Allen Waiyaki Gichuhi v Tiba Oil Company Limited & Abdijan Petroleum Equipment & Services Limited [2021] KEHC 4269 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

COMMERCIAL AND TAX DIVISION

CIVIL SUIT NO. 80 OF 2019

ALLEN WAIYAKI GICHUHI...............................................................................PLAINTIFF

VERSUS

TIBA OIL COMPANY LIMITED...............................................................1ST DEFENDANT

ABDIJAN PETROLEUM EQUIPMENT & SERVICES LIMITED......2ND DEFENDANT

RULING

ORIGINATING SUMMONS

The Applicant filed an Originating Summons Application dated 18th February 2019 for orders; -

1. Judgment is entered jointly and severally against the Defendants for a sum of Kshs.275,774. 05 as at 12th November 2018 together with interest thereon at 14% per annum from 12th November 2018 until payment in full.

2. Upon payment of the fees and the costs the decretal award be released to the Defendants.

3. Costs of this suit on an indemnity basis and interest thereon at court rates until payment in full.

Which Application was supported by the sworn Affidavit of Allen Waiyaki Gichuhidated 18th February 2019on the grounds that; -

1. The Defendants entered into a Construction Agreement dated 27th April 2015, to erect a petrol station and provide civil, electrical and structural works on the agreed site. Dispute arose and through a letter dated 30th September 2015, the Plaintiff was appointed to act as the sole arbitrator in the matter.

2. By a letter dated 16th December 2016, the Arbitrator informed the parties that he had concluded writing the final award and the same was ready for collection upon payment of the Arbitrator’s final fees of Kshs.626, 400 as per the deposit request note enclosed in the letter.

3. The 1st Defendant, on 26th July 2017, forwarded a cheque of Kshs.313, 260 being half of the fees and expenses. On 28th February 2018, the 2nd Defendant forwarded a cheque of Kshs.100, 000 in part settlement of the outstanding fees.

4. The Defendants only made payment of the sum of Kshs.413, 260. They made promises to pay the balance but reneged on the promises.

5. By a letter dated 14th September 2017, the Plaintiff requested the 1st Defendant to settle the balance of the fees to enable the release of the final award. The Plaintiff also informed the parties that a 14% per annum interest rate would be charged on the fees in the event that the same was not settled within 14 days of the letter.

6. The Plaintiff informed the Defendants vide a letter dated 19th February 2018 that he had a lien on the final award until the balance of the fees was paid and that the party paying on behalf of the defaulter would recover the portion during the execution process. The Plaintiff also notified the Defendants that a suit would be instituted if the balance of the fees was not settled within 7 days of the letter.

7. The amount outstanding as at 12th November 2018 is Kshs.275, 774. 05 which continues to accrue interest at the rate of 14% per annum. The Arbitrator on numerous occasions called upon the Defendants to settle the fees so that the final award can be released but to no avail.

1ST DEFENDANT’S REPLYING AFFIDAVIT

The 1st Defendant opposed the Application vide the sworn Affidavit of Nur Shillow Hassan dated 11th April 2019 and stated as follows; -

1. A preliminary meeting was held on 12th November 2015 and it was agreed that each party would pay half of the amount raised on any fee note or invoice.

2. The 1st Defendant paid out a cheque of Kshs.224, 400 as the fees raised for initial 20 hours of work and upon completion of the Arbitration the Plaintiff raised a fee note claiming that the total time spent on the Arbitration to be 50 hours hence the payment of an additional Kshs.626, 400 to be paid at 50% per party to facilitate the collection of the Final Award.

3. The Defendants disputed the 50 hours billed by the Plaintiff since only brief 10 minute meetings were held, hearing was conducted for about 12 hours and the submissions for around one hour.

4. The Plaintiff refused to negotiate the demanded amount and the total hours leaving the 1st Defendant with no other option but to pay the demanded amount.

5. The 1st Defendant paid the total amount of Kshs.313, 260 the 50% obligation for the Arbitration and the Plaintiff should claim from the 2nd Defendant.

6. The purpose of Arbitration should be to provide a cheaper alternative and by demanding the 1st Defendant to pay the whole cost of the Arbitration it would be expensive and unfair to the 1st Defendant.

7. The Plaintiff has no reasonable or justifiable claim against the 1st Defendant.

2ND DEFENDANT’S REPLYING AFFIDAVIT

The 2nd Defendant opposed the Application vide the sworn Affidavit of Caleb Oluoch Obunga Owino dated 12th July 2019 and stated as follows; -

1. After the 1st preliminary meeting the Plaintiff raised an invoice for 20 hours covering the fees and other expenses which the Defendants paid in full.

2. Thereafter 4 meetings were held which took less than 10 minutes each and a two days hearing after which the parties were given less than an hour to highlight their submissions.

3. The 2nd Defendant the Arbitration cost to still be within the 20 hours charges and any additional fees was to be utmost for 3 to 4 hours.

4. The Plaintiff raised a further invoice of Kshs.626, 400 being legal fees and the Defendants found the fee note to be too high since they were always present during the meetings and requested the Plaintiff to review the same.

5. The 2nd Defendant has not been able to get any contract since the arbitration process making it difficult to settle the balance of the cost of the Arbitration.

6. The 2nd Defendant proposed the following

a. The Plaintiff to write off the interest charged on the balance of the fees.

b. 2nd Defendant be allowed to settle the balance of the fees by monthly instalment.

c. 2nd Defendant be allowed to pay the 1st instalment of Kshs.150, 000 followed by a monthly instalment of Kshs.10, 000 payable by the 10th day of every month.

d. All parties to meet their cost of the suit.

PLAINTIFF’S SUBMISSIONS

The Plaintiff submitted that under the doctrine of joint and several liability, each liable party is individually responsible for the entire obligation, but a paying party may have a right of contribution and indemnify the non-paying party.

In the case of Hellen Njenga –versus- Wachira Murage & Another [2015] eklr cited the decision in Dubai Electronics –versus- Total Kenya & 2 Others Civil Case No. 870 of 1998 where the court explained the concept of joint and several liability as follows;

“Clearly therefore where you have joint liability all the tortfeasors are and each one of them is liable to settle the full liability. However, in a purely several liability each tortfeasor is only liable to settle the sum due to the tune of his liability. Where, however, the liability is joint and/or several the plaintiff has the option either directing his claim against any one of the tortfeasors or making his claim against each one of the tortfeasors according to their individual liability. Either way he cannot recover more than the total sum decreed. However, the defendants are entitled to reimbursement from the co-defendants in the event that the plaintiff only opts to recover from one of them. That is my understanding of joint and several liability.”

Further, the Plaintiff submitted that he has the right to execute judgment against one of the Defendants. The only recourse available to the Defendants is to claim from its co-defendant the amount after satisfying the decretal sum.

DETERMINATION

After considering the pleadings filed by the parties and the submissions by the Plaintiff (the Defendants did not file submissions), the issue for determination is whether Judgment be entered jointly and severally against the Defendants.

The Plaintiff sought judgment to be entered jointly and severally against the Defendants for a sum of Kshs.275, 774. 05 as at 12th November 2018 together with interest thereon at 14% per annum from 12th November 2018 until payment in full.

The concept of joint and several liability is defined in Black’s law Dictionary 10th Edition as follows:

“liability that may be apportioned among two or more parties or to only one or a few select members of the group at the adversary’s discretion. Thus, each liable party is individually responsible for the entire obligation, but a paying party may have a right of contribution and indemnity from non-paying parties”

Order 1 Rules 4, 7 and 24 of the Civil Procedure Rules, 2010 provide as follows; -

Rule 4 - Court may give judgment for or against one or more of joint parties

Judgment may be given without amendment—

(a) for such one or more of the plaintiffs as may be found to be entitled to relief for such relief as he or they may be entitled to;

(b) against such one or more of the defendants as may be found to be liable according to their respective liabilities.

In the case of Africa Planning & Design Consultants –versus- Sololo Outlets Ltd (In Receivership) & Anor (2018) eKLR; the court quoted the case of Kenya Airways Limited v Mwaniki Gachohi it was stated thus;

“...The concept of joint and several liability comprehends one judgment and decree against two or more persons who are liable collectively and individually to the full extent of such decree...

The 1st Defendant paid the Plaintiff Kshs.313, 260 being half of the fees and expenses. While the 2nd Defendant paid Kshs.100, 000 in part settlement of the outstanding fees. Further, the Plaintiff informed the Defendants that he had a lien on the final award until the balance of the fees was paid and that the party paying on behalf of the defaulter would recover the portion during the execution process.

The 1st Defendant argued that the Plaintiff has no reasonable or justifiable claim against the 1st Defendant as it had paid 50% of its share and paying the whole cost of the Arbitration would be expensive and unfair to it.

The sum owed is Kshs.275, 774. 05 as at 12th November 2018 together with interest thereon at 14% per annum from 12th November 2018 until payment in full. This amount has continued and continues to accrue interest.

Entering judgment against the Defendants jointly and severally would amount to injustice against the 1st Defendant as it had paid its 50% share and in addition, compelling the 1st Defendant to pay the interest accrued over the years would be unjust and unfair.

The 2nd Defendant on the other hand acknowledged its indebtedness to the Plaintiff and asked to be allowed to settle the balance of the fees by monthly instalment. The 2nd Defendant is willing to settle the balance of the amount in instalments.

The parties entered into an dispute resolution agreement and by their choice contracted arbitration as their choice of forum. It is not disputed that both parties participated in arbitration proceedings before the Arbitrator the Plaintiff herein.

The 2nd Defendant was served with Mention notice to appear in Court on 17th February 2020 and the Affidavit of Service was filed on 14th February 202. The 2nd defendant failed to attend/appear.

The plaintiff confirmed release of Final Award after 1st Defendant paid part of the Arbitration Fees. The 2nd Defendant was to negotiate with the plaintiff on repayment of its part of the Fees.

On 16th March 2020, the matter was mentioned but no proposals were received from the 2nd Defendant on payment of the outstanding debt save for the proposals in the Replying Affidavit. There was no proof on payment in instalments as proposed.

The law encourages Arbitration as an efficient, cost effective and expeditious mechanism of dispute resolution over litigation. The Final Award was ready on 16th December 2016 and five years have since passed.

The 2nd Defendant if aggrieved by the Legal Fees and Expenses imposed by the Arbitrator/Plaintiff ought to have pursued the remedy provided by Section 32B (4) of Arbitration Act, to tax the Bill of Costs. The 1st Defendant paid its part of Legal Fees and expenses and cannot be penalized to judgment severally and jointly without liability.

DISPOSITION

1. The upshot of the above is that judgment is entered for the Plaintiff as prayed against the 2ndDefendant NOT jointly and severally.

2. The judgment sum to be paid by the 2nd Defendant with interest at Court Rates and costs of the suit as the 1st Defendant had already paid its share of the Arbitration fees.

DELIVERED SIGNED & DATED IN OPEN COURT ON 30TH JULY 2021. (VIRTUAL CONFERENCE DUE TO CORVID 19 PANDEMIC MEASURES RESTRICTING OPEN COURT OPERATIONS AS PER CHIEF JUSTICE DIRECTIONS OF 17TH APRIL 2020)

M.W. MUIGAI

JUDGE