Industrial and Commercial Development Corporation v Sum Model Industries Limited [2007] KECA 320 (KLR)
The bottom line
#Kenya's Court of Appeal cut a Kshs.8.5 million damages award to Kshs.2.2 million because the company couldn't prove its losses with evidence.
What this practically means
#Executive summary
#Key legal issues
#Effect of non-service or defective service of summons where the defendant entered appearance unconditionally
The ground fails; the appellant entered appearance unconditionally, filed a defence and participated in the trial without complaint, so the issue is an afterthought
The Court held that a memorandum of appearance was filed, indicating service in accordance with superior court practice, and the appellant never raised the objection at trial. Defective or late service does not automatically nullify proceedings; it depends on the circumstances. Without a record of the summons or evidence on the delay, the Court could not rule without risking injustice to the respondent.
Whether the daily loss of business award had a factual basis
The award was set aside because documentary evidence showed the bakery had ceased operations before receivership
The Kshs.5,000 per day figure was not supported by records of sales, prices or overheads. Internal memos showed the factory closed in June 1992 due to electricity disconnection and lack of capital. A business not operating before receivership could not suffer loss of business during receivership, so the award was unsustainable.
Proof of special damages for undersale and unaccounted-for machines
Undersale computed at Kshs.2,024,970 using new-machine values; the claim for unaccounted-for machines was disallowed for want of evidence
Following Timsales Ltd v Up & Down Saw Mills, the Court used the new-machine value as the basis of computation. The value of machines at the date of seizure was unavailable because the appellant had seized them, so the Court took the only two acceptable values: purchase value and auction value. The claim for unaccounted-for machines failed for lack of clear evidence.
Date from which interest should run
Interest varied to run from the date of judgment rather than the date of the suit, because of the unexplained delay in serving summons
Although interest is discretionary, the unexplained delay of several years in effecting service made it improper for interest to run from the date of the suit. The Court accordingly ordered interest at 18% per annum from the date of judgment until payment in full.
Legal principles established
#- Failure to serve summons to enter appearance within the stipulated period does not necessarily render proceedings null and void; it depends on the circumstances of each case, and a party who enters appearance unconditionally and participates without objection cannot later complain of the defect
- Special damages must be both specifically pleaded and specifically proved
- In assessing damages for seized machinery, the price of a new machine may be taken as the basis of computation notwithstanding that the machine was old
Court orders
#- 1.Allow the appeal in part and vary downwards the sums awarded from Kshs.8,515,060 to Kshs.2,235,138.90
- 2.Order interest to run from the date of judgment until payment in full at the rate of 18% per annum
- 3.Award the appellant half of the costs of the appeal
- On appeal from
- High Court of Kenya, Nairobi
- H.C.C.C. No. 3389 of 1994
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Constitution/Civil Procedure regime (not expressly stated in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
Cite this brief
#Cite this brief
Caselaw, "Industrial and Commercial Development Corporation v Sum Model Industries Limited [2007] KECA 320 (KLR)", Case Analysis (2007). Civil Appeal 229 of 2001. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/320/eng@2007-06-08
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.