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JudgmentOutsource Designs Limited VS Wema Magharibi Limited AND National Construction Authority AND 1 Others19 min read

Outsource Designs Limited VS Wema Magharibi Limited AND National Construction Authority AND 1 Others

High Court at Kisumu High Court · · Joe M. Omido

A. THE CHAMBER SUMMONS DATED 12TH JUNE, 2026.
1. The Applicant Outsource Designs Limited filed the chamber summons dated 12th June, 2026, expressed to be brought under Section 7 of the Arbitration Act, Sections 1A, 1B and 3A of the Civil Procedure Act, Order 40 and Order 51 of the Civil Procedure Rules and all other enabling provisions of the law and seeks the following orders:

1. THAT this Application be certified as urgent and that the same be heard ex parte in the first instance.

2. THAT pending the hearing of this Application inter partes, this Honourable Court be pleased to issue a temporary injunction restraining the Respondent whether by itself, its directors, officers, members, employees, agents, servants, successor consultants or assigns or any of them or otherwise howsoever from selling, transferring, charging, mortgaging, leasing, allocating, alienating or in any manner whatsoever dealing with, disposing of or creating any third-party interest over the suit property known as L.R. No. KISUMU/DAGO/5400 or any units or sectional interests arising therefrom.

3. THAT pending the hearing and determination of this Application inter partes, this Honourable Court be pleased to issue an order of inhibition under Section 68 of the Land Registration Act, 2012, inhibiting the registration of any dealing, transfer, lease, charge, sub-division or the issuance or registration of any sectional title or sectional units in respect of the suit property known as L.R. No. KISUMU/DAGO/5400, and directing the Chief Land Registrar and/or the Land Registrar, Kisumu to register the said inhibition against the title to L.R. No. KISUMU/DAGO/5400.

4. THAT pending the hearing and determination of this Application inter partes, this Honourable Court be pleased to issue an injunction restraining the Respondent whether by itself, its directors, officers, agents, employees, successor consultants or assigns or any of them or otherwise howsoever from relying upon, presenting, utilising or in any manner deriving benefit from Compliance Certificate No. 50623915710402 issued in respect of the development on L.R. No. KISUMU/DAGO/5400, on the grounds that the said certificate was procured through misrepresentation and through the unauthorised use of the Applicant’s architectural drawings without the Applicant’s Letter of No Objection or professional discharge, in continuing infringement of the Applicant’s copyright under the Copyright Act (Cap. 130).

5. THAT as a necessary and consequential order to give effect to the injunction sought in prayer (4) above, this Honourable Court be pleased to direct the National Construction Authority to forthwith annotate and flag Compliance Certificate No. 50623915710402 issued in respect of the development on L.R. No. KISUMU/DAGO/5400 on its Online Project Registration System (OPRS) as being subject to these proceedings and to suspend operational effect of the said Compliance Certificate pending the hearing determination of this Application inter partes and thereafter pending the hearing determination of the intended arbitration between the parties or until further order of this Honourable Court, whichever is the earlier; AND THAT the National Construction Authority be further directed to confirm in writing to the Advocates for the Applicant and to this Honourable Court within three (3) days of service of this Order upon it that the said annotation, flagging and suspension has been effected on its Online Project Registration System; the foregoing relief being grounded in this Honourable Court’s inherent jurisdiction under Section 3A of the Civil Procedure Act and Article 165(3) of the Constitution of Kenya 2010, and being necessitated by the National Construction Authority’s own confirmation by its letter Ref: NCA11/COMP/9/VOL IV/47 dated 18th May, 2026 that it will not act unilaterally in this matter and that the judicial system is the only effective forum for redress, thereby rendering the intervention of this Honourable Court indispensable to preservation of the Applicant’s rights and to the prevention of irreparable harm pending the determination of the dispute referred to arbitration.

6. THAT pending the hearing and determination of the intended arbitration, the orders sought in prayers 2, 3 and 4 above be issued and do remain in force.

7. THAT this Honourable Court be pleased to order the Respondent to deposit the sum of Kenya Shillings Seventeen Million, Nine Hundred and Twenty-Five Thousand (Ksh.17,925,000.00/-) being one half of the Applicant’s claim of Kenya Shillings Thirty-Five Million, Eight Hundred and Fifty Thousand (Ksh.35,850,000.00/-) referred to arbitration. The foregoing sum comprises of the outstanding contractual fees of Ksh.6,390,000/-, intellectual property damages of Ksh.26,000,000/- and consequential and special damages of Ksh.3,460,000/-. The said sum be deposited into a joint interest-bearing escrow account opened in the joint names of the Advocates for the Applicant and the Respondent at a tier-one commercial bank in Kenya within twenty-eight (28) days of the date of the order, the said sum to be held and operated upon the joint signatures of the said Advocates and to be released only upon the issuance of the final arbitral award, a settlement executed by the parties or the further directions of this Honourable Court or of the Arbitral Tribunal.

8. THAT IN THE ALTERNATIVE to prayer 6 above, this Honourable Court be pleased to order the Respondent to furnish, within twenty-eight (28) days of the date of the order, an unconditional and irrevocable bank guarantee issued by a tier-one commercial bank in Kenya in favour of the Applicant for the full sum of Kenya Shillings Thirty-Five Million, Eight Hundred and Fifty Thousand (Ksh.35,850,000.00/-) to secure the Applicant’s claim pending the hearing and determination of the intended arbitration.

9. THAT this Honourable Court be pleased to issue a preservation order restraining the Respondent, whether by itself, its directors, officers, agents, employees, successor consultants or otherwise from altering, deleting, destroying, overwriting or otherwise interfering with any digital project data, drawings, schematics, technical specifications, site records or member ledgers relating to the development, pending the hearing and determination of the intended arbitration.

10. THAT the costs of and incidental to this Application be provided for.

11. THAT this Honourable Court be pleased to grant such further or other relief as it may deem just and expedient in the circumstances.

2. The grounds upon which the application is premised are in precis that the Applicant and the Respondent are bound by a written Contract for Consultancy Services dated 7th July, 2023, Clause 5.2 of which provides that any dispute arising out of or in connection with the Contract which is not amicably resolved may be referred to arbitration in accordance with the Arbitration Act, 1995.

3. The Applicant contends that a dispute has arisen between the parties on account of the Respondent’s alleged breach of the Contract by purporting to suspend and subsequently replace the Applicant’s architectural services without complying with the contractual termination mechanism, and by engaging a successor architect in alleged violation of the Contract.

4. The Applicant further alleges that the Respondent unauthorizedly used, modified and commercially exploited its architectural drawings, the copyright in which the Applicant claims vests in it as the author under the Copyright Act, without obtaining a Letter of No Objection or professional discharge.

5. Arising from the alleged breaches, the Applicant has referred to arbitration a claim for Ksh.35,850,000/-, comprising Ksh.6,390,000/- in outstanding contractual fees, Ksh.26,000,000/- in intellectual property damages and Ksh.3,460,000/- in consequential and special damages. The Chartered Institute of Arbitrators (Kenya Branch) is said to be in the process of appointing an arbitrator.

6. The Applicant contends that Section 7 of the Arbitration Act empowers the Court to grant interim measures of protection in respect of an intended or pending arbitration.

7. It is further contended that the suit property constitutes the Respondent’s sole substantial asset and that its subdivision into sectional units and transfer thereof to third parties is imminent. The Applicant apprehends that unless the subject property is preserved, such dealings may render the enforcement of any arbitral award ultimately made in its favour nugatory.

8. The Applicant asserts that the Respondent is experiencing acute illiquidity, as evidenced by a notice of intention by its principal contractor to suspend works on account of unpaid certified sums and the near-complete allocation of all the units to the Respondent’s members. It is further alleged that the Respondent’s beneficial owners and directors reside outside the jurisdiction, thereby making any future personal enforcement against them impractical.

9. The Applicant alleges that the Respondent procured a compliance certificate from the 1st Interested Party – the National Construction Authority – through misrepresentation and through the unauthorized use of the Applicant’s architectural drawings without obtaining a Letter of No Objection or professional discharge and that the 1st Interested Party, by its letter dated 18th May 2026, is said to have declined to act unilaterally on the matter and directed the Applicant to seek recourse through the judicial system, thereby rendering the Court’s intervention necessary.

10. The Applicant further contends that the Respondent’s continued use, modification and economic exploitation of its architectural drawings constitutes a subsisting infringement of its copyright under the Copyright Act. It is argued that, unlike a mere claim for delayed payment of contractual fees, continuing copyright infringement constitutes a distinct and ongoing legal injury which cannot be adequately remedied by an eventual award of damages alone.

11. Consequently, the Applicant maintains that it has an arguable case with a high likelihood of success, that it stands to suffer irreparable harm incapable of adequate compensation by an award of damages if the orders sought are declined, and that the balance of convenience lies in favour of preserving the subject matter of the dispute pending the determination of the arbitration.

B. THE APPLICANT’S SUPPORTING AFFIDAVIT.
12. The application is supported by the affidavit of Paul Ochieng Onyango sworn on 12th June, 2026 in which he deposes that he is an architect and a director of the Applicant, and is duly authorized to swear the affidavit on its behalf.

13. The deponent states that the Applicant was engaged by the Respondent, under a Contract for Consultancy Services dated 7th July, 2023 to provide architectural design, documentation and construction supervision services for the development of residential apartments and related facilities on L.R. No. KISUMU/DAGO/5400, Kisumu (the suit property). He has annexed the title deed as “POO-01” and the Contract as “POO-02”.

14. The deponent states that under Appendix III to the Contract, the Applicant’s professional fees were fixed at Ksh.22,000,000/- inclusive of VAT, payable in instalments linked to stages of construction, while Clause 5.2 provided for the referral of unresolved disputes to arbitration and, in default of agreement on an arbitrator, appointment by the Chartered Institute of Arbitrators would follow.

15. The deponent deposes that the Applicant performed its contractual obligations and the project progressed under its drawings and supervision to approximately 85% completion, as evidenced by the project progress report annexed as “POO-03”. However, on or about 25th April, 2026, the Respondent’s Board Chairperson sent him a WhatsApp message purporting to suspend the Applicant’s involvement without invoking the contractual mechanism for suspension or termination, which communication is annexed as “POO-04”.

16. The deponent asserts that following the communication, the Applicant sought clarification from the project team but received no response. He states that in discharge of its professional and statutory obligations, the Applicant thereafter notified the 1st Interested Party of the withdrawal of its professional responsibility over the site pending clarification. The relevant correspondence is annexed as “POO-05”.

17. The deponent contends that the Respondent subsequently characterized the notification as a self-termination of the Contract, which the Applicant disputes, maintaining that the notification was made pursuant to its statutory safety obligations.

18. The deponent states that in an effort to minimize disruption to the project, the Applicant offered to nominate a qualified replacement lead architect, but the Respondent declined the nomination and confirmed that it had already engaged a successor architect. The deponent states that the Applicant nevertheless remains the architect on record and has not issued a Letter of No Objection or professional discharge to the Respondent or the successor architect.

19. The deponent further deposes that the Respondent subsequently caused the Applicant’s architectural drawings to be uploaded onto the 1st Interested Party’s portal under a fresh application and procured Compliance Certificate No. 50623915710402 without the Applicant’s knowledge, consent, Letter of No Objection or professional discharge. A complaint lodged with the 1st Interested Party in that regard is annexed as “POO-06”.

20. He adds that by its letter dated 18th May, 2026, (annexed as “POO-07”), the 1st Interested Party confirmed that its project registration continued to reflect the deponent as the architect on record, that the project was flagged pending regulatory correspondence and that intellectual property ownership fell outside its mandate. The 1st Interested Party further advised that where the Applicant had evidence that its drawings had been fraudulently acquired, its recourse lay through the judicial system, while revocation of the compliance certificate was conditional upon BORAQS determining whether the successor architect was wrongfully on the project.

21. The deponent asserts that the Applicant is the author and statutory owner of the copyright in the architectural drawings, designs and works prepared for the project. He maintains that the Respondent’s continued use, modification and commercial exploitation of those drawings constitutes a continuing infringement of the Applicant’s copyright, causing ongoing professional, reputational and economic harm which cannot adequately be remedied by damages alone.

22. He deposes that the alleged breaches and infringement give rise to a total principal claim of Ksh.35,850,000/-, comprising Ksh.6,390,000/- in outstanding contractual and professional fees, Ksh.26,000,000/- in intellectual property damages and Ksh.3,460,000/- in consequential and special damages. He maintains that the precise quantum of the claim is to be determined by the Arbitral Tribunal.

23. The deponent states that the Applicant invoked the arbitration agreement by a Notice of Dispute dated 8th May, 2026 and, following the failure of the parties to agree on an arbitrator, applied to the Chartered Institute of Arbitrators (Kenya Branch) for appointment of one. The Institute acknowledged the reference and forwarded the matter for appointment, as evidenced by its letter dated 28th May 2026 annexed as “POO-08”.

24. The deponent states that the suit property is, to the best of his knowledge, the Respondent’s sole substantial asset and that nearly all the residential units have already been allocated to individual third parties. He relies on the Respondent’s unit-allocation schedule, annexed as “POO-09”, in support of that assertion.

25. He further states that the Respondent has commenced the process of sectionalization of the suit property, having engaged a licensed surveyor who, by letter dated 7th March, 2026, submitted sectional plans to the County Government of Kisumu for certification under the Sectional Properties Act. The surveyor’s letter is annexed as “POO-10”. He consequently apprehends that registration and transfer of individual sectional titles is imminent.

26. The deponent also avers that the Respondent is experiencing acute illiquidity, as evidenced by a Notice of Intention to Suspend Works dated 24th April, 2026 issued by its principal contractor, Corban Construction Limited, citing unpaid certified sums under Interim Payment Certificates Nos. 15 and 16 exceeding Ksh.47,000,000/-. The notice is annexed as “POO-11”. He further states that the Respondent’s directors and beneficial owners are resident outside Kenya, thereby making future personal enforcement against them impractical.

27. On the foregoing basis, the deponent maintains that the Applicant has an arguable case fit for determination through arbitration, that the imminent registration and transfer of sectional titles and dissipation of the suit property would occasion irreparable harm, and that the balance of convenience favours preservation of the subject matter pending arbitration. He states that the interim orders sought are intended to preserve the status quo without unnecessarily halting construction.

28. As an alternative to restraining the project revenues, the Applicant proposes that the Respondent deposit Ksh.17,925,000/-, being one half of the principal claim, in a joint interest-bearing escrow account within 28 days or, alternatively, furnish an unconditional and irrevocable bank guarantee from a tier-one commercial bank for the full claim of Ksh.35,850,000/-. He contends that either measure would secure the Applicant’s claim while permitting construction works to continue.

29. He therefore urges the Court to allow the application and grant the orders sought in the interests of justice.

C. THE RESPONDENT’S (REPLYING) AFFIDAVIT.
30. The Respondent resisted the Applicant’s application and to that end filed an affidavit sworn on 24th June, 2026 by George Mudachi, in which the deponent describes himself as a director and authorized representative of the Respondent.

31. The said deponent contends that the Respondent’s business involves sourcing members of the diaspora to jointly invest in property development in Kenya, and that the suit property was acquired by such members and developed into approximately 147 residential apartments financed through their contributions.

32. He states that all the apartments have since been allocated to individual members or purchasers, who have been making payments towards them. A schedule of the members and their contributions is annexed as “GM-001.”

33. The deponent states that the Applicant, through Architect Paul Ochieng, was engaged as the Project Architect and Project Manager. He alleges that during the early stages of the project, the architect advised the Respondent to import tiles from Turkey and, relying on that advice, the Respondent released Ksh.24,280,476.80/- to him for import duty, clearing charges and transportation, pursuant to a letter dated 4th March, 2024 annexed as “GM-002.”

34. He states that the architect subsequently furnished documents purporting to show that Ksh.19,847,739/- had been incurred as import and excise duty, which documents are annexed as “GM-003.”

35. The deponent further alleges that the architect misrepresented the mode of transportation of the tiles, resulting in inflated transport costs, and subsequently agreed to reimburse Ksh.2,521,250/-, which amount was to be deducted from his professional fees. The relevant correspondence is annexed as “GM-004.” He further states that the tiles were later found to be insufficient to cover the staircases and common areas despite the architect having represented that they would suffice.

36. The deponent asserts that upon further investigation, the Respondent established that the actual import and excise duty paid was Ksh.15,074,578/-, and that the documents previously furnished by the architect were fake or doctored, resulting in an alleged overstatement of Ksh.4,773,161/-. The KRA receipts, which he refers to as genuine are annexed as “GM-005.”

37. The deponent states that the architect acknowledged the discrepancy and agreed that the said amount be recovered from his professional fees, as evidenced by an email dated 15th April, 2026 annexed as “GM-006.” He therefore contends that the Applicant failed to disclose to the Court the existence of an agreement for recovery of a total sum of Ksh.7,294,411/- from its professional fees.

38. The deponent states that, following the Applicant’s failure to satisfactorily explain the discrepancies relating to the purported KRA receipts, the Respondent informed him of its intention to suspend him from the project. However, before the suspension letter could be served, the architect, by a letter dated 27th April, 2026 (annexed as “GM-007”), withdrew his professional services and architectural licence from the project.

39. He adds that the withdrawal was communicated to the relevant regulatory authorities, following which the 1st Interested Party withdrew the project’s Compliance Certificate and closed the site, causing delays and disruption. The 1st Interested Party’s notice is annexed as “GM-008.”

40. The deponent contends that the Respondent consequently appointed another architect and submitted his credentials to the 1st Interested Party to facilitate compliance and reopening of the site. The deponent maintains that the new architect’s credentials were used solely for that purpose and that the Respondent did not interfere with the Applicant’s professional records.

41. He further contends, on advice of counsel, that the Respondent was entitled to continue using the architectural drawings since it had paid for them and was using them only for the project for which they had been commissioned.

42. The deponent further contends that, following the Applicant’s withdrawal of his professional licence, the project was left without an architect, thereby entitling the Respondent to appoint another architect to complete the development. He states that the transition and handover from one architect to another is regulated by the Board of Registration of Architects and Quantity Surveyors (BORAQS) and should be addressed through the mechanisms established under the applicable professional regulations.

43. The deponent states that the Applicant has already lodged a complaint with BORAQS concerning the professional issues arising from the transition, which complaint remains pending determination. A copy of the correspondence from BORAQS is annexed as “GM-009.”

44. He consequently contends that the Applicant has prematurely approached this Court on matters falling within the mandate of the professional regulatory body and that the issues concerning professional conduct, architectural practice and the transition between architects are contested matters requiring determination on evidence and the applicable professional standards.

45. The deponent further contends that the alleged copyright infringement, its extent and any damages arising therefrom are substantive matters properly determinable by the Arbitral Tribunal upon hearing the parties and considering the evidence. He characterizes the Applicant’s claim of Ksh.26,000,000/- for intellectual property damages as inordinately high, speculative and unsubstantiated, maintaining that any damages can only be assessed following a full hearing.

46. The deponent states that the Respondent is a going concern and that the Kisumu project is only one of several projects which it intends to undertake or continue in the ordinary course of its business. He contends that all 147 apartments have been allocated to their respective owners, some of whom have completed payment.

47. He further states that the Respondent is at an advanced stage of processing sectional titles for the residential units and that any injunctive orders or restrictions would adversely affect the rights and interests of third-party purchasers who are not parties to these proceedings and are not privy to the Applicant’s contractual relationship with the Respondent.

48. He maintains that those purchasers acted in good faith, contributed financially to the project and legitimately expected its completion and the issuance of sectional titles, and that it would therefore be unjust to subject them to adverse consequences arising from the dispute between the Applicant and the Respondent.

49. The deponent also alleges that the Applicant declined or neglected several requests to meet and reconcile the parties’ accounts and resolve the outstanding issues, choosing instead to lodge complaints against the Respondent before various regulatory bodies, including BORAQS. He therefore maintains that the Applicant failed to disclose these material circumstances to the Court.

50. On that basis, the Respondent contends that the Applicant, having concealed and/or failed to disclose material facts, is not entitled to equitable relief.

51. Finally, the deponent states, on advice of counsel, that the grant of interim injunctive relief is discretionary and that the Applicant has failed to satisfy the established principles governing such relief.

D. THE 1ST INTERESTED PARTY’S REPLYING AFFIDAVIT.
52. The 1st Interested Party filed an affidavit sworn on 16th July, 2026 by Stephen Mwilu in which the said deponent states that he is the Manager, Compliance of the 1st Interested Party and is conversant with the matter and duly authorised to swear the affidavit on its behalf.

53. He explains that the 1st Interested Party is established under Section 3(1) of the National Construction Authority Act, with a mandate to oversee and coordinate the development of the construction industry, promote quality assurance and enforce the prescribed Building Code.

54. He further states that the National Construction Authority Regulations, 2014 require construction works, contracts and projects to be registered with the 1st Interested Party, and prescribe the process for issuance of compliance certificates.

55. The deponent outlines the regulatory framework governing construction projects, stating that upon an application for registration by a project owner, accompanied by the requisite County Government and NEMA approvals, the 1st Interested Party issues a compliance certificate.

56. He states that the 1st Interested Party is also empowered to inspect construction sites to ascertain compliance with the Act and Regulations, including verification of a valid compliance certificate, a licensed contractor, accredited skilled workers and site supervisors, requisite approvals and appropriate safety measures and that where a site is non-compliant, the 1st Interested Party may suspend works and place the red NCA “X” mark on the site until compliance is achieved, after which a lifting of the suspension must be obtained before construction resumes.

57. The deponent states that the suit property had previously been suspended on 11th November, 2025 for lack of a valid Certificate of Compliance and accredited skilled workers and site supervisors, pursuant to Suspension of Works Order No. 201437 dated 11th November, 2025, annexed as “SM1” and that the Respondent subsequently obtained the requisite approvals from the County Government of Kisumu and NEMA and was issued with Certificate of Compliance No. 50623915710242 dated 20th January, 2026, valid for two years, annexed as “SM2.”

58. The deponent states that the 1st Interested Party was thereafter copied on the Applicant’s letter dated 27th April, 2026 notifying the Respondent of the withdrawal of its practising licence and professional indemnity in respect of the project. The said letter is annexed as “SM3”, and that following the notification, the 1st Interested Party revoked the Certificate of Compliance and suspended the construction works on account of the absence of a valid certificate requiring the engagement of a licensed professional. The Suspension of Works Order No. 190681 dated 28th April, 2026 is annexed as “SM4.”

59. The deponent states that the Respondent subsequently, by its letter dated 30th April, 2026, confirmed to the Applicant, with the 1st Interested Party copied, that the Applicant had withdrawn from the development. The letter is annexed as “SM5.” The Respondent thereafter applied for a fresh Certificate of Compliance, which was issued by the 1st Interested Party on 6th May, 2026 under Serial No. 50623915710402, valid for two years and identifying Aziz Ottar Hussein, Registration No. A2207, as the new licensed architect. The certificate is annexed as “SM6”.

60. He explains that following the issuance of the new Certificate of Compliance, the Respondent applied for the lifting of the suspension, which was granted by the 1st Interested Party through Lifting of Suspension of Works Order Serial No. 078358 dated 7th May, 2026, annexed as “SM7”.

61. The deponent further states that on 15th May, 2026, Architect Karisa, on behalf of the Applicant, lodged a complaint with the 1st Interested Party alleging the fraudulent acquisition and unauthorized use of the Applicant’s architectural works to procure the new Certificate of Compliance. The complaint is annexed as “SM8”.

62. He states that in response, the 1st Interested Party, by its letter dated 18th May, 2026 (annexed as “SM9”), advised the Applicant that the complaints concerning the alleged unauthorized use of the architectural works fell outside its mandate and that the Applicant’s recourse lay with the Board of Registration of Architects and Quantity Surveyors.

63. The deponent therefore maintains that the 1st Interested Party acted within its statutory mandate in suspending th
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    Outsource Designs Limited VS Wema Magharibi Limited AND National Construction Authority AND 1 Others Outsource Designs Limited VS Wema Magharibi Limited AND National Construction Authority AND 1 Others