Nile Hauliers Ltd v Busia Outgrowers Company Limited & another (Civil Appeal 91 of 2019) [2025] KECA 483 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that a company that walked away from a lease without following the contract's three-month notice clause had to pay over Kshs. 25 million in hire charges.
What this practically means
#Executive summary
#Key legal issues
#Whether the lease agreement was renegotiated or varied
The Court found that the lease agreement was not renegotiated; the alleged variation correspondence was between Nile Hauliers and the Sugar Board, who was not party to the lease, and there was no evidence that Busia Outgrowers agreed to any new arrangement.
Most of the letters relied on were signed by the Chief Executive Officer of the Kenya Sugar Board and were addressed to Nile Hauliers or Mumias Sugar Company, with copies to Busia Outgrowers. Although some letters referenced renegotiation of revenue sharing, there was no firm conclusion in any letter and no evidence that Busia Outgrowers was involved or agreed. The single letter from Busia Outgrowers' Acting General Manager did not refer to a renegotiated agreement. The trial Judge's finding could not be faulted.
Whether Nile Hauliers was in breach of the lease agreement
Nile Hauliers was in breach because it terminated the lease without invoking clause 16(a), which required three months' written notice; it was therefore liable for the outstanding hire charges.
Clause 16(a) of the lease provided that a party wishing to terminate other than for fundamental breach had to give three months' written notice, effective only upon reconciliation of accounts and settlement of outstanding liabilities. Nile Hauliers adduced no evidence that it invoked the clause or served a notice of termination. Its defence was that the agreement had been renegotiated, which the Court rejected. Having failed to invoke the termination clause, Nile Hauliers was liable to pay the hire charges of Kshs.25,070,169/-, less the Kshs.2,250,000/- used for repairs.
Whether the claim for arrears of hire charges was proved
The claim for Kshs.25,070,169/- in hire charge arrears was proved; the amount was reduced from the pleaded Kshs.25,805,452.32 by the claimant's own witness accounting for insurance payments.
The financial statement showed hire charge arrears of Kshs.23,566,308.98 which, with insurance for 2012 to 2013, totalled Kshs.25,805,452.33 as claimed. However, Fredrick Marthia Wandera, who prepared the statements of accounts, reduced the claim to Kshs.25,070,169/- explaining some insurance payments. The Court held this amount was due as arrears of hire charges and the trial Judge could not be faulted for awarding it.
Whether the monopoly-of-transport defence could excuse non-payment
The lease agreement did not provide for any monopoly of transport in the BOCO zone, so Nile Hauliers could not rely on the absence of a promised monopoly to avoid paying hire charges.
Nile Hauliers blamed Busia Outgrowers and the Sugar Board for failing to protect its claimed monopoly over cane transport. The Court held that clause 12.1 of the lease, the only clause touching on the outgrowers zone, concerned the area of operation only and did not state that Nile Hauliers would be the sole transporter. As the agreement contained no monopoly provision, Nile Hauliers could not avoid its responsibility to pay hire charges notwithstanding its financial difficulties.
Treatment of the counter claims (repairs and the Kshs.5million deposit)
The Court declined to interfere with the trial court's findings on the Kshs.2,250,000/- repairs counter claim and the Kshs.5million deposit, as there was no cross appeal by Busia Outgrowers.
The trial Judge had allowed the counter claim for repairs on the basis that the lease did not address initial repairs, common sense dictated the lessor would meet them, and Busia Outgrowers did not respond to that claim. The Kshs.5million was held to be a deposit refundable at expiry of the lease absent outstanding liabilities, not a proper subject of counter claim. Absent any cross appeal, the Court found it unnecessary to interrogate or interfere with those findings.
Legal principles established
#- A first appellate court must re-evaluate, reassess and re-analyze the evidence on the record and determine for itself whether the trial court's conclusions should stand.
- A party to a contract who wishes to terminate it must follow the contractual termination clause; termination without the stipulated notice is a breach of the contract.
- A party to a contract cannot rely on negotiations to which a non-party to the contract was involved, absent evidence that the contracting party agreed to the variation.
Court orders
#- 1.The judgment of the trial court is upheld
- 2.The appeal is dismissed with costs
- On appeal from
- High Court of Kenya
- Not stated in the judgment
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (no specific constitutional or statutory provision cited in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nile Hauliers Ltd v Busia Outgrowers Company Limited & another (Civil Appeal 91 of 2019) [2025] KECA 483 (KLR)", Case Analysis (2025). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/483/eng@2025-03-07
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.