ALFA MOTORS v TOYOTA EAST AFRICA LIMITED & TOYOTA EAST AFRICA CORPORATION [2010] KEHC 4050 (KLR)

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI (MILIMANI COMMERCIAL COURTS)

Civil Case 664 of 2002

ALFA MOTORS.......................................................................PLAINTIFF

VERSUS

TOYOTA EAST AFRICA LIMITED.............................1ST DEFENDANT

TOYOTA EAST AFRICA CORPORATION................2ND DEFENDANT

R U L I N G

1.       By a plaint amended on 27. 3.2007, the plaintiff is seeking for judgment against the defendants in the sum of Kshs. 1,941,753,048/= with interest at commercial rates from the date of filing of the suit as well as costs of the suit and any other relief this court may deem fit. After the pleadings closed, the plaintiff filed a list of documents sometimes in the year 2005 and on 28. 5.2009; the plaintiff filed a notice to admit documents listing some 521 documents which both defendants were supposed to admit.  By a notice dated 22. 6.2009, issued to both defendants, the plaintiff requested for inspection of the documents listed in the notice to admit.

2.       The 1st defendant filed their list of documents on 24. 3.2006 and the 2nd defendant on 1. 7.2009. the plaintiff/applicant has now filed this Notice of Motion dated 2. 7.2009 under Order X Rules 11A, 17 (2), and 18of Civil Procedure Rules seeking for orders inter alia; that the 1st and 2nd defendants do make discovery by filing and serving on the plaintiff a list of documents relating to any matter in question in the suit herein which are; or have been in their possession or power. The documents required are listed in the application. They range from the audited accounts for both the 1st and 2nd defendants from 1997-2003, management agreements between the 2nd defendant and Lonrho Motors East Africa and several other documents listed as prayers number 2-4 of the Notice of Motion.

3.       This application is based on the grounds that the defendants failed to make discovery as provided for under Order X Rule 11 A (1) of the Civil Procedure Ruleswhich is a mandatory requirement in all the proceedings before the High Court. Mr. Harbinda Singh Bhogal, the managing director of the plaintiff, has also deposed in the supporting affidavit that the documents sought to be produced and inspected are relevant to the matters in question and are necessary for the court to dispose the suit fairly. It is further alleged the documents are in possession and power of the defendants either jointly or severally. Counsel for the applicant also relied on the written submissions filled on 26. 10. 2009 and a reply to the submissions on 2. 11. 2009.

4.       Briefly stated, it was the contention by Counsel for the plaintiff that the court should ignore the grounds of opposition by the 2nd defendant because they were supposed to file an affidavit to deny the allegations that the documents sought to be produced are not in their possession and are not relevant.       The grounds of objection can therefore not amount to evidence since the defendants had complied with the requirement for discovery under Order X Rule 11A, this application is predicated on Rule 17 (2) and the applicant has demonstrated that the defendants refused to admit documents that are necessary for the fair determination of the matter. That refusal is without basis because it is obvious the documents such as the defendant’s annual accounts and annual returns do exist and are in possession of the defendants.

5.       The dispute in this matter is in respect a distributorship agreement between the plaintiff and the defendants which the defendants purported to deny. Counsel for the plaintiff referred to a ruling by Azangalala, J. delivered on 21. 11. 2007 in which the Judge held that the plaintiff made a definite claim against the 2nd defendant and thus allowed the 2nd defendant to be joined as a necessary party to this suit. Yet another ruling by Kimaru, J. delivered on 27. 4.2009, the Judge alluded to the fact that during the hearing of the matter the 2nd defendant will have an opportunity to disprove the allegations of commercial impropriety made by the plaintiff. This court was therefore urged to find that the documents sought to be inspected are necessary for a fair trial in view of those rulings made in favor of the plaintiff.

6.       Moreover the courts have always exercised discretion and ordered discovery in order to save time for trial and also for a fair trial. Reference was made to the case of Wendy Martin vs. II Ngwesi Company Ltd. & 2 others – HCCC 1135 of 2000 (Milimani) – (unreported), in which Ojwan’g, J. made the following finding:-

“For the proof of her case which is quite legitimately founded on occupier’s liability, she needs to establish occupation and control of the premises where the injury did take place. Therefore all documentation which goes to show occupation and control is eminently relevant. This should have been listed and availed to the plaintiff, upon request; and the non-rendering of discovery, which, with respect, offended the law of procedure has had the effect of causing inordinate delay in the hearing of the main suit. This has been harmful to the plaintiff, as well as to the judicial process which, as a result, could not dispose of the matter with dispatch.”

7.       Finally, it was also urged the documents spelt out in the notice to admit are relevant to the matters in issue. The claim is in respect of a business dealership which was destroyed by the defendants; therefore the accounts of the defendants will be necessary for the plaintiff to prove their claim. This request is also supported by the matters pleaded by the plaintiff.

8.       This application was opposed by both the defendants; the 1st defendant relied on the replying affidavit sworn by Mr. Mahamoud Omar sworn on 1. 10. 2009 and the written submissions. In further arguments counsel submitted that they have duly complied with the requirements under Order X regarding discovery.        The plaintiff’s application was faulted for failure to comply with the provisions of Order X Rule 14 which requires a party to give notice as per Form 7 of Appendix B of the Civil Procedure Rules. Moreover, under Rule 17 (2) the plaintiff does not have an automatic right to inspect documents. The plaintiff has to prove that the documents sought to be inspected are not only within the power and possession of the 1st defendant, but also prove the relevance of the documents in relation to the pleadings.

9.       Further the court has to be satisfied that the documents are necessary for the fair disposal of the suit and for saving costs. The plaintiff has failed to demonstrate that it is entitled to inspect the documents. It has also failed to show that documents stated in the notice are in possession of the 1st defendant and their relevance in relation to the pleadings. Both the 1st and 2nd defendants were served with one notice despite the fact that they are separate entities. The affidavit of Mahamoud Omar has shown that some of the documents are not in the 1st defendant’s possession. He has also deposed that some documents do not exist, thus the plaintiff has failed to discharge the burden of showing the documents are in possession of 1st defendant. Lastly, the documents are not necessary for disposing the suit as the plaintiff’s claim is liquidated and the claim cannot be assessed based on another party’s accounts.

10.     The 2nd defendant also opposes this application by relying on the grounds of opposition filed on 16. 9.2009, and the written submissions filed on 9. 11. 2009. The 2nd defendant contends that they filed their list of documents regarding the specific issues that are raised in the plaintiff’s claim.  It was further argued that this application offends the provisions of Order X Rule 11A, 17 (2) and 18 because the notice was sent to the two defendants who are different entities without specifying which document should be produced by who.

11.     The request is also an abuse of the process of the court and is oppressive to the 2nd defendant because the 2nd defendant is asked to produce documents which are between 1st defendant and another entity, Lonrho East Africa, who are not parties to this suit.  Moreover, the audited accounts and the annual returns can easily be obtained at the company’s registry because they are public documents. Some of the documents sought to be produced fall outside the limitation period. The court is being burdened by documents which will not be necessary for a fair disposal of the case.

12.     The plaintiff has also not shown that the documents are in possession of the 2nd defendant. The claim by the plaintiff is for special damages which can be ascertained by the plaintiff proving their specific losses.  This suit has been fixed for hearing on 22nd and 23rd January, 2010 and the documents sought to be produced will delay the trial and become unnecessary expense.    13.     In analyzing the submissions and the material for and against this application, the matters to bring into consideration are as provided for under Order X Rules 11A to 18 of the CPR. Based on those rules several principles have evolved from the cases decided by this Court, the Court of Appeal and also persuasive authorities by English Courts some of which were cited by the parties.  In determining whether discovery is material or not, the court will exercise its discretion on whether to allow the application based on the following prerequisites:-

(a)There is sufficient evidence that the documents exist which the other party has not disclosed;

(b)The documents relate to the matter in issue in the action;

(c)There is sufficient evidence that the documents are in possession, custody or power of the other party.

(See the case of Oluoch vs. Charagu – East Africa Law Reports [2003] EA 649 (CCK).

14.    According to the plaintiff’s claim, it is principally based on allegations of breach of a dealership agreement which bleaches started in the year 2000 and escalated in April, 2001 and the dealership was finally terminated in 2002. The plaintiff has quantified the special damages, item by item, as I understand the notice to admit documents, it is not clearly spelt out what is  the relevance of the documents vis a vis the pleadings. A party seeking discovery must link the documents sought to be discovered with the pleadings, otherwise the whole exercise becomes oppressive and expensive to the other party.

15.     The plaintiff’s claim is also a liquidated claim for special damages. I am not persuaded that the documents sought to be produced are necessary because to ask both defendants to take the trouble of preparing a similar list of documents for so many years some of which do not relate to the period when the dealership was terminated seems to me vexatious and oppressive. It has also not been explained why the plaintiff issued one notice to two defendants who are different entities. It is also doubtful whether some of the documents especially the accounts going as far back to 1997, and agreements with third parties who are not parties to this suit are relevant to aid this court determine the issues fairly.

16.     I have considered the several authorities cited for and against the application, the case of Wendy Martin (suppra) deserves to me mentioned. I find the facts of the matter were different from the present case. It was a claim for compensation under the Occupier’s Liability Act. The documents sought to be produced were needed to shed light on the vital questions alluded to show who was in control of the premises when Wendy Martin was injured.

17.     The present case is based on a written agreement of dealership. The plaintiff is claiming specific damages as a result of termination, in my opinion, some of the documents sought by the plaintiff such as the annual returns and annual accounts if indeed, are said to be relevant are public documents which the plaintiff can obtain from the Registrar of Companies. Why should the plaintiff vex the defendants to provide documents which the plaintiff can obtain within the public domain? The other documents regarding agreements with 3rd parties are in my opinion not necessary and the plaintiff did not prove that they are in possession of the defendants.

18.     For the aforesaid reasons, I am unable to exercise my discretion to allow the application by the plaintiff. Even if I were wrong on the aforesaid grounds, this  application is defective because discovery having been done; this application ought to have been drawn in the format provided for in Form 7 Appendix B of the CPR. The notice should have identified the particular pleadings which relate to the documents. From a technical point of view, the notice is defective for failure to show the relevance of documents vis a vis the pleadings. The application is dismissed for the above reasons with costs to the defendants.

Ruling read and signed on this 18th day of January 2010.

M.K. KOOME

JUDGE