[2024] KEHC 11176 (KLR)

Patrick Musimba Limited & 2 others v Premier Properties Limited (Miscellaneous Case E453 of 2023) [2024] KEHC 11176 (KLR) (Commercial and Tax) (19 September 2024) (Ruling)

Neutral citation: [2024] KEHC 11176 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Miscellaneous Case E453 of 2023

JWW Mong'are, J

September 19, 2024

Between

Patrick Musimba Limited

1st Plaintiff

Ehm & Ehm Consulting Limited

2nd Plaintiff

Samurai Consultants Limited

3rd Plaintiff

and

Premier Properties Limited

Defendant

Ruling

1. There are two Applications before the Court. The first Application is a Chamber Summons dated 5th June 2023 by the Defendant seeking recognition and enforcement of the Interim Arbitral Award published on 2nd December 2020, Final Arbitral Award published on 14th December 2021 and the Additional Arbitral Award published on 1st November 2022.

2. The Application is brought under Section 36 of the Arbitration Act and Rule 9 of the Arbitration Rules 1997. It is grounded on the supporting affidavit sworn by the Defendant’s Legal Officer, Donald Lewis Orito Onyango and written submissions.

3. The grounds in support of the Application are:-1. The Arbitral Tribunal gave the Interim Arbitral Award on 2nd December 2020, dismissing the Plaintiffs Notice of Motion dated 9th July 2020 and consequently awarded costs to the Defendant.2. A final award on 14th December 2021 to the effect that the Defendant was entitled to terminate the Agreement for Lease in respect to Offices Number 10 and 11 located on the 6th Floor of Western Heights Building and thereafter to negotiate and offer for sale offices Number 10 and 11 on 6th Floor of Western Heights Building and awarded the Defendant damages in the total sum of Kshs. 40,699,797. 83/= as compensatory damages together with simple interest on the said amounts.3. The additional tribunal award published on 1st November 2022 dismissed the Plaintiffs’ claim for specific performance and the completion of transfer of office unit 6 on 4th floor of Western Heights Building and granted the liberty to re-enter and take possession of the same and declared that the Plaintiffs’ prayers for specific damages over office units nos. 10 and 11 and, directed the Plaintiffs to jointly and severally reimburse the Defendant arbitration costs of Kshs. 2,374,750/= and costs of Kshs. 200,000/=, on account of the Application dated 9th July 2020 that was dismissed.4. The Plaintiffs have failed to honour the Arbitral Award, thus prompting this Application seeking to recognize, adopt and enforce the Award as a judgment and decree of this Honourable Court.

4. The Application was opposed through Replying Affidavit sworn by Patrick Mweu Musimba sworn on 2nd October 2023.

Application Dated 2nd October 2023 5. The second Application is a Notice of Motion dated 2nd October 2023 by the Plaintiffs/ Respondents seeking: -1. the striking out and expungement from the record of the Supporting Affidavit sworn by Donald Lewis Orito Onyango on 5th June 2023 for offending the mandatory provisions of Section 4(1) of the Oaths and Statutory Declaration Act.2. An order to the effect that the Supporting Affidavit sworn by Donald Lewis Orito Onyango on 5th June 2023 is incurably and fatally defective as it was not administered in accordance with the provisions of Section 4(1) of the Oaths and Statutory Declaration Act.3. An order that the entire proceedings in relation to this matter are null and void ab initio and they be struck out.4. The Court be pleased to issue summons to Donald Lewis Orito Onyango to be cross-examined on his Supporting Affidavit sworn on 5th June 2023. 5.The Honourable Court be pleased to declare that Donald Lewis Orito Onyango has committed the offence of perjury contrary to Section 108 of the Penal Code and consequently is in contempt of Court.6. The Honourable Court be pleased to declare the Final Award published on 14th December 2021 and the additional Arbitral Award published on 1st November 2022 was internally incoherent, unenforceable and lacked cogency as the same are incapable of enforcement as it goes against the public policy.7. The Honourable Court be pleased to direct the Applicant to pay the 2nd Respondent the undisputed owed amounts to the Respondents amounting to Kshs. 9,482,853. 86/=.

6. The grounds are set out on the face of the Application, the supporting affidavit sworn by the Respondents’ director, Patrick Mweu Musimba and the written submissions dated 27th November 2023.

7. In brief, the grounds are that:-1. The Supporting Affidavit was commissioned by Kevin Kokebe who is a principal associate of the firm of Diro Advocates LLP, which firm has conduct of this matter on behalf of the Defendant.2. The Supporting Affidavit contains blatant material falsehoods in paragraphs 14 to 17 and it will be necessary for the Deponent to be summoned and cross-examined to ascertain the nature of his perjury.3. The Final Award and the Additional Award were internally incoherent, unenforceable and lacked cogency and a logical flow and thus cannot be enforced as it goes against public policy as it fails to strictly apply the provisions of the Agreement between the parties, failed to appreciate the conduct of the parties in performance of the Contract and failed to answer a key question asked by the Respondents effectively amounting to segregation in dispensation of Justice and the legitimate expectation of fairness.

Analysis and Determination 8. I have carefully considered the Applications, the grounds in support and opposition to both applications, the rival affidavits and written submissions and the authorities cited. From my analysis, I note that the issues that arise for determination by the court are:-1. Whether the Respondents have made a case for the striking out of the Supporting Affidavit sworn by Donald Lewis Orito Onyango on 5th June 2023 and for cross-examining the deponent on the affidavit's contents.2. Whether the interim Arbitral Award published on 2nd December 2020, Final Arbitral Award published on 14th December 2021 and the Additional Arbitral Award published on 1st November 2022 should be recognized and adopted as an order of the Court.

9. On the first issue, the Plaintiff argued that the Defendant’s supporting affidavit ought to be expunged as it offends Section 4 (1) of the Oaths and Statutory Declaration Act since the said affidavit was commissioned by Kevin Kokebe Advocate, who it alleged was a principal associate in the firm of Diro Advocates LLP, which firm of Advocates has the conduct of this matter on behalf of the Applicant.

10. Section 4(1) of the Oaths and Statutory Declaration Act provides that:-“4. Powers of commissioner for oaths1. A commissioner for oaths may, by virtue of his commission, in any part of Kenya, administer any oath or take any affidavit for the purpose of any court or matter in Kenya, including matters ecclesiastical and matters relating to the registration of any instrument, whether under an Act or otherwise, and take any bail or recognizance in or for the purpose of any civil proceeding in the High Court or any subordinate court:

Provided that a commissioner for oaths shall not exercise any of the powers given by this section in any proceeding or matter in which he is the advocate for any of the parties to the proceeding or concerned in the matter, or clerk to any such advocate, or in which he is interested.”

11. The import of the above provision is that an advocate in the firm that is acting for a party cannot commission an affidavit drawn by the lawfirm that has conduct on behalf of the deponent. See James Francis Kariuki & Another V United Insurance Co. Ltd Civil Appeal No. 1450 of 2000 and Lee Njiru v J.K. Lokorio & Another (2019) eKLR

12. In this case, the Plaintiffs produced a screenshot of the website of Diro Advocates, LLP showing that Kevin Kokebe, the advocate who commissioned the supporting affidavit sworn by the Defendant’s Legal Officer, Donald Lewis Orito Onyango on 5th June 2023. On the other hand, the Defendant produced a copy of an employment letter showing that Kevin Kokebe was employed by the Nairobi City County as a principal legal associate from 10th November 2022. It also produced a copy of the LSK search engine results showing that Kevin Kokebe is not employed at Diro Advocates, LLP. In view of the evidence above I take cognizance that the Law Society is the proper custodian of the records of practising Advocates and having confirmed that the said Advocate is not listed as practising in the Firm representing the Applicant herein, I am therefore, not persuaded that the supporting affidavit to the Defendant’s Application offends section 4 (1) of the Oaths and Statutory Declarations Act.

13. On the basis for cross-examining the deponent on the affidavit's contents, the Plaintiffs contended that the following depositions made by the deponent of the supporting affidavit to the Defendant’s Application were false:-(1)That in Interim Arbitral Award published on 2nd December 2020, Final Arbitral Award published on 14th December 2021 the Defendant was awarded damages in the total sum of Kshs 40,699,797. 83 as compensatory damages together with simple interest on the said amounts broken down below:-(a)Kshs. 7,052,182. 52/= as compensatory damages together with interest for loss of user in office 6 on 4th floor from 1st April 2016 when the Plaintiff moved into the office to 30th September 2019 when they moved out and arbitration costs borne by the Defendant;(b)Kshs 5,294,860. 84/= being compensation and interests for rescinding of sale for unit 10 on 6th Floor(c)Kshs 25,778,004. 47/= being compensation and interests for rescinding of sale for unit 11 on 6th Floor together with simple interest on the said amounts;(d)Kshs. 7,052,182. 52/= as compensatory damages together with interest for loss of user in office 6 on 4th floor from 1st April 2016 when the Plaintiff moved into the office to 30th September 2019 when they moved out and arbitration costs borne by the Defendant.

14. The issue of whether the Plaintiffs have laid basis for the cross-examining the deponent on the affidavit's contents has been overtaken by events as the Court has already heard the Defendant’s Application.

Whether the Respondents have laid the basis for setting aside the award 15. Section 35(2) of the Arbitration Act sets out the grounds for setting aside an Arbitral Award, as follows:-“35. Application for setting aside Arbitral Award(1)Recourse to the High Court against an Arbitral Award may be made only by an application for setting aside the award under subsections (2) and (3).(2)An Arbitral Award may be set aside by the High Court only if—(a)the party making the application furnishes proof—(i)that a party to the arbitration agreement was under some incapacity; or(ii)the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication of that law, the laws of Kenya; or(iii)the party making the Application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or(iv)the Arbitral Award deals with a dispute not contemplated by or not falling within the terms of the reference to arbitration or contains decisions on matters beyond the scope of the reference to arbitration, provided that if the decisions on matters referred to arbitration can be separated from those not so referred, only that part of the Arbitral Award which contains decisions on matters not referred to arbitration may be set aside; or(v)the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless that agreement was in conflict with a provision of this Act from which the parties cannot derogate; or failing such agreement, was not in accordance with this Act; or(vi)the making of the award was induced or affected by fraud, bribery, undue influence or corruption;(b)the High Court finds that—(i)the subject-matter of the dispute is not capable of settlement by arbitration under the law of Kenya; or(ii)the award is in conflict with the public policy of Kenya.”

16. In this matter, the Plaintiffs’ case is that subject awards contravene the public policy of Kenya in that the Arbitrator failed to appreciate the conduct of the parties in performance of the Contract and failed to answer a key question asked by the Respondents effectively amounting to segregation in dispensation of Justice and the legitimate expectation of fairness.

17. In Christ for All Nations v Apollo insurance Company Limited [2002] EA 366 Ringera J. elaborated on the concept of public policy in arbitration as follows:-“Public policy is a broad concept incapable of precise definition. An award can be set aside under Section 35 (2) (b) (ii) of the Arbitration Act as being inconsistent with the public policy of Kenya if it is shown that it was either (a) inconsistent with the Constitution or any other law of Kenya whether written or unwritten, or (b) inimical to the national interest of Kenya, or (c) contrary to justice and morality.”

18. The position propounded by the Plaintiffs is that the Arbitrator determined, albeit outside the scope of the pleadings, that the Defendant was only entitled to the agreed 10% of the purchase price for units 10 and 11 as damages for failure to complete, as tabulated below:-UNIT STAND PREMIUM AMOUNT PAID VALUE OF AMOUNT PAID VIS A VIS STAND PREMIUM (%)

10 17,782,022. 80. 10,484,868. 50 59%

11 19,746,192. 80 5,325,556. 92 27%

19. The Plaintiff highlighted that the Defendant retained 49% with respect to unit 10, and 17% with respect to unit 11. The Arbitrators thereafter declined to give the Plaintiffs a positive order to this effect and only focused on the issue of his costs that were settled by the Defendant. The consequence of this is that despite rendering a decision that effectively stated that the Applicants owed the Respondents Kshs.12,057,603. 90/=, focused solely on what the Defendant was owed for the costs amounting to Kshs. 2,574,750/=.

20. The Plaintiffs contended that the Defendant is the one who owes the Plaintiffs Kshs. 9,482,853. 86/= and enforcing the award as is would be against public policy of rewarding a party that is not deserving.

21. I have gone through the Supporting Affidavit. I have also read the Interim Arbitral Award published on 2nd December 2020, Final Arbitral Award published on 14th December 2021 and the Additional Arbitral Award published on 1st November 2022. As regards the alleged compensatory damages, I note from the Final Award, the Arbitrator stated as follows:-“282. The Respondent cannot have its cake and eat it. It has sought compensatory damages in the form of the balance of the purchase price on offices 10 and 11. This runs contrary to the Agreement which only provided for forfeiture of the maximum of 10% of the deposit as agreed liquidated damages. By agreement of the parties, therefore, the maximum damages payable by the Claimant in default of meeting its obligations would not exceed the aforesaid forfeiture. The Respondent cannot keep the properties or resell them and still be entitled to the balance of the purchase price. To countenance such a proposition would amount to double benefit on the property, and an unjust enrichment of the Respondent.

283. In similar vein, the Respondent’s prayer for general damages on account of breach of contract cannot be sustained. Ordinarily, general damages in breach of contract can only be allowed if there is an agreement to that effect. In this case, the agreed general damages were 10% of the purchase price as set out in the forfeiture clause of the agreements. An award of further general damages would be unjust, oppressive and uncontractual.

284. The Respondent would, if it had sought in its counterclaim, been entitled to mesne profits, the equivalent of rent, but for unauthorized occupation of land. Unfortunately, this has not been sought. A party is strictly bound by its pleadings. In the absence of a specific claim on mesne profits, I am afraid that the Tribunal cannot award.

285. On account of the foregoing, most of the prayers by the parties relating to the second issue for consideration are moot, save for a declaration in favour of the Respondent to the effect that the Respondent was well within its rights under the Agreements for Lease to terminate the Agreements for Lease in respect to Offices Number 10 and 11 located on the 6th Floor to third parties.”

22. Following the publication of the final award, by way of email, the Respondent applied for an additional award under Section 34 of the Arbitration Act. Through an email dated 23rd September 2022, the Plaintiffs sought for clarification on the balance owed and or overpayment in respect of Offices No. 10 and 11.

23. In the additional award, the Arbitrator found that the Plaintiffs claim for the refund of the 10% deposits and furniture fittings was not captured in its pleadings as they did not seek to amend their statement of claim. The Arbitrator could not depart from its findings in the final award and under Section 34, his jurisdiction was circumscribed to clarifications or matters left out inadvertently. The Plaintiffs did not make their own Application under Section 34 and could therefore not piggy ride on the Defendant’s Application. Parallel distress for rent proceedings involving auctioneers and court proceedings outside the scope of the arbitration were ongoing. In the end, the Arbitrator ordered that:-“…. 3. The Claimants shall pay the Respondents Kshs. 200,000 being the costs of the Application dated 9th July 2020.

4. The Claimants shall reimburse the Respondent, Kshs.2,374,750/-= being costs of the Arbitration borne by the Respondent on their behalf.

5. All the monetary awards herein shall attract simple interest at court rates of 14% per annum from the date of this award until payment in full.

6. Each party shall bear its costs of this Additional award, and equally the Arbitrators fees and charges…”

24. Flowing from the above, I find that there was no award of compensatory damages to the Defendant in the final or additional awards as claimed by the Defendant. I also find that there was also no award of damages to the Plaintiffs.

25. To my mind, the issues raised by the Plaintiffs do not fall under issues to do with the public policy of Kenya. Rather, they are on factual matters which this Court has no jurisdiction to interfere with. In Mahican Investments Limited and 3 others vs Giovanni Gaida & Others NRB HC (Misc. Civil Application No. 792 of 2004) [2005] eKLR held that:-“A court will not interfere with the decision of an Arbitration even if it is apparently a misinterpretation of a contract, as this is the role of the Arbitrator. To interfere would place the court in the position of a Court of Appeal, which the whole intent of the Act is to avoid. The purpose of the Act is to bring finality to the disputes between the parties.”Whether the Interim Arbitral Award published on 2nd December 2020, Final Arbitral Award published on 14th December 2021 and the Additional Arbitral Award published on 1st November 2022 should be recognized and adopted as an order of the Court. Therefore, I find that the Plaintiffs have not established the grounds for setting aside the awards.

26. I now turn to consider whether the awards should be recognized and adopted as an order of the Court. Section 36(1) of the Arbitration Act provides as follows:-“36. (1)A domestic Arbitral Award, shall be recognised as binding and, upon Application in writing to the High Court, shall be enforced subject to this Section and Section 37. (2)…(3)Unless the High Court otherwise orders, the party relying on an Arbitral Award or applying for its enforcement must furnish.(a)the original Arbitral Award or a duly certified copy of it; and(b)the original arbitration agreement or a duly certified copy of it.(4)….(5)….”

27. It is clear from the record that the Defendant has furnished copies of the Interim Arbitral Award published on 2nd December 2020, Final Arbitral Award published on 14th December 2021 and the Additional Arbitral Award published on 1st November 2022.

28. As earlier stated, the Plaintiffs have not established the grounds for setting aside of the awards under section 37. As to the alleged computation or clerical errors in the award, the Plaintiffs did not apply for their rectification within 30 days after receipt of the awards. See Lalji Meghji Patel & Co. Limited v Nature Green Holdings Limited (Civil Misc. Application No. 41 of 2016) [2017] Eklr.

Disposition 29. In conclusion, I now make the following orders:1. The Plaintiffs’ Application dated 2nd October 2023 is dismissed.2. The Defendant’s Application dated 5th June 2023 is allowed with the consequent result that the Interim Arbitral Award published on 2nd December 2020, Final Arbitral Award published on 14th December 2021 and the Additional Arbitral Award published on 1st November 2022 of the Arbitrator Wilred A. Mutubwa C. ARB FCIARB be and are hereby recognized and adopted as a decree of the Court and leave is granted to the Defendant to enforce it as such.3. Each party shall bear the costs of this Application. It is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 19TH DAY OF SEPTEMBER, 2024. ………………………………………..J.W.W. MONG’AREJUDGEIn the Presence of:-Mr. Mulaku for the Applicants.Mr. Mabango holding brief for Mr. Manthi for the Respondents.Amos - Court Assistant