Brollo Kenya Ltd v Ali
The bottom line
#Kenya's Court of Appeal cut a Kshs 280,000 damages award to Kshs 100 because the buyer proved no actual loss, even though the seller had wrongfully resold the goods.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the price of Kshs 2.80 per kilo was inclusive or not of the sales tax
- 2.If the price was inclusive, whether the defendant was entitled to refuse delivery and sell off the goods
- 3.If not, what damages, if any, were payable
Key legal issues
#Whether the contract price of Kshs 2.80 per kilo was inclusive of sales tax
The price was not inclusive; sales tax was payable by the purchaser in addition to the sale price under section 10(2) of the Sales Tax Act, and the trial judge erred in holding otherwise.
Section 10(1) obliges a registered manufacturer to state tax separately on the invoice; section 10(2) makes the tax recoverable from the purchaser in addition to the sale price. The defendant was an undisputed registered manufacturer and had invoiced the tax of Kshs 84,000. Payment of the tax follows upon sale of taxable goods by statute, so evidence about whether tax was mentioned in negotiations was irrelevant.
Whether the defendant was entitled to refuse delivery and resell the pipes
The defendant was an unpaid seller with rights of lien and resale, but the resale without notice to the buyer contravened section 48(3) of the Sale of Goods Act and was wrongful.
Having agreed to sell, the defendant was an unpaid seller under section 39(1)(a) of the Sale of Goods Act with a right to retain the goods and a right of resale as limited by the Act. Section 48(3) permits resale only where the unpaid seller gives the buyer notice of intention to resell and the buyer does not within a reasonable time pay or tender the price. No such notice was given, so the resale was improper and a breach of contract.
What damages, if any, the plaintiff was entitled to
The plaintiff proved no loss and no market price; only nominal damages of Kshs 100 were awardable in place of the Kshs 280,000 awarded at trial.
Section 51(3) of the Sale of Goods Act provides a prima facie measure of damages only where there is an available market. There was no available market for these second-quality pipes, and the plaintiff bought no equivalent goods elsewhere. Following Fidahussein v Mohamedally, where no market price is proved and the amount of loss is not evidenced, only nominal damages can be awarded.
Legal principles established
#- Sales tax payable on taxable goods under section 10 of the Sales Tax Act is recoverable by a registered manufacturer from the purchaser in addition to the sale price and is not a matter for negotiation between the parties.
- An unpaid seller may not resell goods without giving the buyer notice of intention to resell as required by section 48(3) of the Sale of Goods Act; resale without notice contravenes that section.
- Where no market price is proved and no available market exists, the buyer who fails to prove the fact and amount of loss is entitled only to nominal damages.
Court orders
#- 1.Appeal allowed to the extent that the judgment of Kshs 280,000 damages is set aside and nominal damages of Kshs 100 substituted
- 2.Respondent to have the costs of the suit in the High Court
- 3.Appellant to have three-quarters of its costs in the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
First judgment. Held sales tax was payable by the purchaser in addition to the contract price under section 10 of the Sales Tax Act and was not negotiable; the trial judge erred in holding otherwise. The resale without notice contravened section 48(3) of the Sale of Goods Act, but the plaintiff proved no loss, so only nominal damages of Kshs 100 were due in place of Kshs 280,000.
In my judgment the judge erred in his finding that the plaintiff was not required to pay any sales tax in addition to the purchase price.
Wrote the judgment
Separate judgment. Held the seller acted wrongly: even assuming sales tax was leviable, the seller resold without giving notice of intention to resell as required by section 48(3) of the Sale of Goods Act, and there was no available market so no market price was proved. Damages limited to nominal damages of shs 100, with costs as in Fidahussein's case.
The seller was obviously at fault. In my opinion there was evidence from which the learned judge could draw the inference that the seller had got a better bargain elsewhere and was not interested in the contract with the plaintiff.p. 7
Wrote the judgment
Agreed with Nyarangi JA but added that the defendant was guilty of selling goods already sold to the plaintiff without notice; the plaintiff was partly to blame as sales tax is a statutory, non-negotiable payment; and the plaintiff having proved no loss was entitled only to nominal damages of Shs 100.
I have read the draft judgment of Nyarangi JA which I agree with. However, I wish to add that the defendant is guilty of selling the goods which had already been sold to the plaintiff.p. 9
- On appeal from
- High Court at Mombasa
- Jurisdiction invoked
- First appeal to the Court of Appeal under the appellate jurisdiction of the Court of Appeal (statutory appeal from the High Court; no specific constitutional provision cited)
Relief refused
#Substantial damages of Kshs 280,000 for the respondent
The plaintiff failed to prove any loss or market price; only nominal damages were justified
Costs
The respondent should have the costs in the High Court and the appellant company three-quarters of the costs in this appeal.
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.
I would allow the appeal but I would award damages in the nominal sum of Kshs 100 in place of the Kshs 280,000 awarded by the trial learned judge.
I too would allow this appeal to the extent of the damages awarded. I would set aside the judgment for Shs 280,000 and substitute thereof the sum of Shs 100/- nominal damages.
I would allow the appeal to the extent that I would substitute nominal damages of shs 100 for the sum of shs 280,000 awarded by the learned judge.
it is obvious that the amount of sales tax payable on taxable goods as defined in section 2 (d) of the Act is not a matter for negotiation between parties.
The defendant ought to have served notice on the plaintiff of his intention to resell. The resale contravened section 48(3) of the SGA.
Nominal damages may also be awarded where the fact of a loss is shown, but the necessary evidence as to its amount is not given.
Issues in the judgment
#The three judgments issue conflicting costs orders: Nyarangi JA would set aside the High Court costs order while Platt JA says it should stand.
Nyarangi JA's judgment refers to the plaintiff tendering the balance on April 12, 1983 when the amended defence was filed, which appears to be a date error.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Brollo Kenya Ltd v Ali", Case Analysis (1987). Civil Appeal 161 of 1986. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1987/91/eng@1987-08-13
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.