Westmont Power (Kenya) Limited v Kenya Oil Company Limited [2014] KECA 454 (KLR)

REPUBLIC OF KENYA

IN THE  COURT OF APPEAL AT NAIROBI

(CORAM:   KOOME,  MWERA & GATEMBU,  JJA)

CIVIL  APPLICATION NO.NAI 254  OF 2013

BETWEEN

WESTMONT  POWER (KENYA) LIMITED…..........................APPLICANT

AND

KENYA OIL COMPANY LIMITED……...……………………...RESPONDENT

(An application pursuant to the judgmentof the Court of Appeal at Nairobi (Bosire, Waki & visram, JJA) dated 1stApril,2011

in

CIVIL  APPEAL NO.154 OF 3003)

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RULING  OF THE  COURT

The applicant company filed the notice of motion dated 20th September,  2013  under  Section  91  of the Civil Procedure Act, Sections 3(2), 3(3), 3A, 3B of the Appellate Jurisdiction Act as well as Rule 57(2) of the Court of Appeal Rules with two substantive prayers:

(i)        that  the respondentmake restitution of all  sums obtained by  it  from the applicant by  a  decree  in HCCC 106/2002;

(ii)       that  thesums  aforesaid be  paid with  interest at Court rates with effect from 1stMay,  2003 until payment.

The grounds in the body of the motion and the deposition in the supporting  affidavit  were   presented   by   Mr.   A.  Wandabwa,  learned counsel for the applicant while  Mr.  A. A. K. Esmail, learned counsel for the respondent opposed  the application relying on the replying affidavit filed here on 5th June,  2014.

Mr.  Wandabwatold us that the respondent/plaintiff in  the HCCC 106/2002,  got  an  ex  partejudgment  against the applicant,  who  had failed to file  a  defence,  in  the sum  of  Sh.33. 9 million.  Together  with interest, the total came to Sh.38. 2 million.  The applicant applied  to have that judgment  set  aside  and  or stay its  execution so  that  the parties could  go for arbitration.   Ombija,Jdeclined to grant the orders and  the applicant appealed  to this Court in Civil Appeal 154/2003, having  so far paid Sh.36. 6m of  the decretal  sum.    On  1st  April, 2011  the Court set aside the ex partejudgment and ordered that:

“…the  appellant’s application  under section  6(1)  of  the Arbitration Act dated 13thMarch, 2002be set down  for hearing in the superior court…”

As  for  the  prayer  for  the  refund   of  the  decretal   sum   paid   to  the respondent, the Court directed:

“…that the decretalsum  paid to the respondent be deposited   in  an   interest ­earning   account in  the  joint names  of the two advocates on record…within the next21  days.   If that cannot be accomplished for any  reason within the time­frame  stipulated herein, we  order that the funds be deposited in court.”

In  short Mr.  Wandabwaargued that  since  the  respondent had neither  deposited  the subject sum  of money  in  the joint account of the advocates,   nor  deposited   it  in   court  and   had   also   not  moved   to arbitration of their dispute, it should have paid  it back  to the applicant. Counsel added that in any event any arbitral  proceedings had since been time­barred  and  therefore  only  a  refund  of  the decretal  sum  was  the viable option.

Mr. Esmailon his part started off by positing that Rule 57(2) of the Rules of this Court was inapplicable, because the direction of this Court to deposit  the decretal  sum  was not an order of restitution  as stated in the application but an order to deposit  the sum  pending the arbitration process.   However,  Mr. Esmailtold us  that even as the applicant was invoking  the powers donated  by  Section  91  of  the Civil Procedure Act here, it had done so earlier in an application heard by Havelock, J.who on 19th  June  2013  declined to order restitution,  finding that this Court on  1st   April, 2011  had  not ordered restitution  but had  simply directed that  the  respondent  do  deposit  the  subject  sums as  earlier  noted.

Counsel  added   that  earlier  on   Kimondo,   J.had   heard  applicant’s application dated 12th  March, 2002,  and  ordered that the proceedings in the  suit  be  stayed   so  that  the  parties  could   refer  their   dispute   to arbitration.      This    was    quite  clearly   in    line    with   this   Court’s order/direction of 1st  April, 2011  (above).

In  sum  Mr.  Esmail’sposition was  that the Court having directed that the decretal sum  be deposited and not that it should be refunded to the  applicant,  and,   moreover,  Havelock,J.also  having   found   that restitution  was  not  open  to  the  applicant,  the  course the  applicant should have taken, rather than file the present application, is to seek to execute  this  Court’s  orders requiring  the  respondent to  deposit  and, probably thereafter the applicant could  apply  for payment out to itself.

On its part, so we heard, the respondent was considering to apply  for a review of Kimondo, J’sorder to go to arbitration so that the same could be set aside because arbitration proceedings had since been time­barred. Mr. Esmaildid not think that the prayers sought here were merited.

Mr.  Wandabwaresponded that  justice would  be done  if  we varied/rescinded the order of 1st  April, 2011,  directing the respondent to deposit the decretal sum  and instead ordered those sums  to be refunded to his  client.  It would  be unnecessary to execute  the decree  to deposit so that when  the respondent does so, the applicant is obliged  to go to court and seek orders to pay out.  The respondent should not continue to benefit from the decretal  sum  which this Court directed that  it should not keep  or hold  on.   The sum  should be refunded with interest.   It is warranted and deserved in the circumstances, as stated in Mulla’s Codeof Civil Procedure, 16thEditionPage 1325­1333.

In our view Rule 57(2) of the Court of Appeal Rules and Section 91 of the Civil Procedure Act  do not directly  answer the dispute  before  us, even if  the two provisions have  a bearing.   Whereas  Rule  57(2)  of our rules essentially appears to lay focus  on an order made by a single judge falling to be varied or even rescinded by that judge,  or any other Judge  of the Court, section 91 of Civil Procedure Act says that:

“91.   (1)     Where  and  in so far as  a  decree  is varied or reversed,   the court of  the first  instance shall,  on application  of the party  entitled to any  benefit by way   of  restitution  or  otherwise,  cause  such restitution  to be made  as    will, so far as  may  be, place parties in the position they would have occupied  but for such  decree  or  such  part thereof as   has   been   varied  or   reversed;   and    for  this purpose  the court may  make  any  orders,  including orders  for the refund of costs  and  for the payment of interest,  damages, compensation and  mesne profits, which are  properly consequential on such variation or reserval.

(2)No suit shall be instituted for the purpose  of obtaining  any   restitution  or   other  relief  which could  be obtained by application under sub­section (1).”

It was under this Section 91 of the CPA among  other provisions, that the applicant sought orders from Havelock,  J for restitution in its application dated  11th  May,  2012.    As stated earlier, the learned Judge  declined to grant restitution pointing out that this Court, in reversing the decision  of the High  Court, limited  itself  to ordering the respondent to deposit  the decretal  sum  and  accordingly no more could  be read into that decision, including the relief of restitution.

In  determining  this  matter we  do  not think that it will serve  the interests of  justice  to direct,  as  Mr. Esmail argued, that  the applicant should instead seek  to execute  this Court’s decision  of  1st   April, 2011 directing the respondent to deposit the decretal sum  and thereafter apply to have the deposited sums  restituted to it.  Neither are we of the opinion that the belated proposal/intention that the respondent is considering to apply  to the High  Court for setting aside  Kimondo,  J’sorders for the parties to go to arbitration will serve  any  purpose. The latter  course to seek setting aside  Kimondo,  J’sorders, appears an  exercise  in  futility since  we were  told that the arbitral  process  had  been time­barred  while the former ­ to seek to execute this Court’s orders to deposit, will unnecessarily  consume   time  and  other  resources on  the  part  of  the parties, leading to the end result that the applicant will get restitution of the decretal  sum.    Accordingly, the path we take and  which we believe will lead to the ends of justice in  this matter is to allow  the prayers laid, by  varying our orders of 1st   April, 2011  in the terms that  the decretal sum  be restituted  to the applicant.

This  we say,  aware of the fact that the respondent did not comply  with the Court’s orders to deposit the said sum  and  has given absolutely no reason for that failure.   It has also not explained why it did not proceed to arbitration, some two years down  the line,  to save the process  from being  time­barred.   And  finally we find it unconscionable, unfair and  unjust  after all the foregoing omissions that the respondent still holds  onto the money  it was paid in  the decree that was reversed by this Court on 1st April, 2011.   There is no justification to do this.  It amounts to detriment to the applicant.

As regards payment of interest,  we grant orders that the same be paid on the decretal sum  to be restituted at court rates with effect from

1st  May, 2003  as prayed.

Mulla(supra) says  of restitution  under  Section  144  of the Indian

Civil Procedure Act, in similar wording as our Section 91, that:

“The  restitution to be made  must be such as will, so far as  may  be, place the parties in the position which they would have occupied but for the decree appealed from or such part there of as has been varied or reversed.”

And further that:

“Interest is part of normal reliefgiven in restitution.”

Finally we have arrived at the above decision  cognizant of the well­ practised powers conferred on  this Court in  Sections  3(2),  3(3),  3A,  3B and 4 of the Appellate Jurisdiction Act.

In sum  we make the following orders:

(i)        that the respondentdo make  restitution of all sums obtained by it from the applicant pursuant to the decree  in  HCCC  106/2002   within  the next thirty (30) days in default execution to issue; and

(ii)       thesums  payable in (i)  above,  be subject  to court rates  of  interest  with  effect from  1stMay,   2003 until payment in full.

(iii)       Costs hereinshall be paid by the respondent to the applicant.

Datedand  delivered at Nairobi this 11thday  of July, 2014

M. K. KOOME

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JUDGE OF APPEAL

J. W. MWERA

……………………………..

JUDGE OF APPEAL

S. GATEMBU  KAIRU

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JUDGE OF APPEAL

I certify that this is a true copy of the original

DEPUTY REGISTRAR