Ahmed v Muthoka & 2 others (As the legal representatives of the Estate of Peter Paul Muthoka) [2025] KEELC 37 (KLR)

Ahmed v Muthoka & 2 others (As the legal representatives of the Estate of Peter Paul Muthoka) (Land Case E479 of 2024) [2025] KEELC 37 (KLR) (16 January 2025) (Ruling)

Neutral citation: [2025] KEELC 37 (KLR)

Republic of Kenya

In the Environment and Land Court at Nairobi

Land Case E479 of 2024

MD Mwangi, J

January 16, 2025

Between

Abdisalam Abdullahi Ahmed

Plaintiff

and

Joseph Musyoka Muthoka

1st Defendant

Regina Wayua Waema and

2nd Defendant

Salome Syokau Muthoka

3rd Defendant

As the legal representatives of the Estate of Peter Paul Muthoka

(In respect to the Plaintiff’s Notice of Motion dated 20{{^th}} November 2024 brought under the provisions of Sections 1A, 3 and 3A of the {{>/akn/ke/act/1924/3 Civil Procedure Act}}, Sections 6, 7, and 10 of the {{>/akn/ke/act/1995/4 Arbitration Act}}, Order 40 Rules 1, 2 (2) and 4 (1) of the Civil Procedure Rules and all other enabling provisions of the law and the Defendants’ amended Notice of Motion dated 4{{^th}} December 2024)

Ruling

Background 1. The Plaintiff’s application dated November 20, 2024 seeks two main orders, namely;a.That a temporary injunction be issued restraining the Defendants, whether by themselves, their servants, agents, or otherwise, from selling, transferring, or dealing with the property known as L.R. No. 1/266 (original No. 1/48/3) as well as the shares held by the Defendants in Chaka Complex Limited, pending the hearing and determination of the arbitration proceedings as provided for under the agreement for sale dated 4th October 2023. b.That a temporary injunction be issued restraining the Defendants, whether by themselves, their servants, agents or otherwise, from selling, transferring, or dealing with the property known as L.R. No. 1/266 (original No. 1/48/3) as well as the shares held by the Defendants in Chaka Complex Limited, pending the hearing and determination of the arbitration proceedings and/or the resolution of the disputes arising from the agreement for sale dated 4th October 2023.

2. The application is premised on the grounds on the face of it and on the supporting affidavit of Abdisalam Abdullahi Ahmed sworn on 20th November 2024. The gist of the application is that the parties herein entered into an agreement dated 4th October 2023 for purchase of shares in Chaka Complex Limited which is the registered owner of L.R. No. 1/266 at a price of Kshs.440,000,000/-. The Plaintiff paid a deposit of Kshs. 108,000,000/- leaving a balance of Kshs.332,000,000/=.

3. The Plaintiff alleges that on 19th April 2024, the Defendants issued him with a completion notice demanding the balance of Kshs. 332,000,000/- by 6th May 2024. The Plaintiff states that one of the beneficiaries of the estate, Jennifer Ndunge Muli, has withdrawn her consent to the sale and the Defendants have failed to secure the necessary consents from all the beneficiaries of the estate as required by the sale agreement. The Plaintiff affirms that completion may only take pace once the Defendants procure the consents of all the beneficiaries of the estate.

4. The Plaintiff avers that in view of the lack of consent from all the beneficiaries of the estate, the completion notice issued by the Defendants is illegal and the Plaintiff risks suffering irreparable harm if the Defendants proceed to rescind the sale and forfeit the deposit he had paid to them.

5. The Plaintiff alleges that he has fulfilled all his obligations under the sale agreement and the Defendants’ unlawful actions will lead to significant financial loss to him unless they are restrained by the court.

Response by the defendants/respondents 6. The Defendants responded to the Plaintiff’s application by way of the replying affidavit of Joseph Musyoka Muthoka sworn on 3rd December 2024. They too filed the Notice of Motion dated 4th December 2024 seeking to set aside the temporary injunction orders issued herein on 26th November 2024 and further that the Administrators of the estate of the late Peter Paul Muthoka be at liberty to sell the suit property as ordered by the Family court vide the certificate of confirmation of grant dated 14th January 2022 as amended. Finally, the Defendants too prayed for an order directing the Plaintiff to release all documents free from all encumbrances that he holds in respect of the suit property and all materials in his possession in relation to the property including the transfer of shares held in Chaka Complex Limited.

7. The Defendants aver that the Plaintiff has failed to perform his obligations under the contract for sale of the suit property including shares in the company known as Chaka Complex Limited, the registered proprietor of the suit property. Consequently, a notice of completion was issued to the Plaintiff which he did not honour. The Defendants therefore affirm that there is no subsisting contract between them and the Plaintiff.

8. The Defendants state that the suit property is family property which ought to be sold and distributed in accordance with the confirmation of grant issued by the Family court in High Court Succession Cause No. 220 of 2017 (in the Estate of Peter Paul Muthoka –deceased). The averments are reiterated in the supporting affidavit of Joseph Musyoka Muthoka sworn on 4th December 2024.

9. On 13th December 2024, the Defendants amended their application of 4th December 2024 to include an alternative prayer praying for orders that;“In the alternative and without prejudice to the above prayers, this Honourable Court be pleased to order immediate deposit of security in the joint names of the advocates for the Plaintiff with the advocates for the Defendants the sum of Kshs. 332,000,000/- being the balance of the purchase price before any further orders are issued by this Honourable Court.”

Court’s directions. 10. On 18th December 2024, the court directed that both applications be heard concurrently. Parties were directed to file and exchange submission in the next 14 days. The Defendants amended application was to be considered as a response to the Plaintiff’s application alongside the replying affidavit filed.

Issue for Determination 11. Having considered the application by the Plaintiff and the amended application by the Defendants, this court is of the view that the only issue for determination is whether it is in the interest of justice to issue the interim measures of protection sought by the Plaintiff and as framed in the Notice of Motion dated 20th November 2024.

Determination. 12. The Plaintiff’s application is principally seeking interim measures of protection under Section 7 of the Arbitration Act, Cap 49, Laws of Kenya, pending hearing and determination of arbitration proceedings provided for under the agreement for sale dated 4th October 2023.

13. An interim measure of protection as explained by the court of Appeal in the case of Safaricom Ltd –vs- Ocean View Hotel Limited & 2 others (2010) eKLR, (Nyamu J.A., as he then was);“…is supposed to be issued by the court under Section 7 of the Arbitration Act in support of the arbitral process, not because it satisfies the civil procedure requirements for the grant of injunctions.”.

14. The interim measures of protection are intended in principle to operate as holding orders pending the outcome of the arbitral proceedings.

15. The principles upon which the interim measures of protection are granted are now well established since the decision in the Safaricom case (supra) which has been affirmed and applied in several other cases including CMC Holdings Limited –vs- Jaguar Limited (2013) eKLR and Inforcard Holdings Limited –vs- A.G. & 2 others (2014) eKLR.

16. The interim measures of protection include measures relating to the preservation of evidence, measures aimed at preserving the status quo, or even measures intended to provide security for costs and injunctions depending on the facts and the particular circumstances of each case. The essentials that the court must take into account before issuing interim measures of protection are –a.The existence of an arbitration agreement;b.Whether the subject matter of arbitration is under threat;c.In the special circumstances, which is the appropriate measure for protection after an assessment of the merits of the application; andd.For what period must the measure be given especially if requested for before the commencement of the arbitration so as to avoid encroaching on the tribunal’s decision.

17. The Defendant’s response to the Plaintiff’s application vide the replying affidavit and the amended notice of motion dated 13th December 2024, is that there is no dispute to refer to arbitration since the agreement between them and the Plaintiff was rescinded after the Plaintiff failed to honour the notice of completion issued to him on 19th April 2024. I note that the Plaintiff has not particularly denied this assertion by the Defendants.

18. The Plaintiff too is silent on the payment of the balance of Kshs. 332,000,000/-. He has not expressed his willingness and readiness to pay the said balance, though his advocate Mr. Kimathi somewhat intimated to the court on 18th December 2024 that his client would be willing to deposit the balance of the purchase price. He was however, non-committal and insisted that he would need his client’s explicit instructions before giving a commitment on it.

19. A careful analysis of the Plaintiff’s application and originating summons actually reveals the Plaintiff’s intentions as merely to buy time.

20. I say so for two reasons. The first reason is that the Plaintiff has not referred the dispute to arbitration and has not demonstrated any steps taken so far to refer ‘the dispute’ to arbitration. As stated earlier, a notice of completion, which the Plaintiff acknowledges, was served upon him way back on 19th April 2024. If there was any dispute, that was the time (after service of the notice of completion) for the Plaintiff to initiate the arbitration proceedings. Up to the time of this ruling, this court has not been shown any action/steps taken towards that direction.

21. The second reason is that the Plaintiff in his application alludes to frustration of the contract. He deposes in his supporting affidavit that one of the beneficiaries of the estate by the name of Jennifer Ndunge Muli has withdrawn her consent to the sale. It is his testimony that the said Jennifer further indicated to him that two other beneficiaries had also withdrawn their consent to the sale of the suit property and their respective shares.

22. It is the Plaintiff’s case that it is therefore impossible to complete the sale as contemplated by the parties. The question then that begs an answer is why one would wish to refer a contract that is already frustrated to arbitration.

23. The law is clear on the effect of frustration on a contract. The old English case of Hirji Mulji- vs- Cheong Yue Steamship Co. Limited (1926) AC 497, confirmed the effect of frustration on a contract. Frustration brings the contract to an immediate end, whether or not the parties wish this to be the result. In other words, it is void, not voidable.

24. The Court of Appeal of Kenya in the Case of Charles Mwirigi Miriti –vs- Thananga Tea Growers Sacco Limited & ano (2014) eKLR, while discussing the doctrine of frustration adopted paragraph 897 in the Halsbury’s Laws of England Volume 9, 4th Edition which states as follows.“As subsequently developed, the doctrine of frustration operate to excuse from further performance where, 1. It appears from the nature of the contract and the surrounding circumstances that the parties have contracted on the basis that some fundamental thing or state of things will continue to exist or that some future event which forms the basis of the contract will take place; and

2. before breach, an event in relation to the matter stipulated in head (i) above renders performance impossible or only possible in a very different way from that contemplated.”

25. From the foregoing, I agree with the Defendants’ assertion that the Plaintiff’s application is an abuse of the process of court. I dismiss it forthwith

26. This brings me to the Defendants’ application.

27. It is noteworthy that the Defendants have not filed a counter-claim against the Plaintiff. Their application is therefore neither harnessed on a suit nor a counter-claim. I am therefore unable to issue any of the orders sought therein.

28. In any event, upon rescission of a contract or frustration as pointed out in this ruling, the law takes it course. The application by the Defendants was therefore unnecessary. It is hereby struck out.

29. Since both applications fail, I will not make any orders as to costs; each side shall bear its own costs.

30. I will leave it upon the Plaintiff to decide on the fate of his Originating Summons.

It is so ordered.

DATED SIGNED AND DELIVERED AT KAJIADO VIRTUALLY THIS 16TH DAY OF JANUARY 2025. M.D. MWANGIJUDGEIn the virtual presence of:Ms. Salim h/b for Mr. Kimanthi for the PlaintiffMr. Mungai with Mr. Muoka and Ms. Githaiga for the DefendantsCourt Assistant: Mpoye