Port Florence Community Hospital v Crown Health Care Limited (Civil Appeal E053 of 2021) [2024] KEHC 7021 (KLR) (30 April 2024) (Judgment)
Neutral citation:
[2024] KEHC 7021 (KLR)
Republic of Kenya
Civil Appeal E053 of 2021
MS Shariff, J
April 30, 2024
Between
Port Florence Community Hospital
Appellant
and
Crown Health Care Limited
Respondent
(Being an appeal from the Ruling of Hon P. Gesora delivered on 21/4/2021 in KISUMU CMCC NO 108 Of 2020)
Judgment
A. Background and Facts
1.On the 12th of April 2019 the Appellant and the Respondent entered into an agreement for supply of assorted medical equipment and chemicals. According to the agreement, Crown Healthcare (Respondent) was to supply Port Florence Community Hospital (the Appellant) with the said goods at a cost of Kshs.32,648,110/=.
2.As stipulated by the agreement, a sum of Kshs.19,320,021/= was paid at the signing thereof while the balance was to be settled in monthly instalments on or before 31st of March 2020.
3.As per the Appellant it was dutifully servicing the outstanding amount when on the 10th March 2020 Auctioneers on instructions of the Respondent inexplicably descended on their premises and attached property, ostensibly in recovery of amounts due from the agreement.
4.This attachment, the Appellant averred was unwarranted and a breach of the agreement.
5.The cascading effect of this attachment was the filing of a suit in the magistrate’s court by the Appellant on 12th March 2020 alleging breach of contract among other things. Contemporaneously the Appellant filed an application on even date under certificate of urgency seeking injunctive orders restraining the Respondent from attaching or interfering with their property.
B. Appeal
6.In a ruling dated 22nd April 2021 the learned magistrate found the application unmerited and dismissed it. The Appellant was aggrieved by this decision and lodged this appeal via a memorandum of appeal dated 21st May 2021 contending that: -1.The Learned Magistrate erred in law and in fact in failing to appreciate the proper effect and purport of the evidence in arriving at his decision.2.The Learned Magistrate erred in law and in fact in holding that the Appellant did not demonstrate a prima facie case with a probability of success in the circumstances of the case.3.The Learned Magistrate erred in law and in fact in finding that the Appellant would not suffer irreparable harm and in failing to grant an interim temporary injunction in that behalf to the Appellant.
C. Submissions
7.On 19th July 2023 directions on the appeal were taken to the effect that the it be canvassed by way of written submissions.
8.On 30th January 2024 both parties indicated that they had filed written submissions.
C.1. Appellant’s Submissions
9.On the first ground the Appellant submits that the Magistrate was wrong in construing execution to mean attachment and execution without following legal procedure. It states that according to them execution meant taking legal action to recover the outstanding balance.
10.Additionally, the Appellant faults the Magistrate for making conclusive orders at the interlocutory stage. It states that the finding that proclamation had been done despite the obvious reservations amounted to conclusively dealing with matters in issue in the main suit. Equally, the Appellant submits that the finding that it would amount to miscarriage of justice if a permanent injunction is issued at the end of the case, was beyond the scope of an interlocutory application.
11.In support of this the Appellant relies on the Court of Appeal case of Esso Kenya limited vs Mark Makwata Okiya Civil Appeal No. 69 of 1991 as cited in JM vs SMK & 4 others [2022] eKLR where it was stated that: -
12.On the second ground of appeal it is submitted that the Magistrate was wrong in finding that there was no prima facie case established by the Appellant. The Appellant submits that it had met the principles for grant of injunction orders as stipulated in the Giella vs Cassman Brown, Mrao vs First American Bank ltd & 2 others [2003] eKLR and Nguruman Limited vs Jan Bonde Nielsen & 2 Others [2014] eKLR. It avers that the Magistrate disregarded evidence of payment of the outstanding amount and the fact that the proclamation was unlawful.
13.On the third ground the Appellant submits that the Magistrate was wrong in finding that no irreparable damage would be suffered. It avers that it is a hospital and thus the attachment could lead to fatalities, opening it up to lawsuits. It submits that the Magistrate failed to appreciate the extent and the nature of harm likely to be suffered as the equipment such as Ambulances, X-ray machines were vital.
14.Moreover, it contends that the balance of convenience should shift in its favour. The Appellant urges this court to consider the case of Bryan Chebii Kipkoech vs Barnabas Tuitoek Bargoria & another [2019] eKLR to the effect that the Appellant only needs to show that it will suffer more inconvenience than the Respondent if the orders are not granted. It asserts that if this appeal is not allowed the suit will be rendered moot, the subject matter of the suit will be wasted and they would lose vital equipment that may cause fatalities making them susceptible to law suits resulting in unimaginable losses. On the flipside it argues that the Respondent would not suffer any loss incapable of compensation by way of costs. To buttress this position, it relies on the case of Esso Kenya Limited vs Mark Makwata Okiya where it was stated as follows: -
15.On the strength of this the court is urged to allow the appeal.
C.2. Respondent’s Submissions
16.On its part the Respondent outlined the following issues for determination:-1.Whether the suit is an abuse of the court process;2.Whether the Appellant breached the express terms of the contract;3.Whether the Magistrate appreciated the proper effect and purport of the evidence adduced and hence arrived at a just decision;4.Whether any cause of action has accrued to the Appellant.
17.On the first issue the Respondent answers in the affirmative. It submits that the Appellant breached the agreement and is now looking to court to delay the inevitable outcome. It relies on the case of James Mwashori Mwakio vs Kenya Commercial Bank Ltd Civil Appeal No. 147 of 1986 where it was held that:-
18.The Respondent argues that litigation is not a game of chess where parties seek to outsmart each other. It stresses that the magistrate was right in finding that the conditions in Giella vs Cassman Brown had not been met.
19.On the second issue the Respondent asserts that the Appellant was in default from November 2019 to March 2020, despite incessant pleas to pay up. It restates that the Appellant was well aware that the repercussions of non-compliance would be execution.
20.On the third issue the Respondent stresses that the Magistrate’s decision could not be impugned in the absence of evidence that there was coercion, fraud, misrepresentation or illegality in the making of the contract. It contends that the proclamation was proof enough that the attachment was legal.
21.On the fourth issue the Respondent asserts that having breached the contract there was no cause of action accruing to the Appellant. It urges the court not to punish it just because it adhered to the terms of the agreement.
D. Analysis and Determination
22.Being a first appeal it’s important to restate this court’s duty. On this I am guided by the case of Okeno v Republic [1972] EA, 32 where the then East African Court of Appeal stated: -
23.With the foregoing in mind, and after a careful analysis of the record and the rival submissions the issue that arises for determination is whether the magistrate erred in dismissing the application.
Whether the Learned Magistrate Erred in Dismissing the Application Dated 12th March 2020
24.The Appellant contends that the Magistrate was wrong in dismissing its prayer for injunction. It avers that the magistrate was wrong in finding that the prerequisites for grant of injunctive orders had not been met. The Respondent on its part is of the contrary opinion.
25.A temporary/interlocutory injunction is a court order made in the early stages of a lawsuit or petition which prohibits the parties from doing an act in order to preserve the status quo until a pending ruling or outcome. The purpose of a temporary/ interlocutory injunction is to keep the parties, while the suit is pending, as much as possible in the respective positions they occupied when the suit began and to preserve the court’s ability to render a meaningful decision after a trial on the merits.
26.The locus classicus case on granting of interlocutory injunctions, is that of Giella vs Cassman Brown [1973] EA 358, where it was stated as follows;-
27.The question that arises therefore is whether the Appellant has met the threshold for grant of injunctive orders sought.
Prima Facie Case
28.A prima facie case was discussed in the case of Mrao v First American Bank of Kenya Limited & 2 Others [2003] eKLR in the following manner:
29.In support of a prima facie case the Appellant avers that there is a danger they will lose their property to an illegal process. It equally avers that the Magistrate disregarded the cheques showing it had made the payments. Moreover, the Appellant stated that the Magistrate was wrong in delving into issues that should have been canvassed at the main hearing. The Respondent on its part submitted that the Appellant was in persistent default and breached the contract thereby necessitating attachment.
30.In dealing with the issue the Magistrate stated that there was a proclamation form on instruction from the Respondent’s Counsel. Additionally, he stated that the Appellant had acknowledged the debt and knew that the Respondent may want to execute.
31.I have analysed the rival submissions and major point of contention was the propriety of the attachment process, which has a bearing on whether the Appellant has a prima facie case.
32.The agreement entered into stipulates that the Appellant was supposed to pay the outstanding amount in monthly instalments till payment in full on 31st March 2020. It also stipulates that if the Appellant defaults on any instalment the Respondent would be at liberty to execute for the balance.
33.I have taken a look at the bundle of cheques produced by the Appellant. The three cheques provided are as from March 2020, contrary to the agreement that deposits should be made from April 2019. Up to this point the Respondent was well within its right to enforce the agreement.
34.Turning to the issue of propriety of the execution process, Rule 12 of the Auctioneer Rules is instructive. It states as follows: -
35.The above provision shows that execution does not have to be strictly court initiated. It can be commenced by an advocate or even the principal party via an instruction letter. The contention that execution has to go through the court therefore has no basis. Section 12 (1) provides for the whole process of execution. Section 12(1)(b) provides for a proclamation giving an inventory of the specific goods and their condition.
36.In view of the foregoing there is no doubt that the process of execution can not be impugned. In as much as the Appellant talks of the Debt Recovery Act the agreement was specific on the route to be taken in case of default which is execution.
37.The upshot of the foregoing is that the Appellant does not have a prima facie case with a high probability of success. There is no reason to interfere with the Learned Magistrate’s decision.
38.The Appeal is accordingly dismissed with costs to the Respondent. This court is guided by the Court of Appeal case of Nguruman Limited vs Jan Bonde Nielson & 2 Others [2014] eKLR where it was held that if prima facie case is not established, then irreparable injury and balance of convenience need no consideration.
DELIVERED, DATED, SIGNED AT KISUMU THIS 30TH DAY APRIL, OF 2024.M. S. SHARIFFJUDGE