Background
1. The suit before the Court was filed vide a plaint dated 19/10/2023. The dispute relates to allegations of breach of contract of a Freight Forwarding and Logistics Service Agreement (the agreement) entered into between the parties on 15/3/2016. It is contended that under the said agreement the plaintiff was to offer freight forwarding services to the defendant exclusively. On the strength of this the plaintiff contends that it invested heavily in equipment, human capital, leasing of warehouses and subcontracting third parties so as to be able to service the contract with the defendant.
2. The plaintiff takes issue with the defendant for the unwarranted and abrupt termination of the agreement without proper notice and for appointing another freight forwarder in breach of the said Agreement. The plaintiff contends that this has caused it financial loses.
3. Filed together with the plaint is an application dated 19/10/2023 brought under Order 40 rule 2 and rule 4 of the Civil Procedure Rules, seeking injunctive relief. A second application is dated 27/10/2023 and is brought under section 5 of the Judicature Act, seeking contempt of Court orders against the defendants. Both applications have been filed by the plaintiff.
The application dated 19/10/2023:
4. The pending substantive prayer in this application is for an interim injunction against the defendant from terminating and or appointing any other person company or organization to provide freight forwarding and logistics services pending the hearing and determination of the present suit.
5. The application is opposed by way of a replying affidavit sworn on 2/11/2023 by JOE MUTISYA, the Financial Director of Coca Cola Beverages Africa Limited (formerly Nairobi Bottlers Limited). The defendant confirms having entered into the agreement with the plaintiff but also states that the agreement allowed either party to terminate it by issuing to the other party at least sixty (60) days written notice of intention to terminate.
6. The defendant contends that there is no requirement under that clause to provide a reason for such termination. It is the defendant’s case that a valid notice was issued according to the terms of the Agreement in terminating the contract.
7. Order 40 Rule 1 of the Civil Procedure Rules 2010 gives the circumstances under which a temporary injunction can be granted by the Court. The conditions that guide the Court in granting such orders are also well crystalized. These were set out in the celebrated case of Giella V Cassman Brown & Co. Ltd, (1973) E.A 385, at page 360 where Spry J. held that:
“The conditions for the grant of an interlocutory injunction are ...well settled in East Africa. First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the court is in doubt, it will decide an application on the balance of convenience.”
8. On the first condition, this Court is called upon to ascertain whether the applicants have shown a prima facie case following the threshold laid out in Mrao Ltd V First American Bank of Kenya Ltd & 2 Others, [2003] KLR 125. The Court defined a prima facie case as:
“… a case in which on the material presented to the court a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter...a prima facie case is more than an arguable case. It is not sufficient to raise issues. The evidence must show an infringement of a right, and the probability of the applicant's case upon trial. That is clearly a standard which is higher than an arguable case.”
9. In determining whether a prima facie case has been demonstrated, I am in turn cognizant of the limitations of enquiry that are permitted of this court at this point in time. The Court of Appeal in Nguruman Ltd V Jan Bonde Nielsen 8 2 Others, [2014] eKLR observed that:
“In considering whether or not a prima facie case has been established, the Court does not hold a mini trial and must not examine the merits of the case closely. All that the court is to see is that on the face of it the person applying for an injunction has a right, which has been or is threatened with violation.”
10. The Agreement between the parties has been produced by them both. From the definition clause and particularly clause 1.1.17, the initial period of the Agreement is defined as the Supply Period commencing on the effective date (1st June 2014) and ending on 31st May 2016. The additional period is further defined as the supply period commencing on 1st June 2016 and ending on 31st May 2018.
11. Besides these periods, there is no guarantee that the contract was anticipated to run indefinitely. There is nothing to show that the plaintiffs were entitled to the renewal as of right. Moreover, it is clear from Clause 4 of the Agreement that the term of appointment of the plaintiff by the defendant was always subject to a termination clause. The agreement provides as follows:
“This Agreement shall come into force on the effective date and shall remain in force for the initial period and the additional period subject always to the provisions for termination contained in clause 29.”
12. Clause 29 of the Agreement provides for termination of the Agreement in the following terms:
“Without prejudice to any other legal rights or remedies available to either party either party shall be entitled to terminate this agreement by issuing a written notice of at least sixty (60) days to the other party.”
13. For these reasons I find the averment by the plaintiff that the defendant was not supposed to appoint any other person to provide the services being offered by the plaintiff to be unsubstantiated.
14. I further note that the defendants issued an initial notice dated 24th July 2023 which was withdrawn for being inadequate. The notice was re issued this time for 60 days vide the letter of 29th August 2023, in accordance with Clause 29 of the Agreement. These facts are not disputed by the plaintiff.
15. The reason for termination of the Agreement is spelt out in the letter of 24th July 2023 which in simple terms was expressed as the need to re align the defendant’s business as a result of the Russia/Ukraine conflict which had affected the defendant’s supply chain operations.
16. It is a settled principle of contract law that parties to a contract are bound by the terms that they have negotiated. Courts cannot rewrite their contracts. In National Bank of Kenya Ltd V Pipeplastic Samkolit (K) Ltd & Another, [2001] eKLR the Court of Appeal held that:
“A court of law cannot rewrite a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved.”
17. While it is appreciated that the plaintiff may have invested heavily so as to secure the manpower and other requirements to meet the contract, this Court cannot force parties beyond their agreed terms and especially where these terms are very clear. It is a principle of contract law that in such circumstances the Court should not import any terms into a contract.
18. I do therefore take the view that the issues raised by the plaintiff do not meet the threshold required to demonstrate a prima facie case.
19. In Nguruman Limited V Jane Bonde Nielsen & 2 Others, [2014] eKLR the Court stated that if the plaintiff is unable to satisfy this first condition, the issue as to whether damages are sufficient to compensate the plaintiff in the event the suit succeeds as well as the balance of convenience and where that lies, does not arise.
The application dated 27/10/2023:
20. By this application the plaintiff seeks an Order to have JOE MUTISYA, the Finance Director and JAMES BOW-MAKER the Managing Director of the defendant held in contempt for the alleged disobedience and disregard of the Orders of this Honourable Court issued on 24/10/2023 and to have the said persons committed to civil jail.
21. The plaintiff contends that by the said orders the defendant was injuncted from terminating and or appointing any other person, company or organization to provide freight forwarding and logistics services. Despite having been served with the said orders of the Court the defendants, through the alleged contemnors had gone ahead and appointed other parties for the said business.
22. The application is opposed vide a replying affidavit sworn by JOE MUTISYA, the Financial Director of Coca Cola Beverages Africa Limited (formerly Nairobi Bottlers Limited) on 15/11/2023.
23. The defendant does not deny knowledge of the court order of 24/10/2023 but insists that they did not act in contravention of the said order.
Analysis and determination:
24. Contempt of court is no doubt an affront to judicial authority and to the Constitution. The imposition of sanctions for such contempt serves a fundamental purpose which is to uphold the dignity of the court and ensure the unimpeded administration of justice.
25. In this regard, this Court, Odunga J (as he then was), held in Miguna Miguna V Fred Matiang’i, Cabinet Secretary Ministry of Interior and Co-ordination of National Government & 8 Others [2018] eKLR that:
“In deciding what sanction to mete this Court must reflect on the need to maintain the rule of law and to ensure that the authority and the dignity of our Courts are upheld at all times and to stamp the Court’s authority and uphold the values and principles of governance enshrined in Article 10 of the Constitution.”
26. The Court of Appeal in Shimmers Plaza Limited V National Bank of Kenya Limited, [2015] eKLR further stated as follows:
“The courts should not fold their hands in helplessness and watch as their orders are disobeyed with impunity left, right and centre. This would amount to abdication of our sacrosanct duty bestowed on us by the Constitution. The dignity, and authority of the Court must be protected, and that is why those who flagrantly disobey them must be punished, lest they lead us all to a state of anarchy.”
27. In Samuel M. N. Mweru & Others V National Land Commission & 2 Others, [2020] eKLR, Mativo, J (as he then was), citing with approval from Contempt in Modern New Zealand (available at ip36.publications.lawcom.govt.nz) held that in order to succeed in civil contempt proceedings, the applicant has to prove the following four elements to the required standard:
i. That the terms of the order were clear and unambiguous and were binding on the defendant;
ii. That the defendant had knowledge of or proper notice of the terms of the order;
iii. That the defendant has acted in breach of the terms of the order; and
iv. That the defendant's conduct was deliberate.
28. The Court order in question is the one dated 24/10/2023 by which the court granted prayer 2 of the application dated 19/10/2023 pending further directions on 1/11/2023. The Orders were to the effect that the defendant was stopped from terminating or appointing any other person to provide freight forwarding and logistics services pending further directions.
29. As already determined in the 1st application, the 2nd Notice of Termination of the contract was the valid notice and was issued on 29/8/2023. The same was scheduled to crystalize towards the end of October 2024. The defendant does not deny the fact that by virtue of the subsisting Court orders, the termination of the contract was halted and that as such, no other company was appointed by the defendant under the contract.
30. Likewise, the plaintiff has not provided evidence of any such appointment made after the Orders of 24/10/2023, by way of an executed agreement or otherwise.
31. Having already made a finding that the Agreement between the parties was not exclusive, the export documents confirming the engagement of CZARNIKOW GROUP LIMITED and UNITED SUGAR COMPANY OF EGYPT on behalf of CZARNIKOW GROUP LIMITED confirms this position.
32. These documents predate the Orders by this Court and are dated 1/8/2023, 11/9/2023 and 16/9/2023. It would appear that it was practice for the defendant to engage other logistics partners in addition to the plaintiff.
33. Additionally, the claim by the plaintiff that the defendant had appointed AGL KENYA LIMITED on or about 26th October 2024 in place of the plaintiff has not been substantiated by way of an executed Agreement between AGL KENYA and the plaintiff.
34. The only evidence on record is an export document indicating the name of AGL KENYA LIMITED as the defendant’s agent/representative. The document is dated 19/10/2023 which in itself is not a breach of the orders of this Court, as there was no exclusivity of contract between the parties.
35. Accordingly, I am not satisfied that the defendant has acted in breach of the Court Orders herein.
Disposition:
36. The application dated 19/10/2023 is dismissed with costs. Equally, the application dated 27/10/2023 is also dismissed with costs. The defendant shall have the costs of both applications.