Commercial Bank of Afria Limited v Payless Car Hire & Tours & Jai Surykant Radia [2015] KEHC 8329 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

MILIMANI COMMERCIAL COURTS

CIVIL CASE NO 17 OF 2012

COMMERCIAL BANK OF AFRIA LIMITED…...…….........PLAINTIFF

VERSUS

PAYLESS CAR HIRE & TOURS..................................1ST DEFENDANT

JAI SURYKANT RADIA………………...……………………2ND DEFENDANT

RULING

1. The Notice of Motion dated 8th August, 2014 seeks orders that:-

The Plaintiff be granted leave to amend its Plaint as shown in red in the draft Amended Plaint and to file a Further Statement of Evidence and a Supplementary Bundle of Documents as annexed thereto.

The costs of the application be provided for.

The grounds on which the application is founded are that the Defence and Statement of Evidence of the 2nd Defendant filed herein raise issues relating to:

the conduct of the 1st Defendant’s accounts with the predecessor of the Plaintiff, First American Bank of Kenya and it is necessary to set out the facts and evidence relating to such accounts, and the transfer of such accounts to the Plaintiff;

the validity of the documents executed by the 1st Defendant and it is necessary to set out the indemnities executed by the 2nd Defendant and the representations made by the 2nd Defendant;

the debit of interest and after investigation and on advice the Plaintiff has recalculated the accounts for the 1st Defendant and wishes to amend the claim in the Plaint to reflect the reduced amount resulting  from such recalculation.

2. The Application, which is expressed to have been brought under Order 8 Rule 3 of the Civil Procedure Rules, is grounded on the Supporting Affidavit of Ronald Mworia sworn on 8th August, 2014 as well as the Written Submissions filed on 29th September 2014.

3. The Defendants opposed the Application on the following grounds:

That the Application is an afterthought having been brought after their application for dismissal of the suit for want of prosecution.

That the amendment sought is untenable and farfetched as there is no legal relationship and/or claim as between the Plaintiff and the Defendants.

That the Plaintiff/Applicant is trying to sneak in and/or introduce a new suit or cause of action by the amendment.

That the First American Bank is not a party to the suit and therefore their introduction through this amendment will prejudice the Defendants herein.

That this application is an abuse of the Court process as it will have the drastic effect of altering the whole substratum of the suit.

4. In the Written Submissions filed by Mr. Kelvin Mogeni on 8th July, 2015 it was argued on behalf of the Defendants that the Court should be inclined to refuse leave to amend where the amendment sought would change the action into one of a substantially different character. That since the amendment sought herein has the potential effect of introducing a new cause of action after the expiry of the period of limitation for it, the same ought to be rejected. He relied on the case of Weldon Vs Neal LJR(1877) that was cited in the case of Berahane Tesamarim Vs The Attorney General/ Mombasa HCCC No. 65 of 1997 (UR)to support his arguments and urged the Court to dismiss the instant application.

5. The Court is empowered by Order 8 Rule 3(1) of the Civil Procedure Rulesto allow any party to amend his pleadings at any stage of the Proceedings “…On such terms as to costs or otherwise as may be just…”

6. In the Supporting Affidavit of Ronald Mworia, it has been deponed that following the filing of the Defence and Statement of Evidence by the 2nd Defendant, it was necessary for the Plaintiff to carry out research and investigation into files and records of its predecessor, First American Bank of Kenya Limited. It was thereupon that the Plaintiff re-calculated the Defendant’s accounts, which re-calculation has resulted in a reduction of the amount due, hence the need for amendment of the plaint and the supplementary Statement of Evidence and Bundle of Documents.

7. Regarding amendment of pleadings, the general principle, as  was observed by the Court of Appeal in the case of Central Kenya Limited Vs Trust Bank Limited (2000) 2 EA 365 is that:

“…all amendments should be freely allowed at any stage of the Proceedings provided that the amendment or joinder did not result in prejudice or injustice to the other party that could not be properly compensated in costs... The overriding considerations were whether the amendments were necessary for the determination of the suit and whether the delay was likely to prejudice the opposing party beyond compensation for costs.”

8. The Plaintiff/Applicant herein contends that the proposed amendment has been necessitated by subsequent information that has come up after research and investigation into the relevant accounts some of which were maintained by the Plaintiff’s predecessor, the First American Bank of Kenya Limited. It was their contention that such investigation and research would have been unnecessary had the Defendant’s not raised, in their Written Statement of Defence and Bundle of Documents, issues concerning the conduct of the accounts of First American Bank of Kenya and the interest charged, or the validity of the Indemnities executed by them. The Plaintiff/Applicant contends therefore that, following their investigations, it has become necessary to properly place before the Court all these relevant issues as well as the evidence pertaining thereto for final and effectual adjudication.

9. The nature and extent of the proposed amendment has been set out in the draft Amended Plaint annexed to the Notice of Motion. I have looked at that draft and note that other than Paragraphs 3A, 3B, 3C that seek to introduce facility letters issued by the First American Bank of Kenya Limited, the rest of the Plaint remains intact. And, as has been explained in the Supporting Affidavit, these pleadings are the basis upon which the Plaintiff seeks reduction of the sum prayed for from Kshs. 58,675,389. 14 to Kshs. 49,053,828. 92.

10. It is not disputed by the Defendant/Respondent that First American Bank of Kenya Limited was the predecessor of the Plaintiff. Indeed, the takeover was authorized by the Minister for Finance and gazetted vide Gazette Notice No 3499 of 6th May, 2005. Indeed,the Defendants’ Bundle of Documents go to show that they had a long relationship with First American Bank of Kenya Limited prior to engaging with the Plaintiff from 2006 onwards. For instance, the Statement of Jai Radia, the 2nd Defendant herein, states thus:

“My company started to bank with First American Bank (FAB). Lease agreement for vehicle was financed by FAB. There were three accounts: Thread Setters (TS), Kenya Airways (KQ) and Celtel. The KQ loan was for buses – loan seemed to have been passed to Commercial Bank of Africa (CBA) after it acquired FAB. …The initial agreements with FAB loans paid but logbooks still with CBA…”

11. It is further noted that from their first document by CBA to the Defendant make clear reference to previous facilities and/or renewal thereof. It would amount to an unacceptable departure for the Defendants contend, as they appear to do, that introduction of FAB into the matter would be prejudicial to them. The court is therefore satisfied that it was the Defendant that raised issues touching on the previous facilities. It would only be fair to allow the Plaintiff to place all those issues before the court for a just and efficacious disposal. To that end, it is my finding that the aforementioned amendments are all relevant to the subject matter of this suit.

12. As to whether the effect of the amendment would be to introduce a new cause of action, it is noted that the only deletion in the draft amended plaint is in connection with the sum claimed, which in any event is proposed for reduction along with the interest rate from Kshs. 58,675,389. 14 and 30. 5% to Kshs. 49,053,828. 92 and 23% respectively. Thus rather than prejudice the Defendants/Respondents, the Proposed Amendments would work to their advantage.

13. Besides the foregoing, Order 8 Rule 3(5) of the Civil Procedure Rulesrecognizes that:

“An amendment may be allowed under sub-rule (2) notwithstanding that its effect will be to add or substitute a new cause of action if the new cause of action arises out of the same facts on substantially the same facts as a cause of action in respect of which relief has already been claimed in the suit by the party applying for leave to make the amendment.”

Accordingly, it is plain that even where the proposed amendment will introduce a new cause of action, the application can still be allowed if it serves the interests of justice in the matter.

14. It was further argued on behalf of the Defendant/Respondent that the amendment will have the effect of introducing a new cause of action after the expiry of the limitation period. Counsel relied on the case of BERAHANE TESTAMARIM VS AG MOMBASA HCCC NO. 65 OF 1997 (UR) for the proposition that it would not be just or fair to the Defendant to allow leave for an amendment which would bring in an alternative cause of action which is already time-barred by statute.  It is noteworthy though that the case relied on was decided before the Civil Procedure Rules 2010 came into force. Order 8 Rule 3 (2) of the Civil Procedure Rules now provides that:

“where an application for leave to make an amendment such as is mentioned in sub-rule (3) (4) and (5) is made after any relevant period of limitation current at the date of filing of the suit has expired the Court may nevertheless grant such leave in the circumstances mentioned in any such sub-rule if it thinks just so to do.”

15. In Paragraphs 3A, 3B and 3C which are the target of the argument on limitation, the Plaintiff has sought to introduce the background to the sum claimed and traced the same back to 2004. It has however been explained that those previous facilities were repackaged into new facilities in 2006 and 2009 after the takeover by the Plaintiff of the First American Bank of Kenya Limited, a fact that is in consonance with the Defendants’ own pleadings. Clearly therefore, the application is well within the confines of Order 8 Rule 3 (2) Civil Procedure Rules aforestated. Indeed, what the Plaintiff seeks is to have all the relevant facts placed before the Court for final and efficacious determination of the dispute between the parties, an aspect clearly brought out by Bowden LJ in Cropper Vs Smith (1883) 26 CH Division. 700 at page 711 thus:

“It is a well-established principle that the object of the Court is to decide the rights of the parties and not to punish them for the mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights. I know of no kind of error or mistake, which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy and I do not regard such amendments as a matter of favour or grace…”

16. What is sought by the proposed amendment is to provide the background of the sum claimed, to justify the interest charged and to place the issues in controversy in the right perspective. What is more, the bottom line is that the sum claimed will go down if the proposed amendment is allowed, hence the court is satisfied that no prejudice will befall the Defendant’s thereby, and that the amendment will go to serve the interests of justice.

17. In the result, I find that the Plaintiffs Notice of Motion application dated 8th August, 2015 has merit. The same is hereby allowed as prayed in Paragraph 1 thereof. It is thus ordered that:

The Amended Plaint be filed and served within 14 days from the date hereof.

The Defendant to be at liberty to amend the Defence if need be, within 14 days from the date of service.

Costs thereof to be in the cause.

It is so ordered.

DATED and DELIVERED at NAIROBI this 28th day Octoberof 2015

OLGA SEWE

JUDGE