Kenya’s longest running case goes back to court

The Court of Appeal will hear, for a third time, the longest-running commercial dispute in Kenya after the Supreme Court referred the case back to it.

It is a complex but intriguing tale of how justice can be sweet and sour at the same time.

Manchester Outfitters and Gallot Industries have tasted the sweetness of winning before the Appeals court, but have also walked away bitter after losing to Standard Chartered Bank.

They will now approach the same court to try and win over a new set of judges.

The war between the two firms and the lender dates back to a Sh2 million loan borrowed by the clothes-making company in 1982.

When the borrower defaulted, StanChart appointed a receiver manager, sparking the 30-year-old case.

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The amount in dispute has since grown to Sh251 million.

Unhappy with the bank’s move, Manchester and Gallot moved to the High Court on September 5, 1990, challenging appointment of AD Gregory and CD Cahill as receivers.

In response, StanChart made a claim of Sh24 million, with a 10 per cent interest per year.

After nine years of war before the High Court, Justice Erastus Githinji allowed the bank to claim its dues.

Aggrieved, the two firms lodged an appeal seeking to set aside the decision, or in the alternative, have the case  heard again by the High Court.

But while the Appeals court was hearing the case, StanChart sold the property that Manchester and Gallot had used to secure the loan.

At the end of the hearing on October 4, 2002, the Court of Appeal, in a majority decision, slapped the bank with a Sh251 million bill and directed it to pay 14 per cent interest.

Justices Abdul Lakha and Effie Owuor said the bank should compensate the garments makers, while Justice Phillip Tunoi dissented.

The Appeals court at the time was the highest in the land, meaning its judgement was final.

Stepped aside

But the bank did not bow out from the war. It instead lodged another suit before the Comesa Court of Justice, arguing that the Appeal court’s decision was against the treaty establishing the Common Market for Eastern and Southern Africa (Comesa).

It, however, retreated from the Comesa case in 2006 and filed another application before the Court of Appeal, calling for the declarations by the three-judge bench to be set aside.

The argument by the bank was that Justice Lakha ought to have stepped aside as he had represented Manchester and Gallot in the case before the High Court.

But the firms filed their objection on the grounds that the court had already pronounced itself in their favour.

After 11 years of being in court, on April 8, 2016, a five-judge bench composed of Justices Wanjiru Karanja, Hannah Okwengu, John Mwera, GBM Kariuki and Philomena Mwilu set aside the 2002 judgement and ordered that the case be heard afresh, notwithstanding that the same had previously been determined in finality.

Manchester and Gallot immediately moved to the Supreme Court, arguing that the Court of Appeal had wrongly applied the 2010 Constitution to interpret a dispute determined by the same court using the old constitution.

According to the firms, the judges had no powers to re-open and hear a case that had been settled by another bench.

But the bank argued that the Supreme Court had no powers to hear the application by Manchester and Gallot.

The Supreme Court, in a unanimous decision, observed that although under the old law the Appeals court had no powers to revisit its decisions as the final court in the land, it had under the 2010 Constitution ruled that some of the cases it had previously determined should be re-heard.

The bench, led by Chief Justice David Maraga and including Smokin Wanjala, Njoki Ndung’u and Isaac Lenaola, found that it would be absurd for the Supreme Court to review a Court of Appeal decision if that court itself could not.

“In the end, we find no justifiable fault in the decision of the appellate court to re-open and hear afresh the matter before it, as the previous judgement, based on their consideration of the facts and circumstances, would be deemed as one in which the issues in context must be relooked at afresh,” they ruled.

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Manchester OutfittersGallot IndustriesStanChartLoan