Koinange Investment and Development Limited v Nairobi City County Government & another [2025] KEELC 68 (KLR) | Consent Judgment Review | Esheria

Koinange Investment and Development Limited v Nairobi City County Government & another [2025] KEELC 68 (KLR)

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Koinange Investment and Development Limited v Nairobi City County Government & another (Environment & Land Case 244 of 2023) [2025] KEELC 68 (KLR) (16 January 2025) (Ruling)

Neutral citation: [2025] KEELC 68 (KLR)

Republic of Kenya

In the Environment and Land Court at Nairobi

Environment & Land Case 244 of 2023

JO Mboya, J

January 16, 2025

Between

Koinange Investment and Development Limited

Plaintiff

and

Nairobi City County Government

1st Defendant

Nairobi County Secretary

2nd Defendant

Ruling

Introduction And Background 1. The Applicant has approached the court vide Notice of Motion Application dated the September 25, 2024 brought pursuant to inter-alia the provisions of Order 45 Rules 1 and 2 of the Civil Procedure rules 2010; Section 80 of the Civil Procedure Act and Articles 48 and 159 of the Constitution 2010; and wherein the Applicant has sought for the following reliefs;i.…………………………………………………………………Spent;ii.That the Honourable Court be pleased to review and or vary Clause 3(b) of the Decree of this Honourable Court issued on 29th February, 2024 to allow the Plaintiff/ Applicant to pay monthly instalments of Kenya Shillings Five Hundred Thousand (Ksh. 500,000/- Only) instead of Kenya Shillings One Million (Ksh. 1,000,000/ Only-) for a period of twelve (12) months only, thereafter the Plaintiff/ Applicant to continue paying as per the Decree of this Honourable Court;iii.That this Honourable Court be pleased to grant such other or further orders as it shall deem fit and just for preservation of justice regarding the nature and circumstances of this case;iv.That costs of the Application be in the cause.

2. The instant application is anchored and premised on various grounds which have been enumerated in the body thereof and further supported by the affidavit of Eda Wanjiru Mbiyu [Deponent] sworn on the 25th September 2024 and to which the deponent has annexed four [4] sets of documents including a copy of the decree extracted on the 29th February 2024.

3. Upon being served with the Application beforehand, the Defendants/Respondents filed a Replying affidavit sworn by one, namely, W. S Ogola on the 12th November 2024 and in respect of which same [Defendants/Respondents] have contended that the Applicant herein has neither established nor demonstrated any sufficient cause/basis to warrant review of the consent decree. In any event, it has been contended that the Applicant herein entered into and executed the consent whilst knowledgeable of the fact that her business is situate within the central business district.

4. The subject application came up for hearing on the 13th November 2024; and whereupon the advocates for the parties covenanted to canvass and dispose of the application by way of written submissions. To this end, the court proceeded to and directed that the written submissions be filed and exchanged within circumscribed timelines.

5. The Applicant filed written submissions dated the 9th December 2024; whereas the Defendants/Respondents filed written submissions dated the 12th November 2024. The written submissions by and on behalf of the Respondents preceded the ones filed by on behalf of the Applicant.

Parties’ Submissions: Applicant’s Submissions: 6. The Applicant filed written submissions dated the 9th December 2024; and wherein the Applicant has adopted the grounds contained at the foot of the application. Furthermore, the Applicant has also reiterated the averments adverted to in the supporting affidavit as well as the contents of the annexures attached thereto.

7. Other than the foregoing, the Applicant has highlighted and canvassed two [2] salient issues for consideration by the court. Firstly, the Applicant has submitted that following the entry into and execution of the consent, the Applicants business was affected by the weekly demonstrations/protest[s] that occurred in Kenya in the month of June and July 2024. In this regard, the Applicant has highlighted the protest which were carried out by the Generation Z [Genzees].

8. Arising from the protest, the Applicant contends that several customers were discouraged from parking their motor vehicle with the CBD of Nairobi. In this regard, it has been submitted that as a result of the discouragement arising from the protests, the Applicant’s financial base suffered and hence the inability of the Applicant to pay the covenanted sum of kes.1, 000, 000/= only per month in the manner captured in the consent decree.

9. To this end, the Applicant has invoked the doctrine of Force majeure and thereafter invited the court to find and hold that on the basis of force majeure, the Applicant herein has been exposed to difficulty in fully performing/meeting her obligations under the decree. In particular, it has been contended that force majeure attendant to the protest/demonstrations that took place in June and July 2024 were supervening events, which have thus frustrated the performance of the obligations under the consent.

10. To buttress the submissions anchored on force majeure, the Applicant has cited and relied on inter-alia the decision in Pankaj Transport PVT Ltd v SDV Transami Kenya Ltd [2017]eKLR and Jomo Kenyatta University of Agriculture & Technology v Kwanza Estate Ltd [2023] KECA 700 [KLA], respectively.

11. Secondly, the Applicant herein has also invoked and relied on the doctrine of frustration and thereafter contended that the Applicant’s ability to comply with the terms of the consent decree were frustrated by the demonstrations that caused civil unrest and financial incapacitation to the Applicant. In this regard, the Applicant has therefore contended that the doctrine of frustration is relevant and applicable to the subject matter.

12. Furthermore, the Applicant has submitted that the events that underpin the application of the doctrine of frustration herein were well beyond the control of the Applicant. In any event, it has been contended that the circumstances attendant to the frustration were not self-induced. In the circumstances, the Applicant posits that same [Applicant] has satisfied the requisite exceptions that underpin the application of the doctrine of frustration.

13. To support the submissions founded on the application of the doctrine of frustration, the Applicant has cited and referenced the decision in the case of Davis Contractors Ltd v Farehum U. D. C [1956] AC 696, wherein the court elaborated on the parameters to be satisfied before the invocation and reliance on the doctrine of frustration.

14. Flowing from the foregoing submissions, the Applicant has implored the court to find and hold that same [Applicant] has met and/or satisfied the requisite ingredients to warrant the review/variation of the consent decree. In any event, the Applicant has invited the court to find and hold that the twin doctrine[s] of force majeure and frustration, constitutes sufficient basis upon which a consent can be revied and/or varied.

Respondents’ Submissions: 15. The Respondents filed written submissions dated the 12th November 2024; and wherein the Respondents have reiterated the contents of the replying affidavit sworn by W. S Ogola on the 12th November 2024. In addition, the Respondents have raised and canvassed one salient issue for consideration.

16. The Respondents have contended that the Applicant herein has neither established nor demonstrated the requisite basis to warrant the review and variation of the consent decree. In particular, it has been contended that the consent decree under reference can only be set aside and/or varied on circumscribed grounds.

17. Additionally, the Respondents have contended that the terms of the consent decree can only be reviewed and/or set aside if the Applicant demonstrates the grounds that were highlighted and captured in the decision in the case of Flora Wasike v Destimo Wamboko [1988] 1KLR 165 as well as Samuel Mbugua Ikumbu v Barclays Bank of Kenya [2015]eKLR.

18. In a nutshell, the Respondents herein have implored the court to find and hold that the Applicant has not met the requisite/statutory threshold to warrant the review/variation of the consent decree. In this regard, the Respondents have implored the court to find and hold that the Application beforehand is devoid of merits.

Issues For Determination: 19. Having reviewed the application dated the 25th September 2024; the supporting affidavit thereto and the Replying affidavit filed in opposition thereof and upon consideration of the written submissions filed on behalf of the parties, the following issues do emerge[crystalise] and are thus worthy of determination;i.Whether the Applicant has established and demonstrated force majeure as a basis for review of the consent Decree.ii.Whether the Applicant herein can invoke and rely on the Doctrine of frustration to review and vary a portion of the consent or otherwise.

Analysis And Determination: Issue Number 1 Whether the Applicant has established and demonstrated force majeure as a basis for review of the consent decree. 20. The Applicant and the Defendants/Respondents herein entered into a consent vide letter dated 15th December 2023. For coherence, the consent under reference highlighted various terms and conditions which were agreed upon by the parties. In particular, one of the terms of the consent touched on and concerned the payment of monthly instalments in the sum of kes.1, 000, 000/= only payable every 25th day of month w.e.f 25th November 2023.

21. Suffice it to state that the terms of the consent vide letter dated the 15th December 2023 were adopted and constituted as the judgment of the court. In this regard, the decree under reference is a consent decree, which by law has contractual effects and is binding upon the parties thereto.

22. Be that as it may, the Applicant herein has now approached the court and same seeks to review and or vary limb 3[b] of the consent decree. In particular, the Applicant is seeking to vary the monthly sum payable from kes.1, 000, 000/= only to Kes.500, 000/= only per month. Furthermore, it has been contended that the intended variation is to subsist for a period of 12 months from the date of the order of the court.

23. To underpin the request for review and variation, the Applicant herein has invoked and relied upon the doctrine of force majeure. To this end, the Applicant has contended that the protest and demonstration which took place in the months of June and July 2024 impacted upon and/or affected the Applicants financial capacity to pay/meet its obligations under the consent.

24. Additionally, the Applicant has contended that the demonstrations/protest that have been adverted to constitute supervening events and thus same were neither anticipated nor foreseeable by the parties. Notably, the Applicant therefore implores the court to deploy the doctrine of force majeure and to find that same [force majeure] constitutes a basis to warrant review/variation of the consent.

25. Suffice it to state that the Applicant has cited and referenced the decision of the court of appeal in the case of Jomo Kenyatta University of Agriculture and Technology v Kwanza Estate Limited (Civil Appeal 64 of 2022) [2023] KECA 700 (KLR) (16 June 2023) (Judgment), wherein the court of appeal discussed the application of the doctrine of force majeure.

26. In particular, the Applicant has referenced the contents of paragraphs 43 and 44 of the said decision where the court of appeal stated as hereunder;43 .We take cognizance of the government mandated lockdown that affected all institutions in this country and the effect it had on all businesses. Like other institutions of higher learning, the JKUAT Nakuru campus was affected by the lockdown and subsequently closed its doors. It is therefore not disputed that for a period the appellant was rendered unable to use the property subject of the lease agreement and was therefore, not generating any income from the intended purpose of the contract.44. Consequently, it is our view that the pandemic was a force majeure event that caused the appellant undue difficulty in continuing with the lease agreement in accordance with its purpose and making the payments thereupon agreed. The appellant, in good faith, continued to make payments as required up to January 2021 long after seeking to be released from the lease agreement vide a letter dated 10th July 2020. Through the respondent’s own actions of restricting the appellant’s exit it curtailed its own chances of entering into business arrangements with other entities. The pandemic was no secret, and the respondents were aware of the government directive to close schools and universities. Therefore, to require performance in the face of such unforeseen and unavoidable circumstances, not caused by any acts and/or omission on the part of the appellant is absurd, unfair, and unjust.

27. Be that as it may, it is imperative to underscore that the decision of the court of appeal [details in terms of the preceding paragraphs] was challenged before the Supreme Court of Kenya culminating into a decision which was delivered on the 6th December 2024. For coherence, the Supreme Court of Kenya rendered itself in the case of Kwanza Estates Limited v Jomo Kenyatta University of Agriculture and Technology (Petition E001 of 2024) [2024] KESC 74 (KLR) (6 December 2024) (Judgment).

28. Whilst dealing with the doctrine of force majeure, the supreme court stated as hereunder;61 .A notable aspect of the force majeure doctrine is that while English Common law and American jurisprudence recognize similar principles, courts will enforce the force majeure doctrine only when it is explicitly stated in contracts. Put another way, if a provision is not made contractually by way of a force majeure clause, a party will only be able to rely on the very stringent provisions of the common law doctrine of frustration. Under English law, contractual performance will be excused due to unexpected circumstances only if they fall within the relatively narrow doctrine of frustration. This doctrine will apply by default unless the parties agree on something different in their contract.62. A summation of the above distinction leads us to the conclusion that an act of God refers specifically to the natural events that occur and can neither be prevented nor controlled by people. Force majeure applies to contracts to excuse further performance due to both natural disasters and human-caused events such as wars or strikes that prevent a contract from being fulfilled. It must be written into the contract, specifying what kinds of events would apply. Frustration is a common law doctrine which is implied into contracts to allow the discharging parties from further performance due to unforeseen event which makes it impossible to carry out the contract's main purpose, essentially altering the situation so much that the contract no longer makes sense.

29. Flowing from the ratio decidendi [supra], it is apparent that before an Applicant can invoke and rely on the doctrine of force majeure, the Applicant must demonstrate that same [force majeure] was adverted to and captured as one of the terms of the contract. In this case, it behoves the Applicant to demonstrate that force majeure was alluded to and captured in the body of the consent which constitutes the contract between the parties herein.

30. Be that as it may, I have reviewed the terms of the consent which was entered into by the parties herein and it is crystal clear that the parties did not envisage the applicability of force majeure. Simply put, the parties did not provide for its application and invocation in the Consent under reference.

31. Having not provided for the application of the doctrine of force majeure and taking into account the succinct exposition of the law, it is my humble view that the doctrine under reference cannot be invoked and relied upon by the Applicant.

Issue Number 2 Whether the Applicant herein can invoke and rely on the doctrine of frustration to review and varies a portion of the consent or otherwise. 32. Other than the invocation and reliance on the doctrine of force majeure [which has been addressed in the preceding paragraphs] the Applicant has also cited and referenced the doctrine of frustration. To this end, the Applicant has implored the court to find and hold that the doctrine of frustration is applicable to the circumstance of the instant matter. In any event, it has been contended that the events that underpins the invocation and deployment of the doctrine of frustration were beyond the control of the parties.

33. Additionally, it has been submitted that the Applicant herein has shown and demonstrated that the supervening events leading to the invocation of the doctrine of frustration were not self-induced.

34. To buttress the submissions touching on and concerning the relevance of the doctrine of frustration, the Applicant has cited and referenced the decision in the case of Davis Contractors Ltd v FAREHAM U.D.C. [1956] A.C.696 where Lord Radcliffe stated thus;“Frustration occurs whenever the law recognizes that, without the default of either party a contractual obligation has become incapable of being performed because, the circumstances in which the performance is called for would render it a thing radically different from that which was undertaken by the contract...”

35. Having cited and referenced the foregoing decision, the Applicant has thereafter invited the court to find and hold that the doctrine of frustration applies to the instant matter. In particular, the Applicant has invited the court to find and hold that on the basis on the doctrine of frustration, the terms of the consent decree ought to be partially reviewed and or varied.

36. Be that as it may, it is important to state and underscore that where an Applicant invokes and deploys the doctrine of frustration, same [doctrine of frustration] ought to be addressed to the totality of the contract and not to part thereof. Notably, the doctrine of frustration impacts upon the totality of the contract and not part of the contract in the manner adverted to by the Applicant.

37. As pertains to the scope and tenor of the doctrine of frustration, it suffices to revisit the decision of the Supreme Court of Kenya in the case of Kwanza Estates Limited v Jomo Kenyatta University of Agriculture and Technology (Petition E001 of 2024) [2024] KESC 74 (KLR) (6 December 2024) (Judgment), where the court stated as hereunder;71. In summary, the doctrine of frustration releases parties from their contractual obligations when an unforeseen event fundamentally alters the nature of the contract, rendering further performance impossible or significantly different from the original agreement. Key principles include limitation to narrow circumstances, and reliance on events beyond the control or fault of the invoking party, the effect of bringing the contract to an end forthwith, without more and automatically. The final principle is the effect of fully discharging the parties from further liability under the contract from the moment the frustrating event occurs. Though accepted in civil law jurisdictions, the concept of partial discharge has been rejected in common law jurisdictions. This finds footing in the treatise Treitel on the Law of Contract, 11th edition para 50-07 it stated that:“…the contract is either frustrated or remains in force. There is no such concept as partial or temporary discharge frustration on account of partial or temporary impossibility…the concept of partial discharge in English law is restricted to obligations which are severable, whether in point of time or otherwise”As a matter of logic, the doctrine of frustration operates to discharge a contract, bringing it to an immediate and definitive end. Once the doctrine is applied, the contract cannot be deemed suspended or temporarily inoperative; it is terminated entirely unless the parties expressly agree to revive it through a subsequent agreement.72. These are the principles that the Courts have applied time and again when asked to consider the plea of applying the doctrine of frustration. However, the doctrine of frustration is not absolute. The alleging party must prove that the frustrating event occurred without their fault or contribution. Self-induced frustration, where the event results from the party's own actions or breach, cannot be relied upon to terminate a contract.

38. To my mind, if the Applicant herein was seeking to rely on and deploy the doctrine of frustration as the basis for review and/or variation of the consent, then the intended variation and/or review should impact on the entirety of the consent which is the contract beforehand.

39. However, it is not lost on the court that what the Applicant herein desires is to be released and/or discharged from complying with a segment [portion] of the consent and not the others. To this end, it is my humble view that the doctrine of frustration is irrelevant and inapplicable.

40. Other than the foregoing, it suffices to state and underscore that a consent judgment and/or decree, like the one beforehand, can only be reviewed and/or varied on the same terms for review and/or variation of a contract. In this regard, the invocation and reliance on the twin doctrines of force majeure and frustration [which have been referenced by the Applicant] must be interpreted in alike manner as if what was sought to be varied is a contract.

41. Additionally, there is no gainsaying that a consent can only be reviewed and varied on circumscribed grounds. For good measure, the grounds upon which a consent may be varied and/or reviewed have received judicial consideration and pronouncements in a number of decisions.

42. Pertinetly, the grounds for review/variation of a consent were elaborated upon by the Court of Appeal in the case of Brooke Bond Liebig Ltd v Mallya [1975] EA 266: It was there said:-“A court cannot interfere with a consent judgment except in such circumstances as would afford good ground for varying or rescinding a contract between the parties.”

43. Likewise the circumscribed grounds that can be deployed to vary and/or set aside a consent were also highlighted by the Court of Appeal in the case of Samuel Mbugua Ikumbu v Barclays Bank Kenya Ltd [2015]eKLR, where the court stated thus;The law on variation of a consent judgment is now settled. The variation of a consent judgment can only be on grounds that would allow for a contract to be vitiated. These grounds include but are not limited to fraud, collusion, illegality, mistake, an agreement being contrary to the policy of the court, absence of sufficient material facts and ignorance of material facts.

44. Additionally, the grounds to be deployed for setting aside, reviewing and/or varying a consent were revisited in the case of East African Portland Cement v Superior Homes Ltd [2017]eKLR, where the Court of Appeal stated as hereunder;32. ……….. The only issue is whether there were compelling grounds for varying or reviewing the consent decree. Way back in 1952, the predecessor of this Court in Hirani vs Kassam (1952) 19 EACA 131, at 134, stated as follows:“The mode of paying the debt, then, is part of the consent judgment. That being so, the court cannot interfere with it except in such circumstances as would afford good ground for varying or rescinding a contract between the parties. No such ground is alleged here. The position is clearly set out in Setton on Judgments and Orders (7th Edn), Vol 1, p 124, as follows:“Prima facie, any order made in the presence and with the consent of counsel is binding on all parties to the proceedings or action, and on those claiming under them ... and cannot be varied or discharged unless obtained by fraud or collusion, or by an agreement contrary to the policy of the court ...; or if the consent was given without sufficient material facts, or in general for a reason which would enable the court to set aside an agreement.”

45. Flowing from the foregoing analysis, my answer to issue number two [2] is threefold. Firstly, the doctrine of frustration which has been invoked and deployed by the Applicant herein does not apply taking into account the totality of the circumstances. In any event, the doctrine of frustration cannot be relied upon to discharge the Applicant from a portion/part of its obligations.

46. Secondly, it was incumbent upon the Applicant to demonstrate how the alleged supervening events impacted upon its finances and its capacity to perform its obligations under the consent. However, there is no gainsaying that the Applicant herein did not discharge her obligation. For good measure, the averments under reference were not substantiated.

47. Thirdly, it was the obligation of the Applicant to establish and/or demonstrate the circumscribed grounds and/or the existence of a compelling reason to warrant review and/or variation of the consent. However, the Applicant herein failed to meet/satisfy the requisite threshold.

Final Disposition: 48. Flowing from the analysis [details elaborated in the body of the ruling] it must become apparent and evident that the Applicant herein has not demonstrated how the twin doctrine[s] of force majeure and frustration [which are different in nature] have affected the consent under reference.

49. Having failed to meet and/or satisfy the threshold for reviewing and/or varying a consent judgment, the final orders that commend themselves to the court are as hereunder;i.The Application dated the September 25, 2024, be and is hereby dismissed.ii.Costs of the application be and are hereby awarded to the Respondent.iii.The costs in terms of clause [ii] herein above be and are hereby assessed and certified in the sum of kes.30, 000/= only.

50. It is so ordered.

DATED, SIGNED AND DELIVERED AT NAIROBI ON THE 16 TH DAY OF JANUARY 2025. OGUTTU MBOYA,JUDGE.In the presence of:Benson – Court Assistant.Mr. Lawrence Mbabu for the Applicant.Mr. Swanya for the Defendants/Respondents.