Hamptons Hospital Limited v Advanced Medical Solutions Limited [2022] KEHC 12923 (KLR)

Hamptons Hospital Limited v Advanced Medical Solutions Limited (Civil Appeal E002 of 2021) [2022] KEHC 12923 (KLR) (Commercial and Tax) (14 September 2022) (Judgment)

Neutral citation: [2022] KEHC 12923 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Appeal E002 of 2021

DAS Majanja, J

September 14, 2022

Between

Hamptons Hospital Limited

Appellant

and

Advanced Medical Solutions Limited

Respondent

(Being an appeal from the Ruling and Order of Hon. E. Wanjala, PM dated 29th October 2020 at Nairobi Magistrates Court in CMCC No. E1878 of 2021)

Judgment

1. This is an appeal against the ruling and order of the Subordinate Court dismissing the Appellant’s application seeking stay of proceedings pending reference to arbitration under section 6 of the Arbitration Act, 1995.

2. The Appellant’s case before the Subordinate Court was that the Appellant and Respondent entered into an agreement evidenced by the Local Purchase Order dated April 3, 2020 where the Respondent agreed to supply and deliver Hospital Beds to the Appellant’s premises at Butere, Kakamega County for the contract sum of Kshs. 1,748,005. 00 in accordance with the specifications and conditions contained therein. Clause 17. 1 of the Agreement stipulated that any dispute or differences would be referred to arbitration. The Respondent filed suit claiming that it had not been paid and the Appellant responded by filing an application under section 6 of the Arbitration Act seeking stay of proceedings pending reference to arbitration.

3. The Respondent opposed the application on the basis that it has fully performed the Agreement by delivering the items under the LPO and that the items, descriptions and price are not disputed. It pointed out that by a letter dated November 19, 2020, the Appellant’s managing director admitted the debt and made a commitment to pay the amount in two installments; Kshs. 875,000. 00 on December 18, 2020 and Kshs. 873,000. 00 on January 17, 2021. The Respondent also urged that the LPO did not constitute an agreement and as such it was not enforceable.

4. After considering the matter, the trial magistrate dismissed the application as follows;[I] have considered that application and find that the applicant before me has not pointed to any dispute between themselves and the plaintiff which this court ought to refer to arbitration and as clearly indicated by the respondent the dispute is a debt allegedly owed by the application to the claimant and which the applicant has not disputed that it committed to settled the debt being amount owing for goods supplied to them, the alleged commitment is contained in a letter dated November 19, 2020 and that claim before the court is for enforcement of that commitment.

5. It is this ruling that has precipitated this appeal. The thrust of the Memorandum of Appeal is that the trial magistrate erred in failing to stay the proceedings in light of the arbitration clause. In an appeal against the exercise of discretion by the trial court, the appellate court will not interfere with the decision of the trial court unless it is satisfied that the trial court in exercising discretion, misdirected itself in some matter and as a result has arrived at a wrong decision, or unless it is manifest from the case as a whole that the trial court has been clearly wrong in the exercise of its discretion and that as a result there has been an injustice (see Mbogo v Shah [1968] EA 93 and United India Insurance Co. Ltd and Others v East African Underwriters (Kenya) Ltd NRB CA Civil Appeal No. 36 of 1983 [1985] eKLR).

6. The discretion of the court to stay proceeding in a suit pending reference arbitration is prescribed by section 6(1) of the Arbitration Act which provides as follows:6 (1) A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than the time when that party enters appearance or otherwise acknowledges the claim against which the stay of proceedings is sought, stay the proceedings and refer the parties to arbitration unless it finds—(a)that the arbitration agreement is null and void, inoperative or incapable of being performed; or(b)that there is not in fact any dispute between the parties with regard to the matters agreed to be referred to arbitration.

7. In summary, under section 6(1)(a) and (b) of the Arbitration Act, the court may decline to refer a matter to arbitration only when the arbitration agreement is null and void, inoperative or incapable of being performed; or there is not in fact any dispute between the parties with regard to the matters agreed to be referred to arbitration (see Niazsons (K) Ltd v China Road & Bridge Corporation Kenya NRB CA Civil Appeal No. 157 of 2000 [2001] eKLR). Once any of the grounds are satisfied, the court must stay the proceedings.

8. From the extract of the trial court’s decision I have set out above, the trial magistrate relied on section 6(1)(b) of the Arbitration Act. In the replying affidavit before the Subordinate Court, the Respondent annexed clear and unequivocal evidence that the Appellant, through it managing director, had admitted the debt in a letter dated November 19, 2020 and offered to pay the debt in two instalments. This evidence was not controverted at all. The trial magistrate therefore came to the correct conclusion that there was in fact no dispute to be referred to arbitration and rightly dismissed the application.

9. For the reasons I have outlined above, I dismiss the appeal with costs to the Respondent assessed at Kshs. 40,000. 00.

DATED AND DELIVERED AT NAIROBI THIS 14TH DAY OF SEPTEMBER 2022. D. S. MAJANJAJUDGECourt Assistant: Mr M. Onyango.Mr Mbeka instructed by JGS LAW LLP Advocates for the Appellant.Mr Kipkorir instructed by Muturi S. K. and Company Advocates for the Respondent.