[2009] KECA 390 (KLR)

REPUBLIC OF KENYA

IN THE COURT OF APPEAL OF KENYA

AT NAIROBI

Civil Appli 307 of 2008 (UR 203/2008)

SONY GULF FZE-DUBAI..................................................1ST APPLICANT

SONY GULF FZE-NAIROBI.............................................2ND APPLICANT

AND

PARKER RADIO HOUSE LIMITED.....................................RESPONDENT

(Application for stay under Rule 5 (2) (b) of the Court of Appeal Rules pending the filing

herein and determination of an intended appeal from the Ruling and Order of the

High Court of Kenya at Nairobi (Osiemo, J) dated 17th October, 2008

In

H.C.C.C. No. 1053 of 2005)

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RULING OF THE COURT

By its chamber summons dated 25th August 2005 and professing to have been brought under Order 39 Rules 1, 2, 3 and 9of the Civil Procedure Rules, section 3A of the Civil Procedure Act, and “All the Enabling Provisions of the Law,” Parker Radio House Ltd, the respondent herein asked the High Court basically for two orders, at least as concerns the motion now before us, and those orders were:-

“2 THAT pending the hearing and determination of this Application inter-partes, this Honourable Court be pleased to issue an order of temporary Injunction restraining the Defendants jointly and severally, either through themselves, servants or agents from dealing with any other entity or person in any manner howsoever for the purposes of offering for sale, selling by any way whatsoever, marketing or distributing any of the Defendants sony products in the Republic of Kenya.

THAT pending the hearing and determination of this suit, the Honourable Court be pleased to issue an Order of Injunction restraining the Defendants jointly and severally, either through themselves, servants, or agents from dealing with any other entity or person for the purposes of offering for sale, selling by any way whatsoever, marketing or distributing any of the Defendants sony products in the Republic of Kenya.”

The “Defendants” against whom those orders were sought were Sony Corporation Japan, Sony Gulf Fze – Dubai and Sony Gulf Fze – Nairobi. They are now the applicants before us, as per the notice of motion brought under Rule 5 (2) (b) of the Court of Appeal Rules and filed in the Court on 28th November, 2008. The basis of the claims made in the superior court was the plaint filed in that court by the respondent on 25th August, 2005 and wherein it was claimed, inter alia, that

“5. At all material times and specifically since 1987 the Plaintiff [i.e. Parker Radio House Ltd.] was and has been ‘the sole authorized local agent’of the Defendants and has in that respect been responsible for the introduction of the Defendants’ products locally, marketing, sale and distribution of the said products.

6. The aforesaid agency relationship is implicit and/or evincible from the relationship between the parties hereto and the correspondence exchanged. The plaintiff shall rely on the same correspondence to their full meaning, tenor and effect.

12. On or about 15th August 2005 the Plaintiff was surprised to learn that the Defendant (sic) jointly and severally have engaged a local company for the purposes of establishing a parallel distributorship in the Republic of Kenya and the said company, is in the process of opening a show room a few metres from the Plaintiff’s main show-room in Nairobi Kimathi Street at any time in any event on/or before 27th August, 2005.

13. The Plaintiff contends that the said intention and/or conduct of the Defendants is unlawful, illegal, fraudulent, oppressive, malicious and amounts to gross breach of contract.”

The particulars of malice were then set out as were the particulars of the apprehended damage and the prayers sought in the plaint were for

“(a) A permanent injunction to restrain the Defendants from engaging in any other business relationship with any third parties, participating in any activity for sale, distribution and/or marketing of the Defendants products locally.

(b) General damages for breach of contract.

(c) An order for the payment of the Plaintiff’s outstanding commissions to be particularized at hearing hereof.

(d) Costs of the suit plus interest.”

So the prayers made in the chamber summons which we have already set out were to secure interim orders pending those asked for in the plaint. The chamber summons was heard by Osiemo, J and by his ruling dated and delivered on 17th October, 2008 the learned Judge concluded as follows:-

“All in all I am satisfied that the Plaintiff has met the conditions of granting an injunction and I therefore allow the application in terms of prayers 3 and 4 of the chamber summons dated 25th August, 2005. Costs will be costs in the suit.”

We have already set out the terms of prayers 2 and 3 in the chamber summons. Prayer 2 had merely asked for an interim order pending the hearing of the chamber summons. Prayer 4 had also merely asked for liberty to apply for any further orders as the circumstances of the case may permit. But by granting prayer No.3, the learned Judge restrained the three applicants jointly and severally either by themselves, their servants and/or agents

“---from dealing with any other entity or person for the purposes of offering for sale, selling by any way whatsoever, marketing or distributing any of the Defendant’s sony products in the Republic of Kenya.”

In other words, if the applicants or any of them should wish to do business in the Republic of Kenya, they must do so only through the respondent. There can be no doubt at all that the scope of that order is extremely wide and its effects drastic. It is understandable that the applicants are unhappy with it and they seek its stay pending the lodging, hearing and determination of the appeal.

But however serious the scope and consequences of the order might be, we can only stay the order if the three applicants satisfy us on two scores, one that they have an arguable appeal , i.e. an appeal which is not frivolous, and two that unless we grant to them an order of stay their proposed appeal, were it to succeed, would have been rendered nugatory. Those are the two principles which this Court applies when considering an application under Rule 5 (2) (b) of the Court’s Rules. The High Court applies totally different principles and those have to be found in the old and well known case of GIELLA VS. CASSMAN BROWN & CO. LTD. [1973] EA 358 which was one of the cases considered by Osiemo, J in his ruling proposed to be challenged before us.

Mr. Harith Sheth, learned counsel for the applicants, contended that they have an arguable appeal, first on the basis that the type of order given to the respondent is against public policy , we suppose on the ground that it is unreasonable restraint of trade, and secondly on the ground that there was no agreement of sole agency between the applicants and the respondent. We think that it is arguable, and we put it no higher than that , that under the provisions of section 10 of the Restrictive Trade Practices, Monopolies and Price Control Act, Chapter 504 Laws of Kenya, the kindb of sole agency relied on by the respondent could constitute a restrictive trade practice. Again we note that the respondent’s claim was that the sole agency agreement was to be found in various documents and conduct of the parties. To quote from the plaint,

“--- the agency relationship was implicit and/or evincible from the relationship between the parties hereto and the correspondence exchanged.”

The applicants say there was no such agreement. We think this is another arguable point.

On the question of whether the appeal would be rendered nugatory we have already pointed out the drastic nature and consequences of the orders granted. If the applicants want to continue trading in the Republic of Kenya, they can only do so through the respondent. That order was given without the respondent giving any undertaking as to payment of damages in the event of the respondent’s claim failing and that the respondent would be in a position to pay such damages. We think that the very drastic nature of the order given and the total silence of the respondent on the question of an undertaking to pay damages are factors which we must consider could well render the appeal nugatory were it to succeed in the end. The applicants have satisfied us on the two issues required under Rule 5 (2) (b) of the Court’s Rules. Accordingly we allow the motion dated 27th and lodged in Court on 28th November, 2008 and we order a stay of the learned Judge’s order

“--- restraining the Applicants jointly and severally either by themselves, their servants and/or agents from dealing with any other entity or person in any manner howsoever for the purposes of offering for sale, selling by any way whatsoever, marketing or distributing any of the Applicants Sony products in the Republic of Kenya ----”

and the said stay shall be until the hearing and determination of the intended appeal. We see no reason for staying the order granted in prayer No 4 as that order simply gave to the respondent leave to apply to the Judge for any order which might become necessary. If such an application were to be made, the applicants will also be heard. The costs of the motion shall be in the intended appeal. Those shall be the orders of the Court on the motion.

Dated and delivered at Nairobi this 6th day of February, 2009.

R.S.C. OMOLO

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JUDGE OF APPEAL

P.N. WAKI

.................................

JUDGE OF APPEAL

D.K.S. AGANYANYA

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JUDGE OF APPEAL

I certify that this is a true copy of the original.

DEPUTY REGISTRAR.