(Being an appeal from the ruling and order of Honourable L. B. Koech, Principal Magistrate delivered on 8th November 2021 in the Magistrates Court at Milimani MCCC No.7988 of 2018)
- This appeal arises from a ruling of the trial court delivered on 8/11/2021 allowing the respondent’s application dated 20/8/2020 where the court found that negotiations made between the parties on the issue of liability and marked as “without prejudice” by the appellant through his advocate in his communication to the respondent through his advocates and accepted by the respondent had crystallized into a contract that was binding and enforceable. The court therefore entered judgment for the respondent against the appellant on liability in the ratio 60:40.
- Dissatisfied with that decision the appellant filed the present appeal through a memorandum of appeal dated 11/11/2021. He has set out some 11 grounds in support of the appeal but in effect it is just one ground, that the learned trial magistrate erred in law and in fact finding that the negotiations between the parties had crystallized into an firm contract that was capable of enforcement.
- This being a first appeal, the duty of the court is to re-evaluate, re-analyze and re-consider the evidence and draw its own conclusions, bearing in mind that it did not see witnesses testifying and therefore give due allowance for that. See for example Selle & another vs. Associated Motor Boat Co. Ltd & others [1968] E.A at page 126 where it was held as follows:
“An appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled. Briefly put they are that this Court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular, this court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally (Abdul Hameed Saif v Ali Mohamed Sholan (1955), 22 E.A.C.A. 270)”.
- I have considered the record of the trial court. The respondent filed suit against the appellant in a plaint dated 5/9/2018 for material damage to the respondent’s motor vehicle registration number KBN 711A allegedly arising from an accident that occurred on 8/9/2015 and involving the appellant’s motor vehicle registration number KCB 297S. The respondent blamed the accident upon the driver of the appellant’s motor vehicle. It prayed for special damages of KShs 819,175/= together with costs and interest.
- The appellant filed a statement of defence dated 27/11/2018 and denied the claim in toto and in the alternative blamed the driver of the respondent’s vehicle averring that he was either wholly or substantially to blame for the accident. In the further alternative, the appellant pleaded inevitable accident.
- At the first occasion for pre-trial when the matter came up on 30/7/2019 learned counsels for the parties informed the court that they were engaged in negotiations for an out of court settlement and the court granted them time to negotiate. This went on at all subsequent mentions until the respondent filed the application dated 20/8/2020, the subject of the appeal herein.
- The respondent’s application prayed for an order that judgment be entered for the respondent against the appellant on liability in the ratio of 60:40 based on the respondent’s acceptance of the appellant’s offer of the same.
- The appellant opposed the application through a replying affidavit sworn on 1/3/2021 on grounds that the negotiations were strictly on a without prejudice basis and the same could not be enforced.
- Upon considering the application, the response thereto and submissions of parties, the learned trial magistrate found that the appellant through his advocates had made an offer to the respondent through his advocates and that the respondent accepted the offer and a valid agreement ensued which is enforceable in law. She therefore allowed the application and entered judgment for the respondent on liability as prayed in the ratio of 60:40 against the appellant.
- This court directed that the appeal be heard by way of written submissions which learned counsels for the appellant and the respondent duly filed.
- I have considered the grounds set out in the memorandum of appeal and the submissions by learned counsels for the parties. The issue for determination is whether the negotiations between the parties on liability crystallized into an agreement that is enforceable and whether the learned trial magistrate erred in law and in fact in finding so.
- The correspondence exchanged between the parties are central to the determination of the issue herein.
- Learned counsel for the respondent submits that an agreement was reached between the parties regarding the issue of liability as per the various correspondences exchanged herein and contained at pp 51-60 of the record of appeal. He submits that a clear offer was made by the appellant and accepted by the respondent thus crearing a binding contract between the parties.
- Learned counsel for the appellant on his part submits that without prejudice negotiations can never be enforced. He submits that the letters exchanged between the parties were not admissible as they were on without prejudice basis
- I will now consider the correspondences in order to discern their import and intendment.
- Date: 12/2/2019
From: Wangai Nyuthe & Co Advocates
To: Lilian Njuguna & Co. Advocates WITHOUT PREJUDICE
RE: MILIMANI – CMCC NO. 7988 OF 2018
VEGRO KENYA LIMITED VS. JUSTUS NJOROGE MUNENE
We refer to the above matter. On a without prejudice basis, kindly address us on liability and reasonably quantify your client’s claim and avail us copies of the Instruction Note, the Claimant’s Identity Card and receipts for the pleaded specials and Court Fees to enable us seek further instructions on the claim.
Yours faithfully
signed
WANGAI NYUTHE & COMPANY
- 25/2/2019
From: Lilian Njuguna & Company LLP
To: Wangai Nyuthe & Company
Advocates “WITHOUT PREJUDICE”
RE: MILIMANI – CMCC NO. 7988 OF 2018
VEGRO KENYA LIMITED VS. JUSTUS NJOROGE MUNENE
We refer to your letter dated 18th February, 2019 and write to inform you that this is a material damage claim in which we act for the insurers of the Plaintiff’s motor vehicle.
All the documents in support of the claim were filed with the Plaint. Enclosed herewith are copies of the court receipts.
We are by a copy of this letter seeking instructions on the concessions our clients would be prepared to make to facilitate settlement of their claim and revert to you as soon as we hear from them.
LILIAN NJUGUNA & COMPANY, LLP.
signed
L. M. NJUGUNA (MRS)
- Date: 7/4/2019
From: Wangai Nyuthe & Co Advocates
To: Lilian Njuguna & Co. Advocates WITHOUT PREJUDICE
RE: MILIMANI – CMCC NO. 7988 OF 2018
VEGRO KENYA LIMITED VS. JUSTUS NJOROGE MUNENE
We refer to the above matter and previous correspondence.
We have noted contents of your letter dated 2nd May 2019, our client is amenable to an out of court settlement; however, our client proposes liability be apportioned in the ratio of 60:40 in favour of plaintiff.
Kindly consult your client and revert
Yours faithfully
signed
WANGAI NYUTHE & COMPANY
- 14/1/2020
From: Lilian Njuguna & Company LLP
To: Wangai Nyuthe & Company
Advocates “WITHOUT PREJUDICE”
Attn: Christopher N. Chengecha
Dear Sir,
RE: MILIMANI – CMCC NO. 7988 OF 2018
VEGRO KENYA LIMITED VS. JUSTUS NJOROGE MUNENE
We refer to our telephone discussion held this afternoon when we confirmed our client’s willingness to accept your client’s proposal to have liability apportioned at 60:40% in our client’s favour.
The amount payable will thus work out as follows:-
Principal amount …………….KShs 819,175/=
Less 40% agreed concession...Kshs 327,670/=
Kshs 491,505/=
Party and Party costs Kshs 65,000/=
Court fees Kshs 42,045/=
Service of Summons Kshs 19,280/=
Kshs 617,830/=
We had earlier forwarded copies of documents in support of disbursements. Kindly confirm that we shall have a consent judgment at the said sum of Kshs 617,830/= when the case comes up in court on the 16th January 2020.
Yours faithfully,
LILIAN NJUGUNA & COMPANY, LLP.
signed
L. M. NJUGUNA (MRS)
- 26/2/2020
From: Lilian Njuguna & Company LLP
To: Wangai Nyuthe & Company
Advocates “WITHOUT PREJUDICE”
Attn: Mr. Mahugu
Dear Sir,
RE: MILIMANI – CMCC NO. 7988 OF 2018
VEGRO KENYA LIMITED VS. JUSTUS NJOROGE MUNENE
We refer to several court attendances and telephone discussions held between you and the writer in which we have been following up your response to our letter dated 14th January 2020.
The case is scheduled for further mention on the 6th March 2020. Kindly follow up the instructions so that we may be in a position to have a consent judgment recorded then. In light of the fact that our clients accepted your client’s offer on liability, the issue of costs should not stand in the way of a settlement as these are on scale and the disbursements have been supported by way of documents.
We await your prompt response.
Yours faithfully,
LILIAN NJUGUNA & COMPANY, LLP.
signed
L. M. NJUGUNA (MRS)
- 28/5/2020
From: Lilian Njuguna & Company LLP
To: Wangai Nyuthe & Company
Advocates “WITHOUT PREJUDICE”
Attn: Christopher N. Chengecha
Dear Sir,
RE: MILIMANI – CMCC NO. 7988 OF 2018
VEGRO KENYA LIMITED VS. JUSTUS NJOROGE MUNENE
We refer to our letter dated 26th February 2020 and to pur subsequent telephone discussions concerning the above case.
In a telephone discussion held on the 6th March 2020, you advised that your clients had confirmed the settlement terms verbally and that you were waiting for their written instructions. Please advise whether you have since received the same.
Kindly respond well before the 10th July 2020 when matters which were scheduled for 20th March 2020 have been re-scheduled to.
Yours faithfully,
LILIAN NJUGUNA & COMPANY, LLP.
signed
L. M. NJUGUNA (MRS)
- From these correspondences, it is not disputed that the parties entered into negotiations on the issue of liability. It would appear that there is another letter dated 18/2/2019 which is missing from those provided to court because the reply dated 25/2/2019 refers to such a letter and not the one dated 12/2/2019. It would also appear that there were several other correspondences exchanged between the parties, both in writing and orally. However, the respondent seems to narrow down its case to two letters. The first one by the appellant dated 7/4/2019 where the appellant indicated that he was proposing liability in the ratio of 60:40 in favour of the respondent. This, according to the respondent was the offer. The second one dated 14/1/2020, some nine months later where the respondent without referring to the letter dated 7/4/2019 indicated that it was willing to accept the proposal by the appellant to have liability apportioned in the ratio 60:40 in the respondent’s favour. It is the respondent’s contention that this was the acceptance and at this point the negotiations crystallized into an enforceable agreement. There is no other written correspondence after that from the appellant made available to court. The appellant’s contention and therefore the basis of this appeal is that the court could not enter judgment based on the correspondence.
- The appellant’s case is that the letters relied on were issued on without prejudice basis, hence the letters were not admissible and hence no enforceable agreement ensued that could form the basis for judgment. Both parties have cited several decisions on the import of without prejudice correspondence. The general principle is that a without prejudice offer is inadmissible to prove the contents of the admission unless the admission is accepted and leads to binding agreement. In Geoloy Investments Ltd v Behal t/a Krishan Behal and Sons [2002] 2 KLR 447, Mwera J., expressed the rationale for this position as follows:
“The rubric “without prejudice” has been used over the ages particularly in correspondence between counsel for litigating parties to facilitate free and uninhibited negotiations to explore settlement of dispute. Until such time as there is a definite agreement on the issues at hand, such correspondence cannot be used as evidence against any party. The rubric simply means “I will make you an offer, if you do not accept it, this letter should not be used against me. Or I make the offer which you may accept or not, as you like, but of you do not accept it, my having made it is to have no effect at all.”
- The privilege of “without prejudice” correspondence between parties ensures that parties and their advocates negotiate in an environment of freedom without the fear that their proposals may be held against them in subsequent legal proceedings (see the case of Guardian Bank Ltd v Jambo Biscuits Kenya Ltd [2014] eKLR). It therefore helps to narrow down issues for the court’s determination or to reach a settlement altogether.
- Both learned counsels for the parties have cited the case of Mumias Sugar Co. Ltd & another v Beatrice Akinyi Omondi [2016] eKLR in which case several of the other decisions cited by learned counsel’s herein are discussed.
- Among them is the case of Lochab Transport Ltd v Kenya Arab Orient Insurance Ltd [1986]eKLR where the court observed that,
“.. if an offer is made "without prejudice", evidence cannot be given on this offer. If this offer is accepted, a contract is concluded and one can give evidence of the contract and give evidence of that ‘without prejudice’ letter".
- The “without prejudice” principle finds grounding in section 23(1) of the Evidence Act (Chapter 80 of the Laws of Kenya) which stipulates that:
S. 23(1). In civil cases no admissions may be proved if it is made either upon an express condition that evidence of it is not to be given or in the circumstances from which the court can infer that the parties agreed together that evidence of its should not be given.
- Returning to the two correspondences I have referred to above as the anchor of the respondent’s application, the first letter dated 7/4/2019 from the appellant where the alleged offer of apportionment of liability in the ratio of 60:40 was made refers to the respondent’s letter dated 2/5/2019. There could not have been a letter dated 2/5/2019 because that date was not yet. Yet, there is no letter in the available correspondences dated 2nd of any month prior to 7/4/2019. Be that as it may, the appellant stated clearly that he was proposing liability to be apportioned in that ratio. It was therefore an express “without prejudice” offer for a specific issue, liability.
- The next correspondence from the respondent came on 14/1/2020 and as stated, it does not refer to the letter of 7/4/2019 from the appellant. However, there is indication therein that there had been telephone discussions held. It then proceeds to indicate “our client’s willingness to accept your client’s proposal…” (emphasis mine). Does “willingness to accept” show an unequivocal acceptance of the offer made? In my assessment, it does not. Most importantly, the letter went ahead to indicate the “amount payable…” (emphasis mine). Now, remembering that the letter of 7/4/2019 only referred to the issue of liability, could it be said that this letter of 14/1/2020 was in response thereto and that it was an unequivocal acceptance given the time lapse taken to respond to it as well as the fact that there had been other verbal correspondences on the issue as captured in that letter? I find it difficult to answer that question in the affirmative. For me, the effect of the respondent’s letter dated 14/1/2020 could not be construed to be an acceptance of the appellant’s offer but it was to make a counter-offer which was now incorporating the issue of amount payable because the appellant had not made an offer on this. In the case of KSC International Limited (Under Receivership) & 4 others v Bank of Africa (Kenya) Limited & 7 others (Civil Case 446 of 2015) [2023] KEHC 24298 (KLR) the High Court in considering a similar issue held thus:
“From the foregoing, it is clear that without prejudice communication is protected. However, it can be relied on to where there is compromise. This includes where there is acceptance of the proposal made on a without prejudice. The acceptance must be unequivocal and without conditions. Where it is accepted with conditions, the same amounts to a counter-offer and the rules relating counter-offers apply.”
- In the present case, the counter-offer by the respondent was then subject to acceptance by the appellant. No such acceptance has been exhibited here either written or oral. It is apparent from the respondent’s letter to the appellant dated 26/2/2020 that the issue of the computation of the amount payable, specifically the issue of costs, had brought about the hitch in the appellant proceeding with the negotiations. I know the respondent made his application on the issue of liability only and not the quantum payable. Had the respondent in his response stuck to the issue of liability only, there would be no difficulty in finding that the parties had reached an agreement that the appellant could not resile from. The High Court in the case of KSC International Limited (Under Receivership) cited above went on to explain that:
“On the second aspect of acceptance, it is trite that acceptance must be unequivocal and must not be qualified.
In the letters of acceptance by the defendants, it was agreed that the proposed sums would be accepted in full settlement but upon satisfaction of several conditions. The moment conditions were attached to the acceptance, they amounted to a counter-offer which the plaintiffs should have accepted for an enforceable contract to arise. The intention of the 3 defendants was to first have the conditions settled or accepted by the plaintiffs before they could be bound.
In view of the foregoing, this Court finds that there was no compromise of the suit capable of being recorded. The communication did not amount to an enforceable contract that is capable of being enforced by this Court.”
- I am persuaded by the reasoning in the cited case which aptly applies in the present case and I adopt it herein. The respondent having made a counter-offer then left the negotiations open to proceed without a binding agreement on “without prejudice basis”.
- Having reviewed and re-evaluated the affidavit evidence upon the application before the trial court, I find and hold that the there was no agreement reached between the parties that is capable of enforcement. It appears to me that the parties were not at consensus ad idem so that there was no agreement at all that crystallized. The appellant made a proposal on settlement of liability, the respondent made a counter-offer of settlement on liability and damages, including costs but there was no acceptance of the same by the appellant which was capable of enforcement as a consent by the parties. The learned trial magistrate was therefore in error to find that there was an offer and acceptance, in other words, that the parties had reached an agreement capable of enforcement.
- Consequently, this appeal is allowed, the ruling of the learned trial magistrate set aside and substituted with a ruling dismissing the respondent’s application in the trial court with costs.
- The appellant shall also get the costs of this appeal.
Dated, Signed and Delivered at Nairobi this 15th day of July, 2024 through the Virtual platform, Teams.
In the presence of:
Mugo holding brief for Mahugu for the Appellant.
Kajama for the Respondent.
Eutropia Court Assistant.