A commercial court has lifted
orders that had previously prevented the board of management at Nairobi Hospital
from borrowing for any capital expenditure.
Justice Peter Mulwa ruled that
a number of the issues raised by Samuel Muchiri (plaintiff) were similar to
matters pending before another related case.
Muchiri in his court papers
had challenged 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 claimed that the
hospital intended to borrow offshore, Sh4.2bn using assets of the hospital as
collateral, which according to him demonstrated imprudence that would drive the
hospital to insolvency.
The Judge at the time 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.
The court had 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equipment replacing old outdated equipment that manufacturers have since ceased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.
For instance, the hospital
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 utilizing 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," the defendants told the court.
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.
The judge in considering the issues before the court said:
"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 said.
He explained that the 'concept
of sub judice' is that where an issue is pending in a court of law for
adjudication between the same parties, any other court is barred from trying
that issue so long as the first suit goes 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,"
he said
He also noted that the issue
of the Sh4.2 billion borrowing raised by Muchiri is best addressed in the
initial case where the matter was first raised.
"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," he said
The Hospital in a statement
welcomed the decision of the court saying 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 endeavour to
deliver service at optimal levels,” said the Chairman of the Board of Management Dr
Barcley Onyambu.
The matter will resume in court on April 28.
