Nile Hauliers Ltd v Busia Outgrowers Company Limited & another (Civil Appeal 91 of 2019) [2025] KECA 483 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that a company that walked away from a lease without following the contract's three-month notice clause had to pay over Kshs. 25 million in hire charges.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the lease agreement between Busia Outgrowers and Nile Hauliers was renegotiated or varied
- 2.Whether Nile Hauliers was in breach of the lease agreement in terminating it without invoking the termination clause
- 3.Whether the learned Judge was right in finding in favour of Busia Outgrowers and allowing its claim
- 4.Whether the learned Judge was right in partly allowing Nile Hauliers' counter claim with regard to amounts spent in repairs of tractors
Key legal issues
#Whether the lease agreement was renegotiated or varied
The Court found that the lease agreement was not renegotiated; the alleged variation correspondence was between Nile Hauliers and the Sugar Board, who was not party to the lease, and there was no evidence that Busia Outgrowers agreed to any new arrangement.
Most of the letters relied on were signed by the Chief Executive Officer of the Kenya Sugar Board and were addressed to Nile Hauliers or Mumias Sugar Company, with copies to Busia Outgrowers. Although some letters referenced renegotiation of revenue sharing, there was no firm conclusion in any letter and no evidence that Busia Outgrowers was involved or agreed. The single letter from Busia Outgrowers' Acting General Manager did not refer to a renegotiated agreement. The trial Judge's finding could not be faulted.
Whether Nile Hauliers was in breach of the lease agreement
Nile Hauliers was in breach because it terminated the lease without invoking clause 16(a), which required three months' written notice; it was therefore liable for the outstanding hire charges.
Clause 16(a) of the lease provided that a party wishing to terminate other than for fundamental breach had to give three months' written notice, effective only upon reconciliation of accounts and settlement of outstanding liabilities. Nile Hauliers adduced no evidence that it invoked the clause or served a notice of termination. Its defence was that the agreement had been renegotiated, which the Court rejected. Having failed to invoke the termination clause, Nile Hauliers was liable to pay the hire charges of Kshs.25,070,169/-, less the Kshs.2,250,000/- used for repairs.
Whether the claim for arrears of hire charges was proved
The claim for Kshs.25,070,169/- in hire charge arrears was proved; the amount was reduced from the pleaded Kshs.25,805,452.32 by the claimant's own witness accounting for insurance payments.
The financial statement showed hire charge arrears of Kshs.23,566,308.98 which, with insurance for 2012 to 2013, totalled Kshs.25,805,452.33 as claimed. However, Fredrick Marthia Wandera, who prepared the statements of accounts, reduced the claim to Kshs.25,070,169/- explaining some insurance payments. The Court held this amount was due as arrears of hire charges and the trial Judge could not be faulted for awarding it.
Whether the monopoly-of-transport defence could excuse non-payment
The lease agreement did not provide for any monopoly of transport in the BOCO zone, so Nile Hauliers could not rely on the absence of a promised monopoly to avoid paying hire charges.
Nile Hauliers blamed Busia Outgrowers and the Sugar Board for failing to protect its claimed monopoly over cane transport. The Court held that clause 12.1 of the lease, the only clause touching on the outgrowers zone, concerned the area of operation only and did not state that Nile Hauliers would be the sole transporter. As the agreement contained no monopoly provision, Nile Hauliers could not avoid its responsibility to pay hire charges notwithstanding its financial difficulties.
Treatment of the counter claims (repairs and the Kshs.5million deposit)
The Court declined to interfere with the trial court's findings on the Kshs.2,250,000/- repairs counter claim and the Kshs.5million deposit, as there was no cross appeal by Busia Outgrowers.
The trial Judge had allowed the counter claim for repairs on the basis that the lease did not address initial repairs, common sense dictated the lessor would meet them, and Busia Outgrowers did not respond to that claim. The Kshs.5million was held to be a deposit refundable at expiry of the lease absent outstanding liabilities, not a proper subject of counter claim. Absent any cross appeal, the Court found it unnecessary to interrogate or interfere with those findings.
Legal principles established
#- A first appellate court must re-evaluate, reassess and re-analyze the evidence on the record and determine for itself whether the trial court's conclusions should stand.
- A party to a contract who wishes to terminate it must follow the contractual termination clause; termination without the stipulated notice is a breach of the contract.
- A party to a contract cannot rely on negotiations to which a non-party to the contract was involved, absent evidence that the contracting party agreed to the variation.
Court orders
#- 1.The judgment of the trial court is upheld
- 2.The appeal is dismissed with costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the judgment
Wrote the judgment
- On appeal from
- High Court of Kenya
- Not stated in the judgment
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (no specific constitutional or statutory provision cited in the judgment)
Relief refused
#The appellant's appeal in its entirety (five grounds of appeal)
The Court found no merit in the appeal; the agreement was not renegotiated, Busia Outgrowers was not party to the negotiations with the Sugar Board, and Nile Hauliers failed to invoke the termination clause.
Busia Outgrowers' claim for general damages for loss of business for the unexpired period of the lease (not pursued on appeal)
No cross appeal was filed by Busia Outgrowers against the trial court's failure to award general damages, so the matter was not open for consideration.
Costs
The appeal is dismissed with costs (costs to Busia Outgrowers, the successful respondent).
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
This being a first appeal, we are minded of our primary role as a first appellate court namely, to reevaluate, reassess and reanalyze the extracts on the record and then determine whether the conclusions reached by the learned trial Judge are to stand or not and give reasons either way.
Nile Hauliers having failed to invoke the termination clause in the agreement, it was liable to pay the hire charges.
The lease agreement did not provide for any monopoly, and therefore, Nile Hauliers cannot avoid its responsibility of payment of the hire charges.
The upshot of the above is that we find no merit in this appeal. We, therefore, uphold the judgment of the trial court and dismiss the appeal with costs. It is so ordered.
Issues in the judgment
#The judgment inconsistently refers to the claimant's witness Benjamin Kigen's affidavit as '(PW1)' although Kigen testified for the defence, and refers to 'Article 16(a)' of the lease agreement whereas elsewhere it is called clause 16(a).
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nile Hauliers Ltd v Busia Outgrowers Company Limited & another (Civil Appeal 91 of 2019) [2025] KECA 483 (KLR)", Case Analysis (2025). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/483/eng@2025-03-07
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.