By amended plaint dated 7 th October 2015, the plaintiff sought the following orders against the defendant;
Kenya shillings fifteen million two hundred and fifty-five thousand (Ksh. 15,255.000.00).
An account of the profit made by the defendant arising from each on sale of the on-sold Runda plot showing;
All sales by the defendant to the third parties of the Runda Properties.
And the proceeds of such sales
An order of payment by the defendant to the plaintiff of all sums found to be due from the defendant to the plaintiff upon the taking of the account under paragraph (2) above;
General damages.
Punitive and or aggravated damages.
Cost of this suit; and
Interest on (1), (3), (4) and (5) at such rate as the Court thinks fit in the circumstances from the date of filing suit until payment in full.
The plaintiff pleaded that the defendant who was a managing director of Pan Africa Insurance Holding Limited (hereinafter referred to as ‘Pan Africa’) and a director in the plaintiff breached his fiduciary duty to the plaintiff by purchasing plots from the plaintiff at prices which were below the market prices. This involved 9 plots whose sale to the plaintiff is detailed in the testimony of the plaintiff’s witness reproduced elsewhere below.
In its statement of defence, the defendant admitted having been a managing director of Pan Africa and a director as explained above but denied the allegations of having breached his fiduciary duties. He admitted buying the plots but denied that they he did so at prices below the market value and added that the sale was authorized by the plaintiff’s board of directors.
The plaintiff’s case
The plaintiff called Gladys Munene as its only witness who introduced herself as the plaintiff’s legal manager. She adopted her statement recorded on 27-08-2023 and highlighted some parts of it. She stated that the defendant was a director of the plaintiff and managing director of Pan Africa and that he acquired nine plots from the plaintiff at below the market values then sold the same to third parties at higher prices without disclosing conflict of interest. The plaintiff was claiming the profits made from the sales.
The witness added that the defendant being a director of the two companies, he was a trustee of their assets and as such was under the duty to ensure that there was no conflict between his duties to Pan Africa and the plaintiff and his personal interest and therefore, he ought not to have participated in the scheme. She stated that in the minutes of the plaintiff dated 8 th July 1993, the plaintiff’s board of directors resolved among others that;
The plaintiff would sell one acre or half acre at the price of 400,000/= and 250,000/= respectively to senior employees and that the same terms shall be offered to other senior members of the plaintiff and those of Pan Africa.
The plaintiff’s board of directors did not have mandate to decide the terms of sale of plots to the senior members of staff of Pan Africa but there were good reasons to extend the same preferential treatment to the employees of Pan Africa.
No special policy could be formulated as regards the sale of the plaintiff’s plot whether or not the plots were unattractive, unsellable or good to the directors of either Pan Africa or the plaintiff as it would amount to a payment of fees or emoluments to the directors which required approval from the shareholders and that such sales would raise ethical issues.
Any director of the plaintiff or Pan Africa who was interested in a plot should approach the management of the plaintiff and negotiate the market price of the chosen plot, actual acreage and payment terms.
In a meeting of Pan Africa held on 24-02-1994, it was resolved that the issue of the sale of plots should be extended to the directors of the plaintiff and Pan Africa and that appropriate recommendation should be made at the next AGM for approval and that approval or sale of the plots to senior members of the staff of Pan Africa in grades 11 and 12 with condition that only one plot would be sold to the staff members. Consequently, the witness added that the defendant was only entitled to one half acre plot from the plaintiff but the defendant went on to purchase LR numbers 7785/556, 7785/831, 7785/832, 7785/917, 7785/928, 7785/953, 7785/1007, 7785/1014 and 7785/1061 at prices below their market values.
In cross-examination the witness told the court that the cause of action occurred between 1994 and 1999 while she was employed by the plaintiff in 2015. She added that the company’s articles of association did not allow directors to keep the company’s profits. She stated further that, the directors were allowed to acquire only one plot in non-attractive areas but the properties the defendant acquired were not non-attractive plots and had not been approved by the board. She added that the resolutions in the minutes and the board papers were made by the same board and that the prices were usually set by the management and approved by the directors. She produced a total of 78 exhibits.
The witness also stated that other directors were terminated on the same grounds as the defendant. She also added that even without conflict of interest, the prices would have been the same. She also claimed that the defendant sued after he was terminated but he lost because the court found that he had breached his fiduciary duty. She stated that she was not relying on the valuation reports the plaintiff had filed as that was in 2003 and that the figures in the plaint came from the plaintiff’s management although she did not have documents from the management stating the prices and that they did not have comparative prices for the neighboring properties.
Pressed further, she stated that not all offers were made in the name of the defendants as he assigned some of them to other persons. She added that the sale to the defendant was not ratified by the shareholders in an annual general meeting as it should have. She also added that the public were buying the plots at prices higher than market value although she did not produce documents to prove the prices at which the public bought the plots.
In re-examination, she clarified that at the time the suit was filed, the plaintiff did not know how much the properties were sold for but it applied for discoveries and the defendant provided the information after the court made an order to that effect.
The defendant’s case
The defendant testified by adopting his statement dated 2-0-2017 and identified bundle of documents dated 27-03-2017 and supplementary list dated 14-11-2023.
He stated that he was the managing director of the plaintiff appointed by Pan Africa and that on a date he did not identify, the plaintiff’s board of directors decided that they should identify a strategic partner in development and through his connections, he identified a partner from South Africa. He added that soon after the new partner came in, the plaintiff started raising the issues in this suit which had happened before they joined the company. This made some prominent members in the board who did not want their names spoiled to resign as they maintained that they had done nothing wrong. The two directors from South Africa wanted to call for an extra ordinary general meeting in order to get rid of directors they were accusing of the issues in question. The defendant stated further that, after the resignation of the said board members, the chairman offered to pay him ex gratia payment which he declined then he was sacked immediately.
He added that he bought the properties in question following an opinion from Mohammed & Muigai Advocates which had advised that he could buy the plots provided that the law was complied with. He also stated that the company’s articles of association allowed them to do business with the company and retain the profits. He added that the plaintiff’s board approved a recommendation that senior managers could buy plots at concessionary price of 250,0000/= for a quarter acre and 400,000/= for one acre.
He stated further that he was a member of grade 12 and the approval was given on 24-02-1994 which meant that all conditions applicable to senior managers of the plaintiff became applicable to employees of Pan Africa. According to the defendant, the restriction of one plot referred to the concessionary prices of 250,000/= and 400,000/=. He made reference to a resolution dated 8-07-1993 which talked of any other property the director wanted to buy and added that a director could negotiate at whatever price. During his time, the cheapest plot was going for 600,000/= while the most expensive was 1,500,000/= which was fixed by the board. He stated that the board had members who had capacity to determine prices and gave examples of members who were managing director of Tysons, an architect and a developer who had developed ngumo estate in Nairobi.
He posited that the plaintiff gad not given the market value it had referred to. The plaintiff was a developer who was developing properties and releasing them to the market at a given price and he was not the only one who bought from the plaintiff and sold to third parties. He added that each of his purchase was reported in the plaintiff’s meetings and board papers which would show who had bought which plots. To him these were enough disclosures as the board paper came before the relevant board meeting. He also stated that there were other staff members who bought more plots but were not sacked and he gave example of one Kioi who bought 10 plots. The defendant produced a total of 10 exhibits
In cross-examination, the defendant admitted that he made profits from the sale of the properties and that he was an ordinary director of the board. He also admitted that he was bound by principal of fiduciary duty. He also admitted that the board would set minimum and maximum process and the sale were supposed to be as close to the maximum as possible and that the final price depended on the location, shape and other features. He further added that he was in a better position to know the minimum than the public would.
The defendant added that he bought parcel 7785/556 at 700,000/= and sold at 2,300,000/= in 1997 after three years. and parcel 7785/1014 at 1,200,000/= in July 1996 and sold at 2,000,000/= after three months. The purchaser of the latter paid directly to the company and paid the balance to him. He maintained that the disclosure to co-directors was sufficient. He stated further that he was a salaried director and did not receive director’s fees but denied that he was competing with the company.
He further stated that he sued the plaintiff after he was sacked vide high court civil suit number 509 of 2002 but the court found him to have breached fiduciary duty and dismissed the suit. He appealed in civil appeal number 357 of 2017 and the court of appeal dismissed it. He alleged that the two decisions were wrong and his attempt to go to the Supreme Court was unsuccessful.
In re-examination he maintained that the company allowed him to retain profits through its Articles of Association and his disclosure was ratified by the shareholders of the company.
Analysis and determination.
I have carefully gone through the pleadings, the documents produced by the parties. I have also read the submissions of the plaintiff dated 22-01-2025 and those of the defendants dated 1-04-2025. I see only two issues in this matter which are;
Whether the defendant breached his fiduciary duty to the plaintiff.
If ‘a’ above is in the affirmative, whether the plaintiff suffered loss as a result and of so how much?
It is indisputable position of the law that directors of a company owe a fiduciary duty to the company and as trustees of its asset, they are under an obligation to always act to the best interest of the company. This includes ensuring that their actions do not affect the company in a negative manner and they must always avoid putting themselves in a position that would breed conflict of interest between their actions and those of the company. In Pan Africa Insurance Holdings Limited & another v Dickson Ngatia Gachuche (2021) KEELC 1497 (KLR), Honorable Lady Justice Komingoi held that;
‘A director must avoid conflicts between their role and their personal interests, and must avoid situations in which they have, or could have, an interest that conflicts, or may conflict, with the interests of the company. This applies in particular to the exploitation of any opportunity, information or property.’
The defendant in this matter has admitted and confirmed that he was a director of the plaintiff during the period in question. It has also been a common ground that the defendant bought the nine plots from the plaintiff and sold the same to third parties at a profit. This obviously translated to the defendant doing business with the company and its assets. The admission that he bought and sold the plots at a profit means that he was buying the properties for commercial purposes and the plaintiff having been in the same business, the actions of the defendant were definitely in conflict with the interest of the plaintiff. That said, if the sale were sanctioned by the board of directors and approved by the shareholders, I would not find any breach of fiduciary duty.
It has been alleged that the offer to the defendant and other directors was limited to one plot but the defendant bought nine. That would then mean that we should be talking of eight plots and not nine.
I think I have said enough of the issue of breach of fiduciary duty noting that the issue was litigated in Nairobi High Court civil suit number 509 of 2002 and affirmed by the Court of Appeal in civil appeal number 357 of 2017. I have read the judgment in civil case number 509 of 2002 and find that the issue was covered and discussed in the case and I hold that it the same is now res judicata. It is the same issue between the same parties involving the same subject matter and I do believe that the issue should not be re-litigated in this case.
The defendant claims that the judgment in the previous case and the civil appeal were wrong. Whereas it is arguable that I could depart from the decision in the High Court case and disagree with Honourable Judge, I don’t think I can depart from or contradict what was affirmed by the Court of Appeal. Although the Court of Appeal judgment was not availed to me, the defendant admitted that the appeal was dismissed. What is left is to decide is whether the breach resulted to loss to the plaintiff and whether the same is recoverable from the defendant.
The onus of proving the loss was on the plaintiff. The plaintiff did not produce any valuation report in proof of what it called market value which in my view should have been the basis for assessing the loss. In all the exhibits produced by the plaintiff, none had the value of the plots in question. There was an undated valuation report which was listed as document number 13 but the plaintiff abandoned it. When the matter was called out for confirmation of hearing, Mr. Kahura for the plaintiff told the court that he would not be calling the valuer and would be relying on a valuation report filed by the defendant. After going through the defendant’s 10 exhibits, I did not see any valuation report. What I have seen is a list of the plots sold and prices which was produced as defence exhibit 6.
In my opinion, the loss the plaintiff would have suffered would be the difference between the amount received from the defendant and the market value of the properties. The plaintiff not show the court that there were better offers than what the defendant paid neither did its witness produce evidence to prove the prices the other purchasers of similar plots in the same area paid. None of the plots in question was bought at a price lower than what the plaintiff’s board of directors and shareholders approved.
The amended plaint only pleaded what it stated as market value of the plots but the plaintiff did not go on to prove the averments. It is trite law that averments in the pleadings do not constitute evidence or proof. It remains a statement of fact which must be proved and where a party fails to call sufficient evidence to prove the fact, the case must fail. The Court of Appeal held in CMC Aviation Ltd v Kenya Airways Ltd (Cruisair Ltd (1978) KECA 9 (KLR) that
‘The pleadings in a suit are not normally evidence. They may become evidence if they are expressly or impliedly admitted as then the admission itself is evidence. Evidence is usually given on oath. Averments are not made on oath. Averments depend upon evidence for proof of their contents.’
The same position was taken in Kensilver Express Limited & another v JNG (Suing as legal representative for FKN (Deceased) (2023) KEHC 2920 (KLR) where the court held that;
‘Appellants did not tender any evidence. That averments in pleadings are not evidence was appreciated in Francis Otile vs. Uganda Motors Kampala HCCS No. 210 of 1989 where it was held that the court cannot be guided by pleading since pleadings are not evidence and nor can they be a substitute therefor.’
This court cannot assume that the price at which the defendant sold was the market value of the plots as at the time he acquired them from the plaintiff. Land is an asset that appreciates in value overtime and the plaintiff ceased to be the owner of the plots once the same were transferred to the defendant. The plaintiff could only benefit in form of an award for the value of the plots or where there is evidence that the plaintiff lost better offers than what the defendant paid.
It is my finding that the plaintiff has failed to produce the value of what was lost and as such there is no proof of damages suffered and the suit must on that account fail. Similarly, there is no basis for award of general, punitive or aggravated damages as prayed in the amended plaint.
Consequently, the suit is hereby dismissed with costs.
Dated, signed and delivered at Nairobi this 11 th day of July 2025.
B.M. MUSYOKI
JUDGE OF THE HIGH COURT.
Judgment delivered in presence of Mr. Kahura for the plaintiff and Mrs Ochieng for the defendant.
Kenya shillings fifteen million two hundred and fifty-five thousand (Ksh. 15,255.000.00).
An account of the profit made by the defendant arising from each on sale of the on-sold Runda plot showing;
All sales by the defendant to the third parties of the Runda Properties.
And the proceeds of such sales
An order of payment by the defendant to the plaintiff of all sums found to be due from the defendant to the plaintiff upon the taking of the account under paragraph (2) above;
General damages.
Punitive and or aggravated damages.
Cost of this suit; and
Interest on (1), (3), (4) and (5) at such rate as the Court thinks fit in the circumstances from the date of filing suit until payment in full.
The plaintiff pleaded that the defendant who was a managing director of Pan Africa Insurance Holding Limited (hereinafter referred to as ‘Pan Africa’) and a director in the plaintiff breached his fiduciary duty to the plaintiff by purchasing plots from the plaintiff at prices which were below the market prices. This involved 9 plots whose sale to the plaintiff is detailed in the testimony of the plaintiff’s witness reproduced elsewhere below.
In its statement of defence, the defendant admitted having been a managing director of Pan Africa and a director as explained above but denied the allegations of having breached his fiduciary duties. He admitted buying the plots but denied that they he did so at prices below the market value and added that the sale was authorized by the plaintiff’s board of directors.
The plaintiff’s case
The plaintiff called Gladys Munene as its only witness who introduced herself as the plaintiff’s legal manager. She adopted her statement recorded on 27-08-2023 and highlighted some parts of it. She stated that the defendant was a director of the plaintiff and managing director of Pan Africa and that he acquired nine plots from the plaintiff at below the market values then sold the same to third parties at higher prices without disclosing conflict of interest. The plaintiff was claiming the profits made from the sales.
The witness added that the defendant being a director of the two companies, he was a trustee of their assets and as such was under the duty to ensure that there was no conflict between his duties to Pan Africa and the plaintiff and his personal interest and therefore, he ought not to have participated in the scheme. She stated that in the minutes of the plaintiff dated 8 th July 1993, the plaintiff’s board of directors resolved among others that;
The plaintiff would sell one acre or half acre at the price of 400,000/= and 250,000/= respectively to senior employees and that the same terms shall be offered to other senior members of the plaintiff and those of Pan Africa.
The plaintiff’s board of directors did not have mandate to decide the terms of sale of plots to the senior members of staff of Pan Africa but there were good reasons to extend the same preferential treatment to the employees of Pan Africa.
No special policy could be formulated as regards the sale of the plaintiff’s plot whether or not the plots were unattractive, unsellable or good to the directors of either Pan Africa or the plaintiff as it would amount to a payment of fees or emoluments to the directors which required approval from the shareholders and that such sales would raise ethical issues.
Any director of the plaintiff or Pan Africa who was interested in a plot should approach the management of the plaintiff and negotiate the market price of the chosen plot, actual acreage and payment terms.
In a meeting of Pan Africa held on 24-02-1994, it was resolved that the issue of the sale of plots should be extended to the directors of the plaintiff and Pan Africa and that appropriate recommendation should be made at the next AGM for approval and that approval or sale of the plots to senior members of the staff of Pan Africa in grades 11 and 12 with condition that only one plot would be sold to the staff members. Consequently, the witness added that the defendant was only entitled to one half acre plot from the plaintiff but the defendant went on to purchase LR numbers 7785/556, 7785/831, 7785/832, 7785/917, 7785/928, 7785/953, 7785/1007, 7785/1014 and 7785/1061 at prices below their market values.
In cross-examination the witness told the court that the cause of action occurred between 1994 and 1999 while she was employed by the plaintiff in 2015. She added that the company’s articles of association did not allow directors to keep the company’s profits. She stated further that, the directors were allowed to acquire only one plot in non-attractive areas but the properties the defendant acquired were not non-attractive plots and had not been approved by the board. She added that the resolutions in the minutes and the board papers were made by the same board and that the prices were usually set by the management and approved by the directors. She produced a total of 78 exhibits.
The witness also stated that other directors were terminated on the same grounds as the defendant. She also added that even without conflict of interest, the prices would have been the same. She also claimed that the defendant sued after he was terminated but he lost because the court found that he had breached his fiduciary duty. She stated that she was not relying on the valuation reports the plaintiff had filed as that was in 2003 and that the figures in the plaint came from the plaintiff’s management although she did not have documents from the management stating the prices and that they did not have comparative prices for the neighboring properties.
Pressed further, she stated that not all offers were made in the name of the defendants as he assigned some of them to other persons. She added that the sale to the defendant was not ratified by the shareholders in an annual general meeting as it should have. She also added that the public were buying the plots at prices higher than market value although she did not produce documents to prove the prices at which the public bought the plots.
In re-examination, she clarified that at the time the suit was filed, the plaintiff did not know how much the properties were sold for but it applied for discoveries and the defendant provided the information after the court made an order to that effect.
The defendant’s case
The defendant testified by adopting his statement dated 2-0-2017 and identified bundle of documents dated 27-03-2017 and supplementary list dated 14-11-2023.
He stated that he was the managing director of the plaintiff appointed by Pan Africa and that on a date he did not identify, the plaintiff’s board of directors decided that they should identify a strategic partner in development and through his connections, he identified a partner from South Africa. He added that soon after the new partner came in, the plaintiff started raising the issues in this suit which had happened before they joined the company. This made some prominent members in the board who did not want their names spoiled to resign as they maintained that they had done nothing wrong. The two directors from South Africa wanted to call for an extra ordinary general meeting in order to get rid of directors they were accusing of the issues in question. The defendant stated further that, after the resignation of the said board members, the chairman offered to pay him ex gratia payment which he declined then he was sacked immediately.
He added that he bought the properties in question following an opinion from Mohammed & Muigai Advocates which had advised that he could buy the plots provided that the law was complied with. He also stated that the company’s articles of association allowed them to do business with the company and retain the profits. He added that the plaintiff’s board approved a recommendation that senior managers could buy plots at concessionary price of 250,0000/= for a quarter acre and 400,000/= for one acre.
He stated further that he was a member of grade 12 and the approval was given on 24-02-1994 which meant that all conditions applicable to senior managers of the plaintiff became applicable to employees of Pan Africa. According to the defendant, the restriction of one plot referred to the concessionary prices of 250,000/= and 400,000/=. He made reference to a resolution dated 8-07-1993 which talked of any other property the director wanted to buy and added that a director could negotiate at whatever price. During his time, the cheapest plot was going for 600,000/= while the most expensive was 1,500,000/= which was fixed by the board. He stated that the board had members who had capacity to determine prices and gave examples of members who were managing director of Tysons, an architect and a developer who had developed ngumo estate in Nairobi.
He posited that the plaintiff gad not given the market value it had referred to. The plaintiff was a developer who was developing properties and releasing them to the market at a given price and he was not the only one who bought from the plaintiff and sold to third parties. He added that each of his purchase was reported in the plaintiff’s meetings and board papers which would show who had bought which plots. To him these were enough disclosures as the board paper came before the relevant board meeting. He also stated that there were other staff members who bought more plots but were not sacked and he gave example of one Kioi who bought 10 plots. The defendant produced a total of 10 exhibits
In cross-examination, the defendant admitted that he made profits from the sale of the properties and that he was an ordinary director of the board. He also admitted that he was bound by principal of fiduciary duty. He also admitted that the board would set minimum and maximum process and the sale were supposed to be as close to the maximum as possible and that the final price depended on the location, shape and other features. He further added that he was in a better position to know the minimum than the public would.
The defendant added that he bought parcel 7785/556 at 700,000/= and sold at 2,300,000/= in 1997 after three years. and parcel 7785/1014 at 1,200,000/= in July 1996 and sold at 2,000,000/= after three months. The purchaser of the latter paid directly to the company and paid the balance to him. He maintained that the disclosure to co-directors was sufficient. He stated further that he was a salaried director and did not receive director’s fees but denied that he was competing with the company.
He further stated that he sued the plaintiff after he was sacked vide high court civil suit number 509 of 2002 but the court found him to have breached fiduciary duty and dismissed the suit. He appealed in civil appeal number 357 of 2017 and the court of appeal dismissed it. He alleged that the two decisions were wrong and his attempt to go to the Supreme Court was unsuccessful.
In re-examination he maintained that the company allowed him to retain profits through its Articles of Association and his disclosure was ratified by the shareholders of the company.
Analysis and determination.
I have carefully gone through the pleadings, the documents produced by the parties. I have also read the submissions of the plaintiff dated 22-01-2025 and those of the defendants dated 1-04-2025. I see only two issues in this matter which are;
Whether the defendant breached his fiduciary duty to the plaintiff.
If ‘a’ above is in the affirmative, whether the plaintiff suffered loss as a result and of so how much?
It is indisputable position of the law that directors of a company owe a fiduciary duty to the company and as trustees of its asset, they are under an obligation to always act to the best interest of the company. This includes ensuring that their actions do not affect the company in a negative manner and they must always avoid putting themselves in a position that would breed conflict of interest between their actions and those of the company. In Pan Africa Insurance Holdings Limited & another v Dickson Ngatia Gachuche (2021) KEELC 1497 (KLR), Honorable Lady Justice Komingoi held that;
‘A director must avoid conflicts between their role and their personal interests, and must avoid situations in which they have, or could have, an interest that conflicts, or may conflict, with the interests of the company. This applies in particular to the exploitation of any opportunity, information or property.’
The defendant in this matter has admitted and confirmed that he was a director of the plaintiff during the period in question. It has also been a common ground that the defendant bought the nine plots from the plaintiff and sold the same to third parties at a profit. This obviously translated to the defendant doing business with the company and its assets. The admission that he bought and sold the plots at a profit means that he was buying the properties for commercial purposes and the plaintiff having been in the same business, the actions of the defendant were definitely in conflict with the interest of the plaintiff. That said, if the sale were sanctioned by the board of directors and approved by the shareholders, I would not find any breach of fiduciary duty.
It has been alleged that the offer to the defendant and other directors was limited to one plot but the defendant bought nine. That would then mean that we should be talking of eight plots and not nine.
I think I have said enough of the issue of breach of fiduciary duty noting that the issue was litigated in Nairobi High Court civil suit number 509 of 2002 and affirmed by the Court of Appeal in civil appeal number 357 of 2017. I have read the judgment in civil case number 509 of 2002 and find that the issue was covered and discussed in the case and I hold that it the same is now res judicata. It is the same issue between the same parties involving the same subject matter and I do believe that the issue should not be re-litigated in this case.
The defendant claims that the judgment in the previous case and the civil appeal were wrong. Whereas it is arguable that I could depart from the decision in the High Court case and disagree with Honourable Judge, I don’t think I can depart from or contradict what was affirmed by the Court of Appeal. Although the Court of Appeal judgment was not availed to me, the defendant admitted that the appeal was dismissed. What is left is to decide is whether the breach resulted to loss to the plaintiff and whether the same is recoverable from the defendant.
The onus of proving the loss was on the plaintiff. The plaintiff did not produce any valuation report in proof of what it called market value which in my view should have been the basis for assessing the loss. In all the exhibits produced by the plaintiff, none had the value of the plots in question. There was an undated valuation report which was listed as document number 13 but the plaintiff abandoned it. When the matter was called out for confirmation of hearing, Mr. Kahura for the plaintiff told the court that he would not be calling the valuer and would be relying on a valuation report filed by the defendant. After going through the defendant’s 10 exhibits, I did not see any valuation report. What I have seen is a list of the plots sold and prices which was produced as defence exhibit 6.
In my opinion, the loss the plaintiff would have suffered would be the difference between the amount received from the defendant and the market value of the properties. The plaintiff not show the court that there were better offers than what the defendant paid neither did its witness produce evidence to prove the prices the other purchasers of similar plots in the same area paid. None of the plots in question was bought at a price lower than what the plaintiff’s board of directors and shareholders approved.
The amended plaint only pleaded what it stated as market value of the plots but the plaintiff did not go on to prove the averments. It is trite law that averments in the pleadings do not constitute evidence or proof. It remains a statement of fact which must be proved and where a party fails to call sufficient evidence to prove the fact, the case must fail. The Court of Appeal held in CMC Aviation Ltd v Kenya Airways Ltd (Cruisair Ltd (1978) KECA 9 (KLR) that
‘The pleadings in a suit are not normally evidence. They may become evidence if they are expressly or impliedly admitted as then the admission itself is evidence. Evidence is usually given on oath. Averments are not made on oath. Averments depend upon evidence for proof of their contents.’
The same position was taken in Kensilver Express Limited & another v JNG (Suing as legal representative for FKN (Deceased) (2023) KEHC 2920 (KLR) where the court held that;
‘Appellants did not tender any evidence. That averments in pleadings are not evidence was appreciated in Francis Otile vs. Uganda Motors Kampala HCCS No. 210 of 1989 where it was held that the court cannot be guided by pleading since pleadings are not evidence and nor can they be a substitute therefor.’
This court cannot assume that the price at which the defendant sold was the market value of the plots as at the time he acquired them from the plaintiff. Land is an asset that appreciates in value overtime and the plaintiff ceased to be the owner of the plots once the same were transferred to the defendant. The plaintiff could only benefit in form of an award for the value of the plots or where there is evidence that the plaintiff lost better offers than what the defendant paid.
It is my finding that the plaintiff has failed to produce the value of what was lost and as such there is no proof of damages suffered and the suit must on that account fail. Similarly, there is no basis for award of general, punitive or aggravated damages as prayed in the amended plaint.
Consequently, the suit is hereby dismissed with costs.
Dated, signed and delivered at Nairobi this 11 th day of July 2025.
B.M. MUSYOKI
JUDGE OF THE HIGH COURT.
Judgment delivered in presence of Mr. Kahura for the plaintiff and Mrs Ochieng for the defendant.