1.By a plaint dated 23/4/2018, the plaintiff sought judgment against the defendant for damages for expectation of loss/loss of bargain of Kshs 26,600,000/- together with damages for breach of contract in the sum of Kshs 4,200,000/=.
2.The plaintiff’s case was that 1/3/2016, the plaintiff and the defendant entered into a lease agreement whereby it leased five trucks to the defendant for a period of three years. That the agreement contained a termination clause by which any party thereto could terminate the lease by giving three months’ notice.
3.That on 23/8/2017, the defendant terminated the agreement without any notice and was therefore in breach thereof. As a result of the said breach, the plaintiff suffered loss of business expectation of Kshs 26,600,000/- for terminating the lease before its full term and breach of clause 12 of the contract for Kshs 4,200,000/-.
4.The defendant did not enter appearance or file any defence and the matter was fixed for formal proof. The court allowed the hearing to proceed by way of document evidence.
5.The plaintiff filed written submissions which I have considered. It was submitted that the defendant breached the contract by failing to give a three months’ notice for the termination of the lease agreement. That the plaintiff had expected to earn a total sum of Kshs 26,600,000/- at the end of the three year period. It had therefore suffered loss of business expectation. Further, that it was entitled to damages for breach of contract in the sum of Kshs 4,200,000/= in respect thereof.
7.From the foregoing, it is clear that in a formal hearing, all rules of evidence and procedure are observed and the party to a suit has to adduce evidence sufficient to sustain the suit. The party has to raise a presumption that whatever is claimed is true and this therefore goes to the merits of the case. In a full hearing, the court must determine the matter based on the evidence that is presented before it by parties. In contrast, at a formal proof hearing, if the party with the onus of adducing evidence fails to satisfy the truth threshold, the matter would stand dismissed on the basis that it was unmeritorious and did not raise sufficient proof of any issues of fact or law.
8.In the present case, the plaintiff’s claim is on breach of contract whereby it claims that the defendant breached clause 12 of the lease agreement by failing to give a three months’ notice upon termination.
9.Clause 12 of the agreement reads that: -
10.From the above, it is clear that the contract required the parties to give notice before termination thereof. The uncontested allegations by the plaintiff is that, on 23/8/2017, the defendant called and asked that the plaintiff do send its drivers to collect the trucks as the defendant no longer needed them. There was no notice in terms of the aforesaid Clause 12 of the contract. In this regard, I find that the defendant was in breach of the subject agreement.
11.As to whether the plaintiff was entitled to damages for the expectation of loss, it was contended that the projected income before termination of contract was Kshs 26,600,000/= and the plaintiff had legitimate expectation that it would make economic gain of the contract.
14.In the present case, it was not disputed that the contract was breached by the defendant. It is trite that for breach of contract, the remedy available to the innocent party is the actual damage suffered. In Chitty on Contracts, Sweet & Maxwell Vol 1, 1994 at pg 1198, the learned writer observes: -
15.In the present case, the plaintiff has prayed for a total of Kshs 26,600,000/- which the amount it would have earned until the end of the contract. I doubt whether that would be the proper estimation of the loss or damages the plaintiff suffered. The contract between the parties had a termination clause. Either party would have terminated the same by giving a three month’s notice. The defendant failed to give such notice.
16.In this regard, the only breach by the defendant was the failure to issue the notice. My view therefore is that, compensation should be with respect to the three months the defendant failed to give notice. In this case the monthly payment was Kshs 1,400,000/- therefore in three months the plaintiff is entitled to Kshs 4,200,000/-.
18.From the foregoing, the amount claimed as damages for breach of contract in the sum of Kshs 4,200,000/- is a duplication. Accordingly, the claim for Kshs 26,600,000/- is declined. However, damages of Kshs 4,200,0000/- is awarded to the plaintiff. In the upshot, the plaintiff has proved part of its claim to the required standard.
19.Accordingly judgment is entered in favour of the plaintiffs against the defendant for Kshs 4,200,000/- together with interest thereon at court rate from the date of the suit until payment in full. The plaintiff will also have the costs of the suit.It is so decreed.