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Court of AppealPartially AllowedCivil Appeal No. 178 of 2005· [2015] KECA 822 (KLR)

Total (Kenya) Limited Formally Caltex Oil (Kenya) Limited v Janevams Limited [2015] KECA 822 (KLR)

Court of Appeal of Kenya
13 February 2015
Mohamed Abdulahi WarsameM. WarsameKMK. M'InotiAMA. K. Murgor
4,746 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal held that proforma invoices don't prove special damages and excessive interest rates must be backed by evidence, cutting most of Janevams' award.

What this practically means

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Executive summary

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This was a first appeal by Total (Kenya) Limited (formerly Caltex Oil (Kenya) Limited) against the High Court's award of damages and interest to Janevams Limited for unlawful termination of a service station dealership and operators agreement dated 10th June 1987. The trial judge (Onyango Otieno, J.) had awarded special damages for equipment proved by proforma invoices, interest on a refundable deposit of Kshs.491,450 at 35% per annum, and general damages of Kshs.50,000 for breach of contract. The Court of Appeal, in a unanimous judgment, partially allowed the appeal. It held that a proforma invoice is a commitment to purchase and not a receipt, and therefore cannot attest to the existence or acquisition of goods; the award of special damages was accordingly set aside for failure of strict proof. On interest, the court affirmed that section 26(1) of the Civil Procedure Act confers discretion to award interest for the pre-suit period, but found the 35% rate had no evidential basis since the respondent could not prove the commercial rate claimed; interest at court rates was substituted. The Kshs.50,000 general damages award was upheld as a reasonable exercise of judicial discretion, despite the general rule that general damages cannot be awarded for breach of contract. Interest on general damages was ordered to run only from the date of judgment, when the obligation to pay arises. Ground one was abandoned by consent. As each party partially succeeded, the court ordered each party to bear its own costs.

Key legal issues

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01

Proof of special damages by proforma invoices

Holding

The award of special damages on the basis of proforma invoices was erroneous; the award was set aside.

Reasoning

The court reaffirmed that special damages must be specifically pleaded and strictly proved. Proforma invoices are mere quotations or commitments to purchase, not receipts evidencing payment or acquisition of goods. The trial judge's partial discount of invoice values could not cure the absence of strict proof of the respondent's loss or the replacement value of the equipment allegedly withheld.

p. 8
02

Interest at 35% per annum on the withheld deposit

Holding

The discretion under section 26(1) of the Civil Procedure Act permitted an award of interest before suit, but the 35% rate had no evidential basis; substituted with interest at court rates.

Reasoning

Section 26(1) empowers the court to award interest at a rate it deems reasonable, covering the pre-suit, suit-to-judgment, and judgment-to-payment periods. Since the deposit was wrongfully withheld for over three years, interest was properly awardable. However, the respondent offered no proof of the 35% commercial rate claimed from its bankers, and the discretion must be exercised judiciously, so court rates applied instead.

p. 7
03

General damages for breach of contract

Holding

The general rule is that no general damages lie for breach of contract, but the Kshs.50,000 award was upheld as an exercise of judicial discretion, being compensation for loss arising from the unlawful termination.

Reasoning

The court acknowledged the authority that general damages cannot be awarded for breach of contract since such damages are quantifiable. However, where loss arises from breach, damages may be awarded to place the claimant in the position as if no loss had occurred. The trial judge inferred some suffering from the unlawful eviction and relocation of the business; the appellate court found the modest award of Kshs.50,000 reasonable and declined to interfere.

p. 8
04

Interest on general damages

Holding

Interest on general damages accrues only from the date of judgment, not from the date of filing suit.

Reasoning

While interest on damages is discretionary, the obligation to pay general damages arises only when judgment is pronounced, since that is when the principal obligation is established. The court adopted the principle in Kenya Commercial Bank Limited v Sheikh Osman Mohammed and ordered that the Kshs.50,000 general damages award attract interest from the date of judgment.

p. 8

Legal principles established

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  • Special damages must be specifically pleaded and strictly proved; a proforma invoice is not satisfactory proof of loss or replacement value.
  • General damages cannot be awarded for breach of contract; damages for breach of contract are quantifiable and not at large.
  • The power to award interest, including for the pre-suit period, derives from section 26(1) of the Civil Procedure Act and is a discretion to be exercised judiciously, not capriciously or on whim.
  • Interest on general damages accrues only from the date of judgment, when the obligation to pay arises.
  • A first appeal takes the nature of a retrial, but an appellate court will be slow to interfere with findings of fact by the trial court.

Court orders

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  1. 1.The award of special damages is set aside
  2. 2.The award of interest at 35% on the sum of Kshs 491,450 is set aside and substituted with an award of interest at court rates
  3. 3.The award of general damages will attract interest from the date of judgment
  4. 4.Each party to bear its own costs

Authorities

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Legislation

  • Civil Procedure ActSection 26(1)
  • Court of Appeal RulesRule 103

Cases cited (16)

  • Highway Furniture Mart Limited vs The Permanent Secretary Office of the President
    Civil Appeal No. 52 of 2005
  • Dharanshi vs Karsam
    (1974) EA 4
  • Prem Iata vs Peter M. Mbiyu
    [1965] EA 593
  • Selle vs Associated Motor Boat Co Ltd
    [1968] EA
  • Mariera vs Kenya Bus Service (MBS) Ltd
    [1987] KLR 440
  • Peters vs Sunday Post Ltd
    [1958] EA 474
  • New Tyres Enterprises v Kenya Alliance Insurance
    [1988] KLR 380
  • Ajay Indravadan Shah v Guilders International Bank Ltd
    [2002] 1 EA 269
  • Abok James Odera T/A A.J Odera & Associates v John Patrick Machira T/A Machira & Co. Advocates
    [2013] eKLR (Civil Appeal No. 161 of 1999)
  • Hahn vs Singh
    1985 Kenya Law Reports 716
  • Great Lakes Transport Co (U) Ltd vs Kenya Revenue Authority
    (2009) eKLR 720
  • Provincial Insurance Co East Africa Ltd v Nandwa
    LLR No. 867 (CAK)
  • Habib Zurich Finance (K) Limited vs Muthoga & Another
    [2002] 1 EA 81
  • Securicor Courier (K) Ltd vs Benson David Onyango
    [2008] eKLR
  • Visoi Saw Mills Ltd v The Attorney-General
    [1997] eKLR (Civil Appeal No. 78 of 1996)
  • Kenya Commercial Bank Limited v Sheikh Osman Mohammed
    [2013] eKLR (Civil Appeal No. 179 of 2010)
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 3325 of 1994
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal Rules (appeal from the judgment and decree of the High Court)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Total (Kenya) Limited Formally Caltex Oil (Kenya) Limited v Janevams Limited [2015] KECA 822 (KLR)", Case Analysis (2015). Civil Appeal No. 178 of 2005. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/822/eng@2015-02-13

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