[2014] KECA 302 (KLR)

IN THE COURT OF APPEAL

AT NAIROBI

(CORAM: WAKI, NAMBUYE & G.B.M. KARIUKI - JJ.A)

MISC. CIVIL APPEAL NO. 18 OF 2014

BETWEEN

CORN PRODUCTS KENYA LIMITED……...….......................APPELLANT

AND

ELDO CITY LIMITED.......................………………………1ST RESPONDENT

EQUIP AGENCIES LIMITED..............................................2ND RESPONDENT

(Appeal from the Ruling and Order of the High Court of Kenya at Milimani Commercial, Nairobi (Mabeya, J) Dated 21stJune, 2013

in

High Court Civil Case No. 37 of 2013)

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JUDGMENT OF THE COURT

In a plaint dated and filed on the 1st day of February, 2013 the first respondent Eldo City Limited moved to the High Court of Kenya Nairobi, Commercial and Admiralty Division Milimani Law Courts, and filed Civil Suit No. 37 of 2013 against the appellant, Corn Products Kenya Limited, seeking various reliefs. The second respondentEquipment Agencies Limitedwas enjoined in the proceedings on the 18th day of February, 2013 following an oral intimation to the Court by the first respondent that it (2nd respondent) was a necessary party to the proceedings.

On the plaint the first respondent successfully anchored a Notice of Motion seeking a temporary order of injunction to issue restraining the appellant whether by itself or its servant or agents or otherwise howsoever from alienating , transferring, selling or disposing the suit assets to any other party other than the first respondent pending the hearing and determination of the application in the first instance; and pending the hearing and the determination of the main suit in the second instance. The application was supported by the grounds in the body of the application and the supporting affidavit of David BettLang’at.

The application was opposed by the appellant’s grounds of opposition dated and filed on the 13th day of February, 2013; and a replying affidavit of one Martin Ndungu Kariuki deposed and filed on the same 13th day of February, 2013.

The merit disposal of the interim application resulted in the ruling dated the 21st day of June, 2013 granting the first respondent the interim injunctive reliefs they had sought.

The appellant was aggrieved by that decision and he appealed to this Court citing ten (10) grounds of appeal. In summary, the appellant alleges that the learned Judge erred in law in holding that: (i) the Memorandum of Understanding signed between the Appellant and the 1st respondent was a Collateral Agreement; (ii) that there was an agreement capable of enforcement; (iii) when he ruled that appellant’s failure to produce the Agreement executed between the appellant and the 2nd respondent, was not demonstration that the suit assets had been sold and were no longer available for sale to the 1st respondent; (iv) by holding that the 1st respondent had disclosed a prima facie case against the appellant when no rights had been created in the absence of a signed contract in the first instance, and in the second instance when there was no threatened breach of contract or other injury likely to be suffered by the 1st respondent in the circumstances; (v) by erroneously ruling that the 1st respondent stood to suffer irreparable loss and harm when the appellant had demonstrated that the 1st respondent had no right or interest in the suit property and assets, all of which are the property of the appellant (vi) when he failed to appreciate that no loss whatsoever had been demonstrated to have been suffered by the 1st respondent as the appellant properly exercised its right as agreed in the Memorandum of Understanding to terminate negotiations and sell the property to the 2nd respondent (vii) by failing to appreciate that the first respondent executed the memorandum of understanding agreeing that it would be responsible for its own expenses, including attorney fees, relating to the negotiation of the proposed transaction; (viii) when he failed to note that the order granted restrains the Appellant from disposing of its own property and assets to any party other than the 1st respondent (ix) when he failed to appreciate that no special circumstances had been demonstrated to exist for the granting of an order for specific performance however couched, especially when the memorandum of understanding itself expressly excluded the applicability of specific performance; (x) in holding that the loss that the 1st respondent stood to suffer was irreparable and could not be compensated by an award of damages.

In consequence thereof, the appellant prayed for the appeal to be allowed; the High Court decision to be set aside and be substituted with an order that the 1st respondent’s chamber application dated 1st February, 2013 be dismissed with the costs to the appellant both on appeal and of the application in the High Court and any other alternative relief this Honourable Court may deem fit to grant.

In his oral submissions before us, Mr. G. Gitonga Murugara leading Miss Kirimi for the appellant has argued that the Memorandum of Understanding (MOU) executed between the appellant and the first respondent, did not in any way result in the creation of a contractual relationship; the appellant as the rightful owner of the suit property was entitled to put the said property up for sale on terms as it deemed fit; the bid for purchase of the suit property was open to other bidders besides the first respondent; and that the appellant cannot therefore be faulted for reserving to itself the right to pick the successful bidder for the purchase of its suit property.

Mr. Murugaraargued further that since the appellant was not bound by the MOU executed between it and the first respondents, the appellant was entitled to enter into a binding sale agreement with the 2nd respondent; the appellant was not obligated to disclose to the first respondent that it was simultaneously engaged in negotiations with other intending bidders for the purchase of its property because first, it was not bound to do so; and second, it was bound by the confidentiality clause in the MOU.

Mr. Murugaracontinued to argue that the injunctive relief should not have been granted as a penalty for the appellant’s failure to disclose the content of the sale Agreement between it and the 2nd respondent; in the absence of a binding contractual relationship between the appellant and the first respondent, the remedy of specific performance would not be available to form a basis for the granting of an interim injunctive relief in favour of the 1st respondent; the first respondents’ remedy lay in damages as pleaded by it in the plaint; the injunctive relief has been very expensive to the appellant who has to meet the cost of protecting property it has already lawfully disposed of.

Lastly, he concluded it was wrong for the learned Judge not to have applied other tests such as issues of irreparable loss, failing to note that all that the first respondent lost was a bargain and not money; failing to note that the balance of convenience titled in favour of the appellant; failing to note that the existence of liability as between the appellant and the first respondent was highly contested on the one hand and on the other hand the party that was bound to suffer as a result of the initiation of the litigation has the appellant.

Mr. Odera Obar,learned counsel for the second respondent supports the appellant’s appeal on the grounds that the 2nd respondent was merely joined into these proceedings following an order of Court; they have a valid contract of sale of the suit property pursuant to which they paid a deposit of the purchase price with the balance being secured by a bank guarantee; the sale agreement between it and the appellant was disclosed but not tendered before Court because it was not necessary. Lastly that the learned trial Judge applied wrong principles to the rival arguments before him and that is why he arrived at an erroneous conclusion that the first respondent was entitled to an injunctive relief in his favour and yet the learned Judge was aware that the suit property had passed on to the 2nd respondent.

Mr. Namachanjalearned counsel for the first respondent has strongly opposed this appeal. he agrees that the appellant as an owner of the suit property sent out invitation for tenders for the purchase of the suit property; the first respondent became interested in the purchase and tendered its bid along side a bank guarantee as requested for by the appellant; an MOU together with a confidentiality agreement was executed between the appellant and the first respondent containing the terms of sale; the appellant declined to alter any of those terms at the request of the 1st respondent; the first respondent complied with other additional terms on the bank guarantee requested for by the appellant to the convenience of the appellant.

According to Mr. Namachanja, the submission of the Draft agreement of sale to the first respondent by the appellant was sufficient proof that, indeed an agreement of sale for the suit property had been concluded and there was thus no turning back by either party as at that point parties had crossed the negotiations line and all that was left was the engrossing and execution of the Draft sale Agreement as an agreement of sale. The learned trial Judge was therefore entitled on the facts before him to rule as he did since Section 38 of the Land Act had been fully complied with.

It was also Mr. Namachanja’s contention that it was the first respondent who stood to suffer prejudice and serious consequences if the learned trial Judge had not intervened. This Court should not upset that intervention as the learned trial judge was entitled to look at the conduct of the parties as well as the totality of the entire transaction and he arrived at the right conclusion that on the basis of the facts before him. The appellant should not be allowed to wriggle out of its binding obligations and this Court is urged to affirm that position in order to give effect to the intention of the parties. Furthermore Mr. Namachanjasubmitted, that the undertaking as to damages given by them in the High Court is sufficient to cushion the appellant against any loss should the 1st respondent loose out in this litigation; that the case is suitable for an order of specific performance and that there was no demonstration that the suit property had been put beyond the reach of the appellant.

In response to the first respondents submissions, Mr. Murugara maintained that the appellant was entitled to back out of the negotiation with the first respondent in accordance with their agreement that either party was free to walk out of the negotiations; no contract had been concluded as between the appellant and the first respondent over the sale of the suit assets; this was a clear case for a claim of damages as pleaded by the first respondent; the learned trial Judge fell into an error when he treated the issues in controversy as arising from a breach of contract curable by an order for specific performance on the basis of which an injunctive relief could flow in favour of the first respondent.

As to the undertaking given by the 1st respondent on damages, he submitted that it was not sufficient to shield the appellant from any anticipated loss should it successfully contest the first respondents’ claim; the authorities relied upon by the first respondent in support of its claim, are distinguishable; the appellant was not obligated to sell the suit property to the first respondent etc as acceptance was not reflected anywhere in the documents relied upon by the first respondent in support of their case; no prejudice was occasioned to either party for the appellant’s failure to tender to Court the sale agreement between it and the 2nd respondent; the trial Judge was not oblivious of the existence of other parties also interested in the purchase of the suit assets.

On case law, the appellant relied on the decision in the case of Smith versus Cooke [1891] AC299for the proposition that the duty of the Court is to give effect to the natural meaning of the language of the deed when determining the intention of the parties; Cheshire and Fifoot law on contract , 9thEdition ButterWorth 1976 at page 108for the proposition that ,there is a rebuttal presumption that even in commercial transactions parties can make non binding contracts; the case of Rose and Frank Company versus J.R. Crompton and Brothers Limited & others [1923] AC455for the proposition that not every agreement is a contract; Chitty on contract Vol.1 28th Edition at page 93 for the proposition that an invitation to make an offer is not an offer capable of inviting an out right enforceable acceptance; the case of Giella versus Cassman Brown andCompany Limited [1973] EA358 for the proposition that the test for granting an interlocutory injunction is well settled, firstly the applicant must show a prima facie case with a probability of success, secondly an injunction will not normally be granted unless the applicant might suffer irreparable injury, and Thirdly, when the Court is in doubt it will decide the case on a balance of probability. The case of Mrao Limited versus American Bank of Kenya Ltd & 2 others Civil Appeal No 39 of 2002 (UR)for the proposition that a prima facie case is one which on the material presented to the Court, a tribunal properly, directing itself will conclude that there exists a right which apparently has been infringed by the opposite party so as to call for an explanation or rebuttal from the latter. The case of Waithaka versusIndustrial and Commercial Development Corporation [2001]KLR 374 for the proposition that, an injunction will issue even in instances where damages may be an appropriate remedy; if the adversary has been shown to be highhanded or oppressive in its dealings with the applicant.

The first respondent placed reliance on various decisions also

Storer versus Manchester City Council [1974] 3ALL ER 824 for the proposition that a binding contract for sell may be contained in correspondence exchanged between the parties; Black Pool and

Fylde Aero Club Ltd versus Black Pool Borough Council [1990]3ALLER 25 for the proposition that in certain circumstances an invitation to tender could give rise to binding contractual obligations;

Kienzeco Limited versus Kenatco Taxis Limited (under receivership) [2005] eKLR for the proposition that where there is a demonstration that if an injunctive relief is not granted, the substratum of the litigation will dissipate making it ultimately impossible for the applicant even to recover damages from his opponent, then a proper remedy in such circumstances in the interests of justice to both parties would be an interim order for a status quo (injunctive relief); Mumias

Sugar Co. Limited versus Freight Forwarders (K) Ltd [2005] 1KLR 403 for the proposition that a contract to enter into a lease or sublease contained in correspondence between the parties consisting of letters signed by authorized employees and companies is capable of forming the basis of a suit as such correspondence is a sufficient memorandum to prove the existence of a binding contract.; and lastly the decision in the case of Kenya Institute of Management versus Re Insurance Corporation [2008] eKLRfor the propositions that (i) a party holding himself out as a vendor will not be allowed to back out of his obligations where he had led another holding himself out as the vendee to go out of his way to obtain facilities to conclude the deal; (ii) the adversary cannot act in a high handed and oppressive manner to his opponent just because he is in a position to pay damages; (iii) though damages may be an adequate compensation, the high handedness and oppressiveness of the defendant may be tamed by an injunctive relief; (iv) where the injustice likely to be caused to the defendant if the plaintiff were granted the injunctive relief and later lost his claim at the trial does not outweigh the injustice that would be caused to the plaintiff if the injunctive relief were to be refused and yet he succeeded at the trial, an injunctive relief should not be withheld; (v) an injunctive relief may also be granted first to preserve a property which is unique and cannot easily be replicated; second where the plaintiff has demonstrated readiness to pay over what had been agreed; and third where the defendant may be compensated by way of appreciation in the value of the property.

The second respondent on the other hand relied on the provisions of Section 38 of the Land Act No.6 of 2012 for the proposition that “no suit can be brought upon a contract for the disposition of an interest in land unless the contract upon which the suit is founded (i) is in writing (ii) is signed by all the parties thereto, and (b) the signature of each party signing has been attested to by a witness who was present when the contract was signed by such parties”. He also cited case ofMbogo and another versus Shah [1968]EA93for the proposition that a Court of Appeal should not interfere with the exercise of the discretion of a judge unless it is satisfied that he misdirected himself in some matter and as a result arrived at a wrong decision, or unless it is manifest from the case as a whole that the Judge was clearly wrong in the exercise of his discretion and that as a result there has been misjustice; Kirkdale Limited versus Mount Agencies Limited and 3 others Nai Civil Appeal No. 42 &45 of 2008(consolidated) (UR) for the propositions that where there is doubt as to the existence of a valid contract of sale on the one hand and where the part purchase price if any, has been refunded to the intended purchaser, the intending purchaser cannot fall back on to the plea for a constructive trust as a basis for a plea for an injunctive relief (ii) in a clear case where any damages suffered by an aggrieved party can be quantified, sought and/or paid for in the form of damages, a plea for an injunctive relief should be withheld.

This being a first appeal, our mandate is as set out in Article 164

(1) of the Kenya Constitution 2010, Section 3 of the Appellate Jurisdiction Act No. 9 Laws of Kenya, Section 78 of the Civil Procedure Act and rule 29(1) of this Court’s Rules namely, to re-appraise the facts before us and draw our own inferences from that reappraisal. In the case of Selle and another versus Associated Botor Boat Company Limited & others [1968]EA123at page 126 paragraphG-I Sir Clement De Lestang V.Phad this to say:-

“An appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled. Briefly put, they are that this Court must reconsider the evidence, evaluate it itself and draw its own conclusion. Though it should always bear in mind that it has neither seen nor heard the witness and should make due allowance in this respect. In particular, this Court is not bound necessarily to follow the trial Judges findings of fact if it appears either that he has clearly failed in some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is in consistent with the evidence on the case generally.”

See also the case of Sumari & 9 others versus Allied Industries Limited [2007] 2KLR1for the proposition inter aliathat:-

“A court of Appeal would not normally interfere with a finding of fact by the trial Court unless;

(a) It was based on no evidence or

(b) It was based on a misapprehension of the evidence or

(c) The Judge was shown demonstrably to have acted on wrong principle in reaching the finding he did.

As regards interference by this Court of the exercise of judicial discretion Mbogo versus Shah The first respondent sought order of Court “restraining the appellant whether by itself or its servants, or agents or otherwise howsoever from alienating , transferring, selling or disposing the suit Assets being the equipments and related assets listed under the second schedule of the Draft Agreement for sale exchanged between the parties and the property known as TitleNumber Eldoret Municipality/Block8/47, to any other party other than the first respondent pending the hearing of the application in the first instance and pending the hearing of the main suit.”

The main issues in controversy in the pleadings filed by either side in the High Court still remain unresolved. Care has to be exercised so as not to prematurely preempt the outcome of those issues. In the circumstances, we have to confine ourselves to the determination as to whether on the facts as they were before the learned Judge he exercised his discretion judiciously in granting the equitable injunctive relief to the first respondent. The guiding principle in the exercise of discretion is that, it should be exercised judicially. That is to say on sound reason, rather than whim, caprice or sympathy; and most importantly that in the exercise of its discretion, the Courts’ primary concern should be to do justice between the parties (see the case ofGithiaka versus Nduriri [2004]2KLR67).

The undisputed factual base for seeking injunctive relief was simply that the appellant owned the suit property together with all the assets incidental thereto; this property was put up for sale by way of advertisement and invitation for bids for purchases was made; the first respondent expressed an interest to purchase the suit property and placed his bid; as a show of commitment, a memorandum of understanding was executed, between the appellant and the 1st respondent; there were certain conditionalities to be met by the intending purchasers. Among these were sourcing and placement of bank guarantees on payment of the purchase price should the first respondent bid be accepted. It is indicated there was a confidentiality clause binding on either side. It is apparent that the invitation to bid for the purchase was open to other intending competitors. Further, engagement between the parties yielded a draft Agreement of Sale portions of which the first respondent attempted to have the appellant modify a move declined by the appellant. The first respondent then accepted the terms of engagement as set by the appellant. When the first respondent requested for the Draft Agreement to be engrossed for execution the appellant backed out of the deal forcing the first respondent to move to Court to successfully seek the interim injunctive relief intending to forestall the sale of the said suit property to any other competitor other than the first respondent.

When the 2nd respondent was brought on board, it transpired that it was the successful bidder, the property had vested in it, part payment has made and the balance of the purchase price has secured by a bank guarantee. The appellant and the second respondent intimated to the Court that a valid agreement of sale of the suit property was in fact in existence though a copy was not tendered before the Court. The first respondent viewed the non tendering of the agreement of sale between the appellant and the 2nd respondent as proof that the suit property had not in fact changed hands but was still within the reach of the appellant who could be specifically compelled to perform its part of the bargain. The learned Judge agreed with them hence their successful plea for an injunctive relief.

According to the appellant and the 2nd respondent, the intimation to the Court that the suit property had changed hands, the fact that the 2nd respondent enjoined as a party. The 2nd respondent’s admission of existence of a binding contract of sale between it and the appellant was sufficient proof that the property sought to be protected in favour of the 1st respondent had in fact changed hands, and was beyond the reach of appellant. Hence the remedy of specific performance was unavailable. To the appellant, failure to tender the agreement between it and the 2nd respondent before Court was inconsequential to the relief the 1st respondent had sought as neither party (appellant) and 2nd respondent) was asked to tender it.

Both the appellant and the 2nd respondent contend that this was a proper case for the Court to rule that an award of damages which had in fact been pleaded for by the first respondent would be adequate compensation for the loss of any of the suit property by the 1st respondent. Injunctive relief should therefore have been withheld.

Upon appraising both facts and the applicable guiding principles of law, the learned Judge made observations that the email and the letters dated 27th and 28th January, 2013 confirm that the first respondent was ready to execute the agreement as had been drawn by the appellant. The 1st respondent moved to Court to seek relief. The view taken by Judge, was that as at the 28th day of January, 2013, the appellants and the 1st respondent were not still negotiating as they had agreed on the terms of the draft Agreement leaving only the engrossment and execution of the sale agreement.

In sum the above state of affairs went to demonstrate that the transactions between the parties herein had gone beyond the negotiation stage; the parties had reached the arena of execution of the formal contract; the parties had sealed their bargain; the appellant could not therefore claim that they were still negotiating and was therefore entitled to wriggle out of the terms of the MOU; it was therefore wrong for the appellant to preoccupy itself with enticing the 1st respondent to the transaction while preserving itself the freedom of opting out of the already negotiated transaction; the appellant was not entitled to back out of the negotiations after all its conditions had been accepted by the 1st respondent; the first respondent had already acted on the representations and the parties had reached consensus; it was not proper for a party to wriggle out of a transaction when parties were already at consensus ad idem; once all the terms had been agreed and settled the appellants freedom to wriggle out should dissipate.

In conclusion, the learned trial Judge had this to say:-

“....There is therefore no evidence that the suit assets are beyond reach of the defendant. In light of the foregoing I hold the view that the justice of the case requires that the suit assets be preserved pending the hearing and determination of this suit.

21. I am satisfied that on the foregoing, the plaintiff has established a prima facie case. I need not consider the other two limbs of the Giellas case. However my view is that, from the nature of the suit assets, if an injunction is not granted , damages will not be enough compensation were the plaintiff to succeed at trial. As regards the balance of convenience, I consider it tilting in favour of maintaining the status quo.

22. For these reason, the Court is satisfied that the plaintiff has laid down sufficient ground for the grant of a temporary injunction. However, in the circumstances of this case, I think a conditional injunction will be appropriate. Prayer 3 of the Notice of motion dated February 2013 is hereby granted on the condition that the plaintiffs do execute under seal and file in Court within seven (7) days an undertaking as to damages”

The principles that guide a Court of law when granting or withholding an injunctive relief are now well settled. First, demonstration of existence of a prima facie case with a probability of success (see Giella Versus Cassman Brown (supra) prima facie case, is not a case which must succeed, but one which a Court of law or a tribunal properly directing its mind to it would state that on the facts before it, there has been demonstration that a right of the complaining party has been breached, on the basis of which the Court of law or tribunal should call upon the infringing party to give an explanation (see the case of Mrao Limited versus Americal Bank of Kenya (Ltd) and 2 others(supra). Second, demonstration that, on the fact, before Court, if an injunctive relief were to be denied, the applicant would suffer irreparable loss, that is, one capable of compensation by way of damages ( See Giella versus Cassmon Brown (supra). By irreparable loss is meant that the injustice that would be caused to the defendant if the applicant were granted the injunction and later failed at the trial does not outweigh the injustice that will be caused to the plaintiff if the injunction were to be refused but he succeeded, at the end of the trial (see FLM RoverInternational Limited and others versus Common Film Sales Limited 3ALLER 772). Third, where none of the above principles are applicable, the Court will nonetheless decide the matter on the basis of the balance of convenience to both parties.

Other considerations are that an injunctive relief should not be withheld (i) solely for the reason that liability is in contest and therefore contigent ( See Aikman versus Michuki [1984] KLR 353)

(ii) Even in instances where damages may be capable of being quantified and paid as compensation, nonetheless, an injunctive relief may be granted where there is demonstration that the opponent has acted in a highhanded and oppressive manner towards the complaining party in relation to the substratum of the litigation; ( SeeWaithaka versus Industrial and Commercial Development Corporation( supra); (iii)where, one the property is unique and may not be easily replicated, and two, where the opponent can be compensated for by the appreciation in value which can be computed and paid for as additional purchase price an injunctive relief, will not be withheld. (See the case of Kenya Institute of Management versusReinsurance Corporation (supra).

The appellants contention is that the 1st respondent’s claim does not fall within the ambit of the principles laid by the decision in Giella versus Cassmon Brown (supra)It is also outside the exceptions in the decision of Waithaka and Kenya Institute of Management decisions. To the appellant, the above two decisions as well as the decision in the case of Mumias Sugar Company Limited versus Freight Forwarden (KS) Limited (supra) heavily relied upon by the 1st respondent are all distinguishable.

On our own revisit and analysis of the entire record, we find that the learned trial Judge heavily relied on the MOU sighed between the appellant and the first respondent as the major negotiation document.

The correspondence exchanged between the parties did not form part of the instrument (documents) demonstrating existence of negotiation. But these simply referred to the already agreed terms of the intended contract as contained in the memorandum of understanding. We say intended contract because, it was clear to the engaging parties that a further document was to follow. That is why the Draft Agreement of Sale was forwarded to the 1st respondent for consideration. In our view, this scenario is distinguishable from the scenario in the Mumias case where the contract was deduced from the correspondence exchanged between the parties which did not make a reference to any other existing document, but only referred to a contract which was to follow for execution. Matters of the appellant behaving in a high handed and oppressive manner towards the first respondent in relation to the substratum of the litigation was not one of the reasons that the learned Judge gave as reason for granting the first respondent the injunctive relief.

As for the decision in the Kenya Institute of Management case, what weighed heavily on the mind of Nambuye, J ( as she then was) when granting injunctive relief to the applicant therein can be found in the following observations:-

“On the balance of convenience, the defendant’s allegation of loosing income from the suit property and their assertion that the property has appreciated and now fetch much more thanwhat the plaintiff was offering, as well as allegation that the contract if upheld would offend the provisions of Section 3(3) of the law of Contract does not weigh heavier than the plaintiff willingness to complete the contract and readiness to pay over what had been agreed upon. In the premises, the Court is of the view that the balance of convenience tilting in favour of the plaintiff /applicant.

Lastly the core of the claim is specific performance. Some of the considerations that a Court seized of such matters has to consider is the conduct of the parties in relation to each other, part performance of the contract, if any sincere and honest demonstration of the aggrieved party to perform his part of the contract or complete the performance should he be given a chance, and evidence of steps taken by the aggrieved party towards the fulfillment of that performance, as well as lack of absence of an impossibility to perform the contract.

In this Court’s view, the plaintiff has demonstrated all these by the following:-

(i) When he saw the advertisement for sale, he expressed interest to purchase.

(ii) The expression of interest was accepted by the defendant and then parties got into serious negotiations.

(iii) When the defendant declined to finance the deal the plaintiff got another financier.

(iv) When he realized that the defendant had developed cold feet, he moved to Court promptly for protection.

(v) He has been ready and willing to prosecute the action and has promised processing the action for speedy disposal ofthe suit so that parties can know their correct position in the matter.

(vi) He had demonstrated that the action taken by them and the principles relied upon by them can be construed to be in built in the principles envisaged by Section 3(3) of the law of contract Act (Cap 23 Laws of Kenya.

(vii)They are ready and willing to deposit the200 million or even pay it over to the defendant if they are willing to accept the same.

(viii) There is no allegation of an impossibility to perform the contract.

The decision in the Kenya Institute of management case (supra) is not binding on us. However, since it is heavily relied upon by the first respondent in their request that we should affirm the learned trial Judges decision on the one hand; and by the appellant on the other hand on account of it being distinguishable from the facts of this case, we have no alternative but to interrogate its applicability or otherwise to the rival arguments herein. But in doing so, we are minded not to lose sight of our earlier self warning that the main issues in controversy as between the parties herein are yet to be resolved. We have taken note of the following key distinguishing features.

(i) In the Kenya Institute of Management case, the core claim centered on specific performance. Herein both the claim of specific performance as well as the claim for damages have been fronted by the first respondent as equal competitors.

Issue of the suit property being unique and incapable of being easily replicated did not feature.

There was no mention of the appellant having acted in a high handed and oppressive manner towards the first respondent in relation to the transaction between them. All that the appellant did was to be obstinate in so far as the terms of sale were concerned and since it had allegedly reserved its right to backout of negotiations with any other intending bidders. It in fact wriggled out of further negotiations with the first respondent.

Issues of the first respondents’ willingness to pay over the contract sum and even the sum equivalent to any appreciation in value of the substratum of the litigation in the intervening period did not feature in the interrogation by the learned Judge.

3rd party intrusion into the dispute was a non issue. At least the aggrieved party therein moved to the Court swiftly before any notable intrusion was made notwithstanding, that the offending party was in fact making moves in that direction. Herein, 3rd party intrusion was complete and in fact this was the cause of the grievance that prompted the first respondent to move to Court for a reprieve.

The Court was categorical that the substratum of the suit was still within reach of the offending party. Herein this point is in contention, first because of the undisputed presence of the intruding 3rd party; two, both the 2nd respondent and appellant have conceded that a binding contractual instrument between them is in existence notwithstanding it not having been tendered to Court.

Matters of hardship likely to be suffered by the offending party such as those mentioned by the appellant that they are incurring heavy financial expenses placing guards at the premises likely to deplete the value of the substratum of the litigation were not raised for consideration by the Judge but have now been raised an appeal and not disputed by the respondent.

The upshot of all the above is that cause has been shown by the appellant to warrant us to interfere with the learned trial Judge’s exercise of judicial discretion in granting injunctive relief to the first respondent. We make no hesitation in stating that on the basis of what we have stated in our above reasoning this was a proper case where the scales of justice should have tilted against the granting of the injunctive relief but in favour of an order to the effect that the first respondent’s loss, should it ultimately succeed in its quest for justice, fell into the realm of an award of damages as adequate compensation.

In the result, we allow the appeal, set aside the orders of A. Mabeya, Jgranted on 21st day of June, 2007 substitute there an order for dismissal of the 1st respondent’s application dated 1st day of February, 2013. The appellant will have costs of this appeal and of the application in the Court below.

Dated and Delivered at Nairobi 24thday of October, 2014

P.N. WAKI

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JUDGE OF APPEAL

R.N. NAMBUYE

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JUDGE OF APPEAL

G.B.M. KARIUKI

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JUDGE OF APPEAL

I certify that this is a true copy of the original.

DEPUTY REGISTRAR

D/O