, LAW OF CONTRACT, 10th edition, Sweet & Maxwell, Page 161-170). Section 3(1), therefore, applies where the defendant has guaranteed the creditor that he shall answer for the debtor’s debt should the debtor fail to pay.” [Emphasis added].
26. Further, in Ali Abid Mohammed versus Kenya Shell & Company Limited (2017) eKLR, the Court of Appeal was explicit that a contract may exist even where no words are used but where it can be inferred from the conduct of the parties that a contract has been concluded. The court stated that: -
“It therefore follows that a contract can exist where no words have been used but where it can be inferred from the conduct of the parties that a contract has been concluded. See Timoney and King v King 1920 AD 133 at 141. In the circumstances of the instant case, there existed an enforceable contract between the parties by reason of Conduct. Indeed, it was not disputed by the respondent that it supplied petroleum products to the appellant at a specific amount per liter and for a certain period of time.”
27. It therefore follows that a contract need not be in writing but can be inferred from the conduct of the parties, particularly where the conduct demonstrates the presence of the elements of a valid contract, that is, the elements of offer, acceptance, and consideration.
28. In the present case, it is the Plaintiff’s case that by way of a written agreement, he advanced a total sum of Kshs. 60,000,000.00 to the Defendant, through the Defendant’s advocates, the firm of Makhandia & Makhandia Advocates. The advances were made in three tranches: Kshs. 35,000,000.00 on 10th September 2012, Kshs. 15,000,000.00 on 8th November 2012, and Kshs. 10,000,000.00 on 7th December 2012. The Plaintiff, however, testified that he has since misplaced the agreement and could therefore not produce a copy in Court.
29. The Plaintiff nevertheless produced bank statements showing payments of Kshs. 35,000,000.00 on 10th September 2012, Kshs. 15,000,000.00 on 8th November 2012, and Kshs. 10,000,000.00 on 7th December 2012, totaling Kshs. 60,000,000.00. These payments were made to the Defendant through its advocates, Makhandia & Makhandia.
30. The Plaintiff also produced as evidence a letter dated 13th March 2015, in which the Defendant expressly acknowledged owing the Plaintiff Kshs. 50,000,000.00 with interest of Kshs. 9,000,000.00 as at February 2015.
31. It is a settled principle of law that an admission is the best evidence against the maker and that just as parties are bound by their pleadings, parties are equally bound by what they admit, which need not necessarily be in the pleadings. In Choitram & another v Nazari [1984] KECA 47 (KLR), the Court of Appeal stated as follows: -
“If upon a purposive interpretation of either clearly written or clearly implied, or both, admissions of fact the case is plain and obvious there is no room for discretion to let the matter go to trial for then nothing is to be gained by having a trial. The court may not exercise its discretion in a manner which renders nugatory an express provision of the law.
Admissions of fact under order XII rule 6 need not be on the pleadings. They may be in correspondence or documents which are admitted or they may even be oral. The rule uses the words “or otherwise” which are words of general application and are wide enough to include admissions made through letter, affidavits and other admitted documents and proved oral admissions.”
32. The Plaintiff''s submissions established that despite the absence of a formal written document, a legally binding agreement was formed. The Plaintiff provided evidence of the transfer of KShs. 60,000,000 to the Defendant''s advocates, and the Defendant''s own witness, Camelyne Sheila Khamati, admitted to receiving Kshs. 37,200,000, thereby confirming the existence of a transaction.
33. The Defendant''s subsequent partial payment of Kshs. 10,000,000, and the letter dated 13th March 2025 acknowledging the debt of Kshs. 50,000,000 further buttress the claim that a valid agreement existed between the parties. The Defendant''s conduct demonstrates a clear intention to create a legal relationship.
34. The Defendant did not call any witness to testify in support of its case. It is settled that where a party fails to call evidence in support of its case, that party''s pleadings remain mere statements of denial. The opposing party’s evidence remains uncontroverted and unchallenged. In Shaneebal Limited v County Government of Machakos (2018) eKLR, while relying on the case of Trust Bank Ltd v Paramount Universal Bank Ltd & 2 others Nairobi (Milimani) HCCS No 1243 of 2001, Odunga J (as he then was) held as follows:
“It is trite that where a party fails to call evidence in support of its case, that party''s pleadings remain mere statements of fact since in doing so the party fails to substantiate its pleadings and in the same vein the failure to adduce evidence means that the evidence adduced by the plaintiff against them is uncontroverted and therefore unchallenged.”
35. In the circumstances, I am therefore satisfied that the evidence establishes the existence of a binding contract between the parties notwithstanding the absence of the original written agreement. The conduct of the Defendant and its officials, including part payments and express acknowledgments, sufficiently establish the existence of a binding contract.
(ii) Whether there was a breach
36. A breach occurs when a party fails to perform its contractual obligations. Black’s Law Dictionary 8th Edition at Page 200 defines breach of contract as;
“Violation of a contractual obligation by failing to perform one’s own promise, by repudiating it, or by interfering with another party’s performance. A breach may be one by non-performance, or by repudiation, or both. Every breach gives rise to a claim for damages, and may give rise to other remedies. Even if the injured party sustains no pecuniary loss or is unable to show such loss with sufficient certainty, he has at least a claim for nominal damages. If a court chooses to ignore a trifling departure, there is no breach and no claim arises.”
37. In this case, the evidence by the Plaintiff unequivocally demonstrates that the Defendant failed to repay the full principal amount and the agreed-upon interest. Apart from a partial repayment of Kshs. 10,000,000/-, the Defendant failed to refund the balance of the principal sum and the agreed interest. No evidence was tendered by the Defendant to prove repayment of the sums advanced. The only evidence before me, therefore, is that the Defendant acknowledged the debt but failed to discharge it.
38. The Defendant''s acknowledgment of a principal sum of Kshs. 50,000,000/-, plus interest of Kshs. 9,000,000/- in its letter of 13th March 2015, and the lack of any subsequent evidence of repayment, as noted in the Plaintiff''s submissions, constitutes a clear breach of the terms of the agreement.
39. In the circumstances, it I the finding of this Court that the Defendant has breached the agreement by failing to repay the admitted principal sum of Kshs. 50,000,000/-and accrued monthly interest of 2% as agreed.
(iii) Whether the Plaintiff is entitled to the reliefs sought
40. Having found that a valid contract existed and that the Defendant breached it, the Plaintiff is entitled to the reliefs sought. The general principle is that damages for breach of contract are compensatory, aimed at placing the innocent party in the position they would have been had the contract been performed.
41. In Hydro Water Well (K) Limited v Sechere & 2 others (sued in their representative capacity as the officers of Chae Kenya Society & 2 others (Sued in their representative capacity as the officers of Chae Kenya Society) [2021] KEHC 22 (KLR), Mativo J (as he then was) stated as follows: -
“The principal remedy under common law for breach of contract is an award of damages, with the purpose of damages being to compensate the injured party for the loss suffered as a result of the breach, rather than (except for very limited circumstances) to punish the breaching party. This general rule, which can be traced back to Robinson v Harman (supra) is to place the claimant in the same position as if the contract had been performed, with the guiding principle being that of restitution. The compensatory nature of damages for breach of contract, and the nature of the loss for which they are designed to compensate, were explained by Lord Diplock in Photo Production Ltd v Securicor Transport Ltd…”
42. From the evidence, the Plaintiff advanced Kshs. 60,000,000.00, of which Kshs. 10,000,000.00 was repaid, leaving Kshs. 50,000,000.00 outstanding. The Defendant had agreed to pay interest at 2% per month, and indeed made part payments consistent with that rate. I therefore find that the Plaintiff is entitled to judgment for the outstanding principal sum of Kshs. 50,000,000.00 together with contractual interest at 2% per month from the date of default until payment in full.
Conclusion
43. In light of the foregoing analysis, the Court finds that the Plaintiff has proved his case on a balance of probabilities. Accordingly, judgment is entered in favour of the Plaintiffs against the Defendant in the following terms: -
i. The Defendant shall pay to the Plaintiffs the sum of Kenya Shillings Fifty Million (Kshs. 50,000,000.00) being the outstanding principal amount advanced.
ii. The said sum shall attract interest at the contractual rate of 2% per month from the date of default, namely 1st March 2015, until payment in full.
iii. The Defendant shall bear the costs of the suit, together with interest thereon at court rates from the date of taxation until payment in full
44. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
18TH SEPTEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
Ms, Koskei
h/b for Maero…………..for the Appellant
Lemiso………….…..... for the Respondent
'