Bandari Development Company Limited & another v Trustees of the Kenya Ports Authority Pension Scheme [2023] KEHC 27612 (KLR)

Bandari Development Company Limited & another v Trustees of the Kenya Ports Authority Pension Scheme (Civil Case E074 of 2021) [2023] KEHC 27612 (KLR) (17 November 2023) (Ruling)

Neutral citation: [2023] KEHC 27612 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Case E074 of 2021

F Wangari, J

November 17, 2023

Between

Bandari Development Company Limited

1st Plaintiff

EPCO Builers Limited

2nd Plaintiff

and

The Trustees of the Kenya Ports Authority Pension Scheme

Defendant

Ruling

1. The Notice of Motion dated 16/6/2022 filed by the Defendant seeks to have the suit filed by the 2nd Plaintiff against the Defendant be struck out and/ or with costs on account of lack of privity of contract. A Notice of Preliminary Objection dated 16/6/2022 was also filed by the Defendant. By a separate ruling dated 7/7/2023, the P.O was determined.

2. In respect to this application, the Defendant stated that the contract dated 12/7/2007, and which is the subject matter to this suit was strictly between the 1st Plaintiff and the Defendant. Further, the said contract prohibited the 1st Plaintiff from assigning, delegating or transferring any rights and obligations under the contract.

3. The 2nd Plaintiff filed a Replying Affidavit dated 27/9/2022 denying that the 2nd Plaintiff is not privy to the contract.

4. Directions were taken that the application be disposed of by way of written submissions. Both parties duly complied by filing submissions and cited various authorities in support of their rival positions.

Analysis and Determination 5. I have considered the parties’ pleadings, the submissions together with the authorities relied upon by the parties as well as the law and in my view, the following issues are for determination;a.Whether the 2nd Plaintiff was privy to the contract dated 12/7/2007. b.Who bears the costs?

6. On the first issue, the Defendant submitted that the contract for the construction and sale of residential property on L.R No. 123 Section I Mainland North was between the 1st Plaintiff and the Defendant. The 2nd Plaintiff was contracted as the main contactor by the 1st Plaintiff, hence there was no direct contract between the 2nd Plaintiff and the Defendant. The obligation of the 2nd Plaintiff was therefore towards the 1st Plaintiff.7. In support of their arguments, the Defendant relied on the case of Zenith Steel Fabricators Limited v Continental Builders Limited & Another [2018] eKLR and Agricultural Finance Corporation v Lengetia Limited & Jack Mwangi [1985] eKLR, which I need not replicate.

8. On the part of the 2nd Plaintiff, it was submitted that the 2nd Plaintiff being part of the consortium company (the 1st Plaintiff), the Defendant cannot deny that it was not privy to the contract. Further, it was submitted that the Defendant having made a direct payment of a sum of Kshs. 489,702,207. 74 to the 2nd Plaintiff being payment of work done, is a clear indication that the Defendant made the 2nd Plaintiff privy to the contract.

9. In support of its argument, the 2nd Plaintiff relied on the cases of Savings & Loan (K) Limited v Kanyenje Karangita Gakombe & Another [2015] eKLR, Chidhya (Kenya) Limited v Africa Equipment Engineering Power S.A [2020] eKLR and Samuel Mbuvi Mutemi t/a Samtech Building Contractors v County Government of Machakos [2020] eKLR.

10. I have perused the Plaint dated 23/7/2021 and filed on 10/8/2021. Paragraph 1 and 2 read as follows;

(1)The 1st Plaintiff is a consortium company registered in Kenya under the Companies Act CAP 486 comprising of 3 companies i.e. Epco Builders Company Limited (hereinafter referred to as ‘the contractor’), M/S Gitutho Associates (hereinafter referred to as ‘the Architect’) and M/S Kanjumba Consultants Limited (hereinafter referred to as ‘the Quantity Surveyor’). The address of service for purposes of this suit…(2)The 2nd Plaintiff is a Private Limited Company registered in Kenya under the Companies Act, CAP 486 whose principal business is building and construction. The address of service for purposes of this suit…

11. From the above, it is clear that the 2nd Plaintiff forms part of the 1st Plaintiff Company. From the reliefs sought, there is no specific prayers for the Plaintiffs individually but jointly. From the authorities cited by the 2nd Plaintiff on the doctrine of privity of contract, I need not elaborate further other than what the 2nd Plaintiff has defined what ‘privity’ is.

12. The 2nd Plaintiff cannot therefore depart from the said definition by stating that despite the 2nd Plaintiff being part of the consortium company, it still existed as an independent company. The contract was between the 1st Plaintiff and the Defendant. The 2nd Plaintiff was not privy to the contract. Being part of the 1st Plaintiff company, any claim against the Defendant should be done through the 1st Plaintiff.

13. On the issue of costs, it is settled that the same follows the event. That is the import of section 27 of the Civil Procedure Act. The court reserves its discretion on whether to award costs to either party. This was well enunciated by the Supreme Court in the case of Jasbir Singh Rai & 3 others v Tarlochan Singh Rai Estate of & 4 others [2013] eKLR. In exercise of the discretion of the court, each party to bear its own costs in respect to this application.

14. Following the foregone discourse, the upshot is that the following orders do hereby issue: -a.The Notice of Motion dated 16/6/2022 has merits.b.The suit by the 2nd Plaintiff as against the Defendant is hereby struck out.c.No orders as costs.Orders accordingly.

DATED, SIGNED AND DELIVERED AT MOMBASA THIS 17TH DAY OF NOVEMBER, 2023. ....................................F. WANGARIJUDGEIn the presence of;Nadongo Advocate h/b for Luther Advocate for the PlaintiffsN/A by the DefendantBarile, Court Assistant