KENYA INDUSTRIAL ESTATES LIMITED v LEE ENTERPRISES LIMITED [2009] KECA 418 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that damaged machinery is compensated at repair cost, not replacement value, unless it is destroyed beyond repair.
What this practically means
#Executive summary
#Key legal issues
#Correct measure of damages for damage to goods
Cost of repair is the prima facie measure; replacement cost applies only where goods are destroyed or beyond repair
The claim was in tort for destruction, damage and loss of goods. The court adopted Halsbury's Laws (Vol 12(1), para 862) and Bacon v Cooper (Metals) Ltd, holding that the basic rule for damage to a chattel is cost of repair, and replacement cost only where repair is unreasonable or the article is beyond repair. On the facts, a reputable engineer's valuation found all equipment repairable with a working life of 5-8 years, and repair costs (Shs.357,530/=) were low relative to machine values, so diminution in value measured by cost of repairs was the correct measure.
Whether the machinery was damaged beyond repair
No - the D.K. Engineering valuation report showed all equipment was in repairable condition
The valuation report of 10th June 1997 stated that all equipment was in repairable condition with an expected working life of 5-8 years, specified the damage or missing part of each machine and the repair cost, and showed nearly all machines were manufactured in 1985. Cumulative repair costs were relatively low compared to the value of the machinery in damaged state. A repair contract had also been offered to a reputable supplier. Replacement costs were therefore unjustified.
Whether the trial judge's award of Shs.2,024,420/= was correct
The judge erred in principle by awarding the total value in working condition (damaged value plus repair costs) instead of the cost of repairs, but the award could not be disturbed because the main appeal had been withdrawn
The court observed, for clarity of the law, that awarding the sum comprising both the damaged-state value and repair costs was an error of principle, since the correct measure was the cost of repairs of Shs.357,530/=. However, because KIE had withdrawn its appeal under Rule 93(5) of the Court of Appeal Rules, the Court of Appeal had no jurisdiction to disturb the resulting award and confined itself to the cross-appeal, which was dismissed.
Proof of the pleaded value of machinery and stolen goods
The trial judge's finding that the pleaded values were not strictly proved was correct
Although the plaint itemised the value of each item of machinery, accessories and stolen goods, Linus Echakara gave no evidence of their value and tendered no documentary proof. The trial judge expressly remarked that there was no clear evidence of the respective value of each item, relying instead on the D.K. Engineering valuation of Shs.2,024,420/=. The appellate court found that finding unimpeachable, defeating the Shs.10,047,505/= claim on the cross-appeal.
Legal principles established
#- The normal measure of damages for damage to goods is the diminution in value, of which the cost of repair is prima facie the measure; only where goods are destroyed or damaged beyond repair does the replacement cost apply
- Where goods are destroyed, the owner is entitled to restitutio in integrum and the measure of damages is the cost of replacement, being the market value at the time and place of destruction
- An award comprising both the value of damaged machinery and the cost of repairs (the 'total value in working condition') is erroneous in principle where the correct measure is the cost of repairs alone
Court orders
#- 1.The cross-appeal is dismissed with costs to the appellant (KIE)
- On appeal from
- High Court of Kenya at Milimani Commercial Courts, Nairobi
- H.C.C.C. No. 1060 of 1999
- Jurisdiction invoked
- Appeal to the Court of Appeal under the Court of Appeal Rules (first appeal/cross-appeal); no constitutional provision invoked
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (3)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Shisanya & another v National Olympic Committee of Kenya & 3 others; Tysons Limited (Interested Party)[2023] KEELC 19939 (KLR)21 Sept 2023
- Shisanya & another v National Olympic Committee of Kenya & 3 others; Tysons Limited (Interested Party)[2023] KEELC 19939 (KLR)21 Sept 2023
- Gracan (K) Ltd v General Motors (K) Ltd & Ryce Motors Limited[2016] KEHC 3153 (KLR)18 Aug 2016applied
Cite this brief
#Cite this brief
Caselaw, "KENYA INDUSTRIAL ESTATES LIMITED v LEE ENTERPRISES LIMITED [2009] KECA 418 (KLR)", Case Analysis (2009). Civil Appeal 54 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2009/418/eng@2009-05-06
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.