Indigo Telecom Limited v Independent Electoral and Boundary Commission Limited [2016] KEHC 112 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL & ADMIRALTY DIVISION

CIVIL SUIT  NO.  391  OF  2015

INDIGO   TELECOM   LIMITED……........PLAINTIFF

VERSUS

INDEPENDENT ELECTORAL AND

BOUNDARY COMMISSION LIMITED..DEFENDANT

RULING

1. The  Application before   the Court is brought by the Plaintiff.   It  seeks  an  Order  for  the  Defence  to be  struck  out and Judgment entered  for  the   Plaintiff  in  the  full  sum  of  the  claim.

2. By way of Background, the   Plaintiff is a   limited liability   company incorporated   under   the Laws of Kenya.   In  fact, the  Plaintiff  is  a  satellite-based  telecommunications  service  provider  which offers  satellite  services  to various   clients,  including  government  agencies  including  the  Defendant,  the   Department  of  Defence  and  the  Kenya Police.    The Defendant  is described as  a  Constitutional  commission   established  under  Article  88 of    The   Constitution  of  Kenya  2010

(“CoK 2010”).

3. The Plaintiff filed a Plaint on  11th  August 2015  seeking  payment   of  its  Invoice  No.066620  for  the  supply   of  equipment  pursuant  to  Local  Purchase Order  No. 1905534  in  the  sum of  Kshs.39,364,273. 30  dated  21st February 2013.  The equipment alleged  to have  been  supplied comprises:

a. Five  hundred   (500) SG 2520 Thuraya Gen II Sat/GSM Phones at KShs.62,722. 50;

b. Five hundred (500) Cassic Prepaid Sim cards each at KShs5,608. 32;

c. Seven hundred and fifty (750) 20 units Thuraya airtime vouchers each at KShs.1,927. 86;

d. Two   hundred  &  Fifty (250) GenII Thuraya Car Chargers each at KShs.6,221. 73.  The Invoice was payable on or before 31st March 2013.

4. The  Order was said to have been made on short notice,  however it  seems to have  been  preceded  by a quotation in the sum of US$449,210 (US$) dated 21st   February 2013.  A copy of the Quotation appears as JWM-1.  The  proximity  between  the  two  events (being the quotation  and the  Local Purchase Order (“LPO”)  suggests  that  there  is  more  than  a  passing  connection  between  the two.

5. The   Plaint was filed on 11th August  2015, that is, during the vacation as then was.  The Summons was dated 8th September 2015.  The Defendant’s Advocates entered appearance by a Memorandum filed on 25th September 2015.   The Defence was filed on 9th October 2015.  The Defence contains a number of denials, it inter alia denies paragraph 3 of the Plaint.  In  effect  that  is denying  the  Plaintiff’s  description  of  itself  and  also the  fact  that  a  quotation  was  provided.  Paragraph 4 of the   Plaint is also denied.  That is the averment that an LPO was issued.  The  Defence then goes on to contradict  itself  and  state “That  the   Local  Purchase  Order  was  issued  illegally  and/or  unlawfully  and  in  blatant,  flagrant  and   arbitrary  violation  of  the provisions  of  the  Constitution.”

6. Paragraphs  8  and   9  of  the  Defence  raise  interesting  and  intriguing  issues  in  the face  of   the   documents  exhibited  to  the  Plaint.  It is worthwhile setting them out verbatim;

“8. The Defendant denies the contents of Paragraph 8 of the Plaint and puts the Plaintiff to strict proof thereof.  The Defendant specifically denies having promised to pay for any sum allegedly owing to the Plaintiff.  The Defendant states that in ay event using public resources to settle unlawful payments constitutes bad governance, abuse of office, misuse of taxpayers resources and/or breach of public trust, public duty and public power.

9. The Defendant further states that it would be against public policy to settle the amount claimed in the Plaint.”

7. Receipt of the Letter of  Demand  and  Notice  of  Intention  to Sue  is  also denied.  However at page 14 of the Documents is a copy of that Letter and at page 15 there is a response supposedly from the Defendant.

8. Faced  with  the  Defence  containing  blanket  denials,  the  Plaintiff  filed  the  aforesaid  application for judgment.  The Application is brought by  a Notice  of  Motion dated 16th February  2016.  It  is  brought  under  Sections  1A, 1B and  3A of  the  Civil  Procedure  Act (Cap 21 of the Laws of Kenya)and  Order  2  Rule  15,  Order  51  Rule 1of  the  Civil  Procedure  Rules  and  all enabling  Provisions  of  the  law. The Application prays for the following  Orders:

“1. THAT the Defendant’s Statement of Defence dated and filed herein on 9th October 2015 be and is hereby struck out.

2. That judgment be and is hereby entered for the laintiff against the Defendant for the sum of Kshs.39,364,272. 30 together with interest of 2% per month from 31st March 2013 when the said amounts became due and payable until payment in full.”

The Grounds relied upon are:

1. The Defendant is well and truly indebted to the Plaintiff for the sum of Kshs.39,364. 272. 30 together with interest thereon as more particularly set out in the Plaint, and was so indebted from 31st March 2013;

2. The Plaintiff’s claim herein is for a liquidated sum.

3. The Defendant does not have any reasonable defence to this suit.

4. The Defendant’s Statement of Defence dated and filed herein on 9th October 2015 is a bare denial and a sham and does not disclose any genuine or proper triable issues to warrant a hearing.

5. The Defendant is truly and justly indebted to the Plaintiff.”

9. The Supporting Affidavit is sworn by a Julius Waita Mwatu, the Chief   Finance Officer of the Plaintiff Company.  At paragraph 4 he  states that “the  Plaintiff  is  licenced  by  the  Communications  Authority  of  Kenya  and  was  at  the  time  of  this  transaction  the  only appointed   National  Service  Providers (sic) of  Thuraya  in  Kenya”.

“The  Affidavit  repeats  the  evidence  of  the  dealings  between  the   Plaintiff  and  Defendant  from  the  Plaintiff’s  perspective  only  paragraphs  13-15 relate  specifically  to  the  Application.    The Deponent complains  that  the  Statement  of  Defence is illusionary, a  sham  and  aimed  at  delaying  the  course  of  Justice.   He   also  says  the  he  is  advised  by  his  Advocate  that  “this is a plain and obvious and proper case for the exercise of the honourable  court’s discretion in the Plaintiff’s favour”.He  also asserts  that  the   Defendant is  truly  and  justly  indebted  to  the  Plaintiff  and  it is  in  the  interests  of  justice   that  judgment  be  entered against  the  Defendant  summarily.

10. The  Defendant  has  filed  a  Replying  Affidavit sworn  by  its  Senior  Legal  Officer Secretary, a Moses Kipkogei.  The Replying Affidavit contains very little factual content that has any bearing on the issues before the Court.  The  Affidavit  presumes  to repeat vaste tranches of  Statues, a  function  more  appropriate  to  Legal  argument.  The  Affidavit  also  contains  legal  argument  on  the  interpretation  of  the   Pleadings  before  the  Court.  Clearly,  the deponent  has  lost  sight  of  the  demarcation  between  fact,  law  and  argument.   It  is  also  interesting  to  note  that  he  is  not  one  of  the  Defendant’s  intended  witnesses   and  therefore  may  have  very  little  personal  knowledge  of  the  underlying  facts.

11. The Admissions that the Deponent   does make are at paragraph 13 of the Replying  Affidavit.  In that paragraph  it is  admitted  that:

i. The  Local Purchase  Order  sent  to  the  Plaintiff  was  not grounded  on  a  legitimate  procurement  process;

ii. The  recognized  procedures for open tendering,  restrictive tendering  etc  with  the  requisite  approvals  were  not complied  with by the Defendant and

iii.That equates to misuse and/or abuse of  taxpayer’s resources.

12. Although  there  is  no  mention  of  the  public interest  or  protection  of  the   taxpayer  referred  to  in  the  Statement of Defence, the  Affidavit  at  paragraph  14 interpretes the Defence as “ an  invitation”  to the  Court  to  determine what is in the public interest and not enforce a transaction that  is in contravention of  the Act and supposedly defeats the Administration  of  Justice.

13. The Replying Affidavit does deal with the substantive issues raised by the Application in paragraph 16 onwards.  The Issues which are raised and  are  completely valid  are:

1. Whether  the  Court  has  the  power to, or   should  enforce  an “illegal  contract”;

2. Whether  there  are  good  reasons  e.g. the  so  called “ weighty   issues”  that   require  consideration  and  scrutiny  and /or  airing  at   trial;

3. Whether the Application is an abuse of process.

4. Whether the Application pre-empts the parties  putting  their  respective  cases.

14. The  issues, therefore, for the Court to determine  are;

1. Should the  Court   strike  out  the Defence?

2. Should   the  Court  order Summary Judgment in favour of the   Plaintiff?

3. Are   there  any  overriding   reasons  that   militate  against   a  summary  procedure  and  require   a  full  trial  in  the  interest  of  Justice.

15. Starting with the issue of striking out the Defence.  Striking  out  a  Defence  can  have  far  reaching  implications  for  access  to  Justice  and  as  such  is  considered  a  draconian  remedy.  There  is ample  judicial  authority for  the   proposition,  that  it  should  only  be  exercised  in  the  clearest of  cases (DT Dobie  -vs- Muchina & Another).  In  this case  the  Plaintiff’s  relies   heavily   on  the  argument  that  the Defence  contains bare denials.  In fact, that is not the case.  At  paragraph 4 of  the Statement of Defence the Defendant alleges that  the  “contract  or  agreement  to  supply  was  illegal.”  That contradicts  earlier  parts  of  the  Pleading  and  the  Replying Affidavit  which  assert  that

a. there was no  agreement  and

b. nothing  was   supplied.

16. The argument that the agreement was illegal presupposes  a completed  agreement  which  is  then  enforceable.    From  the  evidence  before  the  Court,  the  Plaintiff  and  its  Advocates  have  failed  to go through the  step   of  a  reference  to  the  Procurement  Oversight  Authority in relation to the supplies in question. The Plaintiff does however raise the issue of  unjust  enrichment  in  submission.The  flip  side   of  goods  allegedly   supplied  and  received  under  an  unenforceable  contract  is  the  question  of  restitution  and  unjust  enrichment.  Although  the  Plaintiff seeks  a  strike  out  of  the  Defence, on  the  face  of  the  aforesaid  admissions,  it  is  questionable  whether   such  an  order  is  in  fact  in  the  best  interests  of  the  Plaintiff.

17. Dealing  with  the issue  of   Summary  Judgment,  the  Defendant  raises  issues  of  enforceability  of the  contract  it  hitherto  denied  existed  at  all.  The  Defendant  is  a  Constitutional  body  created  under  Article  88 Constitution  of  Kenya 2010,  with  all  the  rights  and obligations/ responsibilities  that implies.

18. However, that  is  not  the  end  of  the  matter.  The  Defendant  operates  through  the  actions  of  its  officers  and  staff.  That  is  readily   apparent  from  the  evidence  already  filed  by  the  Plaintiff.  For  example  page  15  of  the  Plaintiff’s  Bundle  is  a  letter  from  the  Defendant  to  the  Plaintiff’s  Advocates.  It  is  dated  22nd June, 2015.

It  is  in  reply  to  a  letter dated  9th June, 2015. It  creates   the  impression  that  the  relevant  officer  will  deal  with “it”.  The “It”  being  referred to was the  demand   for  payment.  It  is  signed  by  the  Manager Legal  Services  for  the  Commission  Secretary / Chief  Executive  Officer.

19. Twelve  months  later  the  Defendant  is  saying  the   Letter  of  9th  June  was  never  received.  Both of those statements   cannot be  true.  At  the   very  least  the  litigation  conduct  of  the  Defendant  and  its  Officers  raises  the  risk  of  a  deliberate  intention  to  mislead  not  only  the  Plaintiff  but  the  Court  as  well.

20. The  Parties  filed  written  Submissions  and  their  lists  of  Authorities.  (The Defendant  has  not  filed  its  documents  nor  Witness Statements contrary to CPR Order 7).  The  Court  has  considered  the  documents  and  arguments  placed  before  it.  In  particular  this  Court  takes  note  of  the  Ruling  of   Hon. Lady  Justice  Aburilli  Judge  in  Transcend  Media  Group  Limited  -vs-  I.E.B.C   HCC. No. 618  of  2012.

Apart  from  the  reasoning  of  the  Learned  Judge  that  decision  demonstrates  that  the   Defendant and  its  officers  were  fully  aware  of  the  correct  procurement  procedures.  In that case they were not followed.  In that case liability was being evaded.  That is the same in this case.  For the Court to leave  the  matter   with a  declaration  of  unenforceability   would  be  to allow  a  party  to  benefit  from  its own  wrongdoing.

21. The Defendant  is  tasked  with  specific  tasks  under   the Constitution  that  can  be  paraphrased  as  ensuring  that  the  process  of   general  elections  is  run  smoothly,  efficiently  and  in  a  way  that  inspires  the  Confidence  of  the  public  at  large.   On  aspect  of  that  is  dealing  with  suppliers  in  effect  on  behalf  of  the  Public  in  a  fair  and  transparent  way  that  will  stand  up  to  the demands   of  transparency  and  accountability.

22. The  Court  Takes  Judicial  Notice  of  the  fact that the Commissioners of  the Defendant  were required  to  attend  a  meeting  by  the  Public  Accounts Committee  in  May 2016 and issues raised there concerned procurement  of  equipment,  specifically   voter  kits,  during  the  2013  Elections. That is the same period as the items the Plaintiff claims to have supplied.  The  Court  also  takes  Judicial Notice  of  the  fact  that  the  commissioners  and   officers  of  the  Defendant are,  or were  public  officials  at  the  time  of  the  facts  and  matters  in  dispute  as  well   as  when  the   Defence  was  filed.  That  implies  that  what  did  or did  not  transpire  took  place “ on their  watch”  and  at the very least with  their knowledge  and/or concurrence,  in  the  “ worst  case  scenario”.  However,  they  pray  in  their  aid “ public  interest  and  public  policy”  to  prevent  “ misuse  and/ or  abuse  of  taxpayers   resources”.

23.  In  the  circumstances, it  is  in   the  interests  of  justice  and  in  the  interests  of  the   public  at  large  for  the  dealings  of  these  parties  to  be  aired  in  a  full  trial.  The  Court  takes  cognisance  of  the  fact  that   in  such  an  organisation  the   individuals  may  change  roles  or  move  on.  The  Court  is  of  the  view  that  it  is  in  the  interests  of  justice  that  the  Officers  of  the  Defendant  involved  in  the  matters   giving  rise  to  these  proceedings   are  given  an  adequate  opportunity  to  explain  their  conduct  to  the  Court  and  the  Plaintiff, in order to effectively address the issues in dispute.

24. In the Circumstances the application is dismissed, both for striking out the Defence and summary judgment.

25.  It  is   further  ordered  that  all  and  each  Officer  of  the  IEBC in  office  between  1st February 2015  and  6th  May, 2016  be personally joined  as  parties  to  this  suit.  This  will  include,  but  not   be  limited  to,  the  Chief  Executive  Officer,  the  Legal  officers  and  the  Procurement  Officer.

Order accordingly,

FARAH S. M. AMIN

JUDGE

SIGNED AND DELIVERED AT NAIROBI THIS 23rd DAY OF  NOVEMBER   2016.

In   the  Presence  of;

Court  Assistant:  Otieno

Mr. Kotanya holding brief for Mr. Muthui:  For   Plaintiff/ Applicant.

Mr. Lawi   holding brief for Mr. Mukele:  For Defendant/ Respondent.