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|Case Number:||Civil Case 421 of 2013|
|Parties:||Hausram Limited v Nairobi City County|
|Date Delivered:||07 Nov 2013|
|Court:||High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)|
|Judge(s):||Jonathan Bowen Havelock|
|Citation:||Hausram Limited v Nairobi City County  eKLR|
|Case Outcome:||Application Partly Allowed|
|Disclaimer:||The information contained in the above segment is not part of the judicial opinion delivered by the Court. The metadata has been prepared by Kenya Law as a guide in understanding the subject of the judicial opinion. Kenya Law makes no warranties as to the comprehensiveness or accuracy of the information|
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
MILIMANI COMMERCIAL & ADMIRALTY DIVISION
CIVIL CASE NO. 421 OF 2013
HAUSRAM LIMITED ………..……………….. PLAINTIFF/APPLICANT
NAIROBI CITY COUNTY ………….…… DEFENDANT/RESPONDENT
R U L I N G
“1. THAT the Application be certified urgent and heard in priority.
2. THAT service on the Defendant/Respondent be dispensed with in the first instance.
3. THAT a mandatory order do issue against the Defendant/Respondent to immediately pay Kenya Shillings Twenty Million Three Hundred and Seventy One Thousand Four Hundred Shillings (KSHS. 20,371,400) being the operational expenses incurred by the Plaintiff/Applicant from September 2012 to July 2013.
4. THAT a mandatory injunction do issue restraining the Defendant/Respondent its servants, agents and or employees from harassing and or interfering with the operations of the Plaintiff/Applicant pending the hearing and determination of this suit.
5. THAT a mandatory injunction do issue to the Defendant/Respondent ordering it to forthwith withdraw the advertisement for Tender to supply implement and maintain an electronic revenue collection and payment solution advertised in the Daily Nation Newspaper on 17th September 2013 pending the hearing and determination of this application.
6. THAT a mandatory injunction do issue against the Defendant/Respondent from engaging with any other consultant or supplier of E-Payment Platform Solutions pending the hearing and final determination of this suit.
7. The Defendant/Respondent do pay the Plaintiff/Applicant a sum of Kenya Shillings One Billion Five Hundred Million in the following manner:
IN THE ALTERNATIVE
8. THAT an order do issue that this matter be referred to a neutral arbitrator as anticipated in the Operationalization Contract dated 23rd July 2012.
9. Costs of this Application be provided for”.
“1. The Defendant/Respondent without any justification whatsoever terminated the contract with the Plaintiff/Applicant in July 2013. This has led to the grounding of the Electronic Bill Presentation and Payment Platform also known as the E-Payment Platform thereby causing the Plaintiff/ Applicant loss of money and time.
2. The Tender advertisement and subsequent operationalization contract executed with the Plaintiff/Applicant was for the fiscal years 2010 to 2015 and the said period has not expired.
3. The Defendant/Respondent has failed, refused and or neglected to give any reasons for the said termination and has systematically and deliberately refused to cooperate with the Plaintiff/Applicant to ensure that the E-Payment Platform is deployed to the market as had been anticipated in the contract.
4. Pursuant to Clause 10 of the Operationalization Contract date 23rd July 2012 each party is bound to terminate the contract after issuing a six (6) months notice. Therefore the purported termination is illegal and intended to undermine the established principles of contract law.
5. Plaintiff/Applicant has entered into binding bi-lateral non-disclosure agreements with several other third parties including Safaricom, Family Bank, YU Company, Equity Bank on behalf of the Defendant/Respondent to entrench them into the E-Payment platform ready for deployment to the market and as such its reputation in the Information Communication Technology Industry has suffered.
6. The E-Payment Platform Project being exceptional, unique, highly innovative involving Intellectual Property and specific to the Kenya Market the Plaintiff/Applicant will suffer a substantial loss towards this investment.
7. The Defendant/Respondent’s actions are unlawful, discriminatory, without any justification, politically motivated and solely aimed at frustrating the Plaintiff/Applicant’s operations.
8. The Defendant/Respondent has since advertised in the Daily Nation Newspaper dated 17th September 2013 for the expression of interest to supply, implement and maintain an electronic revenue collection and payment solution, similarly and exact e-payment services being rendered by the Plaintiff/Applicant with the sole intention of rewarding cronies with the said tender.
9. Further the Defendant/Respondent actions and conduct from January 2013 demonstrate a well co-coordinated effort to unduly frustrate Plaintiff/Applicant.
10. The objects of this Application would be defeated by any further delay and the urgency of this matter is further disclosed in the Affidavit of Gideon Magak Omodho sworn in support hereof”.
“a. Whether there was material breach of the Operationalisation Contract by the Defendant/ Respondent;
b. Whether the Plaintiff/Applicant is entitled to Twenty Million Three Hundred and seventy-one thousand shillings (Kshs 20,371,400) being the Operational Expenses incurred in maintaining the e-payment system.
c. Whether the Plaintiff/Applicant has established a clear case to warrant the granting of the mandatory orders sought.
d. Whether this matter can, in the circumstances of this suit be referred to arbitration as sought in Prayer 8.”
The submissions then went into a synopsis of the detailed background relating to the dispute between the parties which was basically a summary of the Supporting Affidavit to the Plaintiff’s Application. At page 8 of the Submissions, the Plaintiff addressed the issue of the termination by the Defendant of the Contract on the Establishment of an Electronic Bill Presentation and Payment Platform. It set out the provisions of clause 20 of the Operationalization Contract as follows:
As the Court reads this clause, it was almost as if the Plaintiff had anticipated that the Defendant would prematurely terminate the Operationalization Contract. The Defendant commented that such provided for the 6 months’ notice, was not for a fixed term but that the Defendant was at liberty to terminate the Contract due to political expediency but would necessarily have to compensate the Plaintiff for any such premature termination.
“It is plain that in most circumstances a mandatory injunction is likely other things being equal, to be more drastic in its effect than a prohibitory injunction. At the trial of the action, the court will of course grant such injunction as the justice of the case requires; but at the interlocutory stage, when the final result of the case cannot be known and the court has to do the best it can, I think the case has to be unusually strong and clear before a mandatory injunction can be granted even if it is sought to enforce a contractual obligation.”
“The parties can of course expressly agree to ignore or disregard the (Arbitration) clause. They may also do so by conduct. Once the parties have submitted to the jurisdiction of the court, they cannot blow hot and cold and subsequently without consent of each other rely upon the condition precedent of the arbitration clause….”
The Court believes that this authority was cited by the Plaintiff in order to justify its statement:
“Parties have thus by conduct abandoned the arbitral process and chosen this court as the proper forum to hear and determine this dispute.”
As a result, the Plaintiff maintained that it had abandoned prayer 8 of the Application since the Defendant had now fully submitted to the jurisdiction of this Court.
“(a) Whether this Court can rewrite a contract between the Applicant and the Respondent, or read into the Contract an implied term that was not expressed by the parties in the Contract;
(b) Whether there were material breaches of the Contract by the Applicant to warrant issuance of a termination notice to the Applicant by the Respondent;
(c) Whether the Applicant establishes a clear and summary case to warrant granting of mandatory orders as sought in prayers 3-6 of the Application;
(d) Whether a party seeking damages as sought by the Applicant in prayers 3 and 7 of the Application is entitled to an order of injunction and whether the damages sought are capable of granting at this interim stage; and
(e) whether this matter can, in the circumstances of this suit, be referred to arbitration as sought in prayer 8 of the Application”.
So far as this Court is concerned, it does not view issues (a) and (b) above as having anything to do with the Application but would be relevant for consideration at the hearing of this suit in due course. As a result, the Court does not consider that the cases of Githinji T/A Limpopo Snacks v Kenya Commercial Finance Ltd HCCC No. 1209 of 2001, Gimalu Estates Ltd & 4 Ors v International Finance Corporation & Anor. HCCC No. 606 of 2003, and Muchemi v Agricultural Finance Corporation HCCC No. 165 of 2001 to be of any relevance to the Application before it.
“The test whether to grant a mandatory injunction or not is correctly stated in Vol. 24 Halsbury’s Laws of England 4th Edition paragraph 948 which reads:
‘A mandatory injunction can be granted on an interlocutory application as well as at the hearing, but, in the absence of special circumstances, it will not normally be granted. However, if the case is clear and one which the court thinks it ought to be decided at once, or if the act done is a simple and summary one which can be easily remedied, or if the defendant attempted to steal a march on the plaintiff …. a mandatory injunction will be granted on an interlocutory application’.
Also in Locabail International Finance Ltd. V. Agroexport and others  1 All ER 901 at page 901 it was stated:
‘A mandatory injunction ought not to be granted on an interlocutory application in the absence of special circumstances, and then only in a clear case either where the court thought that the matter ought to be decided at once or where the injunction was directed at a simple and summary act which could be easily remedied or where the defendant had attempted to steal a march on the plaintiff. Moreover, before granting a mandatory interlocutory injunction the court had to feel a high degree of assurance that at the trial it would appear that the injunction had rightly been granted, that being a different and higher standard than was required for a prohibitory injunction’.
The principles of law enunciated by these decisions have received full approval by the court within our jurisdiction. See the cases of Belle Maison Limited vs. Yaya Towers Limited H.C.C.C. 2225 of 1992, per Bosire, J. (as he then was) and the Ripples Limited vs. Kamau Mucuha H.C.C.C. No. 4522 1992 per Mwera, J.”
“First the applicant must show a prima facie case with a probability of success at the trial. Secondly an interlocutory injunction will not be granted unless the applicant would suffer an injury which cannot be compensated in damages. Thirdly if the court is in doubt, it should decide the application on a balance of convenience. It must be appreciated that an interlocutory injunction is a discretionary equitable remedy and accordingly, the same will not be granted where it is shown that the applicant’s conduct with respect to matters pertinent to the suit does not meet the approval of a court of equity.”
The Defendant maintained that by the Plaintiff unequivocally seeking damages as prayed in prayers 3 and 7 of the Application, it had removed itself from the realm of consideration for the granting of an interlocutory injunction. Further, the Defendant maintained that the damages sought as against it by the Plaintiff were speculative and incoherent and pleaded in a matter that fell well short of the test as restated by the Court of Appeal in the case of Charles Sande v Kenya Cooperative Creameries Ltd Civil Appeal No. 154 of 1992 to the extent that special damages must be pleaded specifically and strictly proved.
“10.1.2. Either party continuously fails to perform or under-performs any obligation(s) of the Company in terms of or arising from this agreement which non-performance or under-performance shall be consistent with the inference that the Party is unable or unwilling to perform such obligation/s in terms of the provisions of this agreement; or”
Clause 10.2 then reads:
“Upon the occurrence of an event of default by a Party, the other Party shall be entitled, at their sole discretion and without prejudice to any other rights that they may have in terms of this agreement or in law, either to claim specific performance of the terms of this agreement or to terminate this agreement by written notice forthwith, without prejudice to its rights to claim damages.”
As a consequence of the above clause 10 under the heading of Breach, it will be for the arbitrator or trial court in due course to decide whether termination of the contract as between the Plaintiff and the Defendant was proper or otherwise. This Court is only concerned as to whether, as a result of the termination letter as above from the Defendant, the Plaintiff is entitled to an interim measure of relief by way of mandatory injunctive Orders as prayed for. In my view, it is not so entitled for the simple reason, (quite apart from prayers 3 and 7 of the Application), that in accordance with the second principle expounded in Giella v Cassman Brown, the Plaintiff would be entitled to compensation for any breach of contract by the Defendant, in damages.
“Except as provided in this Act, no Court shall intervene in matters governed by this Act.”
“It was held by the Court of Appeal in the case of East African Power Management Ltd v Westmount (K) Ltd [Nairobi Civil Appeal No. 55 of 2006] that the Court under Section 10 of the Arbitration Act had a limited role in intervening in matters where parties have agreed to refer matters to arbitration except where the Act specifically provided for such intervention. The Court consequently held that the said provision was mandatory and that the Court’s role in arbitration matters was merely a facilitative one.”
In my opinion, it is quite clear from the said three Contracts as between the parties above referred to that they had entered into agreements in which their disputes were to be resolved by Arbitration. Once the parties had decided on this alternative mode of dispute resolution, which has been clearly recognised under Article 159 (2) (c) of the Constitution of Kenya, 2010, the Court as reiterated in the case of Kenya Shell Ltd v Kobil Petroleum Ltd (2006) eKLR will let the process take its course. The Court’s intervention, in the process proper or the arbitral award thereafter, is limited and restricted to matters that are provided for under the Arbitration Act. The authorities quoted to this Court from England and Australia are merely persuasive. Further, the Judgement of Pall JA in the Kisumuwalla case (supra) was delivered (as a single Judge of Appeal) on 14th February 1997. This is well before the Court of Appeal decisions that I have referred to above, namely the East African Power Management and Kenya Shell cases. I believe that these authorities have superseded Pall JA’s said Judgement. Further, I am of the belief that Article 159 (2) (c) of the Constitution, 2010 is expressed in mandatory terms and this Court is under a duty to promote alternative forms of dispute resolution. This is all the more so when the parties themselves have chosen the forum as is the case here. This Court, as the Defendant has pointed out in its submissions, cannot rewrite the Contracts already entered into between the parties and, as a result, it has no alternative but to grant the alternative prayer 8 of the Plaintiff’s said Application. To this end, and if not by the Motion of the Plaintiff, the Court takes cognizance of the provisions of Order 46 rule 20 (1) of the Civil Procedure Rules which reads:
“Nothing under this order may be construed as precluding the court from adopting and implementing, of its own motion or at the request of the parties, any other appropriate means of dispute resolution (including mediation) for the attainment of the overriding objective envisaged under sections 1A and 1B of the Act.”
As a result, and bearing in mind that the parties themselves in the dispute resolution clauses in the said contracts have nominated the Chartered Institute of Arbitrators (Kenya Chapter) as the appointing body, I direct that the Chairman of that Institute shall, within 21 days from the date of this Ruling, appoint a suitable arbitrator to consider and determine the disputes between the parties herein.
DATED and delivered at Nairobi this 7th day of November, 2013.
J. B. HAVELOCK