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ELCDismissedNot stated in the judgment (plaintiff's suit filed 25/6/2018)· [2020] KEELC 1667 (KLR)

PBM Nominees Limited v Uchumi Supermarkets Limited [2020] KEELC 1667 (KLR)

Environment and Land Court (Nairobi)
15 July 2020
BEB M Eboso
1,211 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 refused to pause a landlord's Kshs 147 million rent claim because the insolvency case the supermarket relied on had already been settled under a rescue plan.

What this practically means

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Executive summary

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The plaintiff sued on 25/6/2018 claiming rent arrears, service charge and interest totalling Kshs 147,610,693.20, and moved for summary judgment or alternatively judgment on the admitted sum of Kshs 61,304,565.60. The defendant entered appearance, filed a defence and a preliminary objection challenging the court's jurisdiction. While the plaintiff's application and the objection were pending ruling, the defendant sought a stay of all proceedings, rulings, judgments and orders pending the hearing and determination of Nairobi High Court Insolvency Petition No 25 of 2018, in which Kasango J had earlier stayed legal proceedings against the defendant company. The defendant relied on Anthony Obidulu v Sanju Park, arguing that insolvency administration serves all creditors collectively. The plaintiff opposed through Mr Atul Shah's affidavit, stating it was not party to the CVA, that it was owed a colossal sum, and that it had no other forum; it cited Nakumatt Holdings v Ideal Locations and Section 560(1) of the Insolvency Act. The court examined the insolvency record and found that on 1/7/2020 Kasango J approved the CVA and marked the winding up petition as settled. Since the stay application was entirely premised on a petition no longer pending, it lacked merit. The notice of motion dated 18/11/2019 was rejected, with the defendant to bear the costs of the application. The suit itself and the plaintiff's application remain before the court.

Key legal issues

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Whether a stay of proceedings should issue pending an insolvency petition

Holding

The application failed because the insolvency petition it was premised on had been marked as settled under the approved Company Voluntary Arrangement and was no longer pending

Reasoning

The court appraised the record of Nairobi High Court Insolvency Petition No 25 of 2018 and found that on 1/7/2020 Kasango J approved the CVA and ordered that the winding up petition be marked as settled. Since the applicant's application was entirely premised on stay orders tied to that petition, and the petition was no longer pending, no basis existed to grant the stay sought.

p. 2

Legal principles established

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  • A stay pending determination of an insolvency petition cannot stand where the petition has been marked as settled and is no longer pending

Court orders

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  1. 1.Notice of motion dated 18/11/2019 rejected for lack of merit
  2. 2.Defendant to bear costs of the application

Authorities

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Legislation

  • Insolvency ActSection 560(1)

Cases cited (2)

  • Anthony Obidulu v Sanju Park
    [2010] eKLR
  • Nakumatt Holdings Limited & Another v Ideal Locations Limited
    [2019] eKLR
Jurisdiction invoked
Not expressly invoked; original civil jurisdiction over a claim for rent arrears, service charge and interest, with jurisdiction challenged by preliminary objection (left unresolved)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "PBM Nominees Limited v Uchumi Supermarkets Limited [2020] KEELC 1667 (KLR)", Case Analysis (2020). Not stated in the judgment (plaintiff's suit filed 25/6/2018). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/1667/eng@2020-07-15

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