Amcon Builders Ltd v Vintage Investment Ltd & Shankla t/a Shankla & Partners [2018] KEHC 2801 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MOMBASA

CIVIL SUIT NO. 255 OF 1994

AMCON BUILDERS LTD ….………………………………………………….PLAINTIFF

VERSUS

VINTAGE INVESTMENT LTD

SHANKLA T/A SHANKLA & PARTNERS ................................................DEFENDANTS

R U L I N G

1. The plaintiff has by a notice of motion dated 28/11/2016 sought from court orders that:-

i) “THAT leave be granted to the Plaintiff to present, lodge and serve the award issued/read in May 2003 to the Court and parties out of time.

ii) THAT upon grant of leave, the Court be pleased at the interpartes hearing of this Application to Adopt the Award of Ksh.7,272,886. 50 excluding V.A.T less any payments made todate.

iii) THAT the costs of this Application be provide for”.

2. The application is grounded on the facts that; parties did appoint one Harold R. Fenwick & Associates as the mediator to assist resolve the suit dispute and agreed to be bound by the finding by the mediator. The mediation proceeded and an award made in the year 2003 and no challenge was made to it by any of the parties as agreed in their letter of reference.

3. Accordingly, the plaintiff contends that it is only just that an award be adopted as a judgment of the court.  The application was supported by the Affidavit of GOVIN LALJI PATEL which essentially reiterated the grounds of the application and exhibited to court documents marked GLP 1-3.  The documents are intended to show that Ms. Harold R. Fenwick & Associates was appointed to mediate the dispute and did come up with a final figure of Kshs.7,272,886. 50.  For that reason, the plaintiff seeks the orders in terms of the prayers in the application.

4. The application was opposed by the replying affidavit sworn by Regine Butt who swears to be a director of the 1st defendant.  The first point taken in the said Affidavit is that by the court ruling of 14/10/2006, the court erred by directing that an application be made to enforce an non-existent arbitral award and that the court neither allowed nor dismissed the application to dismiss the suit for want of prosecution.  The affidavit also says that the purported compliance with that order was belatedly done, in violation of the provisions of Section 36 & 37 of the Abelratio Act as well as known and settled practice and should be dismissed.  To the 1st defendant the dispute was never validly referred to arbitration nor was there any valid arbitration agreement and that the alleged award is actually an experts’ evidence procured at the instant of one Monika Solanki who is not party to the agreement nor dispute in this suit.

5. As a consequence of those facts, the 1st defendant deems the document called “Resolution of Dispute Report” very prejudicial to defendant who cannot vouch for the existence or authenticity of the document owing to death or non-existence of witnesses.  The ruling of 14/10/2016 is revisited and termed erroneous, made upon a mistake and can only be seen to serve to impede justice by delaying the conclusion of the matter and should be reviewed.

6. Parties did file submissions and attended court on the 24/7/2018 to highlight the submissions.

Submissions by the parties

7. For the plaintiff/applicant, Mr. Akanga Advocate filed submissions dated 10/11/2017 on the same day and attended court to highlight the same.  In the highlights, stress was made of the fact that parties agreed to go to mediation to be bound by the outcome of such medition and that the mediator having come up with a report the court was entitled to enforce that report as a decision of the court.  He clarified that even though parties had earlier on adverted to arbitration proceedings that was not the case.  What was there, according to Mr. Akanga, was mediation by an expert, quantity surveyor.  He then cited to court the provisions of article 159(2) of the constitution and stressed the fact that alternative dispute resolution mechanism ought to be promoted.  He thus urged the court to allow the application.

8. For the 1st defendant, Mr. Miyare Advocate filed very elaborate submissions dated 27/9/2017 on the same day and attended court to highlight same.  The mainstream contention in those submissions is that there was never a valid reference to arbitration and that the document exhibited as an award is not such an award but ammounts to expert evidence, that the plaintiffs laches in prosecuting the suit cannot be cured by the application dated 28/11/2016 and that the same ought to be dismissed to bring litigation to a close.

9. On the validity of arbitration proceedings, the 1st defendant submitted that there could only be arbitration proceedings pursuant to an arbitration agreement or by consent of the parties backed by an order of reference by the court.  In the circumstances of this suit the counsel submitted that the defendants having filed a defence, the matter could not be referred to arbitration otherwise than by consent of the parties.  He cited the decision in Martin Otieno Kwach vs Kenya Post Office Savings Bank [2014] eKLR for the proposition of law that a court of law has no mandate to compel a defendant to go to arbitration merely on the basis that parties had failed to agree on the appointment of an arbitrator.  He also cited to court the decision in Lofly vs Bedoulin Enterprises Ltd [2005] EA for the holding that it is the arbitration clause in an agreement which clothes the court with jurisdiction to refer the matter to arbitration.

10. To the counsel there was no evidence of an arbitration clause nor a consent by parties hence there was no reference to arbitration, no arbitral proceedings were ever undertaken and no award therefore could result to be enforced or adopted by the court.  The counsel delved at length on the issue that there was never arbitration hence no award for adoption and that any award was null and void.  It was also pointed out that the application and submissions to support it had abandoned the claim to arbitration in the affidavit in opposition to the application to dismiss from court of prosecution, which itself informed the court orders of 14/10/2016.  The 1st defendant therefore concentrated on arbitration aspects and said very little on the application as far as it alleged mediation as opposed to arbitration.

Issues for determination

11. Having read the application under consideration, the Replying Affidavit by the 1st defendant and written submissions by both parties as orally highlighted, the issues that stand out for court’s determination are:-

Was there an agreement to go to mediation?

Was a mediator ever appointed?

Has the mediation ended with an agreement?

Analysis and determination

12. Before I delve into the merits of the application, there was a position taken by the 1st defendant regarding the court orders of 14/10/2016 to the effect that decision failed to dismiss or allow the defendants application dated 11/05/2016.  It was equally raised in the Replying Affidavit and in submissions that the ruling is riddled with mistakes and error and should be set aside and reviewed.

13.    On the fate of the application, dated 11/05/2016, the ruling is self- speaking when the court said at paragraphs 8 & 9.

“The next question is whether or not the suit should bedismissed.  It is true and conceded by all sides thatthe file has been unavailable at the registry immediately after the appearance of 4/5/2011.  In those circumstance can the plaintiff or indeed any of the parties be faulted for failure to move the file forward?  I do not think so.  In any event, the court file in which the proceedings ought to have been undertakdn has just been reconstructed now.  To me to dismiss it would be to own up that the court misplaced the parties file, agrees that it needs reconstruction and proceed on the same breath to say that for that misplacement, the parties shall not be heard.

No justice would have been served if that were tohappen.  Coupled with the assertion that the matter was referred to arbitration and an award was made, this file can’t just be dismissed as yet.  If that be the position, and I note that the deposition is not contested, then I hold the view that substantial justice demand that chance be given to the parties to have that award adopted or considered for adoption”.

14. The court said enough on dismissal of the suit for want of prosecution at that juncture.  It should be clear that the application was dismissed.  However, even without an order for dismissal, the law is that a prayer made to court but which is not expressly granted is deemed not granted.[1]

15. On the said application being wrought with error and being mistaken, this court takes the view that the complaint does not lie before this court.  It does not be because:-

i. The 1st defendant was aggrieved by that ruling and indeed filed a Notice of Appeal dated 27/10/2016 on the 1/11/2016 signaling an appeal to the Court of Appeal.  That notice remains undisturbed and the propriety of the ruling must be left for the determination by the Court of Appeal alone.

ii. On the 28/10/2016, the 1st defendant filed an application dated the same day and sought review of the orders of 14/10/ 2016.  That application was fixed for hearing the 15/12/2016 and was dismissed from non-attendance by the 1st defendant as the applicant.  That dismissal order remains undisturbed and cannot be upset by the replying affidavit nor the submissions on a totally different application.

Now on the merits.  Was there an agreement to go to mediation?

16. I have read the documents filed with the affidavit in support of the application, all the way from the email by Monika Solanki dated 18/5/2001 and the response by Harold R. Fenwick dated 3/8/2001 including a handwritten agreement dated 02/5/2001 together with a document headed “Appointment of mediators, resolution of dispute arising from the contract” shown to have been signed by the three parties and I am convinced that parties voluntarily agreed, though through the intercession of the said Monika Solanki, to have the matter mediated by the said quantity surveyor Ms. Harold R. Fenwick.  Infact the handwritten agreement is evidently signed by two people Mr. W. Oster Tay, and Mrs. R. Osterlay both of the 1st defendant.  There is also a typed document said to be appointment of mediators at page 1-3 of the annextures to the Affidavit of GOVIN LALJI PATEL which show the 1st defendant did sign the same.

17. With such documents, I am convinced, prima facie, that there was an agreement to refer the dispute to mediation and that Ms. Harold R. Fenwick was indeed appointed to mediate the dispute.

Did mediation end with an agreement?

18. Unlike arbitration or litigation mediation process ends with an agreement not an award.  The success of a mediation process is that parties come up with own resolution.  The part of the mediator is merely to guide the parties by setting an atmosphere of mutual, candid and honest discussions.  He makes no own findings nor does he make any coercive determination at all.  His is to listen and assist the parties settle.  Once a settlement is reached, he may assist in drawing and crafting the agreement which is then owned by the parties by each appending his signature thereto.  Even where parties agree on the dispute but decline to sign the agreement, the mediator must report lack of agreement.  Indeed parties can reach a partial agreement which if signed is reported by the mediator as such.  A mediator merely helps parties reach a mutually agreeable solution.

19. Put in the context of this matter, while I wholly agree that there was no arbitration proceedings initiated and conducted while agreeing with the plaintiff that there was indeed a mutual agreement to go for mediation, there has not been shown to me a mediation agreement capable of being made a judgment of the court.  Whatever report or document shown to have been made by the mediator and coming up with a figure as a figure of settlement does not qualify as mediation agreement.  It is as best a piece of evidence by the said expert.  It cannot be adopted as a decision of the court.  The most to get from it, may be being received as evidence when the matter proceeds to hearing.

20. I thereto do find that there is no mediation agreement between the parties.  I also find that there was never arbitration proceedings to result into an award and therefore the application by the plaintiff dated 28/11/2016 was not properly conceived and cannot be allowed.  It is ordered dismissed with costs.

21. Having so failed, where does that outcome leave the suit?  The suit remains pending determination in the usual manner.  To give it a road map, it is now directed that within 30 days from today parties shall file any desired witness statements and documents and thereafter settle and file a statement of agreed issues.

22. This matter shall now be mentioned before court on the 29/11/2018 for further directions and case conference.

Dated and Delivered at Mombasa this 15th day of October 2018.

P.J.O. OTIENO

JUDGE

[1] Explanation 5, Section 7, Civil Procedure Act