Brollo Kenya Ltd v Ali
The bottom line
#Kenya's Court of Appeal cut a Kshs 280,000 damages award to Kshs 100 because the buyer proved no actual loss, even though the seller had wrongfully resold the goods.
What this practically means
#Executive summary
#Key legal issues
#Whether the contract price of Kshs 2.80 per kilo was inclusive of sales tax
The price was not inclusive; sales tax was payable by the purchaser in addition to the sale price under section 10(2) of the Sales Tax Act, and the trial judge erred in holding otherwise.
Section 10(1) obliges a registered manufacturer to state tax separately on the invoice; section 10(2) makes the tax recoverable from the purchaser in addition to the sale price. The defendant was an undisputed registered manufacturer and had invoiced the tax of Kshs 84,000. Payment of the tax follows upon sale of taxable goods by statute, so evidence about whether tax was mentioned in negotiations was irrelevant.
Whether the defendant was entitled to refuse delivery and resell the pipes
The defendant was an unpaid seller with rights of lien and resale, but the resale without notice to the buyer contravened section 48(3) of the Sale of Goods Act and was wrongful.
Having agreed to sell, the defendant was an unpaid seller under section 39(1)(a) of the Sale of Goods Act with a right to retain the goods and a right of resale as limited by the Act. Section 48(3) permits resale only where the unpaid seller gives the buyer notice of intention to resell and the buyer does not within a reasonable time pay or tender the price. No such notice was given, so the resale was improper and a breach of contract.
What damages, if any, the plaintiff was entitled to
The plaintiff proved no loss and no market price; only nominal damages of Kshs 100 were awardable in place of the Kshs 280,000 awarded at trial.
Section 51(3) of the Sale of Goods Act provides a prima facie measure of damages only where there is an available market. There was no available market for these second-quality pipes, and the plaintiff bought no equivalent goods elsewhere. Following Fidahussein v Mohamedally, where no market price is proved and the amount of loss is not evidenced, only nominal damages can be awarded.
Legal principles established
#- Sales tax payable on taxable goods under section 10 of the Sales Tax Act is recoverable by a registered manufacturer from the purchaser in addition to the sale price and is not a matter for negotiation between the parties.
- An unpaid seller may not resell goods without giving the buyer notice of intention to resell as required by section 48(3) of the Sale of Goods Act; resale without notice contravenes that section.
- Where no market price is proved and no available market exists, the buyer who fails to prove the fact and amount of loss is entitled only to nominal damages.
Court orders
#- 1.Appeal allowed to the extent that the judgment of Kshs 280,000 damages is set aside and nominal damages of Kshs 100 substituted
- 2.Respondent to have the costs of the suit in the High Court
- 3.Appellant to have three-quarters of its costs in the appeal
- On appeal from
- High Court at Mombasa
- Jurisdiction invoked
- First appeal to the Court of Appeal under the appellate jurisdiction of the Court of Appeal (statutory appeal from the High Court; no specific constitutional provision cited)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Brollo Kenya Ltd v Ali", Case Analysis (1987). Civil Appeal 161 of 1986. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1987/91/eng@1987-08-13
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.