Lule Autospares Ltd v Rift Valley Agricultural Contractors Ltd [2014] KEHC 36 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAKURU

CIVIL APPEAL NO. 45 OF 2004

(Being an appeal from the Ruling/Orders of Hon. S. Muketi, SRM, Nakuru delivered on 19th February, 2004 in Nakuru CMCC No. 270 of 2004)

LULE AUTOSPARES LTD......................................................................APPELLANT

VERSUS

RIFT VALLEY AGRICULTURAL CONTRACTORS LTD..................RESPONDENT

JUDGMENT

1. This appeal arises from the decision of the lower court  made on 19th February 2004  in  relation  to  the  Chamber  Summons  dated  5th February 2004 wherein  the Plaintiff (Respondent  herein)  had  sought,  inter  alia,  the  following orders, that -

(1) …

(2) pending the hearing and determination of this application the Plaintiff/ Applicant be allowed to repossess the earth  moving machines registration numbers X-GK 8061  engine No. 96F 1119 and KUH 332 engine No. 99 E7750,

(3) pending the  hearing  and  determination  of this  suit  the  defendant  by itself, its servants and  or agents be restrained by way  of an injunction from  holding, using or in any other manner interfering with  the Plaintiffs  quiet and  peaceful possession of the  machines  mentioned in paragraph 2 hereinabove)

(4) the officer commanding Nakuru) Molo) Busia  or any   other  Police Stations in the whole area of command the said machines  may be do provide security,

(5) the costs of the application be provided for.

2.  The  synopsis of the Plaintiffs (Respondent) case was that by an Agreement dated 8th April 2002, it hired 2 graders of Caterpillar to the Defendant (Appellant) for a period of 7 months commencing on 1st January  2002 and ending on 30th July 2002. It was agreed by the parties that upon expiry of the lease period or completion of its project, the Appellant would return the machinery to the Yard at Nakuru. However, the Respondent  alleged that  despite  written  requests,  by letters dated  19th December 2003 and 2nd January 2004, the  Appellant refused to return or deliver the said machinery as agreed. Therefore, the Respondent sought a declaration that retention of its machinery by the Appellant was unlawful, general damages for conversion and costs of the suit.

3. The Respondent also sought   interlocutory reliefs in the Chamber Summons dated 5th February 2004, who’s Ruling is the subject of this appeal.  The Summons aforesaid, was heard ex-parte in the first instance and allowed in terms of prayers (2) and (4) thereof. Upon being served, the Respondent filed Grounds of Opposition dated 9th February 2004 and a Replying Affidavit of Nashon Oluoch sworn on 10th February 2004. It contended  that the application  was pre-mature under  the  agreement,  that  the  court  lacked  jurisdiction  to  determine   matters outside Nakuru, the application had not satisfied the requirements for grant of an interlocutory injunction set out in GIELLA Vs. CASSMAN BROWN & COMPANY LIMITED [1973] E.A. 358 and the orders granted ex-parte are premature as they were conclusive and condemned the Appellant without being heard.

4. The Appellant further contended that the spirit of the agreement was that it would retain the machinery until completion of the projects assigned to it by the then Ministry of Roads, Housing and Public Works. Thus after the 7 months period stipulated in the agreement lapsed the two continued working together and the Appellant annexed payment vouchers of cash advances to the Respondent.

5. However, the Appellant alleged that at the time when it acquired the machines, they were not in good working condition. It repaired and reconditioned them at its own expense pursuant to an oral agreement with the Respondent that the costs would be deducted  from the moneys to be paid for the hiring. As these costs had not been reimbursed, the Appellant  was holding the machinery as lien.

6. In her Ruling, the learned Magistrate found that she had territorial jurisdiction as the cause of action arose in Nakuru where both parties carry on business. She however declined to make a finding on the claim that the subject matter exceeded her  pecuniary jurisdiction  as the  issue was  raised  for the first time during submissions  and  the  claim that  the  machinery  was  worth  Kshs. 8 million was made from the bar. In any event had the issue been properly raised, the court had jurisdiction to determine the matter as the dispute was not one of ownership and had nothing to do with the value of the property.

7. The court further held that the contract was for a period of 7 months. However, as the Respondent had by its conduct indicated that they still recognized the  contractual  relationship,  they  could  not  repossess the machinery without notice.Therefore,  as  the  machines had been repossessed by the Respondent pursuant  to  the  ex-parte order issued on  6th February  2004, she ordered the Respondent to release the machines to the Appellant, at the Appellant's costs. She further  directed  the  parties  to  operate under the terms of the agreement  in relation to the daily charges and costs of repairs and that the Appellant shall hand over the machinery, in good working condition, to the Respondent within 30 days.

8. Aggrieved by the finding of the court, the Appellant has appealed to this court on four grounds set out in the Memorandum of Appeal dated 22nd March 2004, that-

(a) the trial magistrate erred in law and fact in failing to consider that she had no monetary jurisdiction to entertain the suit before her,

(b) that  the trial court erred in law and in fact when she failed to take into account that by making  an order that the Respondent do repossess the Caterpillars, she concluded the suit before her,

(c) that  the  learned magistrate  erred in  law  and  fact when on  her own motion  she  made  an  order  determining the contract  between  the Appellant and the Respondent,

(d) that  the  learned magistrate  erred in law  and  fact when she directed the  Appellant  to  return  the  Caterpillars to  the Respondent after 30 days in good working condition without any knowledge of each caterpillar's mechanical condition.

9. The appeal   was   canvassed   by way of written submissions; the Appellant's were filed on 22nd June 2011 while those of the Respondent were filed on 14th November 2011. The issues for determination in this appeal are-

(a) Whether the trial court had jurisdiction to entertain the matter before her; and

(b) Whether the trial court erred in granting the order issued on 19th February 2004.

Of whether the court had the requisite jurisdiction

10. The Appellant objected to the territorial and pecuniary jurisdiction of the lower court. Jurisdiction was defined by the case of OWNERS OF THE MOTOR VESSEL "Lillian S Vs. CALTEX OIL (KENYA) LIMITED [1989],quoting an excerpt fromWords and Phrases Defined- Vol3: I-N, Page 113-

"By  jurisdiction is meant the authority which a court has to decide  matters   that   are  litigated  before  it   or  to   take cognisance of matters  presented in  a  formal  way  for  its decision. The limits of this authority are imposed by the Statute, Charter or Commission under which the court is constituted, and may be extended or  limited  by  the  like means. A limitation  may either be as to the kind and nature of actions and matters  of which the particular cognisance, or as to the area over which the jurisdiction shall extend, or it may partake both of these characteristics....Where a court takes upon itself to exercise a jurisdiction which it does not possess, its decision amounts  to nothing. Jurisdiction must be acquired before judgment is given."

11. The first limitation to the  jurisdiction of the Resident  Magistrate's court is found under the Civil Procedure Act, which provides for the places where suits may be instituted, thus providing for the territorial jurisdiction of  the Subordinate Courts.Section 14 thereof provides that a suit for compensation for a wrong against the Plaintiff or movable property may be filed where the cause of action arose or where the defendant resides or ordinarily carries on business. The Plaintiff is given an option to choose the forum in which he wishes to be heard.

12. I have  perused the pleadings herein and note that  the Appellant's address is listed as P.0. Box 13945 Nakuru. Therefore it appears that the Appellant carries on business in Nakuru. Further it was not disputed that  the cause of action herein arose in  Nakuru.  Consequently, I find  that the trial magistrate had the requisite territorial jurisdiction to determine the matters herein.The fact that one of the machines is located in Busia,outside the territorial jurisdiction of the court had no bearing on the place of filing the suit.

13. The pecuniary jurisdiction of the Resident Magistrate's Court in civil matters is provided for under Section 5 (1) of the Magistrates Courts Act, (Cap 10, Laws of Kenya) as follows-

"S. 5(1) Subject to any other written law the Resident Magistrate's Court shall have and exercise jurisdiction and powers in proceedings of a civil nature in which the value if the subject matter in dispute does not exceed ..... Provided that the Chief Justice may, by Notice in the Gazette increase the limit of jurisdiction.”

14. Accordingly, the court can only deal with proceedings of a civil nature whose subject  matter  has  a value  falling within  the  monetary  limit set  out  in Section 5(1). The Respondent contended that the term subject matter refers to the value of the Plaintiffs claim. As such, where the claim was for an injunction or enforcement of a contract as is in the present case, it was not possible to place a monetary value to the claim. Therefore the court should find that the subject matter of the suit to be the relief sought.

15. The term "subject matter" has the three possible meanings. In Black’s Law Dictionary, Ninth Edition:  the term means either “the issue presented for consideration, or the thing in which a right or duty has been asserted, or the thing in dispute."   Under the above definition the two machines leased  out to the  Appellant  also  constitute  the  subject  matter  of  the  suit  contemplated   by Section 5 of the  Magistrate's Court Act. Any orders whether of repossession or injunction are   pegged   on   their   monetary   value   falling within   the   court's jurisdiction. The fact that  ownership  thereof  was not  contended  did  not  in my view have any bearing to this issue, and the court erred in finding otherwise.

16. The Appellant contended that their value exceeded the pecuniary jurisdiction of the lower court. Although there was no evidence submitted on their value, Counsel submitted that the two graders or earth-moving machines are not cheap and the court ought to have taken judicial notice of their monetary value. I disagree  with  the  submissions of Counsel  in  this  regard as the  value of  the machines was  not  a  matter  that  the  court  could  take  judicial  notice  of under Sections 59 and 60 of the Evidence Act, Cap 80.

17. The  court  must  therefore decide the issue based on the facts and evidence before it, no matter  how scanty or limited as once raised, it is a question that must be determined  forthwith. It is therefore my view that without evidence as to the value of the machines, the court could not determine this question. The challenge on the jurisdiction of the lower court is dismissed as there was no basis laid to challenge the same.

Of whether the mandatory injunctive orders of 19th February were properly issued

18. The purpose of an interlocutory injunction issued under Order 40 of the Civil Procedure Rules, 2010, is to preserve the property in dispute or the rights of the parties pending the hearing and determination of the suit. It is intended to preserve the status quo pertaining as at the time when the cause of action arose pending the final declaration of the rights of the parties.

19.  The principles for granting an interlocutory injunction as per the celebrated case of GIELLA Vs. CASSMAN BROWN [1973] E.A 358,  are that the Plaintiff must demonstrate a prima facie case with a probability of success, that he stands to suffer irreparable  damage  unless the orders  sought  are  granted  and where the court is in doubt, it will decide the application on a balance of convenience.

20. The Respondent herein  however did not seek to maintain  the status quo  of the  matter  or  to  restrain  the  Appellant from  doing  any  act  that  may prejudice the suit and defeat the rights of the parties if not granted at that interlocutory stage. It sought to be allowed to repossess the machines which were at the time in the possession of the Appellant. The orders sought in the interlocutory application were similar to the final orders sought in the Plaint.

21. The orders sought  being for a mandatory injunction,  the Respondent had  to  demonstrate  in  addition  to  the  principles in  GIELLA VS. CASSMAN BROWN (supra), a clear case and special circumstances. The distinction between a mandatory injunction and the other types of injunctions was laid out by Megary, J in the   English case of SHEPHERD  HOMES Vs SANDHAM [1979]  3 W.L.R. 348, cited with approval by the Court of Appeal in KAMAU MUCUHA  Vs THE RIPPLES LIMITED, Civil Application  No. NAI 186 of 1992, (U/R), as follows-

"Whereas a prohibitory injunction merely requires abstention from acting, a mandatory injunction requires the taking of positive steps, and may (as in the present case) require the dismantling or destruction of something already erected or constructed. This will result in a consequent waste of time, money and materials if it is ultimately, established that the defendant was entitled to retain the erection."

22. Thus, in HASSAN Vs. ADAN [2007] E.A. 178 the court held that the Plaintiff bears a much higher standard of proof than that set out in GIELLA Vs. CASSMAN BROWN (supra). The court was of the view that the principles applicable for  the grant of  a  mandatory  injunction,  to  be  those set  out  in LOCABAIL INTERNATIONAL FINANCE LIMITED Vs. AGRO-EXPORT & ANOTHER [1986] ALLER 901 -

A mandatory injunction ought not to be granted in an interlocutory application, in the absence of special circumstances and then only in cases where the court thought that the matter ought to be decided at once or where the injunction was directed at a simple summary act, which could easily be remedied or where the Defendant has attempted to steal a match on the Plaintiff. Moreover, before granting a mandatory injunction the court has to feel a high sense of assurance that at the trial it would appear that the injunction had rightly been granted, that being a different and higher standard that was required for a prohibitory injunction."

23. I have carefully considered the affidavits of the parties herein and I find that the application the subject of the appeal herein did not meet the above threshold. Firstly it was not contended that the Appellant took possession of the machinery pursuant to the agreement by the parties. The dispute was essentially the duration for which the same had been leased.  Although alleged by the Respondent to be for 7 months, the Appellant contended that under clause 6 of the Agreement, the contract was upon the expiry of the 7 months period to be extended until completion of the projects being undertaken by the Appellant.

24. The Appellant in addition contended that even after the expiry of the 7 months, there was evidence that  the Respondent continued  to accept payment from the Appellant as under the contract although the authenticity of some of the receipts were disputed  by the  Respondent. Thus by its conduct the Appellant intimated that the agreement was still in force,

25. From the above it is clear that this was not a clear and simple case for which the interlocutory mandatory injunction could be granted to the Respondent. Having demonstrated  that it may have an interest over the machines which can only  be determined  after  full  hearing,  the  Appellant was  entitled  to  retain possession of the machinery pending the final disposal of the suit. In addition the balance of probability tilted in favour of the Appellant as it was at the time undertaking projects pursuant to contracts issued by the then Ministry of Roads and Public Works. Any damage suffered by the Respondent could be properly compensated under the terms of the contract between the parties.

26. Further at this interlocutory  stage, and  having  not  had  a chance  to consider all the evidence or heard the submissions and arguments  of the parties the  court  should  refrain  from  making  any  findings on  disputed  facts  or  final orders.  The correct approach   is set out in MBUTHIA Vs.  JIMBA CREDIT FINANCE CORPORATION & ANOTHER [1988] KLR I -

"…not to decide the issues of fact, but rather to weigh up the relevant strength of each side's proposition."

27. Consequently, it is my finding that the trial court erred when it made conclusive findings  as to  the  duration  and  the  rights  of the  parties  under  the contract. It erred when it made a finding that it could not have been the intention of the parties for the contract to be until the completion of the works given to the Appellant by the Ministry, without hearing the parties on the same and while their conduct demonstrated that it may have been the case and having found that their conduct demonstrated that the contract was still in existence after the expiry of the 7 months stipulated therein. I also agree with the Respondent that the court erred in directing the Appellant to hand over the machines to the Respondent in good working condition  while it was not clear under  what  condition  they were hired.The court in essence terminated the contract without affording the parties a chance to be heard.

28. For the above  reasons, the  appeal herein succeeds and the orders issued on 9th February 2004 are hereby set aside, and substituted as follows-

(a) the lower court has territorial and pecuniary jurisdiction to hear the sui,t

(b) The application dated 5th February 2004 is dismissed

(c) The Appellant shall retain possession of the machines registration Nos. X­ GK 8061 engine No.  96 F   and KUH 332 engine NO. 99 E7750 pending the hearing and determination of the suit

(d) the terms as to the costs of the lease and repair of the machinery shall be as per the agreement of the parties dated 8th April 2002

(e) The Appellant shall have the costs of this suit.

Dated, signed and delivered at Nakuru this 6th day of June, 2014

M. J. ANYARA EMUKULE

JUDGE