The plaintiff brought this suit against the defendant vide plaint dated 19 th February 2019 claiming the following;
USD 172,445.49.
Costs of this suit.
Interest from the date the amount became due until payment in full.
Any other or further relief that this Honourable Court may deem fit and just so to grant.
The plaintiff’s claim was based on undisputed business relationship between the parties which began in 2015 where the defendant was an agent of the plaintiff for its products. The plaintiff pleaded that between September 2017 and November 2017, the plaintiff supplied a variety of its products for cumulative costs of USD 172,445.49 which the defendant failed to pay for.
In its amended statement of defence, the defendant denied being indebted to the plaintiff and counterclaimed for loss of business, loss of profits, costs, storage charges, general damages, special dagames and aggravated damages and an injunction restraining the plaintiff from appointing another agent.
The plaintiff’s evidence
PW1 and the only witness for the plaintiff was Vivian Gu who stated that she was a sales director of the plaintiff who is located in Shanghai in China. She told the court that, sometimes between September and November 2017, the plaintiff supplied assorted industrial equipment among others safety shoes, safety headgears, hand tools and clamps to the defendant. She stated that the goods had been inspected by SGS, an authorized agent of Kenya Bureau of Standards and had been found to be fit.
It was her further testimony that despite raising invoices for the goods supplied, the defendant had failed to pay and upon enquiry, the defendant alleged that the products were wearing out faster due to the high humidity. She stated that despite the alleged humidity not being the plaintiff’s fault, they agreed to take back the said goods.
In October 2018, the parties agreed that the defendant was to return the goods to the plaintiff. The defendant shipped back the products but upon arrival of the shipment, it was discovered that the defendant had not returned some of the goods and even those returned were found to be in good condition. The plaintiff met the costs of the re-shipment. When the plaintiff made enquiry on the goods not returned, the defendant agreed to pay the costs of the unreturned goods whose costs cumulatively came to USD 172,445.49.
She added that the plaintiff’s products had a warranty of normally three years. The contract between the parties was terminated after the debt went unpaid beyond six months and the defendant changed and developed bad attitude. She denied that the goods the plaintiff shipped to the defendant were of low quality as their goods were certified by Kenya Bureau of Standards.
She was categorical that the returned products were not subject of this litigation.
She pointed out that there was an acknowledgment of the debt by the defendant and that the defendant had signed the statement of account willingly which was done before the complaint of the quality of the shoes came up. She added that the defendant had not given the inventory of the goods it claimed to have been of low quality and was still keeping them in its shop even as at the time of the hearing.
The witness produced the following documents as exhibits;
Credit agreement dated 29-06-2017.
Bill of lading dated 26 th September 2017.
Bill of lading dated 26 th October 2017.
Payments and costs report as at 11-06-2018.
Statement of account for 10-06-2010 to 26-01-2018.
Emails exchanged between the plaintiff and the defendant dated 16-01-2018, 30-10-2017, 27-10-2017, 7-11-2018 and 6-09-2018.
Demand letter dated 14 th December 2018.
Guarantee dated 1-01-2015.
Notification to terminate agency agreement dated 1-10-2018.
Certificate of electronic evidence dated 9-11-2022 and photographs.
In cross-examination, the witness stated that the products in dispute were still with the defendant. She maintained that their products have a three-year guarantee and not a lifetime guarantee as alleged by the defendant. She stated that they did not make conduct with the defendant’s customers but CMC conducted her. She had added that there was no evidence that the defendant was backlisted in China or it could not access China anymore. She confirmed that any goods which are damaged are returned.
Defendant’s case
Daniel Muriithi Waweru was the defendant’s sole witness. He described himself as the managing director of the defendant who traded in tools and safety equipment which it purchases and sells to factories and companies at a profit. He admitted the business relationship between the parties which he said began in 2015. He testified that the plaintiff’s representative first represented to him that the plaintiff was a manufacturer of the said equipment and tools. After several correspondences and communication, the plaintiff appointed the defendant as the sole and exclusive agent/distributor in Kenya vide a letter dated 1-11-2015.
The witness added that the arrangements between the parties was that the defendant would buy and import the plaintiff’s products and sell them in Kenya as well as marketing the plaintiff in the local market. In return, the plaintiff was not to enter the Kenya market on its own or appoint another agent for the Kenyan market. He alleged further that, there were more arrangements that the plaintiff was to sell to the defendant on credit which was payable upon the defendant getting payments from the customers and that the plaintiff would provide a life guarantee of its products such that it would recall and replace defective goods at its costs. The witness claimed that the defendant developed a market for the plaintiff whose products were not known in Kenya before and created visibility of the products.
The witness stated further that he later came to learn that the plaintiff was not the manufacturer of the products as it had represented but a seller. He also added that the lifetime guarantee the plaintiff had issued was unilaterally reduced to two years and later the contract terminated.
He stated that in December 2017, the plaintiff supplied the defendant with goods worth USD 240,000 which were found to be defective after the defendant sold them to its customers and for this reason, the customers failed to pay and returned them. He added that due to the failure by the customers, the defendant could not recover its expences to repay bank overdrafts that were obtained to pay for the importation costs. Since the defendant was unbale to pay for the goods due to the nonpayment by the customers, there arose a dispute. The witness gave an example of CMC Motors who he claimed had a 45 million supply contract with the defendant in 2016 and who threatened to take legal action against the defendant and who wanted the issue of guarantee and defective goods resolved. The defendant also claimed that the plaintiff defamed it before its clients who it sought to deal with it directly.
The witness alleged further that in April 2018, the plaintiff agreed to recall the defective goods and its representative in Kenya one Lenson Njagi Njogu inspected and confirmed that the goods were defective and also visited several of the defendant’s clients in the company of DW1 where he noted the client’s complaints but the plaintiff refused to take up the costs of shipping, taxation and other costs the defendant had incurred which became a point of disagreement.
The witness added that without the guarantee which the plaintiff withdrew after disagreement, customers refused to buy the goods the defendant had already shipped causing the defendant to incur storage charges. He added that the defendant shipped the defective goods to Shanghai in October 2018 and gave an inventory thereof. The plaintiff however went back on its word and started making additional claims as per the plaint. The witness added that the defendant prepared and sent a final statement of account taking into account the costs incurred in shipping the defective goods to Kenya and back to China, taxes, storage and other charges. In addition, the defendant made transfers to the plaintiff of USD 10,000 on 26 th March 2018, USD 1,500 on 24 th January 2018 and USD 9,500 on 11 th June 2018 which it considered final upon which the plaintiff terminated the agency agreement in December 2018.
According to the defendant’s witness, the termination of the agency, the credit lines and the guarantee when the defendant had the plaintiff’s stock and while complaints from the customers were still alive disabled the defendant from making profits from those goods because the customers could not buy without a guarantee of merchantability. The defendant’s witness stated that in addition, the plaintiff defamed it and destroyed its reputation amongst its customers, poached the defendant’s customers and therefore denied it livelihood.
The witness added that in order to help it pay customs for the goods shipped to it, defendant took out an overdraft of Kshs 5.2 million from Credit Bank Limited and a further personal loan of Kshs 4.2 million to enable it clear the goods and fund their sales operations. Unfortunately shoes and helmets expired and as a result they massively failed to sell and they could not collect payments from the customers as expected. The defendant advised their clients to follow warranty replacement from the plaintiff directly which the plaintiff had refused to honour.
The witness stated that defendant was claiming from the plaintiff the following;
Kshs 115,456,993.00 being free on-board purchase from 2015, 2016 and 2017.
Loss of business at Kshs 92,365,594.40.
Kshs 346,370,970.00 being compensation for warranties.
Damages for tarnishing its name.
Analysis and determination
I have read the testimony of the witnesses and perused the exhibits produced by the parties in this matter. I have also read the submissions of the parties and I hold the opinion that the issue is a matter of reconciliation of accounts between the parties and whether the defendant suffered damages as a result of cancellation of agency.
It is common ground that the plaintiff appointed the defendant as its sole agent in Kenya with effect from 1-11-2015. I have seen the letter of appointment as an agent dated 1-11-2015 which was clear that the agency agreement lapsed on 30-12-2016. There is no indication that the agency was renewed but it is clear that the parties continued with their established relationship with the defendant buying the products from the plaintiff until the dispute arose around December 2017.
I have looked at the emails exchanged between the parties and it is clear that the defendant by email dated 16-01-2018 admitted that it owed the plaintiff USD 240,000.00 and no supplies were delivered after that. After the dispute arose, there was mutual agreement that the defendant should return the goods which were said to have defects. The parties are in agreement that the defendant returned the defective goods which would mean that the value of the returned goods was to be offset from the amount owed.
The said defective goods returned through bill of lading dated 23-10-2018. The defendant admitted retaining some of the goods which are still in its store although it claims that they are not sellable for lack of warranty. The defendant has not demonstrated to court that the goods said to lack warranty have ever been rejected by its customers. The defendant’s witness is also on recorded saying that it sells the same goods under the same warranty given by the real manufacturers and not the plaintiff. In view of this, it is my position that the goods which were not returned to the plaintiff cannot be loaded or credited to the debts the defendant owed. They remain within its disposal and it is under an obligation to pay for them.
Both parties produced an account prepared by the defendants as exhibits 4 for the plaintiff and exhibit 12 for the defendant. This in my view demonstrates that the statement was a reflection of the position taken by the defendant and for the court to ascertain the liability of the defendant or otherwise, it just needs to go through the items in the statement and interrogate whether the debits therein are justified or proved. The statement shows that the debt stood at USD 239,711.65 before the defective goods were returned then proceeds to deduct five payments totaling to USD 36,000.00 which would reduce the debt to USD 203,711.65. The defendant’s statement further reduces the debt with what it refers to as costs incurred including rejected shoes and helmets of USD 76,940.93 leaving a balance of USD 126,770.72.
The plaintiff’s exhibit 5 was a statement of account as at 26-01-2018 which shows the debt due as USD 239,711.65. This statement is executed by both the plaintiff and the defendant. In his testimony, the defendant’s witness admitted signing the statement and that the rubber stamp appearing thereon belongs to the defendant. The amount shown in that statement is the same amount indicated in the defendant’s own statement as per the plaintiff’s exhibit 4 which is the same as the defendant’s exhibit 12. Plaintiff’s exhibit 5 proceeds to give further account for the debt of USD 239,711.65 by reducing it by USD 86,461.72 and adding USD 19,195.56 which brings the debt to USD 172,445.49.
The plaintiff has described the items for debt reductions as follows;
On 28-03-2018 deposit to CMC USD 10,000
On 26-04-2018 balance pay USD 1,500
On 13-06-2018 balance pay USD 5,000
On 3-05-2018 2000 pairs shoe cost USD 19,251.94
On 15-10-2018 container return USD 46,209.78.
The plaintiff described the additions as follows;
On 1-01-2018 YET17246 USD 118.02
On 22-06-2018 YET18117 USD 842.54
On 10-06-2018 cost for fair in June USD 13,235.00.
Unspecified date Kenya website USD 5,000
The plaintiff flashed the above figures without giving proper explanation in its witness written statement or the oral testimony. I however have made efforts to interrogate and understand these figures as given in the statement of account and the other exhibits. I discern that items on reductions are explained by the defendant’s exhibit number 12 which are bank transfers and are all appearing in the defendant’s statement. For the additions, this court has been unable to verify the same. The statement lack explanations and it is my position that where a party files pleadings and documents and fails to make the court understand them and their purport, the case must fail. I am inclined to decline these additions for the following reasons;
Item ‘a’ was already included in the agreed and executed statement produced as part of exhibit 5 and there was no justification for adding it to the reconciliation statement.
Item ‘b’ has no supporting evidence. It is not stated what the invoice of was for and it was not acknowledged by the defendant.
Similarly, item ‘c’ was not explained and the court cannot say what it
was incurred for and how the defendant was liable for the same.
There was no explanation what item ‘d’ entailed. It is not clear whether it was a payment due to the defendant or to the plaintiff although it was mentioned in one of the emails as an online payment.
In view of my above analysis, this court adjusts the plaintiff’s statement of accounts by reducing the acknowledged debt of USD 239,711.65 by USD 86,461.72 leaving the amount due at USD 153,250.23.
I next turn to the statement as given by the defendant which has also started with the agreed opening balance of 239,711.65. The defendant then reduces the debt by USD 36,000 as follows;
On unspecified date deposit (CMC payment) USD 10,000.
On unspecified date website
(CMC payment not utilized) USD 5,000.
On 20-03-2018 TT payment USD 10,000
On 24-04-2018 TT payment USD 1,500
On 11-06-2018 TT payment USD 9,500
Item ‘a’ above is not supported by documents but in my understanding, it seems to be a duplication of item ‘c’ which item appears is included in the plaintiff’s own statement. All the other items are supported and acknowledged by the plaintiff.
The deductions by the defendants do not end there. It proceeds to give the following as other costs which should be deducted from the debt;
Cost of rejected shoes USD 41,856.00
Cost of rejected green helmets USD 765.00
Taxes, customs & shipping costs USD 7,374.69
Cost of replacements under warranty at selling price USD 1,695.24
Loss of business costs USD 20,000.00
Fuel costs USD 300.00
Wear and tear costs USD 250.00
Accommodation charges USD 200.00
Mileage costs USD 200.00
Loss on VAT USD 3,500.00
Verification trip with Yato team USD 800.00
The above comes to a total of USD 76,940.93 leaving the balance outstanding at USD 126,770.72. This is the amount the defendant by his own statement acknowledged to be the debt owed to the plaintiff and would in my view have constituted judgement on admission if it were not for the defendant’s counterclaim.
I have gone through the exhibits produced by the defendant and I have not seen anything that would prove any of the items listed by the defendant. However, I note that the plaintiff acknowledged the costs of rejected goods at USD 19,251.94. In that case, I hold that items ‘a’ and ‘b’ in the defendant’s list of deductions shall remain at the amount acknowledged by the plaintiff. All the other items above must be rejected as all that the defendant did was to list down the expences without substantiation. For instance, the defendant claims to have paid for the return of the goods to China but has not shown any proof of the payments neither has it shown any proof of the expences he has listed in his statement. The only proof of return is the waybill which does not have the cost of the shipment. I am guided by the decision of the Court of Appeal in Capital Fish Kenya Limited v The Kenya Power & Lighting Company Limited (2016) KECA 56 (KLR) where it held as follows;
‘No evidence whatsoever was led by the appellant on this aspect. This, as we already stated elsewhere, was an abstract figure which was thrown to the court with a mere statement that “this is the loss the appellant has suffered. Please award it to the appellant.” In the case of Ryce Motors Ltd & Another vs Muchoki (1995-98) 2 E. A 363 (CAK) commenting on statements of accounts presented without more as in this case stated, this Court observed;
“… The pieces of paper produced as evidence of income could not be accepted as correct accounting practice. They did not constitute proof of special damages.”
I now turn to the counterclaim which has pleaded as follows;
Total FOB purchase from 2015, 2016, 2017 of USD 449,249 sold at Kshs 115,456,993.00 tax inclusive.
Loss of business at 20 per cent of sold value recovered for 4 years: 20/100 x 115,456,993 x 4 years = Kshs 92,365,595.40.
Warranty demand for all goods to be recovered at 30 per cent of total amount sold for the next 10 years: 30/100 x 115,456,993 x 10 year = Kshs 346,370,970.00.
Cost of and on repudiated and retuned goods comprising FOB + Shipping + Import taxes + inland transport + sales costs + VAT + costs of loan facility, totaled US Dollars $ 76,940.93 at an average rate of Kshs 103/=. i.e. Kshs 7,924,915.79.
Storage charges on goods returned upon revocation of commercial agency agreement and on repudiation of contract.
General damages and or special damages for loss of business goodwill.
General damages for destruction of business owing to tortious interference of and with business of Kshs 100,000,000/=.
Injunction restraining the plaintiff, now defendant, its associates, its agents and assigns from appointing any other person as its sole commercial agent in Kenya.
Aggravated and exemplary damages of Kshs 150,000,000.00 for the plaintiff’s now defendants’ arbitrary manner by which they set out to destroy the defendant’s now counter claimant’s entire business and livelihood in order to take advantage of the same.
I have reproduced the prayers in the counterclaim in verbatim which are clearly hardly comprehensible especially the liquidated claims, as compared to the evidence adduced by the defendant’s witness. No iota of evidence was produced before the court in proof of any of the Kshs 812,118,474.10 claimed as liquidated damages. In Godfrey Julius Ndumba Mbogori & another v Nairobi City Council (2018) KECA 702 (KLR), the Court of Appeal held that;
‘A claim for special damages must be specifically pleaded and proved with a degree of certainty and particularity.
As stated by Chesoni, J (as he then was) in the case of Ouma v Nairobi City Council (1976) KLR 304;-
“Thus for a plaintiff to succeed on a claim for special damages he must plead it with sufficient particularity and must also prove it by evidence. As to the particularity necessary for pleading and the evidence in proof of special damage the court’s view is as laid down in the English leading case on pleading and proof of damages, Ratcliffe v Evans (1892) 2 QB 524 where Bowen L J said at pages 532, 533; -
The character of the acts themselves which produce the damage, and the circumstances under which these acts are done, must regulate the degree of certainty and particularity with which the damage done ought to be stated and proved. As much certainty and particularity must be insisted on, both in pleading and proof of damage, as is reasonable, having regard to the circumstances and to the nature of the acts themselves by which the damage is done. To insist upon less would be to relax old and intelligible principles. To insist upon more would be the vainest pedantry.”
In the instant case there was an allegation and a list of the appellants’ items demolished or carted away by the respondent’s agents. This was in the pleading, but certainty and particularity of proof were lacking. In the circumstances, the claim for special damages fails.’
It is trite that special damages must not only be specifically pleaded but must also be strictly proved. As I have stated above, the defendant did not produce any document either in form of receipts, vouchers, books of accounts, tax returns or other form of evidence to prove the loss of business and the costs it has pleaded. I have not found any justifications for the amount the defendant has claimed and I must disallow the same.
The same applies for general damages and prayer for injunction. There is nothing in the evidence produced by the defendant to show that its name was tarnished or that its business went down or was affected by severing of the relationship between the parties. The appointment of the defendant as an agent of the plaintiff lapsed in 2016 and was not renewed and the defendant did not adduce evidence to show that there was any intention or promise of renewing the same. The relationship between the parties had grown to that of seller and customer as the defendant would buy goods from the defendant and sell them at a profit to its customers. There is no basis upon which this court can award damages as prayed for.
In the final analysis, I find that the plaintiff has proved on a balance of probabilities that the defendant owes it USD 153,250.23 and the defendant has failed to prove its counterclaim. The final orders which commend themselves for issue are that;
Judgement is entered for the plaintiff against the defendant for USD 153,250.23.
The above sum shall attract interest at court rates from the time of filing this suit until payment in full.
The defendant’s counterclaim against the plaintiff is hereby dismissed.
The defendant shall pay the costs of the suit and the counterclaim.
Dated signed and delivered at Nairobi this 4 th day of July 2025.
B.M. MUSYOKI
JUDGE OF THE HIGH COURT.
Judgment delivered in presence of Miss Njoroge for the plaintiff and Mr. Nyoroku for the defendant.
USD 172,445.49.
Costs of this suit.
Interest from the date the amount became due until payment in full.
Any other or further relief that this Honourable Court may deem fit and just so to grant.
The plaintiff’s claim was based on undisputed business relationship between the parties which began in 2015 where the defendant was an agent of the plaintiff for its products. The plaintiff pleaded that between September 2017 and November 2017, the plaintiff supplied a variety of its products for cumulative costs of USD 172,445.49 which the defendant failed to pay for.
In its amended statement of defence, the defendant denied being indebted to the plaintiff and counterclaimed for loss of business, loss of profits, costs, storage charges, general damages, special dagames and aggravated damages and an injunction restraining the plaintiff from appointing another agent.
The plaintiff’s evidence
PW1 and the only witness for the plaintiff was Vivian Gu who stated that she was a sales director of the plaintiff who is located in Shanghai in China. She told the court that, sometimes between September and November 2017, the plaintiff supplied assorted industrial equipment among others safety shoes, safety headgears, hand tools and clamps to the defendant. She stated that the goods had been inspected by SGS, an authorized agent of Kenya Bureau of Standards and had been found to be fit.
It was her further testimony that despite raising invoices for the goods supplied, the defendant had failed to pay and upon enquiry, the defendant alleged that the products were wearing out faster due to the high humidity. She stated that despite the alleged humidity not being the plaintiff’s fault, they agreed to take back the said goods.
In October 2018, the parties agreed that the defendant was to return the goods to the plaintiff. The defendant shipped back the products but upon arrival of the shipment, it was discovered that the defendant had not returned some of the goods and even those returned were found to be in good condition. The plaintiff met the costs of the re-shipment. When the plaintiff made enquiry on the goods not returned, the defendant agreed to pay the costs of the unreturned goods whose costs cumulatively came to USD 172,445.49.
She added that the plaintiff’s products had a warranty of normally three years. The contract between the parties was terminated after the debt went unpaid beyond six months and the defendant changed and developed bad attitude. She denied that the goods the plaintiff shipped to the defendant were of low quality as their goods were certified by Kenya Bureau of Standards.
She was categorical that the returned products were not subject of this litigation.
She pointed out that there was an acknowledgment of the debt by the defendant and that the defendant had signed the statement of account willingly which was done before the complaint of the quality of the shoes came up. She added that the defendant had not given the inventory of the goods it claimed to have been of low quality and was still keeping them in its shop even as at the time of the hearing.
The witness produced the following documents as exhibits;
Credit agreement dated 29-06-2017.
Bill of lading dated 26 th September 2017.
Bill of lading dated 26 th October 2017.
Payments and costs report as at 11-06-2018.
Statement of account for 10-06-2010 to 26-01-2018.
Emails exchanged between the plaintiff and the defendant dated 16-01-2018, 30-10-2017, 27-10-2017, 7-11-2018 and 6-09-2018.
Demand letter dated 14 th December 2018.
Guarantee dated 1-01-2015.
Notification to terminate agency agreement dated 1-10-2018.
Certificate of electronic evidence dated 9-11-2022 and photographs.
In cross-examination, the witness stated that the products in dispute were still with the defendant. She maintained that their products have a three-year guarantee and not a lifetime guarantee as alleged by the defendant. She stated that they did not make conduct with the defendant’s customers but CMC conducted her. She had added that there was no evidence that the defendant was backlisted in China or it could not access China anymore. She confirmed that any goods which are damaged are returned.
Defendant’s case
Daniel Muriithi Waweru was the defendant’s sole witness. He described himself as the managing director of the defendant who traded in tools and safety equipment which it purchases and sells to factories and companies at a profit. He admitted the business relationship between the parties which he said began in 2015. He testified that the plaintiff’s representative first represented to him that the plaintiff was a manufacturer of the said equipment and tools. After several correspondences and communication, the plaintiff appointed the defendant as the sole and exclusive agent/distributor in Kenya vide a letter dated 1-11-2015.
The witness added that the arrangements between the parties was that the defendant would buy and import the plaintiff’s products and sell them in Kenya as well as marketing the plaintiff in the local market. In return, the plaintiff was not to enter the Kenya market on its own or appoint another agent for the Kenyan market. He alleged further that, there were more arrangements that the plaintiff was to sell to the defendant on credit which was payable upon the defendant getting payments from the customers and that the plaintiff would provide a life guarantee of its products such that it would recall and replace defective goods at its costs. The witness claimed that the defendant developed a market for the plaintiff whose products were not known in Kenya before and created visibility of the products.
The witness stated further that he later came to learn that the plaintiff was not the manufacturer of the products as it had represented but a seller. He also added that the lifetime guarantee the plaintiff had issued was unilaterally reduced to two years and later the contract terminated.
He stated that in December 2017, the plaintiff supplied the defendant with goods worth USD 240,000 which were found to be defective after the defendant sold them to its customers and for this reason, the customers failed to pay and returned them. He added that due to the failure by the customers, the defendant could not recover its expences to repay bank overdrafts that were obtained to pay for the importation costs. Since the defendant was unbale to pay for the goods due to the nonpayment by the customers, there arose a dispute. The witness gave an example of CMC Motors who he claimed had a 45 million supply contract with the defendant in 2016 and who threatened to take legal action against the defendant and who wanted the issue of guarantee and defective goods resolved. The defendant also claimed that the plaintiff defamed it before its clients who it sought to deal with it directly.
The witness alleged further that in April 2018, the plaintiff agreed to recall the defective goods and its representative in Kenya one Lenson Njagi Njogu inspected and confirmed that the goods were defective and also visited several of the defendant’s clients in the company of DW1 where he noted the client’s complaints but the plaintiff refused to take up the costs of shipping, taxation and other costs the defendant had incurred which became a point of disagreement.
The witness added that without the guarantee which the plaintiff withdrew after disagreement, customers refused to buy the goods the defendant had already shipped causing the defendant to incur storage charges. He added that the defendant shipped the defective goods to Shanghai in October 2018 and gave an inventory thereof. The plaintiff however went back on its word and started making additional claims as per the plaint. The witness added that the defendant prepared and sent a final statement of account taking into account the costs incurred in shipping the defective goods to Kenya and back to China, taxes, storage and other charges. In addition, the defendant made transfers to the plaintiff of USD 10,000 on 26 th March 2018, USD 1,500 on 24 th January 2018 and USD 9,500 on 11 th June 2018 which it considered final upon which the plaintiff terminated the agency agreement in December 2018.
According to the defendant’s witness, the termination of the agency, the credit lines and the guarantee when the defendant had the plaintiff’s stock and while complaints from the customers were still alive disabled the defendant from making profits from those goods because the customers could not buy without a guarantee of merchantability. The defendant’s witness stated that in addition, the plaintiff defamed it and destroyed its reputation amongst its customers, poached the defendant’s customers and therefore denied it livelihood.
The witness added that in order to help it pay customs for the goods shipped to it, defendant took out an overdraft of Kshs 5.2 million from Credit Bank Limited and a further personal loan of Kshs 4.2 million to enable it clear the goods and fund their sales operations. Unfortunately shoes and helmets expired and as a result they massively failed to sell and they could not collect payments from the customers as expected. The defendant advised their clients to follow warranty replacement from the plaintiff directly which the plaintiff had refused to honour.
The witness stated that defendant was claiming from the plaintiff the following;
Kshs 115,456,993.00 being free on-board purchase from 2015, 2016 and 2017.
Loss of business at Kshs 92,365,594.40.
Kshs 346,370,970.00 being compensation for warranties.
Damages for tarnishing its name.
Analysis and determination
I have read the testimony of the witnesses and perused the exhibits produced by the parties in this matter. I have also read the submissions of the parties and I hold the opinion that the issue is a matter of reconciliation of accounts between the parties and whether the defendant suffered damages as a result of cancellation of agency.
It is common ground that the plaintiff appointed the defendant as its sole agent in Kenya with effect from 1-11-2015. I have seen the letter of appointment as an agent dated 1-11-2015 which was clear that the agency agreement lapsed on 30-12-2016. There is no indication that the agency was renewed but it is clear that the parties continued with their established relationship with the defendant buying the products from the plaintiff until the dispute arose around December 2017.
I have looked at the emails exchanged between the parties and it is clear that the defendant by email dated 16-01-2018 admitted that it owed the plaintiff USD 240,000.00 and no supplies were delivered after that. After the dispute arose, there was mutual agreement that the defendant should return the goods which were said to have defects. The parties are in agreement that the defendant returned the defective goods which would mean that the value of the returned goods was to be offset from the amount owed.
The said defective goods returned through bill of lading dated 23-10-2018. The defendant admitted retaining some of the goods which are still in its store although it claims that they are not sellable for lack of warranty. The defendant has not demonstrated to court that the goods said to lack warranty have ever been rejected by its customers. The defendant’s witness is also on recorded saying that it sells the same goods under the same warranty given by the real manufacturers and not the plaintiff. In view of this, it is my position that the goods which were not returned to the plaintiff cannot be loaded or credited to the debts the defendant owed. They remain within its disposal and it is under an obligation to pay for them.
Both parties produced an account prepared by the defendants as exhibits 4 for the plaintiff and exhibit 12 for the defendant. This in my view demonstrates that the statement was a reflection of the position taken by the defendant and for the court to ascertain the liability of the defendant or otherwise, it just needs to go through the items in the statement and interrogate whether the debits therein are justified or proved. The statement shows that the debt stood at USD 239,711.65 before the defective goods were returned then proceeds to deduct five payments totaling to USD 36,000.00 which would reduce the debt to USD 203,711.65. The defendant’s statement further reduces the debt with what it refers to as costs incurred including rejected shoes and helmets of USD 76,940.93 leaving a balance of USD 126,770.72.
The plaintiff’s exhibit 5 was a statement of account as at 26-01-2018 which shows the debt due as USD 239,711.65. This statement is executed by both the plaintiff and the defendant. In his testimony, the defendant’s witness admitted signing the statement and that the rubber stamp appearing thereon belongs to the defendant. The amount shown in that statement is the same amount indicated in the defendant’s own statement as per the plaintiff’s exhibit 4 which is the same as the defendant’s exhibit 12. Plaintiff’s exhibit 5 proceeds to give further account for the debt of USD 239,711.65 by reducing it by USD 86,461.72 and adding USD 19,195.56 which brings the debt to USD 172,445.49.
The plaintiff has described the items for debt reductions as follows;
On 28-03-2018 deposit to CMC USD 10,000
On 26-04-2018 balance pay USD 1,500
On 13-06-2018 balance pay USD 5,000
On 3-05-2018 2000 pairs shoe cost USD 19,251.94
On 15-10-2018 container return USD 46,209.78.
The plaintiff described the additions as follows;
On 1-01-2018 YET17246 USD 118.02
On 22-06-2018 YET18117 USD 842.54
On 10-06-2018 cost for fair in June USD 13,235.00.
Unspecified date Kenya website USD 5,000
The plaintiff flashed the above figures without giving proper explanation in its witness written statement or the oral testimony. I however have made efforts to interrogate and understand these figures as given in the statement of account and the other exhibits. I discern that items on reductions are explained by the defendant’s exhibit number 12 which are bank transfers and are all appearing in the defendant’s statement. For the additions, this court has been unable to verify the same. The statement lack explanations and it is my position that where a party files pleadings and documents and fails to make the court understand them and their purport, the case must fail. I am inclined to decline these additions for the following reasons;
Item ‘a’ was already included in the agreed and executed statement produced as part of exhibit 5 and there was no justification for adding it to the reconciliation statement.
Item ‘b’ has no supporting evidence. It is not stated what the invoice of was for and it was not acknowledged by the defendant.
Similarly, item ‘c’ was not explained and the court cannot say what it
was incurred for and how the defendant was liable for the same.
There was no explanation what item ‘d’ entailed. It is not clear whether it was a payment due to the defendant or to the plaintiff although it was mentioned in one of the emails as an online payment.
In view of my above analysis, this court adjusts the plaintiff’s statement of accounts by reducing the acknowledged debt of USD 239,711.65 by USD 86,461.72 leaving the amount due at USD 153,250.23.
I next turn to the statement as given by the defendant which has also started with the agreed opening balance of 239,711.65. The defendant then reduces the debt by USD 36,000 as follows;
On unspecified date deposit (CMC payment) USD 10,000.
On unspecified date website
(CMC payment not utilized) USD 5,000.
On 20-03-2018 TT payment USD 10,000
On 24-04-2018 TT payment USD 1,500
On 11-06-2018 TT payment USD 9,500
Item ‘a’ above is not supported by documents but in my understanding, it seems to be a duplication of item ‘c’ which item appears is included in the plaintiff’s own statement. All the other items are supported and acknowledged by the plaintiff.
The deductions by the defendants do not end there. It proceeds to give the following as other costs which should be deducted from the debt;
Cost of rejected shoes USD 41,856.00
Cost of rejected green helmets USD 765.00
Taxes, customs & shipping costs USD 7,374.69
Cost of replacements under warranty at selling price USD 1,695.24
Loss of business costs USD 20,000.00
Fuel costs USD 300.00
Wear and tear costs USD 250.00
Accommodation charges USD 200.00
Mileage costs USD 200.00
Loss on VAT USD 3,500.00
Verification trip with Yato team USD 800.00
The above comes to a total of USD 76,940.93 leaving the balance outstanding at USD 126,770.72. This is the amount the defendant by his own statement acknowledged to be the debt owed to the plaintiff and would in my view have constituted judgement on admission if it were not for the defendant’s counterclaim.
I have gone through the exhibits produced by the defendant and I have not seen anything that would prove any of the items listed by the defendant. However, I note that the plaintiff acknowledged the costs of rejected goods at USD 19,251.94. In that case, I hold that items ‘a’ and ‘b’ in the defendant’s list of deductions shall remain at the amount acknowledged by the plaintiff. All the other items above must be rejected as all that the defendant did was to list down the expences without substantiation. For instance, the defendant claims to have paid for the return of the goods to China but has not shown any proof of the payments neither has it shown any proof of the expences he has listed in his statement. The only proof of return is the waybill which does not have the cost of the shipment. I am guided by the decision of the Court of Appeal in Capital Fish Kenya Limited v The Kenya Power & Lighting Company Limited (2016) KECA 56 (KLR) where it held as follows;
‘No evidence whatsoever was led by the appellant on this aspect. This, as we already stated elsewhere, was an abstract figure which was thrown to the court with a mere statement that “this is the loss the appellant has suffered. Please award it to the appellant.” In the case of Ryce Motors Ltd & Another vs Muchoki (1995-98) 2 E. A 363 (CAK) commenting on statements of accounts presented without more as in this case stated, this Court observed;
“… The pieces of paper produced as evidence of income could not be accepted as correct accounting practice. They did not constitute proof of special damages.”
I now turn to the counterclaim which has pleaded as follows;
Total FOB purchase from 2015, 2016, 2017 of USD 449,249 sold at Kshs 115,456,993.00 tax inclusive.
Loss of business at 20 per cent of sold value recovered for 4 years: 20/100 x 115,456,993 x 4 years = Kshs 92,365,595.40.
Warranty demand for all goods to be recovered at 30 per cent of total amount sold for the next 10 years: 30/100 x 115,456,993 x 10 year = Kshs 346,370,970.00.
Cost of and on repudiated and retuned goods comprising FOB + Shipping + Import taxes + inland transport + sales costs + VAT + costs of loan facility, totaled US Dollars $ 76,940.93 at an average rate of Kshs 103/=. i.e. Kshs 7,924,915.79.
Storage charges on goods returned upon revocation of commercial agency agreement and on repudiation of contract.
General damages and or special damages for loss of business goodwill.
General damages for destruction of business owing to tortious interference of and with business of Kshs 100,000,000/=.
Injunction restraining the plaintiff, now defendant, its associates, its agents and assigns from appointing any other person as its sole commercial agent in Kenya.
Aggravated and exemplary damages of Kshs 150,000,000.00 for the plaintiff’s now defendants’ arbitrary manner by which they set out to destroy the defendant’s now counter claimant’s entire business and livelihood in order to take advantage of the same.
I have reproduced the prayers in the counterclaim in verbatim which are clearly hardly comprehensible especially the liquidated claims, as compared to the evidence adduced by the defendant’s witness. No iota of evidence was produced before the court in proof of any of the Kshs 812,118,474.10 claimed as liquidated damages. In Godfrey Julius Ndumba Mbogori & another v Nairobi City Council (2018) KECA 702 (KLR), the Court of Appeal held that;
‘A claim for special damages must be specifically pleaded and proved with a degree of certainty and particularity.
As stated by Chesoni, J (as he then was) in the case of Ouma v Nairobi City Council (1976) KLR 304;-
“Thus for a plaintiff to succeed on a claim for special damages he must plead it with sufficient particularity and must also prove it by evidence. As to the particularity necessary for pleading and the evidence in proof of special damage the court’s view is as laid down in the English leading case on pleading and proof of damages, Ratcliffe v Evans (1892) 2 QB 524 where Bowen L J said at pages 532, 533; -
The character of the acts themselves which produce the damage, and the circumstances under which these acts are done, must regulate the degree of certainty and particularity with which the damage done ought to be stated and proved. As much certainty and particularity must be insisted on, both in pleading and proof of damage, as is reasonable, having regard to the circumstances and to the nature of the acts themselves by which the damage is done. To insist upon less would be to relax old and intelligible principles. To insist upon more would be the vainest pedantry.”
In the instant case there was an allegation and a list of the appellants’ items demolished or carted away by the respondent’s agents. This was in the pleading, but certainty and particularity of proof were lacking. In the circumstances, the claim for special damages fails.’
It is trite that special damages must not only be specifically pleaded but must also be strictly proved. As I have stated above, the defendant did not produce any document either in form of receipts, vouchers, books of accounts, tax returns or other form of evidence to prove the loss of business and the costs it has pleaded. I have not found any justifications for the amount the defendant has claimed and I must disallow the same.
The same applies for general damages and prayer for injunction. There is nothing in the evidence produced by the defendant to show that its name was tarnished or that its business went down or was affected by severing of the relationship between the parties. The appointment of the defendant as an agent of the plaintiff lapsed in 2016 and was not renewed and the defendant did not adduce evidence to show that there was any intention or promise of renewing the same. The relationship between the parties had grown to that of seller and customer as the defendant would buy goods from the defendant and sell them at a profit to its customers. There is no basis upon which this court can award damages as prayed for.
In the final analysis, I find that the plaintiff has proved on a balance of probabilities that the defendant owes it USD 153,250.23 and the defendant has failed to prove its counterclaim. The final orders which commend themselves for issue are that;
Judgement is entered for the plaintiff against the defendant for USD 153,250.23.
The above sum shall attract interest at court rates from the time of filing this suit until payment in full.
The defendant’s counterclaim against the plaintiff is hereby dismissed.
The defendant shall pay the costs of the suit and the counterclaim.
Dated signed and delivered at Nairobi this 4 th day of July 2025.
B.M. MUSYOKI
JUDGE OF THE HIGH COURT.
Judgment delivered in presence of Miss Njoroge for the plaintiff and Mr. Nyoroku for the defendant.