Riley Falcon Security Services Limited v Maseno University & Bedrock Holdings Limited [2017] KEHC 3411 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT

AT KISUMU

CIVIL SUIT NO. 22 OF 2014

BETWEEN

RILEY FALCON SECURITY SERVICES LIMITED...........PLAINTIFF

AND

MASENO UNIVERSITY..........................................1ST DEFENDANT

BEDROCK HOLDINGS LIMITED..........................2ND DEFENDANT

JUDGMENT

Introduction

1. The dispute between the plaintiff and 1st defendant (“the University”) stems from an Agreement for Provision of Security Services at the University Premises for the period 1st April 2013 to 31st March 2014. The facts upon which the plaintiff’s claim is based were agreed upon at the pre-trial conference and were as follows;

(a) The University entered into a contract for provision of security services at the University premises with the plaintiff for the period 1st April 2013 to 31st March 2014 (“the Agreement”).

(b) The Agreement was to expire on 31st March 2014 but was extended by the letter dated 30th April 2013 for one month from 1st May 2014 to 31st May 2014.

(c) In the meantime, the University had commenced procurement of security services for the next financial year. The award of the tender to the 2nd defendant (“Bedrock”) was challenged before the Public Procurement Administrative Review Board (“the Board”) by Gillys Security and Investigation Services Ltd (“Gillys”) in Application No. 14 of 2014. The Board dismissed the application on about 16th May 2014.

(d) Gillys lodged an appeal to the High Court being HCCA No. 54 of 2014-Kisumu and also filed an application seeking orders of stay restraining the University from negotiating and entering any contract with Bedrock.

(e) On 23rd May 2014, the High Court (Dulu J.) issued an order restraining the University from executing or entering into a contract with Bedrock or any other person for provision of security services to the University.

(f) The University entered into contract dated 19th May 2014 with Bedrock for provision of security services at its premises for the period 1st June 2014 to 31st May 2016.

(g) The University sent a letter dated 16th May 2014 to the plaintiff, which the plaintiff received on 17th May 2014 requesting it to hand over the premises on 30th May 2014 and 31st May 2014.

(h) The University sent a letter dated 29th May 2014 to the plaintiff, which it received on 30th May 2014, requesting it to hand over the premises in response to the plaintiff’s letter dated 29th May 2014.

Plaintiff’s Claim

2. The plaintiff’s claim, set out in the plaint dated 24th June 2014, is that the University breached the Agreement by evicting it from its premises without giving it 3 months’ notice and was therefore liable to pay it 3 months’ fees and charges in lieu of the notice as required by the Agreement. It further pleaded that the University breached the court order issued on 23rd May 2014 by entering into a contract for provision of security services with Bedrock. It also asserted the contract between the University and Bedrock was in breach of section 100 of the Public Procurement and Disposal Act, 2005 and was therefore void.

3. The plaintiff also claimed that the University terminated the Agreement by means of violence and that its conduct towards its employees was cruel, demeaning, traumatizing and degrading.

4. As a result of the breaches, the plaintiff sought the following reliefs;

(a) A declaration that the purported contract between the Defendants is null and void ab initio having been made in defiance of valid and binding Court Order issued on 23rd May, 2014.

(b) A declaration that the contract between the Plaintiff and the 1st defendant was automatically renewed and or extended indefinitely by operation of the Court Order issued on 23rd May, 2014 and by operation of the section 100 of the Public Procumbent and disposal Act, 2005.

(c) A declaration that the purported contract between the Defendants is null and void ab initio having been made before the expiry of the statutory stay of 14 days under section 100 of the Public Procurement and disposal Act, 2005.

(d) A declaration that the purported contract between the Defendants is null and void ab initio having been made during the pendency of the Civil Appeal No. 54 of 2014 contrary to the provisions of section 100 of the Public Procurement and disposal Act, 2005.

(e) An order to nullify the purported contract between the Defendants.

(f) An order to immediately reinstate the Plaintiff as the security services provider to the 1st Defendant.

(g) An order to compel the 1st Defendant to pay the Plaintiff the outstanding principal sum of ….. Kshs 10,538,695. 09…..  plus interest at commercial rate from the date of default until payment in full.

(h) An order for the sum of ……. Kshs. 11,954,979. 75 ……….. in lieu of three (3) months’ notice plus interest at commercial rate from the date of default until payment in full.

(i) An order for pecuniary damages.

(j) An order for general damages for breach of contract.

(k) An order for aggravated damages.

(l) An order for exemplary damages.

(m) Costs of the suit.

Agreed issues

5. In their respective statements of defence, the defendants admitted the basic facts of the case but denied that the plaintiff was entitled to the reliefs sought.

6. The parties agreed on the following issues at the pre-trial conference:

i. Whether the University, by evicting the plaintiff from the University premises, breached the Agreement by, inter alia, failing to give the plaintiff 3 months’ notice and if so, whether the plaintiff is entitled to 3 months’ fees in lieu of the notice.

ii. Whether the University disobeyed the order issued by Justice Dulu on 23rd May 2014 before entering into the agreement with the 2nd defendant and if so, what is the effect.

iii. Whether execution of the contract between the University and the 2nd defendant was in breach of Section 100 of the Public Procurement and Disposal Act, 2005 and is therefore null and void.

iv. Whether the plaintiff is entitled to Kshs 10,538,695. 09 being the outstanding balance for services rendered by it prior to termination and eviction.

v. Whether the defendants acted unlawfully and maliciously in evicting the plaintiff and its employees from the premises and so what relief should be given.

7. The issues framed by the parties were basically matters of interpretation of the Agreement and application of the law on the basis of the agreed facts. The issue of eviction was contested and the parties called oral testimony. The parties also filed written submissions which I have considered.

Determination of issues

Issue No. 1

8. The determination of this issue hinges on the interpretation of the Agreement and whether the extension of the Agreement by Maseno University excluded the terms of the agreement regarding notice of termination or payment in lieu of notice. The plaintiff submitted that the provisions regarding termination were preserved by the letter of extension which stated that, “kindly note that other terms and conditions of the contract shall remain in force including payment.” It also submitted that the order issued on 23rd May 2014 preserving the status quo ante preserved the terms of the Agreement.

9. The University took the position that the Agreement came to an end on 31st March 2014 and that the letter of extension was specific and that the period for the contract was extended for one month which excluded the possibility of a notice period.

10. In my view, this question is not difficult on the Agreement had already expired on 31st March 2014 and the extension of the Agreement was for one month only from 1st May 2014 to 31st May 2014. This extension was for a fixed term excluded the application of a notice period longer than the fixed term. The intention of the parties was clear that the Agreement would expire on 31st May 2014.

11. I also reject the argument that the order issued by Dulu J., was sufficient to extend the contract or alter the contractual relationship of the parties particularly in a case where the plaintiff was not a party. I will deal with the import of the order fully in determining issue no. 2. I therefore find and hold that the extension of the Agreement was for a fixed period of a month and as such it excluded the provision for termination by notice or payment in lieu thereof.

Issue No. 2

12. This issue concerns the order issued by Dulu J., restraining the University from entering into a contract with Bedrock. Counsel for the plaintiff cited the cases of Africa Management Communication International Limited v Joseph Mathenge Mugo & Another Milimani HCCC No. 242 of 2013[2013]eKLR and Martin Nyaga Wambora & 4 Others v Speaker of the Senate & 6 Others Kerugoya Petition No. 3 of 2014[2014]eKLR to support the proposition that anything done in breach of or in disobedience of a court order is null and void in law. He submitted that since the University breached the order, the contract between it and Bedrock was null and void.

13. The defendants submitted that the court order was not in existence at the time they executed the contract. They also contended that the plaintiff could not rely on the orders of a case to which it was not a party. They also submitted that anything touching on HCCA No. 54 of 2014 – Kisumu is subjudice and anything touching on it ought to be adjudicated in that case.

14. From the outset, it is important to note that the appeal, subject of that order, was lodged by Gillys and was against the University. The injunction issued by Dulu J. was for the benefit of Gillys. A violation of the order ought to be determined by the court that issued it and since plaintiff was not a party to the suit, it cannot implead that order in these proceedings. In fact, Gillys filed an application for contempt against the University and the matter was adjudicated upon.

15. This issue whether the plaintiff or Gillys was the beneficiary of the order is not new and was indeed raised in an application for contempt in HCCA 54 of 2014 - Kisumu where Gillys sought to cite the University and its officers for contempt for disobeying the order of 23rd May 2014 for entering into the contract with Bedrock. In a ruling dated 29th June 2016 striking out the application for contempt, Chemitei J., stated that he could not hold the University liable for contempt as the plaintiff, who was party to the Agreement, was not party to the appeal.

16. When the Board dismissed the application by Gillys on 16th May 2014, it added that, “The Procuring Entity is therefore at liberty to proceed with the procurement process and may enter into a contract with the successful bidder within Fourteen (14) days from today.”   Following the order, the agreement between the University and Bedrock was signed on 19th May 2014 way before the order in HCCA No. 54 of 2015 – Kisumu was made on 23rd May 2015. I cannot therefore say that the University violated the order of Dulu J., restraining it from entering the contract with Bedrock.

Issue No. 3

17. This issue deals with the effect or otherwise of section 100 of the Public Procurement and Disposal Act which provides as follows:

100 (1)   A decision made by the Review Board shall, be final and binding on the parties unless judicial review thereof commences within fourteen days from the date of the Review Board’s decision.

(2) Any party to the review aggrieved by the decision of the Review Board may appeal to the High Court and the decision of the High Court shall be final.

(3)A party to the review which disobeys the decision of the Review Board or the High Court shall be in breach of this Act and any action by such party contrary to the decision of the Review Board or the High Court shall be null and void.

(4) If judicial review is not declared by the High Court within thirty days from the date of filing, the decision of the Review Board shall take effect. [Emphasis mine]

18. As I understand, the plaintiff’s case is that Agreement between it and Bedrock should be declared null and void on the basis of section 100(3) of the Act. The plaintiff contended that the Boards directive that the procuring entity and the highest bidder enter into the contract within 14 days was automatically stayed by operation of law. Counsel for the plaintiff cited the case of Republic v Public Procurement Administrative Review Board & 2 Others ex-parte Noble Gases International Limited Milimani JR App. No. 337 of 2013[2013]eKLR where the court held that a reading of section 100 of the Act was clear that the legislative intention was that the Board’s decision would not be final and binding and would remain in abeyance until the expiry of the 14 days period provided for appeal.

19. Counsel for the University submitted that that the rights conferred are rights in personam and only accrue to a person who is aggrieved by the decision of the Board and in so far as the plaintiff did not take any step to challenge the tender and subsequent proceedings, it cannot benefit from the section 100 of the Act.  I agree. Since the plaintiff was not a party aggrieved within the meaning of the Act, it cannot benefit from the statute. The provision assumes that the party aggrieved would have been entitled to the enter in the agreement but for the breach contemplated in section 100(3) of the Act. In this case, the Agreement had already expired and it is only Bedrock which was entitled to a new contract having won the tender.

Issue No. 4

20. The next issue for determination is whether the plaintiff is entitled to Kshs 10,538,695. 09 being the outstanding balance for services rendered by it prior to termination and eviction.  In the course of proceedings, I directed parties to resolve the issue of accounts by exchanging invoices and evidence of payment within 21 days and thereafter file a report on the disputed items. Thereafter the parties admitted that University paid the plaintiff Kshs 7,576,326 leaving a balance of Kshs 2,962,198. 15. I directed that the plaintiff particularizes its claim and the respondent to file its response and thereafter parties to file written submissions for resolution of the issues.

21. The plaintiff submitted that by admitting and paying part of its claim, the plaintiff admitted its indebtedness which was an accumulation of unpaid invoices dating back to 2011. In addition to the documents filed with the plaint, the plaintiff relied on the supplementary list of documents dated 6th December 2016 to support its claim. In its submissions, the counsel for the plaintiff listed the following invoices as due and owing and as evidence of its claim:

ITEM INVOICE NUMBER DATE OUTSTANDING AMOUNT IN KSHS.

1 11279 01. 04. 2011 257,635. 84

2 15410 16. 09. 2011 22,233. 52

3 17488 02. 05. 2012 111,184. 27

4 18754 01. 08. 2012 29,000. 02

5 22246 03. 04. 2013 5,316. 66

6 34771 08. 10. 2013 9,531. 34

7 34935 01. 11. 2013 1,423,627. 27

8 35327 01. 12. 2013 200,493. 27

9 36582 01. 03. 2014 250,953. 27

10 36966 01. 04. 2014 3,984,993. 27

11 37357 01. 05. 2014 3,984,993. 27

12 37343 01. 05. 2014 19,623. 34

TOTAL

10,299,585. 34

22. Counsel for the University pointed out that from the particulars of the claim provided, the plaintiff had, on 10 occasions, invoiced the University for a monthly sum of Kshs. 3,984,993. 27 which was in excess of the contractually agreed price of Kshs. 3,734,040. 00. The University urged that under Clause 7. 2, it could raise temporary work orders of work done. It disowned the temporary work orders which were not signed in accordance with the contract.

23. The plaintiff’s counsel, on the other hand, submitted that since the University had previously requested for guard services, it could not deny that the plaintiff was entitled to payment. Counsel cited the doctrine of estoppel and waiver to support its claim that the temporary work orders had to be honoured.

24. The plaintiff had to prove the amount due to it on the balance of probabilities. Since a substantial part of the claim had been settled, the plaintiff was obliged to particularise how the disputed amount was made up in reference to Clauses 7. 1 and 7. 2 of the Agreement which provided for the contract price and the mode of requisition of additional services. These clauses provided as follows;

7. 1 In consideration of the services to be rendered by the security company under this agreement Maseno University shall at any given time contract as follows.

Total number of guards – 222 (to include supervisors and dog handlers)

Cost per guards – Ksh. 16,820. 00 p.m

The costs shall be inclusive of VAT

7. 2 Whenever there is need Maseno University shall raise a temporary work order which is duly signed by an authorized university officer to request for additional services. The order shall last for 30 days and thereafter revert to the contract terms and rates.

25. From Clause 7. 1, the total monthly payment was Kshs. 3,734,040. 00 hence the monthly invoice ought to have been for that sum. Although the University claimed overpayment, it did not raise a claim for a set-off or a counterclaim. I have also looked at the temporary work orders and only four of them are signed in accordance with Clause 7. 2. These are numbers 1999, 4116, 3722 and 3732. I also cannot tell whether these were paid for and more particularly how Kshs. 2,962,198. 15 was made up. Overall, I am constrained to dismiss this claim and in doing so I adopt the dictum of Goddard LCJ., in Bonhan Carter v Hyde Park Hotel Limited [1948] 64 TLR 177, stated:

It is trite law that the Plaintiff must understand that if they bring actions for damages it is for them to prove damage. It is not enough to note down the particulars and to speak, throw them at the head of the court saying ‘this is what I have lost’, I ask you to give me these damages; they have to prove it.

Issue No. 5

26. The final issue for determination is whether the University acted maliciously by evicting the plaintiff and its employees from its premises and if so what relief should be given. I have already determined, in issue no. 1, that the extended contract between the plaintiff and University was upto 31st May 2014. It is therefore not in dispute that the premises ought to have been handed over by the last day of the contract. It is on this issue that I took affidavit and oral evidence to determine what took place at the University premises.

27. The plaintiff’s witness was it Senior Controller at it control room at Kisumu, George Ong’ute (PW 1). He stated that at 8. 00am on 30th May 2014, while on duty at the University Main Campus at Maseno, he saw about 200 Bedrock Holding Security Guards led by Willis Wandei (DW 2), the University Security Supervisor. DW 2 ordered the plaintiff’s guards to open the gate and when they did, he ordered the Bedrock guards to enter the premises. The Bedrock guards entered the premises and overpowered the plaintiff’s guards. PW 1 recalled that DW 2 personally removed the plaintiff’s guards from the Main Gate, Administrative Reception, Transport Yard and the other premises within the University. He stated that the Bedrock guards were mobilized to eject the plaintiff’s guards and in the process, the plaintiff’s guards were violently ejected and one of the guards, Leonard Simiyu was assaulted and rushed to Chulaimbo Hospital where he was treated and discharged and reported the matter at Maseno Police Station. PW 1 testified that he was ejected out of the University premises and did not return thereafter.

28. DW 1, a security officer at the University denied recalled that he received a letter dated 16th May 2014 from the University Vice Chancellor written to the plaintiff, informing it that Bedrock was taking over security services on 30th and 31st May 2014. He testified that on the morning of 30th May 2014 at 7. 00am when reported to work at the University Main Campus, the plaintiff’s security guards refused me to let him get into the premises with his vehicle.  At the time, guards from Bedrock were outside the main gate and when it was opened for him, the Bedrock guards also came in with me.  He went to talk to PW 1, who was in charge, about the handing over but PW 1 refused. When PW 1 refused to assist, he proceeded with the Bedrock guards to the Administration offices. DW 1 denied that he saw any fighting as alleged by PW 1. He stated that he began deploying guards when he returned to the gate and did find PW 1 or the plaintiff’s guards. He told the court that on 30th May 2014, the plaintiff’s guards left the University premises at the Main Campus, Siriba Campus, Kisumu Hotel, Varsity plaza, Kisumu Conference Building, Vice Chancellor residence, Uhanya Heritage House in Usenge, Homa Bay Learning Centre and the Vice Chancellor’s house in Nyakach.

29. The events of 30th May 2014 were triggered by the upcoming handing over of the University premises which had been communicated by University Vice-Chancellor by the letter dated 16th May 2016 to the plaintiff. The letter stated in part, “Following the contract for provision of security services coming to an end on 31st May 2014, it has been decided that the handing over and taking over the security be conducted on Friday 30th May 2014 and 31st May 2014 in broad daylight between 7. 00am – 6. 00pm.”  The plaintiff was told to contact Mr Wandei for handing over. The letter was acknowledged by the plaintiff on 17th May 2014.

30. In response, the plaintiff, through its Director, Tobias See, responded by the letter dated 29th May 2014. In the letter, he referred to the court order issued in HCCA N0. 54 of 2014 – Kisumu restraining the University from entering into any contract with Bedrock ordering the status quo ante to be maintained and stated that in face of that order, no contract was entered into by the University and another party and decision of the Board remained suspended pending hearing of the appeal. He concluded, “Consequently, we are unwilling to handover to you or to any person lest we become accomplices in disobedience of a valid order.” When this letter was put to Mr Omute, he admitted that he understood from his director that he should not move out.

31. It is clear from the correspondence that the plaintiff did not intend to hand over the premises as its director believed that the court order protected its decision to remain on the University premises. I find that it is more likely that altercation occurred when the handing over was to take place on that morning in view of the position the plaintiff had taken. If any person was assaulted, he or she would be entitled to bring a cause of action for assault against the perpetrator or the University. I do not think the plaintiff can sustain such a cause of action on behalf of its employee who was injured.

32. Even if I accept the plaintiff’s assertion that it guards were evicted from the University premises, its claim would be for damages. Such damages would be in the nature of special damages for the two days it was forcefully removed. Since the special damages were neither pleaded nor proved, the claim for eviction is dismissed.

Conclusion

33. For the reasons I have stated above, I answer issues all the issues framed in the negative. It follows that the plaintiff’s claim against both defendants is dismissed.

34. As regards costs, I note that the parties settled a substantial part of the plaintiff’s claim for outstanding payments under the Agreement. I therefore order the plaintiff to pay half the 1st defendant’s costs and the 2nd defendant full costs.

DATED andDELIVERED at KISUMUthis 2ndday of October 2017.

D. S. MAJANJA

JUDGE

Mr  Gachuba instructed by Onyoni Opini and Gachuba Advocates for the plaintiff.

Mr  K’ouko instructed by Odhiambo Owiti and Company Advocates for the 1st defendant.

Mr Mwamu instructed by Mwamu and Company Advocates for the 2nd defendant.