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Court of AppealPartially Allowed· [2023] KECA 1067 (KLR)

Texas Alarms (K) Limited v General Cargo (Transport) Limited (Civil Appeal 10 of 2021) [2023] KECA 1067 (KLR)

Court of Appeal
22 September 2023
PNP. NyamweyaJLJ. LesiitGOG.V. Odunga
9,446 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~38 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal threw out a Kshs 6.9 million claim against a security firm because the wrong company sued and the loss was never actually proven.

What this practically means

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Executive summary

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The Respondent sued the Appellant, a security services provider, in the High Court at Mombasa claiming Kshs 6,964,788.66 as special damages after a lorry loaded with 494 SUV tyres allegedly stolen on 4th April 2010 from the Respondent's yard guarded by the Appellant's guard. The trial Judge (P.J. Otieno, J.) found the Appellant's guard negligent for fleeing the premises, rejected the unpleaded Kshs 25,000 liability cap as an ambush, and entered judgment for the Respondent while dismissing the claim for general damages. On first appeal, the Court of Appeal (P. Nyamweya, J. Lesiit and G.V. Odunga, JJ.A) identified five issues: privity of contract, locus standi of the Respondent as bailee, proof of special damages, proof of the theft, and the pleaded limitation clause. The Court held that the security contract was between the Appellant and General Cargo Services Limited, a different entity, and the Respondent failed to discharge its burden of proving privity. As bailee of Auto Express Ltd's cargo, the Respondent was responsible to the bailor and could not sue the Appellant to recover the bailor's loss; further, as agent of a disclosed principal it could not sue. The special damages of Kshs 6.9 million were not strictly proved, the cargo owner having claimed only Kshs 1.9 million of which Kshs 900,000 was paid. The evidence of theft was reduced to hearsay because the Respondent's guards were not called as witnesses. On the liability cap, although unpleaded, the Court held the Appellant could rely on the contract since it was produced by the Respondent itself. The Court allowed the appeal in its entirety, set aside the High Court judgment, dismissed the Respondent's suit, and awarded the Appellant costs of both the appeal and the High Court suit.

Key legal issues

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01

Privity of contract between Respondent and Appellant

Holding

The Respondent failed to prove privity of contract with the Appellant; the security services contract was between the Appellant and General Cargo Services Limited, a different entity

Reasoning

The contract on record was executed between Texas Alarms (K) Ltd and General Cargo Services Ltd. The Appellant's witness's evidence linking the Respondent to the contract was self-contradictory and could not amount to an admission. Under Section 107(1) of the Evidence Act, the burden lay on the Respondent to prove the contract as the foundation of its suit, and it did not discharge that burden.

p. 11
02

Locus standi of the Respondent as bailee

Holding

As bailee of Auto Express Ltd's cargo, the Respondent could not sue the Appellant for the bailor's loss; it was non-suited and lacked locus standi

Reasoning

The Respondent's role was to clear, store and transport Auto Express Ltd's cargo; it stood as bailee responsible to the bailor. A bailee liable to the bailor for loss of the goods cannot sue a third party to recover the bailor's loss. Additionally, as agent of a disclosed principal, the Respondent could not sue without joining the principal.

p. 14
03

Proof of special damages and of the theft

Holding

The Respondent neither strictly proved the pleaded special damages of Kshs 6,964,788.66 nor established that the theft occurred at its yard

Reasoning

The cargo owner, Auto Express Ltd, claimed only Kshs 1,915,945.08 from the Respondent, of which Kshs 900,000 was paid; the pleaded Kshs 6.9 million had no evidential basis. The Respondent's guards, the critical witnesses, were not called, reducing the theft evidence to hearsay, and no medical evidence supported the drugging claim.

p. 15
04

Limitation of liability clause not pleaded

Holding

Although the trial Judge treated reliance on the Kshs 25,000 liability cap as an unpleaded ambush, the Court held no harm arose since the contract was produced by the Respondent itself; in any event, the Appellant was not liable at all

Reasoning

Parties are bound by their pleadings, but the contract containing the cap was produced by the Respondent's own witness as the basis of its claim, so the Appellant could properly rely on it as an uncontested document. The cap of Kshs 25,000 per twelve-month period was indeed in clause 6(a), but liability under the contract failed at the threshold.

p. 16

Legal principles established

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  • Only parties to a contract have enforceable rights and obligations under it; a third party cannot sue to enforce its terms (privity of contract)
  • A bailee is responsible to the bailor for goods in its custody and cannot sue a third party to recover the bailor's loss
  • An agent of a disclosed principal cannot sue; where the principal is disclosed, the agent is not to be sued
  • Special damages must be both specifically pleaded and strictly proved
  • On a first appeal, the Court reconsiders and evaluates the evidence afresh, making due allowance for not having seen or heard the witnesses
  • An appellate court will not normally interfere with a finding of fact by the trial court unless it is based on no evidence, misapprehension of the evidence, or a wrong principle

Court orders

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  1. 1.Appeal allowed in its entirety
  2. 2.Judgment of the High Court (P.J. Otieno, J.) dated 2nd December 2016 in High Court Civil Case No 201 of 2010 set aside and substituted with an order dismissing the respondent's claim against the appellant
  3. 3.Appellant awarded the costs of the appeal and of the case in the High Court

Authorities

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Legislation

  • Evidence ActSection 107(1)
  • Evidence ActSection 108

Cases cited (18)

  • Savings & Loan (K) Limited v Kanyenje Karangaita Gakombe & another
    [2015] eKLR
  • Kenya National Capital Corporation Ltd v Albert Mario Cordeiro & another
    [2014] eKLR
  • Victor Mabachi & another v Nurtun Bates Limited
    [2013] eKLR
  • Anthony Francis Wareheim t/a Wareheim & 2 others v Kenya Post Office Savings Bank
    Civil Application Nos Nai 5 & 48 of 2002
  • Wareham t/a A.F. Wareham & 2 others v Kenya Post Office Savings Bank
    [2004] 2 KLR 91
  • Equator Distributors v Joel Muriu & 3 others
    [2018] eKLR
  • British Road Services Ltd v Arthur Crutchley & Co Ltd (Factory Guards Ltd, third parties)
    [1968] 1 All ER 811
  • Selle and another v Associated Motor Boat Company Ltd & others
    [1968] 1 EA 123
  • Ephantus Mwangi & another v Duncan Mwangi Wambugu
    [1982 – 1988] 1 KAR 287
  • Charles C. Sande v Kenya Co-operative Creameries Limited
    Civil Appeal No 154 of 1992
  • Hahn v Singh
    Civil Appeal No 42 of 1983 [1985] KLR 716
  • Daniel Gatihi Gachomo v Kenya Union of Teachers Nyeri Branch
    [2013] eKLR
  • Capital Fish Limited v Kenya Power and Lighting Company Limited
    [2016] eKLR
  • Securicor Courier (K) Ltd v Benson David Onyango & another
    [2008] eKLR
  • Independent Electoral and Boundaries Commission v Stephen Mutinda Mule & 3 others
    [2014] eKLR
  • Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd
    [1915] AC 847
  • Agricultural Finance Corporation v Lengetia Ltd
  • William Muthee Muthami v Bank of Baroda
On appeal from
High Court at Mombasa
Civil Suit No 201 of 2010
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (statutory first appeal; no specific Article 163(4) invocation)

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, "Texas Alarms (K) Limited v General Cargo (Transport) Limited (Civil Appeal 10 of 2021) [2023] KECA 1067 (KLR)", Case Analysis (2023). . Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/1067/eng@2023-09-22

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