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Case Brief · caselaw.co.ke
High CourtPartially AllowedCivil Suit No 279 of 2004· [2019] KEHC 5961 (KLR)

Plaintiff v Flamingo Bottlers (1st Defendant) & Nairobi Bottlers (2nd Defendant)

High Court of Kenya
27 June 2019
3,088 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Unilateral changes to a contract can lead to damages, and the clock for filing a lawsuit starts when the problem occurs, not when the contract was signed.

What this practically means

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Executive summary

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The plaintiff sued Flamingo Bottlers (1st defendant) and Nairobi Bottlers (2nd defendant) for breach of a Strategic Sales Depot distributorship agreement dated 24 April 1998, seeking general damages, exemplary damages and loss of earnings. He testified that he invested heavily to meet upgrade requirements to key distributor status – demolishing rental rooms to build a warehouse, securing a Kshs 1,000,000 bank facility and employing 14 workers – before the 1st defendant unilaterally changed the distribution system in October 2002, stopped supplying stock and effectively pushed him out of the territory without the written termination notice the agreement required. The defendants, who called no evidence, argued the suit was time barred, that the 2nd defendant was wrongly sued, and that the contract was automatically terminated when bank guarantees were cancelled. The court framed three issues. On limitation, it held time runs from accrual of the cause of action (the 2002 changes), not the agreement date, so the suit filed in October 2004 was in time. On joinder, applying Kirugi v Kabiya, it found the plaintiff failed to prove any nexus between the two companies and dismissed the suit against the 2nd defendant, with costs to the plaintiff. On the merits, the court found the unilateral switch to direct outlet allocation substantially destroyed the plaintiff's investment and that, no new contract having been signed after the temporary upgrade, the initial contract remained in force; it awarded general damages of Kshs 2,000,000 against the 1st defendant with interest from filing and the 1st defendant to pay the plaintiff's costs. Exemplary damages and loss of earnings were not awarded for want of proof.

Key legal issues

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01

Limitation

Holding

Suit not time barred; time runs from accrual of the cause of action (the alleged frustration around October 2002), not the 1998 agreement date.

Reasoning

The agreement was signed on 24 April 1998 but the plaintiff was still distributing products as at 9 October 2002, as confirmed by the warning letter of that date. The alleged frustration occurred years after smooth operation of the contract, so counting limitation from the agreement date would be incorrect; the suit filed on 1 October 2004 was in time.

p. 3
02

Joinder of the 2nd defendant

Holding

The 2nd defendant was wrongly sued; the suit against it was dismissed.

Reasoning

Although the defendants adduced no evidence, the burden remained on the plaintiff to prove his case on a balance of probabilities. The plaintiff produced no evidence that the 2nd defendant was the parent company of the 1st defendant or that any takeover occurred; the agreement was between the plaintiff and the 1st defendant only.

p. 3
03

Frustration/breach of contract and damages

Holding

The unilateral change from distributorship to direct allocation of outlets substantially affected the plaintiff's business; the initial contract remained in force and the plaintiff was entitled to general damages of Kshs 2,000,000.

Reasoning

The plaintiff complied with the upgrade requirements to key distributor, including a warehouse, stock, bank guarantee and manpower, and continued operating beyond the 6-month temporary appointment, showing the initial contract still governed. The switch to selling direct to allocated outlets rendered his capital investment unusable; the changes came from one side and fairness required accommodation of the plaintiff's legitimate expectation of returns.

p. 4

Legal principles established

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  • Time for filing suit runs from when the cause of action arises, not from the date of the agreement
  • The burden of proving a case on a balance of probabilities remains on the plaintiff even where the defendant adduces no evidence
  • Where a party makes substantial unilateral changes to the mode of operation after the other party has invested in compliance, there should be fair play to avoid frustration

Court orders

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  1. 1.Judgment entered for the plaintiff against the 1st defendant for Kshs 2,000,000
  2. 2.Suit against the 2nd defendant dismissed
  3. 3.Interest on the judgment sum to be paid at court rates from the date of filing suit
  4. 4.Costs of the 2nd defendant to be paid by the plaintiff
  5. 5.Plaintiff's costs to be paid by the 1st defendant

Authorities

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Legislation

  • Civil Procedure ActOrder 1 Rule 7
  • Civil Procedure ActOrder 9 Rule 9
  • Sale of Goods ActSection 5

Cases cited (8)

  • Autar Singh Bahra & another Vs Raju Govindjl
    HCC No. 548 of 1998 (unreported)

    Where defendant fails to adduce evidence, plaintiff's case stands unchallenged and defence/counterclaim is unsubstantiated

  • Motex Knitwear Limited v Gopitex Knitwear Mills Limited
    Nairobi Civil Case No. 834 of 2012

    Same proposition on unchallenged evidence where defendant calls no witness

  • Miguna Miguna Vs The Star Publication Ltd and 5 others
    Nairobi HCC No. 137 of 2016

    No suit defeated for misjoinder of parties

  • Rashmikabnt Meghji t/a Rah Wholesalers Vs South Nyanza Sugar Company Ltd
    Nakuru Civil Case No. 586 of 1195

    Measure of damages under Section 5 of the Sale of Goods Act – estimated loss directly resulting in ordinary course of events

  • Mary Osundwa Vs Nzoia Sugar Company Limited

    Court lacks jurisdiction to extend time in contract cases; limitation applies to contract not only tort

  • Behange Vs School outfitters (U) LTD
    Court of Appeal of Uganda at Kampala No. 53 of 1999

    Courts should not interfere with the contract of parties

  • Kirugi & Another V Kabiya & 3 Others
    [1987] KLR 347

    Burden always on plaintiff to prove case on balance of probabilities, even in formal proof

  • Delilah Kerubo Otiso v Ramesh Chander Ndingra
    [2018] eKLR

    Courts do not normally award damages for breach of contract except where conduct is oppressive, high-handed, outrageous, insolent or vindictive

Jurisdiction invoked
Original civil jurisdiction of the High Court in a contract claim (Civil Procedure Act, Order 1 Rule 7 and Order 9 Rule 9 cited on joinder)

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, "Plaintiff v Flamingo Bottlers (1st Defendant) & Nairobi Bottlers (2nd Defendant)", Case Analysis (2019). Civil Suit No 279 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/kehc/2019/5961/eng@2019-06-27

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