Introduction
1. This ruling determines the Plaintiffs’ Notice of Motion Application dated 9th May 2024 seeking injunctive reliefs against the defendants and the 2nd Defendant’s application dated 20th May 2024 seeking the setting aside of this court’s orders of 15th May 2024 which had grated granting temporary injunctive reliefs in respect of the plaintiff’s said application.
2. The primary dispute in this matter emanates from what the plaintiffs in their plaint dated 9th May 2024 alleged to be unlawful suspension by the 1st defendant of the banker-customer contract between the plaintiff and the 1st defendant as well the 2nd defendant’s suspension of M-PESA Paybill Numbers 867271 and 528879 operated by the 1st plaintiff.
3. The defendants, on the other hand, maintained that the suspension of the bank accounts and MPESA paybill numbers were lawful and justified following the designations published on 11th March 2024 by the United States Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) listing of one of the directors of the 1st Plaintiff, Mr. Mohamed Awale Jumale Ali, as a specifically designated person with links to a terrorist group, Al-Shabaab.
4. Contemporaneously with the plaint, the plaintiffs filed a notice of motion application under Sections 1A, 1B, 3, 3A, 63(e) of the Civil Procedure Act, Cap. 21 (Laws of Kenya) and Order 40, rules 1 and 2 of the Civil Procedure Rules, 2010. The application is supported by the affidavits of Zahra Mohamud, Mohamed Muhamud Jumale, Mohamud Jumale Awale, and Ahmed Mohamud, all sworn on 9th May 2024.
5. In the application, the plaintiff seeks as against the 1st defendant, an order of mandatory injunction compelling the 1st defendant, whether by itself, agents, or servants, to grant Plaintiffs access to and use of accounts number 1179528190 KES and 1179528514 USD; accounts number 1219708704 KES and 1219708828 USD; accounts number 1134687761 KES,1240720874 KES, and 1260948021 UGX; and accounts number 1136341242 KES and 1136341269 USD operated with the 1st Defendant at the 1st Defendant's Kimathi Street Branch, Nairobi.
6. The prayer against the 2nd defendant is an order of mandatory injunction, compelling the 2nd Defendant whether by itself, agents, or servants to grant the 1st Plaintiff access to and use of M-PESA Pay bill Numbers 867271, and 528879.
7. The plaintiffs’ application is opposed by way of replying affidavit sworn on behalf of the 1st defendant by Miriam Kendi on 19th June 2024 and that of Mwenja Ndamba sworn on 28th June 2024 on behalf of the 2nd defendant.
8. On 15th May 2024, this court (Mongare J) granted temporary ex-parte orders on the plaintiffs’ application pending hearing and determination of the application.
9. On 20th May 2024, the second Defendant filed an application dated the same date, seeking an order setting aside the temporary ex-parte orders issued by the court on 15th May 2024 in their entirety. The application is opposed by the plaintiffs, who filed their joint grounds of opposition dated 2nd October 2024.
10. Directions were given by the court that both the plaintiff’s application seeking injunctive reliefs against the defendants and the 2nd Defendant’s application seeking to set aside the court order of 15th May 2024 be canvassed together by way of written submissions. The Plaintiffs filed their joint submissions dated 2nd October 2024 whilst the 1st and 2nd defendants filed their separate submissions, both dated 8th October 2024.
Analysis & Determination
11. I have carefully considered the pleadings, the evidence, and submissions filed by opposing parties. The main issue is whether the applicants have met the threshold for granting an injunction to restrain the 1st and 2nd defendants from suspending their respective customer-client relationships with the plaintiffs and to allow the plaintiffs to have access and use to both the subject back accounts as well as the MPESA paybill numbers.
12. It is critical that I first deal with the 2nd Defendant’s application dated 20th May 2024 in which they sought to have the temporary ex-parte orders issued by the court on 15th May 2024 set aside on the basis that the 1st plaintiff had failed to disclose that the MPESA pay bill numbers were suspended by the 2nd defendant following the designation published on 11th March 2024 by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC).
13. I have reviewed the plaintiffs’ application of 9th May 2024 and the supporting affidavit by which the interim orders were issued and find that contrary to the position taken by the 2nd defendant, I note that the plaintiffs disclosed at paragraph 18 of Zahara Mohamud sworn on 9th May 2024 in support of the application that the 2nd defendant’s actions were among others, said to be based on the designation published on 11th March 2024 by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC).
14. In the circumstances, I hold and find that there was no material non-disclosure on the part of the plaintiffs in their application of 5th May 2024 as alleged by the 2nd defendants.
15. In any event, as rightly submitted by the plaintiffs, the issues raised by the 2nd defendant in its application dated 20th May 2024 are substantially the same issues taken up by the 2nd defendant in its response to the plaintiffs' application.
16. In the circumstances, I will therefore proceed and consider the plaintiffs’ application for injunctive reliefs, in light of the responses filed by both defendants.
17. The considerations for the grant of injunctions as set out under Order 40(1) (a) and (b) of the Civil Procedure Rules, 2010 are now well settled. 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.”
18. The first question that this Court must answer is whether the applicants have shown that they have a prima facie case with a probability of success. In Mrao Ltd V First American Bank of Kenya Ltd & 2 Others, [2003] KLR 125, the Court defined a prima facie case as follows:
“... 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.”
19. The applicants’ case is premised on their rights to access and use their various bank accounts held with the 1st defendant well as the access and use of the two MPESA paybill numbers the 1st plaintiff maintains with the 2nd defendant. That the actions by the defendants amount to a breach of the banker-customer contract between the plaintiffs and the 1st defendant, and the contract between the 1st plaintiff and the 2nd defendant.
20. The applicants maintain that there exists a banker-customer relationship between the 1st defendant and the plaintiffs and a subscriber relationship between the 2nd defendant and the 1st plaintiff. According to the plaintiffs, the actions by the defendants to cancel and or suspend their respective customer-client relationship with the plaintiffs is not only unjustified but is also illegal.
21. The 1st and 2nd defendants, on the other hand, argue that their respective actions of canceling and/or suspending their customer-client relationship with the plaintiffs is justified on account of designations published on 11th March 2024 by the United States Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) listing of one of the directors of the 1st Plaintiff, Mr. Mohamed Awale Jumale Ali, as a specifically designated person with links to a terrorist group, Al-Shabaab.
22. It is further the 1st and 2nd defendants on the other side argue that their actions of canceling and/or suspending their respective relationships with the plaintiff are contractual and may be terminated as guided by the contracts signed between the parties as at the time of opening the various bank accounts in question (with the 1st defendant) and the two MPESA paybill numbers operated with the 1st plaintiff (with the 2nd defendant).
23. Quite clearly, the dispute that the Court is faced with in this matter is to determine the priority of rights as between the plaintiffs/applicants and the defendants/respondents. The court after a full hearing, will have to decide whether the defendants were in law entitled to suspend and/or terminate their respective relationships with the plaintiffs, whether based on the said designation by the United States Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’), or on based the contractual terms as argued by the respondents.
24. In the premises, I am therefore satisfied that a prima facie case has been made out by the applicants. In reaching this conclusion, I am certainly conscious of the limits of my inquiry at this point as laid down in the case of Nguruman Ltd V Jan Bonde Nielsen 8 2 Others, [2014] eKLR where the Court of Appeal warned that:
“In considering whether or not a prima facie case has been established, the Court does not hold a mini trial and must not examine the merits of the case closely. All that the court is to see is that on the face of it the person applying for an injunction has a right, which has been or is threatened with violation.”
25. The second consideration for the grant of an injunction is whether the applicants have shown that they might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. The court in Paul Gitonga Wanjau V Gathuthi Tea Factory Company Ltd & 2 Others, [2016] eKLR referred to the Halsbury’s Laws of England on what irreparable loss is and stated that:
“By the term irreparable injury is meant injury which is substantial and could never be adequately remedied or atoned for by damages, not injury which cannot possibly be repaired, and the fact that the plaintiff may have a right to recover damages is no objection to the exercise of the jurisdiction by injunction if his rights cannot be adequately protected or vindicated by damages.”
26. The applicants aver that they risk being blacklisted by other banks as a result of the 1st defendant’s action and that the businesses carried out by the plaintiffs cannot be undertaken without a bank account and an MPESA paybill. Accordingly, the plaintiffs assert that they have suffered and will continue to suffer irreparable injury and loss in their business if the defendants’ actions are not restrained.
27. The defendants on their part argue that no irreparable loss will be suffered by the plaintiffs. According to the 1st defendant, it has not denied the plaintiffs access to their money and the plaintiffs have an option to of opening bank accounts with other banks and continue their respective business operations without hindrance. For the 2nd defendant, it is their submissions that the 1st plaintiff’s claim against them is predicated on loss of profits due to breach of contract and therefore, such a loss can be compensated in damages.
28. I have carefully reviewed the respective parties’ submissions and take the view that the plaintiffs have demonstrated that they would suffer irreparable loss if an injunction is refused.
29. On the 2nd defendant’s argument that the 1st plaintiff’s claim against them is predicated on loss of profits due to breach of contract and therefore, such a loss can be compensated in damages, this court adopts the position that was taken by Warsame J (as he then was) in the case of Joseph Siro Mosioma V Housing Finance Company of Kenya & 3 Others, [2008] that: -
“Damages is not automatic remedy when deciding whether to grant an injunction or not. Damages is not and cannot be a substitute for the loss, which is occasioned by a clear breach of the law. In any case the financial strength of a party is not always a factor to refuse an injunction. More so a party cannot be condemned to take damages in lieu of his crystallized right which can be protected by an order of injunction.”
30. Having found that the applicants have established a prima facie case with triable issues and that they would suffer irreparable loss if an injunction is refused, I hold that the balance of convenience tilts in favour of the applicants.
Appropriate orders:
31. Having found that the plaintiffs are deserving of injunctive orders, the next task for this court is to determine whether the prayers can be granted in the manner and to the extent sought by the Applicants. From the Notice of Motion dated 5th May 2024, the applicants sought the following orders; -
"i. Spent
ii. Spent
iii. Spent
iv. Pending the hearing and determination of this suit, an injunction be and is hereby issued restraining the 1st Defendant whether by itself, agents, servants, or otherwise howsoever from suspending, freezing, closing, restricting access to, or in any other manner curtailing the 1st, 2nd, 3rd and 4th Plaintiffs' access to and use of accounts number 1179528190 KES and 1179528514 USD; accounts number 1219708704 KES and 1219708828 USD; accounts number 1134687761KES, 1240720874 KES and 1260948021 UGX; and accounts number 1136341242KES and 1136341269 USD operated with the 1st Defendant at the 1st Defendant's Kimathi Street Branch, Nairobi.
v. Pending the hearing and determination of this suit an injunction be and is hereby issued restraining the 2nd Defendant whether by itself, agents, servants, or otherwise howsoever from suspending, freezing, closing, restricting access to, or in any other manner curtailing the 1st Plaintiff's use of M-Pesa Paybills 867271 and 528879.
vi. Pending the hearing and determination of this suit, a permanent mandatory injunction be and is hereby issued compelling the 1st Defendant whether by itself, agents, or servants to grant the 1st, 2nd,3rd, and 4th Plaintiffs access to and use of accounts number 1179528190 KES and 1179528514 USD; accounts number 1219708704 KES and 1219708828 USD; accounts number 1134687761 KES,1240720874 KES, and 1260948021 UGX; and accounts number 1136341242 KES and 1136341269 USD operated with the 1st Defendant at the 1st Defendant's Kimathi Street Branch, Nairobi.
vii. Pending the hearing and determination of this suit, a permanent mandatory injunction be and is hereby issued compelling the 2nd Defendant whether by itself, agents, or servants to grant the 1st Plaintiff access to and use of M-Pesa Paybills 867271 and 528879.
viii. The costs of this Application be provided for"
32. From the above, it is evident that the plaintiffs are in their application seeking both temporary and permanent injunction against the defendants.
33. To start with, it is settled law that an order of permanent injunction or perpetual injunction cannot be issued at an interlocutory stage but only after a full hearing of a suit. This is the position that the Court of Appeal took in the case of Kenya Power & Lighting Co. Limited v Sheriff Molana Habib [2018] eKLR, where the court stated and held that; -
“It is apparent from the pleadings that the Respondent was seeking a permanent injunction against disconnection of his electricity by the Appellant. A permanent injunction which is also known as perpetual injunction is granted upon the hearing of the suit. It fully determines the rights of the parties before the court and is thus a decree of the court. The injunction is granted upon the merits of the case after evidence in support of and against the claim has been tendered. A permanent injunction perpetually restrains the commission of an act by the defendant in order for the rights of the plaintiff to be protected.
A permanent injunction is different from a temporary/interim injunction since a temporary injunction is only meant to be in force for a specified time or until the issuance of further orders from the court. Interim injunctions are normally meant to protect the subject matter of the suit as the court hears the parties.”
34. Again, in the case of Kenya Consortium to Fight Aids, Tb & Malaria & Another V Brigitte Mukui Kitenge & 4 Others [2013] eKLR, where the court held thus:
“In fact the way the said prayers are crafted, they seem to be seeking perpetual injunctions. In The Headmaster Kiembeni Baptist Primary School & Another vs. The Pastor of Kiembeni Baptists Church Mombasa HCCA No. 103 of 2004, Maraga, J (as he then was) held that when dealing with applications for interlocutory injunctions it is wrong to grant a permanent injunction whose effect is to conclusively decide the suit as issues of fact should be decided after hearing evidence and that Courts should be wary of parties who make applications for interlocutory injunctive orders which if granted as prayed would have the effect of granting permanent or mandatory injunctions and sometimes even eviction orders as order 39 does not provide for grant of permanent injunctions at interlocutory stage.”
35. In the circumstances prayers 6 and 7 of the plaintiff’s application dated 5th May 2024 cannot be granted at this stage since doing so would amount to summarily disposing the suit at an interlocutory stage, contrary to the established legal principle.
36. Regarding prayers 4 and 5 of the application relating to the temporary injunction, it is the duty of this court to ensure that the interests of both parties are sufficiently secured and protected pending the hearing and final determination of the suit. The plaintiffs need to continue with their business and the respondents need equally to continue effectively playing their respective roles as reporting institutions within the meaning of section 2 of the Proceeds of Crime and Money Laundering Act No. 9 of 2009.
37. In my view, the balance can only be achieved by allowing the plaintiff’s application dated 5th May 2024 in terms of prayers 4 and 5 of the application.
Disposition
38. In conclusion, the application dated 9th May 2024 is allowed in terms of prayers 4 and 5 of the application.
39. Prayers 6 and 7 are declined as granting the same would amount to disposing of the whole suit at an interlocutory stage.
40. Given the nature of this dispute, I direct that the matter be heard on a priority basis.
41. Costs of the application shall be in the cause.
42. It is so ordered.
SIGNED DATED and DELIVERED IN VIRTUAL COURT THIS
19TH DAY OF DECEMBER, 2024
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
Angawa h/b for Havi………...for Plaintiff
Athman h/b for Mungu……...for 1st Defendant
N/A…………………………for 2nd Defendant