https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12330

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **COMMERCIAL & TAX DIVISION** **COMMERCIAL CIVIL CASE NO. E387 OF 2025** **WILLOW & WHITE GLOBAL VENTURES LIMITED...........................................................1ST PLAINTIFF** **WILLOW & WHITE EA VENTURES LIMITED...........................................................2ND PLAINTIFF** **OLIVER HEINRICH NEPOMUCENO....................3RD PLAINTIFF** **VERSUS** **PALM EXOTICA LIMITED................................1ST DEFENDANT** **GIUSEPPE MOSCARINO..................................2ND DEFENDANT** **THE REGISTRAR OF COMPANIES...................3RD DEFENDANT** **NEPO HOLDING LIMITED.........................INTERESTED PARTY** **JUDGMENT** 1. The Plaintiffs moved this Court by a plaint dated 12th June 2025 seeking declaratory, injunctive and monetary reliefs against the Defendants jointly and severally arising from an alleged breach of a Credit Facility Agreement dated 26th February 2020. 2. The record shows that despite service and several appearances before court, the Defendants failed to enter appearance or file a defence within the prescribed period. 3. Consequently, on 20th February 2026, the Deputy Registrar (Hon. Noelle Kyanya) entered interlocutory judgment against the Defendants in respect of the liquidated claims contained in prayers (C) and (D) of the plaint. The matter thereafter proceeded to formal proof on the remaining reliefs. 4. During formal proof, the Plaintiffs relied on the affidavit evidence, witness statements and documentary exhibits filed in support of their claim. The Defendants neither participated in the proceedings nor tendered any evidence in rebuttal. 5. Having considered the pleadings, the evidence adduced and the written submissions filed, the issues falling for determination are: 6. *Whether this Court has jurisdiction notwithstanding the arbitration clause contained in the Credit Facility Agreement;* 7. *Whether the 1st and 2nd Defendants breached the Credit Facility Agreement dated 26th February 2020;* 8. *Whether the Plaintiffs have proved the liquidated claims;* 9. *Whether the allotment of shares to the Interested Party was lawful and valid;* 10. *Whether the Plaintiffs are entitled to the declaratory and injunctive reliefs sought; and* 11. *Who should bear the costs of the suit* 12. Before considering the substantive dispute, it is necessary to address the arbitration clause contained in the Credit Facility Agreement. 13. Clause 12 of the Agreement provides that the contract shall be governed by Swiss law, while Clause 13 stipulates that disputes arising therefrom shall be referred to arbitration in Lugano, Switzerland under the Swiss Rules of International Arbitration. 14. It is, however, settled law that an arbitration clause does not, by itself, divest the High Court of jurisdiction. Rather, it confers upon a party the procedural right to seek a stay of proceedings under Section 6(1) of the Arbitration Act. 15. Where a party who is duly served neither enters appearance nor invokes Section 6 of the Arbitration Act by applying for referral of the dispute to arbitration, that party is deemed to have waived the right to insist upon arbitration. Such conduct falls within the ambit of Section 5 of the Arbitration Act, which recognises waiver of procedural rights. 16. In the present case, the Defendants neither filed any application seeking referral of the dispute to arbitration nor raised any objection to the jurisdiction of this Court. The proceedings therefore properly remained before this Court. 17. Equally, although the Agreement identifies Swiss law as the governing law, no party invited this Court to determine the dispute by reference to Swiss substantive law or tendered expert evidence on its content. Throughout these proceedings the parties litigated the matter under Kenyan procedural law and sought remedies recognised under Kenyan law. Accordingly, I am satisfied that this Court is properly seized of the matter. 18. On whether the Defendants breached the Credit Facility Agreement. The parties' relationship is governed by the Credit Facility Agreement dated 26th February 2020. The law is settled that courts do not rewrite contracts for parties. Parties are bound by the terms they freely negotiate and execute. This principle was succinctly stated by the Court of Appeal in **National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another [2001] KLR 112**. 19. The Agreement expressly required that all monies advanced be utilised solely for the development of the Palm Exotica Project. The Auditor's Report produced by the Plaintiffs demonstrates that substantial amounts were withdrawn in cash and that numerous transfers were effected by the 2nd Defendant, who was the sole signatory to the account, to himself and other third parties. The evidence before Court establishes a *prima facie* case that the facility funds were diverted from the agreed purpose. 20. The Agreement further required repayment of the facility together with interest by 31st December 2021. The evidence demonstrates that the Defendants failed to honour that obligation notwithstanding the demand letter dated 17th September 2021. 21. The evidence tendered by the Plaintiffs therefore establishes, on a balance of probabilities, that the Defendants failed both to apply the facility for its intended purpose and to repay the facility as contractually agreed. Those failures constitute material breaches of the Credit Facility Agreement. 22. As to whether the Plaintiffs proved the liquidated claims. Interlocutory judgment having already been entered in respect of the liquidated claims, the Court is nevertheless required during formal proof to satisfy itself that the sums claimed are properly payable. 23. A liquidated demand is one which is either agreed upon by the parties or capable of precise ascertainment by reference to the contract. **Order 10 Rule 4(1)** of the **Civil Procedure Rules** recognises such claims, while **Goldrock Capital Limited v Cabinet Secretary, National Treasury & 5 Others [2017] eKLR** adopted the definition contained in the *Black's Law Dictionary*. 24. The principal sum of EUR 6,070,000 is expressly provided for in the Credit Facility Agreement and is corroborated by the remittance records produced before Court. The claim for EUR 1,200,000 as incidental costs was specifically pleaded and supported by documentary evidence. Since no defence was filed to challenge either claim, both remain uncontroverted. I am therefore satisfied that the Plaintiffs have proved both liquidated claims. 25. On the validity of the Share Allotment. The Plaintiffs seek a declaration validating the Board Resolution passed on 23rd April 2025 allotting 4,990,000 previously unallotted ordinary shares, valued at Kshs. 249,500,000/=, to the Interested Party in partial capitalization of the outstanding loan. No evidence was placed before Court challenging either the legality of the resolution or the corporate process through which it was passed. In the absence of any contrary evidence, I find no legal basis upon which the allotment may be impeached. Accordingly, I find that the allotment was lawful, valid and effective and that the value of the shares shall be credited against the outstanding indebtedness. 26. On Declaratory and Injunctive Reliefs. Having found that the Defendants materially breached the Credit Facility Agreement, the Plaintiffs are entitled to a declaration to that effect. 27. The Plaintiffs also seek a permanent injunction restraining interference with the shareholding structure of the 1st Defendant. The evidence demonstrates that the Plaintiffs' security under the transaction comprised the shareholding in Palm Exotica Limited. The conduct attributed to the 2nd Defendant establishes a real risk of further interference with that security and with the company's corporate records maintained by the Registrar of Companies. I am satisfied that the circumstances justify the grant of a permanent injunction preserving the existing shareholding pending any lawful variation or further order of this Court. 28. On interest. The Credit Facility Agreement provides for interest at the contractual rate of 3% per annum. Courts ordinarily enforce contractual interest rates freely agreed by commercial parties unless they are shown to be illegal, unconscionable or contrary to public policy. No such evidence was presented in this case. Accordingly, the contractual interest of 3% per annum shall accrue on the principal sum of EUR 6,070,000 from 31st December 2021 until payment in full. The incidental costs of EUR 1,200,000 shall attract interest at court rates from the date of filing suit until payment in full. 29. Costs ordinarily follow the event under Section 27 of the Civil Procedure Act unless the Court, for good reason, orders otherwise. No circumstances have been demonstrated to justify departure from that principle. Given the Defendants' conduct in failing to honour their contractual obligations and in failing to defend these proceedings, the Plaintiffs are entitled to the costs of the suit. 30. Accordingly, judgment is entered for the Plaintiffs against the 1st and 2nd Defendants jointly and severally in the following terms: 31. ***A declaration is hereby issued that the 1st and 2nd Defendants are in material breach of the Credit Facility Agreement dated 26th February 2020 by failing to utilise the advanced funds solely for the Palm Exotica Project and by failing to repay the principal and interest by 31st December 2021.*** 32. ***A permanent injunction is hereby issued restraining the 1st, 2nd and 3rd Defendants, whether by themselves, their servants, agents or otherwise, from transferring, allotting, reallocating, altering or otherwise interfering with the shareholding or directorship of Palm Exotica Limited except pursuant to a further order of this Court or with the written consent of the Plaintiffs.*** 33. ***Judgment is entered for the Plaintiffs against the 1st and 2nd Defendants jointly and severally in the sum of EUR 6,070,000, together with contractual interest at 3% per annum from 31st December 2021 until payment in full.*** 34. ***Judgment is entered for the Plaintiffs against the 1st and 2nd Defendants jointly and severally in the further sum of EUR 1,200,000, together with interest at court rates from the date of filing suit until payment in full.*** 35. ***A declaration is hereby issued that the allotment and transfer of 4,990,000 previously unallotted ordinary shares in the 1st Defendant to the Interested Party pursuant to the resolution dated 23rd April 2025, valued at Kshs. 249,500,000/=, was lawful, valid and effectual, and that the said amount shall be credited towards the outstanding indebtedness.*** 36. ***The 1st and 2nd Defendants shall jointly and severally bear the costs of the suit.*** **JUDGMENT** delivered virtually, dated and signed at **NAIROBI** This **31st** day of **July** 2026. **PETER M. MULWA** **JUDGE** **In the presence of:** *Ms. Somba h/b for Dr. Okubasu* for Plaintiff Court Assistant*: Lispa*