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Court of AppealDismissedCivil Appeal No. 270 of 2005· [2015] KECA 962 (KLR)

The Da Gama Rose Group of Companies v Stokman Rozen Kenya Limited

Court of Appeal
6 February 2015
4,333 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 confirmed that paying part of a deposit and acting on a deal can create a binding contract, even if full terms were never paid.

What this practically means

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Executive summary

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The Da Gama Rose Group of Companies appealed against a High Court judgment (Waweru J, 15 July 2005, HCCC No. 1168 of 2001) awarding Stokman Rozen Kenya Limited the equivalent of NLG 170,719 for rose plants ordered in 1997, prepared but never collected, and dismissing the appellant's counterclaim for refund of its 5% deposit. The appellant argued there was no binding contract because terms were still being renegotiated, the stipulated 10% deposit was never paid in full, the sum was not admitted, the claim was unproved special damages, and the conversion rate ordered was wrong. A three-judge bench (Karanja, G.B.M. Kariuki and M'inoti JJ.A) delivered a single joint judgment. Applying its duty under Rule 29(1) of the Court of Appeal Rules, guided by Selle v Associated Motor Boat Co and PIL Kenya Ltd v Oppong, the Court re-evaluated the evidence and held that the signed confirmed order, the 5% part payment and the respondent's part performance in preparing the plants established a binding, enforceable contract with consensus ad idem. The refrigerated preservation costs, though outside the contract, were reasonably incurred, disclosed to the appellant and never objected to. The NLG 170,719 was unequivocally admitted in the Managing Director's letter of 2nd December 1999, so strict proof of special damages was unnecessary. Conversion at the filing-date rate was upheld as reasonable since the guilder had ceased to exist at judgment. The counterclaim failed because the deposit was set off against amounts properly owed, the appellant having caused the frustration. The appeal was dismissed with costs to the respondent; the decision below was affirmed in full.

Key legal issues

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01

Existence of a binding contract

Holding

A binding and enforceable contract existed despite payment of only half the stipulated deposit

Reasoning

The confirmed order of 13th June 1997 (backdated revision signed 5th September 1997) was an offer accepted by signature; payment of the 5% deposit was part payment of consideration and part performance. Correspondence referred to 'terms of the contract' without rebuttal, establishing consensus ad idem. Failure to pay the full 10% did not prevent contract formation.

p. 6
02

Maintenance costs in animated suspension

Holding

Costs of preserving plants by refrigeration were properly chargeable to the appellant though not provided for in the contract

Reasoning

Preservation was the rational and prudent response to the appellant's delay; the respondent informed the appellant of the costs and no objection was raised, from which the court presumed acceptance of responsibility. Had the appellant collected the plants in time, the costs would have been avoided.

p. 7
03

Admission of NLG 170,719 and special damages

Holding

The sum was unequivocally admitted in writing, so strict proof of special damages was unnecessary

Reasoning

The Managing Director's agreement to the amount in the letter of 2nd December 1999, and the absence of any denial or challenge to the computation, amounted to an unequivocal admission. Where a sum is admitted, the respondent need not particularise how it was composed.

p. 7
04

Rate of currency conversion

Holding

Conversion at the rate obtaining at the time of filing suit was reasonable and logical

Reasoning

The guilder was valid currency when the suit was filed but had been replaced by the Euro by judgment. Using the filing-date rate was ascertainable via the Central Bank and obviated rendering the judgment ineffectual by ordering payment in a defunct currency.

p. 8
05

Counterclaim for refund of deposit

Holding

Counterclaim properly dismissed; the deposit was set off against amounts owed

Reasoning

The amount claimed was subsumed within the NLG 170,719 properly owed. There was no forfeiture; the deposit was set off against money used to grow and preserve plants the appellant ordered but never collected. The appellant's own conduct frustrated the contract.

p. 8

Legal principles established

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  • A first appellate court must re-appraise, re-analyse and re-evaluate the evidence and arrive at its own independent decision
  • Special damages must be specifically pleaded and strictly proved, but where a sum is expressly admitted, particularisation and strict proof are unnecessary
  • Part payment of consideration together with part performance evidences a binding contract

Court orders

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  1. 1.Appeal dismissed
  2. 2.Costs of the appeal awarded to the respondent
  3. 3.Judgment of the High Court (NLG 170,719 converted at the rate at filing suit) affirmed

Authorities

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Legislation

  • Rules of this Court (Court of Appeal Rules)Rule 29(1)

Cases cited (3)

  • Hyde vs Wench
    (1840) 49 ER 132

    Offer and counter-offer: a counter-offer rejects the original offer, so no binding contract arises (cited by appellant).

  • Selle vs Associated Motor Boat Company Limited
    [1968] E.A. 123

    Duty of a first appellate court to re-evaluate evidence and reach its own conclusions.

  • PIL Kenya Limited vs Oppong
    [2009] KLR 442

    Concurrence with Selle on the first appellate court's re-evaluation duty.

On appeal from
High Court of Kenya at Nairobi
HCCC No. 1168 of 2001
Jurisdiction invoked
First appeal to the Court of Appeal under the Court's appellate jurisdiction (Rule 29(1) of the Court of Appeal Rules invoked for re-evaluation of evidence)

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, "The Da Gama Rose Group of Companies v Stokman Rozen Kenya Limited", Case Analysis (2015). Civil Appeal No. 270 of 2005. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/962/eng@2015-02-06

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