Background
1. For determination is the application dated 17/11/2023. It seeks injunctive relief against the respondents from re-advertising and re issuing a tender for cleaning, painting and repair of LPG tanks, being tender No. KPRL/OT/023.035/2023-2024 pending the hearing and determination of the arbitration proceedings and for an order suspending the advertisement.
2. The applicant contends that it entered into a joint venture agreement with the 2nd respondent (the JVA). The parties to the JVA then entered into a contract on 22/6/2022 for cleaning, painting and repair of LPG Tanks, with the 1st respondent.
3. A dispute arose amongst the parties on the execution of the contract and the 1st respondent recalled the performance bond issued by the interested party to the 1st respondent on account of the JVA. The applicant contends that there are interim orders against the recall of the performance bond and that it intends to subject the dispute to arbitration.
4. The applicant further contends that the contract had not been terminated but that the 1st respondent had already re-advertised it on 7/11/2023. The tender was scheduled to close on 22/11/2023. It is the applicant’s case that if the injunction is not granted the arbitration proceedings will be rendered nugatory. That the applicant will suffer irreparable harm as a result of the investment that it had made on the project. Finally, that it had already performed part of the work and was willing to negotiate and complete the pending works.
5. On its part the 1st respondent confirms the agreement entered into with the applicant and the 2nd respondent, through a JVA, for a term of 6 months. The applicant and the 2nd respondent were jointly ‘the contractors’ and the contract was set to lapse on 23/12/2022. The JVA agreement recognized the 2nd respondent as the lead partner in the implementation of the tender.
6. In accordance with the contract the joint contractor secured a performance bond in favour of the 1st respondent, which performance bond was set to expire on 19/6/2023.
7. The 1st respondent confirms that the joint contractor requested an extension of the contract initially for 3 months. The extension was granted vide a deed of variation dated 21/3/2023 for a period of 3 months ending 30/6/2023. On 29/6/2023 the 1st respondent again received another request from the contractor for an extension of time, this time seeking 4 months, from 1/7/2023 to 30/10/2023 to complete the project. The request was declined by the 1st respondent.
8. It is important to note that the applicant denies being granted any extension, as the lead contractor, noting that it only requested one extension which was declined. It is therefore the applicant’s case that they were not given sufficient time to perform the contract.
9. The 1st respondent confirms that it has withheld the outstanding amount together with the retention amount from the joint contractors. It further confirms that on 4/7/2023 it recalled the performance bond pursuant to the terms of the contract but acknowledges that this Court issued an injunction restraining the release of the performance bond.
10. The 1st respondent also acknowledges that upon a final valuation of the works, it found that the applicant had only completed 35% of the work having raised payment certificates valued at Kshs. 4,340,200/=.
11. It is the 1st respondent’s case that there is hence no justifiable reason as to why the injunctive orders should be allowed, as the applicant had been in breach of the contract, which fact is admitted. As such, the 1st respondent was desirous of completing the works having suffered loss of use of the LPG tanks since 30/6/2023.
12. It is the 1st respondent’s further case that there is no correlation between the re-advertisement of the tender and the recalling of the performance bond noting that even if the applicant was willing to complete the works, it had already demonstrated its inability to do so. Further, the 1st respondent argues that the previous tender had expired and that it was within its rights to re-advertise the same for the 2023/2024 financial year so as to avoid the ripple effect that would in turn affect the business operations of the 1st respondent.
13. The 1st respondent argues that the tender had been re-advertised and had a closing date of 22/11/2023 and that the injunctive relief had therefore been overtaken by events. In response it is the applicant’s case that by the time that the application was filed and served, the period for the tender had not yet lapsed and as such the application had not been overtaken by events.
Analysis and determination
14. I have carefully considered the pleadings, submissions and evidence filed by the parties in this case. 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.”
15. 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.”
16. The existence of a JVA between the applicant and the 2nd respondent for purposes of performing the contract has not been denied. The preamble to the said agreement is clear that the parties to the JVA were jointly and severally responsible for the successful performance of the contract.
17. This disabuses the argument by the applicant that it is not the one that sought the first extension of the contract and that it was not granted enough time to perform the contract. In my view the applicant and the 2nd respondent had a collective responsibility under the JVA and as such the request for extension of the contract was made by the parties to the JVA jointly and not in their individual capacity.
18. It is also clear from the tender agreement that time was of essence in the performance of this contract. The evidence on record shows that the first Deed of Variation extended the contract period for a period of 6 months. That was between 23/6/2022 to 23/12/2022. Thereafter, the 2nd Deed of Variation dated 19/12/2022 extended the contract by a further 3 months. The same was set to expire on 23/3/2023. The Deed of Variation is signed by all the parties signifying their acceptance of the terms.
19. A 3rd extension was declined by the 1st respondent. In the absence of that, it meant that there was no contract in place between the parties after the lapse of the 2nd extension, on 23/3/2023 and that indeed the 1st respondent was at liberty to re-advertise for a subsequent contract.
20. On the face of this evidence I am not satisfied that the applicant has demonstrated a right, which has been or is threatened with violation. It is therefore my finding that the first limb of the test for grant of an order of injunction fails as no prima facie case has been established.
21. In any case, it is my view that the 1st respondent stands to suffer a lot more loss by having the unfinished work remaining pending and by having to contract other parties to carry out the unfinished work left by the applicant and the 2nd respondent. Any loss that the applicant may have suffered can be adequately compensated in damages once proved.
Disposition
22. In the premises I find that the applicant has not made out a case for grant of injunctive orders. I find no merit in the application and the same is dismissed with costs.