The High Court in Nairobi on Friday, September 6, 2019 awarded the Kenya Tea Development Agency Ltd (KTDA), the over 600,000-member association for smallholder tea farmers, over KShs 53 million in delayed payments, costs and accrued interest that the Agency was owed by tea brokerage firm, Victoria Tea Brokers.
KTDA had, in March 2009, filed a suit against Victory Tea Brokers in a bid to recover USD 923,385.69 (KShs. 73,058,275.79/= at the conversation rate of USD 1=Kshs. 79.12 as at February 2009) after the tea broker failed to honour a tea brokerage agreement it had with the Agency.
The amount comprised of net proceeds from the sale of made tea from Litein, Kapset, Kiru, Momul and Kapkoros Tea Factories which were not remitted to KTDA accounts by Victory Tea Brokers as should have been the case.
By so doing, Victory Tea Brokers was in breach of a Tea Brokerage Agreement between itself and KTDA; the Constitution of Kenya; as well as the Rules of East Africa Tea Trade Association (EATTA).
In his ruling, Judge Patrick Otieno found that, at the time of filing the suit, KTDA had proved that Victory Tea Brokers owed the KTDA a sum of USD923,385.69/- to which sum the KTDA admits having received KShs 20 Million from a corporate guarantee thus leaving the sum of Kes. 53,058,275.79/- as due and payable to KTDA.
The judge went further to note that Victory Tea Brokers admitted to owing the debt and that its defence comprised of mere allegations that were not supported by any evidence.
“I consider and deem the statement of defence as mere allegations having not been supported by any evidence. I therefore choose to believe the unrebutted evidence in the document authored by the Defendant itself admitting the sum to be outstanding,” the judge ruled.
He added “When the plaintiff made the demand, the 1st Defendant readily admitted owing the debt. There were also statements of accounts produced to show the value of tea sold and the sums remitted and that outstanding… I do enter judgement for the plaintiff against the 1st Defendant together with costs thereof as well as interest at court rates from the 30th October 2008, being the contractual date, the sum was due for remittance to the plaintiff, till payment in full.”
KTDA-member tea factories have tea brokerage arrangements with firms to sell their tea to the highest bidder, on their behalf, at the Mombasa auction at a fee. In return, the brokerage firms are supposed to remit sale proceeds to KTDA for onward forwarding to the factories.
The ruling is a major win for smallholder tea farmers across the country as it sets clear precedence against such breaches and safeguards the interests of smallholder farmers across the country against rogue firms.