Automated Summary
Key Facts
The Environment and Land Court in Nairobi ruled on an application by the 2nd Defendant (Ajmal Company Limited) to vary or set aside an injunction issued on 28th July 2022, which halted development on Land Reference Number 209/4194/38. The 2nd Defendant, as the registered owner, argued that the injunction caused daily losses of Kshs 500,000 and posed structural risks due to excavated land. The court partially granted the application, allowing development to continue under the condition of depositing a Kshs 5,000,000 bank guarantee within 30 days. The ruling emphasized the need to prevent property waste and balance the parties' interests.
Transaction Type
Purchase of property by Ajmal Company Limited from Multiple Hauliers (EA) Limited in 2021
Issues
- Whether the application is bad in law, vexatious and an abuse of the court process.
- Whether the Plaintiff would have suffered irreparable harm not adequately compensable by damages if the injunction was not granted.
- Whether the application is res judicata.
- Whether the balance of convenience was in the favor of granting the Interlocutory Injunction in favor of the Plaintiff.
- Whether the Plaintiff had a prima facie case with a probability of success for the grant of the Interlocutory Injunction.
Holdings
- The court partially granted the application, allowing the 2nd Defendant to proceed with development on Land Reference Number 200/4194/38 pending the suit's determination, subject to depositing a Kshs 5,000,000/- bank guarantee within 30 days.
- The court rejected claims that the application was res judicata or an abuse of process, noting the injunction order was not final and new issues (financial and safety) were raised.
- The court emphasized that the 2nd Defendant's losses (Kshs 500,000/- daily) and structural risks from excavation justified reviewing the injunction orders, as the Plaintiff cannot compensate these costs.
- The court concluded the Plaintiff's claim (breach of contract against 1st Defendant) could be resolved through damages, and the balance of convenience favored the 2nd Defendant.
Remedies
- Allowed to proceed with the proposed development on the suit property in accordance with existing development approvals, pending the hearing and determination of the suit, on condition that a bank guarantee of Kshs 5,000,000 is deposited with the court within 30 days from the date of the ruling.
- If the bank guarantee of Kshs 5,000,000 is not deposited within 30 days, the orders permitting development shall automatically lapse.
- The costs of the application will be determined by the outcome of the suit.
- Parties are permitted to apply for further orders where appropriate, pending the hearing and determination of the suit.
Legal Principles
The court applied the three-part test for granting interlocutory injunctions as outlined in Giella V Cassman Brown and Co Ltd 1973 E.A 360: (a) prima facie case with probability of success, (b) irreparable harm without adequate compensation by damages, and (c) balance of convenience. The Plaintiff failed to meet these requirements, leading to the partial grant of the application to vary the injunction orders.
Precedent Name
- Mrao Limited v First American Bank of Kenya & 2 others
- Giella V Cassman Brown and Co Ltd
- American Cynamid co v Ethicon
- Peter Kaime Gitu v KCB Bank Kenya Limited & Another
Cited Statute
- Constitution of Kenya 2010
- Civil Procedure Rules 2010
Judge Name
EK Wabwoto
Passage Text
- 16. In the instant application, the 2nd Defendant has raised issues to the effect that they are incurring losses of about Kshs 500,000/- and that the Plaintiff has no financial capability to pay the said damages in the likely event the suit is dismissed. The 2nd Defendant also raised issue to the effect that the suit property had already been excavated which poses serious structural and environmental danger to the public and other adjacent properties.
- i) That pending the hearing and determination of the suit, the 2nd Defendant shall proceed with the proposed development on the suit property in accordance with the existing development approvals on condition that it avails and deposits with this court a bank guarantee in the sum of Kshs 5,000,000/- within 30 days from the date hereof.
- 17. In view of the foregoing and also considering the need to avoid wasting away of the suit property and while doing substantive justice to all the parties, this court is inclined to vary and review its orders issued on 28th July 2022 in line with certain conditions.
Damages / Relief Type
- Variation of injunction allowing development with Kshs 5,000,000 bank guarantee deposit
- Application costs to abide outcome of the suit