ISAAC AWUONDO v SURGIPHARM LIMITED & another [2007] eKLR

Key Facts

Transaction Type

Issues

• The first issue concerns the court's failure to appreciate that the pleadings, affidavits, and submissions before it disclosed several triable issues that could only be effectively determined at a trial of the suit. The applicant argues that the judge did not sufficiently consider these issues, leading to an erroneous ruling.
• The second issue challenges the judge's reliance on conflicting and insufficient affidavit evidence, as well as the use of materially altered documents, to determine the case. The applicant contends this constitutes a fundamental error of law, undermining the validity of the judgment.
• The third issue asserts that the learned Judge incorrectly concluded the applicant had no defense to the respondent's claim and that the statement of defense did not raise any reasonable or plausible triable issues. The applicant argues this decision was legally flawed.

Holdings

• The court accepted the 1st respondent's proposal for the decretal amount to be deposited in a jointly held account or secured by a suitable bank guarantee, aligning with the interests of both parties.
• The court granted a stay of execution pending the determination of the appeals, assuming they are arguable and not frivolous. The stay is conditional upon the applicant providing a Bank Guarantee of Shs.8,000,000/= within 30 days. If the guarantee is not provided, the application for stay shall be dismissed with costs.

Remedies

• The court directed that the costs associated with the motion be considered as part of the appeal proceedings.
• The court has granted an order to stay the execution of the ruling until the hearing and determination of the intended appeal, contingent upon the applicant providing a bank guarantee of Shs.8,000,000 within thirty days. If the applicant fails to meet this condition, the stay application will be dismissed with costs. However, if the bank guarantee is successfully submitted, the execution will be stayed.

Contract Value

Monetary Damages

Key Disputed Contract Clauses

• The applicant contended that the credit agreement was limited to a maximum of Kshs.75,000, while the respondent argued the guarantee covered all sums owed. The court's ruling on this clause's scope directly impacted the liability determination.
• The court analyzed the interpretation of the guarantee clause, determining whether it was a continuing and unlimited obligation as asserted by the 1st respondent (SurgiPharm) or whether the applicant (Awuondo) correctly argued it was limited in scope and duration. The High Court judge ruled the guarantee was continuing and unlimited, a finding central to the appeal.
• Awuondo claimed he was discharged from the guarantee when his account with the 1st respondent was closed in 1992. The court rejected this argument, finding no valid discharge, which formed a basis for the appeal's first ground.

Cited Statute

Judge Name

• P.K. Tunoi
• W.S. Deverell
• P.N. Waki

Passage Text

• We are prepared to assume without considering the issues therein that the appeals are arguable and not frivolous.
• In a lengthy ruling the learned Judge Nyamu, J. held, inter alia, that the guarantee executed by the applicant and the 2nd respondent did cover the amount claimed in the plaint and was of a continuing nature and the guarantee was unlimited. The learned Judge found no bona fide triable issue or any triable issue in the suit and entered judgment in favour of the 1st respondent for the sum claimed in the plaint.
• Weighing the interest of each side, we grant an order of stay on condition that the applicant shall, within thirty (30) days of the date hereof provide a Bank Guarantee in the sum of Shs.8,000,000/=. If that is not done within the stated period the application for stay shall stand dismissed with costs...

Damages / Relief Type