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Court of AppealAllowedNot stated in the judgment· [1987] KECA 18 (KLR)

Mwanzo Shirandula v Marko Mukhweso [1987] KECA 18 (KLR)

Court of Appeal of Kenya
19 March 1987
1,343 words in judgment
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The bottom line

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Kenya's Court of Appeal ruled the Government must pay a supplier for goods delivered against a valid-looking local purchase order, even though the order was fraudulently obtained.

What this practically means

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Executive summary

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This was the plaintiff's appeal to the Court of Appeal (Nyarangi, Platt and Gachuhi, JJA) against the judgment of Mrs Justice Aluoch of the High Court delivered on May 15, 1984, dismissing his claim against the defendant for Kshs 34,320 for foodstuffs supplied to the Prisons Department. The plaintiff, a supplier of foodstuffs to government departments for 40 years, had won tender No 76/77 to supply the Nairobi Area. He supplied goods against local purchase order No D799849, which on its face was regular - completed, dated, signed and stamped and quoting the tender reference - but which had been fraudulently extracted from a book of LPOs issued to the Ministry of Natural Resources. The Court of Appeal held that the plaintiff had acted in good faith on the basis of the LPO; that the long course of dealing constituted trade usage (applying Harilal & Co v Standard Ltd [1967] EA 512); that no Gazette Notice of the loss of the LPO had been published; and that the defendant, despite receiving details of the vehicle that transported the goods, made no police report and carried out no investigations. Platt JA added that the Government permitted its agents to bind it and was estopped from denying liability, the plaintiff having relied on the ostensible authority of the signatory. Gachuhi JA agreed that there was no iota of negligence. The appeal was allowed with costs and costs of the High Court; the High Court judgment was set aside and judgment entered for the plaintiff as prayed in the plaint.

Key legal issues

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01

Whether the plaintiff acted in good faith on the basis of the LPO

Holding

Yes. The LPO was on its face in order - completed, dated, signed and stamped - and quoted the tender reference; nothing would have caused the plaintiff to doubt it. This finding was described as the keystone of the High Court judgment and was upheld.

Reasoning

The LPO bore the tender reference, was signed on behalf of the Senior Supplies Officer, and followed 40 years of course of dealing amounting to trade usage with the Prisons Department. No Gazette Notice of loss had been issued and, although the plaintiff reported the swindle and identified the vehicle proprietor, no police report was made and no investigations carried out by the defendant. The plaintiff was therefore not negligent either at the time of supply or subsequently, and the defence that there was no agreement of sale was unsustainable.

p. 2
02

Whether the Government was bound by the LPO and estopped from denying liability

Holding

Yes. The Government printed and supplied the LPO books to its servants and agents and permitted its agents to bind it; the plaintiff was entitled to rely on the ostensible authority of the signatory.

Reasoning

Platt JA reasoned that the LPO was in proper form, quoted tender No 76/77, and was signed on behalf of the Senior Supplies Officer. The Ministry of Natural Resources, from whose book the LPO was extracted, did not notify the public of the loss of the order. The queries raised by the Ministry were insufficient to warn the appellant of the fraud. Estoppel therefore prevented the Government from denying liability for goods supplied in good faith by a long-standing supplier.

p. 3
03

Whether the plaintiff was negligent

Holding

No. There was no iota of negligence on the part of the appellant, and the defendant did nothing to warn the public not to honour the LPO.

Reasoning

The argument that the plaintiff should have cautioned himself before loading goods into a non-GK vehicle was rejected: after the plaintiff reported the swindle and identified the vehicle proprietor, no action was taken and no explanation was given. The goods might have been traced had a police report been made. The failure to issue any warning to the public meant the defence should be rejected.

p. 3

Legal principles established

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  • A supplier who in good faith supplies goods against a local purchase order that on its face is regular and completed may rely on trade usage and the ostensible authority of the person signing the LPO, and the Government is estopped from denying liability where it issued the LPO books to its servants and gave no public notice of loss.
  • A government department intending to disclaim liability for a lost LPO must publish a Gazette Notice notifying its loss to the general public.

Court orders

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  1. 1.Appeal allowed with costs
  2. 2.Costs of the High Court awarded to the plaintiff
  3. 3.Judgment of the High Court set aside
  4. 4.Judgment entered for the plaintiff as prayed in the plaint
On appeal from
High Court of Kenya
Not stated in the judgment
Jurisdiction invoked
First appeal to the Court of Appeal (statutory appellate jurisdiction; specific provision not cited in the judgment)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Mwanzo Shirandula v Marko Mukhweso [1987] KECA 18 (KLR)", Case Analysis (1987). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1987/18/eng@1987-03-19

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.