Comfort Gardens Ltd v Gladhome (1977) Ltd [2021] KEELC 1562 (KLR)
The bottom line
#A Kenyan court threw out a Kshs. 200 million lost-income claim because the company pleaded no breakdown, the loss was too remote, and the property belonged to its director, not the company.
What this practically means
#Executive summary
#Key legal issues
#Whether the claim for loss of income of Kshs. 200 million was pleaded and proved
The claim failed: it was special damages not pleaded with particularity, not strictly proved, and a lump sum of Kshs. 200 million was pleaded without a breakdown
The court held that loss of expected income from a project on Parcel 75 did not flow naturally from the breach of the contract over the Nyeri properties, so it required particularised pleading. The pleadings did not disclose the number of houses, their purpose, expected income per house, or the period. Merely pleading a lump sum without a breakdown fell short of the strict standard for special damages laid down in Hahn v Singh.
Whether the claimed loss was too remote under the law of contract
The loss was remote because the sale of Parcel 75 was not part of, or conditional upon, the contract for the suit properties, and the proposed development was never disclosed during negotiations
PW1 conceded the offer was not conditional on the sale of Parcel 75; the letter of offer made no reference to Parcel 75; and the Defendant was not privy to the intended development. Applying Hadley v Baxendale principles as set out in Johnson Mugwe Wanganga, loss not arising naturally from the breach nor within the contemplation of both parties is irrecoverable.
Whether the Plaintiff, rather than its director, could claim the loss on Parcel 75
No: Parcel 75 belonged to PW1 (Charles Rukwaro Gitahi), and all project documents named PW1 as client, so the Plaintiff suffered no loss
The sale agreement for Parcel 75 was between Charles Rukwaro Gitahi as vendor and Dozen Ventures Limited as purchaser. The architectural drawings, structural design report, bills of quantities and letters all named PW1 as client. Applying the principle in Salomon v Salomon as adopted in Omondi v National Bank of Kenya, the Plaintiff was a separate legal entity from its director and could not claim his losses.
Whether the Plaintiff was entitled to additional costs and interest
No; the claim failed and costs follow the event under Section 27 of the Civil Procedure Act
The consent of 27th February 2019 covered only costs of the compromised claim, leaving the court free to award costs on the loss of income claim. Since that claim failed, the Defendant as successful litigant was entitled to costs of the suit on that claim absent good reason to depart from the general rule.
Legal principles established
#- Special damages must be both specifically claimed and strictly proved, and may not be inferred from the act complained of
- In contract, recoverable damages are those arising naturally from the breach or within the reasonable contemplation of both parties at the time of contracting; other losses are too remote
- A company has a distinct legal personality from its shareholders and directors; the company's property is distinct from that of its shareholders
- Costs follow the event and a successful litigant should ordinarily be awarded costs unless there is good reason to direct otherwise
Court orders
#- 1.The Plaintiff's claim for loss of income of Kshs. 200 million in terms of paragraph (f) of the further amended plaint of 29th January, 2015 is dismissed with costs to the Defendant
- Jurisdiction invoked
- Original civil jurisdiction over a claim for breach of contract relating to the sale of land (suit properties Nyeri Municipality Block 1/623 and 624); no specific constitutional/statutory provision invoked
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Comfort Gardens Ltd v Gladhome (1977) Ltd [2021] KEELC 1562 (KLR)", Case Analysis (2021). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/1562/eng@2021-10-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.