Pride Inn Limited v Thatchmaanz Limited (Civil Appeal 167 of 2019) [2026] KECA 135 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that oral business deals are enforceable, and a missing licence is the licence-holder's problem, not an escape route.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether a valid and enforceable contract existed between the appellant and the respondent
- 2.If the contract existed, whether it runs afoul of the principle of 'ex turpi non ortur actio'
- 3.Whether the respondent proved that the appellant is indebted to it
- 4.Whether PW1 is liable to indemnify the appellant
Key legal issues
#Existence of a valid oral contract
A valid and enforceable oral contract existed, proved by consistent unrebutted testimony of PW1 and PW2, the participation of the appellant's Managing Director, and part-performance including construction of a bar and a part-payment of Kshs. 322,000.
The court examined the essential elements of a contract and found them satisfied. The appellant did not call its Managing Director, a critical participant, to controvert the evidence of PW1 and PW2, whose accounts were consistent. Evidence of performance - stocking, staffing, the Lantana Road bar - and a part-payment by cheque corroborated the agreement. Under Section 119 of the Evidence Act, the court presumed the existence of the fact from the common course of human conduct. The agreement was a hybrid service and supply arrangement, not a sale of goods, so the Sale of Goods Act did not apply.
Applicability of the Sale of Goods Act
The Sale of Goods Act was inapplicable because the arrangement was deliberately structured so that no property in the alcohol would pass to the appellant, given its religious no-alcohol-ownership policy; it was a service and supply contract.
The court adopted the trial judge's reasoning that the appellant never wished to own or handle alcohol; the respondent supplied, managed and collected proceeds directly. Since section 3 of the Sale of Goods Act contemplates transfer or agreed transfer of property in goods for a price, and ownership of alcohol was abhorred by the appellant, the transaction could not be viewed through the prism of that Act.
Illegality and ex turpi causa non oritur actio
The doctrine did not apply: the duty to obtain the liquor licence lay with the appellant since the sale occurred on its premises for the benefit of its clientele; the absence of a licence was a regulatory lapse, not a vitiating illegality, particularly given the nine-month transitional period under section 56(b) of the County Act.
PW3 testified that efforts were made to obtain the licence, including payment of inspection fees, and that they were given go-ahead to trade pending formation of the Licensing Board. The appellant did not controvert that the County Government allowed sales to proceed. The court quoted the maxim's classic formulation but held that a party implicated in the illegality by its own default cannot rely on it, and the transitional provision reinforced that conclusion.
Proof of debt and special damages
The respondent pleaded and strictly proved special damages of Kshs. 2,104,770 through unpaid invoices produced to the court, plus acknowledged part-payment.
Applying the rule that special damages must be specifically pleaded and strictly proved, the court found the respondent had fulfilled its supply obligations while the appellant failed to pay. Copies of unpaid invoices totalling Kshs. 2,104,770 were on the record of appeal, and the appellant had acknowledged the debt by a partial payment via cheque. The debt was thus established.
Third-party indemnity by PW1
The third-party notice ground failed; the appellant never effected or even applied for substituted service on PW1 and never prosecuted the third-party proceedings.
Although leave was sought to serve the third-party notice by substituted service, no application was made and no service was effected. The proceedings were not prosecuted in the trial court, and PW1 was not a party to the appeal, so no orders could issue against him. The ground therefore failed.
Legal principles established
#- On a first appeal, the Court of Appeal must re-evaluate the evidence and reach its own conclusions while bearing in mind that it did not hear or observe the witnesses, and may interfere with the trial judge's findings only if he failed to take particular circumstances into account, relied on impressions of demeanour inconsistent with the evidence, or plainly went wrong.
- An oral contract is enforceable if it contains the essential elements of a valid contract - offer, acceptance, consideration, capacity and legality - and its existence and terms may be proved through receipts, emails or witness testimony, including by inference from the parties' conduct.
- A party cannot invoke the doctrine of ex turpi causa non oritur actio where the statutory duty to obtain the relevant licence lay with that party; a failure to obtain a licence which is the defendant's own regulatory lapse does not render the contract void for illegality.
- Special damages must be specifically pleaded and strictly proved.
Court orders
#- 1.Upheld the trial court's judgment
- 2.Dismissed the appeal with costs to the respondent
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya, Milimani High Court & Tax Division
- Case No. 329 of 2015
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (no specific provision quoted in the judgment)
Relief refused
#Indemnity by third party PW1 (Anthony Ngunga)
Third-party proceedings were never prosecuted; no evidence of substituted service or of any application for it
Appellant's plea of illegality under ex turpi causa non oritur actio
The duty to obtain the liquor licence lay with the appellant; the absence of a licence was a regulatory lapse for which the appellant bore responsibility and did not render the contract void
Costs
The appeal was dismissed with costs to the respondent.
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.
Consequently, upon re-evaluating the evidence afresh we find no merit in this appeal. We uphold the trial court's judgment and dismiss the appeal with costs to the respondent. It is so ordered.
Going by the conduct of the parties herein, and having regard to the common course of natural events and human conduct in relation to the prevailing facts of this particular case, we are convinced that there was an orally binding contract between the appellant and the respondent and we so find.
the appellant cannot rely on the doctrine of 'ex turpi causa non oritur actio' where it has been proved that the duty was upon it to ensure that it had obtained the licence before it allowed the sale of alcoholic beverages in its premises.
in the case of special damages it is the law that they must be specifically pleaded and strictly proved, (see HAHN V SINGH [1985] KLR, 716) as this implicates the integrity of the judicial process and avoids ambush and surprise.
Being a first appeal we must re-evaluate the evidence and come to our own conclusions, but always bearing in mind that we did not hear the witnesses nor observe their demeanour.
Issues in the judgment
#Internal inconsistency in the hearing timeline: PW1 is first described as CEO 'for the period between 10th February 2014, and 2nd December 2014', later as CEO 'from 10th March 2014 to 2nd December 2014', and the part-payment is variously described as Kshs. 322,200, Kshs. 322,000 and as a cheque 'dated 16th December 2015' while PW4 says it was 'On 15th December 2014'.
The passage describing the HAHN V SINGH principle is quoted from Telkom Kenya v John Ochanda but the quotation is not enclosed in opening/closing quotation marks in the judgment, making the boundary between the quoted authority and the court's own text ambiguous.
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Kimani & another v Mohammed alias Jaro Mohammed Abdi & 2 others (Enviromental and Land Originating Summons E022 of 2022) [2026] KEELC 5192 (KLR)[2026] KEELC 5192 (KLR)29 Jul 2026applied
Cite this brief
#Cite this brief
Caselaw, "Pride Inn Limited v Thatchmaanz Limited (Civil Appeal 167 of 2019) [2026] KECA 135 (KLR)", Case Analysis (2026). Court of Appeal at Nairobi (first appeal from Milimani High Court & Tax Division Case No. 329 of 2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2026/135/eng@2026-01-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.