[2009] KEHC 4149 (KLR)
The court found that the defendant operated the plaintiff's CDS account without authority and in breach of statutory regulations and fiduciary duties. The defendant's actions were contrary to the express or implied agreements and detrimental to the plaintiff. Given the clear breach and the need to protect the...
Source-derived case information.
- Citation
- [2009] KEHC 4149 (KLR)
- Parties
- Plaintiff: Juja Road Fancy Store Ltd.; Defendant: CFC Financial Services Ltd.
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Civil Case 331 of 2008
- Procedural Posture
- Civil Case / Interlocutory Application for Mandatory Injunction
- Outcome
- Application allowed. Mandatory injunction granted as prayed under prayer 3 and 4 with costs to the applicant.
- Legal Topics
- Fiduciary Duties of Stockbrokers, Mandatory Injunctions, Capital Markets Regulation, Unauthorized Share Transactions
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Juja Road Fancy Store Ltd.
Plaintiff
CFC Financial Services Ltd.
Defendant
Procedural Posture
Civil Case / Interlocutory Application for Mandatory Injunction
Legal Issues
- 1 Whether the defendant operated the plaintiff's CDS account without mandate and in breach of statutory regulations.
- 2 Whether the plaintiff is entitled to a mandatory injunction compelling the defendant to reverse and cancel the share purchase entry.
- 3 Whether the defendant breached fiduciary duties owed to the plaintiff.
Ratio Decidendi
The court found that the defendant operated the plaintiff's CDS account without authority and in breach of statutory regulations and fiduciary duties. The defendant's actions were contrary to the express or implied agreements and detrimental to the plaintiff. Given the clear breach and the need to protect the plaintiff's interests, the court held that a mandatory injunction was warranted at the interlocutory stage to compel the defendant to reverse and cancel the unauthorized share purchase. The court relied on established authorities that permit the grant of such relief where justice so demands.
Court Disposition
Application allowed. Mandatory injunction granted as prayed under prayer 3 and 4 with costs to the applicant.
Orders
- A mandatory injunction is issued compelling the defendant to reverse and cancel the entry reflecting the purchase of 10,000 shares of ICDC Investments Co. Ltd. by the defendant over CDS Account No.381543 pending the hearing and determination of the suit.
- Costs of the application awarded to the applicant.
Full Case Text
Judgment text and source record
19 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
AT NAIROBI (MILIMANI COMMERCIAL COURTS)
Civil Case 331 of 2008
JUJA ROAD FANCY STORE LTD. ………………………..PLAINTIFF
VERSUS
CFC FINANCIAL SERVICES LTD. ……………………...DEFENDANT
R U L I N G
Notice of motion dated 10. 7.08 under Order XXXIX, Rules 2, 2A. Orders sought prayer 3 – mandatory injunction do issue compelling the defendant to reverse and cancel the entry reflecting the purchase of 10,000 shares of ICDC Investments Co. Ltd. by the defendant on or about November 2006 over CDS Account No.381543 pending the hearing and determination of this suit.
The application is grounded that the defendants are operating plaintiff’s CDS Account No.381543 without mandate and contrary to Statutory regulations and have in fact purported to purchase shares worth Kshs.4,379,124. 00 in breach of terms of the contract which purchase though disputed, the defendant has refused to cancel.
Also that there is breach of fiduciary duties owed to the plaintiff and that the defendant continues to act uncontractually and illegally contrary to the statutory obligations and terms of professional stockbroker. The supporting affidavit shows that the defendant was not authorized to transact the said transaction. The contractual relationship expressly and/or impliedly required that the defendant would deal with the account professionally and with the authority of the plaintiff. Furthermore, operate the account in a manner beneficial to the plaintiff and adhere to the Capital Markets Authority Licensing and general regulations and to further the plaintiff’s investment.
The defendant has filed grounds of opposition substantially denying the right to obtain mandatory injunction at this stage of interlocutory application.
Counsel for the applicant has relied on two authorities. In the HCC No.2014 of 1987 – Njonjo Itotia vs. Family Finance Building Society which deals with sale of a chattel (motor vehicle) and claim for damages. The other decision is the ruling in the case of HCC No.2225/1992 – Belle Maison Ltd. vs. Yaya Towers Ltd. in which there was an application for mandatory injunction at interlocutory stage. Bosire, J. as he then was relying on the authority of Despine Pontikos and Adonia vs. Mutkance 1970 E.A. 429 and came to a conclusion that where the interest of justice demands the court will invoke its inherent powers to grant the orders.
In this case where the defendants insists on using its fiduciary duty against the applicant’s account contrary to express or implied agreements and all to the detriment of the applicant and contrary to the statutory regulations, it is my view that the applicants are entitled to protection.
I therefore allow application and grant orders as prayed under prayer 3 and 4 of the application with costs to the applicants.
Orders accordingly.
DATED and DELIVERED this 6th day of February 2009.
JOYCE N. KHAMINWA
JUDGE