1. This Ruling is in respect to two applications. The first application is the defendant’s Notice of Motion dated 3rd July 2024 filed pursuant to the provisions of Sections 1A, 1B & 3A, Order 40 Rule 7, and Order 51 Rule 3 of the Civil Procedure Rules, 2010. The defendant prays for an order of interim relief permitting it to rent out the properties known as Covo Commercial space numbers F1B, F129 and Shops No. 3, 4, 5, 6 & 7 located along Gitanga Road and Othaya Road, with a requirement that the net rental income after deducting expenses and taxes be deposited into an escrow account pending the final determination of the arbitral dispute. The defendant also prays for an order that this Court varies its earlier orders issued on 9th February 2024 to expressly include authorization for the defendant to rent out the said properties and deposit the net proceeds into an escrow account during the arbitration process.
2. The application is premised on the grounds on the face of the Motion, and it is supported by an affidavit sworn on the same day by Mr. Patrick Mugo, the defendant’s Finance Director. Mr. Mugo averred that this Court in a Ruling delivered on 9th February 2024 granted the plaintiff temporary injunctive orders restraining the defendant from selling or offering for sale the specified Covo Commercial properties or exercising the right of sale under the rescission clauses pending arbitration. He contended that the said Orders did not prohibit the defendant from renting out the premises during the pendency of the arbitration.
3. Mr. Mugo deposed that on 22nd May 2024, the defendant notified the plaintiffs of its intention to rent out the properties to mitigate its losses, but the plaintiffs objected asserting that doing so would amount to contempt and claimed that the Orders of 9th February 2024 preserved the status quo. He contended that the plaintiffs’ objection is illogical since before the Arbitral Tribunal, the plaintiffs have sought damages for loss of rental income, a claim which the defendant has disputed because the plaintiffs breached the Sale Agreements, resulting in rescission. Mr. Mugo maintained that the plaintiffs are in breach of the said Agreements for failing to pay outstanding instalments amounting to Kshs.20,905,936.00 as demonstrated in the payment schedule. He asserted that unless the Orders of 9th February 2024 are varied, the defendant will continue to suffer escalating financial loss.
4. Mr. Mugo stated that tenants on other floors of the property in issue have threatened to vacate due to low human traffic caused by the unoccupied premises, worsening the defendant’s financial hardship. He averred that the defendant has executed various offer letters with prospective tenants including Miniso, Lorenzo Dry Cleaners and Lifemed Pharmacy, but cannot conclude these arrangements due to the plaintiffs’ opposition. He averred that the defendant continues to incur substantial losses estimated at Kshs.1,750,000/= per month in rental income. Mr. Mugo asserted that no prejudice would be suffered by the plaintiffs if the suit premises are leased, as the defendant is willing to deposit the net rental income in an escrow account pending the arbitral proceedings scheduled for 8th August 2024.
5. In opposition to the application, the plaintiffs filed a replying affidavit sworn on 8th October 2024 by Mr. Kidist Admass Ambie, the 3rd plaintiff herein and a Director of the 1st plaintiff company. Mr. Admass deposed that in a Ruling delivered on 9th February 2024, this Court granted conservatory Orders preserving the status quo over units F1B, F129, 3, 4, 5, 6 and 7, and as such, the instant application effectively seeks a review of that Ruling. He averred that the application herein misuses the review jurisdiction, noting that the defendant has neither demonstrated discovery of new and important evidence nor shown any error apparent on the face of the record.
6. He emphasized that issues such as the alleged sale of units to third parties were already raised and considered by the Court and cannot constitute new evidence. He further averred that execution of Sale Agreements alone does not pass title and that the interim reliefs were properly granted to preserve the subject matter of arbitration. Mr. Admass asserted that the defendant is intent on extinguishing the plaintiffs’ proprietary rights and abusing the Court process, highlighting that the defendant unsuccessfully sought a stay pending Appeal, and subsequently filed a Notice of Appeal and yet still seeks review of the same Ruling, while arbitration proceeds. He deposed that the defendant has acted in contempt by renting out the premises and collecting rental income despite the subsisting Court Orders, a conduct which he says undermines the administration of justice.
7. The 2nd application is the plaintiffs’ Notice of Motion dated 20th September 2024 filed under the provisions of Article 159(1) & (2) of the Constitution, Section 5 of the Judicature Act, Order 51 Rule 1 of the Civil Procedure Rules, 2010, and all other enabling provisions of the law. The plaintiffs seek orders for leave for the joinder of Mr. Nurdin Abdikadir Mohamed, the sole Director and Shareholder of the defendant, as the 1st interested party, and Ms Carolyn Cecilia Wanjiku Njoroge, the Company Secretary, as the 2nd interested party, and upon their joinder, the proposed interested parties, together with the defendant, be required to show cause why they should not be committed to civil jail for up to six months for disobeying the Court Orders issued on 9th February 2024, and in the event that they fail to show cause, they be committed to civil jail for a period not exceeding six (6) months and/or attachment of their property.
8. The plaintiffs also seek orders to direct the defendant and the interested parties to purge the alleged contempt by immediately stopping any further installations on the suit properties and by providing proof of issuance of notices to vacate in respect of Covo Commercial Space No. 3 occupied by Jajemelo Pizza, as well as any other occupants of the suit premises. They further requested that the defendant and the interested parties be denied audience before the Court unless and until they purge the contempt, and that the proposed interested parties be required to personally attend Court during the hearing of the application herein. Additionally, the plaintiffs seek for orders directing the OCS Kilimani Police Station to assist them in executing any arrest or enforcement orders issued by the Court.
9. The plaintiffs’ application is premised on the grounds on the face of the Motion, and it is supported by an affidavit sworn on the same day by Mr. Kidist Admass Ambie, the 3rd plaintiff herein and a Director of the 1st plaintiff company. Mr. Admass averred that this Court in a Ruling delivered on 9th February 2024 issued conservatory interim Orders and a temporary injunction restraining the defendant from selling, offering for sale, or otherwise dealing with Covo Commercial Spaces No. F1B, F1C, F129, F130, 03, 04, 05, 06 & 07 pending the appointment of an Arbitrator and the determination of the arbitration.
10. He contended that despite the clarity of those Orders, the defendant, through its Director Nurdin Abdikadiir Mohamed and Company Secretary Carolyn Cecilia Wanjiku Njoroge, has expressly violated them by carrying out improvements, installations, and alterations in Units F1B & F129 and Shops No. 3-7, and further handing over the units to third parties for business use, including leasing Shop No. 3 to an entity known as Jajemelo Pizza. He deposed that these acts were confirmed during a joint site visit on 7th August 2024 pursuant to directions of the Arbitral Tribunal, during which parties took photographs showing the extent of the installations and additional photographs taken on 9th September 2024 showing ongoing business operations.
11. Mr. Admass contended that the defendant and the interested parties’ actions show deliberate and calculated disregard of the Court Orders and the authority of the Arbitral Tribunal, undermining the rule of law and the administration of justice. He further contended that the defendant and the interested parties were fully aware of the Court Orders, as the defendant’s Advocates were present at the delivery of the Ruling of 9th February 2024, but despite Notice, they continued in defiance. He asserted that the gravity and intentionality of the breach warrants punitive sanctions, including committal to civil jail and attachment of property, in order to protect the integrity of the arbitration and prevent the subject matter from being rendered nugatory. He averred that unless the Court intervenes urgently, the defendant will continue to unlawfully dispose of the units that remain subject to active arbitration.
12. In opposition to the plaintiffs’ application, the defendant filed a replying affidavit sworn on 7th October 2024 by Mr. Patrick Mugo, the defendant’s Finance Director. Mr. Mugo averred that the Court’s Ruling of 9th February 2024 properly construed, did not prohibit the defendant from renting out the suit property, as the temporary injunction issued only restrained the sale, transfer, or exercise of the right of sale under the rescission clauses. He stated that the defendant accordingly notified the plaintiffs, through a letter dated 22nd May 2024, of its intention to rent out the units to mitigate losses while complying with the Court Order not to sell the properties, but the plaintiffs objected in a letter dated 27th May 2024, prompting the defendant to file an application dated 3rd July 2024 seeking variation of the Orders to expressly permit rental of the premises and deposit of net rental income into an escrow account pending arbitration.
13. The applications herein were canvassed by way of written submissions. The defendant’s submissions were filed by the law firm of Mr. Wamae & Allen LLP on 25th October 2024 and 5th November 2024, while the plaintiffs’ submissions were filed on 26th October 2024 by the law firm of Kendi & Company Advocates.
Application dated 3rd July 2024
14. Mr. Allen Gichuhi, Senior Counsel and learned Counsel for the defendant relied on the cases of Benl Development Limited v First Community Bank Limited [2021] KEHC 7136 (KLR) & St. Patricks Hill School Ltd v Bank of Africa Kenya Ltd [2018] KEHC 4886 (KLR), and submitted that this Court has unfettered discretion under Order 40 Rule 7 of the Civil Procedure Rules, 2010, to vary or discharge its injunctive Orders where the ends of justice so require. He contended that significant hardship has arisen from the Orders issued on 9th February 2024, as the plaintiffs have refused to permit the defendant to rent out the suit premises despite the Orders not expressly prohibiting leasing. He stated that as a result, the defendant continues to suffer substantial monthly losses estimated at Kshs.1,750,000/= in foregone rent, in addition to ongoing security, cleaning, and maintenance expenses for the unoccupied units, costs that would ordinarily be covered through service charge.
15. Counsel argued that no prejudice would be occasioned to the plaintiffs if the Orders of 9th February 2024 are varied, as any rental income collected would be deposited into an escrow account after deduction of taxes and expenses. Mr. Gichuhi cited the Court of Appeal case of Serah Njeri Mwobi v John Kimani Njoroge [2013] KECA 501 (KLR), and asserted that the plaintiffs are estopped from opposing the application dated 3rd July 2024, having themselves claimed damages for loss of rent and profits before the Arbitral Tribunal, which is inconsistent with resisting the collection and preservation of rental income. He referred to the Court of Appeal case of Benjoh Amalgamated Limited & another v Kenya Commercial Bank Limited [2014] KECA 872 (KLR), and stated that this Court has residual jurisdiction to vary its Orders of 9th February 2024 to prevent continued hardship and injustice arising from its operation.
16. Mr. Alphonce Barrack, learned Counsel for the plaintiffs cited the Court of Appeal case of Shimmers Plaza Limited v National Bank of Kenya Ltd [2013] KECA 359 (KLR), and submitted that the Ruling of 9th February 2024 expressly required the defendant to maintain the status quo of the suit premises pending arbitration. He argued that the defendant has not satisfied the strict requirements of review under Section 80 of the Civil Procedure Act and Order 45 of the Civil Procedure Rules, 2010. Counsel maintained that the defendant has not presented any new or previously unavailable material, nor demonstrated any error apparent on the record to warrant this Court to review its Ruling of 9th February 2024.
17. He cited the Supreme Court case of Parliamentary Service Commission v Wambora & 36 others [2018] KESC 74 (KLR) and the case of Stephen Gathua Kimani v Nancy Wanjira Waruingi t/a Providence Auctioneers [2016] KEHC 6883 (KLR) and further submitted that the defendant’s application merely rehashes issues already considered and determined by the Court, thereby seeking to re-open the case in a manner akin to an appeal.
Application dated 20th September 2024
18. Mr. Alphonce Barrack, learned Counsel for the plaintiffs relied on the case of Samuel M. N. Mweru & others v National Land Commission & 2 others [2020] KEHC 9233 (KLR) and submitted that the defendant has willfully disobeyed the Orders of 9th February 2024 and is therefore in contempt. He contended that the Court expressly issued conservatory Orders preserving the status quo of units F1B & F129, and Shops No. 3, 4, 5, 6 & 7, and restraining their sale or disposal during the pendency of arbitration. He argued the orders of the status quo meant that the defendant was not to undertake any action that altered or threatened the plaintiffs’ proprietary interests.
19. Counsel contended that despite these clear terms, the defendant undertook extensive improvements to the aforesaid units and proceeded to lease them to third parties for its own benefit, thereby disturbing the status quo and undermining the authority of both this Court and the Arbitral Tribunal. Counsel referred to the case of Basil Criticos v Attorney General & 8 others & 4 others [2012] KEHC 1480 (KLR) and stated that since the defendant’s Counsel was present in Court during the delivery of the Ruling of 9th February 2024, he had full knowledge of the Orders issued therein, thus personal service of the Orders was unnecessary.
20. Mr. Allen Gichuhi, Senior Counsel for the defendant submitted that the plaintiffs have failed to meet the legal threshold for proving contempt of Court. He relied on the Court of Appeal case of Kigio Group Company Limited v Kibaara & 8 others [2024] KECA 919 (KLR) and argued that in order for contempt of Court to be sustained, the plaintiffs must demonstrate the existence of clear and unambiguous Court Orders, the defendant’s knowledge of those Orders and a willful and deliberate breach thereof.
21. He cited the Court of Appeal case of Jihan Freighters Ltd v Hardware & General Stores Ltd and A.B. & Another v R.B. [2016] eKLR, to support the principle that the Orders allegedly disobeyed must be precise in setting out what a party is to do or refrain from doing. Counsel contended that the Orders of 9th February 2024 merely prohibited the sale or offering for sale of the suit properties, and did not bar leasing them out. He maintained that none of the subject units has been sold or offered for sale and therefore no contempt can arise from leasing them.
ANALYSIS AND DETERMINATION.
22. I have considered the applications filed herein, the affidavits filed in support thereof, the replying affidavit by the plaintiffs and the defendants, and the written submissions by Counsel for the parties. The issues that arise for determination are -
i) Whether the defendant’s application dated 3rd July 2024 is merited;
ii) Whether the defendant and the interested parties are in contempt of the Court Orders made on 9th February 2024;
iii) Whether the interested parties should be joined to this suit;
iv) Whether the defendant and the interested parties should be directed to purge the contempt;
v) Whether the interested parties should be committed to prison for up to six months for contempt; and
vi) Whether the OCS Kilimani Police Station should be directed to assist the plaintiffs in executing any arrest or enforcement Orders issued by the Court.
Whether the defendant’s application dated 3rd July 2024 is merited.
23. In this application, the defendant seeks permission to rent out the properties known as Covo Commercial Space No. F1B, F129, and Shops No. 3, 4, 5, 6, and 7 situated along Gitanga Road and Othaya Road, on condition that the net rental income after deducting applicable expenses and taxes, be deposited into an escrow account pending the conclusion of the arbitral proceedings. The defendant also seeks an order that this Court varies its Orders of 9th February 2024 to expressly authorize the leasing of the said properties and the deposit of the resulting net rental proceeds into an escrow account for the duration of the arbitration.
24. On 9th February 2024, this Court issued temporary injunctive Orders restraining the defendant from selling or offering for sale the properties known as Covo Commercial Units F1B & F129 and Shops No. 3, 4, 5, 6 & 7 pending arbitration. The defendant contends that the Orders did not bar it from renting out the said premises. It averred that it notified the plaintiffs of its intention to lease the properties to mitigate its losses, but the plaintiffs objected, asserting that doing so would amount to contempt of Court, since the Orders of 9th February 2024 required maintenance of the status quo. The defendant maintained that it is necessary to vary the Orders of 9th February 2024 solely to allow leasing of the suit properties, with all net rental proceeds after taxes and necessary expenses being deposited into an escrow account pending the conclusion of the arbitral proceedings, aimed at mitigating escalating financial losses.
25. The plaintiffs however contended that the defendant’s application amounts to an abuse of the Court process, as it effectively seeks a review of the Orders made on 9th February 2024 without complying with the requirements of Section 80 of the Civil Procedure Act and Order 45 of the Civil Procedure Rules, 2010, which include discovery of new evidence or any error on the face of the record.
26. This Court notes that the defendant’s application was filed under the provisions of Order 40 Rule 7 of the Civil Procedure Rules as opposed to Section 80 of the Civil Procedure Act and Order 45 of the Civil Procedure Rules, 2010, as alleged by the plaintiffs. Order 40 Rule 7 of the Civil Procedure Rules provides that -
Any order for an injunction may be discharged, or varied, or set aside by the court on application made thereto by any party dissatisfied with such order.
27. On perusal of the Ruling delivered by this Court on 9th February 2024, it is evident that the Orders granted in favour of the plaintiffs against the defendants are Orders of temporary injunction, therefore, this Court has not only the jurisdiction but also the discretion to vary the said Orders on such grounds that are just, to meet the ends of justice. The Orders made on 9th February 2024 read as hereunder –
i) A temporary order of injunction is hereby issued pending the hearing and determination of the impending arbitration restraining the defendant/respondent or any one acting on its behalf from selling or offering for Sale the properties known as Covo Commercial space nos. F1B, F129, and Shops No. 3, 4, 5, 6, 7 all constructed along Gitanga Road and Othaya Road.
ii) A temporary order of injunction is hereby issued pending the hearing of the impending arbitration against the defendant/ respondent or any one acting on their behalf restraining them from directly or indirectly exercising the right of Sale and purchase under the rescission clause (c) (b) of the various Agreements for Sale of the properties Covo Commercial space Nos. F1B, F129, and Shops No. 3, 4, 5, 6, 7, F1C, and F130 all constructed along Gitanga Road and Othaya Road.
iii) The applicants will have the costs of the application.
28. It is evident from the above that contrary to the plaintiffs’ assertions, the Orders made on 9th February 2024 were not status quo Orders. Rather, they specifically restrained the defendant and its agents from selling, offering for sale, or exercising any rights of sale or purchase under the relevant rescission clauses in respect of Covo Commercial units F1B, F129, F1C, F130 and Shops No. 3, 4, 5, 6 & 7 along Gitanga Road and Othaya Road. The Orders did not prohibit the defendant from leasing or renting out the premises, as the restrictions expressly related only to actions involving sale of the said premises.
29. Accordingly, as the situation currently stands, there is nothing preventing the defendant from renting or leasing out the suit properties. Nevertheless, based on the material presented before me by both parties, there is no indication that the plaintiffs would suffer any prejudice if the orders being sought by the defendant are granted. This Court is therefore satisfied that the plaintiffs stand to suffer no prejudice in the event that the suit units are leased out given that the defendant does not intend to appropriate the rental income but to preserve it in an escrow account for the benefit of whichever party will succeed in arbitration. This means that the core proprietary rights of the plaintiffs over the units remain unaffected.
30. Additionally, this Court is inclined to agree with the defendants that leaving the subject units vacant is causing substantial financial strain on the parties, including the loss of potential tenants and diminished foot traffic impacting existing tenants in the building, particularly given that the plaintiffs in the arbitration are themselves seeking damages for loss of rental income. In the premise, it is my finding that the circumstances of this case justify intervention to prevent further deterioration of the subject matter.
31. Accordingly, this Court finds that it is in the interest of justice for the Orders made on 9th February 2024 to be varied, to allow controlled use of the suit premises without jeopardizing the ongoing arbitration or dissipating the subject matter in dispute.
Whether the defendant and the interested parties are in contempt of the Court Orders made on 9th February 2024.
32. This Court derives its jurisdiction to punish for contempt of Court from Section 5 of the Judicature Act, which states as follows -
Contempt of court
1) The High Court and the Court of Appeal shall have the same power to punish for contempt of court as is for the time being possessed by the High Court of Justice in England, and such power shall extend to upholding the authority and dignity of subordinate courts.
2) An order of the High Court made by way of punishment for contempt of court shall be appealable as if it were a conviction and sentence made in the exercise of the ordinary original criminal jurisdiction of the High Court.
33. The import of the above provisions was considered by the Court of Appeal in the case of Christine Wangari Gachege v Elizabeth Wanjiru Evans & 11 others [2014] KECA 840 (KLR) as hereunder -
the English law on committal for contempt of court under Rule 81.4 of the English Civil Procedure Rules, which deals with breach of judgment, order or undertakings, was applied by virtue of section 5(1) of the Judicature Act which provided that:
(1). The High Court and the Court of Appeal shall have the same power to punish for contempt of court as is for the time being possessed by the High Court of justice in England, and that power shall extend to upholding the authority and dignity of the subordinate courts.”
34. It is evident that both the High Court and the Court of Appeal are vested with the authority to sanction parties whose conduct undermines the dignity and authority of the Court. It is therefore a firmly established principle that any person against whom lawful Orders have been made is obligated to obey it unless and until it is varied or set aside, regardless of their personal views on the correctness or validity of the said Orders. It is trite law that Court Orders are never issued in vain and willful disobedience of Court Orders constitutes an unlawful act. The test for what amounts to contempt of Court when it comes to disobedience of Court Orders arising from civil proceedings is whether the disobedience was committed deliberately and mala fides.
35. In the case of Samuel M. N. Mweru & others v National Land Commission & 2 others (supra), the Court in disallowing an application for contempt of Court held as follows -
It is an established principle of law that [45] in order to succeed in civil contempt proceedings, the applicant has to prove (i) the terms of the order, (ii) Knowledge of these terms by the Respondent, (iii). Failure by the Respondent to comply with the terms of the order. Upon proof of these requirements the presence of willfulness and bad faith on the part of the Respondent would normally be inferred, but the Respondent could rebut this inference by contrary proof on a balance of probabilities.[46] Perhaps the most comprehensive of the elements of civil contempt was stated by the learned authors of the book Contempt in Modern New Zealand[47] who succinctly stated:-
"There are essentially four elements that must be proved to make the case for civil contempt. The applicant must prove to the required standard (in civil contempt cases which is higher than civil cases) that: -
a) the terms of the order (or injunction or undertaking) were clear and unambiguous and were binding on the defendant;
b) the defendant had knowledge of or proper notice of the terms of the order;
c) the defendant has acted in breach of the terms of the order; and
d) the defendant's conduct was deliberate. (Emphasis added).
36. Contempt of Court is a quasi-criminal jurisdiction and the standard of proof required is higher than that of a balance of probabilities. Therefore, a party claiming contempt of Court is required to demonstrate, with clarity and precision, the terms of the Orders allegedly breached, that the respondents were personally served with the said Orders or had actual knowledge of the same, and that there was willful and deliberate disobedience.
37. The plaintiffs contended that the defendant and the interested parties disobeyed the interim Orders issued by this Court in a Ruling delivered on 9th February 2024 by undertaking installations and permitting occupation of portions of the suit property. It is not contested that the defendant had full knowledge of the Orders issued by this Court in its Ruling delivered on 9th February 2024. However, from the instant application and the evidence placed before this Court, the plaintiffs have not demonstrated with sufficient certainty that the activities complained of fell within the prohibited conduct under the Orders of 9th February 2024.
38. This Court has already found earlier in this Ruling that the Orders issued on 9th February 2024 prohibited only the selling or offering for sale of the suit units. The plaintiffs have neither alleged nor shown that the defendant has taken any steps towards disposing of the units. It is evident from the said Ruling that although the issue of renting the units remains contentious between the parties herein, such action was not expressly prohibited by the terms of the Orders of 9th February 2024. Consequently, in the absence of a specific restriction, the stringent standard for establishing contempt as set out in the case of Samuel M. N. Mweru & Others v National Land Commission & 2 others (supra), has not been satisfied.
39. In view of the foregoing, this Court is not persuaded that by leasing out the suit properties the defendant willfully disobeyed the Court Orders issued on 9th February 2024, thus I do not find that the defendant and the interested parties are in contempt of the said Orders.
40. In view of the above finding, it is unnecessary to address the remaining issues previously identified for determination, as their consideration was contingent upon a finding that the defendants and the interested parties were in contempt of the Orders made by this Court in its Ruling delivered on 9th February 2024.
41. Accordingly, this Court finds that the defendant’s application dated 3rd July 2024 is merited, whereas the plaintiffs’ application dated 20th September 2024 is bereft of merits. As a result, I make the following orders –
i) The Orders granted by this Court on 9th February 2024 are hereby varied to expressly include authorization for the defendant to rent out the properties known as Covo Commercial space numbers F1B, F129 and Shops No. 3, 4, 5, 6 & 7 located along Gitanga Road and Othaya Road, and deposit the net proceeds into an escrow account less taxes and service charge pending the hearing and determination of the arbitral dispute. The escrow account to be opened within 30 days from today;
ii) The plaintiff’s application dated 20th September 2024 is hereby dismissed; and
iii) Costs of the plaintiffs’ application and the defendant’s application shall be borne by the plaintiffs.
It is so ordered.
DATED, SIGNED and DELIVERED at NAIROBI on this 5th day of December, 2025. Ruling delivered through Microsoft Teams Online Platform.
NJOKI MWANGI
JUDGE
In the presence of;-
Mr. Otieno h/b for A. Gichuhi (SC) for the defendant/applicant
Mr. Alphonce Barrack for the plaintiffs/respondents
Mr. Peter Wanyama – for the Arbitrator
Ms B. Wokabi – Court Assistant.
2. The application is premised on the grounds on the face of the Motion, and it is supported by an affidavit sworn on the same day by Mr. Patrick Mugo, the defendant’s Finance Director. Mr. Mugo averred that this Court in a Ruling delivered on 9th February 2024 granted the plaintiff temporary injunctive orders restraining the defendant from selling or offering for sale the specified Covo Commercial properties or exercising the right of sale under the rescission clauses pending arbitration. He contended that the said Orders did not prohibit the defendant from renting out the premises during the pendency of the arbitration.
3. Mr. Mugo deposed that on 22nd May 2024, the defendant notified the plaintiffs of its intention to rent out the properties to mitigate its losses, but the plaintiffs objected asserting that doing so would amount to contempt and claimed that the Orders of 9th February 2024 preserved the status quo. He contended that the plaintiffs’ objection is illogical since before the Arbitral Tribunal, the plaintiffs have sought damages for loss of rental income, a claim which the defendant has disputed because the plaintiffs breached the Sale Agreements, resulting in rescission. Mr. Mugo maintained that the plaintiffs are in breach of the said Agreements for failing to pay outstanding instalments amounting to Kshs.20,905,936.00 as demonstrated in the payment schedule. He asserted that unless the Orders of 9th February 2024 are varied, the defendant will continue to suffer escalating financial loss.
4. Mr. Mugo stated that tenants on other floors of the property in issue have threatened to vacate due to low human traffic caused by the unoccupied premises, worsening the defendant’s financial hardship. He averred that the defendant has executed various offer letters with prospective tenants including Miniso, Lorenzo Dry Cleaners and Lifemed Pharmacy, but cannot conclude these arrangements due to the plaintiffs’ opposition. He averred that the defendant continues to incur substantial losses estimated at Kshs.1,750,000/= per month in rental income. Mr. Mugo asserted that no prejudice would be suffered by the plaintiffs if the suit premises are leased, as the defendant is willing to deposit the net rental income in an escrow account pending the arbitral proceedings scheduled for 8th August 2024.
5. In opposition to the application, the plaintiffs filed a replying affidavit sworn on 8th October 2024 by Mr. Kidist Admass Ambie, the 3rd plaintiff herein and a Director of the 1st plaintiff company. Mr. Admass deposed that in a Ruling delivered on 9th February 2024, this Court granted conservatory Orders preserving the status quo over units F1B, F129, 3, 4, 5, 6 and 7, and as such, the instant application effectively seeks a review of that Ruling. He averred that the application herein misuses the review jurisdiction, noting that the defendant has neither demonstrated discovery of new and important evidence nor shown any error apparent on the face of the record.
6. He emphasized that issues such as the alleged sale of units to third parties were already raised and considered by the Court and cannot constitute new evidence. He further averred that execution of Sale Agreements alone does not pass title and that the interim reliefs were properly granted to preserve the subject matter of arbitration. Mr. Admass asserted that the defendant is intent on extinguishing the plaintiffs’ proprietary rights and abusing the Court process, highlighting that the defendant unsuccessfully sought a stay pending Appeal, and subsequently filed a Notice of Appeal and yet still seeks review of the same Ruling, while arbitration proceeds. He deposed that the defendant has acted in contempt by renting out the premises and collecting rental income despite the subsisting Court Orders, a conduct which he says undermines the administration of justice.
7. The 2nd application is the plaintiffs’ Notice of Motion dated 20th September 2024 filed under the provisions of Article 159(1) & (2) of the Constitution, Section 5 of the Judicature Act, Order 51 Rule 1 of the Civil Procedure Rules, 2010, and all other enabling provisions of the law. The plaintiffs seek orders for leave for the joinder of Mr. Nurdin Abdikadir Mohamed, the sole Director and Shareholder of the defendant, as the 1st interested party, and Ms Carolyn Cecilia Wanjiku Njoroge, the Company Secretary, as the 2nd interested party, and upon their joinder, the proposed interested parties, together with the defendant, be required to show cause why they should not be committed to civil jail for up to six months for disobeying the Court Orders issued on 9th February 2024, and in the event that they fail to show cause, they be committed to civil jail for a period not exceeding six (6) months and/or attachment of their property.
8. The plaintiffs also seek orders to direct the defendant and the interested parties to purge the alleged contempt by immediately stopping any further installations on the suit properties and by providing proof of issuance of notices to vacate in respect of Covo Commercial Space No. 3 occupied by Jajemelo Pizza, as well as any other occupants of the suit premises. They further requested that the defendant and the interested parties be denied audience before the Court unless and until they purge the contempt, and that the proposed interested parties be required to personally attend Court during the hearing of the application herein. Additionally, the plaintiffs seek for orders directing the OCS Kilimani Police Station to assist them in executing any arrest or enforcement orders issued by the Court.
9. The plaintiffs’ application is premised on the grounds on the face of the Motion, and it is supported by an affidavit sworn on the same day by Mr. Kidist Admass Ambie, the 3rd plaintiff herein and a Director of the 1st plaintiff company. Mr. Admass averred that this Court in a Ruling delivered on 9th February 2024 issued conservatory interim Orders and a temporary injunction restraining the defendant from selling, offering for sale, or otherwise dealing with Covo Commercial Spaces No. F1B, F1C, F129, F130, 03, 04, 05, 06 & 07 pending the appointment of an Arbitrator and the determination of the arbitration.
10. He contended that despite the clarity of those Orders, the defendant, through its Director Nurdin Abdikadiir Mohamed and Company Secretary Carolyn Cecilia Wanjiku Njoroge, has expressly violated them by carrying out improvements, installations, and alterations in Units F1B & F129 and Shops No. 3-7, and further handing over the units to third parties for business use, including leasing Shop No. 3 to an entity known as Jajemelo Pizza. He deposed that these acts were confirmed during a joint site visit on 7th August 2024 pursuant to directions of the Arbitral Tribunal, during which parties took photographs showing the extent of the installations and additional photographs taken on 9th September 2024 showing ongoing business operations.
11. Mr. Admass contended that the defendant and the interested parties’ actions show deliberate and calculated disregard of the Court Orders and the authority of the Arbitral Tribunal, undermining the rule of law and the administration of justice. He further contended that the defendant and the interested parties were fully aware of the Court Orders, as the defendant’s Advocates were present at the delivery of the Ruling of 9th February 2024, but despite Notice, they continued in defiance. He asserted that the gravity and intentionality of the breach warrants punitive sanctions, including committal to civil jail and attachment of property, in order to protect the integrity of the arbitration and prevent the subject matter from being rendered nugatory. He averred that unless the Court intervenes urgently, the defendant will continue to unlawfully dispose of the units that remain subject to active arbitration.
12. In opposition to the plaintiffs’ application, the defendant filed a replying affidavit sworn on 7th October 2024 by Mr. Patrick Mugo, the defendant’s Finance Director. Mr. Mugo averred that the Court’s Ruling of 9th February 2024 properly construed, did not prohibit the defendant from renting out the suit property, as the temporary injunction issued only restrained the sale, transfer, or exercise of the right of sale under the rescission clauses. He stated that the defendant accordingly notified the plaintiffs, through a letter dated 22nd May 2024, of its intention to rent out the units to mitigate losses while complying with the Court Order not to sell the properties, but the plaintiffs objected in a letter dated 27th May 2024, prompting the defendant to file an application dated 3rd July 2024 seeking variation of the Orders to expressly permit rental of the premises and deposit of net rental income into an escrow account pending arbitration.
13. The applications herein were canvassed by way of written submissions. The defendant’s submissions were filed by the law firm of Mr. Wamae & Allen LLP on 25th October 2024 and 5th November 2024, while the plaintiffs’ submissions were filed on 26th October 2024 by the law firm of Kendi & Company Advocates.
Application dated 3rd July 2024
14. Mr. Allen Gichuhi, Senior Counsel and learned Counsel for the defendant relied on the cases of Benl Development Limited v First Community Bank Limited [2021] KEHC 7136 (KLR) & St. Patricks Hill School Ltd v Bank of Africa Kenya Ltd [2018] KEHC 4886 (KLR), and submitted that this Court has unfettered discretion under Order 40 Rule 7 of the Civil Procedure Rules, 2010, to vary or discharge its injunctive Orders where the ends of justice so require. He contended that significant hardship has arisen from the Orders issued on 9th February 2024, as the plaintiffs have refused to permit the defendant to rent out the suit premises despite the Orders not expressly prohibiting leasing. He stated that as a result, the defendant continues to suffer substantial monthly losses estimated at Kshs.1,750,000/= in foregone rent, in addition to ongoing security, cleaning, and maintenance expenses for the unoccupied units, costs that would ordinarily be covered through service charge.
15. Counsel argued that no prejudice would be occasioned to the plaintiffs if the Orders of 9th February 2024 are varied, as any rental income collected would be deposited into an escrow account after deduction of taxes and expenses. Mr. Gichuhi cited the Court of Appeal case of Serah Njeri Mwobi v John Kimani Njoroge [2013] KECA 501 (KLR), and asserted that the plaintiffs are estopped from opposing the application dated 3rd July 2024, having themselves claimed damages for loss of rent and profits before the Arbitral Tribunal, which is inconsistent with resisting the collection and preservation of rental income. He referred to the Court of Appeal case of Benjoh Amalgamated Limited & another v Kenya Commercial Bank Limited [2014] KECA 872 (KLR), and stated that this Court has residual jurisdiction to vary its Orders of 9th February 2024 to prevent continued hardship and injustice arising from its operation.
16. Mr. Alphonce Barrack, learned Counsel for the plaintiffs cited the Court of Appeal case of Shimmers Plaza Limited v National Bank of Kenya Ltd [2013] KECA 359 (KLR), and submitted that the Ruling of 9th February 2024 expressly required the defendant to maintain the status quo of the suit premises pending arbitration. He argued that the defendant has not satisfied the strict requirements of review under Section 80 of the Civil Procedure Act and Order 45 of the Civil Procedure Rules, 2010. Counsel maintained that the defendant has not presented any new or previously unavailable material, nor demonstrated any error apparent on the record to warrant this Court to review its Ruling of 9th February 2024.
17. He cited the Supreme Court case of Parliamentary Service Commission v Wambora & 36 others [2018] KESC 74 (KLR) and the case of Stephen Gathua Kimani v Nancy Wanjira Waruingi t/a Providence Auctioneers [2016] KEHC 6883 (KLR) and further submitted that the defendant’s application merely rehashes issues already considered and determined by the Court, thereby seeking to re-open the case in a manner akin to an appeal.
Application dated 20th September 2024
18. Mr. Alphonce Barrack, learned Counsel for the plaintiffs relied on the case of Samuel M. N. Mweru & others v National Land Commission & 2 others [2020] KEHC 9233 (KLR) and submitted that the defendant has willfully disobeyed the Orders of 9th February 2024 and is therefore in contempt. He contended that the Court expressly issued conservatory Orders preserving the status quo of units F1B & F129, and Shops No. 3, 4, 5, 6 & 7, and restraining their sale or disposal during the pendency of arbitration. He argued the orders of the status quo meant that the defendant was not to undertake any action that altered or threatened the plaintiffs’ proprietary interests.
19. Counsel contended that despite these clear terms, the defendant undertook extensive improvements to the aforesaid units and proceeded to lease them to third parties for its own benefit, thereby disturbing the status quo and undermining the authority of both this Court and the Arbitral Tribunal. Counsel referred to the case of Basil Criticos v Attorney General & 8 others & 4 others [2012] KEHC 1480 (KLR) and stated that since the defendant’s Counsel was present in Court during the delivery of the Ruling of 9th February 2024, he had full knowledge of the Orders issued therein, thus personal service of the Orders was unnecessary.
20. Mr. Allen Gichuhi, Senior Counsel for the defendant submitted that the plaintiffs have failed to meet the legal threshold for proving contempt of Court. He relied on the Court of Appeal case of Kigio Group Company Limited v Kibaara & 8 others [2024] KECA 919 (KLR) and argued that in order for contempt of Court to be sustained, the plaintiffs must demonstrate the existence of clear and unambiguous Court Orders, the defendant’s knowledge of those Orders and a willful and deliberate breach thereof.
21. He cited the Court of Appeal case of Jihan Freighters Ltd v Hardware & General Stores Ltd and A.B. & Another v R.B. [2016] eKLR, to support the principle that the Orders allegedly disobeyed must be precise in setting out what a party is to do or refrain from doing. Counsel contended that the Orders of 9th February 2024 merely prohibited the sale or offering for sale of the suit properties, and did not bar leasing them out. He maintained that none of the subject units has been sold or offered for sale and therefore no contempt can arise from leasing them.
ANALYSIS AND DETERMINATION.
22. I have considered the applications filed herein, the affidavits filed in support thereof, the replying affidavit by the plaintiffs and the defendants, and the written submissions by Counsel for the parties. The issues that arise for determination are -
i) Whether the defendant’s application dated 3rd July 2024 is merited;
ii) Whether the defendant and the interested parties are in contempt of the Court Orders made on 9th February 2024;
iii) Whether the interested parties should be joined to this suit;
iv) Whether the defendant and the interested parties should be directed to purge the contempt;
v) Whether the interested parties should be committed to prison for up to six months for contempt; and
vi) Whether the OCS Kilimani Police Station should be directed to assist the plaintiffs in executing any arrest or enforcement Orders issued by the Court.
Whether the defendant’s application dated 3rd July 2024 is merited.
23. In this application, the defendant seeks permission to rent out the properties known as Covo Commercial Space No. F1B, F129, and Shops No. 3, 4, 5, 6, and 7 situated along Gitanga Road and Othaya Road, on condition that the net rental income after deducting applicable expenses and taxes, be deposited into an escrow account pending the conclusion of the arbitral proceedings. The defendant also seeks an order that this Court varies its Orders of 9th February 2024 to expressly authorize the leasing of the said properties and the deposit of the resulting net rental proceeds into an escrow account for the duration of the arbitration.
24. On 9th February 2024, this Court issued temporary injunctive Orders restraining the defendant from selling or offering for sale the properties known as Covo Commercial Units F1B & F129 and Shops No. 3, 4, 5, 6 & 7 pending arbitration. The defendant contends that the Orders did not bar it from renting out the said premises. It averred that it notified the plaintiffs of its intention to lease the properties to mitigate its losses, but the plaintiffs objected, asserting that doing so would amount to contempt of Court, since the Orders of 9th February 2024 required maintenance of the status quo. The defendant maintained that it is necessary to vary the Orders of 9th February 2024 solely to allow leasing of the suit properties, with all net rental proceeds after taxes and necessary expenses being deposited into an escrow account pending the conclusion of the arbitral proceedings, aimed at mitigating escalating financial losses.
25. The plaintiffs however contended that the defendant’s application amounts to an abuse of the Court process, as it effectively seeks a review of the Orders made on 9th February 2024 without complying with the requirements of Section 80 of the Civil Procedure Act and Order 45 of the Civil Procedure Rules, 2010, which include discovery of new evidence or any error on the face of the record.
26. This Court notes that the defendant’s application was filed under the provisions of Order 40 Rule 7 of the Civil Procedure Rules as opposed to Section 80 of the Civil Procedure Act and Order 45 of the Civil Procedure Rules, 2010, as alleged by the plaintiffs. Order 40 Rule 7 of the Civil Procedure Rules provides that -
Any order for an injunction may be discharged, or varied, or set aside by the court on application made thereto by any party dissatisfied with such order.
27. On perusal of the Ruling delivered by this Court on 9th February 2024, it is evident that the Orders granted in favour of the plaintiffs against the defendants are Orders of temporary injunction, therefore, this Court has not only the jurisdiction but also the discretion to vary the said Orders on such grounds that are just, to meet the ends of justice. The Orders made on 9th February 2024 read as hereunder –
i) A temporary order of injunction is hereby issued pending the hearing and determination of the impending arbitration restraining the defendant/respondent or any one acting on its behalf from selling or offering for Sale the properties known as Covo Commercial space nos. F1B, F129, and Shops No. 3, 4, 5, 6, 7 all constructed along Gitanga Road and Othaya Road.
ii) A temporary order of injunction is hereby issued pending the hearing of the impending arbitration against the defendant/ respondent or any one acting on their behalf restraining them from directly or indirectly exercising the right of Sale and purchase under the rescission clause (c) (b) of the various Agreements for Sale of the properties Covo Commercial space Nos. F1B, F129, and Shops No. 3, 4, 5, 6, 7, F1C, and F130 all constructed along Gitanga Road and Othaya Road.
iii) The applicants will have the costs of the application.
28. It is evident from the above that contrary to the plaintiffs’ assertions, the Orders made on 9th February 2024 were not status quo Orders. Rather, they specifically restrained the defendant and its agents from selling, offering for sale, or exercising any rights of sale or purchase under the relevant rescission clauses in respect of Covo Commercial units F1B, F129, F1C, F130 and Shops No. 3, 4, 5, 6 & 7 along Gitanga Road and Othaya Road. The Orders did not prohibit the defendant from leasing or renting out the premises, as the restrictions expressly related only to actions involving sale of the said premises.
29. Accordingly, as the situation currently stands, there is nothing preventing the defendant from renting or leasing out the suit properties. Nevertheless, based on the material presented before me by both parties, there is no indication that the plaintiffs would suffer any prejudice if the orders being sought by the defendant are granted. This Court is therefore satisfied that the plaintiffs stand to suffer no prejudice in the event that the suit units are leased out given that the defendant does not intend to appropriate the rental income but to preserve it in an escrow account for the benefit of whichever party will succeed in arbitration. This means that the core proprietary rights of the plaintiffs over the units remain unaffected.
30. Additionally, this Court is inclined to agree with the defendants that leaving the subject units vacant is causing substantial financial strain on the parties, including the loss of potential tenants and diminished foot traffic impacting existing tenants in the building, particularly given that the plaintiffs in the arbitration are themselves seeking damages for loss of rental income. In the premise, it is my finding that the circumstances of this case justify intervention to prevent further deterioration of the subject matter.
31. Accordingly, this Court finds that it is in the interest of justice for the Orders made on 9th February 2024 to be varied, to allow controlled use of the suit premises without jeopardizing the ongoing arbitration or dissipating the subject matter in dispute.
Whether the defendant and the interested parties are in contempt of the Court Orders made on 9th February 2024.
32. This Court derives its jurisdiction to punish for contempt of Court from Section 5 of the Judicature Act, which states as follows -
Contempt of court
1) The High Court and the Court of Appeal shall have the same power to punish for contempt of court as is for the time being possessed by the High Court of Justice in England, and such power shall extend to upholding the authority and dignity of subordinate courts.
2) An order of the High Court made by way of punishment for contempt of court shall be appealable as if it were a conviction and sentence made in the exercise of the ordinary original criminal jurisdiction of the High Court.
33. The import of the above provisions was considered by the Court of Appeal in the case of Christine Wangari Gachege v Elizabeth Wanjiru Evans & 11 others [2014] KECA 840 (KLR) as hereunder -
the English law on committal for contempt of court under Rule 81.4 of the English Civil Procedure Rules, which deals with breach of judgment, order or undertakings, was applied by virtue of section 5(1) of the Judicature Act which provided that:
(1). The High Court and the Court of Appeal shall have the same power to punish for contempt of court as is for the time being possessed by the High Court of justice in England, and that power shall extend to upholding the authority and dignity of the subordinate courts.”
34. It is evident that both the High Court and the Court of Appeal are vested with the authority to sanction parties whose conduct undermines the dignity and authority of the Court. It is therefore a firmly established principle that any person against whom lawful Orders have been made is obligated to obey it unless and until it is varied or set aside, regardless of their personal views on the correctness or validity of the said Orders. It is trite law that Court Orders are never issued in vain and willful disobedience of Court Orders constitutes an unlawful act. The test for what amounts to contempt of Court when it comes to disobedience of Court Orders arising from civil proceedings is whether the disobedience was committed deliberately and mala fides.
35. In the case of Samuel M. N. Mweru & others v National Land Commission & 2 others (supra), the Court in disallowing an application for contempt of Court held as follows -
It is an established principle of law that [45] in order to succeed in civil contempt proceedings, the applicant has to prove (i) the terms of the order, (ii) Knowledge of these terms by the Respondent, (iii). Failure by the Respondent to comply with the terms of the order. Upon proof of these requirements the presence of willfulness and bad faith on the part of the Respondent would normally be inferred, but the Respondent could rebut this inference by contrary proof on a balance of probabilities.[46] Perhaps the most comprehensive of the elements of civil contempt was stated by the learned authors of the book Contempt in Modern New Zealand[47] who succinctly stated:-
"There are essentially four elements that must be proved to make the case for civil contempt. The applicant must prove to the required standard (in civil contempt cases which is higher than civil cases) that: -
a) the terms of the order (or injunction or undertaking) were clear and unambiguous and were binding on the defendant;
b) the defendant had knowledge of or proper notice of the terms of the order;
c) the defendant has acted in breach of the terms of the order; and
d) the defendant's conduct was deliberate. (Emphasis added).
36. Contempt of Court is a quasi-criminal jurisdiction and the standard of proof required is higher than that of a balance of probabilities. Therefore, a party claiming contempt of Court is required to demonstrate, with clarity and precision, the terms of the Orders allegedly breached, that the respondents were personally served with the said Orders or had actual knowledge of the same, and that there was willful and deliberate disobedience.
37. The plaintiffs contended that the defendant and the interested parties disobeyed the interim Orders issued by this Court in a Ruling delivered on 9th February 2024 by undertaking installations and permitting occupation of portions of the suit property. It is not contested that the defendant had full knowledge of the Orders issued by this Court in its Ruling delivered on 9th February 2024. However, from the instant application and the evidence placed before this Court, the plaintiffs have not demonstrated with sufficient certainty that the activities complained of fell within the prohibited conduct under the Orders of 9th February 2024.
38. This Court has already found earlier in this Ruling that the Orders issued on 9th February 2024 prohibited only the selling or offering for sale of the suit units. The plaintiffs have neither alleged nor shown that the defendant has taken any steps towards disposing of the units. It is evident from the said Ruling that although the issue of renting the units remains contentious between the parties herein, such action was not expressly prohibited by the terms of the Orders of 9th February 2024. Consequently, in the absence of a specific restriction, the stringent standard for establishing contempt as set out in the case of Samuel M. N. Mweru & Others v National Land Commission & 2 others (supra), has not been satisfied.
39. In view of the foregoing, this Court is not persuaded that by leasing out the suit properties the defendant willfully disobeyed the Court Orders issued on 9th February 2024, thus I do not find that the defendant and the interested parties are in contempt of the said Orders.
40. In view of the above finding, it is unnecessary to address the remaining issues previously identified for determination, as their consideration was contingent upon a finding that the defendants and the interested parties were in contempt of the Orders made by this Court in its Ruling delivered on 9th February 2024.
41. Accordingly, this Court finds that the defendant’s application dated 3rd July 2024 is merited, whereas the plaintiffs’ application dated 20th September 2024 is bereft of merits. As a result, I make the following orders –
i) The Orders granted by this Court on 9th February 2024 are hereby varied to expressly include authorization for the defendant to rent out the properties known as Covo Commercial space numbers F1B, F129 and Shops No. 3, 4, 5, 6 & 7 located along Gitanga Road and Othaya Road, and deposit the net proceeds into an escrow account less taxes and service charge pending the hearing and determination of the arbitral dispute. The escrow account to be opened within 30 days from today;
ii) The plaintiff’s application dated 20th September 2024 is hereby dismissed; and
iii) Costs of the plaintiffs’ application and the defendant’s application shall be borne by the plaintiffs.
It is so ordered.
DATED, SIGNED and DELIVERED at NAIROBI on this 5th day of December, 2025. Ruling delivered through Microsoft Teams Online Platform.
NJOKI MWANGI
JUDGE
In the presence of;-
Mr. Otieno h/b for A. Gichuhi (SC) for the defendant/applicant
Mr. Alphonce Barrack for the plaintiffs/respondents
Mr. Peter Wanyama – for the Arbitrator
Ms B. Wokabi – Court Assistant.