Maersk Kenya Limited v Corporate Legends Limited; Bcs Kenya Limited (Interested Party) [2023] KEHC 25445 (KLR)

Maersk Kenya Limited v Corporate Legends Limited; Bcs Kenya Limited (Interested Party) (Civil Appeal E024 of 2022) [2023] KEHC 25445 (KLR) (Commercial and Tax) (3 November 2023) (Judgment)

Neutral citation: [2023] KEHC 25445 (KLR)

Republic of Kenya

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

Commercial and Tax

Civil Appeal E024 of 2022

EC Mwita, J

November 3, 2023

Between

Maersk Kenya Limited

Appellant

and

Corporate Legends Limited

Respondent

and

Bcs Kenya Limited

Interested Party

(Appeal from the Ruling and Order of the Chief Magistrate’s Court, Milimani Commercial Courts, Nairobi (Hon H. M. Nyaberi (CM), dated 17th February 2022 in CMCC No. 11479 of 2021)

Judgment

Background 1. Corporate Legends Limited (Corporate Legends) a clearing and forwarding company, had a clearing agent account at Maersk Kenya Limited (Maersk)’s trading portal. The two parties signed a container guarantee agreement for a standard dry container. By that agreement, Corporate Legends agreed to return Maersk’s containers within specific timelines. The agreement stipulated that failure to return the container within the specified timelines or if the container was damaged, Corporate Legends would pay detention and administration charges.

2. Maersk claimed that Corporate Legends incurred detention charges of USD. 2,300 which remained unpaid despite demand. Corporate Legends asserted that the delay in returning the container was due to unforeseen circumstances. Corporate Legends sought and was given an indemnity by the interested party against the detention charges accrued.

3. Corporate Legends paid USD 2300 on behalf of the interested party in settlement of the initial detention invoice to Maersk. That notwithstanding, Maersk generated further invoices which Corporate Legends claimed were not substantiated. Maersk also limited Corporate Legend’s transactions on the trading portal.

4. As a result of the disagreements, Corporate Legends filed a suit and application against Maersk before the trial court and sought temporary injunction restraining Maersk from holding delivery orders, pre-release validations (PRVs) and deposit refunds for Corporate Legend’s clients and from limiting Corporate Legends conducting business through the trading portal pending the determination of the suit.

5. After hearing the application, the trial court granted the injunction sought. Maersk was aggrieved and filed this appeal on the grounds that:1. the learned magistrate erred in law and in fact in granting interlocutory mandatory orders to a party in breach of a contract whereas it is trite law that a party in breach of a contract is not entitle to injunctive relief or any other form of relied as it would be approaching Court with unclean hands.2. the learned magistrate erred in law and in fact in granting vague and wide orders without appreciating the effect such orders would have on the business of the appellant and its ability to run its business effectively and profitably.3. the learned magistrate erred in law and in fact in granting interlocutory mandatory orders, yet the respondent was neither deserving of the same nor had it satisfied the high standard of proof required for the grant of such orders.4. the learned magistrate erred in law and in fact in effectively rewriting the contract between the parties by compelling the appellant to continue to do business with a non-paying customer on terms unacceptable to the appellant, which flies in the face of the principle of freedom of contract.5. the learned magistrate further erred in law and in fact in finding that the respondent had made out a prima facie case for the grant of interlocutory mandatory orders, yet the same had not been done as the respondent was and continues to be in breach of the contract between the parties a fact which the learned magistrate failed to take into account or appreciate at all.6. the learned magistrate further erred in law and in fact in finding that the respondent would suffer substantial loss if the orders sought were not granted, yet the said loss had neither been particularized nor proven before the Honourable Court.7. the learned magistrate further erred in law and in fact in finding that the balance of convenience tilted in favour of the respondent, whereas the respondent was actually in breach of the contract between the parties thereby undeserving of any relief.8. the learned magistrate further erred in law and in fact in finding that the appellant would not be prejudiced if the orders sought by the respondent were granted, yet the opposite was true as the appellant’s freedom of contract was compromised as the ruling and order would compel the appellant to engage with a non-paying customer on terms completely unacceptable to it.9. the learned magistrate further erred in law and in fact in granting injunctive orders in the name of protecting interested parties who were not before him and had not made out a case for the grant of the said orders, and further, no evidence had been led by the respondent as to the existence and losses suffered by the said interested parties.10. the learned magistrate misapprehended both the facts and the applicable law in the matter, disregarded the submissions and relevant authorities that were presented before him, and arrived at a decision that was contrary to the law.11. In the circumstances, the learned magistrate failed to do justice as regards the matter that was before him and accordingly erred in law by arriving at the decision that he did, and which ultimately resulted in a gross miscarriage of justice.

6. Maersk urged the court to allow the appeal with costs set aside the ruling and order of the trial court and be substituted with an order dismissing the application dated 27th September 2021 with costs.

7. This appeal was disposed of through written submissions.

Submissions by Maersk 8. Maersk argued that the trial court failed to consider that there were no special circumstances to warrant the grant of mandatory injunction. Maersk contended that since Corporate Legends did not prove existence of its other clients and the losses it incurred from the restriction, the trial court erroneously concluded that Corporate Legends had established a prima facie case.

9. Maersk asserted that it had the right to restrict Corporate Legends’ use of its platform due to the debt and that even the interested party did not confirm that Corporate Legends’ business was hampered due to that restriction.

10. Maersk faulted the trial court for failing to take into account the debt owed by Corporate Legends and that Maersk would be prejudiced by the injunction as it was robbed of the choice to only engage with paying customers.

11. Maersk relied on among others, Giella v Cassman Brown & Company Limited [1973] EA 358 on the principles for granting interlocutory injunction; Jackson M Italakua & another v Kenya Farmers Association Limited (ELRC Case No 43 of 2019) [2021] eKLR and Locabail Finance Ltd v Agroexport (C.A.) [1986] 1 W.L.R. 657 (1985) on mandatory injunctions.

12. Maersk again relied on Caliph Properties Limited v Barbel Sharma & another (ELC Case No 1110 of 2013) [2015] eKLR and Kenya Breweries Limited & another v Washington O. Okeyo [2002] eKLR, for the proposition that he who comes to equity must fulfil all or substantially his outstanding obligations before insisting on his rights or cannot approach the Court with unclean hands.

13. Maersk further relied on Kenya Commercial Finance Co. Ltd v Afraha Education Society [2001] 1 EA 86, that the requisites for the granting an interlocutory injunction must be met sequentially, failure to which the whole application fails.

14. Maersk again cited the decision in Pius Kipchirchir Kogo v Frank Kimeli Tenai (ELC No 221 of 2017) [2018] eKLR, to argue that the trial court erred in finding that the balance of convenience tilted in favour of Corporate Legends yet it was in breach of clear and unequivocal terms of the contract.

Submissions by Corporate Legends 15. Corporate Legends supported the decision of the trial court arguing that the trial court was correct in granting temporary injunction. According to Corporate Legends, the claim is monetary and did not extend to other transactions done through the portal platform. Corporate Legends took the view, that Maersk acted wrongly in limiting the trading portal thereby affecting transactions involving other clients who were not party to the suit.

16. Corporate Legends maintained that the trial court was right in finding that it had established a prima facie case; that it would suffer irreparable loss if the injunction were not granted and that the balance of convenience tilted in its favour.

17. Though the issue in dispute arose from a single transaction, by barring its access to the trading portal, Maersk which holds a monopoly in the shipping industry, caused it to lose business as it could not transact with its pre-existing clients.

18. Corporate Legends relied on the decisions in Mrao v First American Bank of Kenya Limited & 2 others (Civil Appeal No 39 of 2002); [2003] eKLR, on prima facie case and Pius Kipchirchir Kogo v Frank Kimeli Tenai [supra] on substantial loss.

19. Corporate Legends further asserted that the trial court only issued a temporary injunction that subsists only in the course of the proceedings and not a mandatory injunction as Maersk claimed. Corporate Legends relied on Kenya Breweries Limited & another v Washington O. Okeyo [supra] that in granting a mandatory injunction at an interlocutory stage, the case must be clear and even if this court determines that the trial court granted a mandatory injunction, the trial court was right in granting the injunction.

20. Corporate Legends urged the Court to dismisses this appeal with costs.

Determination 21. This is an interlocutory appeal arising from the ruling and order of the trial court granting an injunction restraining Maersk from limiting Corporate Legends’ use of its (Maersk’s) trading portal, pending determination of the suit in that court. At the time of hearing this appeal, that suit had not been set down for hearing. The core issue in this appeal therefore is whether the trial court erred in granting the injunction.

22. In granting the injunction the trial court exercised judicial discretion. In that regard, it is settled law that an appellate will not interfere with the exercise of the discretion of a trial court unless it is satisfied that the trial court misdirected itself and as a result arrived at a wrong conclusion. (Mbogo v Shah [1968] E.A. 93; Stephen Wanyee Roki v K-Rep Bank Limited & 2 others [2018] eKLR).

23. In Patel v E.A. Cargo Handling Services Limited [1974] E.A. 75, the Court of Appeal held that when exercising discretion, there are no limits or restrictions on the judge ’s discretion. The main concern of the court is to do justice to the parties and the court will not impose condition on itself or fetter the wide discretion given to it by the rules.

24. The courts should also endeavour to ensure that the factors considered are in tandem with the overriding objective in civil litigation: That is; the just, expeditious, proportionate and affordable resolution of disputes before the court. (Stephen Wanyee Roki v K-Rep Bank Limited & 2 others) (supra).

25. I have read the record and the impugned ruling. The trial court considered the application and noted that Corporate Legends conducted business through Maersk’s portal (PRV system) through which orders and clearances were made. The trial court was of the view that it would be more damaging if Corporate Legends’ clientele were cut out of communication due to limited transactions.

26. The trial court further observed that Corporate Legends would suffer irreparable damage due to limited transactions in the PRV code as goods belonging to other parties would not be cleared in time thus attracting penalties and other charges.

27. The trial court therefore granted a temporary injunction restraining Maersk from holding delivery orders, pre-release validations and deposit refunds for Corporate Legends’ clients not party to the suit pending determination of the suit.

28. The trial court further granted a temporary injunction restraining Maersk from limiting Corporate Legends’ practise on the trading portal until determination of the suit.

29. It is undisputed that the orders granted were temporary pending determination of the suit and were issued in exercise of the court’s discretion. The argument that the trial court granted a mandatory injunction is not correct since the orders were restraining in nature and scope.

30. According to Corporate Legends, the reasons Maersk had given for limiting its transaction through the portal were based on invoices made to the interested party and the detention invoice had been caused by actions of Maersk’s sister company. The invoice should have been borne by Eric India Ltd and not Corporate Legends or the interested party.

31. A perusal of the record and the impugned ruling, shows that the trial court considered the facts of the matter and being satisfied that granting a temporary injunction was deserved, exercised its discretion in favour of granting the orders.

32. In the circumstances, I do not find merit in the submission that the trial court erred in granting the injunction. This is so given that the main suit is yet to be heard and the dispute before the trial court resolved in one way or the other.

33. For the foregoing reasons, this appeal fails and is dismissed with costs.

DATED SIGNED AND DELIVERED AT NAIROBI THIS 3RD DAY OF NOVEMBER 2023E C MWITAJUDGE