Cannon Assurance Kenya Ltd v Gerhard Matthiessen, Harald Kampa & Cotswold Estates Ltd [2018] KEHC 2359 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT MOMBASA

CIVIL SUIT NO. 29 OF 2010

CANNON ASSURANCE KENYA LTD....................PLAINTIFF

VERSUS

GERHARD MATTHIESSEN...........................1ST DEFENDANT

HARALD KAMPA............................................2ND DEFENDANT

COTSWOLD ESTATES LTD..........................3RD DEFENDANT

RULING

RULING

1. The plaintiff, CANNON ASSURANCE KENYA LTD filed a suit claiming  from the Defendants, GERHARD MATTHIESSEN LIMITED, a  liquidated sum of Khs.25,680,185. 00 allegedly from services   rendered on account of their guarantee and or promise to pay by  various  Directors of either entities in which the 1st defendant was   participating as Director. In essence, the remedies sought are said to  arise from a guarantee executed between the plaintiff and the 1st and  2nd defendants.

2. The plaintiff by a notice of motion application dated 19th November,  2013 applied to amend the plaint in terms of the draft amended copy  annexed to the supporting affidavit sworn on 19th November, 2013 and  marked as exhibit “ MM1”Baciscall, it is seeking to amend the original  plaint in order, in its view, to add facts that will align with the prayers  sought in the pleadings.

3. The same is opposed by the Defendant, who filed their joint grounds of  opposition dated 31st day of August, 2015.

4. The parties counsel appeared before this court to urge this application.  Having listened to their rival arguments with regard to the said  application for amendment, I have also considered the circumstances  of the case, and find it is important to consider the law on amendment  of pleadings.

5. The power to amend pleadings is donated by section 100 of the Civil  Procedure Act which states a follows;

“ That  court may at any time, and  on such terms as to   costs or otherwise as it may think fit, amend any defect or error in any proceedings in a suit, and all necessary amendments shall  be made for the purpose of  determining the real question or issue raised by or  depending on the proceedings”

This power is wide and courts have reiterated this principle every now  and again to  align pleadings to the issues raised by the parties so that  they are clear, definite and ascertainable for the purpose of achieving a   conclusive trial in resolution of disputes.

6. The Rules committee introduced Order 8 Rule 3 of the Civil Procedure  Rules which provides for a framework on matters an amendment can  cover and which  the court can grant.

Order 8 Rule 5 (1) of the Civil Procedure Rules is similar to section 100  of the  Civil Procedure Act and is  what actually is the reason the court  has general power to  freely grant and or allow amendments to  pleadings. Order 8 rule 5 (1)  provides as follows;

“ For the purpose of  determining the real question in controversy between the parties, or of  correcting any   defect or error in any  proceedings, the  court may enter of  its own motion or on the application of any    party, order  any document to be amended in such a manner as it directs and on such  terms as to  costs or    otherwise as are just”

This Rule supplies section  100 of  the Civil Procedure Act, Cap. 21 Laws  of Kenya and Order 8 Rule 3 of the Civil Procedure  Rules  2010, with  the requirement for fairness.

7. It is  these  principles that the courts have applied from time to time  and refined them to suit the  working framework so as to resolve  disputes litigants find themselves in and  bring before court as in the  instant case.

8. The court was referred by the plaintiff/Applicant counsel to the   authorities of the court of Appeal, PRINTING INDUSTRIES LTD &  ANOTHER  VRS. BANK OF BARODA ( 2017) e KLR, whose finding  allowed a defence to be amended. The court  in that case discussed  the  statute and warned that the discretion given to courts should be  exercised cautiously. I am alive  to the principals  laid down in the  following  decisions:

(a) EASTERN BAKERY V CASTELINO ( 1958) E.A 461, which     propounded that  each case must be viewed on its own facts.

(b) MOHAN MEAKIN (K) LTD VRS A.G ( 2014) e KLR where the   court  of appeal endorsed that  amendments relate back to the    date of filing suit and against aligned  the principles stated in    EPAINITO VRS UGANDA COMMERCIAL BANK ( 1971) E. A    185 that;

“ Amendments  should not be allowed if they will cause   an injustice on the other side which cannot be  amended by an award of costs”

9. The fact of the instant case is that the amendments are introducing   three new paragraphs being 2 A, 2A and 2C and patched paragraph  3. These elicited an apposition from the defendant.

10. The first ground of opposition is that the amendment seeks to  maintain a cause of action against a deceased person where a death  certificate was attached to the grounds. It is worth noting that the 1st  Defendant demised on 29th February, 2012. The application for  amendment of plaint was filed on 22nd November, 2013 which is two  (2) years after the demise of the first defendant. I have perused the  record and not seen an affidavit of service or any evidence of when the  death certificate was served upon the plaintiff/Applicant.

However, to date there is no demand to substitute the 1st defendant.  The companies named in that paragraph are not parties to the  pleadings neither is there even pretence to join them as parties. The  challenge the companies find themselves is that they will be mentioned variously in an adverse matter without affording them an opportunity  to defend themselves.

11. The other observation is with regard to grounds 5 and 6 as one  examines paragraphs 2A, 2B and 2C generally, and in the context of  the claim.

The legal personality of a limited  liability company shields its directors  and shareholders from direct  liability. The fact of cross-share holding  and Directorship does not combine action of one company with  another. There is nothing said of the 3rd Defendant as relates to the  claim under 2C which is well documented.

12. The proposed amendment introduced at paragraphs 2A, 2B and 2C  mention entities that are not sued as Defendants purportedly as   beneficiaries of the services which were  rendered by the plaintiff. The  only  party named, and who is also the 1st defendant, is the one whose  death certificate has be annexed to the grounds of opposition. The   other parties are strangers to the pleadings.

13. The other observation noted is that the pleadings have not complied  with the basic requirements of the  pleadings  under the Civil Procedure  Rules, 2010 Parties are required to comply  fully with the provisions of   Order 3 of the Civil Procedure  Rules for the plaintiff and order 7 of the  Civil Procedure  Rules for the Defendant, in order to make compliance  of the provisions of  Order  11 of the Civil Procedure  Rules possible and  so that the objects  of  sections 1A and 1B of the Civil Procedure  Act,  Cap 21 of the Laws of Kenya are achieved.

14. In view of my above mentioned observations, I  find and  hold that  there is no sufficient material on record to assist the court make a  reasoned  ruling  in either granting or dismissing  the application. I  therefore make no orders.

Ruling delivered, dated and signed this 24th day of October, 2018.

LADY JUSTICE D.O. CHEPKWONY

24. 10. 2018