[2022] KEHC 13638 (KLR)

Maya Duty Free Limited v Kenya Airports Authority (Civil Case E182 of 2022) [2022] KEHC 13638 (KLR) (Civ) (7 October 2022) (Ruling)

Neutral citation: [2022] KEHC 13638 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Civil

Civil Case E182 of 2022

EC Mwita, J

October 7, 2022

Between

Maya Duty Free Limited

Plaintiff

and

Kenya Airports Authority

Defendant

Ruling

1. Maya Duty Free Limited (Maya), took out motion on notice dated May 26, 2022, under order 40 rule 2(1) of the Civil Procedure Rules, seeking a temporary injunction restraining Kenya Airports Authority (KAA) from accepting or processing any bids on tender No KAA/RT/MBD/0210/2021-2022 pending the hearing and determination of the suit; a temporary injunction restraining KAA from concluding any contracts or agreement for leasing the spaces demised to Maya at clause 2 and second schedule of the lease agreement dated October 5, 2007 on terminal B and C at Jomo Kenyatta International Airport for duty free business/ shops: as well as spaces within the said aerodrome:

2. The motion is premised on the grounds on its face, supporting and further affidavits sworn by Kuldip Madan Sapra on May 26, 2022 and June 22, 2022 respectively. According to the grounds and affidavits, Maya entered into a lease agreement with KAA on October 5, 2007 for a term of 11 years and 9 months for premises erected on part of LR No 21919, at Jomo Kenyatta International Airport (terminals B and C), with a priority to renew the lease on expiry (clause 6(i) of the lease). KAA would not offer the premises to a third party unless and until negotiations for a new term of lease had broken down.

3. Maya asserts that there is apprehension that KAA may lease the suit premises to third parties. According to Maya, even though it sent a letter dated May 25, 2022 to KAA expressing intention to exercise the option to renew the lease which expired on April 30, 2019, KAA advertised a limited tender process through tender No KAA/RT/MBD/0210/2021-2022, inviting bid for part of the suit premises in violation of the terms of the lease.

Response 4. KAA filed a replying affidavit sworn by Margaret Munene, Ag Corporation Secretary, on June 13, 2022. KAA stated that the suit is barred under sections 12, 33 and 34(a) of the Kenya Airports Authority Act, (the Act) for failure to exhaust alternative remedies.

5. KAA asserted that it exercised powers under section 12, to procure development and management of lot 1-6. In that regard, section 33 provides that no suit can lie where damage is occasioned due to development and management of the premises. An aggrieved party has a right to compensation as may be agreed between the parties and in default of agreement, the matter is to be determined by a single arbitrator appointed by the registrar of the Nairobi Centre for International Arbitration.

6. KAA also contended that Maya had not complied with section 34(a) of the Act which states that no action or other legal proceedings should be commenced until service of one month’s notice to the managing director or its agent with particulars of claim and intention to commence action or legal proceedings.

7. On without prejudice, KAA stated that had parties entered into a lease agreement which expired on April 30, 2019; that it is currently undertaking refurbishment works for terminal 1B and C; that it granted Maya a temporary occupation license from January 15, 2021 to December 31, 2021 to continue with operations in terminal 2 and that the said license was extended for a further term of three months effective April 1, 2022.

8. KAA asserted that following rehabilitation of the terminal building, the suit premises no longer exist and Maya had not demonstrated the nexus between the spaces it seeks injunction on and the lots which are the subject of the tender. KAA further asserted that upon expiry of the lease, Maya’s rights were extinguished and by accepting the allocation of temporary licenses, Maya is estopped from seeking to enforce the option under the lease. Maya was also at liberty to participate in the tender and bid through a competitive process.

Maya’s Submissions 9. Maya submitted through written submissions dated March 21, 2022 and urged the court to uphold the parties’ agreement and intention under clause 6(1) of the lease. Reliance was placed onNational Bank of Kenya v Pipelastic Samkolit (K) Ltd & Another (civil appeal No 95 of 1999).

10. Relying on Giella v Cassman Brown Ltd [1973] EA 358, Maya argued that it had established a prima facie case with a probability of success. Maya also relied on Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] eKLR for the argument that an arguable case is not one which must succeed but one which is not frivolous.

11. Maya argued that damages would not be adequate compensation if the demised premises are let to third parties. Maya relied on Patricia Njeri & 3 others v National Museum of Kenya [2004] eKLR for the argument that damages are not an adequate compensation for matters relating to property. According to Maya, the suit would be rendered nugatory if KAA is not restrained from dealing with and or disposing of the premises as it will face competing interests with third parties.

12. Relying on Nguruman Ltd v Jan Bonde Nielsen [2014] eKLR, Maya asserted that the balance of convenience tilts in favour of preserving the suit premises pending the hearing of the suit.

13. Maya also argued that section 33 of the Act only applies where KAA has in exercise of its powers caused another person damage occasioning loss. In the present case, Maya argued, no damage had been suffered as parties were still engaged in negotiations. Maya maintained that due to the advertisement of the tender, it was forced to file the suit without giving the notice under section 34(a) due to exceptional circumstances. Reliance was placed on Kenya Bus Service Ltd & Another v Minister for Transport & 2 others [2012] eKLR, to argued that failure to issue notice required by section 34(a) is not fatal.

14. Maya maintained that refurbishment and rehabilitation of terminal buildings where the spaces under the lease were, (terminal 1B and C) did not involve demolition of structures hence there is sufficient nexus between the spaces sought to be secured and the space subject to the tender.

15. In Maya’s view, allocation of temporary licenses was a proposal by KAA to accommodate the existing tenants at Terminal 1B and C while works were ongoing as a way of satisfying the obligation under clause 6(c)(iii) of the lease. Under clause 6 (ii), no provisions in the lease could be waived or varied by either party except by agreement in writing duly registered in the land titles registry. Maya argued, therefore, that by merely accepting temporary licenses, it was not estopped from seeking to enforce its rights under the lease.

Submissions by KAA 16. KAA filed written submissions dated June 24, 2022, arguing that Maya had not established a prima facie case. KAA maintained that section 33 of the Act is applicable as it is aimed at expeditious and efficient disposal of disputes and is in line with article 159 (2) (c) of the Constitution. In this respect, KAA relied on the Supreme Court decision in Modern Holdings (EA) Limited v Kenya Ports Authority [2020] eKLR and Paul Mungai Kimani & 2 others v Kenya Airports Authority & 3 others [2021] eKLR.

17. KAA argued that the only remedy available to Maya under section 33(1) is compensation and not an injunction. KAA again relied on Maya Duty Free Limited v Hon Attorney General & others, (petition No 45 of 2017 (unreported), for the proposition that Maya ought to have exhausted the alternative remedy under section 33(1) before approaching the court unless the alternative remedy was not efficacious.

18. KAA submitted that Maya had plenty of time and opportunity to file the notice required under section 34(a) of the Act from the time the lease expired on April 30, 2019 to when it instituted the suit. KAA faulted Maya for failure to disclose that it accepted temporary occupation licenses and ceased to be a lessee when it became a licensee.

19. KAA took the view that since Maya’s interests are commercial in nature, any alleged injury can be compensated by of damages. KAA relied on Maya Duty Free Limited v Attorney General & another [2019) eKLR (supra), to argue that the balance of convenience tilts in its favour, taking into consideration its primary duty to protect and promote the public interest in the airports, which interest overrides Maya’s commercial desire to make profit at those airports.

Determination 20. I have considered the motion, the response, submissions and the decisions relied on. This being an application for interlocutory injunction, the law is settled that Maya must demonstrate aprima facie case with probability of success, irreparable loss that cannot be adequately compensated by damages or that the balance of convenience is in its favour.(Giella v Cassman Brown & Company Limited[1973] EA 358].

21. InMrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] eKLR, the Court of Appeal restated the principles on which an interlocutory injunction is granted and more so what a prima facie is thus:The principles which guide the court in deciding whether or not to grant an interlocutory injunction are well settled…. So what is a prima facie case? I would say that in civil cases it is a case in which on the material presented to the court a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter.

22. In Nguruman Limited v Jan Bonde Nielsen & 2 others [2014] eKLR, the Court of Appeal again stated that the party on whom the burden of proving a prima facie case lies must show a clear and unmistakable right to be protected which is directly threatened by an act sought to be restrained, the invasion of the right has to be material and substantive and there must be an urgent necessity to prevent the irreparable damage that may result from the invasion.

23. In the present application, Maya entered into a lease agreement with KAA on October 5, 2007 for a term of 11 years and 9 months for specified shop premises erected and being on part of LR No 21919, at Jomo Kenyatta International Airport (Terminals B and C). Clause 6(1) of the lease gave Maya an option (on priority) to renew the lease upon expiry. And according to Maya, KAA would not offer the premises to a third party unless and until negotiations for renewal of the lease had broken down.

24. The lease expired on April 30, 2019, while the letter expressing Maya’s desire to renew the lease was dated May 25, 2022, three years after expiration of the lease. Maya brought this motion asserting its apprehension that KAA may lease the premises to third parties. According to Maya,KAA advertised a limited tender process inviting bids for part of the suit premises in violation of the terms of the lease.

25. KAA admitted that parties entered into a lease agreement which however expired on April 30, 2019. it has been undertaking refurbishment works on Terminal 1B and C and had granted Maya a temporary occupation license from January 15, 2021 to December 31, 2021 to continue with operations in Terminal 2 which (license) was extended for a further term of three months effective April 1, 2022.

26. KAA asserted that following rehabilitation of the premises, the space let out to Maya no longer exists and Maya had not demonstrated the nexus between the space it seeks an injunction on and the lots that are the subject of the tender. KAA again asserted that upon expiry of the lease, Maya’s rights were extinguished, and by accepting the allocation of temporary licenses, Maya is estopped from seeking to enforce the option under an expired the lease. KAA points out that Maya was also at liberty to participate in the tender and bid for the new space.

27. In the present application, one of the terms of the lease agreement was that Maya had an option to seek renewal of the lease on expiry of the original lease. There is no dispute that the lease expired on April 30, 2019, while the letter expressing the desire to renew the lease was dated May 25, 2022, three years after expiration of the lease and one day before the filing of this application. Parties did not tell the court when the letter intention to renew the lease was to made but without expressing a final opinion in the matter, three years was certainly a long period of time.

28. KAA asserts that Maya was allocated temporary occupation license in Terminal 2 from January 15, 2021 to December 31, 2021 to continue with operations. That the license was extended for a further term of three months effective April 1, 2022 which means the temporary occupation license was to expire at the end of July 2022. KAA also argues that Maya has not shown the nexus between the space for which tender has been advertised and the space for which the lease related. In essence, KAA states that with renovation concluded, the space that was let to Maya ceased to exist and, therefore, injunction is not merited.

29. As already stated, the law is settled that an applicant for interlocutory injunction must demonstrate a prima facie case with a probability of success. This should be through concrete evidence but not apprehension. In Amicabre Travel Services Limited v Alios Kenya Finance Limited[2014] eKLR, the court stated:The court requires tangible evidence when considering an application for interlocutory injunction pending the hearing and determination of the suit. It is therefore incumbent upon an applicant to submit a cogent case during the interlocutory stage to show that it has an arguable case. This is important because at this time, the court would not have had an opportunity to listen to all the evidence in support of each party’s case. This is a burden that lies on the applicant.

30. Maya has not shown that the space it occupies is the one that has been offered for letting out through the floated tender or that its license is being terminated before time. Rather, Maya’s case relates to a lease that expired more three years ago and which Maya did not occupy at the time of filing this application.

31. Maya was required to show that a right was being violated or is likely to be violated by KAA in order to shift the burden ontoKAA to explain or rebut that claim. It is not enough for Maya to merely state that it has a prima facie case with a probability of success. That alone will not bring the matter within the meaning of a prima facie case as required by law.

32. I have considered the material placed before this court, the basis of which Maya seeks an interlocutory injunction. This court is not conducting a mini trial of the case at this stage. Its task is to determine on the material placed before it, whether Maya has established a case requiring intervention and restrain KAA from exercising the righto lease the suit premises; show that It will suffer irreparable injury that cannot otherwise be compensated by way of damages or that the balance of convenience tilts in its favour.

33. Maya has not shown that it occupies the premises being let out. On the other hand, KAA argues that Maya has been given space that it occupies under license and the license had just been extended prior to the filing of this application. It is also clear from the facts of this application that the lease, the subject of the application expired on April 30, 2019. It is also clear that the letter seeking renewal of the lease was written on May 22, 2022, just before the filing of this application.

34. On the above facts, I am not persuaded that Maya has satisfied the test for granting a temporary injunction. That is to say, Maya has not demonstrated a prima facie case with a probability of success.

35. On whether Maya will suffer irreparable injury which cannot be compensated by damages, I am not also persuaded that this will be the case. KAA is a public body that would easily compensate Maya were the suit to eventually succeed. The loss to be suffered if at all would be known or can be quantified and, therefore, Maya can recoup the loss if the suit succeeded.

36. Regarding the balance of convenience, there is no doubt that KAA is the owner of the premises and by calling for tenders, intends to get the best possible price for the space. In any case, Maya could also participate in the tender as it is open to those interested in the space on the offer for letting. This means if an injunction is granted until the suit is determined, it may delay conclusion of the tender and as a result, KAA may not be able to let the premises and it cannot be guaranteed KAA and Maya will agree the terms of the lease. In that regard, I find the balance of convenience to tilts in favour of KAA which can, in any case, compensate Maya if suit succeeded.

37. In the circumstances, having considered the application, the response, submissions and the law, the conclusion I come to, is that Maya has not met the threshold for granting an interlocutory injunction. Consequently, the application is declined and dismissed with costs.

DATED, SIGNED AND DELIVERED AT NAIROBI THIS 7TH DAY OF OCTOBER 2022E C MWITAJUDGE