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Enzyene Creations Limited v China Qingjian International Group (K) Limited; Kenya Urban Roads Authority & another (Interested Parties) (Miscellaneous Application E008 of 2022) [2023] KEHC 25414 (KLR) (Commercial and Tax) (20 November 2023) (Ruling)

Enzyene Creations Limited v China Qingjian International Group (K) Limited; Kenya Urban Roads Authority & another (Interested Parties) (Miscellaneous Application E008 of 2022) [2023] KEHC 25414 (KLR) (Commercial and Tax) (20 November 2023) (Ruling)
Citation
Enzyene Creations Limited v China Qingjian International Group (K) Limited; Kenya Urban Roads Authority & another (Interested Parties) [2023] KEHC 25414 (KLR)
Media Neutral Citation
[2023] KEHC 25414 (KLR)
Court
High Court
Court station
High Court at Nairobi (Milimani Commercial Courts)
Outcome
Allowed
Case number
Miscellaneous Application E008 of 2022
Judges
A Mabeya
Judgment date
20 November 2023
Language
English
Type
Judgment
Original source file
Download DOCX (26.3 KB)
Collections
Date published
21 November 2023
Case action
Ruling
Court division
Commercial and Tax
Filing county
Nairobi
Order
Accordingly, both applications dated 27/2/2023 and 7/3/2023 are hereby allowed on the terms that the ruling of this Court made on 27/1/2023 is hereby reviewed by setting aside the order granting prayer 3 thereof and substituting the same with prayer no.2 of the Originating Summons dated 22/1/2022. There will be no order as to costs.
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1.This ruling determines two applications. The application dated 27/2/2023 by the 1st interested party (1st application) and the application dated 7/3/2023 By Enzyene Creations Limited (2nd application).
Application dated 27/2/2023
2.The application was brought under section 1A and 3A of the Civil Procedure Act, section 80 of the Civil Procedure Act, Order 45 rules 1&2 and Order 51 Rule 1 of the Civil Procedure Rules 2010. The application sought to set aside or vary the orders of this Court made on 27/1/2023 directing the 1st Interested Party to detain any payments due to the respondent to the tune of Kshs.173,801,105/69 in respect of the contract for the construction of Ngong road and consider the ruling delivered in MCCOMMSU/E133/2021 on 1/11/2022.
3.The application was based on the grounds set out on the face of it and the supporting affidavit sworn by Peter Ogamba Bosire dated 27/2/2023. It was contended that vide a ruling made on 27/1/2023, the Court directed the interested party not to make any payments to the respondent to preserve the subject matter of the arbitration.
4.That there were other parties who had lodged claims against the respondent and in MCCOMMSU/E133/2021 the 2nd interested party had obtained a decree in its favour. According to the 1st interested party, the 2nd interested party being a sub-contractor in the contract subject to arbitration, they both retain equal status in the project. That a garnishee absolute had been issued directing it to pay Kshs 6,782,579.84 to the 2nd interested party but it was not in a position to comply because of the blanket order of this Court. That there was need to vary the subject orders in order to shield the it from contempt proceedings.
5.The 2nd interested party filed a replying affidavit dated 10/3/2023 sworn by Vincent Sosi. He deponed that the 2nd interested party obtained a judgment against the respondent and the amount owing stood at Kshs 6,782,579.84. That the Court issued a garnishee absolute over the decretal amount but the 1st interested party has been unable to settle the same as a result of the orders of 27/1/2023. He urged the court to review the said orders to allow the interested party enjoy the fruits of its judgment.
6.The respondent filed a replying affidavit dated 9/3/2023 sworn by Qui Gaolei. He stated that he was contracted to construct Ngong road Dagoretti Corner by the 1st interested party and the whole project was carried out by over 50 sub-contractors, suppliers and service providers. That the orders of the court in question affect not only the interested party but a group of sub-contractors, suppliers and service providers who worked on the project. That the orders have had the effect of crippling the respondents company operation and he urged the court to vary or set aside the said orders.
7.The applicant in opposition to the application filed a replying affidavit sworn by Evans Omari on 9/3/2023. He stated that the order granted by the court did not direct the 1st interested party to detain any payments due to the respondents. That the 2nd interested party was not a party to the suit as no leave was obtained to enjoin it. That the 2nd interested party could still be paid from any other sums apart from the ones the applicant had sought to be retained.
Application dated 7th March 2023
8.The application was brought under sections 1A, 1B, 3A and 80 of the Civil Procedure Act, Cap 21 Laws of Kenya, Order 45 rule 1 and Order 50 rule 1 of the Civil Procedure rules 2010. The application sought to review the order of the Court made on 27/1/2023 to give orders in terms of prayer no. 2 of the Originating Summons dated 11/1/2023. That in the alternative, an order be made directing the Director General of the 1st interested party to deposit Kshs. 173,801,105.69 due to the respondent a joint interest earning account.
9.The application was supported by the grounds on the face of it and the supporting affidavit dated 7/3/2023 sworn by Evans Omari. It was contended that the orders of 27/1/2023 had an error since no substantive directions and orders were granted to protect the applicant’s interests. The applicant was apprehensive that the 1st interested party would release the funds to the respondent.
10.On 23/3/2023, the respondent raised a preliminary objection to the application dated 27/2/2023. The objection was based on the grounds that the court had already pronounced itself on the matter by granting orders to preserve the subject matter of arbitration. That no new evidence had been adduced to necessitate granting the orders for review and that the interested party had no locus standi since it was not a primary party to the proceedings.
11.The applications were canvassed by way of written submissions which I have considered.
12.I have considered the record and the submissions. The issues for determination are whether there is merit on the objection dated 23/3/2023 and whether the order of 27/1/2023 should be reviewed.
13.With respect to the preliminary objection, the respondent argued that no new evidence had been produced to warrant review orders and that the interested party had no locus to be part of these proceedings.
14.In Mukisa Biscuits Manufacturing Ltd –v- West End Distributors (1969) EA 696, it was held that: -“A preliminary objection consists of a point of law which has been pleaded, or which arises by clear implication out of pleadings, and which if argued as a preliminary point may dispose of the suit.…It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion”.
15.In the case of Oraro v Mbaja [2005] eKLR, it was held: -“I think the principle is abundantly clear. A preliminary objection as correctly understood is now well settled. It is identified as, and declared to be the point of law which must not be blurred with factual details liable to be contested and in any event, to be proved through the processes of evidence. Any assertion which claims to be a preliminary objection, and yet it bears factual aspects calling for proof, or seeks to adduce evidence for its authentication, is not, as a matter of legal principle, a true preliminary objection which the court should allow to proceed. I am in agreement that where a court needs to investigate facts, a matter cannot be raised as a preliminary point.”
16.A preliminary objection should be raised on a point of law on the assumption that all the facts raised are true. On the issue of new evidence, the Court is of the view that the same does not amount to a point of law as the same is the subject of the review applications. The objection is without merit and is dismissed.
17.The applicant challenged the 2nd Interested Party’s locus in the suit stating that no leave had been obtained for it to be part of the proceedings.
18.In the case of Law Society of Kenya v Commissioner of Lands & Others, Nakuru High Court Civil Case No.464 of 2000, the Court held that: -“Locus Standi signifies a right to be heard. A person must have sufficiency of interest to sustain his standing to sue in Court of Law”.
19.In Francis Karioki Muruatetu & Another v Republic & 5 others Petition 15 as consolidated with 16 of 2013 [2016] eKLR the Supreme Court stated as follows with respect to applicable conditions for joinder: -“One must move the Court by way of a formal application. Enjoinment is not as of right, but is at the discretion of the Court; hence, sufficient grounds must be laid before the Court, on the basis of the following elements:i.The personal interest or stake that the party has in the matter must be set out in the application. The interest must be clearly identifiable and must be proximate enough, to stand apart from anything that is merely peripheral.ii.The prejudice to be suffered by the intended interested party in case of non-joinder, must also be demonstrated to the satisfaction of the Court. It must also be clearly outlined and not something remote.iii.Lastly, a party must, in its application, set out the case and/or submissions it intends to make before the Court, and demonstrate the relevance of those submissions. It should also demonstrate that these submissions are not merely a replication of what the other parties will be making before the Court.”
20.In view of the foregoing, it is evident that any stage the court can order the joinder of any party to the proceedings but the same should be done in a formal application. The 2nd interested party did not file any application for joinder and therefore is a stranger to these proceedings. There had been enough time before the delivery of this ruling whereby the 2nd interested party would have moved the court for joinder but it failed to do so.
21.The next issue is whether there has been established a proper case for review. The 1st application the 1st interested party has moved the court seeking the review of the ruling dated 27/1/2023 to allow it to make payments to the subcontractors and in this case the 2nd interested party. On the 2nd application, the applicant moved the court seeking review orders to allow prayer 2 in the application dated 11/1/2022 or in the alternative have the sum of Kshs 173,801,105.69 be deposited in a joint interest earning account.
22.The court’s jurisdiction for review of the ruling stems from section 80 of the Civil Procedure Act and Order 45 Rule 1 of the Civil Procedure Rules. An applicant must show an error on the face of the record or discovery of new evidence that was not available at the time the order was made or decree passed or for any sufficient reason.
23.The ruling that is subject to these applications was made pursuant to an Originating motion dated 11/1/2022 where the court found it meritorious and allowed it in terms of prayer 3. That prayer was in the following terms: -“The court do give such directions and orders as may be necessary to preserve any award that may arise from the dispute Enzyne Creations Ltd and China Qingjian International Group K Ltd in respect to the contract for provision of various services and construction materials with regard to the construction of Ngong road whose employer is the Kenyan Urban Roads Authority. The said dispute is already pending before an arbitrator.”
24.The interpretation of the said ruling is to the effect that the monies held by the 1st interested party with respect to the said contract be preserved pending the arbitration proceedings. The court further held that the amount that was sought to be determined would be established at the arbitral tribunal. In this regard, an Interim preservation order was granted pending the arbitration.
25.The Court appreciates that the blanket order had far reaching consequences. Since the applicant was only claiming a known sum, ie Kshs.173,801,105/69, it will be unreasonable to restrain the interested party from paying over the sums due to the respondent in respect of the whole contract. The proper order should have been to detain the amount in dispute between the applicant and the respondent and not more.
26.In view of the foregoing, I find that the order made on 27/1/2023 was too wide and there is reasonable ground to review the same. I decline to grant the prayer for payment over by the interested party as sought by the applicant. The monies shall continue to be in the possession of the 1st interested party until the conclusion of the proceedings. It is only then that the interests of all parties can be preserved and assured.
27.Accordingly, both applications dated 27/2/2023 and 7/3/2023 are hereby allowed on the terms that the ruling of this Court made on 27/1/2023 is hereby reviewed by setting aside the order granting prayer 3 thereof and substituting the same with prayer no.2 of the Originating Summons dated 22/1/2022. There will be no order as to costs.It is so ordered.
DATED AND DELIVERED AT NAIROBI THIS 20TH DAY OF NOVEMBER, 2023.A. MABEYA, FCI ArbJUDGE
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