Equity Bank (Kenya) Limited v Nganga [2022] KEHC 16149 (KLR)

Equity Bank (Kenya) Limited v Nganga (Civil Suit E839 of 2021) [2022] KEHC 16149 (KLR) (Commercial and Tax) (9 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16149 (KLR)

Republic of Kenya

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

Commercial and Tax

Civil Suit E839 of 2021

A Mabeya, J

December 9, 2022

Between

Equity Bank (Kenya) Limited

Plaintiff

and

Joakim Kimani Nganga

Defendant

Ruling

1. This ruling is in respect of three applications dated November 16, 2021, November 15, 2021 and 28/2/2022. They were consolidated and heard together. Application dated November 15, 2021 by Apollo Mutisya and Don Raul Ngumbau Muinde

2. The application was brought under Order 1 rule 10(2), Order 37 rule 3 and order 51 rule 1 of the Civil Procedure Rules. The applicants seek to have their names added as plaintiffs in the suit together with the costs of the application.

3. The grounds upon which the application was predicated upon were set out on the face of the application as well as the affidavit in support sworn by Apollo Mutisya Muinde the first applicant. They contended that the plaintiff and the defendant had executed a discharge on the defendant’s property known as Kiambaa/Ruaka/2818 (“the suit property”). On that basis, the applicants entered into a sale agreement with the defendant for the purchase of Apartment No 3. Before purchasing the apartment, the applicants conducted due diligence on to the title and found the same to be free of encumbrances. They were bonafide purchasers for value and it was important for the court to make a determination on execution of the replacement charge.

4. The defendant opposed the application vide grounds of opposition dated 28/2/2022. He contended that the orders sought would prejudice him it as the cause of action was not similar to that of the plaintiff. That the applicants stake was the same as the one for the defendant and they would be more suited in defending the claim. That the cause of action by both the plaintiff and the applicants arose at different times and could therefore not be prosecuted concurrently.

5. The plaintiff filed grounds of opposition dated 16/2/2022 in opposition to the application. It contended that the law did not provide for addition of parties as plaintiffs and their joinder would convolute the issues and derail the suit. That there was no unity of causes of action between the parties to the suit to warrant the joinder and the application aimed at burdening and delaying the finalization of the suit.

Application dated November 16, 2021 by Borehole Engineering. 6. The application was brought under Article 40,158(2)(d) of the Constitution of Kenya 2010, Section 3A of the Civil Procedure Act cap 21 laws of Kenya, Order 1 rules 10(2) and 51 rule 1 of the Civil Procedure Rules. The applicant sought to be enjoined in the suit as an interested party.

7. The application was premised on the grounds on the face of the application and the supporting affidavit sworn by James Maina. It was averred that, upon conducting due diligence and finding the title to be unencumbered, the applicant purchased Apartment No 1 on the suit property. That it was a bona fide purchaser for value who had acquired good title and retains sufficient interest in the suit.

8. The defendant opposed the application vide a replying affidavit dated 28/2/2022 sworn by Joakim Kimani Nganga. He swore that the applicant did not have a stake in the development of the suit property as the defendant had already issued termination notices. That the issues raised by the applicant had been raised in the Kiambu Civil Suit No 341 of 2020 in the applicant’s suit against him.

Application Dated 28/2/2022 9. The application was by the defendant and was brought under Order 51 Rule 1 of the Civil Procedure Rules, Section 1A,1B and 3A of the Civil Procedure Act. The defendant sought to restrain the firm of Albert Mumma Advocates from appearing for the plaintiff.

10. The application was based on the grounds set out on its face and on the supporting affidavit sworn by the defendant. The defendant contended that firm of Albert Mumma had been retained by the defendant in the transaction leading to the suit. That he was apprehensive that the information sent to the advocates would be used against him to advance the plaintiffs claim. It was contended that the defendant would suffer prejudice as the law firm had acted as a mutual advocate for both the plaintiff and the defendant.

11. The applications were canvassed by way of written submissions which I have considered.

12. On the application dated November 15, 2021, the applicants submitted that they had a right to be enjoined as plaintiffs to the suit and ought to be given an opportunity to be heard. That the plaintiffs were estopped from recharging the suit property as it would affect the applicant’s rights as a purchaser. It was submitted that the applicants had a claim against both the plaintiff and the defendant which arose from the same series of transaction. That the applicants had filed a separate suit against the defendant and the plaintiff in ELC Case 27 of 2022.

13. On behalf of the defendant, it was submitted that he had retained the services of Albert Mumma and Company Advocates for conversion of the property from freehold to leasehold and for preparation of sale agreements with respect to the purchasers. It was further submitted that the law firm further received funds on behalf of the defendant and it would be prejudicial to have the said firm continue acting for the plaintiff.

14. For the intended interested party, it was submitted that it had a stake as the search conducted showed that the property was free of encumbrance. That it had relied on the defendant and plaintiff’s advocate before entering into the sale agreement. It was submitted that the applicants’ interests were both in the subject matter of the suit as well as the outcome of the suit.

Analysis 15. I have considered the applications, the responses and the submissions on record. There are two issues that arise for determination; joinder of parties and restraint of a firm of advocates from acting for a party in the proceedings.

16. On joinder, the parties in the applications dated 15th and 16th of November 2021 seek to be enjoined as parties to the suit in different capacities. In the application dated November 15, 2022 the applicants seek to be enjoined as plaintiffs whereas in the application dated November 16, 2021, the applicant seeks to be enjoined as an interested party.

17. Order 1 Rule 10 of the Civil Procedure Rulesprovides for substitution and addition of parties. Sub-rule 2 thereof provides: -“(2)The Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all questions involved in the suit be added”

18. In Francis Karioki Muruatetu & Another v Republic & 5 othersPetition 15 as consolidated with 16 of 2013 [2016] eKLR, the Supreme Court stated as follows with respect to joinder: -“… One must move the Court by way of a formal application. Enjoinment is not as of right, but is at the discretion of the Court; hence, sufficient grounds must be laid before the Court, on the basis of the following elements:i.The personal interest or stake that the party has in the matter must be set out in the application. The interest must be clearly identifiable and must be proximate enough, to stand apart from anything that is merely peripheral.ii.The prejudice to be suffered by the intended interested party in case of non-joinder, must also be demonstrated to the satisfaction of the Court. It must also be clearly outlined and not something remote.iii.Lastly, a party must, in its application, set out the case and/or submissions it intends to make before the Court, and demonstrate the relevance of those submissions. It should also demonstrate that these submissions are not merely a replication of what the other parties will be making before the Court.”

19. In Lucy Nungari Ngigi & 128 Others v National Bank Of Kenya Limited & Another [2015] Eklr, the court held: -“Joinder of parties is governed by Order 1 of the Civil Procedure Rules. In law, joinder should be permitted of all parties in whom any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist, whether jointly, severally; or in the alternative, where if such persons brought separate suits, any common question of law of fact would arise. See also Order 7 Rule 9 of the Civil Procedure Rules. The court may even in its own motion add a party to the suit if such party is necessary for the determination of the real matter in dispute or whose presence is necessary in order to enable the court to effectively and completely adjudicate upon and settle all questions involved in the suit. Therefore, joinder of parties is permitted by law and it can be done at any stage of the proceedings. But, joinder of parties may be refused where such joinder: will lead into practical problems of handling the existing cause of action together with the one of the parties being joined; is unnecessary; or will just occasion unnecessary delay or costs on the parties in the suit. In other word, joinder of parties will be declined where the cause of action being proposed or the relief sought is incompatible to or totally different from existing cause of action or the relief. The determining factor in joinder of parties is that a common question of fact or law would arise between the existing and the intended parties.”

20. In view of the foregoing, have the parties demonstrated that they have a stake to the proceedings which legal right can be prejudiced by the proceedings? The 1st application dated November 15, 2021 seeks that the applicants be enjoined as plaintiffs. In their submissions the applicants contend that indeed there is a pending case in ELC Case 27 of 2022 based on the same cause of action as against the plaintiff and the defendant. How then can the applicant expect to be enjoined as plaintiffs in the matter when the cause of action is substantially in issue in another suit?

21. In my view the applicants have instituted a suit in another court as against the parties and the best they could be in these proceedings is as interested parties and not plaintiffs. While I appreciate their interest in the matter, it is my view that the application was not properly founded and therefore lacks merit. I will exercise my discretion and enjoin them as interested parties and not as plaintiffs as they had sought. Their claim and that of the plaintiff herein is diametrically in opposition.

22. In the application dated November 16, 2021, the applicant sought to be enjoined as an interested party. From the records, it is evident that the applicant was a purchaser of Apartment 1 in the suit property. The purchase was done at the time the property’s title is alleged to have been unencumbered. I find that it has a legal right that could be prejudiced and a stake in the proceedings. In this regard, I find that the transactions relate to the same subject matter and in order to have the dispute determined without wasting time, it is necessary to enjoin the applicant herein.

23. The second issue is whether the firm of Albert Mumma Advocates should be restrained from acting for the defendant. It was the applicant’s case that the said law firm has acted for both the plaintiff and the defendant in the conversion of tile from freehold to leasehold and defendant retained the said law firm in other transactions.

24. The law relating to disqualification of an Advocate from acting for a party is provided from under Rule 8 (formerly Rule 9) of the Advocates (practice) Rules which provides: -“No advocate may appear as such before any court or tribunal in any matter in which he has reason to believe that he may be required as a witness to give evidence, whether verbally or by declaration or affidavit; and if; while appearing in any matter, it becomes apparent that he will be required as a witness to give evidence whether verbally or by declaration or affidavit, he shall not continue to appear:Provided that this rule does not prevent an advocate from giving evidence whether verbally or by declaration or affidavit on formal or non-contentious matter of fact in any matter in which he acts or appears."

25. In Dorothy Seyanoi Moschioni v Andrew Stuart & another (2014) e KLR, Gikonyo J, stated: -“I will not re-invent the wheel. All the cases which have been quoted by counsels are relevant. I will not multiply them too. What I need to state is that, in applications for disqualification of a legal counsel, a court of law is not to engage a cursory look at the argument that ‘’these advocates participated in the drawing and attestation of the Deeds in dispute’’; as that kind of approach may create false feeling and dilemmas; for it looks very powerful in appearance and quite attractive that those advocates should be disqualified from acting in the proceedings. It is even more intuitively convincing when the applicant says ‘I intend to call them as witnesses’. What the court is supposed to do is to thrust the essential core of the grounds advanced for disqualification, look at the real issues in dispute, the facts of the case and place all that on the scale of the threshold of the law applicable. In the process, courts of law must invariably eliminate any possibility that the arguments for disqualification may have subordinated important factual and legal vitalities in the transactions in question while inflating generalized individual desires to prevent a party from benefiting from a counsel who is supposedly should be “their counsel’’ in the conveyancing transaction. I say these things because that kind of feeling is associated with ordinary human sense where both parties in the suit were involved in the same transaction which was handled by the advocate who now is acting for one of the parties in a law suit based on the very transaction; and the feeling is normally expressed in an application for disqualification of the counsel concerned in the hope it will pass for a serious restriction to legal representation. But the law has set standards and benchmarks which must be applied in denying a person of legal representation of choice; the decision must not be oblivious of the centrality of the right to legal representation in the Constitution as the over-arching hanger; equally, it should not be removed from reach to the sensitive fiduciary relation between an advocate and his clients, which in transactions such as these, would prevent the advocate from using the privileged information he received in the employ of the parties, to the detriment of one party or to the advantage of the other; it must realize that the advocate has a duty not only to himself or his client in the suit, but to the opponent and the cause of justice; but in all these, it must be convinced that real mischief and real prejudice would result unless the advocate is prevented from acting in the matter for the opponent. The real questions then become: Is the testimony of the advocate relevant, material or necessary to the issues in controversy? Or is there other evidence which will serve the same purpose as the evidence by counsel? Eventually, each case must be decided on its own merits, to see if real mischief and real prejudice will result in the circumstances of the case. And in applying the test, if the argument on disqualification becomes feeble and inconsistent with causing real mischief and prejudice, then a disqualification of counsel will not be ordered."

26. From the foregoing, the advocate is precluded from representing one party in a matter where there is competing interests and where the advocate may appear as a witness. In this case, the advocate acted for both the plaintiff and the defendant in the transaction leading to this litigation and the defendant is apprehensive that the advocate may use information in his disposal to his detriment. The proposed interested party have also raised the issue that they purchased the properties based on the information given by the advocate representing both parties. The defendant further stated that the advocate client relationship continued even after the discharge.

27. In my view, it is more likely than not that the advocates from the law firm may become witnesses especially where it is claimed that they acted during the sale transactions. The stakes are high. There is a charge sought to be effected over the suit property which is being resisted. There are issues which I think it is more likely than not, the said law firm may be called by the parties to clarify.

28. Accordingly, if they act for only one party, it may be prejudicial to the other. The apprehension is not far-fetched.

29. In the upshot, I make the following orders: -a.The applications are allowed and the applicants for joinder are enjoined as interested parties.b.The defendant’s application is allowed as prayed.c.The costs will be in the cause.

It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 9TH DAY OF DECEMBER, 2022. A. MABEYA, FCIArbJUDGE