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Mwangi & another v Bank of Africa Kenya Limited & another (Civil Suit 444 of 2016) [2022] KEHC 87 (KLR) (Commercial and Tax) (11 February 2022) (Ruling)

Mwangi & another v Bank of Africa Kenya Limited & another (Civil Suit 444 of 2016) [2022] KEHC 87 (KLR) (Commercial and Tax) (11 February 2022) (Ruling)
Citation
Mwangi & another v Bank of Africa Kenya Limited & another [2022] KEHC 87 (KLR)
Media Neutral Citation
[2022] KEHC 87 (KLR)
Court
High Court
Court station
High Court at Nairobi (Milimani Commercial Courts)
Outcome
Dismissed
Case number
Civil Suit 444 of 2016
Judges
A Mabeya
Judgment date
11 February 2022
Language
English
Type
Judgment
Original source file
Download DOCX (30.1 KB)
Collections
Date published
17 February 2022
Case action
Ruling
Court division
Commercial and Tax
Filing county
Nairobi
Order
a. The plaint dated 1/11/2016 and filed on even date is hereby struck out. b.Judgment is entered against the plaintiffs for the sum of Kshs. 50,432,506.66 together with interest on the overdrawn and arrears account at the rate of 14% per annum from the date of filing the counterclaim till payment in full. c.Costs of the application and suit are awarded to the defendants.
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1.Before Court is an application dated 22/3/2021. It was brought under article 159 2(b) of the Constitution, sections 1A & B and 3A of the Civil Procedure Act, section 63(e) of the Civil Procedure Act, order 2 rule 11 & 15, order 7 rule 5 & 11, and order 13 rule 1 & 2 and order 51 rules 1 of the Civil Procedure Rules.
2.The application sought orders that the plaintiff’s suit vide a plaint dated 1/11/2016 be struck out and judgment be entered for the defendants as prayed in the defence and counterclaim.
3.The application was supported by the affidavit of Charles Waiyaki sworn on 22/3/2021. The grounds were that the defendant bank had advanced a loan of Kshs. 31,211,175/= to the plaintiffs. That two charges dated 28/5/2013 and 7/5/2014, respectively were executed and registered against the property known as Naivasha Maraigushu Block 1/1137 (“the suit property”) to secure the facility.
4.That the plaintiffs had admitted their debt to the defendant bank vide various letters but had reneged on all the promises to pay the debt owed.
5.Following the default, the defendant issued the statutory notice and the 40day notice under the Land Act. It instructed auctioneers to issue the 45 day’s notification of sale. The plaintiffs’ response was to file an injunction application dated 1/11/2016 seeking to restrain the defendant from exercising its statutory power of sale. They also sought that the defendant do undertake a forced sale valuation before proceeding with the intended auction.
6.That on 9/6/2016, the parties recorded an oral consent to stay the auction and the firm of Kinyua Koech Valuers valued the suit property and issued a valuation report dated 18/11/2016 which showed the suit property to have a market value of Kshs. 11,000,000/= and forced sale value of kshs. 8,250,000/=, respectively.
7.On 5/10/2017, this Court delivered a ruling in which it dismissed the plaintiff’s application seeking restraining orders against the sale of the suit property. The Court made a finding therein that the plaintiffs were in default of the loan repayment. At paragraph 20 of the ruling, the Court sanctioned the sale of the suit property on the basis of the aforesaid valuation dated18/11/2016.
8.On two occasions, 28/2/2018 and 16/9/2019, the bank attempted to sell the suit property by auction but failed due to low bidding and low purchase offers.
9.The defendants contended that the Court had found that the requisite statutory notices were not defective and were duly served upon the plaintiffs. That there was no evidence provided by the plaintiffs to proof that the bank had changed the rate of interest without prior notice to the plaintiffs or that it was not contractual or contrary to statute.
10.It was therefore contended that the prayers sought in the plaint had already been determined and the plaintiffs suit lacked substratum. That there were no triable issues against the defendants that required interrogation by the Court in a full trial and that there was no reasonable cause of action.
11.With reference to the defendants’ counter claim, it was contended that the plaintiffs were still indebted to the bank in the sum of Kshs. 50,432,506/= as at 3/6/2020 and that judgment ought to be entered in favour of the bank as pleaded in the defence and counterclaim.
12.On 15/4/2021, the Court directed the plaintiffs to file their response within 14 days. As at the time of writing this ruling, the plaintiffs had not yet filed their response.
13.The defendants filed written submissions dated 24/7/2021. It was submitted that the plaintiff’s suit against the defendant ought to have been dismissed as it did not disclose a reasonable cause of action against the defendants. That the plaintiffs’ suit was for an order of permanent injunction restraining the sale of the suit property and for a joint valuation before proceeding with the intended auction.
14.That those claims did not disclose a reasonable action because a joint valuation had already been undertaken on 18/11/2016 and the Court had sanctioned the sale of the suit property on the basis of the said valuation vide its ruling of 5/10/2017.
15.It was also submitted that the bank still had a cause of action against the plaintiffs as they were still indebted to the bank in the sum of Kshs. 50,431,506.66. The defendants relied various case law including Francis Joseph Kamau Ichatha v Housing Financce Company of Kenya ltd (2014) eKLR and Kivanga Estates Limited v National Bank of Kenya Ltd (2017) eKLR.
16.It was also submitted that the plaintiffs suit was frivolous, vexatious and abuse of the court process. On this, the cases of County Council of Nandi vs Ezekiel Kibet Rutto & 6 others (2013) eKLR, and Trust Bank Limited vs. H.S. Amin & Company Ltd & another (2000) Eklr were relied on.
17.The Court has considered the pleadings, the affidavit evidence and the submissions on record. This is an application to strike out the suit and for judgment on admission
18.Order 2 Rule 15 (1) and (2) provides: -“At any stage of the proceedings the court may order to be struck out or amended any pleading on the ground that—a)it discloses no reasonable cause of action or defence in law; orb)it is scandalous, frivolous or vexatious; orc)it may prejudice, embarrass or delay the fair trial of the action; ord)it is otherwise an abuse of the process of the court, and may order the suit to be stayed or dismissed or judgment to be entered accordingly, as the case may be”.
19.Order 2 Rule 15(2) is to the effect that no evidence is admissible on an application under sub rule (1) (a) and therefore, it should be evident from the pleadings sought to be struck out that no reasonable cause of action has been disclosed without reference to further evidence.
20.It is settled law that the court’s power to strike out pleadings is to be exercised sparingly and cautiously. This is because the court exercises the power without being fully informed on the merits of the case through discovery and oral evidence. See D.T. Dobie & Company (Kenya) Ltd. vs. Muchina (1982) KLR 1.
21.The overriding principle to be considered in an application for striking out a pleading therefore is, whether triable issues have been raised. In the instant suit, the plaint dated 1/11/2016 four substantive prayers; a permanent injunction against the sale of the suit property, accounts for the sums so far paid by the plaintiffs, a forced sale valuation before auction and a declaration that the varying interest rate of the loan without notice to the plaintiffs was illegal.
22.On 9/11/2016, the parties recorded an oral consent to stay the auction of the suit property and a valuation be done. This was undertaken by Kinyua Koech Valuers as per their report dated 18/11/2016. In this regard, the 3rd prayer in the plaint was effected.
23.The Court has seen the ruling of 5/10/2017. In that ruling, the Court dismissed the plaintiffs’ application for injunction. It made findings to effect that the requisite statutory notices were properly served upon the plaintiffs, not defective and were duly served upon the plaintiffs and that the bank had not changed the rate of interest without prior notice to the plaintiffs. The Court allowed the bank to sell the suit property on the basis of the aforesaid valuation or other valuation if the sale was outside 12 months. That finding effectively addressed prayer 1 of the plaint.
24.On record are various letters by the plaintiffs. These include those dated 1/11/2016, 18/5/2015, 29/10/2015, 10/2/2016, 22/4/2016 and 3/5/2016 wherein the plaintiffs acknowledged the debt and gave various proposals on how they would settle the same. The plaintiffs have at all times been aware of the debt owed to the defendants less what has already been paid. Indeed, they made numerous proposals to settle the debt which still remains outstanding.
25.In the circumstances, is there any triable issue which requires interrogation by this Court at a full trial? I think not. The Court already gave the defendant bank leeway to proceed with the auction. The claims in the plaint have already been settled or overtaken by events. This Court finds that there are no triable issues that require to be tried.
26.The upshot is that prayer 1 of the application dated 22/3/2021 is merited and is allowed.
27.The 2nd issue for determination whether the defendant’s counterclaim dated 30/11/2020 ought to be allowed as prayed. There is no dispute that the plaintiffs were advanced a sum of Kshs. 31,211,175/- by the 1st defendant on the security of the suit property.
28.The defendants averred that as at 3/6/2020, the plaintiffs were indebted to the bank in the sum of Kshs. 50,432,506.66 as particularized at paragraph 17. That the bank had attempted to auction the suit property with no success owing to low bids. The defendants therefore prayed for judgment for the sum of Kshs. 50,432,506.66 plus interest on the overdrawn and arrears account at the rate of 14% per annum from the date of filing the counterclaim until payment in full.
29.The plaintiffs did not file any defence to the counterclaim. Order 7 rule (1) provides: -“Where a defendant has been served with a summons to appear, he shall, unless some other or further order be made by the court, file his defence within 14 days after he has entered appearance in the suit and serve it on the Plaintiff within 14 days from the date of filing the defence and file an affidavit of service”.
30.The defendants’ application was brought under Order 13 Rule 2 of the Civil Procedure Rules which provides: -“Any party may at any stage of a suit, where admission of facts has been made, either on the pleadings or otherwise apply to the court for such judgment or order as upon such admissions he may be entitled to, without waiting for the determination of any other question between the parties; and the court may upon such application make such order, or give such judgment as the court may think just”.
31.In Choitram Vs Nazari (1984) KLR 327, it was held by the Court of Appeal: -“For the purpose of order XII rule 6, admissions can be express or implied either on the pleadings or otherwise, e.g. in correspondence. Admissions have to be plain and obvious, as plain as a pikestaff and clearly readable because they may result in judgment being entered. They must be obvious on the face of them without requiring a magnifying glass to ascertain their meaning. Much depends upon the language used. The admissions must leave no room for doubt that the parties passed out of the stage of negotiations onto a definite contract. It matters not if the situation is arguable, even if there is a substantial argument, it is an ingredient of jurisprudence, provided that a plain and obvious case is established upon admissions by analysis. Indeed, there is no other way, and analysis is unavoidable to determine whether admission of fact has been made either on the pleadings or otherwise to give such judgment as upon such admissions any party may be entitled to without waiting for the determination of any other question between the parties. In considering the matter, the judge must neither become disinclined nor lose himself in the jungle of words even when faced with a plaint such as the one in this case. To analyse pleadings, to read correspondence and to apply the relevant law is a normal function performed by judges which has become established routine in the courts.
32.In Cassam vs Sachania [1982] KLR 191 the court held that: -“Granting judgment on admission of facts is a discretionary power which must be exercised sparingly in only plain cases where the admission is clear and unequivocal… Judgment on admission cannot be granted where points of law have been raised and where one has to resort to interpretation of documents to reach a decision”.
33.The grounds for the prayer was that the plaintiffs had admitted the debt on several occasions vide various letters. I have already outlined those letters above. They clearly admit indebtedness. They gave proposals on how to settle the debt. I find the admissions to be clear and unequivocal. The claim being liquidated, it is suitable for entry of judgment on admission. Consequently, prayer 2 is allowed as prayed.
34.In the end, this Court makes the following orders: -a.The plaint dated 1/11/2016 and filed on even date is hereby struck out.b.Judgment is entered against the plaintiffs for the sum of Kshs. 50,432,506.66 together with interest on the overdrawn and arrears account at the rate of 14% per annum from the date of filing the counterclaim till payment in full.c.Costs of the application and suit are awarded to the defendants.It is hereby ordered.
DATED AND DELIVERED AT NAIROBI THIS 11TH DAY OF FEBRUARY, 2022.A. MABEYA, FCI ArbJUDGE
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