Kenya Ports Authority v Baharini Oil Supply Services Limited & 2 others

construction of the berth, the appellant to allow Kenya Fluorspar Company Limited to locate its ship loader at the berth and provide free access rights. 3. The two respondents averred further that, subsequent to the signing of the Concession Agreement, the appellant issued to the 1st respondent a stevedoring and shore handling licence for general cargo and oil products; that the 1st respondent engaged professional consultants for the technical part of construction of the berth, and the requisite drawings were approved by the appellant on 1st February 2006; that, in 2006, the appellant advertised a tender for the designing of the berth and multi- storey CFS building; that the bids were opened in October 2006 and evaluated by several jurors, including the appellant’s ocers; and that, in the same year, the 1st respondent applied for a loan facility of USD 9.4 million to nance the construction of the berth, which was approved. 4. According to the 1st and 2nd respondents, on 24th January 2007, the Permanent Secretary in the Ministry of Transport and an inter-ministerial committee issued the go-ahead for the construction of the berth pursuant to the concession; and that, 5 days later, the approval was withdrawn vide a letter signed by the Permanent Secretary in the Ministry of Transport whereupon the appellant refused to grant the 1st respondent access to the site in terms of the concession agreement. This development prompted the 1st respondent to move to court and le suit against the appellant and the Attorney General in the High Court of Kenya at Nairobi in HCCC No. 405 of 2007 seeking specic performance; monetary compensation for the nances injected into the berth; and the losses occasioned by the appellant’s failure to provide access to the site. Subsequently, the parties agreed to have the matter withdrawn to enable them pursue out-of-court settlement vide a consent order dated 18th January 2019. 5. In addition to the foregoing, the 1st and 2nd respondents averred further that, before negotiations began, the 1st respondent’s Director became aware that the appellant had advertised for and invited bids with regard to the intended privatization of the land the subject matter of the Concession Agreement; that the 1st and 2nd respondents wrote a protest letter to the Attorney General copied to the appellant’s management; that, on 1st July 2021, the Attorney General wrote to the appellant advising them that it would not be legally sound to proceed with fresh applications and advised the appellant to engage the 1st and 2ndrespondents with a view to amicable resolution of the dispute concerning the Concession Agreement; that the appellant proceeded to appoint a technical committee to sit with the 1st respondent to explore amicable settlement; that, throughout the negotiations, it became apparent that the initial property intended to be allocated to the 1st respondent pursuant to the Concession Agreement (Plot. No. Mombasa/Block XLVII/558) was no longer available; that the 1st and 2nd respondents proposed access to alternative property, including the G-Section in the Port of Mombasa, BP Shed 1 and Shed 2, Kapenguria behind the re station, Dongo Kundu Berth No. 1 and Mombasa Port Berths 11-14; that the technical committee stated that the alternative properties aforesaid were all unavailable; that the technical committee prepared a report sometime in January 2023, which made several recommendations with a view of allowing the 1st respondent access to the Mbaraki Wharf under Plot No. Mombasa/Block XLVII/558, but that access thereto had not been permitted; and that the 1st and 2nd respondents were later shocked to learn that the appellant had advertised tenders calling for applications for development of port assets through PPP (Public Private Partnership) on properties, which included Mombasa Port Berths 11-14 that had been declared unavailable during the negotiations. 6. The 1st and 2nd respondents stated that they were apprehensive that, should the bidding for Mombasa Port Berths 11-14 continue, they would be taken back to the drawing board and left with only the Concession Agreement with nothing to show for it; that they stood to suer irreparable harm that could not be compensated by way of damages; that, upon further inquiries and pleas, the 1st https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 2

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respondent’s Director was shown a letter dated 18th August 2023 from the 3rd respondent (EACC) addressed to the appellant, and in which the 3rd respondent alluded to a complaint led in their oce in respect of allegations of irregularities in the issuance of the license for the development and operations of the berthing facility; that the appellant seemed to have abandoned negotiations after the 3rd respondent expressed interest in the matter; and that, in view of the foregoing, it became imperative to seek the protection of the court. 7. By reason of the matters aforesaid, the 1st and 2nd respondents took the position that the dispute should not be referred to Arbitration pursuant to the arbitration Clause in the Concession Agreement in view of the fact that the parties had agreed to settle the issue out of court, but that the appellant had failed to implement the recommendations of its own technical committee. They set out the particulars of breach on the part of the appellant and prayed for judgment against the appellant for: “ a) An order for specic performance compelling the Defendant to perform the terms of the contract between the parties dated 18th December, 2002; b. General damages for breach of the Concession Agreement dated 18th December, 2002; c. Special damages in the amount of Kshs. 57,000,000.00 for expenses incurred by the Plaintis in performance of its obligations under the Concession Agreement; d. Loss of business in the sum of USD. 181,203,810.90 for loss of business for the unutilised portion (21 Years) of the Concession Agreement; and e. Any other order that the court deems necessary to grant in the circumstances. f. Costs of this suit.” 8. Along with the plaint, the 1st and 2nd respondents led a Notice of Motion dated 16th October 2023 seeking orders that, pending the hearing and determination of the suit, a temporary injunction do issue restraining the appellant, its agents, ocers, employees, assigns or any other person on authority from the appellant from processing, opening, evaluating, qualifying and dealing in any manner whatsoever with any and all bids/tenders submitted by applicants in respect to Mombasa Port Berths 11-14 under Tender reference no. KPA/052/2023- 2024/CPS. Their Motion was supported by an adavit sworn on 16th October 2023 by Abdiwahid Haji Yerrow, a Director of both the 1st and 2nd respondents, essentially deposing to the grounds on which the Motion was founded. 9. In addition to the factual background leading to the dispute to which the suit relates, the grounds on which the application was anchored were that, following the agreement to withdraw the suit against the appellant in respect of the Concession Agreement with a view of pursuing an out-of-court settlement, the primary intention was to have the 1st respondent given access to discharge their obligations under the Concession Agreement; that, before the parties reached nal settlement and implementation of the terms of the amicable settlement, the 3rd respondent moved in, claiming irregularities; that, consequently, the appellant proceeded to advertise and call for bids on the properties which the 1st and 2nd respondents expected to be allocated for the construction of the Berth pursuant to the terms of the Concession Agreement; that the 1st and 2nd respondents became apprehensive that, should the bidding for the said berths continue, they would be left with a Concession Agreement with nothing to show for it; that they would suer irreparable harm that cannot be compensated by an award of damages; that the matter should not be subjected to the Arbitration Clause in the Concession Agreement because https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 3

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the parties had agreed to settle the issue out of court, but that the appellant had failed to implement the recommendations of its own technical committee; that, even if the court was inclined to disagree, they could still nd protection of the court pursuant to section 7(1) of the Arbitration Act; that the stevedoring and shore handling issued to the 1st respondent was never suspended and was still in force; and that, unless the orders sought were granted, the 1st and 2nd respondents’ loss would be irreparable since there was a real threat to the subject matter of the suit. 10. In response to the Motion, the appellant led a replying adavit of Stephen Kyandih, the appellant’s Principal Legal Ocer, sworn on 6th November 2023. According to the deponent, the communication between the appellant and its legal advisor annexed to the 1st and 2nd respondents’ supporting adavit were privileged and could not be produced by the 1st and 2nd respondents; that the technical committee report annexed to the supporting adavit was a report of negotiations held on a without-prejudice basis, and were equally inadmissible; and that, therefore, the annexures aforesaid should be expunged from the record. 11. According to Mr. Kyandih, the Concession Agreement was specic that it was personal to the 1st respondent and was not assignable; that, consequently, the 2nd respondent had no basis on which to maintain any claim against the appellant; that the Concession Agreement only related to the Mbaraki Wharf accessed through Plot No. Mombasa/Block XLVII/558, but did not relate to Berths 11-14 in respect of which the 1st and 2nd respondents sought injunctive orders; that, in the negotiation between the 1st respondent and the appellant, the 1st respondent was notied that Berths 11-14 were not available having been reserved for other uses, but that the Mbaraki Wharf accessed through Plot No. Mombasa/Block XLVII/558 was available; that the appellant has not proposed to dispose of the Mbaraki Wharf accessed through Plot No. Mombasa/Block XLVII/558 to any other party; that the injunction orders were sought to preserve property which was not and could not be in dispute as far as the Concession Agreement was concerned; that the 1st respondent was inviting the court to compel the appellant to include Berths 11-14 as possible options in a settlement of the dispute relating to the Concession Agreement; that the proposal to reserve Berths 11-14 to the 1st and 2nd respondents would run counter to the principles of public procurement in Article 227 of the Constitution as operationalized by the Public Procurement & Assets Disposal Act and the Public Private Partnerships Act; that the breach complained of by the 1st appellant resulted from refusal by the Ministry of Transport to grant the requisite approval to which performance of the concessional Agreement was conditional; and that, since the necessary approvals were not granted, performance of the Agreement was rendered impossible. 12. The deponent contended further that the 1st respondent had an adequate remedy in damages in the event that the court found that the appellant was in breach of the Concession Agreement; that the 1st respondent had quantied the damages, and the appellant was protable and more than capable of paying the damages; that granting the injunction sought would hamper the Government’s stated desire to improve eciency at the port of Mombasa through partnerships with private players with the relevant expertise for the benet of increased public revenue, and for the benet of the public at large; that, on the other hand, the 1st respondent was pursuing private interests as an investor; that those private interests should not have the eect of curtailing well-intentioned public projects, such as improving eciency at the port of Mombasa; and that their application should be dismissed. 13. In response to the appellant’s replying adavit, the 1st and 2nd respondents led a further adavit sworn by Abdiwahid Haji Yerrow on 9th November 2023. According to Mr. Yerrow, the annexures used in the application were not privileged documents as they were provided to the 1st and 2nd respondents during negotiations with the appellant; that it was apparent that the appellant did not want the court to see https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 4

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the report dated January 2023 since the same was a record of the terms of the negotiations between the parties; that the only reason the appellant sought to have the documents expunged was that they were aware that they were at fault because the appellant had been cautioned against leasing out the wharf to a third party as was evident from the correspondence with the Attorney General; that it was misleading to allege that the breach occurred when approval was denied yet, under section 12(1) of the Kenya Ports Authority Act, the appellant has the power to enter into Agreements with any person to deal with any property for the furtherance of the appellant’s purposes; and that the appellant had already been advised that the Concession was and remained properly in place. 14. On its part, the 3rd respondent also led a replying adavit sworn on 30th October 2023 by Stephen Ivuvu, an Investigator with the 3rd respondent. According to the deponent, the 3rd respondent received an anonymous report on 8th September 2023 regarding allegations of irregularities in the grant of non- exclusive licence for the construction and management of a berthing facility at Mbaraki Wharf to the 1st respondent by the appellant leading to a claim of Kshs. 3.9 billion; that the 3rd respondent was undertaking investigations into the allegations, which were still at a preliminary stage; that, upon conclusion of the investigations, the 3rd respondent shall compile a le and make its recommendations to the Director of Public Prosecutions pursuant to the provisions of section 35 of the Anti-Corruption and Economic Crimes Act; that the 1st and 2nd respondent’s application was grounded on generalities,conjectures and suppositions with respect to when and how the 3rd respondent contravened their constitutional rights; that the allegation that the 3rd respondent investigation was designed to frustrate the Concession was baseless and unfounded; and that disclosing the nature and status of the investigation at this point was prejudicial to the investigators. The 3rd respondent prayed that the 1st and 2nd respondents’ application as against it be dismissed with costs. 15. In addition to opposing the 1st and 2nd respondents’ application for temporary injunction (the 1st application), the appellant also resisted the 1st and 2nd respondents’ suit by way of a Notice of Motion dated 31st October 2023 (the 2nd application) seeking orders that: 16. “ 1. The 1st plainti’s suit be struck out for being time barred. 2. The 2nd plainti’s suit be struck out for lack of privity. 3. Without prejudice to (1) above, the 1st plainti’s suit be stayed pending reference to arbitration.” The appellant’s Motion was supported by the adavit of Michael Sangoro, the appellant’s Manager – Litigation & Disputes, sworn on 31st October 2023. The application was premised on the grounds that the suit was wholly founded on an alleged breach of the Concession Agreement dated 18th December 2002; that the breach resulted from the subsequent cancellation on 29th January 2007 by the Ministry of Transport of its approval, which it had given on 24th January 2007; that the 1st respondent’s cause of action accrued under the Concession Agreement on 29th January 2007 when the approval was withdrawn and access denied; that the cause of action was pursued in Nairobi HCCC No. 405 of 2007, which the 1st respondent withdrew on 18th January 2019; that, by dint of section 4 of the Limitation of Actions Act (Cap. 22), all claims arising in contract must be brought not later than 6 years when the cause of action accrued; that, by dint of section 34(1) of Cap. 22, the Act applies to arbitration and, consequently, the time bar applies to any arbitration which may be commenced under Clause 42 of the Concession Agreement; that it was therefore pointless to stay the proceedings pending an arbitration which was time barred; that, if the claim was not time barred, Clause 42 of the Concession Agreement required that the dispute be referred to arbitration and the suit stayed in accordance with section 6 of the Arbitration Act; that the Concession Agreement was only between the 1st respondent and the https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 5

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appellant; and that the 2nd respondent was a stranger to the Agreement and could not maintain any claim in law as against the appellant whether by suit or arbitral proceedings. 17. In response to the second application, the 1st and 2nd respondents led a replying adavit sworn by their Director, Abdiwahid Haji Yerrow, on 9th November 2023 deposing that the Concession Agreement was to remain in place for a period of 33 years up to 2035 and that, as long as it remained unperformed on the part of the appellant, then the matter was not time barred as the breach was on-going; that the 1st and 2nd respondents have not been given access to the wharf nor the berths that were allocated to them after negotiations; that, even after the appellant indicated that Berths 11-14 were unavailable, the appellant proceeded to advertise bids therefor; that, for every day that passes before the year 2035 while the 1st respondent has not been allowed to realise the fruits of the Concession Agreement, then a fresh breach occurs and remains ongoing; that the cause of action is the date of the notice for bids by the appellant dated 12th September 2023 and the report of January 2023; that the report is the basis of the suit and cannot be separated from the proceedings as it is the culmination of almost a year of negotiations; that, in the report, the committee observed that the 1st respondent lost time from 2002 to 2022 in realising benets that would have accrued from the Agreement, benets that the committee could not quantify, but could be qualied considering the opportunity cost of not being allowed to construct, operate and manage the berth; that, if the appellant was admitting the claim, then the same ought to be recorded and the damages payable to the 1st and 2nd respondents quantied by the court; that the 2nd respondent is a shareholder of the 1st respondent and the main investor of Kshs. 57 million claimed in the plaint; that the matter ought not to be subjected to the arbitration clause in the Concession Agreement because the parties agreed to settle the issue out of court, which resulted in the parties undergoing “self-arbitration” for a period of 6 months, but that the appellant failed to implement the recommendations of its own technical committee pursuant to the said “arbitration”; and that, in the event the court disagreed with that view, then the 1st and 2nd respondents would be relying on section 7(1) of the Arbitration Act providing that “It is not incompatible with an arbitration agreement for a party to request from the High Court, before or during arbitral proceedings, an interim measure of protection and for the High Court to grant that measure.” The 1st and 2nd respondents prayed that the second application be dismissed with no orders as to costs. 18. The two applications were heard together and determined vide the impugned ruling of F. Wangari, J. dated 19th January 2024. On the 1st issue as to whether the 1st and 2nd respondents’ suit was time-barred, the court held that it was not the breach of the Concession Agreement that prompted the ling of the suit, but failure of the appellant to implement its technical committee’s recommendations; that the breach of the concession agreement was addressed in the Nairobi suit; and that, therefore, the present suit was not time barred. 19. Regarding the 2nd issue as to whether the suit by the 2nd respondent ought to be struck out, the court held that, even though the Concession Agreement was strictly between the 1st respondent and the appellant, it did not bar either party from having successors or assigns in the future; that clause 3.3 of the Concession Agreement provided that the rights granted under the agreement were personal to the concessionaire, and that the rights could be assigned as provided in the agreement only by the concessionaire, who is the 1st respondent; that a consideration of the 1st respondent’s initials (BOSS) left no doubt that the two respondents were related; and that, therefore, the appellant had not made out a case to warrant the 2nd respondent’s suit to be struck out. 20. With regard to the 3rd issue as to whether the suit ought to be stayed pending reference to arbitration, the court held that, notwithstanding the arbitration clause, the court was still bound to enquire as to whether there existed a dispute to warrant reference to arbitration; that, in the present case, https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 6

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the parties have held discussions with a view to resolving the impasse culminating in a report with recommendations; that the court found no ecacy in staying the proceedings and referring the matter to arbitration; and that the appellant’s application would have tted well in the Nairobi suit, but not in the present matter. 21. On the 4th issue as to whether the evidential documents objected to by the appellant ought to be expunged from the record, the court held that the 1st and 2nd respondents’ averments as to how the documents were obtained had not been controverted; that there was no averment that the documents were illegally obtained; that a review of the two letters singled out by the appellant did not reveal any privilege, and the court declined to expunge them; that the report was prepared by factoring in the 1st and 2nd respondents’ input, and it was ordinarily expected that the report would be supplied to them; and that, therefore, the report was found to be admissible in evidence. 22. On the 5th issue as to whether the injunction sought ought to be granted, the court held that it was not in dispute that the parties entered into a Concession Agreement and that, to date, the 1st and 2nd respondents have not been granted access by the appellant to execute their part of the bargain; that the 1st and 2nd respondents must have invested money at the inception of the concession and that, had the contract been performed, it would have earned them some income; that, therefore, it behoves the appellant to give a rebuttal to the 1st and 2nd respondents’ assertions and that, therefore, the court was satised that a prima facie case had been made out; that, if the appellant was allowed to advertise the berths without the 1st and 2nd respondents securing their legitimate expectation, there would be substantial loss which cannot be made good by an award of damages, and that the element of irreparable harm had been demonstrated; and that the balance of convenience tilted in favour of the 1st and 2nd respondents. 23. In view of the foregoing, the court allowed the 1st and 2nd respondents’ Motion in terms of the prayer for temporary injunction pending hearing and determination of the suit; dismissed the appellant’s Motion; and ordered that the matter be xed for hearing on priority basis, and not later than 30 days from the date of the ruling. 24. Dissatised with the learned Judge’s ruling dated 19th January 2024, the appellant moved to this Court on appeal on 8 grounds, namely that: “ 1. The learned judge erred in law and fact in failing to nd that the 2nd Respondent had no cause of action known to law against the Appellant to justify the sustenance of the suit by the 2nd Respondent. 2. The learned judge erred in law and fact in failing to nd that the suit was, in any event, time barred thus ousting the court's jurisdiction to entertain it. 3. The learned judge erred in law and fact in refusing to expunge and in fact relying on three (3) specied documents which attracted legal professional privilege and privilege accorded to without prejudice communication. 4. The learned judge erred in law in presuming she had discretion to exercise or the power to balance competing interests, where professional legal privilege applied. 5. The learned judge erred in law and fact in refusing to stay the suit on the basis that there was no dispute to refer to arbitration but then xing the suit for hearing on merits. https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 7

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25. 6. The learned judge erred in law and fact in presuming that the parties' choice of arbitration as a dispute resolution mechanism would only delay the determination of the dispute. 7. The learned judge erred in law and fact in her application of the second limb of Giella v Cassman Brown and Co Ltd [1973] EA 358 to the facts of this case, with the result that learned judge granted an injunction that should not have been granted. 8. The learned judge failed to take into account relevant factors, including the public interest, when exercising her undoubted discretion to grant or refuse the injunction.” In support of the appeal, learned Counsel for the appellant, M/s. Muriu, Mungai & Company, led written submissions and a list of authorities dated 9th April 2024. Counsel cited 12 judicial authorities, namely: Knott v McDonald's Corp. 985 F. Supp. 1222; and Nassau Hotel Co. v Barnett Barse Corp. 162 App. Div 381 (N.Y. App. Div 1914) for the proposition that, if an assignment of contract occurs, the assignor loses rights under the assigned contract, and that contracts of a personal nature cannot be assigned without the other party’s consent; Hannah Maina t/a Taa Flower v Rift Valley Bottlers Limited [2016] eKLR for the proposition that a related company does not have the right to sue merely because of that relation; South Nyanza Sugar Company Limited v Francis Koskei Ntuitai [2021] eKLR for the proposition that the cause of action in a contract accrues when the contract is rst breached; Rift Valley Railways (Kenya) Ltd v Hawkins Wagunza Musonye & another [2016] eKLR; and David Ngugi Waweru v Attorney General & another [2017] eKLR, highlighting the principle that time does not stop running merely because parties are engaged in an out of court negotiations or a parallel remedy; Manani Lilan & Mwetich Co. Advocates v Veronica Sum [2022] eKLR, underscoring the importance of legal advice privilege, and the importance that the communication be made secret, unless with his consent; Guardian Bank Limited v Jambo Biscuits Kenya Limited [2014] eKLR to buttress the proposition that privileged documents do not need to be marked “condential” or “without prejudice” for such privileges to apply to them; UAP Provincial Insurance Company Ltd v Michael John Beckett [2013] eKLR for the proposition that if there is no dispute to refer to arbitration, summary judgment follows; Lucy Wangui Gachara v Minudi Okemba Lore [2015] eKLR, highlighting the principle that an appellate court will not interfere with the exercise of the trial court’s discretion, unless there is a showing of a clear abuse of discretion; Sa Terrazo & General Contractors Limited v Teresia Njeri T/A Gata General Agencies [2008] eKLR, highlighting the general rule that an injunction cannot issue if it is not sought as a nal remedy in the suit alleging breach of contract; and East African Cables limited v Public Procurement Complaints, Review and Appeals Board & Another [2007] eKLR for the proposition that the court should consider the public interest vis-à-vis the private interests in an application for injunction. 26. On their part in opposition to the appeal, learned Counsel for the 1st and 2nd respondents, M/s. Nzamsa Sankale & Company, led written submissions and a list of authorities dated 17th April 2024 citing 8 judicial authorities, namely: Mombasa Bricks & Tiles Ltd & 5 others v Arvind Shah & 7 others [2019] eKLR for the proposition that a party is deemed to be properly joined in a suit if his/her presence is necessary for the determination of the real issue(s) in controversy; The German School Society & another v Ohany & another [2023] KECA 894 (KLR) for the proposition that a continuing wrong https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 8

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is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury; Al-Sabah v East African Fitness Limited [2021] KECA 269 (KLR) for the proposition that a lawyer can only be excused for failing to mark a communication as being on without prejudice basis if is shown that it was truly an omission and that, looking at the overall circumstances surrounding the correspondence, its omission could only be a mistake; Guardian Bank Limited v Jambo Biscuits Kenya Limited [2014] eKLR for the proposition that express marking of a communication as being on without prejudice makes the court’s work easier and, where express marking is lacking, the court falls back to the other requirement of considering the communication and the entire circumstances in which it was made to determine whether it can infer that the parties agreed or intended that the communication should not be given in evidence; UAP Provincial Insurance Company Limited v Michael John Beckett [2013] eKLR for the proposition that if any party to an arbitration agreement commences any legal proceedings in court against any other party to the agreement in respect of any matter agreed to be referred, any party may at any time after entering appearance and before delivering any pleadings apply to the court to stay the proceedings; Credit Reference Bureau Africa Limited t/a Transunion v True African (Kenya) Limited [2022] KEHC 11083 (KLR) for the proposition that the court is empowered in an appropriate suit to enter summary judgment for the claim from the Plainti, subject to there being no triable issues which would entitle a Defendant leave to defend; People's Union for Democratic Rights & Others v Union of India & others [1982] 3 SCC 235 for the proposition that any matter where the interest of the public at large is aected can be redressed by ling a public interest litigation in a court of law; and Waithaka v Industrial and Commercial Development Corporation [2011] eKLR for the proposition that money is not everything at all times and in all circumstances, and that one should not think that they can violate another citizen's rights only at the pain of damages. 27. It is noteworthy that the 3rd respondent did not le any submissions on the issues raised in the instant appeal. 28. We take note of the appellant’s decision to submit on 5 broad issues drawn from the grounds on which the appeal is anchored, namely: 29. (i) whether the 2nd respondent’s suit ought to have been struck out for lack of privity; (ii) whether the 1st and 2nd respondents’ suit was time barred; (iii) whether the learned Judge erred in failing to expunge the documents said to be privileged; (iv) whether the learned Judge erred in failing to stay the suit pending reference to arbitration; and (v) whether the prayer for temporary injunction was merited. To our mind, the foregoing issues to which we now turn to consider seriatim comprise the substratum of the appeal before us. On the 1st issue as to whether the 2nd respondent’s suit ought to have been struck out for the alleged lack of privity, the learned Judge had this to say: “ 38. It is not in doubt that the concession agreement was only between the 1st Applicant and the Respondent. Therefore, technically speaking, the 2nd Applicant cannot seek to enforce a contract it was not part of. However, it was submitted that the 2nd Applicant is a shareholder of the 1st Applicant. According to the CR.12 attached to the Applicants' supporting adavit, the 2nd Applicant was registered on 16th May, 2005. Clearly, at the time the concession agreement was being entered into on 18th December, 2002, the 2nd https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 9

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Applicant was not in existence. Without much interrogation, it would appear that the 2nd Applicant is a stranger to the agreement. 39. However, it would be too hasty to declare as such. In the circumstances, a consideration of the concession agreement would be imperative. At clause 1.4 of the agreement, successors are dened as follows: - ‘Subject to the terms of' this Agreement, any reference in this agreement to any party shall include its respective successors and permitted assigns or permitted transferees.’ 40. Further at clause 3.3, the agreement provides as follows: - ‘The rights granted under this agreement are personal to the concessionaire and shall not be capable of assignment except as provided in this agreement. Such rights may only be exercised by the concessionaire or its duly authorized servants and agents.’ (Emphasis added). 41. This court’s understanding of the above two (2) clauses is that though the concession agreement is strictly between the 1st Applicant and the Respondent, it did not bar either party from having successors or assigns in future. Though clause 3 .3 made the rights under the agreement to be personal to the concessionaire, the same could be assigned as provided in the agreement and this right was solely vested on the concessionaire who in this case is the 1st Applicant. 42. Further, from the report of January, 2023, the Applicants are referred to as BOSS. Though this court is alive to the separate legal entity personality of a company as set out in the celebrated case of Salomon v Salomon [1897] AC 78, a consideration of the 1st Applicant's initials leaves no doubt that the two are related. It has been held severally that striking out pleadings is a drastic remedy that should only be resorted to where a pleading is a complete sham …. 43. Having found as above, this court nds that the Respondent has not made out a case to warrant the suit by the 2nd Applicant to be struck out and it is so held.” 30. Faulting the learned Judge’s decision, Counsel for the appellant submits that the fact that the Concession Agreement did not exclude the possibility of assignment did not of itself give legal standing to the 2nd respondent; that the 2nd respondent did not suggest that the Agreement had been assigned to it; that, if the Agreement had been assigned to the 2nd respondent, the 1st respondent would have lost its rights under the Agreement, including the right to sue thereon; and that the Agreement could not be assigned in view of the Agreement expressed in clause 3.3 to the eect that it was "personal to the provision in concessionaire". 31. Citing the cases of Knott v McDonald's Corp. (supra); and Nassau Hotel Co. v Barnett Barse Corp. (supra), Counsel argued that if an assignment of contract occurs, the assignor loses its rights under the assigned contract; and that contracts of a personal nature cannot be assigned without the other party’s consent, which consent had not been sought by the 1st respondent from the appellant so as to constitute the 2nd respondent an assignee of the concession agreement with rights to sue thereon. 32. Counsel for the appellant submitted further that the mere fact that legal entities are related does not of itself grant one of the entities within the group the right to sue or be sued on behalf of the other. To buttress their submissions, counsel cited the case of Hannah Maina t/a Taa Flower v Rift Valley https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 10

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Bottlers Limited (supra), arguing that a related company does not have the right to sue merely because of that relationship. According to counsel, the two reasons given for rejecting the privity argument are not legally justiable, and the inevitable conclusion is that the 2nd Respondent lacked privity and could not maintain the suit against the Appellant. 33. According to learned Counsel for the 1st and 2nd respondents, the 2nd respondent was a necessary party to the proceedings in the suit before the Court; that, from the pleadings and annexures attached to the supporting adavit, the 2nd respondent was clearly shown to be the majority shareholder in the 1st respondent company; that the 2nd respondent was the investor of the sum of Kshs. 57 million claimed as prayer (c) of the plaint; and that there is no harm in letting the 2nd respondent proceed to trial and substantiate the investment by tabling the bank statements together with any other evidential documents. 34. Counsel submitted further that, in any event, the 2nd respondent did not claim assignment of rights under the Concession Agreement; that the dispute before the trial court has evolved, and that the matters therein are no longer tied to the Concession Agreement only; and that all the issues arising thereafter have entangled and roped in the 2nd respondent thereby making it a necessary party to these proceedings. They cited the case of Mombasa Bricks & Tiles Ltd & 5 others v Arvind Shah & 7 others (supra), submitting that a party is deemed to be properly joined in a suit if his/her presence is necessary for the determination of the real issue(s) in controversy. According to counsel, joinder of the 2nd respondent as a plainti in the suit was necessary for determination of the issues in controversy. 35. We take to mind the provisions of Order 1 Rule 1 of the Civil Procedure Rules, which provides that: 1. Who may be joined as plaintis [Order 1, rule 1.] All persons may be joined in one suit as plaintis in whom any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist, whether jointly, severally or in the alternative, where, if such persons brought separate suits, any common question of law or fact would arise. 36. In Departed Asians Property Custodian Board v Jaer Brothers Ltd [1999] 1 EA 55, the Supreme Court of Uganda held that: “ A party may be joined in a suit, not because there is a cause of action against it, but because that party’s presence is necessary in order to enable the court eectually and completely adjudicate upon and settle all the questions involved in the cause or matter… For a person to be joined on the ground that his presence in the suit is necessary for eectual and complete settlement of all questions in the suit one of two things has to be shown. Either it has to be shown that the orders, which the plainti seeks in the suit, would legally aect the interests of that person, and that it is desirable, for avoidance of multiplicity of suits, to have such a person joined so that he is bound by the decision of the Court in that suit.” 37. In the same vein, in Civicon Limited v Kivuwatt Limited & 2 others [2015] eKLR, this Court held that: “ The objective of these Rules is to bring on record all the persons who are parties to the dispute relating to the subject matter, so that the dispute may be determined in their presence at the time without any protraction, inconvenience and to avoid multiplicity of proceedings. Thus, any party reasonably aected by the pending litigation is a necessary and proper party, and should be enjoined. In the same vein, a party seeking joinder who fails to establish any right over or interest in the subject matter cannot be enjoined. This Court in https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 11

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Meme vs Republic [2004] KLR 637 considering an application for joinder held that joinder will be permissible: 38. (i) Where the presence of the party will result in the complete settlement of all the question involved in the proceedings; ii. Where the joinder will provide protection for the rights of a party who would otherwise be adversely aected in law: and ii. Where the joinder will prevent a likely course of proliferated litigation.” [Emphasis added] The issue as to who may be joined as a necessary party to a suit, whether as plainti or defendant, was even more succinctly enunciated in Kingori v Chege & 3 Others [2002] 2 KLR 243 where Nambuye, J. (as she then was) observed that: “ …parties cannot be added so as to introduce quite a new cause of action or to alter the nature of the suit. Necessary parties who ought to have been joined are parties who are necessary to the constitution of the suit without whom no decree at all can be passed …. A proper party is one who has a designed subsisting direct and substantive interest in the issues arising in the litigation which interest will be recognisable in the Court of law being an interest which the Court will enforce. A person who is only indicated or commercially interested in the proceedings is not entitled to be added as a party. But a person may be added as a defendant though no relief may be claimed against him provided his presence is proper for a complete and nal decision of the question involved in the suit and such a person is called a proper party as distinguished from a necessary party…” [Emphasis ours] 39. It is instructive that the 1st respondent had not pleaded or alleged that it had assigned its rights under the Concession Agreement to the 2nd respondent which, on that score, had no legal claim or substantial interest thereon in the capacity of an assignee. To our mind, the 1st and 2nd respondents’ contention that the 2nd respondent was a necessary party on account of being the majority shareholder in the 1st respondent and its investor in the sum of the Kshs. 57 million claimed in the main suit as expenses incurred in the performance of the 1st respondent’s obligations under the Concession Agreement is inconsequential and goes against the grain of the celebrated principle of corporate personality commonly known as the Salomon principle. It matters not that the 2nd respondent had an interest in the outcome of the concession, but with no contractual right recognisable at law under the concession agreement. Neither can it be argued that no valid decree could have been passed without joinder of the 2nd respondent as party to the suit (see Kingori v Chege & 3 Others (ibid)). 40. In principle, legal personality is accorded a properly formed registered company (as is the 1st respondent), which is viewed as a separate legal entity from its shareholders with distinct rights and liabilities as an autonomous legal person (see Salomon v A Salomon & Co Ltd [1896] UKHL 1; [1897] AC 22). To hold otherwise would be to say that shareholders in a company have the right to be joined as parties in all suits by or against their company by virtue of their shareholding or investment therein; and that an investor (such as a banker) who lends money to a legal entity for any business venture to which it (the investor) is not party has the right to be joined in any suit intended to enforce any rights or obligations under the venture in https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 12

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question. That is not and cannot be the law, and neither does it matter that the investor is a subsidiary of, or investor in, the contractor. 41. In Salomon v A Salomon & Co Ltd (supra) Lord Mcnaghten had this to say on the corporate personality of a company as a separate legal entity: “ …. When the memorandum is duly signed and registered, though there be only seven shares taken, the subscribers are a body corporate ‘capable forthwith’, to use the words of the enactment, ‘of exercising all the functions of an incorporated company’. Those are strong words. The company attains maturity on its birth. There is no period of minority – no interval of incapacity. I cannot understand how a body corporate thus made "capable" by statute can lose its individuality by issuing the bulk of its capital to one person, whether he be a subscriber to the memorandum or not. The company is at law a dierent person altogether from the subscribers to the memorandum; and, though it may be that after incorporation the business is precisely the same as it was before, and the same persons are managers, and the same hands receive the prots, the company is not in law the agent of the subscribers or trustee for them. Nor are the subscribers as members liable, in any shape or form, except to the extent and in the manner provided by the Act. That is, I think, the declared intention of the enactment ….” 42. In our considered view, the 2nd respondent could not have been a proper or necessary party to the suit between the 1st respondent and the appellant merely by virtue of the fact that it was the 1st respondent’s majority shareholder or nancier of the 1st respondent’s concession. To our mind, it matters not that it stood to lose the sums of money invested in the concession in the event that the 1st respondent failed in its bid to enforce its rights of claim under the concession agreement with the appellant, a concession agreement to which the 2nd respondent was not privy. In any event, the 1st respondent was at liberty if it so wished to call such evidence from the 2nd respondent as would have been necessary for the complete settlement of all questions in the suit. 43. As the learned Judge correctly observed, “It is not in doubt that the concession agreement was only between the 1st Applicant and the Respondent. Therefore, technically speaking, the 2nd Applicant cannot seek to enforce a contract it was not part of ….” Having further observed that “… the 2nd Applicant is a stranger to the agreement”, the learned Judge was at fault in concluding that it was a proper party to the suit merely by virtue of its association with, and as the 1st respondent’s majority shareholder. Accordingly, she erred in failing to strike out the 2nd respondent’s suit against the appellant for want of privity to the contract on which the suit was founded. 44. We form this view on the authority of Kenya National Capital Corporation Ltd v Albert Mario Cordeiro & another [2014] eKLR in which Maraga, JA (as he then was) correctly observed that: “ It is trite that the doctrine of privity of contract is a long-established part of the law of contract. Save for the exceptions brought in by recent reforms of the law in this area which allow third parties for whose benet the contract is made to enforce it, the essence of the privity rule is that only the people who actually negotiated a contract, and are thus privy to it, are entitled to enforce its terms. That is to say only the parties to a contract have enforceable rights and obligations under it. A third party to the contract cannot enforce any of its terms nor have any burdens from that contract enforced on them.” [Emphasis added] https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 13

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45. In Savings & Loan (K) Limited v Kanyenje Karangaita Gakombe & another [2015] eKLR, this Court also held that: “ In its classical rendering, the doctrine of privity of contract postulates that a contract cannot confer rights or impose obligations on any person other than the parties to the contract. Accordingly, a contract cannot be enforced either by or against a third party. In Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd[1915] AC 847, Lord Haldane, LC rendered the principle thus: ‘My Lords, in the law of England certain principles are fundamental. One is that only a person who is a party to a contract can sue on it.’ In this jurisdiction that proposition has been armed in a line of decisions of this Court, among them Agricultural Finance Corporation v Lengetia Ltd(supra), Kenya National Capital Corporation Ltd v Albert Mario Cordeiro & Another(supra) and William Muthee Muthami v Bank of Baroda, (supra). Thus in Agricultural Finance Corporation v Lengetia Ltd(supra), quoting with approval from Halsbury’s Laws of England, 3rd Edition, Volume 8, paragraph 110, Hancox, JA, as he then was, reiterated: ‘As a general rule a contract aects only the parties to it, it cannot be enforced by or against a person who is not a party, even if the contract is made for his benet and purports to give him the right to sue or to make him liable upon it. The fact that a person who is a stranger to the consideration of a contract stands in such near relationship to the party from whom the consideration proceeds that he may be considered a party to the consideration does not entitle him to sue upon the contract.’” 46. A clear distinction must be drawn as between privity of contract founded on the legal personality of a company and the right of shareholders in a contract entered into by the company in which they have a stake. Pronouncing itself on this distinction, this Court in Amin Akberali Manji & 2 others v Altaf Abdulrasul Dadani & another [2015] eKLR had this to say that: “ 24. …. There is no divergence of opinion from both counsel on the legal personality of a limited liability company which acquires its own property, rights and liabilities separate from its members upon incorporation. The centuries-old case of Salomon v Salomon Company Limited [1895-99] All ER 33 laid that principle to rest. There is also no argument that the proper plainti in any proceedings or action in respect of a wrong done to the company, is the company itself. Again that was established over 160 years ago in Foss v Harbottle [1843] 67 ER 189 (the Foss case), popularly referred to in company law as ‘the rule in Foss v Harbottle’ (the rule). The rule was restated by Jenkins L.J. in the case of Edwards v Halliwell [1950] All ER 1064 as follows:'“The rule in Foss v Harbottle, as I understand it, comes to no more than this. First, the proper Plainti in an action in respect of a wrong alleged to be done to a company or association of persons is prima facie the company or the association of persons itself. Secondly, where the alleged wrong is a transaction which might be made binding on the company or association and on all its members by a simple majority of the members, no individual member of the company is allowed to maintain an action in respect of that matter for https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 14

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the simple reason that if a mere majority of the members of the company or association is in favour of what has been done, then cadit quaestio; or if the simple majority challenges the transaction, there is no valid reason why the company should not sue.’ 25. In essence the rule established two principles. The rst is the ‘proper plainti principle’ and the second is ‘the majority principle’. Through the former, a wrong done to the company may be vindicated by the company alone. On the second principle, if the alleged wrong can be conrmed or ratied by a simple majority then a shareholder is barred from bringing an action. The principal eect in the rule is to bar actions by minority shareholders. 26. This Court and others in this country have indeed cited and followed the Foss case and others which came after it, as good law …. In a recent case, Arthi Highway Developers Ltd v Westend Butchery Ltd & 6 Others Civil appeal No. 246 of 2013this Court followed the summing up of the rule by Lord Dennin g M.R in Moir v Wallerstainer [1975] 1 All ER 849 at pg 857, thus:‘It is a fundamental principle of our law that a company is a legal person with its own corporate identity, separate from the directors or shareholders and with its own property rights and interests to which alone it is entitled. If it is defrauded by a wrongdoer, the company itself is the one person to sue for the damage. Such is the rule in Foss v Harbottle (1843) 2 Hane 461. The rule is easy enough to apply when the company is defrauded by outsiders. The company itself is the only one who can sue. Likewise, when it is defrauded by insiders of the minor kind, once again the company is the only person who can sue.’” 47. In view of the foregoing, we can only conclude that the 2nd respondent had no place in the suit against the appellant. It was neither a proper nor a necessary party to those proceedings. It was not privy to the Concession Agreement in issue, and its shareholding or investment in the 1st respondent did not confer any contractual rights or interests so as to justify its claim as plainti in the suit. Consequently, its suit stood to be struck out for want of privity. 48. Turning to the issue as to whether the 1st and 2nd respondents’ suit was time barred, the learned Judge posed the question as to whether “… the breach of the concession agreement the cause of action or … the notice dated 12th September 2023 …” and reached the conclusion that: “ 27. As observed elsewhere in this ruling, there is no doubt that parties consented to having the Nairobi case which had been led within time to be withdrawn to allow the parties resolve the matter out of court. As an acknowledgement of the consent, the Respondent formed a technical committee to engage with the Applicants. The technical committee's report leaves no doubt that the deliberations were about resolving the impasse created by the concession agreement. To this end, the committee came up with recommendations. 28. In its report at page 16, the committee conrmed that the Applicants has requested for berths 11 to 14. However, the request was declined on the following terms: “…. Therefore, the requested berths are not available for allocation ….” Having been informed as such, the Applicants turned their sights on Mbaraki Wharf on Plot No. Mombasa/ Block XLVIII/558. https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 15

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The technical committee having considered the Applicants’ application recommended at page 25 of its report that the Respondent’s management consider approval of the lease of the plot for a term of 30 years to BOSS. 49. 29. The report is indicated to have been made in January, 2023. Having not been granted the request for berths 11 to 14, there was legitimate expectation on the Applicants’ part that the committee's recommendation to have them allocated Plot No. Mombasa/Block XLVIII/558 would be implemented. What did the Respondent do? Through a notice dated 12th September, 2023, it invited bids from interested bidders for among others berths 11 to 14. This is exactly what spurred the Applicants to move the court. 30. A reading of the technical committee’s report leaves nothing to doubt as to why berths 11 to 14 were indicated as being unavailable. The committee clearly noted as follows:- “…. Further, under KPA’s Master Plan, there is a proposal for the redevelopment of berths 11 to 14 into multipurpose terminals and their operations are to be carried out by an entity to be identied by the Authority ….” The Respondent, having chosen to implement the recommendation by inviting bidders to bid for berths 11 to 14, was expected to at the same breath notify the Applicants of its approval to Mbaraki Wharf on Plot No. Mombasa/ Block XLVIII/558. 31. As at the time of moving to court, the issue of the concession agreement had been resolved through the Respondent’s technical committee’s recommendation in their report. To this end, it is this court’s nding that it is not the breach of the concession agreement that precipitated the ling of the present suit but the failure of the Respondent to implement its technical committee's recommendations. Breach of the concession agreement was addressed in the Nairobi suit. 32. It is thus the court's nding that the suit herein is not time barred. Before I conclude on this issue, the Respondent relied on the Court of Appeal decision in Rift Valley Railways (Kenya) Limited v Hawkins Wagunza Musonye & Another [2016] eKLR for the proposition that time does not stop running merely because parties are engaged in out of court negotiations …. However, the facts in that case are distinguishable to the present case. In the cited case, the Respondents engaged the Appellant before moving to court and by the time they sought to do so, the three (3) years provided for under section 90 of the Employment Act had lapsed. 33. This is not what obtains in the present case. There was a suit led within time and parties agreed to have the suit withdrawn and opted for out of court negotiations. Those negotiations culminated with the report which the Respondent seems to be implementing selectively.” According to learned Counsel for the appellant, the cause of action arose on 29th January 2007 when the concession Agreement was allegedly breached and, consequently, the suit was barred by section 4 of the Limitation of Actions Act (Cap. 22). Citing the case of South Nyanza Sugar Company Limited v Francis Koskei Ntuitai [2021] eKLR, counsel submitted that,in contract, the cause of action accrues when the contract is rst breached; that the plaint leaves no doubt that the cause of action was the alleged breach of the Agreement; that the 1st and 2nd respondents pleaded the particulars of the breach https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 16

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at paragraph 32 of the plaint; that at no point did the 1st and 2nd respondents suggest that their cause of action was “the failure of the Respondent to implement its technical committee's recommendations”; and that, if they had pleaded so, it would have been unnecessary for them to plead section 7 of the Arbitration Act, since the technical committee’s report did not contain an arbitration clause. 50. Counsel submitted further that the learned Judge conated the cause of action with the evidence in support of the cause of action; that the suit, brought long after the 6 year limitation period, was dead on arrival; and that it would not matter that the 1st respondent and the appellant were engaged in negotiations or that, in between that time, the 1st respondent led suit, which it subsequently withdrew. On the authority of Rift Valley Railways (Kenya) Ltd v Hawkins Wagunza Musonye & another [2016] eKLR; and David Ngugi Waweru v Attorney General & another [2017] eKLR, counsel underscored the principle that time does not stop running merely because parties are engaged in an out-of-court negotiations or in exploration of a parallel remedy. 51. In rebuttal, learned Counsel for the 1st and 2nd respondents submitted that breach of the Concession Agreement is what necessitated the ling of Nairobi HCCC No. 405 of 2007; that, after the parties led a consent and withdrew the Nairobi suit, the negotiations that followed were to explore out-ofcourt settlement; that it is misleading for the appellant to allege that the breach occurred in 2007 while the breach by the appellant has been continuous; and that the Concession Agreement has already been subjected to discussion in order to make changes thereto pursuant to the January 2023 Report, but that this did not happen, which resulted in breach of the Concession Agreement and the discussions of the impending addendum. Citing the case of The German School Society & another v Ohany & another [2023] KECA 894 (KLR), counsel contended that a continuing wrong is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury and that, accordingly, the 1st and 2nd respondents’ suit was by no means statute barred. 52. Learned counsel contended that it is impossible to tie the cause of action to one event when the appellant’s actions have been ongoing and continuous. According to counsel, every time the appellant promised the 1st respondent something, they never fullled those commitments; that that is the exact nature of the principle of a continuing wrong; that the learned Judge was in order to hold that the cause of action was the committee report dated January 2023 and the Notice of 12th September 2023; and that, for this reason, the 1st and 2nd respondents sought orders of specic performance in respect of the Concession Agreement dated 18th December 2002 to have the court compel the Appellant to perform its contractual obligations in respect of the remaining 12 years of the term of the concession Agreement and for lost business for a period of 21 years from 2002 to 2023. 53. It is indubitable that the cause of action in this case is the alleged breach by the appellant of its obligations under the Concession Agreement to allow the 1st respondent access to undertake its contractual obligations under the concession agreement. To our mind, the subsequent advertisement for bids for the privatization of the land subject to the Concession Agreement in March 2021 and the invitation of bids for the development of port assets, specically Mombasa Port Berths 11-14 which were the subject of negotiations aimed at reaching an out of court settlement after the withdrawal of Nairobi HCCC No. 405 of 2007 vide a notice dated 12th September 2023 only compounded the breach that prompted the proceedings in the 2007 suit. 54. The particulars of breach on the part of the appellant as set out in Nairobi HCCC No. 405 of 2007 were in the following words: “ (a) Following the illegal and unlawful instructions of the Ministry of Transport and failing to implement the concession agreement of 18th December 2002. https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 17

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55. b. Failing to adhere to its mandate under the Kenya Ports Authority Act to fulll its contractual obligations towards the Plainti. c. Failing to give the Plainti access to the site for the construction of a berth on the undeveloped frontage of 190 metres north of the existing Mbaraki Wharf. d. Delaying the implementation of the concession agreement for ve years beyond the agreed time for implementation and thereby reducing the concession period to be enjoyed by the Plainti from thirty-three (33) years to twenty-eight (28) years to date.” It is noteworthy that the suit led by the 1st and 2nd respondents in Mombasa HCCC No. E026 of 2023 subsequent to withdrawal of Nairobi HCCC No. 405 of 2007 was founded on the same cause of action, namely the appellant’s breach of the Concession Agreement by failing to give the 1st respondent access to the intended site for construction of the berth, or otherwise to provide an alternative site as sought in the out of court negotiations, in conclusion of which no agreement was reached. Be that as it may, the particulars of breach on the part of the appellant as set out in the subsequent suit were: “ a) Failing to implement the Concession Agreement dated 18th December, 2002 executed between the parties. b. Failing to allocate and allow the 1st Plainti access to a berth where they can execute their obligations under the concession Agreement. c. Failing to adhere to its mandate under the Act to full its obligations towards the 1st Plainti. d. Failing to give the 1st Plainti access to the site for the construction of a berth on the undeveloped frontage of 190M north of the existing Mbaraki Wharf. e. Refusing to provide the 1st Plainti with an alternative site for the construction of a berth pursuant to the discussions out of court in respect to the implementation of the Concession Agreement dated 18th December, 2002. f. Delaying the implementation of the concession and thereby causing the Plaintis unnecessary losses in nances and management time.” 56. To our mind, the cause of action on which the two cases were anchored arose from failure on the appellant’s part to live up to its contractual obligation under the Concession Agreement entered into on 18th December 2002 to provide access to the intended site for construction of a berth. The pertinent question before us is whether withdrawal of Nairobi HCCC No. 405 of 2007 had the eect of freezing or stopping time from running so that the 1st respondent was at liberty at any time thereafter to le a fresh suit on the same cause of action. In the alternative, whether the appellant’s breach was a continuing breach that continually refreshed and revived the cause of action. 57. The 1st and 2nd respondents’ position is that the breach by the appellant has been continuous and was ongoing. To buttress their contention, counsel cited the case of The German School Society & another v Ohany & another (supra) where this Court elucidated on the doctrine of continuing wrongs as follows: “ 37. The principles underlying continuing wrongs and recurring/ successive wrongs have been applied to service law disputes. ‘A continuing wrong’ https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 18

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refers to a single wrongful act which causes a continuing injury. ‘Recurring/ successive wrongs’ are those which occur periodically, each wrong giving rise to a distinct and separate cause of action. The Supreme Court of India in Balakrishna S.P. Waghmare v Shree Dhyaneshwar Maharaj Sansthan AIR 1959 SC 798 explained the concept of continuing wrong (in the context of the Indian Limitation Act) as follows: ‘It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused by it itself continues, then the act constitutes a continuing wrong. In this connection, it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the eect of the said injury.’ …… 39. 58. Also, the Supreme Court of India in M. Siddiq v Suresh Das (2020) 1 SCC 1 observed: ‘343. …. A continuing wrong arises where there is an obligation imposed by law, agreement or otherwise to continue to act or to desist from acting in a particular manner. The breach of such an obligation extends beyond a single completed act or omission. The breach is of a continuing nature, giving rise to a legal injury which assumes the nature of a continuing wrong. For a continuing wrong to arise, there must in the rst place be a wrong which is actionable because in the absence of a wrong, there can be no continuing wrong. It is when there is a wrong that a further line of enquiry of whether there is a continuing wrong would arise. Without a wrong there cannot be a continuing wrong. A wrong postulates a breach of an obligation imposed on an individual, whether positive or negative, to act or desist from acting in a particular manner. The obligation on one individual nds a corresponding reection of a right which inheres in another. A continuing wrong postulates a breach of a continuing duty or a breach of an obligation which is of a continuing nature. [...]Hence, in evaluating whether there is a continuing wrong within the meaning of Section 23, the mere fact that the eect of the injury caused has continued, is not sucient to constitute it as a continuing wrong. For instance, when the wrong is complete as a result of the act or omission which is complained of, no continuing wrong arises even though the eect or damage that is sustained may endure in the future. What makes a wrong, a wrong of a continuing nature is the breach of a duty which has not ceased but which continues to subsist. The breach of such a duty creates a continuing wrong and hence a defence to a plea of limitation.’” It is informative that the alleged breach occurred when the approval for the construction of the berth on 24th January 2007pursuant to the Concession Agreement was withdrawn ve days later vide a letter signed by the Permanent Secretary in the Ministry of Transport and an inter-ministerial committee whereupon the appellant declined to grant the 1st respondent access to the site in accordance with the Concession Agreement. To our mind, the alleged breach was a single act and, even though it appears to have had continuing eects to the detriment of the 1st and 2nd respondents, the breach complained https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 19

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of did not constitute a series of independent and distinct wrongs that gave rise to a new cause of action in relation to which the limitation period had not been extinguished. Even though the 1st and 2nd respondents had led suit in good time, their withdrawal of Nairobi HCCC No. 405 of 2007 did not of itself stop the limitation period from running in their favour so as to negate the eect of section 4 of Cap. 22 on their suit in Mombasa HCCC No. E026 of 2023. 59. We form this view cognisant of the fact that withdrawal of a suit renders it non-existent, and that such withdrawal does not of itself reset or refresh the limitation period in the event that the plainti institutes a fresh suit on the same cause of action. Put dierently, the fresh suit must be instituted within the prescribed period of limitation from the date of the breach complained of as contemplated in section 4 of Cap. 22. In the instant case, it is immaterial that the parties attempted to negotiate during the supervening period, but failed to reach settlement on mutually agreeable terms. If agreement had been reached, such agreement would have constituted a fresh contract or admission of liability on the appellant’s part on the basis of which, if subsequently breached, would have founded a fresh cause of action in Mombasa HCCC No. E026 of 2023. However, that was not the case here. 60. We say so mindful of the fact that the cause of action in Mombasa HCCC No. E026 of 2023 is not distinct from that in Nairobi HCCC No. 405 of 2007 both of which were triggered by the alleged failure on the part of the appellant to provide access to the property that was the subject of the Concession Agreement. Likewise, the failure of the parties to reach settlement following the subsequent out-of-court discussions and recommendations of the Technical Committee’s Report of January 2023 leads to the inescapable conclusion that no fresh cause of action arose. A cursory look at the report demonstrates the reality of our nding that no fresh cause of action arose. 61. In its observations at page 15 -16 of the Report, the Technical Committee stated as follows about the 1st respondent’s proposal to be allocated Berth 5 or Berth 11 for operation as a common user facility to serve all shipping lines and customers dealing with steel: “ The Committee observes that currently all steel is handled by KPA from berth 5, which is equipped with heavy lift equipment. The berth is purpose built for heavy lift and no other area within the Port is capable for such use thus allocation to Boss as proposed will have a negative eect on KPA nancial and operational performance. Further, under the KPA Masterplan, there is a proposal for the redevelopment of berths 11 to 14 into multipurpose terminals and their operations are to be carried out by an entity to be identied by the Authority. Therefore, the requested berths are not available for allocation.” 62. At page 19 of the Report, the Technical Committee further stated that “…. During the Committee meeting on the 5th of July 2022,... The Committee also informed BOSS that berths 5 and 11 were not available for allocation to them.” Accordingly, it goes without saying that the out-of-court discussions were of no consequence to the cause of action on which the two suits were founded. Indeed, no meaningful steps were taken to implement the committee’s recommendations or vary the Concession Agreement on the terms proposed in its report. 63. It is not lost to us that the Technical Committee made various recommendations on the proposals by the 1st respondent on variation of the Concession Agreement. Worth noting were the following recommendations with regard to the 1st respondent’s proposals to leases over the appellant’s various properties: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 20

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64. i. The Management considers approval of a lease of Mombasa/Block XLVIII/558 (the original site intended for the berth) for a term of 30 years to the 1st respondent. ii. Allocation of adequate space within G-Section area Mombasa Port on condition that the current users are allocated to another area and provided the 1st respondent meets the relocation costs. iii. The Management considers approval of a lease of BP Shed 1 and Shed 2 to the 1st respondent for a renewable term of 15 years. iv The Management considers Kapenguria behind the re station provided the open yard can accommodate KRA’s scanning facilities. v The lease of Dongo Kundu Berth No. 1 is not possible. vi. The Management considers the request for allocation of adequate land to the 1st respondent adjacent to Dongo Kundu Berth No. 1 for operations, subject to the 1st respondent submitting a detailed proposal and complying with the policies, procedures and prevailing legal regime in place. Chitty on Contract (24th Edn.) Vol. 1 at page 21, para 41 makes the following observation: “ In order to decide whether the parties have reached an agreement, it is usual to inquire whether there has been a denite oer by one party and an acceptance of that oer by the other. In answering this question, the courts apply an objective test: if the parties have to all outward appearances agreed in the same terms upon the same subject matter neither can generally deny that he intended to agree.” 65. We nd that the report did not constitute a settlement agreement by the parties arising out of their outof-court negotiations after the withdrawal of the earlier suit. The Committee’s recommendations and the appellant’s failure to implement them cannot therefore give rise to a valid cause of action. We nd no evidence on record that the appellant made any oers that were accepted by the 1st respondent in variation of the Concession Agreement. Consequently, in the absence of a fresh contract or variation of the terms of the Concession Agreement, the suit in Mombasa HCCC No. E026 of 2023 was time barred in view of the fact that it was not led within the six-year limitation period prescribed in section 4 of the Limitation of Actions Act, Cap. 22 and ought to have been struck out. 66. Having concluded that the 1st and 2nd respondents’ suit was time-barred by dint of section 4 of Cap. 22, we hasten to observe that the remaining three issues as to whether the learned Judge erred in declining to expunge the documents said to be privileged; whether she erred in failing to stay the suit pending reference to arbitration; and whether the prayer for temporary injunction was merited, fall by the wayside. Accordingly, no useful purpose would be served by pronouncements thereon. 67. Finally, we have carefully considered the record of appeal, the grounds on which it was anchored, the impugned ruling and orders, the rival submissions of learned counsel, the cited authorities and the law, and nd that the appeal succeeds and is hereby allowed. Accordingly, we hereby order and direct that: a. the Ruling and Orders of the High Court of Kenya at Mombasa (F. Wangari, J.) dated 19th January 2024 be and is hereby set aside and substituted for: i. an order striking out the 2nd respondent’s suit for want of privity; https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 21

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ii. a declaration that Mombasa HCCC No. E026 of 2023 was statute barred under and by virtue of section 4 of the Limitation of Actions Act, Cap. 22; and b. that the 1st and 2nd respondents do bear the costs of the appeal. Orders accordingly. DATED AND DELIVERED AT MOMBASA THIS 11TH DAY OF OCTOBER, 2024 A. K. MURGOR ..................................... JUDGE OF APPEAL DR. K. I. LAIBUTA C.Arb, FCIArb. ..................................... JUDGE OF APPEAL G. v ODUNGA ..................................... JUDGE OF APPEAL I certify that this is the true copy of the original Signed DEPUTY REGISTRAR https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1907/eng@2024-10-11 22

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