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Court of AppealDismissedCivil Appeal No. 279 of 2010· [2016] KECA 86 (KLR)

Midado Communications Limited v Total Kenya Limited [2016] KECA 86 (KLR)

Court of Appeal of Kenya
25 November 2016
2,282 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~9 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed you can owe millions under a contract that was never written down or signed.

What this practically means

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Executive summary

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This was a first appeal to the Court of Appeal at Nairobi against the judgment of Azangalala, J of 29th November 2007 in HCCC No. 25 of 2002, in which the High Court allowed Total Kenya Limited's claim against Midado Communications Limited for KShs.14,140,644.93. The dispute arose from a fuel supply arrangement: Midado won a tender to supply 8,000 metric tons of fuel oil to Kengen, and Total Kenya supplied fuel to Kengen's Kipevu Power Station at Midado's order under an alleged contract dated 24th August 2000, though no written contract was produced. Total Kenya mistakenly invoiced Midado for a smaller supply made to Triton, then issued a corrected invoice showing a balance of KShs.14,140,644.93, which Midado refused to pay, denying the contract's existence. On appeal, Midado argued that the respondent failed to discharge its burden of proof, that its sole witness disclosed no contract, and that special damages were not proved. The Court of Appeal, in a single judgment of the court (Okwengu, Sichale and J. Mohammed, JJ.A), restated its duty as a first appellate court to re-assess and re-analyse the evidence, agreed with the trial judge, and held that a contract was inferable from the parties' conduct: there was offer, acceptance and consideration, and Midado's own conduct in invoicing Kengen for the supplied fuel implied the fuel was part of its tender supply. The invoicing error was satisfactorily explained, and the balance was found due. The appeal was dismissed with costs to the respondent; the High Court judgment was affirmed.

Key legal issues

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01

Whether a contract for the supply of fuel existed between the parties absent a produced written contract

Holding

The court affirmed that a contract existed, inferable from the parties' conduct: offer, acceptance and consideration passed, and the appellant's own invoicing of Kengen for the fuel supplied by the respondent demonstrated the existence of the contract.

Reasoning

Although no written contract was produced, the appellant admitted in its defence that it won the tender to supply fuel to Kengen. The respondent pumped 1,906,110 litres of fuel oil to Kengen's Kipevu Power Station at the appellant's request, and the appellant settled the earlier invoice for the Triton supply. The court, adopting Timoney and King v King, held that conduct can conclude a contract, and found offer, acceptance and consideration.

p. 4
02

Whether the invoicing error was explained and whether the balance of KShs.14,140,644.93 was due

Holding

The respondent satisfactorily explained the mistaken invoicing of the Triton supply in place of the Kengen supply; the balance of KShs.14,140,644.93 after payment of KShs.16,833,448.12 was due and owing.

Reasoning

The respondent's accountant explained the confusion over invoicing and appropriate invoices were produced. The appellant did not testify and offered no explanation why the delivery of 1,906,110 litres would cost less than other deliveries. The appellant's conduct in invoicing Kengen for the supplied fuel implied the fuel was part of its tender supply, defeating its denial of liability.

p. 4
03

The duty of a first appellate court

Holding

As a first appellate court, the Court of Appeal is obliged to re-assess and re-analyse the evidence on record, guided by Kenya Ports Authority v Kuston (Kenya) Limited.

Reasoning

The court restated the classic first-appeal principle: it must reconsider the evidence, evaluate it itself and draw its own conclusions, while making due allowance for not having seen or heard the witnesses, and ruling only on the evidence on record without introducing extraneous matters not dealt with by the parties.

p. 3

Legal principles established

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  • On a first appeal, the Court of Appeal must reconsider and re-evaluate the evidence on record and draw its own conclusions, while making due allowance for the fact that it neither saw nor heard the witnesses.
  • A contract may be inferred from the conduct of the parties even where no words, or no signed written document, record its terms.

Court orders

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  1. 1.The appeal is dismissed
  2. 2.Costs of the appeal awarded to the respondent

Authorities

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Legislation

  • Evidence ActSection 107
  • Evidence ActSection 108
  • Evidence ActSection 109

Cases cited (3)

  • Banque Indosuez v D.J. Lowe & Company Limited
    CA No. 79 of 2002
  • Kenya Ports Authority v Kuston (Kenya) Limited
    (2009) 2 EA 212
  • Timoney and King v King
    1920 AD 133
On appeal from
High Court of Kenya at Nairobi
HCCC No. 25 of 2002
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction over the High Court in civil matters

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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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, "Midado Communications Limited v Total Kenya Limited [2016] KECA 86 (KLR)", Case Analysis (2016). Civil Appeal No. 279 of 2010. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2016/86/eng@2016-11-25

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