Kenya: An attempt by the Equity Bank to block Narok County Council from terminating a contract to collect revenue has flopped.
The bank had moved to court to block the civic authority from ending a contract for collection of access fees into Maasai Mara game reserve pending arbitration process to resolve the stalemate.
High Court judge Jonathan Havelock Tuesday ruled that the bank had failed to prove the damages it would have suffered if the contract was terminated.
Justice Havelock added that in the agreement signed between the two institutions clearly outlined what should happen when the termination notice becomes effective in terms of the immediate suspension of the operating system.
“The termination notice has become effective as from June 25, and the defendant (Narok County) has taken over the collection of the revenue from the date. Obviously such an event was anticipated, otherwise I cannot believe that the parties would have clause 14.8 in the agreement,” ruled the judge.
The Judge said the clause spells out the damages that the bank would be entitled to should the agreement be terminated before the expiry of eight years since the date when the system was activated.
“In my opinion this is where the plaintiff (Equity) has been tripped up in respect of this application before this court. It executed the agreement and I do not think it has shown to the satisfaction of this court that damages would be an inadequate remedy,” said Justice Havelock.
The judge in his ruling quoted clause 14.5 of the agreement between the two institutions which states in part: “Upon a termination notice becoming effective (howsoever terminated) the bank shall be entitled to immediately suspend the operation of the pre-paid smart card service and shall effect no further transactions in relation to the pre-paid smart card service, but shall be entitled to deduct from the Escrow Account all monies owed to it prior to termination of the agreement.”
In its submission the bank claimed it had invested in the collection system and would suffer irreparable damages should the contract be terminated.
Narok County terminated the agreement on June 25 following the lapsing of a 14-day notice issued on the grounds that the collection system was defective and that the county was losing revenue which forced the council to start collecting the gate fees.
The Council had signed a 10-year agreement with Equity two years ago through which the bank would earn a commission of seven per cent on a fixed annual revenue base of Sh1.5 billion. Equity Bank attributed the failure of park fees collection system on its migration to a new technology platform and shortage of cards.
By Isaiah Lucheli, The Standard
