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Court of AppealPartially AllowedMisc. Civil Appeal No. 18 of 2014· [2014] KECA 302 (KLR)

Corn Products Kenya Limited v Corn Products Kenya Limited & another [2014] KECA 302 (KLR)

Court of Appeal of Kenya
24 October 2014
PWP.N. WakiRNR.N. NambuyeGKG.B.M. Kariuki
6,434 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~26 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal ruled money compensation, not an injunction, was the right remedy when a buyer's loss from a cancelled property sale could be calculated.

What this practically means

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Executive summary

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The first respondent (Eldo City Limited) sued the appellant (Corn Products Kenya Limited) over a failed sale of the appellant's property and assets, which had been tendered for sale. After executing a memorandum of understanding and exchanging a draft sale agreement, the appellant backed out and sold to the second respondent (Equip Agencies Limited). The High Court (Mabeya, J) granted the first respondent a temporary injunction restraining disposal of the suit assets, conditioned on an undertaking as to damages. The appellant appealed on ten grounds, contending that no binding contract existed, that specific performance was unavailable, and that damages were an adequate remedy. The second respondent supported the appeal. The Court of Appeal, exercising its first-appeal mandate under Article 164(1) of the Constitution, re-appraised the record and confined itself to whether the Judge exercised his discretion judiciously. It restated the Giella injunction test and its exceptions, but found the authorities relied on by the first respondent - notably Mumias Sugar and Kenya Institute of Management - distinguishable: the core claim here combined specific performance and damages, uniqueness of the property did not feature, no high-handedness or oppressiveness was established, third-party intrusion was complete, and the appellant's hardship was raised on appeal. The Court held that the first respondent's loss, should it succeed at trial, fell within the realm of damages as adequate compensation. The appeal was allowed, the High Court orders set aside, the first respondent's application dismissed, and the appellant awarded costs of both the appeal and the application below.

Key legal issues

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01

Whether the trial Judge properly exercised his discretion in granting a temporary injunction

Holding

The appeal was allowed; the Judge's discretion was wrongly exercised because the factual premises relied on were distinguishable from the authorities supporting injunctive relief, and damages would adequately compensate the first respondent.

Reasoning

The Court re-appraised the record and found the Judge had heavily relied on the MOU as the major negotiation document, treating the transaction as beyond negotiation. However, the authorities relied on by the first respondent (Mumias Sugar, Kenya Institute of Management) were distinguishable: no high-handedness or oppressiveness was found, uniqueness of property did not feature, third-party intrusion was complete, and willingness to pay over the contract sum was not interrogated. The proper remedy lay in damages.

p. 9
02

Interlocutory injunctions where liability is contested and damages may be adequate

Holding

An injunctive relief should not be granted where the loss claimed falls within the realm of compensable damages; exceptions apply only where high-handedness/oppressiveness is demonstrated or the property is unique.

Reasoning

The Court restated the Giella principles and the exceptions in Waithaka and Kenya Institute of Management. Applying them, it held that the first respondent's loss, if it ultimately succeeded, would be compensable in damages; the Judge did not make findings of high-handed conduct or uniqueness that would engage the exceptions.

p. 7

Legal principles established

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  • A trial judge's discretion to grant an interlocutory injunction must be exercised judicially, on sound reasons, with the court's primary concern being to do justice between the parties; an appellate court may interfere where that discretion was not exercised judiciously.
  • The settled test for interlocutory injunctions: prima facie case with probability of success, irreparable injury not compensable in damages, and, in doubt, the balance of convenience - with recognized exceptions where the opponent has acted high-handedly or the property is unique.
  • On a first appeal, the Court of Appeal re-appraises the facts and draws its own inferences, though with due allowance for the fact that it did not see or hear the witnesses.

Court orders

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  1. 1.Appeal allowed
  2. 2.Orders of A. Mabeya, J granted on 21st June set aside
  3. 3.Substituted therefor an order dismissing the 1st respondent's application dated 1st February 2013
  4. 4.Appellant awarded costs of the appeal and of the application in the court below

Authorities

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Legislation

  • Constitution of Kenya 2010Article 164(1)
  • Appellate Jurisdiction ActSection 3
  • Civil Procedure ActSection 78
  • Court of Appeal RulesRule 29(1)
  • Land Act No. 6 of 2012Section 38
  • Law of Contract Act (Cap 23 Laws of Kenya)Section 3(3)

Cases cited (17)

  • Smith versus Cooke
    [1891] AC 299
  • Rose and Frank Company versus J.R. Crompton and Brothers Limited & others
    [1923] AC 455
  • Giella versus Cassman Brown and Company Limited
    [1973] EA 358
  • Mrao Limited versus American Bank of Kenya Ltd & 2 others
    Civil Appeal No. 39 of 2002 (UR)
  • Waithaka versus Industrial and Commercial Development Corporation
    [2001] KLR 374
  • Storer versus Manchester City Council
    [1974] 3 ALL ER 824
  • Black Pool and Fylde Aero Club Ltd versus Black Pool Borough Council
    [1990] 3 ALL ER 25
  • Kienzeco Limited versus Kenatco Taxis Limited (under receivership)
    [2005] eKLR
  • Mumias Sugar Co. Limited versus Freight Forwarders (K) Ltd
    [2005] 1 KLR 403
  • Kenya Institute of Management versus Re Insurance Corporation
    [2008] eKLR
  • Mbogo and another versus Shah
    [1968] EA 93
  • Kirkdale Limited versus Mount Agencies Limited and 3 others
    Nai Civil Appeal No. 42 & 45 of 2008 (consolidated) (UR)
  • Selle and another versus Associated Botor Boat Company Limited & others
    [1968] EA 123
  • Sumari & 9 others versus Allied Industries Limited
    [2007] 2 KLR 1
  • Githiaka versus Nduriri
    [2004] 2 KLR 67
  • FLM Rover International Limited and others versus Common Film Sales Limited
    3 ALL ER 772
  • Aikman versus Michuki
    [1984] KLR 353
On appeal from
High Court of Kenya at Nairobi, Milimani Commercial Courts
High Court Civil Case No. 37 of 2013
Jurisdiction invoked
Article 164(1) of the Constitution of Kenya 2010; Section 3 of the Appellate Jurisdiction Act (No. 9, Laws of Kenya); Section 78 of the Civil Procedure Act; rule 29(1) of the Court of Appeal Rules (first appeal)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (5)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Corn Products Kenya Limited v Corn Products Kenya Limited & another [2014] KECA 302 (KLR)", Case Analysis (2014). Misc. Civil Appeal No. 18 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2014/302/eng@2014-10-24

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.