[2017] KEHC 10103 (KLR)
The court found that the Plaintiffs had demonstrated a prima facie case for the grant of a temporary injunction. The dispute between the parties arose from the Completion Accounts under the Share Purchase Agreement, which contained an arbitration clause. The Plaintiffs had taken steps to refer the dispute to...
Source-derived case information.
- Citation
- [2017] KEHC 10103 (KLR)
- Parties
- Plaintiff: Derek James Oatway; Plaintiff: Innovative Support Services Limited; Plaintiff: James Ouya Omwando; Plaintiff: Patrick Gerard Grant; Plaintiff: Derek James Oatway & Erin Verneris (as Trustees of The Parmesan Trust); Defendant: GardaWorld (Kenya) Limited; Defendant: BDO East Africa
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Civil Suit 494 of 2017
- Procedural Posture
- Civil Suit / Ruling on Interim Injunction Application
- Outcome
- temporary injunction granted
- Judges
- OA Sewe
- Legal Topics
- Share Purchase Agreement, Completion Accounts, Arbitration Referral, Temporary Injunction, Expert Determination
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Derek James Oatway
Plaintiff
Innovative Support Services Limited
Plaintiff
James Ouya Omwando
Plaintiff
Patrick Gerard Grant
Plaintiff
Derek James Oatway & Erin Verneris (as Trustees of The Parmesan Trust)
Plaintiff
GardaWorld (Kenya) Limited
Defendant
BDO East Africa
Defendant
Procedural Posture
Civil Suit / Ruling on Interim Injunction Application
Legal Issues
- 1 Whether a temporary injunction should issue to restrain the 2nd Defendant from proceeding with expert determination pending hearing and determination of the application.
- 2 Whether the dispute between the parties ought to be resolved by arbitration as per the Share Purchase Agreement.
Ratio Decidendi
The court found that the Plaintiffs had demonstrated a prima facie case for the grant of a temporary injunction. The dispute between the parties arose from the Completion Accounts under the Share Purchase Agreement, which contained an arbitration clause. The Plaintiffs had taken steps to refer the dispute to arbitration, but the Defendants were proceeding with expert determination, which could render the Plaintiffs' application moot. To preserve the status quo and prevent the application from being overtaken by events, the court granted a temporary injunction restraining the 2nd Defendant from considering or issuing a determination on the dispute pending the inter partes hearing and...
Court Disposition
temporary injunction granted
Orders
- A temporary injunction is issued restraining the 2nd Defendant, in its role under the Share Purchase Agreement dated 1 July 2016 as the Completion Accounts Expert, from considering or otherwise issuing a determination on the purported dispute set out in the 1st Defendant's letter dated 30 November 2017 pending the...
Full Case Text
Judgment text and source record
24 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
MILIMANI LAW COURTS
COMMERCIAL & TAX DIVISION
CIVIL SUIT NO. 494 OF 2017
DEREK JAMES OATWAY............................................1ST PLAINTIFF
INNOVATIVE SUPPORT SERVICES LIMITED......2ND PLAINTIFF
JAMES OUYA OMWANDO..........................................3RD PLAINTIFF
PATRICK GERARD GRANT.......................................4TH PLAINTIFF
DEREK JAMES OATWAY & ERIN VERNERIS (as Trustees of
THE PARMESAN TRUST)............................................5TH PLAINTIFF
VERSUS
GARDAWORLD (KENYA) LMITED........................1ST DEFENDANT
BDO EAST AFRICA...................................................2ND DEFENDANT
RULING
[1]The Plaintiffs moved the Court vide the Chamber Summons application dated 11 December 2017, seeking order, inter alia, that a temporary injunction be issued in terms of Prayer 2 thereof, to restrain the 2nd Defendant, in its role under the Share Purchase Agreement dated 1 July 2016 as the Completion Accounts Expert, from considering or otherwise issuing a determination on the purported dispute set out in the 1st Defendant's letter dated 30 November 2017 pending the inter partes hearing and determination of the application. The application was brought pursuant to Section 7 of the Arbitration Act, 1995, and the Defendants are yet to file their responses. Thus, this Ruling is restricted to the Prayer for interim orders pending the hearing of the application.
[2] The grounds upon which the application is premised are that the Plaintiffs and the 1st Defendant executed a Letter of Intent pursuant to which the 1st Defendant agreed to purchase Kenya Kazi Limited (the Company) a company registered in Kenya, from the Plaintiffs on a "cash free, debt free" basis. Thereafter, on 1 July 2016, the Plaintiffs and the 1st Defendant entered into a Share Purchase Agreement ("the SPA") pursuant to which the 1st Defendant agreed to purchase from the Plaintiffs the entire issued share capital of the Company. In accordance with the terms of the SPA, the 1st Defendant issued Completion Accounts to the Plaintiffs, detailing the Company's indebtedness and net working capital as of 31 December 2016. The Plaintiffs objected to the 1st Defendant's treatment of certain financial items in the Completion Accounts, including failure to account for cash balances and the method of funding certain statutory gratuity obligations.
[3] Thus, it was the contention of the Plaintiffs that a dispute had arisen between the parties, which ought to be resolved by way of arbitration in accordance with the terms of the SPA; and that they have taken steps to have the dispute referred to the London Court of International Arbitration. However, the 1st Defendant had, in the meantime unilaterally appointed the 2nd Defendant as the Completion Accounts Expert to consider and determine the dispute and the Plaintiff contends that in spite of their objection to the process, the Defendants are determined to continue with the dispute determination exercise.
[4] The Letters marked Annexures 7 and 8 to the Supporting Affidavit do confirm that, although the Plaintiffs objected to the expert determination process, the Defendants were resolute in proceeding with the review of the Completion Accounts. Annexure 8 further confirms that the exercise was expected to take no more than 5 days. Thus, in his submissions before me, Counsel for the Plaintiffs intimated that the determination was due by 22ndDecember 2017. Clearly therefore, the application would be rendered moot should the 2nd Defendant proceed to make a determination as is envisaged.
[5] In the premises, I would grant orders in terms of Prayer 2 of the Plaintiffs' Chamber Summons dated 11 December 2017 and direct that a Temporary Injunction do issue restraining the 2nd Defendant, in its role under the Share Purchase Agreement dated 1 July 2016 as the Completion Accounts Expert, from considering or otherwise issuing a determination on the purported dispute set out in the 1st Defendant's letter dated 30 November 2017 pending the inter partes hearing and determination of that application.
It is so ordered.
DATED, SIGNED AND DELIVERED AT NAIROBI THIS 22ND DAY OF DECEMBER 2017
OLGA SEWE
JUDGE