Highway Dynamics Limited v Delamere Flats Limited [2020] KEELC 3529 (KLR)

Environment and Land Court

17 February 2020

BEB M Eboso

2,348 words in judgment

View original judgment Read on Kenya Law Watch case

AI-assisted case brief

·~9 min to read original · ~4 min brief

The bottom line

A Kenyan court protected a flat owner from eviction and share seizure because the company couldn't prove it followed fair constitutional procedures before taking the property.

What this practically means

Executive summary

Delamere Flats Limited, a company incorporated in 1948 to construct and maintain residential flats on a 99-year lease, allocated its shareholders rights to exclusive occupation of flats under its Articles of Association. The plaintiff, holder of Flat No J21, sued on 6/3/2019 after the defendant demanded service charge sums of Kshs 2,116,229 and later Kshs 1,352,927.40 without furnishing particulars, and on 6/2/2019 transferred the plaintiff's shares to itself. The plaintiff sought injunctions protecting its ownership and occupation of the Flat, an order for specific and audited service charge accounts, and costs. With the plaint it filed a notice of motion dated 5/3/2019 seeking interlocutory restraint. The defendant resisted, relying on Articles 13, 14 and 25 of its Articles conferring a lien over shares upon unpaid service charge after 14 days' notice, but its replying affidavit was bare, with no annexures. Applying Giella v Cassman Brown, Mrao and Nguruman, Eboso J found the plaintiff had demonstrated a prima facie case with probability of success: the Articles of Association predate and are subject to the Constitution of Kenya 2010, and there was no evidence of compliance with Article 47 before the defendant purported to deprive the plaintiff of its property. The court also held that dispossession of land cannot be adequately remedied in damages and that the balance of convenience favoured preserving the shares and the Flat, the disputed sum being deposited in court. The court restrained the defendant from interfering with the plaintiff's occupation of, or dealing with, Flat J21 and the associated shares, ordered the plaintiff to continue paying service charge under the Articles, and directed that costs of the application be in the cause. The main suit proceeds to trial.

Key legal issues

Whether the plaintiff established a prima facie case with a probability of success

Holding

Yes - the plaintiff's right to Flat J21 was threatened by the defendant's actions, and the defendant's bare, unannexed affidavit left uncontroverted the plaintiff's contention that Article 47 requirements were not satisfied before depriving the plaintiff of its property

Reasoning

The court found the defendant's replying affidavit bare, containing no annexures, so no evidence controverted the plaintiff's claim. It held the Articles of Association relied on predate and are subject to the 2010 Constitution, and it was not clear whether their application was constitutionally aligned. The disputed service charge computation was also unexplained. On that material the plaintiff demonstrated a threatened right and probability of success.

p. 3

Whether the plaintiff would suffer irreparable injury not compensable by damages

Holding

Yes - land has unique value in Kenya's socio-economic fabric and dispossession of the Flat cannot be casually regarded as adequately remedied by damages

Reasoning

The judge invoked the centrality of land in Kenya to reject the contention that damages would suffice. He also noted the material shares remain held by the defendant and the disputed amount is deposited in court, so the balance of convenience favours preserving the shares and the Flat pending trial.

p. 3

Legal principles established

The interlocutory injunction criteria require a prima facie case with a probability of success, irreparable injury not compensable in damages, and, if in doubt, a balance of convenience analysis
Articles of Association that predate the Constitution of Kenya 2010 are subject to its framework, including the fair administrative action protections of Article 47
Alleged dispossession of land is not a transgression that can be adequately remedied by an award of damages

Court orders

1.Pending the hearing and determination of the suit, the defendant and its agents/servants are restrained against interfering with the plaintiff's right to the exclusive occupation and use of Flat No J21 within Delamere Flats, Nairobi
2.Pending the hearing and determination of the suit, the defendant and its agents and servants are restrained against selling or transferring Flat No J21 or disposing of the plaintiff's shares in the company relating to the said Flat
3.Pending the hearing and determination of the suit, the plaintiff shall continue to pay service charge as resolved from time to time within the framework of the Articles of Association of the defendant company
4.Costs of the application shall be in the cause

Authorities

Legislation

Constitution of Kenya 2010Article 40
Constitution of Kenya 2010Article 47

Cases cited (3)

Giella vs. Cassman Brown & Co. Ltd
(1973) E.A 358
Mrao Limited vs. First American Bank of Kenya Limited & 2 others
(2003) KLR 125
Nguruman Limited vs. Jan Bonde Nielsen & 2 Others
[2014] eKLR

Jurisdiction invoked: Not expressly stated; original civil suit invoking interlocutory injunctive jurisdiction (articles 40 and 47 of the Constitution of Kenya 2010 argued by the plaintiff)

Key timeline

Practical implications

Frequently asked questions

Cite this brief

Caselaw, "Highway Dynamics Limited v Delamere Flats Limited [2020] KEELC 3529 (KLR)", Case Analysis (2020). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/3529/eng@2020-02-17

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