Prime Tech Engineering Ltd v Narok County Government [2017] KEHC 1866 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAROK

MISC APP. NO 2 OF 2017

PRIME TECH ENGINEERING LTD ………………………APPLICANT

-VERSUS-

NAROK COUNTY GOVERNMENT...……….……….RESPONDENTS

RULING

CASE FOR THE CONTRACTOR – PRIME TECH ENGINEERING  LTD

1. The applicant [hereinafter referred to as the contractor]through his chamber summons dated 10/7/2017 has applied to this court for the following orders:

1. That the application be certified urgent and heard ex-parte in the first instance.

2. That this court’s ruling dated 23/2/2017 be reviewed and any consequential orders be set aside.

3. That  alternatively the ruling in Misc Appl. No 2 of 2017 be rescinded.

4. That the matter be immediately be placed before  the Hon. Chief Justice for directions.

5. That costs of this application be provided for.

2. The application is supported by 17 grounds that are set out on the face of the chamber summons together with a 30 paragraphs supporting affidavit of Engineer Harrison Omari dated 10/7/2017.

3. The contractor has relied on the following major grounds.

4. In ground (a),  the application has  stated that the dispute between the parties was referred to arbitration on 2/2/2015 and this court delivered a ruling on the application to set aside the arbitral award dated 29/3/2016 on 23/2/2017.

5. That unbeknown to this court, the record in Misc Applic. No. 1/2015 reflects that the Hon. Justice C. Meoli ruled on a preliminary objection dated 22/1/2015 on a point of jurisdiction in which she dismissed the Preliminary objection by the government in the matter.  As a result, the issue between the parties becameres judicata. And for that reason, the respondents were pre-cluded by the doctrine of issue estoppel from re-litigating it.

6. In ground (d), the contractor has stated that the ruling of 23/2/2017 has an error apparent on the face of the record as it amounted to a reversal or re-interpretation of the ruling of Lady Justice Meoli of 2/2/2015.  In ground (e), the contractor has stated that the subsequent ruling of 23/2/2017 amounted to a reversal against a ruling of a court of concurrent jurisdiction, which the contractor states amounts to an error on the face of the record.

7. Additionally, the contractor has stated in paragraph (f) that the ruling of the arbitrator on the issue of jurisdiction was part of the composite final award that was published on 22/3/2016 at paragraph 102 of the award.  The contractor has further stated that the procedure adopted by the government in raising the preliminary objection both in Misc Appl. No 1/2015 and the arbitral proceedings had to be followed and departure would amount to  a mistake apparent on the face of the record.

8. The applicant in paragraph (g) has stated that the issue of jurisdiction was never raised by the respondent in its notice of motion application of 29/3/2016 as is statutory mandated by section 17 (3) and 17 (6) of the Arbitration Act.  He therefore states that the court’s jurisdiction on the issue had therefore not been triggered, which he states similarly amounts to an apparent error on the face of the record.

9. In paragraph (h), the contractor has stated that once the 30 days time limit for bringing a challenge under section 17(6) of the Arbitration Act had lapsed without any application being made, the preliminary ruling on jurisdiction became final.  And further that the ruling was not therefore subject to challenge subsequently whether by way of setting aside of the arbitral award or at the enforcement stage.  A further challenge the contractor states would amount to an error on the face of the record.

10. Furthermore, in paragraph (i), the contractor has stated that the High Court proceeded on the assumption that the sole arbitrator misconstrued the provisions of the Public Procurement and Disposal Act of 2005 and the Public Procurement and Disposal (County Government) Rules 2013 of the award, which the contractor also states is sufficient reason to review the ruling and vacate it on its entirety.

11. In paragraph (j), the contractor has stated that this court re-opened a valid consent that was entered into by the parties in which they assessed works done for the benefit of the government at Sh.35,288,235/=, whereas this consent had not been challenged or vitiated as required by law.

12. In paragraph (k),  the contractor has stated that this court has implicit powers to correct wrong decisions in order to ensure justice between litigants  and to  ensure public confidence in the administration of justice in addition to developing the law.

13. In paragraph (l), the contractor has stated that the court has to have such powers in order to enforce its rules of practice and suppress any abuse of its processes.

14. In paragraph (m), the contractor has stated that the court has residual jurisdiction to re-open or review a matter in appropriate cases.

15. In paragraph (n), the contractor has stated that there is need to maintain public confidence in the administration of justice and  there should be a remedy in a case where bias is clearly established that injustice has probably occurred.

16. In paragraph (o), the contractor has stated that if the orders sought are not granted, the applicant stands to suffer irreparable damage to its business and loss due to a perversion and manifest injustice.  And for those reasons, the contractor states that it is in the interest of justice that this application be granted since the court has jurisdiction to do so.

17. The contractor through  its director (Eng. Harrison Omari), has deponed to a 30 paragraphs supporting affidavit.  He has deponed to the following major matters.  In paragraph 6, he has averred that Hon. Justice Meoli ruled on a preliminary objection on the issue of jurisdiction in relation to the arbitral tribunal to adjudicate over  the dispute between the contractor and the government.  He has annexed the ruling as annex “HIO – 2”.

18. In paragraph 8, he has averred that  unbeknown to the court the record Misc. Appl. No. 1 of 2015 reflect that Hon. Justice Meoli ruled on point of   jurisdiction and dismissed the preliminary objection by the government in the matter.  He has further averred that the issue of jurisdiction became res judicataand the government was precluded by the doctrine ofissue estoppelfrom re-litigating it.  Furthermore, he has averred that this court’s ruling of 23/2/2017 is an error on the face of the record in that it amounts to a reversal or re-interpretation of the ruling of Hon.  Lady Justice Meoli dated 2/2/2015, which is  court  of concurrent jurisdiction.

19. In paragraphs 11, 12, 13, 14 through to paragraph 19, the applicant has expanded in affidavit evidence form that  which its counsel has stated in the grounds in support of the application for review.  In substance, he has deponed to the fact that the matter is res judicata once the 30 days allowed to challenge an arbitral award had lapsed, the government could not challenge the same either by way of setting aside or at the enforcement state.

20. The contractor has further averred that the government were bound by the procedural requirement of the Arbitration Act in sections 17(3) and 17(6).

21. The contractor has further averred that the government  and the arbitrator had entered into a valid consent which tabled a joint measurement report of 4/8/2015 in which  the assessed works done for the benefit of the government was in the sum of Sh.35,288,235/-, which consent had not been challenged or vitiated as required by law.  He had further averred that it was not open to the government to re-open the issue in respect of the ruling on jurisdiction, since the time lapsed under sections 17(3)(6) of the Arbitration Act.

22. The contractor has further averred that it is not open to a party  to hold off the bringing  of a jurisdictional challenge and at the same time  participate in the arbitration on the merit in the expectation that such a party can revive its jurisdictional challenges at a later stage should the arbitration prove to be unsuccessful.  Additionally, it has averred that  such conduct is bound to make a mockery of the finality and the effectiveness of the arbitral awards on jurisdiction.  Furthermore, the contractor has averred that there was no basis to re-examine the question of jurisdiction when it  came to the recognition and enforcement of the arbitral award.  In this regard, it has further averred that in the absence of an appeal,  the decision of the arbitral tribunal on jurisdiction was final.

23. Finally, and more importantly, it has averred that unless the orders sought are granted, the contractor stands to suffer irreparable damage and loss due to a perversion and manifest injustice.

CASE FOR THE RESPONDENTS – NAROK COUNTY GOVERNMENT

24. The government  has  not filed any replying affidavit.  They have also not filed any grounds of opposition.  As matters stand, the contractor application is unopposed.

ISSUES FOR DETERMINATION

25. In the light of the foregoing affidavit evidence of the contractor, the submissions of his counsel, I find the following to be the issues for determination.

1. Whether or not the sole arbitrator had jurisdiction to arbitrate on the gravelling works on Motony-Pimbiniet road.

2. Whether or not the sole arbitrator was bound by the Public Procurement and Disposal Act of 2005 and Rule 31 of the Procurement Procedure and Disposal Rules of 2006.

3. Whether or not the applicant is entitled to the other  prayers sought in its chambers summons.

4. Who should bear the costs of this application.

On issue no. 1

26. In terms of the  arbitral agreement the contractor was to improve and carry out gravelling works on Salabwek-Sachangwan-Mwangaza road.  However, the contractor unilaterally proceeded to improve and carry out unauthorized gravelling works on Motonyi-Pimbiniet road after the contracting parties mutually agreed to terminate the construction contract on 27/8/2014.

27. As a result, the matter was referred to arbitration after the High Court had overruled the government’s objection.  The outcome of the arbitral  proceedings was that the arbitration awarded the contractor a sum of Sh.35288,253/- with interest at 12% and costs which were assessed at Sh.4,806,000/=.

28. Thereafter, the Narok County Government filed an application to set aside the arbitral award which I granted on 23/2/2017.

29. The contractor seeks review of this ruling on the basis  that by virtue of the ruling  of the High Court (Meoli, J.) on jurisdiction the matter became res judicata. The reason being that the government  did not  challenge that ruling as required by section 17(3(6) of the Arbitration Act of 2005.

30. What was being challenged before me was the final arbitral award on the ground that the arbitrator exceeded his jurisdiction, in terms of section 35 of the Arbitration Act.  The challenge was not based on misconduct.  I find that the challenge against the final award of the arbitrator is based on 2 grounds.  First, the arbitrator exceeded his jurisdiction in arbitrating over Motonyi-Pimbiniet road, a matter over which the parties had mutually terminated the contract.  As a result, the contractor was paid off and that brought to an end the contractual obligations of the parties.   I find that the contractor did not have the authority of the Narok County Government to embark on such works.  This was outside the arbitral agreement.  The arbitrator’s authority in the matter ended once it was brought to his   attention that the parties had mutually terminated the contract.  This is more so when it was clear that the government was not aware that the contractor had              re-started  works on Motonyi-Pimbiniet road.  The arbitrator should have  downed his tools as at that time for lack of jurisdiction.

31. In the circumstances,  I find the contention  by the contractor  that this court lacks jurisdiction is not merited.  The reason being that the jurisdiction which was confirmed by the High Court (Meoli, J.) was in  the context  of whether the arbitrator had jurisdiction to determine the arbitral dispute which ended with the mutual termination of the contract between the parties.  In those circumstances, I find that there is no error on the face of the record in terms of Order 45 of 2010 Civil Procedure Rules.  In the circumstances, I find that there is no basis for this court to review its ruling dated 23/2/2017.

Issue No. 2.

32. Furthermore, there is yet another reason as to why this court’s ruling of 23/2/2017 should not be reviewed.  First, the contractor acted in breach of the mandatory provisions of the Public Procurement and Disposal Act  of 2005 and the Public Procurement and Disposal Regulations of 2006, matters which I fully dealt with in  that ruling.  For this court to review and set aside that ruling, would amount to giving  approval to the breaches of the law by the arbitrator  and is contrary to public policy in terms of section 35 (2) (b) (ii) of the Arbitration Act (Cap 49) Laws of Kenya. The arbitrator was bound by the provisions of those statutory enactments.

33. I am mindful of the finality and effectiveness of arbitral awards in respect of jurisdictional challenges under section 17 (3) & (6) of the Arbitration Act.  It is equally important to bear in mind that the contracting parties, the arbitrator and the court must observe the applicable law.  In this regard, I find that the mutual termination of the contractual  obligations on 27/8/2014 in respect of Motonyi – Pimbiniet road also brought with it the end of the arbitral agreement.  It also brought to the end the jurisdiction  of the arbitrator.

34. Furthermore, assuming that the arbitrator had jurisdiction to arbitrate over Motonyi – Pimbiniet road, he could not award an arbitral sum of Shs.35,288,235/=.  The award was contrary to section 47 of the Public Procurement and Disposal Act of 2005.  It also contravened the FIDIC conditions of contract for works of Civil Engineering construction to which the parties in this review application were signatories.  The reason for this is that the contract price was Shs.11,750,000/= and the maximum variation in terms of price would be 15% of Shs.11,750,000/, which in sum total would be Shs.13,512,500/=.

35. Additionally, an error on the fact of the record must be crystal clear and reasonably capable  of one opinion. This is clear from the persuasive authority of the High Court in Draft and Develop Engineers Ltd v. National Water Conservation and Pipeline Corporation, Civil Case No. 11 of 2011, wherein that court stated that:

“An error apparent on the fact of the record cannot be defined precisely or exhaustively, there being an element of indefiniteness inherent in its very nature,  and it must be left to be determined judicially on the facts of each case.  There is a real distinction between a mere erroneous decision and an error apparent on the face of the record.  Where an error on a substantial point of law stares one in the face, and there could reasonably be no two opinions, a clear case of error apparent on the fact of the record would be made out.  An error which has to be established by a long-drawn process of reasoning or on points where there may conceivably  be two opinions can hardly be said to be an  error apparent on the face of the record.  Again, if a view adopted by the court in the  original record is a possible one, it cannot be an error apparent on the face of the record even though another view was also possible.  Mere error or wrong view is certainly no ground for a review although it may be for an appeal.”

36. Furthermore, where an error that has to be established by a long process of reasoning can hardly be said to be an error on the face of the record.  I find that the grounds advanced for review are many and long drawn out and do not qualify as errors in terms of Order 45 of the 2010 Civil Procedure Rules.                                                                                                                                                                                                                                                                                   Issue No. 3

37. Furthermore, in prayer no. 4, the contractor seeks an order to immediately  place this matter before the Hon. Chief Justice for directions.  In this regard, I refer to Order 45 Rule 3 in respect of matters for review that may be heard by another judge  other than the one  who handed down the ruling or order that is sought to be reviewed. In terms of Order 45 Rule 3, the Chief Justice may designate another judge to entertain and determine the review application, if the judge who passed the decree or made the order is still attached to the court but is precluded by absence or other cause for a period of 3 months next after the application for review is lodged.  It is therefore clear that  the provisions of Order 45 (3), do not apply to the instant application,  since I am still attached to the court.  Additionally, I am not absent from the court and  I am not precluded by absence or other cause for a period of 3 months next after the application for review is lodged.

On issued no. 4

In the light of the foregoing matters, I make  no orders as to costs.

38. The upshot of the foregoing is that the application for review is dismissed in its entirety with no order as to costs.

Ruling delivered in open court this 15th day of November, 2017.

in the presence of

Mr. Kiarie Mungai holding brief for Ms Nchogu Omwanza

and

Nyasimi Advocates for the Applicant and

Mr. Oriri holding brief for Prof. Tom Ojienda & Associates for the Respondent.

J. M. Bwonwonga

Judge

15/11/2017