Butali Sugar Mills Limited v West Kenya Sugar Co. Ltd & another [2022] KEHC 12188 (KLR)

Butali Sugar Mills Limited v West Kenya Sugar Co. Ltd & another (Civil Suit 168 of 2017) [2022] KEHC 12188 (KLR) (Commercial and Tax) (12 July 2022) (Ruling)

Neutral citation: [2022] KEHC 12188 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Suit 168 of 2017

A Mabeya, J

July 12, 2022

Between

Butali Sugar Mills Limited

Plaintiff

and

West Kenya Sugar Co. Ltd

1st Defendant

Kenya Sugar Board

2nd Defendant

Ruling

1. This is a part heard matter. The plaintiff has already closed its case.

2. On July 7, 2022, the 1st defendant opened its defence and D1W1 took the stand. After testifying in Chief, Mr. Ochieng Oduor (Sc), Learned Counsel for the plaintiff, took over to cross-examine him. He questioned the witness on whether he could recall when the shares of the 1st defendant were purchased there was provision for contingent liability in respect of this suit. The witness answered in the affirmative. However, he could not recall how much was provided for.

3. When the witness was stood down at 3. 30pm, Mr Ochieng Oduor (Sc) applied that the witness be compelled to avail the document(s) of sale/purchase of shares of the 1st defendant to ascertain the amount reserved as contingent liability for the litigation. That since the witness had admitted to have carried out due diligence in 2007 when the shares in the 1st defendant were purchased, and knew the claim herein to be Kshs 590m, he should be compelled to produce the said documents. That public policy demanded that the disclosure be made since the 1st defendant was seeking indemnity against the 2nd defendant which is a public body.

4. Mr. Kibe Mungai, Learned Counsel for the 1st defendant opposed the application. He submitted that the transaction the subject of the sale/purchase was between an entity called TS Agro and the 1st defendant. The said TS Agro was not a party to these proceedings. That the said transaction does not affect the liability of the 1st defendant. That the said document had not been demanded during discovery. That the application was being made too late in the day and that there was no basis for the orders sought.

5. I have considered the application and the opposition thereto. What is sought is a document relating to the sale/purchase of the shares in the 1st defendant between the previous shareholders and the current shareholders thereof. The issue for determination is, whether the said document is relevant and if relevant, whether it assist the Court in arriving at a just determination in the dispute before it?

6. It is not in dispute that as at the time the new shareholders of the 1st defendant entered into the sale/purchase transaction for the shares in the 1st defendant, the present claim had been instituted. It is also not in dispute that the said new shareholders knew that the exposure in this litigation as against the 1st defendant was Kshs. 590M. Indeed, D1W1 admitted that the issue of contingent liability for the litigation was taken care of in the said transaction. The question is whether it is relevant in these proceedings.

7. The view the court takes is that; the issue before court is, whether the 1st defendant did cause the plaintiff to suffer loss as a result of its alleged acts and if so, the extent of the loss suffered by the plaintiff. The issue of whether there was provision for the contingent liability for this suit is not an issue. That is an internal issue between the previous and new shareholders of the 1st defendant. The parties to that transaction are not before this court.

8. Further, it should be noted that the issues for determination in the suit were crystalized in the pleadings. The parties undertook pre-trials and all the necessary documents were requested for and provided. It never then occurred to the plaintiffs that the internal arrangements between the previous and new shareholders of the 1st defendant was crucial to its case. To raise the matter at this juncture, with due respect, is too late in the day. The court does not see how the internal arrangements of the shareholders of the 1st defendant would help the plaintiff prove its case against the 1st defendant.

9. As regards the 1st defendant’s claim against the 2nd defendant for indemnity, I agree with the submission that public policy demands that public bodies be protected from unwarranted claims as it impacts on the tax payers. However, in this case, I have not understood it to be the case of the 2nd defendant that the 1st defendant has withheld any evidence from the court that would assist it in its defence.

10. In view of the foregoing, I see no compelling reason to grant the orders sought. If the documents sought were crucial, the provisions of the Evidence Act are clear on how the court is to treat that eventuality.

11. The application is therefore declined.

DATED AND DELIVERED NAIROBI THIS 12TH DAY OF JULY, 2022A. MABEYA, FCIArbJUDGE