Ceres Estate Limited v Kieran Day,Lawrence Ngamau,Ndungu Gathinji ,National Bank of Kenya Limited & International Finance Corporation [2013] KEHC 7036 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL AND ADMIRALTY DIVISION

CIVIL SUIT NO. 436 OF 2003

CERES ESTATE LIMITED ……………………………………….PLAINTIFF

-VERSUS -

KIERAN DAY ………………………………………….…...1ST DEFENDANT

LAWRENCE NGAMAU……………………………...……2ND DEFENDANT

NDUNGU GATHINJI ……………………………….….….3RD DEFENDANT

NATIONAL BANK OF KENYA LIMITED …….………......4TH DEFENDANT

INTERNATIONAL FINANCE CORPORATION ……...…..5TH DEFENDANT

RULING

On 26th January 2012, the plaintiff’s suit was dismissed for want of prosecution.  On 9th July 2013, the plaintiff presented a notice of motion seeking two key reliefs: first, that the order of dismissal be set aside and the amended plaint filed on 9th May 2005 be reinstated; and, secondly, that the plaintiff be allowed to further amend its plaint.

The primary grounds can be summed as follows: That the court erroneously stated the suit was last in court on 27th August 2003; the true position being that the suit had been stayed by the Court of Appeal for a long time. Judgment in Civil Appeal 2 of 2007 Lasit Ltd & 5 others Vs Ceres Limited (in receivership) was delivered only on 25th November 2011.  It was also urged that the Notice to show cause was sent to the plaintiff’s counsel of record but not brought to the attention of the plaintiff.The plaintiff was thus prejudiced because it did not file a suitable deposition to explain the delay. Further that the plaintiff’scounsel failed to give a proper or sufficient explanation to the court which led to the dismissal of the suit.  The plaintiff now contends that the failures of its counsel should not be visited upon it.  Lastly, the plaintiff submitted that it is still keen on prosecution of the suit.  It pleaded with the court to reinstate it to the throne of justice.

The motion is contested by the 1st to 5th respondents. There is a replying affidavit sworn by Damaris Gitonga on 18th September 2013. The key averments are as follows: That the plaintiff is guilty of undue laches; and that the suit has been overtaken by events.  In particular, the suit properties having been sold in 2005, the receivership terminated and the plaint having remained unamended, no useful purpose will be served by reinstatement of the suit. It was submitted further that the present application was brought with delay and under the wrong provisions of the law. The respondent’s case is that no substantial grounds are pleaded for reinstatement of the suit.  Lastly, the 4th defendant contended that it would suffer serious prejudice that is not compensable in costs.

I have heard the rival arguments. The plaintiff has brought this motion under order 12 rule 7.  Order 12 rule 3 allows a court to dismiss a suit for non-attendance.  Rule 7 then allows the aggrieved party to set aside that order and reinstate the suit. Order 12, from its clear heading deals with hearing and consequence of non-attendance.  It is instructive that the suit here was dismissed under order 17 rule 2 for want of prosecution.  The plaintiff was represented at the hearing of the notice to show cause by its counsel on 26th January 2012. On that date, the notice to show cause why the suit should not be dismissed came up for hearing. The plaintiff was represented by Mr. Morara, advocate, holding brief for Mr. Sehmi, advocate on record for the plaintiff. The notice had been served on the plaintiff’s counsel.  Under the Companies Act, a company, being inanimate, can be represented in court by its directors, a duly authorized officer or its advocate.  It would then not be right for the plaintiff to say that the notice was not brought to the attentionof the plaintiff.Secondly, the plaintiff has presented this motion under order 12 rule 7 which deals primarily with dismissal for want of attendance. The plaintiff’s application is thus fatally defective.

True, the court observed that the matter was last in court on 27th August 2003.  The correct position is that the matter was last in this court on 28th October 2005.  At the time of dismissal, nearly seven years had passed.  The plaintiff’s counsel never made reference that day to the Court of Appeal proceedings.  Fundamentally, I do not have an application for reviewof that ruling:  the application before me is for setting aside an ex-parte order made in absence of the plaintiff. That was not the case.  From the explanations then given by the plaintiff’s counsel on 26th January 2012, the court reached the conclusion that there was no sufficient cause shown by the plaintiff.  The remedy for the plaintiff lay either in a review or an appeal against that decision.  See Trust Bank Limited Vs Ajay Shah and 9 others Nairobi, High Court, Civil case 185 of 2001 [2012]    e KLR.

When the plaintiff’s counsel addressed the court on 26th January 2012, he did not explain the delay in prosecuting the suit.  Instead, he sought a further adjournment to the 8th February 2012 to get Mr. Sehmi advocate to come to court and explain the delay.  That is why the court correctly stated that no cause was shown why the suit should not be dismissed.

What is the explanation offered now?  I accept that on 27th August 2003, the court (Mohammed Ibrahim J, as he then was) delivered a ruling in the suit on an interlocutory application by the plaintiff.  That was not the last time the matter was in court.  On 28th October 2005, the court (Ochieng J) enjoined Lasit Limited as a party.  Lasit Limited had bought the suit property at the sale challenged in the suit. That joinder led to the appeal in Civil Appeal No 2 of 2007 at the Court of Appeal that I referred to. Judgment was delivered on 25th November 2011:  It set aside the order of 28th October 2005 enjoining Lasit Limited to the suit and dismissed the plaintiff’s application dated 12th September 2005.

Despite the dismissal of the suit by this court on 26th January 2012 upon the notice to show cause, the plaintiff did not present a suitable motion for reinstatement until 9th July 2013, over 1 ½ years later.  The explanation for that is in the annextures marked ‘KPMD 10’, some court receipts for perusal of the court file and three letters dated between 21st February 2013 and 25th April 2013 addressed to the court claiming the original file could not be traced.  It is thus clear that the current lawyers for the plaintiff did not seek to peruse the court file until February 2013, a year later.  Fundamentally, there is no indication by the Deputy Registrar that the file was lost or misplaced.  The record shows that the original file before me now was not lost.

Although the present motion prays for general leave to amend the plaint, no draft amended plaint is attached. It is thus moot on which direction the plaintiff wishes to take. This matter is particularly relevant: The suit land was sold, the party who bought it has been struck out of the suit by the Court of Appeal and the receivership was terminated. The Court of Appeal stated at page 7 of its ruling of 25th November 2011 as follows:

“In the matter before us the respondent is insolvent.  It fully admits the debt which runs into several millions of shillings and that it has never repaid and is unable to pay even a single cent of it.  Despite this, the respondent has engaged the appellants in a multiplicity of suits and applications seeking to stop the sale of the suit land and the removal of receivers.  Not less than five (5) applications for injunctions have been filed.  All were unsuccessful. The 6th appellant has been on the suit land for over seven (7) years pursuant to the purchase which was consented by the respondent. In our view, procrastination of the suit by seeking a joinder would prejudice the appellants and occasion them extreme inconvenience and may expose the security to further losses which cannot be recovered because the respondent is insolvement”.

The Court of Appeal was completely unhappy with the delays by the plaintiff in prosecuting the suit.  It said as follows at page 9.

“As the respondent had evidently abused the court process by filing several suits and applications so as to prevent the appellants from recovering its just debts it is undeserving of any relief. This case is a classic example of how court process can be invoked to frustrate commercial institutions from recovering the loans they genuinely lend to their customers.  The suit was first lodged nine (9) years ago in 2003 and is still not yet heard substantially save for interlocutory applications.We hope the Constitution and the new Civil Procedure Rules will adequately be operationalised by the courts so as to deal with this kind of process”.

From the passages of the judgment in the Court of Appeal decision, the plaintiff was toblame squarely for the delays in prosecuting this suit.  It reinforces the decision of this court in dismissing the suit on 26th January 2012.  In such circumstances, the court has inherent power to dismiss the suit for want of prosecution.  See Mukisa Biscuit Manufacturing Company Vs Westend Distributors [1969] E A 696, Fitz Patrick Vs Batger & Company Limited [1967] 2 ALL ER 657.

The Court of Appeal emphasized that the plaintiff had fully admitted the debt running into millions and was unable to pay. The Court of Appeal blamed the plaintiff for filing multiplicity of suits and applications that were an abuse of court process leading to serious delays of the matter. This being a commercial matter touching on interests in land, the plaintiff could have been a little more diligent.  As I stated, the suit properties were sold and the receivership terminated.  The plaint has not been amended.  The prayer for amendment is not supported by a draft amended plaint. The court is then uncertain about what purpose will be served by reinstatement of the suit filed way back in the year 2003. The 4th defendant has stated that it will suffer prejudice that cannot be compensated in costs. I agree.  In such circumstances, it is only just to free the respondents from the inert grip of the plaintiff.

The plaintiff may have been prejudiced by the conduct or failures of its previous counsel. The plaintiff states at paragraph 11 of the supporting affidavit that its former lawyers failed to notify it of the developments or steps taken to safeguard its interests. Those may not be ordinary mistakes that should not be visited on the plaintiff.  They seem to me to border on serious lapses or negligence. The plaintiff, if well advised, has a clear remedy.

Taking into account the inordinate delays in prosecuting the matter and the misconduct of the plaintiff expounded at great length by the Court of Appeal, I am not persuaded to exercise my discretion in its favour.  The overriding objective of the court would not come to the aid of the plaintiff.  See Hunker Trading Company Limited Vs Elf Oil Kenya Limited Nairobi, Court of Appeal, Civil Application 6 of 2010 [2010] e KLR, Deepak Kamau & another Vs Kenya Anti-Corruption Commission and others Nairobi, Court of Appeal, Civil Application 152 of 2009 [2010] e KLR.  For all of the above reasons, I find that the plaintiff’s notice of motion dated 9th July 2013 lacks merit.  I order that it be dismissed with costs to the respondents.

It is so ordered.

DATED and DELIVERED at NAIROBI this 5th day of November 2013.

G.K. KIMONDO

JUDGE

Ruling read in open court in the presence of

No appearance for the Plaintiff.

Mr. V. Odhiambo for the Respondents.

Mr. C. Odhiambo, Court clerk.