Eldoret Municipal Council v Rural Housing Estates Ltd

High Court, at Eldoret

July 11, 2002

Tunya J

Civil Suit No 255 of 2001 (OS)

Arbitration – stay of arbitral award – setting aside an arbitral award – arbitral award challenged on the issue of lack of Jurisdiction and limitation – whether arbitral award can be published when fundamental issues of jurisdiction have been raised – whether the court has powers to injunct an arbitral award – validity of an award made without jurisdiction.

The parties to the suit had entered into an agreement which had a provision that in event of a dispute between them, the same would be referred to arbitration. A dispute arose and the same was referred to arbitration. The arbitrator made a preliminary award and the applicant being aggrieved filed a suit seeking to set aside that award.

Held:

1. The applicant’s application is competently before the court under section 17 of Arbitration Act which is the appropriate provision.

2. Jurisdiction cannot be conferred or waived by consent of the parties.

3. The issue of jurisdiction was fundamental. Once a tribunal lacks jurisdiction, any proceedings held before it must be null and void, therefore the issue of jurisdiction must be determined first before the arbitrator may conduct any proceedings

4. The arbitrator’s jurisdiction derives from the reference lodged. In this instance there was no reference lodged for an award of damages and to proceed to give an award in that regard was without jurisdiction.

5. The proceedings before the arbitrator should be stayed, as the suit pending before the court may be rendered nugatory. The twin issues of jurisdiction and limitation had to be determined first. The award was worth a substantial amount of money and if allowed to stand and executed, should it be true that the arbitral tribunal has no jurisdiction, it may result in substantial loss.

6. The court has powers to stay and to set aside arbitral proceedings and awards. Section 17 (8) provides that the arbitration “may proceed”, given its meaning means that he may be injuncted.

7. The validity of the award was in issue, by reason that it was given without jurisdiction. Its publication was in futile exercise and the balance of convenience dictate that no further proceedings be held and by necessary implication that there be no publication of any award pending the hearing and determination of the suit.

Application allowed.

Cases

1. Nyangau v Nyakwara [1986] KLR 712

2. Kenya Commercial Bank Ltd v JJ Matere Civil Appeal No Kisumu 139 of 2002

Texts

White, TAB (1952) Russell on the Law of Arbitration London: Stevens & Sons Ltd 15th Edn p 40

Statutes

1. Arbitration Act (Act No 4 of 1995) sections 17, 17(2), 17(7), 17(8), 35, 36, 37

2. Arbitration Rules 1997 (Act No 4 of 1995 Sub Leg) rules 2, 11

3. Civil Procedure Act (cap 21) section 7

Advocates

Mr Gicheru for the Plaintiff/ Applicant.

Mr Musangi for the Defendant/ Respondent.

Negligence-damages-special and general damages sought-

Joseph Hinga Gati v Barclays Bank (K) Ltd

High Court, at Eldoret September 4, 2001

Nambuye J

Civil Case No 12 of 2001

Civil Practice and Procedure – appearance - entering appearance – when a defendant may enter appearance and file a defence - where the defendant has not been served with summons - defendant not obligated to enter appearance and file defence.

Land – statutory power of sale – chargee’s power of sale over the immovable property of a chargor - notice to exercise statutory power of sale – duration of such notice – requirement that such notice be served.

Injunction - granting of an injunction – where there is no undertaking as to damages – defendant allegedly failing to render accounts – whether an injunction may be granted – whether individual hardships may form a basis for granting an injunction – requirement that injunction only be granted to persons coming to court with clean hands.

Mortgages and Charges - statutory power of sale – notice to exercise statutory power of sale – duration of such notice – requirement that such notice be served.

The plaintiff sought an injunction to restrain the defendant bank from exercising the statutory power of sale under a charge over a parcel of land pending the hearing and disposal of the application and the main suit. The plaintiff alleged, inter alia, that the defendant had not been rendering accounts and no statutory notice was served. The plaintiff averred that he had defaulted in loan repayment due to personal hardships and the defendant had allowed him to subdivide the land and sell it piece-meal to repay the loan.

The defendants, in their replying affidavit, contended that they had always updated the plaintiff on the position of his accounts. Further the plaintiff failed to remit proceeds to them after selling a portion of the land and due to this they advertised the property for sale. They averred that the relevant notice was given and that the application should fail as there was no undertaking as to damages and an injunction was the only relief being sought by the applicant. In reply the applicant alleged that the statutory notice was short of the 3 months period required and that the respondents’ affidavit was not properly on record as they had not entered appearance or filed a defence and thus it should be struck out.

Held:

1. Appearance and defence usually apply where summons to enter appearance have been taken out and served. In the absence of service of the summons the defendants were not obligated to enter appearance and file defence.

2. It is trite law that a statutory notice shall be served before the onset of the realization of the statutory power of sale. The notice has to be served and has to be for 3 months. Any notice which is less than 3 months is invalid.

3. An undertaking as to damages is one of the criteria for granting an injunction and where none has been given an injunction cannot issue. In this case, no undertaking was given as to damages by the applicant.

4. The issue of hardship to an individual and his family is never a consideration for granting of an injunction. Failure to render accounts cannot also form the basis for granting an injunction.

5. An injunction is an equitable remedy and the position in law is that it can only be granted to a person who comes to court with clean hands. The conduct of the applicant showed that he had not come to court with clean hands.

Application dismissed.

Cases

1. Trust Bank Limited v Eros Chemist Limited & White Stone Auctioneers (K) Limited [1999] LLR 1008

2. Magua, Edith Njeri v Johnson Mwaniki Magua & another High Court Civil Case No 1167 of 1996

3. Anyango, Margaret v National Bank of Kenya Limited & 2 others Civil Appeal No 202 of 1994

4. Habib Bank of AG-Zurich v Pop In (K) Limited & 3 others [1990] KLR 609

5. J K Industries Limited v Kenya Commercial Bank Limited & another [1987] KLR 546; [1982- 88] 1 KAR 1088

Texts

Hailsham, Lord et al (Ed) (1980) Halsbury’s Laws of England London:

Butterworth 4th Edition Vol XXXIV para 725

Statutes

1. Civil Procedure Rules (cap 21 Sub Leg) order XXXIX rules 1, 2, 3, 9

2. Civil Procedure Act (cap 21) section 3A

3. Registered Land Act (cap 300) section 77(3)

[RULING] - CIVIL PRACTICE AND PROCEDURE - execution - where it is on record that the plaintiff's counsel was paid money in satisfaction of a decree which he has not passed on to the plaintiff - whether a notice to show cause why execution should not issue against a party can be issued where there is no decree in existence between the plaintiff and that particular party