Haco Industries Limited & another v Doshi Ironmongers Limited & another (Civil Appeal E064 of 2022) [2025] KECA 1604 (KLR)
The bottom line
#Kenya's Court of Appeal threw out a Kshs.15 million refund judgment, finding Haco Industries never breached its settlement agreement with Doshi over Bic pen products.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.What was the intent, scope and nature of the agreement of 20th February, 2002?
- 2.Were the products found in possession of Doshi on 23rd August 2002 the same products as the 1996 Products?
- 3.Did the appellants breach the agreement of 20th February 2002?
- 4.If the answer to (c) is in the affirmative, what damages were Doshi entitled to?
Key legal issues
#Intent, scope and nature of the Settlement Agreement of 20th February 2002
The agreement's consideration of Kshs.15,000,000.00 covered the counterfeit and offending products only; the 1996 Products were expressly excluded and were mentioned only to be excluded, not to be made subject of the consideration
The agreement was triggered by the discovery of counterfeit Bic products on 2nd October 2001, long after Doshi's acquittal of the 1996 charges. The definitions of 'counterfeit' and 'offending' goods expressly excluded the 1996 Products. The Court found it unlikely the agreement was intended to address matters in which Doshi had long been exonerated, so the release and discharge did not extend to the 1996 Products.
Whether the goods seized on 23rd August 2002 were the 1996 Products
No - the numbers did not match and Doshi's explanation that the extra pens were returned by customers was unsupported and implausible
The Fourth Schedule, warranted as accurate, described 633,600 pens; the 2002 charge sheet listed 695,858 pens, an excess of over 62,000 which could not be the 1996 Products. Ashok's claim that the pens were customer returns had no documentary proof. The Court rejected the trial judge's contrary finding as unsupported by pleadings and evidence.
Whether the appellants breached the Settlement Agreement
No breach was established; the criminal proceedings of 2002 did not relate to the 1996 Products which alone were protected by the agreement
Since the 2002 goods were not the 1996 Products, the appellants' lodging of the complaint did not offend the undertaking in clause 6(1)(b). Doshi bore the burden of proving that the 2002 prosecution concerned goods covered by the agreement and failed to discharge it.
Entitlement to damages, including refund of the Kshs.15,000,000.00 and legal fees
No damages were payable; the counterclaim failed in its entirety
The claims for refund and legal fees were premised on breach, which was not established. Further, the legal fees of Kshs.250,000.00 and Kshs.440,800.00 were not strictly proved as special damages, no documents having been produced to substantiate them.
Legal principles established
#- On a first appeal, the Court of Appeal re-evaluates the evidence afresh and draws its own conclusions, making due allowance that it did not see or hear the witnesses
- A denial of breach in a reply to defence and counterclaim puts the claimant to proof of all elements constituting breach, even where a particular averment is neither admitted nor denied
- Where a contract defines terms by reference to a schedule warranted to be accurate, that schedule is the premier provision in construing the defined terms
- Contracts are construed according to the common intention of the parties and a court should not imply terms that contradict express provisions
Court orders
#- 1.The judgment dated 9th March, 2022 of the trial court is set aside
- 2.The counterclaim is dismissed
- 3.The appellants shall have costs both here and at the trial
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- 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; specific provision not cited in the judgment
Relief refused
#Refund of Kshs.15,000,000.00 paid under the Settlement Agreement
The Court found the goods in the 2002 criminal case were not the 1996 Products, so no breach occurred and there was no failure of consideration
Legal fees of Kshs.690,800.00 for defending the two criminal cases
The claim failed with the finding of no breach; the amounts were also not strictly proved
General damages for breach of the Settlement Agreement
No breach of the Settlement Agreement was established by Doshi
Costs
The appellants shall have costs both here and at the trial.
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.
The appeal is with merit and we allow it. The judgment dated 9th March, 2022 of the trial court is hereby set aside. Instead, the counterclaim is dismissed. The appellants shall have costs both here and at the trial.
The purpose of mentioning the 1996 Products in the agreement was for the purpose of excluding them from the scope of what was counterfeit or offending and not for making them a subject of the consideration and the related release and discharge.
The number of the 1996 Products was 633,600 and so on 23rd August, 2002 Doshi would be in possession of 62,285 more pens. Surely at the very least those extra pens could not be the 1996 Products.
As a first appeal court, our role is to re-evaluate the evidence tendered at trial afresh and to draw our own conclusion having regard to the fact that, unlike the trial court, we did not see or hear the witnesses testify.
Issues in the judgment
#The judgment gives two slightly different figures for the excess of the 2002 goods over the 1996 Products: 62,258 in the appellants' submissions and 62,285 in the Court's own reasoning
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Haco Industries Limited & another v Doshi Ironmongers Limited & another (Civil Appeal E064 of 2022) [2025] KECA 1604 (KLR)", Case Analysis (2025). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/1604/eng@2025-10-03
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.