Heineken East Africa Import Company Ltd & another v Maxam Ltd (Civil Appeal E403 & E404 of 2020 (Consolidated)) [2024] KECA 625 (KLR)

The court traced the doctrine's public law origins (Schmidt, Coughlan) and affirmed Supreme Court authority (CCK v Royal Media Services) that the representation must emanate from a public body. It examined the Seychelles and Tanzania decisions that attempted to transplant the doctrine into contract law and noted both were overturned on appeal. It distinguished the Kenyan situation under the 2010 Constitution, where equity under article 10(2)(b) informs contract law, but held that reasonable expectation, not legitimate expectation, supports damages claims in contract.

Relying on section 23(1) of the Evidence Act and Oceanbulk Shipping v TMT, the court held the without prejudice rule renders the letter inadmissible to prove admissions. Adopting Unilever v Procter & Gamble, it refused to dissect out portions of the communication for protection. Applying Chitty's requirement that a notice be clear and unambiguous, doubts were construed against the originator, who could have issued two separate notices. The trial court erred only in finding the notice invalid under clause 18.

The interim orders did not license the appointment; the vacation of the fifth limb only acknowledged the fait accompli. A court cannot rewrite a contract (National Bank of Kenya v Pipeplastic Samkolit). The breach deprived Maxam Ltd of the core benefit of exclusivity, amounting to repudiation, which Maxam Ltd is deemed to have accepted. Third parties without privity take the risk that the giver's rights fail in litigation, and the appellants' pleaded prejudice was self-inflicted.

Relying on AG v Zinj and Griffiths v TUI, the court held that a party who does not tender expert evidence of its own takes the risk of not displacing the opposing expert report; cross-examination was insufficient to jettison the report's methodology and findings. Damages for breach of contract are compensatory, and loss of expected profits may be established by reasonable estimation (MSK Projects India). Clause 21 excluding compensation only applied on valid termination, which had not occurred.

Following Telkom Kenya v John Ochanda and Chandler v Alberta Association of Architects, the functus officio doctrine bars merit-based re-engagement after final judgment. Account of profits (AG v Blake) is available only in exceptional cases and at an interlocutory stage. Exclusive beer distribution agreements qualify as exceptional cases warranting such relief, but it must be sought at the proper stage. Because it was one order among several, it was severable.

The court drew on comparative jurisprudence (the Dentsply case, the South African Breweries characterisation test) to hold that exclusive vertical arrangements require proof of anticompetitive effect or a per se prohibited characterisation such as price-fixing. The appellants conceded Maxam Ltd had no monopoly influence and adduced no evidence. The court also noted that a breach of competition law now founds a private damages claim (Devenish Nutrition).