Win for Nairobi Hospital as court lifts restriction on borrowing Sh4.2 billion
The judge noted that the matter will be best addressed in the initial case where it was first raised
A Nairobi court has lifted orders barring the Nairobi Hospital board from borrowing Ksh 4.2 billion for capital expenditure.
In his ruling, Commercial Court Judge Peter Mulwa said the issues raised by the plaintiff (Samuel Muchiri) were similar to the matters presented in a case before the court that are related.
He directed that the matter shall be mentioned together with the initial file and he ordered the discharge of the interim orders.
“It is for the above reasons that I reserve my comments on the merits of this case and find that the issues herein are similar. This matter shall be mentioned alongside the initial file for possible consolidation and expedited hearing. The interim orders in place are hereby discharged,” Justice Mulwa directed.
The judge stated that the issues raised by Mulwa would be best determined in the initial case and the report of the AGM which was already in court.
“Going through the plant, it is clear that the issues now being raised by Muchiri are consequent to the AGM that was conducted on December 4 last year. In my view, these are issues that will be best determined by the court in the initial case as the outcome and the report of the AGM is before that court,” he noted.
He explained that it would be a concept of sub judice as there is already a pending matter in court for adjudication between the same parties and any other court is barred from trying that issue so long as the first suit is still on.
“It will be untidy for the court to consider the outcome of the AGM both in this suit and the earlier suit as there is a great risk of coordinated courts granting conflicting orders,” Mulwa said.
The ruling comes after Muchiri moved to court to challenge the conduct of the Annual General Meeting (AGM) held on December 4 last year and its outcome which led to the election of a new board of directors.
He also challenged the hospital’s plans to borrow Ksh 4.2 billion to buy assets of the hospital as collateral, which according to him demonstrated imprudence that would drive the hospital to insolvency.
The judge noted that the matter will be best addressed in the initial case where it was first raised.
Previously, the court had issued interim orders suspending the implementation of the resolution of the election of directors of the board of management as well as trustees of the hospital.
It also temporarily stopped the board of the Kenya Hospital Association from borrowing for any capital expenditure.
But these orders have since been discharged after the Board and KHA argued that a number of the issues raised by Muchiri were pending determination in other courts.
The hospital in their defence told Justice Mulwa that Muchiri was not interested in the progression of the hospital as the Sh4.2bn will have more than half of it allocated to medical equipment replacing old outdated equipment that manufacturers have since ceased offering support and servicing of parts.
They mentioned the linear accelerator which is used to provide cancer treatment services.
They told the court that it was acquired in 2012 and is no longer supported by the vendor as it has reached its mechanical ‘end-of-life.’
The hospital urged the court to dismiss the application by Muchiri saying with the new equipment, there shall be a guaranteed return on investment given that the hospital will generate revenue and most importantly offer its patients safety and quality healthcare.
“Injuncting the hospital from utilising the intended Sh4.2bn to pay for the machines will expose the hospital to legal liability running to hundreds of millions which we doubt Muchiri will compensate the hospital if the suit is not found to be with merit,” it explained to Justice Mulwa.
The hospital further contended that the conduct of the voting that happened in an AGM is subject to a pending case where the hospital has provided reports to the court as proof that the AGM was conducted freely and fairly.
In a statement, the board said the lifting of the orders will safeguard the continuity of vital healthcare services and the financial stability required to provide quality healthcare to their patients.
“With the discharge of the court orders previously restricting our operations, we shall endeavor to deliver service at optimal levels,” the Chairman of the Board of Management Barcley Onyambu said.
The matter will resume in court on April 28.
