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ELCPartially AllowedELC Case of 2016 (Application dated 7th September, 2016)· [2017] KEELC 3697 (KLR)

Levius Koyio Matseshe & another Martin Makoosio & another [2017] KEELC 3697 (KLR)

Environment and Land Court
27 January 2017
OAO. A. Angote
1,301 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court protected property buyers by freezing the sale of their unit and sending their dispute with the developer to arbitration.

What this practically means

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Executive summary

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The Plaintiffs, purchasers under a Sale Agreement dated 19th March 2015 with the Defendants over Unit 16 on L.R. Ngong/Ngong/60648, applied on 7th September 2016 for conservatory orders restraining the Registrar of Lands at Ngong from transferring the property, and for referral of the dispute to arbitration under Clause 11 of the Sale Agreement. The dispute arose from a proposed Extension Agreement introducing a surcharge of Kshs.4,500,000 which the Plaintiffs contended was unconscionable and contrary to the sale agreement, and from conflicting expert reports on whether the unit was 97% complete or far from complete. The 2nd Defendant opposed, arguing the Plaintiffs had not paid the balance of Kshs.15,500,000, that the extension agreement was unsigned leaving nothing to arbitrate, that the property had been offered to a third party, and that the application was defective for lack of a corresponding permanent injunction prayer in the Plaint. The court held that the proper provision for the application was Section 7 of the Arbitration Act, permitting interim measures notwithstanding an arbitration agreement. It found the issues raised not frivolous and reserved them - completion status, chargeable surcharge and validity of the termination notice - to the arbitrator. The court allowed the application, issued a conservatory order restraining sale or transfer of the property pending arbitration, referred the matter to arbitration under Clause 11, and ordered each party to bear their own costs. Dated, signed and delivered at Machakos on 27th January 2017.

Key legal issues

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01

Proper statutory basis for interim relief in aid of arbitration

Holding

Although the application was filed under Order 40 of the Civil Procedure Rules, the proper provision was Section 7(1) of the Arbitration Act, permitting interim measures of protection

Reasoning

The court noted the application was brought under Order 40 and Section 1 of the Civil Procedure Rules, but since the Plaint sought referral to arbitration under Clause 11, the appropriate provision was Section 7 of the Arbitration Act, which allows interim measures of protection from the court before or during arbitral proceedings.

p. 2
02

Reference of disputes to arbitration under the agreement

Holding

The disputes raised (state of completion, surcharge, validity of termination notice) are for the arbitrator and the matter was referred to arbitration under Clause 11

Reasoning

The court found the issues raised in the Plaint not frivolous. Questions of whether the property was 97% complete, the chargeable surcharge on extension, and the validity of the terminating notice fell squarely within the arbitration clause and were for the arbitrator to determine.

p. 3
03

Conservatory protection of the suit property pending arbitration

Holding

A conservatory order restraining sale or transfer of the property was issued pending the arbitrator's determination

Reasoning

To preserve the subject matter of the arbitration, the court restrained the Defendants from selling or transferring Unit 16 on L.R. Ngong/Ngong/60648 pending the hearing of the dispute by the arbitrator, given the Defendants had allegedly offered the property to a third party.

p. 3

Legal principles established

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  • A party may seek interim protective measures from the court notwithstanding an arbitration agreement
  • Disputes reserved to an arbitration agreement are for the arbitrator, not the court, to determine

Court orders

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  1. 1.A conservatory order restraining the Respondents from selling and/or transferring ALL THAT property known as unit 16 on L.R. No. Ngong/Ngong/60648 pending the hearing of the dispute by the arbitrator
  2. 2.The matter be and is hereby referred to an arbitrator pursuant to Clause 11 of the Sale Agreement dated 19th March, 2015
  3. 3.Each party to bear his/its own costs

Authorities

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Legislation

  • Civil Procedure RulesOrder 40; Section 1
  • Arbitration ActSection 7(1)
  • Law Society Conditions of Sale (1989 Edition)Condition No. 2(1)
Jurisdiction invoked
Section 7 of the Arbitration Act (interim measures in support of arbitration) read with Clause 11 of the Sale Agreement dated 19th March 2015

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "Levius Koyio Matseshe & another Martin Makoosio & another [2017] KEELC 3697 (KLR)", Case Analysis (2017). ELC Case of 2016 (Application dated 7th September, 2016). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/3697/eng@2017-01-27

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