Ruth Wamuyu VS Inspire Luxe Limited

Background
1. The claim out of which this appeal arises was filed before the Small Claims Court by way of a statement of claim dated 16th March 2023. The appellant claimed a total of Kshs. 440,000/= for breach of an agreement for refund of her money that was invested in the respondent company as initial capital investment upon her exit.

2. The bone of contention is an alleged contract for the incorporation of a Joint Venture Company (JVC). The appellant faults the trial court's conclusion that the JVC was never incorporated due to the non-execution of the JVC Agreement. The appellant argues instead, that the JVC had indeed been incorporated, as evidenced by a CR12 form dated 14th May 2018, which listed her as a director. She maintains that the JVC was formed despite the parties not executing the agreement.

3. The appellant prays that the respondent should be estopped from denying that all the principles for determination as to the existence of a contract were met by the appellant hence the registration of the respondent company. For these reasons it is the appellant’s case that the conclusions of law reached by the lower trial court based on the facts and evidence adduced were inconsistent and unreasonable based on the circumstances.

4. The respondent on his part defended the decision of the trial court as being sound in law having properly analyzed the facts and evidence presented by the parties. It is the respondent’s case that the appellant failed to prove at the trial court that she had invested the amount claimed. The respondent has pointed out to this court the fact that the unexecuted JVC agreement is between the appellant and a non-party to the appeal.

5. The respondents seek to have the appeal therefore dismissed with costs.

6. The Judgment of the Learned Adjudicator appears at page 853 of the Record of Appeal. It is clear that the trial court identified 3 issues for determination. At page 855 of the record the trial Court reached a finding of fact that there was evidence that parties had engaged in talks towards refund of the appellant’s investment costs but found that there was no clarity on the consideration agreed upon.

7. The Court further found that the amount invested by the appellant was not discussed within the correspondence exchanged between the parties and neither was the JVC Agreement that was alleged to be the basis of the company was equally unexecuted. For these reasons the trial court found that the appellant had not proved on a balance of probabilities that there was a binding agreement between the parties and continued to dismiss the appeal.

8. Dissatisfied with the decision of the lower Court dated 2nd November 2022, the appellant filed an Amended Memorandum of Appeal dated 12th November 2023. I must say that the Amended Memorandum of Appeal was precipitated by a notice of preliminary objection raised by the respondent on 12th January 2023. The respondent still challenges the grounds of appeal as set out in the Amended Memorandum of Appeal for being offensive to Section 38 of the Small Claims Court Act (the Act).

9. Both parties have thankfully referred me to the decision of this Court in Momentum Credit Limited V Kabuiya, (Civil Appeal E035 of 2022.  Faced with a similar issue the Learned Judge confirmed the provisions of section 38 of the Act, cautioned himself to the parameters allowed of the appeal and proceeded to determine the appeal on its merits.

10. I equally align myself with the findings in that case for the reasons that a Court may venture into factual matters for purposes of confirming that the trial court correctly interpreted the law. Besides that, the appeal is not necessarily fatally defective by virtue of the appellant having described the grounds of appeal as errors of fact and law. This Court would be correctly within its discretion to deal with issues of law and leave out factual issues. Having so found, I shall proceed to determine the appeal on its merits.

Analysis and determination
11. I have carefully considered the pleadings, submission, evidence and authorities relied upon by the parties. The cardinal point for determination is whether there was a contract between the parties and whether the appellant was entitled to the prayers sought.

12. The Halsburys Laws of England, Volume 9 at paragraph 601 defines a contract as a series of promises or acts themselves constituting the contract as well as the documents(s) evidencing that series of promises between parties. A key point to note from this definition is that a contract does not have to be written to be valid.

13. Equally relevant is paragraph 667 which provides that:
“Whether or not the parties intend a subsequent formal agreement, an outline agreement may achieve sufficient certainty for that agreement to be complete by reason of the maxim that that which is capable of being made certain is to be treated as certain.”

14. This position was supported by the Court in Reveille Independent LLC V Anotech International (UK) Ltd, [2016] EWCA Civ 443 where it was held that:
“… a draft agreement can have contractual force, although the parties do not comply with a requirement that to be binding it must be signed, if essentially all the terms have been agreed and their subsequent conduct indicates this, albeit a court will not reach this conclusion lightly.

The fact that the transaction was performed on both sides will often make it unrealistic to argue that there was no intention to enter into legal relations. It will often make it difficult to submit that the contract is void for vagueness or uncertainty.”

15. The import of these pronouncements is that a contract can be formed even without formal execution of an agreement if there is sufficient evidence of an agreement and the parties have acted upon it. In other words, the absence of a formally signed contract does not negate the existence of a binding agreement if the conduct of the parties indicates that they intended to be bound by the terms discussed.

16. Moreover, the doctrine of estoppel may apply to prevent a party from denying the existence of a contract if the other party has relied on their representations to their detriment.

17. The evidence before this Court by way of the CR12 forms confirm that the respondent company was incorporated on 14th May 2018. The directors and shareholders are the appellant and ETTA COMPANY LIMITED. As at 11th June 2022 the directors were BERNICE JUMA and ALEX JUMA KAMITO. As earlier stated, they are not parties to this appeal. The authenticity of the CR 12 forms has not been controverted. It is also clear from the numerous correspondence that the appellant and other parties not before this Court contributed capital.

18. I have looked at the unexecuted JVC and I note the testimony given at the lower Court. It is clear to me that the actions by the appellant was an indication that parties were operating under the terms of the Joint Venture, even if it was not formally executed.  The correspondence on record goes further to confirm that parties went on to invest and carry out different roles on the strength of the JVC, until the fall out.

19. By way of example, the email of 16th January 2019 from the respondent company confirms that upon leaving the company, “the appellant’s initial investment cost will be refunded and she should provide us with any further documentation in regards to the same”. The email written on behalf of the respondent was clearly an acknowledgement of a functioning JVC and an agreement between the parties following this fallout.  The email went further to state that: “shares currently held by the [appellant] will be transferred to Mr. Alex Kamito who will join the company on a 20% share ownership”.

20. In my view, had the Learned Adjudicator considered the evidence alongside the law on implied contracts and considered the extrinsic evidence I have no doubt that he would have come to a similar finding that there was indeed a contract implied by action and part performance.

21. But then, that is as far as it goes. The appellant’s claim of Kshs. 440,000/= needed to have been proved. The trial court made a factual finding that the parties had engaged in talks towards refund of the appellant’s investment costs but found that there was no clarity on the consideration agreed upon.

22. Section 107 of the Evidence Act provides as follows:
“Burden of proof.
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. When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.”

23. The onus was on the appellant to prove her loss on a balance of probabilities. Having reviewed the evidence presented before the trial court, I concur that the appellant did little, if anything, to substantiate her loss and claim. It is unfortunate but it must be remembered that this Court cannot pluck figures from the air. The appellant was required to prove her loss with precision and certainty, which she failed to do. Therefore, I find no reason to interfere with the decision of the Learned Adjudicator.

Disposition
24. Accordingly, this appeal is devoid of merit and the same is dismissed with costs to the respondent.