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ELCAllowedNot stated in the judgment· [2024] KEELC 6684 (KLR)

Sobocon Associates Limited v Caperina Enterprises Limited (Environment & Land Case 189 of 2024) [2024] KEELC 6684 (KLR)

Environment and Land Court
9 October 2024
2,286 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~9 min to read original · ~4 min brief

The bottom line

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The Environment and Land Court froze a Nairobi property sale and ordered the seller to bank Kshs 16.6 million while a disputed land purchase is decided.

What this practically means

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Executive summary

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The plaintiff/applicant, Bernard Omondi Odhuno, moved the court by Notice of Motion seeking a temporary injunction restraining the defendant from alienating, selling, renting or otherwise dealing with office Suite B, Third Floor, Wing A (approximately 2,586 sqft) with four parking bays at Morningside Office Park on LR No. 2/704, I.R 127882/1 Ngong Road, Nairobi, together with an order that the defendant deposit Kshs 16,653,840 in court. The applicant relied on a sale agreement dated 5/07/2023, payment of a deposit, the defendant's refusal to release completion documents and to submit to arbitration, and fear of resale to a third party. The defendant, through the affidavit of its sole director Priscilla Murungi, contended the transaction was a cash sale for Kshs 36,204,000 to be completed within 90 days; that the applicant paid only Kshs 3,620,400, later Kshs 13,033,440, and despite extensions failed to complete, entitling the defendant to retain the deposit. The court framed two issues: whether the injunction threshold was met and costs. Applying Giella v Cassman Brown, Mrao Ltd and Kenleb Cons Ltd, the court found Clause 3.2(B) of the agreement required payment by RTGS (bank transfer), not cash; the defendant proved no cash requirement and had indulged the applicant. A prima facie case with probability of success, irreparable harm not compensable in damages and balance of convenience favouring the applicant were all found. The court granted an interim injunction in terms of prayer 3, ordered the defendant to deposit Kshs 16,653,840 in a joint interest-earning account of both counsels pending determination, and awarded costs in the cause.

Key legal issues

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01

Whether a prima facie case with probability of success was established

Holding

Yes - the agreement, payment of deposit and applicant's continued willingness to complete established a prima facie case.

Reasoning

The court found the existence of a valid sale agreement, payment of the deposit and set completion timelines undisputed. The applicant sought financing and its counsel gave an undertaking, and the applicant remained ready, able and willing to perform. The defendant's contention that payment had to be in cash was contradicted by Clause 3.2(B) of the agreement, which required payment by RTGS, and the defendant produced no evidence requiring cash payment.

p. 5
02

Whether irreparable harm and balance of convenience favoured granting the injunction

Holding

Yes - damages may not be recoverable if the property is alienated, and the balance of convenience favours the applicant.

Reasoning

The court held there was no guarantee a decree would be enforceable if the suit property were alienated or charged out of the defendant's control. The applicant might never recover the money or the land, so preservation of the subject matter was in the interest of justice. The balance of convenience tilts toward the applicant, who stands to lose both property and deposit. The deposit of Kshs 16,653,840 held by the defendant since 2023 also supported the finding of potential irreparable harm.

p. 5
03

Whether the sale agreement required cash payment

Holding

No - Clause 3.2(B) required payment by RTGS, which is a bank transfer, and the defendant failed to prove cash payment was required.

Reasoning

The court examined Clause 3.2(B) which provided that payment of the purchase price and VAT shall be made by RTGS to the vendor's advocates' account. RTGS is a real-time bank transfer system. The agreement neither excluded bank-sourced funds nor required cash. The defendant produced no evidence that payment had to be strictly in cash, and its indulgence of the applicant showed willingness to allow the applicant to mobilise funds for payment.

p. 4

Legal principles established

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  • An applicant for a temporary injunction must establish a prima facie case with a probability of success and irreparable harm not compensable in damages; the onus is on the applicant.
  • An applicant for an injunction must make full and frank disclosure of all relevant facts and show a legal or equitable right requiring protection.

Court orders

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  1. 1.Interim injunction granted in terms of prayer 3 of the Notice of Motion until the suit is heard and determined, restraining the Defendant from alienating, selling, renting, occupying or dealing with the suit property
  2. 2.Defendant ordered to deposit, within seven (7) days, Kshs 16,653,840 in a joint interest-earning account held by counsel for the plaintiff and the defendant, to be released upon hearing and determination of the suit
  3. 3.Costs in the cause

Authorities

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Legislation

  • Civil Procedure Rules 2010Order 40 Rules 1, 2, 3 and 4; Order 51 Rule 1
  • Civil Procedure Actsections 1A, 1B, 3, 3A, 63(c) & (e)
  • Arbitration Actsection 7

Cases cited (3)

  • Giella vs Cassman Brown & Co. Ltd
    [1973] EA 358
  • Mrao Limited vs First American Bank of Kenya Ltd & 2 Others
    [2003] KLR 125
  • Kenleb Cons Ltd vs New Gatitu Services Station Ltd & Another
    [1990] KLR 557
Jurisdiction invoked
Order 40 Rules 1, 2, 3 and 4 and Order 51 Rule 1 of the Civil Procedure Rules 2010; sections 1A, 1B, 3, 3A and 63(c) & (e) of the Civil Procedure Act; section 7 of the Arbitration Act

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, "Sobocon Associates Limited v Caperina Enterprises Limited (Environment & Land Case 189 of 2024) [2024] KEELC 6684 (KLR)", Case Analysis (2024). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/6684/eng@2024-10-09

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