USHABEN SURENDRA PATEL & MANJULA MAHENDRA PATEL v STAGE MATTRESSES LTD [2008] KEHC 237 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT KERICHO

Civil Suit 44 of 2008

USHABEN SURENDRA PATEL  ………… 1ST PLAINTIFF/RESPONDENT

MANJULA MAHENDRA PATEL …...…….. 2ND PLAINTIFF/RESPONDENT

VERSUS

STAGE MATTRESSES LTD……….....…………. DEFENDANT/APPLICANT

RULING

ON APPLICATION DATED 27TH OCTOBER, 2008 SEEKING STAY OF PROCEEDINGS PENDING ARBITRATION

I: Procedure

1. The Plaintiff 1 and 2/Respondents Ushaben Surendra Patel and Manjula Mahendra Patel filed suit on 8th October, 2008 against M/S Stage Mattress Limited claiming arrears of rent amounting to Kshs. 26,630,000/= excluding taxes being rent so incurred on their sub-lease on premises Kericho/Municipality Block 2/118 Plot No. 631/1092 Kericho.

2.   The Plaintiffs/Respondents as Landlords made this claim pursuant of a lease agreement that was for a period of five years and three months and therefore the defendants/applicants were not protected tenants.

3.   The Defendants/applicants/tenants filed a certificate of urgency and an application on 27th October, 2008 and sought the proceedings herein to be stayed.  They appeared at the High Court of Kenya at Nakuru before Koome, J and were granted stay proceedings.

4.   The Plaintiff/respondents filed a replying affidavit on     7th November, 2008 and an inter-partes hearing was heard on 12th November, 2008 at the High Court of Kenya at Kericho.

II: Application

5.   The application herein prayed for orders:-

“i). That pending the determination of the instant application inter-partes, this Hon. Court be pleased to stay all default proceedings and/or further procedural steps provided for by the CPR….

ii) That the differences between the parties as arising out of the agreement entered into by the Plaintiff and the defendant on 1st March, 2006 and as brought out in the Plaintiff’s statement of claim be transferred to arbitration in accordance with that agreement on clause in that behalf.”

6.   The Applicants/Defendants/Tenants argument is that on  1st March, 2006 an agreement was duly entered into with the Respondents/Plaintiffs/Landlords within the said agreement, it provided in its clause 6 that

“Any dispute which may arise relating to terms of the lease or the liabilities or duties of the parties hereunder SHALL be referred to arbitration in accordance with the arbitration act”

7.   The applicant’s now seeks this Courts orders to be granted a stay of these proceedings and the court refer the matter to arbitration.  The advocate for the applicant relied on the case law of Trustee of the property of Andrews v Brock Builders (Kessingland) Ltd (1997) 3W.L.R 124 in which a stay was sought by the respondent and that the matters be referred to arbitration according to the agreement found in the contract.  The appellant declined to go to arbitration on the grounds that already, Andrews was declared bankrupt and as such was unable to afford arbitration proceedings.  The court on appeal held that the proceedings be accordingly stayed and the matter be referred to arbitration as per the contract. Similarly the case of Goodman v Winchester and Alton Railway PLC (1985) 1W.L.R. 141 on a wrongful dismissal contract ruled that the matter he referred to arbitration as per the contract.

8.   It is clear that in order to seek for a stay of proceedings you require to be a party to the said proceedings Etri Fans Ltd  v N.M.B. UK Ltd (1987) 1W.L.R. 1110.

9.   In reply, the Respondents / Landlord stated that this Court has jurisdiction to entertain this suit.  Its jurisdiction court be questioned.  Further, the contract that was entered into was never registered.  This was to be done by the Defendants/Applicant but they did not.  Despite this the said lease is valid following the decision of Bachelor’s Bakery Ltd v Westlands Securities Ltd (1982) eKLR in which the court ruled that a lease contract remains in force under the Transfer of Property act 1882 Section 106 where it had so been entered for a term exceeding five years.  Such agreement is valid despite the absence of registration.

10. They also relied on the case law of Peter Mwema Kahoro and Samuel Kungu v Benson Maina Githethuki HCCC 1295/05 (Kihara Kariuki , J) where the judge declined to stay a suit pending arbitration on grounds that no application by the defendant had been made to court.

11. Should this matter be stayed pending arbitration?

II: Opinion

12. The lease agreement so entered into on 1st March, 2006 though not registered, provided for a clause that the same be referred to arbitration. In the case law of Harbour Assurance Co. (UK) Ltd v Kansa General international Insurance Co. Ltd and others (1993) 3 W.L.R 43it deals with the issue of illegality. If a matter or an act was illegal, whether it may be referred to arbitration or not? It was held by that Court that it may be so referred to arbitration.

13.  Where in an agreement there is a clause that the said agreement provides for arbitration, and where upon a party files suit, the defendant must apply for the matter to be referred to arbitration and is NOT to file a defence.

14. In this particular situation this matter should be referred to arbitration. I hold that the case herein be stayed pending the referral and finalization of the arbitration case.

15. The application be and is hereby granted with costs.

Obiter Dictum

16. In pleadings an advocate should never plead for his costs within the Plaint or defence.  This would also apply to letters of demand written to the other party.  No advocate costs should be written within the demand letter.

17. Further affidavits should be deponed to in the first person.  See Order XVIII r 5 CPR.

DATED this 17th day of November, 2008 at KERICHO.

M.A. ANG’AWA

JUDGE

Advocates

E.G. Kisila advocate instructed by M/S Sheth Wathigo & Co. advocates for the Defendant/Applicant

A.R. Gadhia advocate instructed by M/S Amit R. Gadhia & Co. Advocates for the 1st and 2nd Plaintiffs/Respondents