Provincial Construction Co. Ltd v Attorney General on Behalf of the Ministry of Health [2017] KEHC 10045 (KLR)

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REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

MILIMANI COMMERCIAL COURTS

COMMERCIAL & TAX DIVISION

MISCELLANEOUS CAUSE NO 208 OF 2015

PROVINCIAL CONSTRUCTION CO. LTD......CLAIMANT

VERSUS

THE HON. ATTORNEY GENERAL ON  BEHALF OF

THE MINISTRY OF HEALTH......................RESPONDENT

RULING

[1] The application that is coming up for Ruling is the Claimant/Applicant's, Chamber Summons dated 7 May 2015, whichwas filed pursuant to Sections 36(1) and Section 40(a) and (d) of the Arbitration Act, Chapter 49 of the Laws of Kenya and Rules 4(1), 6, 9 and 11 of the Arbitration Rules, 1997, for the following orders:

[a] The Final Award of the sole Arbitrator, Norman Mururu, dated 11 February 2003 be recognized as binding and thus be adopted as the Judgment of the Court;

[b] That leave be granted to the Claimant to enforce the Award as a decree of the Court;

[d] That the Court be at liberty to grant any such further orders as it deems fit and appropriate in the circumstances;

[d] That the Respondent do pay the costs of the application.

[2] The application was premised on the grounds that the Arbitrator made an Award against the Respondent on 11 February 2003, and that despite correspondence with the Respondent demanding payment of the sums awarded, the Respondent has failed to pay the amount due and owing to the Claimant. In support of the application the Applicant relied on the Affidavit of Lalji V. Hirani annexed thereto, wherein it was deposed that the Claimant company was contracted by the Ministry of Health in 1979 to undertake the construction of certain facilities at the Nyeri Provincial Hospital. The project cost was agreed at Kshs. 12,000,000. It was further averred by the Claimant that it was a term of the Contract that any dispute arising between the parties pursuant to the Contract would be referred to arbitration.

[3] Mr. Hirani also deposed that a dispute did arise between the parties with regard to the construction of the kitchen, laundry and boiler-house facilities at Nyeri Provincial Hospital which was referred to Mr. Norman Mururu for arbitration on 27 January 1993. Thereafter, on 29 January 2003, the parties entered into an agreement to compromise the claims and counter-claims presented for arbitration. Thus, the only issue left for determination before the Arbitrator was the rate of increase of the tax payable during the currency of the contract. It was further averred by Mr. Hirani that, after hearing the parties on this issue, the Arbitrator made his Final Award on 11 February 2003 in favour of the Claimant in the total sum of Kshs. 13,653,683. 50 together with interest at the simple rate of 14% per annum until payment in full. The Claimant's complaint herein is that the aforesaid amount remains unpaid from 11 February 2003to date. Accordingly, the Claimant moved the Court herein for the recognition and enforcement of that Award.

[4] In response to the application, the Respondent filed a Notice of Preliminary Objection dated 8 June 2015, contending that the application is time-barred by dint of Section 4(1)(c) of the Limitation of Actions Act, which requires that an action to enforce an Arbitral Award be brought within six years from the date of the Award. Accordingly, the Respondent urged for the dismissal of the application dated 7 May 2015.

[5] The Claimant thereafter filed a Supplementary Affidavit sworn by Lalji V. Hirani on 29 June 2015 in response to the Preliminary Objection, in which he deposed that the parties were all along engaged in long and meaningful consultations on the matter of the Award by Mr. Norman Mururu dated 11 February 2003; and that the Respondent had acknowledged the debt in writing and even prepared some payment vouchers in favour of the Claimant. It was accordingly the contention of the Claimant that the Respondent was merely intent on denying it its dues, and should therefore not be entertained by the Court.

[6] The Preliminary Objection was canvassed by way of written submissions and a Ruling delivered thereon by the Court dated 28 October 2016. The Court was of the view that, since the matters raised in the Preliminary Objection were matters that involved an examination of contested evidence presented by way of the Affidavits and the annexures thereto, the Preliminary Objection had been wrongly taken, granted that a preliminary objection properly so called is one that raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct, and therefore cannot be raised if any fact is to be ascertained or if what is sought is the exercise of judicial discretion. (see Mukisa Biscuits Manufacturing Co. Ltd vs. West End Distributors Ltd) Accordingly, the Court directed that the  Chamber Application dated 7 May 2015 be fixed for hearing for disposal on the merits.

[7] Pursuant to the directions given herein by the Court on 21 March 2017, the parties filed and exchanged  their respective written submissions dated 25 May 2017 and 29 June 2017, on which they relied to canvass the application. Counsel for the Claimant reiterated his arguments in connection with the self-sufficiency of the Arbitration Act, and highlighted the provisions of Sections 10, 32A and 35 thereof to support his argument that the Court can only intervene in arbitration matters in the manner set out therein; and therefore that the applicability of the Limitation of Actions Act has been expressly ousted thereby. Counsel relied on the decision of the Court of Appeal in Nyutu Agrovet Limited vs. Airtel Networks Limited [2015] eKLRto support the foregoing argument.

[8] It was further the submission of Counsel for the Claimant that since there appears to be an apparent conflict between the Arbitration Act and the Limitation of Actions Act, the latter legislation must yield to Arbitration Act, not only for the reason of it being the latter statute, but for the reason also that it is a specific statute. It was his argument that this is an instance where the maxim Generalia Specialibus Non Derogantis applicable. He cited the cases of Secretary General of the East African Community vs. AngellaAmudo [2013] eKLR and Shri Prince Shivaji Maratha Boarding House's College of Architecture, Kolhapur & Others vs. State of Mah and Others Writ Petition No. 5942 of 2004 in which the maxim found consideration and application. The Claimant also urged the Court to uphold the principle of finality of arbitral awards, contending that Section 36 of the Arbitration Act, being couched in mandatory terms as it is, does not leave room for court intervention, save as otherwise stipulated in the Act.

[9] Further to the foregoing arguments, it was the Claimant's submission that the Respondent did in fact acknowledge the Award and therefore that the clock had been reset, for purposes of limitation, to run from the date of the last such acknowledgement, pursuant to Section 23(3) of the Limitation of Actions Act; the last acknowledgement being the letter dated 17 May 2010. The Court was thus urged to find that the formalities as to acknowledgements as set out in Section 24of the Act have been satisfied, in that:

[a] There are letters that have been annexed to the Supplementary Affidavit, to show that the Award was acknowledged and that efforts were being made to process the payment.

[b] That the acknowledgment was made by authorized persons in the Ministry of Health; and that the Claimant relied on those promises to pay.

[10] The Claimant also relied on Article 159 of the Constitution, which now makes it imperative that alternative forms of dispute resolution, including reconciliation, mediation and arbitration, be promoted; and argued that any decision that would seek to curtail efforts to that end would be an affront to the letter and spirit of the Constitution. It was further urged that all the Claimant did was to promote these alternative forms of dispute resolution and that it was never at any time indolent in the pursuit of this Award; which is why the Respondent not only acknowledged the Award but also prepared payment vouchers for settlement of the same and provided copies thereof to the Claimant as proof of intention to pay. Counsel accordingly urged the Court allow the Claimant's Chamber Summons application dated for the adoption and enforcement of the Arbitral Award dated 11 February 2003.

[11] The Respondent, on the other hand relied on the Further Affidavit sworn by the Principal Secretary, Ministry of Health, Mr. Julius Korir, sworn on 22 May 2017. The Respondent's main argument is that the application for recognition and enforcement of the Award that was filed herein by the Claimant is time-barred by statute and therefore incompetent, for the reason that it was filed outside the limitation period of 6 years without any order for extension. The Respondent therefore posited that, in the premises, the Court lacks the jurisdiction to entertain the chamber application dated 7 May 2015.

[12] According to the Respondent, no fresh accrual of right of action arose on account of an acknowledgement as alleged by the Claimant as no valid acknowledgement or part payment as provided for in Section 23 of the Limitation of Actions Act have been proved. In the submission of the Respondent, the documents relied on by the Claimant to prove acknowledgement were documents between Government Agencies and officials which, save for communication with the project manager, are not attributable to the Respondent. It was further argued by Counsel for the Respondent that any acknowledgement under Section 23 of the Limitation of Actions Act must be in the form and manner contemplated under Section 24 of the Act, in that the acknowledgement must be in writing and must be made to the Claimant or its agent, which is not the case herein. Thus, the Court was  urged to dismiss the Claimant's application with costs.

[13] Having carefully considered the Chamber Summons application dated 7 May 2015 , the grounds upon which it has been brought and the respective affidavits filed by the parties in connection therewith as well as the written submissions made by their Counsel, it is manifest that most of the facts are not in dispute. For instance, it is not in dispute that the parties entered into a contract on 20 January 1979 for the construction of certain facilities at Nyeri Provincial Hospital and that thereafter a dispute arose between them, which was referred to arbitration. It is also not contested that the Arbitrator, Norman Mururu, accordingly facilitated an amicable settlement and an agreement was signed by the parties to that effect dated 29 January 2003. Thus, the only outstanding question for the Arbitrator to resolve was whether the loss incurred by the Claimant due to increase in the rate of sales tax during the currency of the contract was claimable. That single issue was then inquired into by the Arbitrator and an Award made on 11 February 2003 encompassing the sums agreed upon and the tax element. Hence, the Final Award was made in the sum of Kshs. 13,653,683. 50, payable in 45 days of taking up the award, failing which interest would accrue thereon at 14% until full payment. It is also manifest that after the Award was published, the parties continued to engage in negotiations on payment and when these negotiations yielded no fruit, the Claimant opted to seek the adoption and enforcement of the Award by filing the instant application. Accordingly, the main issue that presents itself for my determination is whether the application is time-barred by dint of Section 4(1)(c)of the Limitation of Actions Act.

[14] Section 4(1) of the Limitation of Actions Act provides that:

"The following actions may not be brought after the end of six years from the date on which the cause of action accrued--

(a) ...

(b) ...

(c) actions to enforce an award..."

The Claimant did not dispute the fact that it moved the Court for enforcement of the Award dated 11 February 2003outside the 6 year period aforementioned. It was however the contention of the Claimant that the parties have all along been on talking terms, and that in the course thereof, the Respondent made various acknowledgements to it. That it was for this reason it took time waiting and hoping that payment would be forthcoming from the Respondent.

[15] The Claimant relied on the various documents annexed to the Supplementary Affidavit sworn on its behalf by Lalji V. Hiranito prove its contention that the debt was thereafter acknowledged by the Respondent, thereby re-setting the clock for purposes of the Limitation of Actions Act. The said documents comprise of letters to the Ministry of Health from the Ministry of Finance and the Office of the Attorney General as well as copies of Payment Vouchers, Statements of Account and the Agreement pertaining to the subject project; which, in the submission of the Respondent's Counsel do not amount to acknowledgement at all for purposes of Section 23(3) of the Limitation of Actions Act.

[16] Section 23(3) of the Limitation of Actions Act does recognize that:

"Where a right of action has accrued to recover a debt or other pecuniary claim ..., and the person liable or accountable therefor acknowledges the claim or makes any payment in respect of it, the right accrues on and not before the date of the acknowledgement or the last payment..."

Section 24of the Act, on the other hand provides that:

"(1) Every acknowledgement of the kind mentioned in section 23 of this Act must be in writing and signed by the person making it;

(2) The acknowledgement or payment mentioned in section 23 of this Act is one made to the person, or to an agent of theperson, whose title or claim is being acknowledged, or in respect of whose claim the payment is being made, as the case may be, and it may be made by the agent of the person by whom it is required by that section to be made.

[17] Going by the foregoing requirements, it is manifest that the documents relied on by the Claimant do not fit the bill. First and foremost, the Contract Agreement dated 20 January 1979 is irrelevant for purposes of Section 4(1)(c) of the Limitation of Actions Act, for it was superseded by the Award of the Arbitral Tribunal. Needless to say that the Payment Voucher dated 25 November 2008, being an internal document to the Ministry of Health cannot pass for an acknowledgement of the Claimant for purposes of Section 24 of the Limitation of Actions Act. In any event it was not signed or processed to conclusion. More importantly, it was not signed by the AIE Holder or authorized for payment as is required. Similarly, the letters dated 9 January 2007 and 28 February 2009 were not addressed to the Claimant, but were correspondence exchanged between the Office of the Attorney General, the Ministry of Finance and the Respondent; and while they evince the clear intention by the Respondent to pay for the works, they were not addressed to or copied to the Claimant. To that extent therefore, they do not amount to acknowledgment "...made to the person, or to an agent of the person, whose title or claim is being acknowledged, or in respect of whose claim the payment is being made..."More importantly, the letters were not written by the Respondent. In the premises, there is no proof that the claim was acknowledged for purposes of Section 23(3) of the Limitation of Actions Act.

[18]Given the foregoing scenario, the question to pose is whether, as was urged by Counsel for the Claimant, the Court should ignore the aforestated provisions of the Limitation of Actions Act and rely exclusively on the Arbitration Act on the basis of the doctrine of Generalia Specialibus Non Derogant. The Indian Supreme Court in Commercial Tax Officer, Rajasthan V M/S Binani Cement Ltd. & Another expressed itself thus in respect of the doctrine:

The rule of statutory construction that the specific governs the general is not an absolute rule but is merely a strong indication of statutory meaning that can be overcome by textual indications that point in the other direction. This rule is particularly applicable where the Legislature has enacted a comprehensive scheme and has deliberately targeted specific problems with specific solutions. A subject specific provision relating to a specific, defined and descriptable subject is regarded as an exception to and would prevail over a general provision relating to a broad subject.

[19] Accordingly, I did not find helpful the case of Secretary General of The East African Community vs. Angella Amudo [2013] eKLR for it appears to me that it was concerned with the construction of general vis-a-vis specific provisions of the East African Community Treaty. It is pertinent that the Court held thus:

"We therefore, accept the guidance provided by Halsbury's Laws of England (above) that: "If the words of a statute are clear and unambiguous, they themselves indicate what must be taken to have been the intention of Parliament, and there is no need to look elsewhere to discover their intention or their meaning." Further, that; "Whenever there is a particular enactment and a general enactment in the same statute, and the latter in its most comprehensive sense, would override the former, the particular enactment must be operative, and the general enactment must be taken to affect only the parts of the statute to which it may properly apply..."

[20] There is however no gainsaying that the maxim applies equally to conflicting provisions of different enactments, which appears not to be the case herein. However, it is noteworthy that the Arbitration Act does not contain a limitation provision that can be deemed to be in conflict with Section 4(1)(c) of the Limitation of Actions Act. Accordingly, I take the view that there was no intention, on the part of the Legislature, in enacting the Arbitration Act, to do away with the aforesaid provision of the Limitation of Actions Act. Indeed, the canons of construction of statutes generally favour the presumption against repeal in such situations. This was held to be the case in the persuasive case of The State of M P vs Kedia Leather and Liquor Ltd & Others [2003] 7SCC 389  in which it was observed thus:

"There is a presumption against a repeal by implication; and the reason of this rule is based on the theory that the legislature while enacting a law has complete knowledge of the existing laws of the same subject-matter, and therefore,when it does not provide a repealing provision, the intention is clear not to repeal the existing legislation."

[21]Additionally, it is instructive to bear in mind the purpose and object of the Limitation of Actions Act; which was well elucidated in Rawal v. Rawal (1990) KLR 275,byBosire, J (as he then was) as follows:

“The object of any limitation enactment is to prevent a plaintiff from prosecuting stale claims on the one hand, and on the other hand protect a defendant after he had lost evidence for his defence from being disturbed after along lapse of time. It is not to extinguish claims”.

And in Iga v. Makerere University [1972] EA 65 the same viewpoint was expressed thus:

“A plaint which is barred by limitation is a plaint “barred by law.”A reading of the provisions of sections 3 and 4 of the Limitation Act (Cap 70) together with Order 7 rule 6 of the Civil Procedure Rules seems clear that unless the appellant in this case had put himself within the limitation period by showing the grounds upon which he could claim exemption the court “shall reject” his claim...The Limitation Act does not extinguish a suit or action itself, but operates to bar the claim or remedy sought for, and when a suit is time-barred, the court cannot grant the remedy or relief”.

[22] By parity of reasoning, it is clear then that even where a matter is governed by a special regime of law, the general superintendence provided under the Limitation of Actions Act to ensure due expedition in the filing and resolution of disputes would apply, unless specifically ousted by that special regime. In the instant matter, there is no particular provision in the Arbitration Act either repealing or otherwise rendering inoperative the provisions of Section 4(1)(c) of the Limitation of Actions Act. I would accordingly be of the view that the Claimant was obliged to pursue his rights within the strictures of the aforesaid provision even as he pursued amicable settlement thereof.

[23] With regard to the Principle of Finality that was raised by Counsel for the Claimant, Section 36(1) of the Arbitration Act merely provides that:

"A domestic arbitral award shall be recognized as binding and, upon application in writing to the High Court, shall be enforced subject to this section and section 37. "

Section 37 on the other hand, sets out the grounds upon which the Court may refuse to recognize or enforce the award, and they include a finding by the Court that the recognition of enforcement of the award would be contrary to the public policy of Kenya, under Section 37(2)(b)(ii); and in this regard, the words of Ringera, J, (as he then was) in Christ for all Nations Vs Apollo Insurance Co. Ltd. (2002) EA 366 are instructive. He held that:

“An award could be set aside under page 35(2) (b) (ii) if the Arbitration Act as being inconsistent with the public policy of Kenya if it is shown  that it was either (e) inconsistent with the Constitution of Kenya or to other laws of Kenya, whether written or unwritten or (b) Inimical to the national interest of Kenya or (c) contrary to justice or morality.

[24] Needless to say that Section 35(2)(b)(ii) is similar to Section 37(2)(b)(ii) save that it deals with setting aside of award while the latter is in respect of grounds for refusal of recognition or enforcement of award. To the extent therefore that the what is in issue is not an application for the reopening of the Award, I would take the view that the Principle of Finality is not pertinent hereto. What is manifest is the case of a Claimant who remained indolent for far too long, not just once but twice; the first phase being the six years from the date of the Award; and the second phase being the six years from the so called letter of acknowledgement. In those circumstances, not even Article 159 of the Constitution that the Claimant clutched on in support of alternative dispute resolution mechanisms such as arbitration, would come to its aid, for on its flipside is the requirement that justice be administered without delay. Clearly therefore,the enforcement of the Award dated 11 February 2003 as sought herein by the Claimant would be contrary to public policy as codified in Section 4(1)(c) of the Limitation of Actions Act.

[25] The foregoing being my view of the matter, I would dismiss the Claimant's Chamber Summons dated 7 May 2015 with an order that each party shall bear own costs.

It is so ordered.

DATED, SIGNED AND DELIVERED AT NAIROBI THIS 6TH DAY OF OCTOBER, 2017

OLGA SEWE

JUDGE