[2022] KEHC 13014 (KLR)

TGI Entertainment N.V v Arudo & 2 others (Civil Suit 763 of 2021) [2022] KEHC 13014 (KLR) (Commercial and Tax) (16 September 2022) (Ruling)

Neutral citation: [2022] KEHC 13014 (KLR)

Republic of Kenya

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

Commercial and Tax

Civil Suit 763 of 2021

A Mabeya, J

September 16, 2022

Between

TGI Entertainment N.V

Plaintiff

and

Dick Okinyi Arudo

1st Defendant

Meryline Lila Anyango Abonyo

2nd Defendant

Paygate Gateway Limited

3rd Defendant

Ruling

1. This is a ruling on a motion on notice dated August 17, 2021. The same was brought by the plaintiff pursuant to sections 1A, 1B & 3A of the Civil Procedure Act and order 36, rules 1, 5, 7, order 39 rule 5, order 40 rule 1, 2, 3 and 4 of the Civil Procedure Rules, 2010.

2. The plaintiff prayed that a sum of EUR 176,510/- be deposited in court or an account designated by this court to protect and to prevent wastage/disposal of the suit amount pending the determination of the main suit.

3. The grounds were set out in its body and the supporting affidavit of Gouloud Hammoud. These were that, on January 19, 2021, the plaintiff entered into a payment service agreement with a company known as Alben Limited (Alben) in which Alben agreed to offer Payment Gateway Services to the plaintiff. Subsequently, Alben contracted a third party that runs a system hosted on the domain name paygate.co.ke to offer card transaction processing services to the plaintiff in a separate agreement that the plaintiff was not a party to.

4. The plaintiff averred that upon its investigations, it discovered that the domain page paygate.co.ke was owned and operated by the defendants. That Alben was a fictitious entity with no records in the companies registry. That the settlement of funds due to the plaintiff were to be settled via Bitcoin, however the defendants never got their Bitcoin facility up and running thus they offered to make payments to the plaintiff via society for worldwide interbank financial telecommunication (SWIFT).

5. That the plaintiff processed card transactions through a system hosted on the defendants’ domain from February 17, 2021 up to March 31, 2021. Despite numerous requests to remit the sum owed to the plaintiff, the defendants failed to make payments due to the applicant which amounted to the sum EUR 19,383. That the defendants acknowledged that they did not have a merchant agreement with the plaintiff but were still processing transactions for the plaintiff.

6. It was further contended that the defendants requested it for a verifiable bank account in its name to enable settlement of the transactions. Since the plaintiff did not have an account in which it could receive SWIFT transactions from Kenya, it provided an alternative bank account that could receive international bank transferred via SWIFTbut only on Euro currency.

7. The plaintiff was apprehensive that the defendants would dissipate the funds as Alben is a fictitious company and that it would suffer irreparable loss if the application was not allowed.

8. In opposition, the 1st and 2nd defendant filed a notice of preliminary objection dated September 19, 2021. They sought the dismissal of the suit in limine on the grounds that; the suit is bad in law, inadmissible and incurably defective and incompetent for lack of privity of contract between the parties; that there is no nexus between the plaintiff and the defendants; that the orders sought by the plaintiff are unenforceable as the defendants are not deposit taking entities licensed as such by the Central Bank of Kenya, they are not directors or in any way in control of any deposit taking entity hence are not capable of and cannot thus 'hold' any funds as alleged by the plaintiff in any way whatsoever.

9. Further, that the suit lacks specificity and clarity as to the nature of the plaintiff’s business activities, how the funds claimed were generated or acquired, where the funds are held in terms of which bank account and by which banking institution and the link between the alleged funds and the defendants. That the plaintiff, being a foreign company with no presence in the jurisdiction of Kenya and not licensed to operate in Kenya is engaging in a cross-border suit with no locus standi with the defendants.

10. The plaintiff responded to the objection through a replying affidavit sworn on September 30, 2021. It was averred that the objection was not based on pure points of law but on facts. That although the 1st and 2nd defendants were denying being privy to any information on the dealings between them and Alben, their advocates on record have acknowledged and given very particular details which only a person privy to the transactions could have known. That no business was conducted in Kenya as the transaction was done online as is done with residents of other countries worldwide and therefore there was no need to register a subsidiary company in Kenya. Finally, that the reason the suit was instituted in Kenya was because the defendants reside and carry on their business in Kenya.

11. In further opposition to the application, the 1st and 2nd defendant filed a replying affidavit sworn by the 1st defendant on October 12, 2021.

12. The affidavit reiterated the contents of the objection.

13. Additionally, the defendants denied any association with Alben and averred that the plaintiff’s grievances should be directed towards that entity. That the domain page paygate.co.ke is non-existent. They denied owing the plaintiff any money.

14. The court has considered the pleadings, averments and submissions on record.

15. The plaintiff’s suit and application are based on the allegation that the defendants hold the sum of EUR 176,510 which is owed to it and that the 1st and 2nd defendants admitted to this indebtedness through a letter dated July 5, 2021.

16. On the other hand, the 1st and 2nd defendant objected to the suit on the basis that there was no privity of contract between them and the plaintiff.

17. The objection raised by the defendant contained both matters of law and fact. To the extent that it contained disputed facts, the same is untenable and cannot be considered. In any event, the same grounds were regurgitated in the replying affidavit.

18. The order sought is in the nature of both a mandatory and prohibitory injunction. The principles applicable are those of granting an interim injunction.

19. In Kenya Breweries Ltd & another v Washington O. Okeya [2002] eKLR, the Court of Appeal stated that: -“A mandatory injunction ought not to be granted on an interlocutory application in the absence of special circumstances, and then only in clear cases either where the court thought that the matter ought to be decided at once or where the injunction was directed at a simple and summary act which could be easily remedied or where the defendant had attempted to steal a march on the plaintiff. Moreover, before granting a mandatory interlocutory injunction, the court had to feel a higher degree of assurance that at the trial it would appear that the injunction had rightly been granted, that being a different and higher standard than was required for a prohibitory injunction.”

20. Mandatory injunctions are seldom granted at the interlocutory stage unless special circumstances are shown.

21. The circumstances of this case indicate that a prima facie case exists. This is because the email correspondence between the parties indicated that the 3rd defendant acknowledged that it needed to settle matured transactions with the plaintiff and sought verifiable bank accounts in order to do so. This is borne by the exhibit produced as ‘PM 7’ in the affidavit of Paul Macharia sworn on September 30, 2021.

22. I find that the said acknowledgement and the fact that the alleged Alben may not exist and that the defendants may have been operating under the said entity to be special circumstances as stipulated in the Kenya Breweries Ltd & Another v Washington O. Okeya [2002] eKLR (supra).

23. It was averred that the defendants may waste the funds if the orders are not granted thereby destroying the substratum of the suit. That in my view will lead to irreparable loss that no award of damages can compensate.

24. As regards the balance of convenience, the same tilts in favour of safeguarding the subject matter of the suit, the funds.

25. As such, I find that the application is merited. The application dated August 17, 2021 is allowed in terms of prayer 3 therein. The sum of EUR 176,510 is to be deposited in a joint interest earning account in the names of advocates for the parties within 30 days of this order. The plaintiff will have the costs of the application.It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 16TH DAY OF SEPTEMBER, 2022. A. MABEYA, FCIArbJUDGE