CHEVRON KENYA LIMITED V OSHWAL SERVICE STATION LTD & 2 OTHERS [2013] KEHC 5346 (KLR)

REPUBLIC OF KENYA

High Court at Nairobi (Nairobi Law Courts)

Civil Suit 277 of 2009

CHEVRON KENYA LIMITED   :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: PLAINTIFF

(formerly Caltex Oil (K) Ltd.

OSHWAL SERVICE STATION LTD. :::::::::::::::::::::::::::::::::::::::::::::::: 1^ST DEFENDANT

NEMCHAND BHARMAL SHAH :::::::::::::::::::::::::::::::::::::::::::::::::::::: 2^ND DEFENDANT

BHARAT N. SHAH :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: 3^RD DEFENDANT

1.           The suit herein was commenced by a Plaintiff filed in court on 23^rd April 2009 praying for Judgement against the Defendants jointly and severally the following:-

a)     The sum of Kshs.3,822,268,85.

b)     Interests.

c)     Costs of the suit.

d)     Further relief

2.           The claim is based on an alleged breach of the terms of an Operator’s Agreement entered into on 1^st October 2000 between the Plaintiff and the 1^st Defendant for the sale of the Plaintiff’s products and the operation of the Plaintiff’s Petrol and Filling Station situate on Plot No. 209/2386 on Kimathi Street in Nairobi.

3.    It is further alleged that it was inter-alia an express term of the contract between the Plaintiff and the 1^st Defendant that:-

                                 i.            The 1^st Defendant would pay cash on delivery for all products unless otherwise agreed by the Plaintiff;

                                ii.            The 1^st Defendant would provide a Bank Guarantee from a reputable bank to the Plaintiff to secure any indebtedness arising from the supply to the 1^st Defendant of any products on credit terms;

                             iii.            2^nd and 3^rd Defendants should also provide their personal Director’s Guarantee to secure any such indebtedness as aforesaid.

        The 1^st Defendant provided the Plaintiff with Bank Guarantees of an aggregate value of Kshs.1,500,000/=.

The 2^nd and 3^rd Defendants provided the Plaintiff with their Director’s Guarantee dated 9^th June 1998. Under the terms of the said guarantee in consideration of the Plaintiff granting credit facilities to the 1^st Defendant the 2^nd and 3^rd Defendants jointly and severally guaranteed the punctual payment by the 1^st Defendant to the Plaintiff of all monies due and owing by 1^st Defendant for all goods sold and supplied and/or delivered to the 1^st Defendant by the Plaintiff. The 2^nd and 3^rd Defendants further indemnified the Plaintiff against all loss and damage resulting from any breach by the 1^st Defendant of its payment obligations thereunder.

The said Operator’s agreement was terminated by the 1^st Defendant by its Notice of Termination dated 1^st December 2006. The termination was effective from 28^th February when the premises was handed over to the Plaintiff by the 1^st Defendant.

At the time of the termination of the Operator’s Agreement and handling over by the 1^st Defendant of the premises to the Plaintiff, the 1^st Defendant was allegedly indebted to the Plaintiff in the sum of Kshs.5,742,772.30 being the value of petroleum products sold and supplied and/or delivered by the Plaintiff to the 1^st Defendant at its express request on credit terms on diverse dates from January 2006 to February 2007 during the term of the Operator’s Agreement.

The Plaintiff succeeded in reducing the said debt to Kshs.3,822,268.85 through:-

                                  i.            realizing the aforesaid bank guarantees amounting to an aggregate value of Kshs.1,500,000.00;

                                ii.            taking over stocks from the premises amounting to Kshs.351,069.70; and

                               iii.            through adjustments by setting off the remaining debt of Kshs.69,433.75 against “Caltex Starcard Credits” held by the 1^st Defendant under the Plaintiff’s then existing fuel credit card scheme.

In breach of the terms of the Operators Agreement and the terms of the aforesaid Director’s Guarantee and despite expressly acknowledging the said debt as being due and owing to the Plaintiff, it is the Plaintiff’s case that the Defendants as at the date of filing suit have not paid the Plaintiff products sold and supplied to the 1^st Defendant by the Plaintiff and the Defendants have thereby jointly and severally occasioned the Plaintiff loss and damage.

The Plaintiff now claims the sum of Kshs.3,822,268.85 against the 1^st Defendant being the value of products sold and delivered to the 1^st Defendant.

4.     The above allegations are totally denied by all the Defendants through their defence filed in court on 7^th July 2009. In their defence the Defendants deny the existence of the alleged control or the existence of any guarantee or any debt as alleged at all and urged the court to dismiss the suit with costs.  

5.           The Plaintiff filed its list of issues on 13^th May 2011 together with its list of documents. The Plaintiff also filed its witness statement on 18^th April 2012 and a supplementary list of documents on 25^th July 2012. There is no evidence on record that the Defendants filed any issues, witness statements or other documents. However, both parties filed their submissions with the Plaintiff filing theirs on 27^th August 2012 and a reply submissions on 11^th October 2012, while the Defendants filed their submission on 28^th September 2012.

6.           The hearing commenced on 19^th April 2012 and proceeded on 26^th July 2012. The Plaintiff called two witnesses – P.W. 1 Mr. Gerald Matola and P.W. 2 Mr. Benson Mulolo. The defence did not call any witnesses.

7.     P.W. 1 adopted his witness statement dated 18^th April 2012. He testified that he was the Marketing Services Manager of Total Kenya Limited which acquired the Plaintiff Company in 2009 and took over the prosecution of this case. At the time of termination of the Operators Agreement dated 1^st October 2000 in 2006, the witness was the Retail Co-ordinator of the Plaintiff Company and personally dealt with issues in dispute herein. He testified that the Plaintiff was and still is the registered proprietor/lesee of the service station premises located in LR. No. 209/2386/Kimathi Street - Nairobi. He confirmed the existence and particulars of the contract dated 1^st October 2000 i.e. the Operator’s Agreement. He further testified of the agreement and the breach stated in the Plaint. The witness widely testified about that agreement, the director’s guarantee which were provided by the Defendants and the claim which he said was owed of Kshs.3,822,268.85/=.

8.     P.W. 2 testified that he was a Sales Administration Accountant of Total Kenya Limited which acquired the Plaintiff Company in 2009. He adopted his witness statement field in court on 18^th April 2012. His testimony corroborated that of P.W. 2 and proved the particulars of the claim in the suit.

9.     The two witnesses appeared to me credible and I believed their testimony to be true. Even in cross-examination they remained focused and appeared to me to be truthful.

10.   I have considered the suit, the witness testimony and submissions of the parties. I have looked at the issues as drafted by the Plaintiff. I will adopt those issues. They are 

1)           Whether the Plaintiff and the 1^st Defendant entered into an Operator’s Agreement on or about 1^st October 2000 and whether the 1^st Defendant was a retailer of the Plaintiff’s petroleum products.

2)           If the answer to number 1, above, is “yes”, whether the express terms thereof are as pleaded in the Plaint.

3)           Whether the 1^st Defendant provided the Plaintiff with a Bank Guarantee for the amount of Kshs.1,500,000/=.

4)           Whether the 2^nd and 3^rd Defendants provided the Plaintiff with their personal guarantees as pleaded in the Plaint or at all.

5)           Whether the said Operator’s Agreement was terminated by the Defendant on 1^st December, 2006.

6)           Whether the Defendants are currently indebted to the Plaintiff in the sum of Kshs.3,822,268.85.

7)           Whether the Plaintiff’s advocates duly issued Legal Demand and Notice of intention to Sue in Default by the Defendants. 

11.   All these issues were canvassed at the hearing and the two Plaintiff Witnesses covered them. Although the Defendants, both in their defence and submissions have denied the existence of the Operator’s Agreement dated about 1^st October 2000, the existence of the said agreement was proved together with its terms as pleaded in the Plaint. It is also proved by evidence that the 1^st Defendant provided the Plaintiff with a Bank Guarantee for amount of Kshs.1,500,000/= and that the 2^nd and 3^rd Defendants also provided the Plaintiff with their personal guarantees. I also accept the testimony of the witnesses that the said Operator’s Agreement was terminated by the Defendant on 1^st December 2006 and that the Defendants are indeed currently indebted to the Plaintiff in the sum of Kshs.3,822,268.85 which they have not paid despite receipt of a legal demand notice from the Plaintiff.

12.   Finally, the Defendants in their submissions objected to the production of photocopy documents as proof of the case. This objection in my view is not merited, firstly, for the reason that the defence did not raise the issue at the trial, and cannot now challenge the same in submissions. Those secondary documents had already been admitted into evidence and no objection can now be entertained.       

Secondly under Section 64 of the Evidence Act, Cap 80, the contents of documents may be proved either by primary or by secondary evidence.    

Section 64 of the Evidence Act (Chapter 80 of the Laws of Kenya) states that:-

“The contents of documents may be proved either by primary or by secondary evidence.”

Section 66 (b) of the Evidence Act states that secondary evidence includes

“. . . copies made from the original by mechanical processes which in themselves ensure the accuracy of the copy, and copies compared with such copies.”

Section 68 (1) (g) of the Evidence Act states that:-

“Secondary evidence may be given of the existence, condition or contents of a document . . . when the original consists of numerous accounts or other documents which cannot conveniently be examined in court, and the fact to be proved is the general result of the whole collection.”

13.   In conclusion, the Defendants chose not to produce any evidence or testimony to discredit the Plaintiff’s claim. The position in law is that where a party chooses not to give evidence, it can be concluded that there is no evidence, and that any evidence would not support the party’s position. 

It is trite law that the person who alleges the existence of certain facts must prove the same. Section 107 (1) of the Evidence Act, Cap 80 states thus:-

“(1) Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.”

14.  For the foregoing reasons, I dismiss the Defendant’s defence and enter judgement in favour of the Plaintiff against the Defendants jointly and severally for:-

a)     Kshs.3,822,268.85.

b)     Interest thereon at court rates from the date of filing of this suit to the date of payment in full.

c)     Costs of the suit and interests therein.

That is the Judgement of the court.

DATED, READ AND DELIVERED AT NAIROBI

E. K. O. OGOLA