' Introduction and Background
1. The application dated 15th February 2025 seeks injunctive orders against the respondent from enforcing any attachment, sale, or otherwise interfering with the sale of dairy products held by the applicant, pending the hearing and determination of the main suit.
2. The application is anchored in a commercial agreement dated 15th September 2022 between the parties for the processing and distribution of Royal Fresh Dairy Products, which are highly perishable in nature. The applicant takes issue with the respondent for having failed to reconcile its rebate entitlements under the contract, specifically, 1% on net sales of KES 5 million and 1.5% on net sales of KES 7 million and above, despite these being express terms of the agreement.
3. The respondent had instead issued a demand notice dated 3rd February 2025, containing threats of business disruption, without addressing or responding to the applicant’s cross-demand of 6th February 2025. The applicant further asserts that it holds substantial stocks of perishable dairy products from other processors, and any disruption would result in significant financial loss, breach of distribution contracts, and erosion of market share.
4. The applicant also warns of broader prejudice to third parties, including investors, creditors, and debtors, who would be adversely affected by the respondent’s actions. The application therefore seeks to preserve the status quo and protect the applicant’s commercial interests pending resolution of the dispute.
5. The application is opposed by way of a replying affidavit sworn by Peter Kamau Mathinji on 20th February 2025 on several grounds. Firstly, while acknowledging the existence of the contract dated 15th September 2022, the respondents assert that Clause 11 of the agreement clearly stipulated a one-year term commencing on 1st October 2023, which was never extended.
6. Secondly, the respondent states that the amount they are claiming from the applicant, being Kshs. 3,597,756.31, falls within the pecuniary jurisdiction of the Resident Magistrates Court. It is the respondent’s case that this Court is therefore not appropriate for the determination of the dispute. Lastly, the respondent contends that the orders sought by the applicant are impractical, as they cannot be effectively supervised or implemented
Analysis and determination
7. I have carefully considered the parties’ pleadings and submissions. The main issue for determination is whether the applicant has met the threshold for granting the injunction orders they seek. To succeed, the applicants must satisfy the conditions established in Giella v. Cassman Brown & Co., Ltd. [1973] E.A. 358. These conditions require the them to demonstrate a prima facie case with a probability of success, show that they would suffer irreparable harm that could not be adequately compensated by damages, and, if the court is in doubt, have the application determined on the balance of convenience.
8. These conditions are are applied as distinct, sequential hurdles which the applicant is expected to surmount sequentially. This means that if the applicant fails to establish a prima facie case, there is no need to consider irreparable harm or the balance of convenience (see Nguruman Limited v Jan Bonde Nielsen& 2 others [2013] KECA 347 (KLR)).
9. As to what constitutes a prima facie case, the Court of Appeal in Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] KECA 175 (KLR) explained as follows:
“A prima facie case in a civil application includes but is not confined to a “genuine and arguable case.” It is a case 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”.
10. Turning to the dispute at hand, the agreement dated 15th September 2022 contains a clear provision under Clause 11 regarding its duration. It states that:
“The term of this agreement shall commence on the Ist date of October 2022 and shall continue in full force and remain effective for a period of one year and shall be renewed at the mutual agreement of both parties unless terminated by either party upon 30 days prior written noticе”.
11. The respondent’s case is premised on the assertion that the agreement ceased to exist after the lapse of the initial one-year term. However, from a plain reading of Clause 11, it is evident that the agreement contemplated the possibility of renewal, and termination was only effective upon written notice. The respondent has not furnished any evidence of such termination.
12. Moreover, the financial records relied upon by the respondent themselves extend up to 24th September 2024, nearly a year beyond the initial term, suggesting that the parties continued to operate under the terms of the agreement.
13. In the absence of any formal termination and in light of continued dealings between the parties, I am persuaded that the agreement remained in force beyond the initial term and was effectively renewed by mutual conduct. As to the applicant’s claim for rebates, and the specific amounts allegedly due under the contractual terms, this issue cannot be conclusively determined at this stage. In the absence of clear documentary evidence or reconciliation of accounts, the question of entitlement and quantum is one that must be subjected to evidentiary scrutiny at a full hearing.
14. Further, bearing in mind that the issues raised are capable of being ascertained and, if necessary, compensated by way of damages, I am persuaded that the balance of convenience tilts in favour of granting the orders sought.
The potential disruption to the applicant’s business, particularly in light of the perishable nature of the goods involved and the broader commercial implications, would occasion irreparable harm that outweighs any prejudice to the respondent. Notably, the respondent has not substantively controverted the grounds advanced in support of the injunction. In the circumstances, I find it just and equitable to allow the application.
15. As regards the issue of forum, it is indeed true that this Court is clothed with unlimited original jurisdiction in criminal and civil matters, pursuant to Article 165(3)(a) of the Constitution. However, Section 11 of the Civil Procedure Act provides that every suit shall be instituted in the court of the lowest grade competent to try it. This is intended to promote judicial efficiency and proper allocation of resources.
16. In the present matter, the applicant does not dispute that the respondent’s demand amounts to Kshs. 3,597,756.31, which falls well within the pecuniary jurisdiction of the Magistrates’ Court. Even when factoring in the applicant’s claim for rebates being 1% of Kshs. 5 million and 1.5% of Kshs. 7 million, the total value remains within the jurisdictional threshold of the subordinate court.
17. In giving effect to the overriding objective under Sections 1A and 1B of the Civil Procedure Act, this Court is under a statutory obligation to ensure the efficient disposal of proceedings, optimal use of judicial and administrative resources, and timely resolution of disputes. Section 18 of the Civil Procedure Act further empowers this Court to transfer a civil suit pending before it to a subordinate court with competent jurisdiction.
18. In view of the foregoing, and considering the nature of the reliefs sought, the value of the claims, and the jurisdictional competence of the Magistrates’ Court, I am satisfied that it is in the interest of justice and judicial economy to transfer this matter to the Chief Magistrate’s Court at Milimani Commercial Courts, Nairobi, considering its centrality and convenience for parties.
Disposition
19. Accordingly, the application dated 7th October 2024 is allowed. The costs shall await the outcome of the suit.
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1. The application dated 15th February 2025 seeks injunctive orders against the respondent from enforcing any attachment, sale, or otherwise interfering with the sale of dairy products held by the applicant, pending the hearing and determination of the main suit.
2. The application is anchored in a commercial agreement dated 15th September 2022 between the parties for the processing and distribution of Royal Fresh Dairy Products, which are highly perishable in nature. The applicant takes issue with the respondent for having failed to reconcile its rebate entitlements under the contract, specifically, 1% on net sales of KES 5 million and 1.5% on net sales of KES 7 million and above, despite these being express terms of the agreement.
3. The respondent had instead issued a demand notice dated 3rd February 2025, containing threats of business disruption, without addressing or responding to the applicant’s cross-demand of 6th February 2025. The applicant further asserts that it holds substantial stocks of perishable dairy products from other processors, and any disruption would result in significant financial loss, breach of distribution contracts, and erosion of market share.
4. The applicant also warns of broader prejudice to third parties, including investors, creditors, and debtors, who would be adversely affected by the respondent’s actions. The application therefore seeks to preserve the status quo and protect the applicant’s commercial interests pending resolution of the dispute.
5. The application is opposed by way of a replying affidavit sworn by Peter Kamau Mathinji on 20th February 2025 on several grounds. Firstly, while acknowledging the existence of the contract dated 15th September 2022, the respondents assert that Clause 11 of the agreement clearly stipulated a one-year term commencing on 1st October 2023, which was never extended.
6. Secondly, the respondent states that the amount they are claiming from the applicant, being Kshs. 3,597,756.31, falls within the pecuniary jurisdiction of the Resident Magistrates Court. It is the respondent’s case that this Court is therefore not appropriate for the determination of the dispute. Lastly, the respondent contends that the orders sought by the applicant are impractical, as they cannot be effectively supervised or implemented
Analysis and determination
7. I have carefully considered the parties’ pleadings and submissions. The main issue for determination is whether the applicant has met the threshold for granting the injunction orders they seek. To succeed, the applicants must satisfy the conditions established in Giella v. Cassman Brown & Co., Ltd. [1973] E.A. 358. These conditions require the them to demonstrate a prima facie case with a probability of success, show that they would suffer irreparable harm that could not be adequately compensated by damages, and, if the court is in doubt, have the application determined on the balance of convenience.
8. These conditions are are applied as distinct, sequential hurdles which the applicant is expected to surmount sequentially. This means that if the applicant fails to establish a prima facie case, there is no need to consider irreparable harm or the balance of convenience (see Nguruman Limited v Jan Bonde Nielsen& 2 others [2013] KECA 347 (KLR)).
9. As to what constitutes a prima facie case, the Court of Appeal in Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] KECA 175 (KLR) explained as follows:
“A prima facie case in a civil application includes but is not confined to a “genuine and arguable case.” It is a case 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”.
10. Turning to the dispute at hand, the agreement dated 15th September 2022 contains a clear provision under Clause 11 regarding its duration. It states that:
“The term of this agreement shall commence on the Ist date of October 2022 and shall continue in full force and remain effective for a period of one year and shall be renewed at the mutual agreement of both parties unless terminated by either party upon 30 days prior written noticе”.
11. The respondent’s case is premised on the assertion that the agreement ceased to exist after the lapse of the initial one-year term. However, from a plain reading of Clause 11, it is evident that the agreement contemplated the possibility of renewal, and termination was only effective upon written notice. The respondent has not furnished any evidence of such termination.
12. Moreover, the financial records relied upon by the respondent themselves extend up to 24th September 2024, nearly a year beyond the initial term, suggesting that the parties continued to operate under the terms of the agreement.
13. In the absence of any formal termination and in light of continued dealings between the parties, I am persuaded that the agreement remained in force beyond the initial term and was effectively renewed by mutual conduct. As to the applicant’s claim for rebates, and the specific amounts allegedly due under the contractual terms, this issue cannot be conclusively determined at this stage. In the absence of clear documentary evidence or reconciliation of accounts, the question of entitlement and quantum is one that must be subjected to evidentiary scrutiny at a full hearing.
14. Further, bearing in mind that the issues raised are capable of being ascertained and, if necessary, compensated by way of damages, I am persuaded that the balance of convenience tilts in favour of granting the orders sought.
The potential disruption to the applicant’s business, particularly in light of the perishable nature of the goods involved and the broader commercial implications, would occasion irreparable harm that outweighs any prejudice to the respondent. Notably, the respondent has not substantively controverted the grounds advanced in support of the injunction. In the circumstances, I find it just and equitable to allow the application.
15. As regards the issue of forum, it is indeed true that this Court is clothed with unlimited original jurisdiction in criminal and civil matters, pursuant to Article 165(3)(a) of the Constitution. However, Section 11 of the Civil Procedure Act provides that every suit shall be instituted in the court of the lowest grade competent to try it. This is intended to promote judicial efficiency and proper allocation of resources.
16. In the present matter, the applicant does not dispute that the respondent’s demand amounts to Kshs. 3,597,756.31, which falls well within the pecuniary jurisdiction of the Magistrates’ Court. Even when factoring in the applicant’s claim for rebates being 1% of Kshs. 5 million and 1.5% of Kshs. 7 million, the total value remains within the jurisdictional threshold of the subordinate court.
17. In giving effect to the overriding objective under Sections 1A and 1B of the Civil Procedure Act, this Court is under a statutory obligation to ensure the efficient disposal of proceedings, optimal use of judicial and administrative resources, and timely resolution of disputes. Section 18 of the Civil Procedure Act further empowers this Court to transfer a civil suit pending before it to a subordinate court with competent jurisdiction.
18. In view of the foregoing, and considering the nature of the reliefs sought, the value of the claims, and the jurisdictional competence of the Magistrates’ Court, I am satisfied that it is in the interest of justice and judicial economy to transfer this matter to the Chief Magistrate’s Court at Milimani Commercial Courts, Nairobi, considering its centrality and convenience for parties.
Disposition
19. Accordingly, the application dated 7th October 2024 is allowed. The costs shall await the outcome of the suit.
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