JUDGEMENT
1. This judgment is in respect to the Appellant’s Appeal dated 7th September 2023, arising from the judgment and decree delivered on 10th August 2023 in Thika Chief Magistrate’s Court Civil Suit No. E469 of 2022 – Straight Security Limited v Etrade Company Limited – by Hon. V. Asiyo, Principal Magistrate.
2. The Appellant, is aggrieved by the judgment of the Learned Trial Magistrate on both legal and factual grounds. It contends that the Learned Magistrate failed to consider the entire body of evidence on record and misdirected herself in the interpretation of a written contract. That she even went so far as to improperly amend a signed contract. The Appellant further complains that the Trial Court erred in finding that it had not made any demands for interest on late payments prior to filing the suit. Thus, it failed to properly appreciate the terms of the contract between the parties. It also argues that the Trial Court failed to recognize that the principal amount was only paid after the suit was filed. That this was after following several demands. Thus, the Trial Court erred in not awarding it costs, contrary to the principle that costs follow the event. Additionally, the Appellant takes issue with the Trial Court’s misapplication of the doctrine of estoppel in relation to the contract. It is also aggrieved by the failure of the Trial Court to award costs despite the finding that the principal sum was paid after the suit was filed.
3. This Court gave directions that the Appeal be disposed of by way of written submissions. The matter came up for Rapid Results Initiative (RRI) hearing on 4th December 2024. This Court has duly considered the Appellant’s submissions dated 13th June 2024 and the Respondent’s submissions dated 14th November 2024. The Court appreciates the industry of Counsel for both parties in the presentation of their respective arguments. The Court also apologises to the parties for the delay in delivery of this decision which was not intended. There was pressure of work and also events that colluded leading to the state of affairs.
Background Facts
4. By a Plaint dated 23rd August 2022, the Appellant, who was the Plaintiff in the lower Court, averred that on or about 1st September 2016, the Plaintiff and the Defendant entered into a contract. This was a General Security Contract for the provision of security services at the Defendant’s facility located in Juja. Pursuant to the said agreement, the Plaintiff duly performed its contractual obligations by deploying security personnel and rendering services at the Defendant’s premises in accordance with the agreed terms and conditions.
5. It was a fundamental term of the contract that upon provision of the services, the Defendant would promptly settle all invoices raised, failing which a liquidated damages clause would take effect. Specifically, the contract provided that delayed payments would attract interest at the rate of 10% if not settled within thirty (30) days from the date of the invoice, and an additional 5% for every subsequent month the payment remained outstanding. Furthermore, the Plaintiff retained the contractual right to cumulatively increase the invoiced sums by 10% monthly where default persisted beyond the stipulated period.
6. The Plaintiff duly issued invoices for the services rendered, which the Defendant neither contested nor repudiated. Despite partial payments amounting to Kshs. 208,800/= on 20th June 2019 and Kshs. 626,400/= on 30th October 2019, the Defendant failed and/or neglected to clear the outstanding balance. As at 30th August 2020 the amount stood at Kshs. 1,192,400/=. The Plaintiff avers that due to continued non-payment, the principal sum has since accrued liquidated damages amounting to Kshs. 3,811,950/=.
7. As a result of the Defendant’s breach of the contractual terms, the Plaintiff has suffered substantial loss and damage, including operational disruption and financial distress. Despite issuance of formal demand and notice of intention to sue, the Defendant has failed, refused, and/or neglected to admit liability or settle the outstanding sum.
8. The Plaintiff further avers that there is no pending suit or previous proceedings between the parties concerning the same subject matter. Accordingly, the Plaintiff’s claim against the Defendant is for the sum of Kshs. 5,004,350/=, being the total outstanding principal and accrued liquidated damages.
9. By a Statement of Defence dated 21st October 2022, the Defendant admitted that, based on the Plaintiff’s invoices and final statement dated 5th August 2020, the outstanding balance was Kshs. 1,192,400. That the Defendant fully paid the said amount on 19th September 2022. The Defendant contended that no liquidated damages or interest were charged or demanded on any invoice or in the Plaintiff’s final statement. That such charges, as now claimed by the Plaintiff, were never part of the contractual dealings between the parties.
10. The Defendant maintained that the claim for interest is illegal, excessive, oppressive, unconscionable, exploitative, and amounts to usury. The Defendant asserted that if such punitive charges had been included in the Plaintiff’s invoices, it would have immediately terminated the agreement to prevent further accrual of such amounts. It was further stated that the invoices shared during the subsistence of the contract did not contain any reference to interest or penalties for delayed payments.
11. The Defendant confirmed having paid the full sum of Kshs. 1,192,400 and denied any further indebtedness. The claim for liquidated damages was described as excessive, unjustifiable, and unsupported by the contractual documents or the conduct of the parties. The Defendant denied the Plaintiff’s claim of having suffered loss or damage and put the Plaintiff to strict proof thereof.
12. While the Defendant admitted having received the demand and notice of intention to sue, it averred that there was no outstanding debt or lawful obligation at the time to warrant the filing of the suit. The Defendant admitted the procedural averments relating to jurisdiction and prior proceedings. However it denied the substantive claim of Kshs. 5,004,350 or any part thereof and invited the Plaintiff to strict proof.
Issues For Determination
13. Upon consideration of the entire record, the pleadings, and the parties’ respective written submissions — namely, the Appellant’s submissions dated 13th June 2024 and the Respondent’s submissions dated 14th November 2024 — this Court is of the view that two key issues arise for determination:
a) Whether the learned Trial Magistrate misinterpreted the terms of the contract and misapplied the doctrine of estoppel vis-à-vis the provisions of the contract.
b) Whether the learned Trial Magistrate misapplied the principles relating to costs.
Analysis
14. Being a first Appeal, this Court is under a duty to re-evaluate and re-analyze afresh the evidence adduced before the Trial Court and draw its own independent conclusions. In doing so, the Court must bear in mind that the Trial Court had the advantage of seeing and hearing the witnesses firsthand — see Selle & Another v Associated Motor Boat Co. Ltd & Others (1968) EA 123.
a) Whether The Learned Trial Magistrate Misinterpreted the Terms of the Contract and Misapplied the Doctrine of Estoppel Vis-À-Vis the Provisions of The Contract.
15. It is trite law that Courts have no authority to rewrite the contract between the parties. In National Bank of Kenya Ltd v Pipe Plastic Samkolit (K) Ltd (2002) 2 E.A. 503, (2011) eKLR the Court of Appeal at page 507 stated as follows:
“A court of law cannot rewrite a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved.”
16. In Pius Kimaiyo Langat v Co-operative Bank of Kenya Limited [2017] KECA 152 (KLR) the Court of Appeal further stated that:
“We are alive to the hallowed legal maxim that it is not the business of Courts to rewrite contracts between parties, They are bound by the terms of their contracts, unless coercion, fraud or undue influence are pleaded and proved.”
17. Also, it is well established that the doctrine of estoppel operates as a legal bar precluding a party from asserting a claim or right that is inconsistent with a position previously taken, whether by words or conduct. Specifically, equitable estoppel functions as a defensive principle designed to prevent a party from taking unfair advantage of another. This is more so where, through misrepresentation or conduct amounting to a representation of fact, the party to be estopped has induced another to act or rely to their detriment, thereby occasioning substantial prejudice.
18. Section 120 of the Evidence Act states as follows;
120. General estoppel.
When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing.
19. The issue of waiver and estoppel in the context of contracts has received consistent and considered treatment by the Superior Courts in Kenya. The Courts have repeatedly underscored that where a party, by words or conduct, knowingly waives a contractual right or leads another party to believe that such right will not be enforced, they may be estopped from later asserting that right—particularly where the other party has relied on such representation to their detriment.
20. In Regnoil Kenya Limited v Karanja (Civil Appeal 534 of 2019) [2023] KECA 112 (KLR) (3 February 2023) at paragraphs 48 and 49, the Court of Appeal undertook a detailed analysis of the relationship between the doctrines of affirmation, estoppel, and waiver. The Court reaffirmed, adopted, and endorsed the reasoning previously articulated in Dhanjal Investments Limited v Shabaha Investments Limited (Civil Appeal 80 of 2019) [2022] KECA 366 (KLR) (18 February 2022), particularly at paragraphs 43 and 44. In that case, the Court stated that:
“43. Waiver on the other hand is defined in Black’s Law Dictionary, Ninth Edition as “the voluntary relinquishing or abandonment- express or implied - of a legal right or advantage”, while estoppel is defined as “a bar that prevents one from asserting a claim or right that contradicts what one has said or done before, or what has been legally established as true”. The doctrine of equitable estoppel is a defense that is raised when such conduct or representation has been relied on by another party, with the result that the other party has suffered a detriment or injury.
44.There is an intertwined connection between the application of the concepts of affirmation, estoppel and waiver in the law that applies to performance and discharge of contracts. Affirmation and estoppel both arise from clear and unequivocal representations or conduct by a party that they will not exercise their right to treat a contract as repudiated, which if proven, then leads the other party to rely on waiver as a defence to any purported termination of a contract. Affirmation will lead to the application of the defence of waiver by election, while waiver by estoppel is also raised as an application of the principle of equitable estoppel. The only difference between the two waivers is that unlike in a waiver by election, no knowledge of the facts giving rise to the exercise of the right to waiver and of its effects is required in a waiver by estoppel.”
21. The High Court in Bank of Africa Limited v Time Trucks Limited & 2 others (Civil Suit 41 of 2016) [2024] KEHC 12494 (KLR) (16 October 2024) (Judgment) further elaborated the contours of equitable estoppel, stated:
“55. […] In Nurdin Bandali v. Lombank Tanganyika Ltd [1963] EA 304, the former Court of Appeal for Eastern Africa set out the conditions under which equitable estoppel arises as follows:
“The precise limits of an equitable estoppel are, however, by no means clear. It is clear, however, that before it can arise one party must have made to another party a clear and unequivocal representation, which may relate to the enforcement of legal rights, with the intention that it should be acted upon and the other party, in belief of the truth of the representation, acted upon it.”
56.Estoppel is a shield and not a sword and as held in Serah Njeri Mwobi vs. John Kimani Njoroge [2013] eKLR:
‘The doctrine of estoppel operates as a principle of law which precludes a person from asserting something contrary to what is implied by a previous action or statement of that person”
22. The decision in Fredico Investments Limited v Graphic Investments Limited (Environment & Land Case 72 of 2019) [2024] KEELC 200 (KLR) (25 January 2024) (Judgment), reaffirmed the doctrine of estoppel as a principle rooted in equity and fairness. The Court, relying on the Court of Appeal’s analysis in Serah Njeri Mwobi v John Kimani Njoroge [2013] eKLR, at paragraph 172, clarified the legal distinction and interplay between waiver, estoppel, and acquiescence. Waiver was described as the intentional relinquishment of a known right, estoppel as a principle that precludes a party from asserting something contrary to their earlier representation or conduct, particularly where the other party has relied on such representation to their detriment, and acquiescence as a form of passive consent through inaction.
23. The Court observed, still at paragraph 173 of the Fredico Investments Limited v Graphic Investments Limited (Supra) that where a party, by words or conduct, makes a representation intended to affect legal relations and to be acted upon by the other party, and the latter does act on it, the first party cannot later revert to the original legal position if doing so would be inequitable. Such conduct binds the representor to the new legal state of affairs induced by their representation.
24. In reinforcing this position, the Court adopted the reasoning in 748 Air Services Limited v Theuri Munyi [2017] eKLR and Sita Steel Rolling Mills Ltd v Jubilee Insurance Company Ltd [2007] eKLR, reiterating that waiver may be inferred from a party’s conduct where it evinces an intention to abandon a right or is inconsistent with any intention to assert it.
25. The decision in Fredico Investments Limited v Graphic Investments Limited (Supra) aligns with the equity-based principle of estoppel as restated in Republic v Chief Land Registrar & 7 others Ex-Parte James Njoroge Njuguna [2018] eKLR. Both cases affirm that estoppel precludes a party from going back on a representation—by words or conduct—when another party has relied on it to their detriment.
26. As outlined in paragraphs 115–120 of the Republic v Chief Land Registrar & 7 others Ex-Parte James Njoroge Njuguna [2018] eKLR, equitable estoppel arises where: (a) a legal relationship exists or is anticipated; (b) one party makes a representation; (c) the other relies on it in good faith; (d) such reliance causes detriment; and (e) it would be unconscionable to allow the promisor to resile. Unconscionability is the core of the doctrine. Lord Cairns' formulation in paragraph 120 reinforces that equity will bar enforcement of strict rights if doing so would be inequitable given the parties’ conduct.
27. Similarly, in Rajnikantkhetshi Shah v Habib Bank A.G. Zurich [2016] KEHC 6740 (KLR), the High Court emphasized that waiver may arise by implication from conduct, and Courts must assess whether the totality of conduct is inconsistent with the maintenance of the right in question. It addressed also waivers of legal rights. it was stated that
“[32] On my part, upon consideration of all relevant material, submission and evidence of the parties, I take this view. In law waiver of a right or relief may be express or implied. Almost no difficult arises where the waiver is made expressly by consent and the party benefiting from it has acted on upon it: that is sufficient consideration. Where waiver is not express and is to be implied from the conduct of the parties, the court has to consider the entire circumstances of the case to establish conduct which is inconsistent with the continuance of the right. See The Laws of England, eds. Viscount Simonds, Vol.14, London: Butterworth & Co. [1956] para 1175.That is the law on waiver.”
28. The most recent articulation of this principle is found in Frametech Equipment Limited v Office Dynamics Limited (Commercial Appeal E145 of 2024) [2025] KEHC 8817 (KLR) (Commercial and Tax) (19 June 2025) (Judgment), where this Court found that the Respondent, having expressly waived a debt through a formal communication, could not later backtrack and impose obligations contrary to that waiver. The waiver was found to be intentional and supported by consideration, creating an enforceable estoppel. This Court stated that:
“Upon consideration of the letter reproduced above, the Court finds that the Respondent waived the debt to a significant and substantial extent. This constitutes an express waiver by the Respondent. The Appellant, having stood to benefit from the waiver, was obliged to act in accordance with the agreed terms, which would have constituted sufficient consideration. However, the Appellant failed to fulfil this obligation.”
29. In the present case, the facts mirror the jurisprudence above with remarkable clarity. The contract between the parties was terminated on 5th August 2020. On 6th August 2020, the Appellant issued a handing over letter confirming cessation of services, explicitly demanding payment of Kshs. 1,192,400, without any reference to liquidated damages or interest. This constituted not only an acknowledgment of final sums due but also an unequivocal election to forgo any further claims. For over four years—from 2016 to 2020—the Appellant had never raised any invoice including interest or liquidated damages, and the only statement of account issued was that of 5th August 2020, reiterating the figure of Kshs. 1,192,400. The letter dated 6th August 2020 authored by the Appellant is reproduced verbatim hereinbelow: (underlined emphasis ours).
“HANDING OVER NOTE & DEMAND FOR THE OUTSTANDING DEBT OF KSH.1,192,400. AS AT 5TH AUGUST 2020
The above subject refers;
We Straight Security Services Limited on this 6th day of August 2020 do handover daily security duties of Etrade Company at Juja site, having confirmed all was okay.
This is after the Security Services contract was duly terminated by Etrade Company through the notice dated 25th June 2020 and further extended by the email to 5th August 2020.
We therefore demand full payment of Ksh.1,192,400 for the services rendered as a way of reciprocating our patience despite your failure in meeting your promises.
We however appreciate the opportunity you accorded us to serve you and we remain hopeful that should there be any other chance in future we shall not hesitate to take it up.
Find the attached statement of account and the invoice for the 5 days worked during the month of August 2020.”
30. The Respondent, in response, acknowledged the debt and expressed a willingness to settle the same, citing financial constraints. However, it was not until much later—specifically on 12th August 2022—that the Appellant, through a demand letter issued by its advocates claiming a sum of Kshs. 7,290,060, and subsequently by way of a Plaint dated 23rd August 2022 seeking recovery of Kshs. 1,192,400 as the outstanding principal sum, Kshs. 3,811,950 as liquidated damages, together with costs and interest—sought, for the first time, liquidated damages and interest. This demand was in stark contradiction to the Appellant’s earlier conduct and representations.
31. Moreover, even if the Appellant had intended to reserve its right to claim interest or liquidated damages, the requirement of clear, express notice was not met. In National Bank of Kenya Ltd v Mwaniki wa Ndegwa [2020] KECA 461 (KLR), the Court of Appeal held that any interest, even if suspended in the lender’s books, must be explicitly stated so that the borrower is fully informed of the extent of their indebtedness. The Court stated itself that:
“39. While the appellant called on us to consider this appeal in line with accounting principles and in line with the contracts entered into by the parties, we note that the question of the appellant exercising its statutory power of sale was pursuant to the power given to it to do so by law. By that law, it fell on the appellant to ensure that the notice was complete in all respects. Any interest, even if suspended as per the lender’s books, must be explicitly stated so that the borrower is fully informed of the extent of his indebtedness.”
32. Applying the authorities above, it is manifest that the Appellant is estopped from asserting a claim for liquidated damages and interest. It had waived those rights, either expressly through its final letter dated 6th august 2022, or by implication through sustained conduct from 1st September 2016 to 5th August 2020, during which period none of the invoices raised by the Appellant included or demanded interest for delayed payments. At no point during the contractual period was interest charged on late payments. The belated attempt to revive these claims—after years of silence and acquiescence—is not only unconscionable but squarely barred by the equitable doctrines of waiver and estoppel.
33. In view of the above, a party cannot be permitted to blow hot and cold—to lull another into a position of perceived finality only to later alter its stance to the detriment of the other. The law does not countenance such duplicity. As equity demands, the Appellant must be held to its word—and its conduct. This Court therefore finds no fault in the trial magistrate’s determination on the foregoing issue and accordingly upholds that portion of the judgment.
b) Whether The Learned Trial Magistrate Misapplied the Principles Relating to Costs.
34. This Court observes that despite having been issued with a formal demand through the Appellant’s letter dated 6th August 2020—accompanied by the final statement and invoice clearly reflecting the outstanding sum of Kshs. 1,192,400—the Respondent took no steps to remit payment. This was until 19th September 2022, over two years later and only prompted solely by legal pressure. The payment was, by the Respondent’s own admission, based on the very invoices and final statement issued in August 2020.
35. As costs follow the event, and the Respondent only settled the admitted sum under the shadow of litigation and despite an earlier demand, the Appellant is rightfully entitled to costs. The Trial Court’s refusal to award them was therefore misplaced and cannot stand. This Court is entitled to interfere with the exercise of jurisdiction of the Trial Court. The Court reminds itself of the decision in Peters v Sunday Post Limited [1958] EA 424, where the Court held as follows:
“It is a strong thing for an appellate court to differ from the findings on a question of fact, of the judge who had the advantage of seeing and hearing the witnesses…But the jurisdiction to review the evidence should be exercised with caution: it is not enough that the appellate court might have come to a different conclusion…”
36. The Court also follows the decision in Mbogo and Another v Shah [1968] EA 93, where the Court held:
“…that this Court will not interfere with the exercise of judicial discretion by an inferior court unless it is satisfied that its decision is clearly wrong, because it has misdirected itself or because it has acted on matters on which is should not have acted or because it failed to take into consideration matters which it should have taken into consideration and in doing so arrived at a wrong conclusion.”
37. The Court finds that there was no justification in failing to award costs to the Appellant for having filed suit. The Trial Court failed to consider the principle set out in Rai & 3 others v Rai & 4 others [2014] KESC 31 (KLR) as follows;
“It emerges that the award of costs would normally be guided by the principle that “costs follow the event”: the effect being that the party who calls forth the event by instituting suit, will bear the costs if the suit fails; but if this party shows legitimate occasion, by successful suit, then the defendant or respondent will bear the costs.”
38. This Court awards the Appellant costs of the suit before the Trial Court, but on the lower scale. As to the costs of this Appeal, the fair orders is let each party bear its own costs. The Appellant did not succeed in dislodging the defence of waiver or estoppel.
Determination
39. The upshot of the foregoing is that the Court makes the following orders: -
a) The appeal succeeds partially, limited only to the issue of costs.
b) The Appellant is awarded the costs of the suit in the lower court, on the lower scale together with interest thereon at Court rates from the date of the Judgement until payment in full.
c) Each party shall bear its own costs of this Appeal.
40. It so ordered.
DATED, SIGNED AND DELIVERED AT THIKA THIS 07TH DAY OF AUGUST 2025.
NJOROGE BENJAMIN K.
JUDGE
In the presence of;
Miss Macharia for the Appellant.
Mr. Githiri for the Respondent.
Susan Nzioka - Amos – Court Assistant
1. This judgment is in respect to the Appellant’s Appeal dated 7th September 2023, arising from the judgment and decree delivered on 10th August 2023 in Thika Chief Magistrate’s Court Civil Suit No. E469 of 2022 – Straight Security Limited v Etrade Company Limited – by Hon. V. Asiyo, Principal Magistrate.
2. The Appellant, is aggrieved by the judgment of the Learned Trial Magistrate on both legal and factual grounds. It contends that the Learned Magistrate failed to consider the entire body of evidence on record and misdirected herself in the interpretation of a written contract. That she even went so far as to improperly amend a signed contract. The Appellant further complains that the Trial Court erred in finding that it had not made any demands for interest on late payments prior to filing the suit. Thus, it failed to properly appreciate the terms of the contract between the parties. It also argues that the Trial Court failed to recognize that the principal amount was only paid after the suit was filed. That this was after following several demands. Thus, the Trial Court erred in not awarding it costs, contrary to the principle that costs follow the event. Additionally, the Appellant takes issue with the Trial Court’s misapplication of the doctrine of estoppel in relation to the contract. It is also aggrieved by the failure of the Trial Court to award costs despite the finding that the principal sum was paid after the suit was filed.
3. This Court gave directions that the Appeal be disposed of by way of written submissions. The matter came up for Rapid Results Initiative (RRI) hearing on 4th December 2024. This Court has duly considered the Appellant’s submissions dated 13th June 2024 and the Respondent’s submissions dated 14th November 2024. The Court appreciates the industry of Counsel for both parties in the presentation of their respective arguments. The Court also apologises to the parties for the delay in delivery of this decision which was not intended. There was pressure of work and also events that colluded leading to the state of affairs.
Background Facts
4. By a Plaint dated 23rd August 2022, the Appellant, who was the Plaintiff in the lower Court, averred that on or about 1st September 2016, the Plaintiff and the Defendant entered into a contract. This was a General Security Contract for the provision of security services at the Defendant’s facility located in Juja. Pursuant to the said agreement, the Plaintiff duly performed its contractual obligations by deploying security personnel and rendering services at the Defendant’s premises in accordance with the agreed terms and conditions.
5. It was a fundamental term of the contract that upon provision of the services, the Defendant would promptly settle all invoices raised, failing which a liquidated damages clause would take effect. Specifically, the contract provided that delayed payments would attract interest at the rate of 10% if not settled within thirty (30) days from the date of the invoice, and an additional 5% for every subsequent month the payment remained outstanding. Furthermore, the Plaintiff retained the contractual right to cumulatively increase the invoiced sums by 10% monthly where default persisted beyond the stipulated period.
6. The Plaintiff duly issued invoices for the services rendered, which the Defendant neither contested nor repudiated. Despite partial payments amounting to Kshs. 208,800/= on 20th June 2019 and Kshs. 626,400/= on 30th October 2019, the Defendant failed and/or neglected to clear the outstanding balance. As at 30th August 2020 the amount stood at Kshs. 1,192,400/=. The Plaintiff avers that due to continued non-payment, the principal sum has since accrued liquidated damages amounting to Kshs. 3,811,950/=.
7. As a result of the Defendant’s breach of the contractual terms, the Plaintiff has suffered substantial loss and damage, including operational disruption and financial distress. Despite issuance of formal demand and notice of intention to sue, the Defendant has failed, refused, and/or neglected to admit liability or settle the outstanding sum.
8. The Plaintiff further avers that there is no pending suit or previous proceedings between the parties concerning the same subject matter. Accordingly, the Plaintiff’s claim against the Defendant is for the sum of Kshs. 5,004,350/=, being the total outstanding principal and accrued liquidated damages.
9. By a Statement of Defence dated 21st October 2022, the Defendant admitted that, based on the Plaintiff’s invoices and final statement dated 5th August 2020, the outstanding balance was Kshs. 1,192,400. That the Defendant fully paid the said amount on 19th September 2022. The Defendant contended that no liquidated damages or interest were charged or demanded on any invoice or in the Plaintiff’s final statement. That such charges, as now claimed by the Plaintiff, were never part of the contractual dealings between the parties.
10. The Defendant maintained that the claim for interest is illegal, excessive, oppressive, unconscionable, exploitative, and amounts to usury. The Defendant asserted that if such punitive charges had been included in the Plaintiff’s invoices, it would have immediately terminated the agreement to prevent further accrual of such amounts. It was further stated that the invoices shared during the subsistence of the contract did not contain any reference to interest or penalties for delayed payments.
11. The Defendant confirmed having paid the full sum of Kshs. 1,192,400 and denied any further indebtedness. The claim for liquidated damages was described as excessive, unjustifiable, and unsupported by the contractual documents or the conduct of the parties. The Defendant denied the Plaintiff’s claim of having suffered loss or damage and put the Plaintiff to strict proof thereof.
12. While the Defendant admitted having received the demand and notice of intention to sue, it averred that there was no outstanding debt or lawful obligation at the time to warrant the filing of the suit. The Defendant admitted the procedural averments relating to jurisdiction and prior proceedings. However it denied the substantive claim of Kshs. 5,004,350 or any part thereof and invited the Plaintiff to strict proof.
Issues For Determination
13. Upon consideration of the entire record, the pleadings, and the parties’ respective written submissions — namely, the Appellant’s submissions dated 13th June 2024 and the Respondent’s submissions dated 14th November 2024 — this Court is of the view that two key issues arise for determination:
a) Whether the learned Trial Magistrate misinterpreted the terms of the contract and misapplied the doctrine of estoppel vis-à-vis the provisions of the contract.
b) Whether the learned Trial Magistrate misapplied the principles relating to costs.
Analysis
14. Being a first Appeal, this Court is under a duty to re-evaluate and re-analyze afresh the evidence adduced before the Trial Court and draw its own independent conclusions. In doing so, the Court must bear in mind that the Trial Court had the advantage of seeing and hearing the witnesses firsthand — see Selle & Another v Associated Motor Boat Co. Ltd & Others (1968) EA 123.
a) Whether The Learned Trial Magistrate Misinterpreted the Terms of the Contract and Misapplied the Doctrine of Estoppel Vis-À-Vis the Provisions of The Contract.
15. It is trite law that Courts have no authority to rewrite the contract between the parties. In National Bank of Kenya Ltd v Pipe Plastic Samkolit (K) Ltd (2002) 2 E.A. 503, (2011) eKLR the Court of Appeal at page 507 stated as follows:
“A court of law cannot rewrite a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved.”
16. In Pius Kimaiyo Langat v Co-operative Bank of Kenya Limited [2017] KECA 152 (KLR) the Court of Appeal further stated that:
“We are alive to the hallowed legal maxim that it is not the business of Courts to rewrite contracts between parties, They are bound by the terms of their contracts, unless coercion, fraud or undue influence are pleaded and proved.”
17. Also, it is well established that the doctrine of estoppel operates as a legal bar precluding a party from asserting a claim or right that is inconsistent with a position previously taken, whether by words or conduct. Specifically, equitable estoppel functions as a defensive principle designed to prevent a party from taking unfair advantage of another. This is more so where, through misrepresentation or conduct amounting to a representation of fact, the party to be estopped has induced another to act or rely to their detriment, thereby occasioning substantial prejudice.
18. Section 120 of the Evidence Act states as follows;
120. General estoppel.
When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing.
19. The issue of waiver and estoppel in the context of contracts has received consistent and considered treatment by the Superior Courts in Kenya. The Courts have repeatedly underscored that where a party, by words or conduct, knowingly waives a contractual right or leads another party to believe that such right will not be enforced, they may be estopped from later asserting that right—particularly where the other party has relied on such representation to their detriment.
20. In Regnoil Kenya Limited v Karanja (Civil Appeal 534 of 2019) [2023] KECA 112 (KLR) (3 February 2023) at paragraphs 48 and 49, the Court of Appeal undertook a detailed analysis of the relationship between the doctrines of affirmation, estoppel, and waiver. The Court reaffirmed, adopted, and endorsed the reasoning previously articulated in Dhanjal Investments Limited v Shabaha Investments Limited (Civil Appeal 80 of 2019) [2022] KECA 366 (KLR) (18 February 2022), particularly at paragraphs 43 and 44. In that case, the Court stated that:
“43. Waiver on the other hand is defined in Black’s Law Dictionary, Ninth Edition as “the voluntary relinquishing or abandonment- express or implied - of a legal right or advantage”, while estoppel is defined as “a bar that prevents one from asserting a claim or right that contradicts what one has said or done before, or what has been legally established as true”. The doctrine of equitable estoppel is a defense that is raised when such conduct or representation has been relied on by another party, with the result that the other party has suffered a detriment or injury.
44.There is an intertwined connection between the application of the concepts of affirmation, estoppel and waiver in the law that applies to performance and discharge of contracts. Affirmation and estoppel both arise from clear and unequivocal representations or conduct by a party that they will not exercise their right to treat a contract as repudiated, which if proven, then leads the other party to rely on waiver as a defence to any purported termination of a contract. Affirmation will lead to the application of the defence of waiver by election, while waiver by estoppel is also raised as an application of the principle of equitable estoppel. The only difference between the two waivers is that unlike in a waiver by election, no knowledge of the facts giving rise to the exercise of the right to waiver and of its effects is required in a waiver by estoppel.”
21. The High Court in Bank of Africa Limited v Time Trucks Limited & 2 others (Civil Suit 41 of 2016) [2024] KEHC 12494 (KLR) (16 October 2024) (Judgment) further elaborated the contours of equitable estoppel, stated:
“55. […] In Nurdin Bandali v. Lombank Tanganyika Ltd [1963] EA 304, the former Court of Appeal for Eastern Africa set out the conditions under which equitable estoppel arises as follows:
“The precise limits of an equitable estoppel are, however, by no means clear. It is clear, however, that before it can arise one party must have made to another party a clear and unequivocal representation, which may relate to the enforcement of legal rights, with the intention that it should be acted upon and the other party, in belief of the truth of the representation, acted upon it.”
56.Estoppel is a shield and not a sword and as held in Serah Njeri Mwobi vs. John Kimani Njoroge [2013] eKLR:
‘The doctrine of estoppel operates as a principle of law which precludes a person from asserting something contrary to what is implied by a previous action or statement of that person”
22. The decision in Fredico Investments Limited v Graphic Investments Limited (Environment & Land Case 72 of 2019) [2024] KEELC 200 (KLR) (25 January 2024) (Judgment), reaffirmed the doctrine of estoppel as a principle rooted in equity and fairness. The Court, relying on the Court of Appeal’s analysis in Serah Njeri Mwobi v John Kimani Njoroge [2013] eKLR, at paragraph 172, clarified the legal distinction and interplay between waiver, estoppel, and acquiescence. Waiver was described as the intentional relinquishment of a known right, estoppel as a principle that precludes a party from asserting something contrary to their earlier representation or conduct, particularly where the other party has relied on such representation to their detriment, and acquiescence as a form of passive consent through inaction.
23. The Court observed, still at paragraph 173 of the Fredico Investments Limited v Graphic Investments Limited (Supra) that where a party, by words or conduct, makes a representation intended to affect legal relations and to be acted upon by the other party, and the latter does act on it, the first party cannot later revert to the original legal position if doing so would be inequitable. Such conduct binds the representor to the new legal state of affairs induced by their representation.
24. In reinforcing this position, the Court adopted the reasoning in 748 Air Services Limited v Theuri Munyi [2017] eKLR and Sita Steel Rolling Mills Ltd v Jubilee Insurance Company Ltd [2007] eKLR, reiterating that waiver may be inferred from a party’s conduct where it evinces an intention to abandon a right or is inconsistent with any intention to assert it.
25. The decision in Fredico Investments Limited v Graphic Investments Limited (Supra) aligns with the equity-based principle of estoppel as restated in Republic v Chief Land Registrar & 7 others Ex-Parte James Njoroge Njuguna [2018] eKLR. Both cases affirm that estoppel precludes a party from going back on a representation—by words or conduct—when another party has relied on it to their detriment.
26. As outlined in paragraphs 115–120 of the Republic v Chief Land Registrar & 7 others Ex-Parte James Njoroge Njuguna [2018] eKLR, equitable estoppel arises where: (a) a legal relationship exists or is anticipated; (b) one party makes a representation; (c) the other relies on it in good faith; (d) such reliance causes detriment; and (e) it would be unconscionable to allow the promisor to resile. Unconscionability is the core of the doctrine. Lord Cairns' formulation in paragraph 120 reinforces that equity will bar enforcement of strict rights if doing so would be inequitable given the parties’ conduct.
27. Similarly, in Rajnikantkhetshi Shah v Habib Bank A.G. Zurich [2016] KEHC 6740 (KLR), the High Court emphasized that waiver may arise by implication from conduct, and Courts must assess whether the totality of conduct is inconsistent with the maintenance of the right in question. It addressed also waivers of legal rights. it was stated that
“[32] On my part, upon consideration of all relevant material, submission and evidence of the parties, I take this view. In law waiver of a right or relief may be express or implied. Almost no difficult arises where the waiver is made expressly by consent and the party benefiting from it has acted on upon it: that is sufficient consideration. Where waiver is not express and is to be implied from the conduct of the parties, the court has to consider the entire circumstances of the case to establish conduct which is inconsistent with the continuance of the right. See The Laws of England, eds. Viscount Simonds, Vol.14, London: Butterworth & Co. [1956] para 1175.That is the law on waiver.”
28. The most recent articulation of this principle is found in Frametech Equipment Limited v Office Dynamics Limited (Commercial Appeal E145 of 2024) [2025] KEHC 8817 (KLR) (Commercial and Tax) (19 June 2025) (Judgment), where this Court found that the Respondent, having expressly waived a debt through a formal communication, could not later backtrack and impose obligations contrary to that waiver. The waiver was found to be intentional and supported by consideration, creating an enforceable estoppel. This Court stated that:
“Upon consideration of the letter reproduced above, the Court finds that the Respondent waived the debt to a significant and substantial extent. This constitutes an express waiver by the Respondent. The Appellant, having stood to benefit from the waiver, was obliged to act in accordance with the agreed terms, which would have constituted sufficient consideration. However, the Appellant failed to fulfil this obligation.”
29. In the present case, the facts mirror the jurisprudence above with remarkable clarity. The contract between the parties was terminated on 5th August 2020. On 6th August 2020, the Appellant issued a handing over letter confirming cessation of services, explicitly demanding payment of Kshs. 1,192,400, without any reference to liquidated damages or interest. This constituted not only an acknowledgment of final sums due but also an unequivocal election to forgo any further claims. For over four years—from 2016 to 2020—the Appellant had never raised any invoice including interest or liquidated damages, and the only statement of account issued was that of 5th August 2020, reiterating the figure of Kshs. 1,192,400. The letter dated 6th August 2020 authored by the Appellant is reproduced verbatim hereinbelow: (underlined emphasis ours).
“HANDING OVER NOTE & DEMAND FOR THE OUTSTANDING DEBT OF KSH.1,192,400. AS AT 5TH AUGUST 2020
The above subject refers;
We Straight Security Services Limited on this 6th day of August 2020 do handover daily security duties of Etrade Company at Juja site, having confirmed all was okay.
This is after the Security Services contract was duly terminated by Etrade Company through the notice dated 25th June 2020 and further extended by the email to 5th August 2020.
We therefore demand full payment of Ksh.1,192,400 for the services rendered as a way of reciprocating our patience despite your failure in meeting your promises.
We however appreciate the opportunity you accorded us to serve you and we remain hopeful that should there be any other chance in future we shall not hesitate to take it up.
Find the attached statement of account and the invoice for the 5 days worked during the month of August 2020.”
30. The Respondent, in response, acknowledged the debt and expressed a willingness to settle the same, citing financial constraints. However, it was not until much later—specifically on 12th August 2022—that the Appellant, through a demand letter issued by its advocates claiming a sum of Kshs. 7,290,060, and subsequently by way of a Plaint dated 23rd August 2022 seeking recovery of Kshs. 1,192,400 as the outstanding principal sum, Kshs. 3,811,950 as liquidated damages, together with costs and interest—sought, for the first time, liquidated damages and interest. This demand was in stark contradiction to the Appellant’s earlier conduct and representations.
31. Moreover, even if the Appellant had intended to reserve its right to claim interest or liquidated damages, the requirement of clear, express notice was not met. In National Bank of Kenya Ltd v Mwaniki wa Ndegwa [2020] KECA 461 (KLR), the Court of Appeal held that any interest, even if suspended in the lender’s books, must be explicitly stated so that the borrower is fully informed of the extent of their indebtedness. The Court stated itself that:
“39. While the appellant called on us to consider this appeal in line with accounting principles and in line with the contracts entered into by the parties, we note that the question of the appellant exercising its statutory power of sale was pursuant to the power given to it to do so by law. By that law, it fell on the appellant to ensure that the notice was complete in all respects. Any interest, even if suspended as per the lender’s books, must be explicitly stated so that the borrower is fully informed of the extent of his indebtedness.”
32. Applying the authorities above, it is manifest that the Appellant is estopped from asserting a claim for liquidated damages and interest. It had waived those rights, either expressly through its final letter dated 6th august 2022, or by implication through sustained conduct from 1st September 2016 to 5th August 2020, during which period none of the invoices raised by the Appellant included or demanded interest for delayed payments. At no point during the contractual period was interest charged on late payments. The belated attempt to revive these claims—after years of silence and acquiescence—is not only unconscionable but squarely barred by the equitable doctrines of waiver and estoppel.
33. In view of the above, a party cannot be permitted to blow hot and cold—to lull another into a position of perceived finality only to later alter its stance to the detriment of the other. The law does not countenance such duplicity. As equity demands, the Appellant must be held to its word—and its conduct. This Court therefore finds no fault in the trial magistrate’s determination on the foregoing issue and accordingly upholds that portion of the judgment.
b) Whether The Learned Trial Magistrate Misapplied the Principles Relating to Costs.
34. This Court observes that despite having been issued with a formal demand through the Appellant’s letter dated 6th August 2020—accompanied by the final statement and invoice clearly reflecting the outstanding sum of Kshs. 1,192,400—the Respondent took no steps to remit payment. This was until 19th September 2022, over two years later and only prompted solely by legal pressure. The payment was, by the Respondent’s own admission, based on the very invoices and final statement issued in August 2020.
35. As costs follow the event, and the Respondent only settled the admitted sum under the shadow of litigation and despite an earlier demand, the Appellant is rightfully entitled to costs. The Trial Court’s refusal to award them was therefore misplaced and cannot stand. This Court is entitled to interfere with the exercise of jurisdiction of the Trial Court. The Court reminds itself of the decision in Peters v Sunday Post Limited [1958] EA 424, where the Court held as follows:
“It is a strong thing for an appellate court to differ from the findings on a question of fact, of the judge who had the advantage of seeing and hearing the witnesses…But the jurisdiction to review the evidence should be exercised with caution: it is not enough that the appellate court might have come to a different conclusion…”
36. The Court also follows the decision in Mbogo and Another v Shah [1968] EA 93, where the Court held:
“…that this Court will not interfere with the exercise of judicial discretion by an inferior court unless it is satisfied that its decision is clearly wrong, because it has misdirected itself or because it has acted on matters on which is should not have acted or because it failed to take into consideration matters which it should have taken into consideration and in doing so arrived at a wrong conclusion.”
37. The Court finds that there was no justification in failing to award costs to the Appellant for having filed suit. The Trial Court failed to consider the principle set out in Rai & 3 others v Rai & 4 others [2014] KESC 31 (KLR) as follows;
“It emerges that the award of costs would normally be guided by the principle that “costs follow the event”: the effect being that the party who calls forth the event by instituting suit, will bear the costs if the suit fails; but if this party shows legitimate occasion, by successful suit, then the defendant or respondent will bear the costs.”
38. This Court awards the Appellant costs of the suit before the Trial Court, but on the lower scale. As to the costs of this Appeal, the fair orders is let each party bear its own costs. The Appellant did not succeed in dislodging the defence of waiver or estoppel.
Determination
39. The upshot of the foregoing is that the Court makes the following orders: -
a) The appeal succeeds partially, limited only to the issue of costs.
b) The Appellant is awarded the costs of the suit in the lower court, on the lower scale together with interest thereon at Court rates from the date of the Judgement until payment in full.
c) Each party shall bear its own costs of this Appeal.
40. It so ordered.
DATED, SIGNED AND DELIVERED AT THIKA THIS 07TH DAY OF AUGUST 2025.
NJOROGE BENJAMIN K.
JUDGE
In the presence of;
Miss Macharia for the Appellant.
Mr. Githiri for the Respondent.
Susan Nzioka - Amos – Court Assistant