[2005] KEHC 582 (KLR)
The court found that the dispute resolution process under Clause 4 of the parties' contract required an agreed statement of difference before the appointment of a conciliator. In this case, the statement of difference was not agreed upon by both parties, which was a prerequisite for the proper initiation of...
Source-derived case information.
- Citation
- [2005] KEHC 582 (KLR)
- Parties
- Plaintiff: Karirana Estates Limited; Defendant: Queconsult Limited; Defendant: Engineer Austin S. Kitololo
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Civil Case 524 of 2005
- Procedural Posture
- Civil Case / Ruling on Interlocutory Injunction Application
- Outcome
- Application for injunctive relief partially granted; dispute proceedings stayed pending compliance with contractual requirements.
- Judges
- PJ Ransley
- Legal Topics
- Contractual Dispute Resolution, Arbitration Clauses, Appointment of Conciliator, Injunctive Relief
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Karirana Estates Limited
Plaintiff
Queconsult Limited
Defendant
Engineer Austin S. Kitololo
Defendant
Procedural Posture
Civil Case / Ruling on Interlocutory Injunction Application
Legal Issues
- 1 Whether the appointment of the conciliator by the Engineers Registration Board is binding on both parties under the contract.
- 2 Whether the dispute resolution process under Clause 4 was properly initiated, including the requirement for an agreed statement of difference.
- 3 Whether the court should grant an injunction restraining the 2nd Defendant from acting as conciliator or arbitrator.
Ratio Decidendi
The court found that the dispute resolution process under Clause 4 of the parties' contract required an agreed statement of difference before the appointment of a conciliator. In this case, the statement of difference was not agreed upon by both parties, which was a prerequisite for the proper initiation of conciliation proceedings. Furthermore, the applicant's reservations about the appointed conciliator (the 2nd Defendant) were not addressed by the contract, which did not provide for objections to the conciliator's appointment. Given these circumstances, the court determined that it was appropriate to stay the dispute proceedings until the parties agreed upon a statement of differences...
Court Disposition
Application for injunctive relief partially granted; dispute proceedings stayed pending compliance with contractual requirements.
Orders
- Dispute proceedings are stayed pending the parties agreeing upon an agreed statement of differences.
- Dispute proceedings are further stayed pending the Engineers Registration Board electing another person to act as conciliator in place of Mr. Kitololo pursuant to Clause 4(b) of the Conditions of Engagement.
Full Case Text
Judgment text and source record
39 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
MILIMANI COMMERCIAL COURTS
Civil Case 524 of 2005
KARIRANA ESTATES LIMITED ……………….…..……………….PLAINTIFF
VERSUS
QUECONSULT LIMITED …………………………..…………1ST DEFENDANT
ENGINEER AUSTIN S. KITOLOLO ………………….……..2ND DEFENDANT
RULING
By its Chamber Summons of the 22. 9.2005 the Applicant seeks the following injunctive relief:-
“1. The application be certified as urgent and be heard exparte in the first instance.
2. Pending the hearing and determination of this suit or until further orders of this Honourable Court, an injunction do issue to restrain the 2nd Defendant from acting as a Conciliator or Arbitrator or in any other capacity howsoever in the dispute between the Plaintiff and the 1st Defendant herein.
3. All proceedings before the 2nd Defendant in connection with the dispute between the Plaintiff and the 1st Defendant be stayed pending the hearing and determination of the suit or until further orders of this Honourable Court.
4. The Defendants do pay costs of this Application.”
The application was opposed by the 1st Respondent but the second Respondent did not appear although served.
The Applicant and 1st Respondent entered into an agreement annexed to the Applicant’s supporting affidavit called “Conditions of Engagement”.
Clause 4 thereof dealt with settlement of disputes and provided initially for differences to be submitted to a conciliator appointed by the Engineers Registration Board for conciliation and if not settled by the conciliator by arbitration.
The Applicants complain that firstly, it was not involved in the process of the appointment of conciliator and secondly the conciliator appointed is not acceptable to the Applicant for good reasons.
It is the Respondent’s contention that the Conciliator was properly appointed and should be allowed to conciliate.
The terms of Clause 4 are as follows:_
“The following steps should be taken if any dispute or difference arises:-
(a)Any dispute or difference arising from this Agreement shall first be confirmed by the issuing of a statement of difference detailing out the areas and extent of the differences. This statement shall be accepted by both parties. This stage should be completed within 21 days of notice of difference by either party.
(b)The statement of difference should be submitted to a Consulting Engineer of good standing elected by the Engineers Registration Board as a conciliator for conciliation. The parties will undertake to accept his judgement.
(c) Any dispute or difference not settled by conciliation shall be referred to the Arbitration of a person to be agreed upon between the Client and the Consulting Engineer or, failing agreement within 28 calendar days, or within such extended time as may be agreed between the two parties after either party has given the other a written request to concur in the appointment of an arbitrator, to a person to be appointed by the Chairman for the time being of the Association of Consulting Engineers of Kenya.”
The agreement does not provide for a situation where either or both of the parties object to the conciliator.
The question arises as to whether the parties are bound to accept the appointment of the conciliator as elected by the Engineers Registration Board or can either one or both objects.
The prerequisite to the election of the conciliator is that there is a dispute between the parties and the issuing of a statement of difference.
Annexed to the supporting affidavit of Michael M. Gakungu, the General Manager of the Applicant is a letter marked JN – 3 from the Respondent’s advocates to the Applicant dated 27. 8.2003 giving the Applicant formal notice of a Difference. Enclosed is their Statement of Difference dated the 21. 8.2003 and signed by the Respondent’s advocates.
Thereafter the Applicant’s advocates were appointed to act and wrote three letters to the Respondent’s advocates in connection with the Statement of Difference asking for an extension of time to file their Statement of Difference and enclosing a Statement of Difference which is different in terms to the Statement of Difference prepared by the Respondent’s advocates.
The parties have themselves detailed the manner in which disputes between them should be resolved.
This matter seems to have got off on the wrong foot as the Statement of Difference was not an agreed document.
In this matter I am asked to make restraining orders.
I make the following orders:-
That the Dispute proceedings be stayed pending the parties agreeing upon an agreed Statement of Differences.
Further in view of the Applicant’s reservations about Mr. Kitololo I order that the dispute proceedings be further stayed pending the Engineers Registration Board electing another person to act in place of Mr. Kitololo as a conciliator pursuant to the provisions of Clause 4(b) of the Conditions of Engagement.
Costs will be in the cause and subject to further orders.
Dated and delivered at Nairobi this 27th day of October, 2005.
P. J. RANSLEY
JUDGE