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JudgmentPRESSURE VESSELS LIMITED VS SEARITE HOLDINGS LIMITED6 min read

PRESSURE VESSELS LIMITED VS SEARITE HOLDINGS LIMITED

High Court at Milimani High Court · · Peter Mulwa

(Being an appeal from the judgment and decree of Hon. V. M. Mochache, Adjudicator/R.M. dated 28th July 2023 in Nairobi Small Claims Court - SCCOMM No. E3191 of 2023)

  1. Before the Small Claims Court, the respondent filed suit by a statement of claim dated 1st February 2023 claiming unpaid arrears of Kshs. 542,000.00 being the sum for security services provided to the appellant from 30th September to 23rd November 2017, plus costs and interest.
  2. The appellant in its response to the statement of claim dated 14th June 2023 admitted entering into an oral contract with the respondent in the year 2015 for the provisions of security services. It disputed the statement of account adduced as evidence and alleged the respondent unilaterally increased the monthly amounts payable to Kshs. 58,000.00 contrary to the agreed amount of Kshs. 43,000.00 without its consent. The contract was terminated on 30th May 2017 and it paid a sum of Kshs. 100,000.00 out of the balance due and owing of Kshs. 187,000.00 and the balance offset.
  3. By the Memorandum of Appeal dated 25th August 2023 the appellant appeals against the trial court’s finding that the respondent had discharged its duty of proving its case on a balance of probability and entered judgment in favour of the respondent. The court relied on the statements of accounts adduced by the respondent. The following grounds are set out in the Memorandum of Appeal.
  4. The learned adjudicator erred in law by relying on a statement of account that was issued to a different entity that was not a party to the suit, and failed to appreciate that the appellant is a body corporate, with a separate independent identity in law that is distinct from its shareholders, directors and agents.
  5. The learned adjudicator erred in law by failing to appreciate that the respondent is a company incorporated under the Companies Act and no resolution was filed sanctioning or authorizing the institution of the claim and that in the absence of a valid resolution, the respondent was not proper before the court.
  6. The learned adjudicator erred in law by failing to consider the facts, evidence and the law but proceeded to rewrite a contract holding that there was an adjustment and variation of the terms of the Contract while the evidence submitted by the Appellant demonstrated there was no meeting of the minds on the issue of variation of the terms of the contract.
  7. The learned adjudicator erred in law by failing to frame and analyze the issues for determination as required in law hence arriving at erroneous finding.
  8. The learned adjudicator erred in law in reaching a decision that was both inequitable and outrightly unconscionable to the appellant while disregarding its evidence.
  9. It proposed to ask that the appeal be allowed and set aside the judgment of 28th July 2023 in Nairobi SCC Commercial Case No. E3191 of 2023. It also prayed to be awarded the costs of the appeal.
  10. The appeal was heard by way of written submissions. The appellant filed submissions dated 28th February 2024 while the respondent filed submissions dated 23rd April 2024.
  11. I have considered the memorandum of appeal, the record of appeal and the parties’ respective submissions. This is a first appeal from a decision of the Small Claims Court. Section 38 of the Small Claims Court Act provides that:

“(1) A person aggrieved by the decision or an order of the Court may appeal against that decision or order to the High Court on matters of law.

(2) An appeal from any decision or order referred to in subsection (1) shall be final.”

  1. It therefore follows that in an appeal from the SCC, this Court’s mandate is circumscribed to handling matters of law only. Matters of fact are only interfered with if they were based on no evidence or wrong principles (See Bashir Haji Abdullahi v Adan Mohammed Nooru & 3 others [2014] eKLR).
  2. In the case of Otieno, Ragot & Company Advocates v National Bank of Kenya Limited [2020] eKLR, the Court stated that:

“This is a second appeal. I am alive to my duty as a second appellate court to determine matters of law only unless it is shown that the courts below considered matters they should not have considered or failed to consider matters they should have considered or looking at the entire decision, it is perverse.”

  1. What constitutes points of law, has been settled. In the case of Peter Gichuki King'ara v IEBC & 2 Others, Nyeri Civil Appeal No. 31 Of 2013, (Court of Appeal) (Visram, Koome & Odek, JJA), the Court of Appeal stated as follows:

“It was held that it is trite law that the exercise of judicial discretion is a point of law and that the trial court in denying a prayer of scrutiny is exercising judicial discretion…that it would not be feasible for the Court to order for a recount and scrutiny as this would involve matters of fact that were within the jurisdiction of the trial court…The question of whether the trial judge properly considered and evaluated the evidence and arrived at a correct determination that is supported by law and evidence – with the caveat that the appeal court did not see the witness demeanor – is an issue of law.”

  1. The issues of failure to exercise discretion is equally a point of law.
  2. At the trial court, parties proceeded by way of submissions and documents. The respondent adduced a statement of account, a notice of termination dated 30 September 2017 and email correspondence.
  3. This court must satisfy itself that the respondent proved its case to the required standard. To prove the indebtedness of the appellant the respondent adduced a statement of accounts dated 22nd November 2022 prepared by the respondent in the cause of business.
  4. The appellant disputed the statement of account on the basis that it was addressed to a different person not a party to the suit. 
  5. From the record, the statement of account was addressed to Githiga Gas Cylinder and sent out to the appellant. The appellant disputed the adjustment of the amounts by an email dated 18th May 2017.
  6. It is trite law that a statement of account alone shall not be sufficient evidence to prove liability. Section 37 of the Evidence Act states:

“Entries in books of account regularly kept in the course of business are admissible whenever they refer to a matter into which the court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability.”

  1. On the statement of account produced to show the appellant’s indebtedness, the Court of Appeal in the case of Five Continents Ltd v Mpata Investments Ltd [2003] eKLR held:

“The plaintiff mainly relied on the accounts analysis to show the defendant’s indebtedness. That accounts analysis was apparently prepared by the plaintiff for use in this suit. It is not itself a book of account regularly kept in the course of business. Even if it were, such a statement would not alone be sufficient evidence to charge the defendant with liability (see Section 37 of the Evidence Act). It follows that the accounts analysis on which the learned judge relied has no evidential value.”

  1. It is therefore my finding that the trial court erred in placing reliance solely on the statement of accounts as filed by the respondent. The respondent failed to provide sufficient evidence to prove its case on a balance of probability.
  2. The trial court addressed itself on the appellant’s assertion of suing a different entity, where the court opined the argument did not hold water. I am thus not in agreement with the respondent that the issue has been raised at the appeal stage.

Disposition

  1. The upshot is that:
  2. The appeal is allowed
  3. The judgment of the Hon. Adjudicator dated 28th July 2023 is set aside and substituted with this Court’s judgment dismissing the suit set out in the statement of claim dated 1st February 2023.
  4. The appellant shall bear its own costs in the Small Claims Court, but is awarded costs of this appeal assessed at Kshs. 40,000.00.

JUDGMENT delivered virtually, dated and signed at NAIROBI

This 7th day of November 2024.


P. MULWA

JUDGE

In the presence of:

N/A for appellant

Mr. Omwanza Nyamweya for respondent

Court Assistant: Carlos

    PRESSURE VESSELS LIMITED VS SEARITE HOLDINGS LIMITED PRESSURE VESSELS LIMITED VS SEARITE HOLDINGS LIMITED