Background
1. This appeal arises from the judgment by the trial court on 5th December 2023 in the Kisumu CMCC No. 547 of 2019, where the court dismissed the appellant’s suit against the Respondent for the recovery of a sum of Kshs. 1,100,000/- reportedly paid by the Appellant to the Respondent as a deposit for the purchase of a motor vehicle.
2. The dispute stems from a contractual arrangement between Synergy Clinics Limited, the appellant, and Fast Forty Importers and Exporters Limited, the respondent, regarding the importation of a motor vehicle. The appellant, a company based in Kisumu, instituted the suit seeking a refund of Kshs. 1,100,000, which it claimed to have paid to the respondent for the purchase and importation of a Toyota Hiace, Chassis No. TRH200, White, CC 1990, Year 2012, Mileage 89,212km.
3. According to the appellant, the respondent had agreed to import the vehicle on its behalf at an agreed purchase price of Kshs. 1,600,000. The appellant asserted that it had already paid Kshs. 1,100,000 in two installments, with the remaining balance of Kshs. 500,000 to be paid upon delivery of the vehicle. However, the appellant alleged that despite fulfilling its part of the agreement, the respondent failed to deliver the vehicle as promised and equally failed to refund the deposited amount, necessitating the filing of the suit in the lower court.
4. The Respondent, in its statement of defence, denied the claim, arguing that it was not in breach of contract. It asserted that it only acted as an agent of the Appellant in the transaction and that it is the Appellant who failed to fulfill its payment obligations under the agreement.
5. The respondent contended that the subject vehicle was imported as agreed, but due to the appellant’s failure to pay the remaining Kshs. 500,000, it could not be cleared from the port of Mombasa, leading to additional charges amounting to Kshs. 620,000 due to accrued due to delays in clearance, which the appellant equally refused to pay.
6. On 5th December 2023, the trial court dismissed the appellant’s suit, holding that it is the appellant who was of the contract. The Court found that an oral contract between the parties existed and was enforceable, but the appellant failed to meet the agreed 70 per cent deposit in a timely manner. According to the trial court, the Appellant had not paid the balance of Kshs. 500,000, which prevented the vehicle from being cleared and delivered.
7. The court also accepted the respondent’s argument that the Kshs. 1,100,000 had been utilized for purchasing the vehicle and was no longer available for refund.
8. Aggrieved by this decision, the appellant filed the present appeal, contesting the trial court’s findings on the following grounds:-
i. The Learned Trial Magistrate erred in law and in fact in failing to assess and evaluate the evidence before her, did not pay attention to the glaring discrepancies, contradictions and untruths in the Respondent's evidence and as a result erred in her finding on the credibility of the Respondent's case.
ii. The Learned Trial Magistrate erred in law and in fact by dialing to find that the Appellant had proved its case against the Respondent on a balance of probabilities.
iii. The Learned Trial Magistrate misdirected herself by failing to appreciate that it is the Respondent who failed to perform its contractual obligation as per the oral contract.
iv. The Learned Trial Magistrate erred in law and in fact by failing to determine the case on the basis of the law and available facts before her.
v. The Learned Trial Magistrate erred in law and in fact by failing to consider the Appellant's submissions.
9. The appeal was canvassed by way of written submissions. The appellant filed its submissions on 26th August 2024, while the respondent’s submissions is dated 5th December 2024.
Appellant's Submissions
10. The Appellant argued that the trial court failed in its duty to assess the evidence before it, ignored glaring inconsistencies in the Respondent’s case, and erroneously dismissed the claim.
11. According to the Appellant, the agreement between the parties was partly oral and partly evidenced through correspondence. The Appellant further argued that part performance of an oral contract makes it enforceable in equity. It emphasized that courts must uphold agreements freely entered into by parties, while also construing surrounding circumstances, including oral statements, to determine the true intention of the parties.
12. The Appellant contended that the Respondent breached its contractual obligation by failing to deliver the subject motor vehicle despite having received Kshs. 1,100,000 as part payment. The Appellant asserted that under Sections 107 and 108 of the Evidence Act, it had discharged its legal burden of proof by demonstrating the existence of the contract and part performance by the Appellant, and that the burden was now on the Respondent to provide evidence that it had imported the vehicle or that it was available for collection.
13. The Appellant highlighted material inconsistencies in the Respondent’s case, particularly regarding the claim that additional demurrage and storage charges had accrued. The Appellant argued that these charges had not been part of the agreement and were introduced as an afterthought to extract further payments beyond the agreed contract price. The Appellant relied on Section 119 of the Evidence Act, which allows courts to presume the existence of facts based on the natural course of events, human conduct, and business practices. It urged the court to find that the Respondent's actions were an attempt to frustrate the agreement and unjustly withhold the vehicle and deposit.
14. Citing the case of RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (2010) UKSC 14, the Appellant asserted that the documents submitted in evidence, such as the proforma invoice issued by the Respondent, showed that there was a valid and binding contract between the parties.
15. Additionally, the Appellant pointed out that the Respondent had failed to provide proof of payment for the alleged additional charges and had not exhibited any receipts or supporting documents.
16. According to the Appellant, the Respondent’s witness, DW1, admitted during cross-examination that he had not verified the whereabouts of the vehicle, further casting doubt on the legitimacy of the Respondent’s claims. The Appellant maintained that the trial court erred by disregarding this evidence and prematurely concluding that the Appellant was in breach of the contract.
17. Finally, the Appellant submitted that by retaining both the deposit and the vehicle, the Respondent was unjustly enriched, which is contrary to principles of fairness and equity. The Appellant, therefore, urged the appellate court to allow the appeal, set aside the trial court’s judgment, and order the Respondent to refund the Kshs. 1,100,000 deposit with interest and costs.
Respondent’s Submissions
18. The Respondent contended that the contract required the Appellant to pay 70 percent of the purchase price before importation, with the remaining 30 percent to be paid upon arrival of the motor vehicle at the Mombasa port for clearance. Additionally, the importation process was to take two months from the date of the initial payment. The Respondent maintained that these terms were clear and binding, as evidenced by the parties’ communications.
19. The Respondent argued that it was the Appellant who breached the terms of the contract by failing to meet the required 70 per cent deposit on time. While the agreement required an upfront payment of Kshs. 1,120,000, the Appellant only paid Kshs. 700,000 on 29th March 2019 and delayed for more than two months before making an additional payment of Kshs. 400,000 on 14th June 2019. The Respondent contended that despite this shortfall, it proceeded with the importation, using the amounts received to purchase and ship the vehicle to Mombasa.
20. The Respondent further submitted that under the contract, the Appellant was required to pay the remaining balance upon the vehicle’s arrival to facilitate clearance. However, despite being informed of this obligation, the Appellant failed to make the payment, rendering it impossible for the Respondent to clear and deliver the vehicle.
21. The Respondent maintained that through a letter dated 1st November 2019, it formally reminded the Appellant of the need to clear the balance and also informed it of the additional charges of Kshs. 620,000 that had accrued due to the delay. Instead of complying, the Appellant chose to institute legal proceedings only 15 days after receiving this communication.
22. The Respondent maintained that the failure to deliver the vehicle was entirely attributable to the Appellant’s breach of contract. It argued that the Appellant’s failure to meet the agreed 70 per cent deposit, its delay in making the second installment, and its refusal to pay the balance and additional charges frustrated the performance of the contract. The Respondent therefore asserted that these delays made it impossible to clear the vehicle from the port, which ultimately resulted in its non-delivery.
23. On the issue of remedy, the Respondent contended that ordering a refund of Kshs. 1,100,000 would be unjust and inequitable, as the funds had already been used to purchase and ship the vehicle. It disputed the Appellant’s claim of unjust enrichment, arguing that it had not benefited from the money since it was spent in execution of the contract. It emphasized that the failure to clear and deliver the vehicle was solely due to the Appellant’s refusal to pay the balance and additional charges. The Respondent submitted that the trial court properly evaluated the evidence and correctly found that it had performed its contractual obligations, while the Appellant had defaulted.
24. In conclusion, the Respondent urged the court to dismiss the appeal with costs, arguing that the Appellant could not seek relief for a breach it had itself occasioned. It maintained that the contractual obligations were clear, and it had acted in good faith to fulfill its part of the agreement, only for the Appellant to frustrate the contract by failing to make the necessary payments.
Analysis And Determination
25. The first appellate court’s role in reviewing decisions of lower courts is guided by well-established principles. In Selle & Another v Associated Motor Boat Co. Ltd & Others [1968] EA 123, the Court of Appeal held that an appeal is by way of retrial and outlined the approach an appellate court must take:-
"An appeal to this court is by way of retrial, and the principles upon which this court acts in such an appeal are well settled. Briefly put, they are that this court must reconsider the evidence, evaluate it itself, and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect."
26. Further, in Mbogo & Another v Shah [1968] EA 93, the court emphasized that an appellate court should not interfere with the discretion of a trial court unless it is demonstrated that such discretion was exercised on the wrong principles or resulted in manifest injustice. The court stated:-
"A court of appeal should not interfere with the exercise of discretion of a judge unless it is satisfied that the judge, in exercising his discretion, has misdirected himself in some matter and as a result arrived at a wrong decision, or unless it is manifest from the case as a whole that the judge has been clearly wrong in the exercise of his discretion and that as a result, there has been injustice."
27. In the present case, having reviewed the submissions by the parties herein, I find that the key issues for the Court’s determination are as follows: -
i. Whether the trial court erred in finding that the Respondent fulfilled its contractual obligations and that the Appellant was in breach of contract.
ii. Whether the trial court erred in dismissing the Appellant’s claim for a refund of Kshs. 1,100,000.
Whether the Trial Court Erred in Finding that the Appellant was in Breach of Contract
28. From the facts of this case, it is not in dispute that the Appellant and the Respondent entered into an oral contract for the supply and delivery of a motor vehicle – Toyota Hiace, Chassis No. TRH200, White, CC 1990, Year 2012, Mileage 89,212km. It is also not in dispute that the agreed purchase price was Kshs. 1,600,000/- out of which the Appellant paid a sum of Kshs. 1,100,000/- leaving a balance of Kshs. 500,000/-.
29. The appellant submitted that having paid Kshs. 1,100,000 in two installments, the remaining balance of Kshs. 500,000/- was to be paid upon delivery of the vehicle. However, the appellant alleged that despite fulfilling its part of the agreement, the respondent not only failed to deliver the vehicle as promised, but also failed to refund the deposited amount, necessitating the filing of the suit in the lower court.
30. The appellant maintained that the failure to deliver the vehicle was solely attributable to the Respondent.
31. The Respondent, on the other hand, submitted that the failure to deliver the vehicle was entirely attributable to the Appellant’s failure to meet the agreed 70 per cent deposit, its delay in making the second installment, and its refusal to pay the balance and additional charges frustrated the performance of the contract.
32. Having considered the rival submissions, I note that the trial court, in its judgment, placed undue weight on the alleged failure of the Appellant to pay the remaining balance of Kshs. 500,000 while ignoring the fundamental fact that the Respondent failed to demonstrate that the subject motor vehicle was indeed imported by the Respondent within the agreed timeline.
33. While the trial court justified non-delivery based on the Appellant’s failure to pay the full deposit and balance, the court failed to assess whether the Respondent took reasonable steps to mitigate the situation. The contract did not state that non-payment of the final 500,000/- absolved the Respondent from delivery. Although the Respondent's email of 1st November 2019 notified the Appellant of outstanding amounts, it is apparent from the record that the said email communication came months after the vehicle's alleged arrival on 11th June 2019.
34. Further, the Respondent failed to prove that it had earlier informed the Appellant of the urgency, explored alternative clearance options, or demonstrated that delivery was impossible without full payment. While the Appellant may have delayed in making payments, the Respondent had a duty to demonstrate that it made reasonable attempts to fulfill its contractual obligations despite those delays.
35. The law on burden of proof is well established under Sections 107 and 108 of the Evidence Act, which provide that:-
"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."
36. This legal burden remains constant throughout a trial and rests on the party asserting a claim. As stated in The Halsbury’s Laws of England, 4th Edition, Volume 17, at paragraphs 13 and 14:-
"The legal burden is the burden of proof which remains constant throughout a trial; it is the burden of establishing the facts and contentions which will support a party’s case. If at the conclusion of the trial he has failed to establish these to the appropriate standard, he will lose."
37. The Court of Appeal in Mbuthia Macharia v Annah Mutua Ndwiga & Another [2017] eKLR further clarified the relationship between the legal and evidential burden, stating:-
“[16] The legal burden is discharged by way of evidence, with the opposing party having a corresponding duty of adducing evidence in rebuttal. This constitutes evidential burden. Therefore, while both the legal and evidential burdens initially rested upon the appellant, the evidential burden may shift in the course of trial, depending on the evidence adduced. As the weight of evidence given by either side during the trial varies, so will the evidential burden shift to the party who would fail without further evidence? In this case, the incidence of both the legal and evidential burden was with the appellant.”
38. The Appellant discharged its burden by producing evidence of part payments made and the terms of the agreement. The evidential burden then shifted to the Respondent to prove that the vehicle was indeed shipped, that it was held due to unpaid fees, and that the additional charges it demanded were legitimate. However, the Respondent failed to provide sufficient proof to support these assertions.
39. The trial court overlooked this principle, accepting the Respondent’s assertions without requiring adequate supporting evidence. I note from the record that the Respondent produced documents such as the Bill of Lading and Certificate of Roadworthiness to suggest that the vehicle had been shipped. However, these alone did not establish that the vehicle was available for collection or that storage fees were justifiably incurred.
40. By failing to provide sufficient proof that the vehicle was imported, that it was awaiting clearance, or that the additional fees were lawfully incurred, the Respondent, in my view, did not meet the evidentiary burden required to support its defense.
41. The trial court, therefore, erred by accepting the Respondent’s assertions without requiring sufficient proof, effectively shifting the burden back to the Appellant despite the Respondent’s failure to discharge its own burden of rebuttal.
Whether the Trial Court Erred in Dismissing the Appellant’s Claim for a Refund
42. A fundamental principle of contract law is that a party cannot insist on performance by another party when it has already failed to fulfill its own obligations under the contract. The evidence presented shows that the contract required the vehicle to be delivered by 14th August 2019, yet the Respondent failed to meet this deadline.
43. In this case, the trial court failed to appreciate that the Appellant’s claim for a refund was not dependent on the payment of the remaining balance but rather on the Respondent’s failure to fulfill its primary obligation of delivery. The Respondent’s refusal to refund the deposit, despite non-performance, is not only commercially unjust but also inconsistent with established legal principles.
44. In any event, I note from the proceedings that the Respondent did not demonstrate whether the vehicle actually arrived in Kenya, and if it did, whether the same was auctioned due to the non-payment of the port storage and handling (demurrage) charges. In his testimony before the trial court, DW1 simply told the court that he did not know what happened to the vehicle after importation.
45. In the circumstances, it is the view of the Court that allowing the Respondent to retain the Kshs. 1,100,000 already paid towards the purchase of the vehicle and the vehicle as well (now that the Respondent is unable to account for the whereabouts of the vehicle) would amount to unjust enrichment contrary to the principle espoused in the case of Madhupaper International Ltd & Another v Kenya Commercial Bank Limited & 2 Others [2003] eKLR, where the Court stated that: -
“Broadly founded upon the aim of equity to do justice between parties, the doctrine of unjust enrichment and the remedy of restitution to counter unjust benefit proceed upon the realization that to allow a defendant to retain such a benefit would result in his being unjustly enriched at the plaintiff’s expense, and this, subject to certain defined limits, will not be tolerated by the law, and owing to the importance and aim of this doctrine in every advanced and civilized system of justice”
46. In this case, the Respondent received Kshs. 1,100,000, but failed to deliver the vehicle. Allowing the Respondent to retain the funds while failing to perform its part of the contract amounts to unjust enrichment, which equity abhors.
47. My finding would have been different had the Respondent demonstrated by way of cogent evidence that the vehicle actually arrived in Kenya and was subsequently auctioned or otherwise disposed of due to the Appellant’s failure to pay the balance of the purchase price and the handling charges.
48. In the premises, the Court finds that the Appellant is entitled to a refund of Kshs. 1,100,000. However, since the Appellant is not entirely without blame for the non-completion of the contract, no interest is to be awarded.
Final Orders
49. Accordingly, the Court makes the following orders: -
i. The appeal is hereby allowed.
ii. The judgment of the trial court dated 5th December 2023 is set aside.
iii. The Respondent is ordered to refund the principal sum of Kshs. 1,100,000/- only, without any interest.
50. On costs, the successful party ordinarily deserves costs. However, in the circumstances of this case, and the reasons cited above, the Court is of the view that each party to bear their own costs.
51. It is so ordered
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT
THIS 7TH DAY OF AUGUST 2025
ADO MOSES
In the presence of:
David Ngoge ……….C/A
1. This appeal arises from the judgment by the trial court on 5th December 2023 in the Kisumu CMCC No. 547 of 2019, where the court dismissed the appellant’s suit against the Respondent for the recovery of a sum of Kshs. 1,100,000/- reportedly paid by the Appellant to the Respondent as a deposit for the purchase of a motor vehicle.
2. The dispute stems from a contractual arrangement between Synergy Clinics Limited, the appellant, and Fast Forty Importers and Exporters Limited, the respondent, regarding the importation of a motor vehicle. The appellant, a company based in Kisumu, instituted the suit seeking a refund of Kshs. 1,100,000, which it claimed to have paid to the respondent for the purchase and importation of a Toyota Hiace, Chassis No. TRH200, White, CC 1990, Year 2012, Mileage 89,212km.
3. According to the appellant, the respondent had agreed to import the vehicle on its behalf at an agreed purchase price of Kshs. 1,600,000. The appellant asserted that it had already paid Kshs. 1,100,000 in two installments, with the remaining balance of Kshs. 500,000 to be paid upon delivery of the vehicle. However, the appellant alleged that despite fulfilling its part of the agreement, the respondent failed to deliver the vehicle as promised and equally failed to refund the deposited amount, necessitating the filing of the suit in the lower court.
4. The Respondent, in its statement of defence, denied the claim, arguing that it was not in breach of contract. It asserted that it only acted as an agent of the Appellant in the transaction and that it is the Appellant who failed to fulfill its payment obligations under the agreement.
5. The respondent contended that the subject vehicle was imported as agreed, but due to the appellant’s failure to pay the remaining Kshs. 500,000, it could not be cleared from the port of Mombasa, leading to additional charges amounting to Kshs. 620,000 due to accrued due to delays in clearance, which the appellant equally refused to pay.
6. On 5th December 2023, the trial court dismissed the appellant’s suit, holding that it is the appellant who was of the contract. The Court found that an oral contract between the parties existed and was enforceable, but the appellant failed to meet the agreed 70 per cent deposit in a timely manner. According to the trial court, the Appellant had not paid the balance of Kshs. 500,000, which prevented the vehicle from being cleared and delivered.
7. The court also accepted the respondent’s argument that the Kshs. 1,100,000 had been utilized for purchasing the vehicle and was no longer available for refund.
8. Aggrieved by this decision, the appellant filed the present appeal, contesting the trial court’s findings on the following grounds:-
i. The Learned Trial Magistrate erred in law and in fact in failing to assess and evaluate the evidence before her, did not pay attention to the glaring discrepancies, contradictions and untruths in the Respondent's evidence and as a result erred in her finding on the credibility of the Respondent's case.
ii. The Learned Trial Magistrate erred in law and in fact by dialing to find that the Appellant had proved its case against the Respondent on a balance of probabilities.
iii. The Learned Trial Magistrate misdirected herself by failing to appreciate that it is the Respondent who failed to perform its contractual obligation as per the oral contract.
iv. The Learned Trial Magistrate erred in law and in fact by failing to determine the case on the basis of the law and available facts before her.
v. The Learned Trial Magistrate erred in law and in fact by failing to consider the Appellant's submissions.
9. The appeal was canvassed by way of written submissions. The appellant filed its submissions on 26th August 2024, while the respondent’s submissions is dated 5th December 2024.
Appellant's Submissions
10. The Appellant argued that the trial court failed in its duty to assess the evidence before it, ignored glaring inconsistencies in the Respondent’s case, and erroneously dismissed the claim.
11. According to the Appellant, the agreement between the parties was partly oral and partly evidenced through correspondence. The Appellant further argued that part performance of an oral contract makes it enforceable in equity. It emphasized that courts must uphold agreements freely entered into by parties, while also construing surrounding circumstances, including oral statements, to determine the true intention of the parties.
12. The Appellant contended that the Respondent breached its contractual obligation by failing to deliver the subject motor vehicle despite having received Kshs. 1,100,000 as part payment. The Appellant asserted that under Sections 107 and 108 of the Evidence Act, it had discharged its legal burden of proof by demonstrating the existence of the contract and part performance by the Appellant, and that the burden was now on the Respondent to provide evidence that it had imported the vehicle or that it was available for collection.
13. The Appellant highlighted material inconsistencies in the Respondent’s case, particularly regarding the claim that additional demurrage and storage charges had accrued. The Appellant argued that these charges had not been part of the agreement and were introduced as an afterthought to extract further payments beyond the agreed contract price. The Appellant relied on Section 119 of the Evidence Act, which allows courts to presume the existence of facts based on the natural course of events, human conduct, and business practices. It urged the court to find that the Respondent's actions were an attempt to frustrate the agreement and unjustly withhold the vehicle and deposit.
14. Citing the case of RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (2010) UKSC 14, the Appellant asserted that the documents submitted in evidence, such as the proforma invoice issued by the Respondent, showed that there was a valid and binding contract between the parties.
15. Additionally, the Appellant pointed out that the Respondent had failed to provide proof of payment for the alleged additional charges and had not exhibited any receipts or supporting documents.
16. According to the Appellant, the Respondent’s witness, DW1, admitted during cross-examination that he had not verified the whereabouts of the vehicle, further casting doubt on the legitimacy of the Respondent’s claims. The Appellant maintained that the trial court erred by disregarding this evidence and prematurely concluding that the Appellant was in breach of the contract.
17. Finally, the Appellant submitted that by retaining both the deposit and the vehicle, the Respondent was unjustly enriched, which is contrary to principles of fairness and equity. The Appellant, therefore, urged the appellate court to allow the appeal, set aside the trial court’s judgment, and order the Respondent to refund the Kshs. 1,100,000 deposit with interest and costs.
Respondent’s Submissions
18. The Respondent contended that the contract required the Appellant to pay 70 percent of the purchase price before importation, with the remaining 30 percent to be paid upon arrival of the motor vehicle at the Mombasa port for clearance. Additionally, the importation process was to take two months from the date of the initial payment. The Respondent maintained that these terms were clear and binding, as evidenced by the parties’ communications.
19. The Respondent argued that it was the Appellant who breached the terms of the contract by failing to meet the required 70 per cent deposit on time. While the agreement required an upfront payment of Kshs. 1,120,000, the Appellant only paid Kshs. 700,000 on 29th March 2019 and delayed for more than two months before making an additional payment of Kshs. 400,000 on 14th June 2019. The Respondent contended that despite this shortfall, it proceeded with the importation, using the amounts received to purchase and ship the vehicle to Mombasa.
20. The Respondent further submitted that under the contract, the Appellant was required to pay the remaining balance upon the vehicle’s arrival to facilitate clearance. However, despite being informed of this obligation, the Appellant failed to make the payment, rendering it impossible for the Respondent to clear and deliver the vehicle.
21. The Respondent maintained that through a letter dated 1st November 2019, it formally reminded the Appellant of the need to clear the balance and also informed it of the additional charges of Kshs. 620,000 that had accrued due to the delay. Instead of complying, the Appellant chose to institute legal proceedings only 15 days after receiving this communication.
22. The Respondent maintained that the failure to deliver the vehicle was entirely attributable to the Appellant’s breach of contract. It argued that the Appellant’s failure to meet the agreed 70 per cent deposit, its delay in making the second installment, and its refusal to pay the balance and additional charges frustrated the performance of the contract. The Respondent therefore asserted that these delays made it impossible to clear the vehicle from the port, which ultimately resulted in its non-delivery.
23. On the issue of remedy, the Respondent contended that ordering a refund of Kshs. 1,100,000 would be unjust and inequitable, as the funds had already been used to purchase and ship the vehicle. It disputed the Appellant’s claim of unjust enrichment, arguing that it had not benefited from the money since it was spent in execution of the contract. It emphasized that the failure to clear and deliver the vehicle was solely due to the Appellant’s refusal to pay the balance and additional charges. The Respondent submitted that the trial court properly evaluated the evidence and correctly found that it had performed its contractual obligations, while the Appellant had defaulted.
24. In conclusion, the Respondent urged the court to dismiss the appeal with costs, arguing that the Appellant could not seek relief for a breach it had itself occasioned. It maintained that the contractual obligations were clear, and it had acted in good faith to fulfill its part of the agreement, only for the Appellant to frustrate the contract by failing to make the necessary payments.
Analysis And Determination
25. The first appellate court’s role in reviewing decisions of lower courts is guided by well-established principles. In Selle & Another v Associated Motor Boat Co. Ltd & Others [1968] EA 123, the Court of Appeal held that an appeal is by way of retrial and outlined the approach an appellate court must take:-
"An appeal to this court is by way of retrial, and the principles upon which this court acts in such an appeal are well settled. Briefly put, they are that this court must reconsider the evidence, evaluate it itself, and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect."
26. Further, in Mbogo & Another v Shah [1968] EA 93, the court emphasized that an appellate court should not interfere with the discretion of a trial court unless it is demonstrated that such discretion was exercised on the wrong principles or resulted in manifest injustice. The court stated:-
"A court of appeal should not interfere with the exercise of discretion of a judge unless it is satisfied that the judge, in exercising his discretion, has misdirected himself in some matter and as a result arrived at a wrong decision, or unless it is manifest from the case as a whole that the judge has been clearly wrong in the exercise of his discretion and that as a result, there has been injustice."
27. In the present case, having reviewed the submissions by the parties herein, I find that the key issues for the Court’s determination are as follows: -
i. Whether the trial court erred in finding that the Respondent fulfilled its contractual obligations and that the Appellant was in breach of contract.
ii. Whether the trial court erred in dismissing the Appellant’s claim for a refund of Kshs. 1,100,000.
Whether the Trial Court Erred in Finding that the Appellant was in Breach of Contract
28. From the facts of this case, it is not in dispute that the Appellant and the Respondent entered into an oral contract for the supply and delivery of a motor vehicle – Toyota Hiace, Chassis No. TRH200, White, CC 1990, Year 2012, Mileage 89,212km. It is also not in dispute that the agreed purchase price was Kshs. 1,600,000/- out of which the Appellant paid a sum of Kshs. 1,100,000/- leaving a balance of Kshs. 500,000/-.
29. The appellant submitted that having paid Kshs. 1,100,000 in two installments, the remaining balance of Kshs. 500,000/- was to be paid upon delivery of the vehicle. However, the appellant alleged that despite fulfilling its part of the agreement, the respondent not only failed to deliver the vehicle as promised, but also failed to refund the deposited amount, necessitating the filing of the suit in the lower court.
30. The appellant maintained that the failure to deliver the vehicle was solely attributable to the Respondent.
31. The Respondent, on the other hand, submitted that the failure to deliver the vehicle was entirely attributable to the Appellant’s failure to meet the agreed 70 per cent deposit, its delay in making the second installment, and its refusal to pay the balance and additional charges frustrated the performance of the contract.
32. Having considered the rival submissions, I note that the trial court, in its judgment, placed undue weight on the alleged failure of the Appellant to pay the remaining balance of Kshs. 500,000 while ignoring the fundamental fact that the Respondent failed to demonstrate that the subject motor vehicle was indeed imported by the Respondent within the agreed timeline.
33. While the trial court justified non-delivery based on the Appellant’s failure to pay the full deposit and balance, the court failed to assess whether the Respondent took reasonable steps to mitigate the situation. The contract did not state that non-payment of the final 500,000/- absolved the Respondent from delivery. Although the Respondent's email of 1st November 2019 notified the Appellant of outstanding amounts, it is apparent from the record that the said email communication came months after the vehicle's alleged arrival on 11th June 2019.
34. Further, the Respondent failed to prove that it had earlier informed the Appellant of the urgency, explored alternative clearance options, or demonstrated that delivery was impossible without full payment. While the Appellant may have delayed in making payments, the Respondent had a duty to demonstrate that it made reasonable attempts to fulfill its contractual obligations despite those delays.
35. The law on burden of proof is well established under Sections 107 and 108 of the Evidence Act, which provide that:-
"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."
36. This legal burden remains constant throughout a trial and rests on the party asserting a claim. As stated in The Halsbury’s Laws of England, 4th Edition, Volume 17, at paragraphs 13 and 14:-
"The legal burden is the burden of proof which remains constant throughout a trial; it is the burden of establishing the facts and contentions which will support a party’s case. If at the conclusion of the trial he has failed to establish these to the appropriate standard, he will lose."
37. The Court of Appeal in Mbuthia Macharia v Annah Mutua Ndwiga & Another [2017] eKLR further clarified the relationship between the legal and evidential burden, stating:-
“[16] The legal burden is discharged by way of evidence, with the opposing party having a corresponding duty of adducing evidence in rebuttal. This constitutes evidential burden. Therefore, while both the legal and evidential burdens initially rested upon the appellant, the evidential burden may shift in the course of trial, depending on the evidence adduced. As the weight of evidence given by either side during the trial varies, so will the evidential burden shift to the party who would fail without further evidence? In this case, the incidence of both the legal and evidential burden was with the appellant.”
38. The Appellant discharged its burden by producing evidence of part payments made and the terms of the agreement. The evidential burden then shifted to the Respondent to prove that the vehicle was indeed shipped, that it was held due to unpaid fees, and that the additional charges it demanded were legitimate. However, the Respondent failed to provide sufficient proof to support these assertions.
39. The trial court overlooked this principle, accepting the Respondent’s assertions without requiring adequate supporting evidence. I note from the record that the Respondent produced documents such as the Bill of Lading and Certificate of Roadworthiness to suggest that the vehicle had been shipped. However, these alone did not establish that the vehicle was available for collection or that storage fees were justifiably incurred.
40. By failing to provide sufficient proof that the vehicle was imported, that it was awaiting clearance, or that the additional fees were lawfully incurred, the Respondent, in my view, did not meet the evidentiary burden required to support its defense.
41. The trial court, therefore, erred by accepting the Respondent’s assertions without requiring sufficient proof, effectively shifting the burden back to the Appellant despite the Respondent’s failure to discharge its own burden of rebuttal.
Whether the Trial Court Erred in Dismissing the Appellant’s Claim for a Refund
42. A fundamental principle of contract law is that a party cannot insist on performance by another party when it has already failed to fulfill its own obligations under the contract. The evidence presented shows that the contract required the vehicle to be delivered by 14th August 2019, yet the Respondent failed to meet this deadline.
43. In this case, the trial court failed to appreciate that the Appellant’s claim for a refund was not dependent on the payment of the remaining balance but rather on the Respondent’s failure to fulfill its primary obligation of delivery. The Respondent’s refusal to refund the deposit, despite non-performance, is not only commercially unjust but also inconsistent with established legal principles.
44. In any event, I note from the proceedings that the Respondent did not demonstrate whether the vehicle actually arrived in Kenya, and if it did, whether the same was auctioned due to the non-payment of the port storage and handling (demurrage) charges. In his testimony before the trial court, DW1 simply told the court that he did not know what happened to the vehicle after importation.
45. In the circumstances, it is the view of the Court that allowing the Respondent to retain the Kshs. 1,100,000 already paid towards the purchase of the vehicle and the vehicle as well (now that the Respondent is unable to account for the whereabouts of the vehicle) would amount to unjust enrichment contrary to the principle espoused in the case of Madhupaper International Ltd & Another v Kenya Commercial Bank Limited & 2 Others [2003] eKLR, where the Court stated that: -
“Broadly founded upon the aim of equity to do justice between parties, the doctrine of unjust enrichment and the remedy of restitution to counter unjust benefit proceed upon the realization that to allow a defendant to retain such a benefit would result in his being unjustly enriched at the plaintiff’s expense, and this, subject to certain defined limits, will not be tolerated by the law, and owing to the importance and aim of this doctrine in every advanced and civilized system of justice”
46. In this case, the Respondent received Kshs. 1,100,000, but failed to deliver the vehicle. Allowing the Respondent to retain the funds while failing to perform its part of the contract amounts to unjust enrichment, which equity abhors.
47. My finding would have been different had the Respondent demonstrated by way of cogent evidence that the vehicle actually arrived in Kenya and was subsequently auctioned or otherwise disposed of due to the Appellant’s failure to pay the balance of the purchase price and the handling charges.
48. In the premises, the Court finds that the Appellant is entitled to a refund of Kshs. 1,100,000. However, since the Appellant is not entirely without blame for the non-completion of the contract, no interest is to be awarded.
Final Orders
49. Accordingly, the Court makes the following orders: -
i. The appeal is hereby allowed.
ii. The judgment of the trial court dated 5th December 2023 is set aside.
iii. The Respondent is ordered to refund the principal sum of Kshs. 1,100,000/- only, without any interest.
50. On costs, the successful party ordinarily deserves costs. However, in the circumstances of this case, and the reasons cited above, the Court is of the view that each party to bear their own costs.
51. It is so ordered
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT
THIS 7TH DAY OF AUGUST 2025
ADO MOSES
In the presence of:
David Ngoge ……….C/A