EVANSON NJIIRI WANJIHIA V CALTEX OIL (K) LTD [2009] KEHC 2114 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL CASE 1993 OF 1993

EVANSON NJIIRI WANJIHIA ............................... PLAINTIFF

VERSUS

CALTEX OIL (K) LTD ........................................ DEFENDANT

RULING

Before the court is an application by the Plaintiff brought by way of a Notice of Motion dated the 18th of March, 2009.  It has been brought under the provisions of section 3A and 80 of the Civil Procedure Act, and Order XLIV rule I(1) & 6 and Order XXII & Order L Rule 1 of the Civil Procedure Rules.

The application is mainly for orders as follows –

(i)That the court do review, vacate and set aside the consent order entered into as set out in the letter dated 29th February, 2008.

(ii)That the court do order the immediate payment of the outstanding amount due under the Judgment delivered by Justice Osiemo on 31st march, 2007.

(iii)That costs of the application be awarded to the applicant.

The application is based on the following grounds –

(i)That as a result of the discovery of new and important matter or evidence which after the exercise of due diligence; was not within the Plaintiff’s knowledge or could not be produced by him at the time when the consent order was entered into.  The Plaintiff desires to obtain a review of the decree passed or the order made.

(ii)That further there has been a breach of the terms expressed and implied of the consent order entered into as not only has the appeal herein not been filed, but the defendant is disposing off all its assets in Kenya.

(iii)That further there was misrepresentation in entering into a consent order in that not only has no appeal been filed herein, but the Defendant has no intention of satisfying a decree made and is disposing of all its locally held assets.

(iv)That the Plaintiff stands to suffer prejudice if the orders are not granted.

On its part the defendant opposes the application.  A Replying Affidavit in this respect was filed on the 24th March, 2009.  In summary the defendant has four grounds of opposition as follows –

(1)That the application is fatally defective

(2)That there are no grounds to interfere with the consent either in Law or infact.

(3)That the application is misconceived

(4)The application is made in bad faith and with ulterior motive.

The Plaintiff first brought this action on the 4th of November, 1992 complaining of breach of contract and seeking for damages and in the alternative specific performance.  On the 31st May, 2005 Osiemo J delivered a Judgment in favour of the Plaintiff as against the defendant for the sum of Kshs.15,055, 423/= with  costs and interest.

Aggrieved by the Judgment the Defendant/Respondent filed a notice of intention to appeal.  More importantly for purpose of this application, an application for stay of execution of the Judgment & Decree of the High Court of Kenya, pending the Lodging; hearing and determination of the appeal.

In as far as the said application for stay is concerned, the parties after lengthy negotiations entered into a Consent order vide a letter dated 29th February, 2008.  The consent letter was filed in court and adopted as such, as the order of the court. The consent letter executed by counsel for both parties read in part as follows:-

1. The defendant herein do furnish a sum of Kshs.3,000,000. 00/= as security for payment of decretal sum and costs pending the intended appeal from the Judgment and/or Decree of the Honourable Justice Osiemo.

2. The said sum of Kshs.3,000,000. 00/= shall be deposited in an interest bearing account to be opened within 30 days in the joint names of counsels for both parties.

3. The defendant’s motion dated June, 2007 be marked as settled with either party having liberty to apply.

The above consent order is now the subject of the application before me.  Recent events touching on the operations and status of the defendant’s business in Kenya have or are likely to change, causing fear and apprehension to the Plaintiff who has moved the court.

Certain facts regarding this matter are not disputed namely:-

1. That there is a Judgment in favour of the Plaintiff for Kshs.15,055,45. 00/=

2. That the intended appeal is yet to be filed.

3That the sum of Kshs.3,000,000. 00/= paid as security is lying at the Equity bank in an interest earning account.

4. That it the appeal is successful the award of Kshs.15,055,435/= together with costs & interest will have accumulated to a sum in excess of Kshs.25,000,000. 00/=.

5. That there is an ongoing transaction between the defendant and Total Oustre Mer SA for the purchase of the defendants business.

I have considered the pleadings before me, submissions by both counsels and case law cited and have summarized the issues before me as follows -

(i)  Whether the application before me is competent

(ii)  If so whether the consent order entered into between the parties on the 29th February as detailed elsewhere in this ruling can be reviewed and/or set aside

The Defendant/Respondent’s counsel contends that the application is fatally defective as there is no extracted order annexed thereto.  That a review under Section 80 & 44 requires a formal order to be annexed, that failure to do so is fatal to the application.  The counsel has cited the case of FIDELITY COMMERCIAL BANK vs. MICHAEL RURAYA MWANGI & ANOTHER (2005) e KLR at page 2-4

In this case the court found that an extracted order is prerequisite of an application for review.  The court found the application incompetent and struck out the same with costs.

In G.M. JIVANJI vs. M. JIVANJI & ANOTHER (1929-30) 12 KLR 44:-

It was held the person aggrieved by a Judgment has the duty to move the court and to draw up and issue the formal decree or order.

The Applicant/Plaintiff’s counsel contends that the consent letter they have annexed to the affidavit in support of the application is sufficient.

The Defendant/Respondent’s counsel is right in his assertion that there was need to extract and for the formal order and the same to annexed to the application

However, looking at the circumstances of this case I am minded of the following cases

1.   NORTH vs BARNET COUNCIL (1978)1 W L.R. 220 Lord Denning M.R. said-

“It is the voice of the strict constructionists.  It is the voice of those who go by the letter.  It is the voice of those who adopt the strict literal and grammatical construction of the words, hidless of the consequences.  Faced with glaring provisions the Judges are, it is said impotent, incapable and sterile.  Not so with us in this court.  The Literal method is now completely out of date.  It has been placed by the approach which Lord Diplock described as the “Purposive approach”

In all cases now in the interpretation of statutes we adopt such a constructions as we “provide the general Legislative purpose” underlying the provision.  It is no longer necessary for the Judges to wring their hands and say –

“There is nothing we can do about it, whenever the strict interpretation of a statute gives use to an absurd and unjust situation the Judges can and should us their good sense to remedy – by reading words in, if necessary so as to do what Parliament would have done, had they the situation in mind.”

2.  In MACHIRA vs. NDANJERU (1982-88) I KAR 1062 Apoloo J. A. stated 1065:-

“At all events it seems to me that the appellant is merely standing on bare technicalities.  Nobody has a vested right in procedure and a court, must at least at the present day, strive to do substantial justice to the parties, undeterred by technical procedure rules.”

3.  In Lt COLONEL JOSEPH MUETERI IGWETA vs. MUKIRA M’ETHARE & ATTORNEY GENERAL C. A. No. 270 of 2001 Shah J. (as he then was) stated.

“If I were to dismiss this application there would be one bone fide Litigant who will blame the system for relying on procedural technicalities to deny him justice.  Whilst I do not condone errors on the part of counsel I must consider the interest of a Kenyan seeking justice in our courts.  He is be bewildered at the twists and turns the hearing of appeals take---”

Being guided by the above authorities cognizant of the fact that the Applicant/Plaintiff first initiated the case in 1993, has a Judgment of over Kshs.15M hanging over his head, I am minded of using the “purposive approach” in dealing with this application.  I am aware that the rules of procedure are put in place to guide and manage proceedings before the court, however rules of procedure are meant to assist and ensure that courts in the cause of duty, administer justice.  The rules of procedures ought to be adhered to except where a strict sense of application of the same will be against justice and fair play.  Rules of procedure should not be used to create hardship or injustice to a litigant.   From time to time courts of justice must overlook a technical procedure and apply where circumstances of a case demands     substantial justice.   Guided as above I decline to dismiss this application on the ground that the same is incompetent for failure by counsel for the Applicant/Plaintiff to extract and annex a formal court order.

On the second issue as to whether the consent order can be reviewed and/or set aside, both counsels have vehemently argued on the same.

The Plaintiff/Applicant’s counsel in propagating his position relied on the ground of discovery of new and important matters.  That since entering into the consent order the Defendant/Respondent has proceeded to wind up its business operation in Kenya thereby frustrating the consent order.  The counsel contends further that the presence of the Defendant/Respondent in the country was the very foundation that informed the consent order. That the winding up of business by the defendant is a new and important matter that was not known by the Plaintiff/Applicant at the time of signing of the consent.

The counsel relied on the case of FLORA WASIKE vs. DESTIMO WAMBOKO (1982 -88) I KAR 625 and several others.  In his submissions the counsel has also relied on the doctrine of frustration, misrepresentation and public policy. Lastly, that the consent allowed liberty for either party to apply.  This giving the parties an opportunity to bring the matter back to court for consideration if need be.

On his part the Defendant/Respondent’s counsel contends that there are no grounds, either in law or in fact to interfere with the consent order.  The counsel for the Defendant/Respondent cited the case of BROOKE BOND LIEBIG (T) LTD vs. MALYYA (1975) E. A 266.  The counsel contends further that there is no allegation of fraud, or misrepresentation.  The counsel states that the application is centered on misapprehension of facts and the nature of transaction the Defendant/Applicant is transacting currently.  The counsel submitted also that the application is brought in bad faith to coerce the Defendant/Respondent to pay the decretal sum.

The Law on settling aside consent orders is now settled.  In FLORA N. WASIKE Vs DESTIMO WAMBOKO (1982 -88) I KAR at 628 the Court of Appeal held in part –

“It is settled law that a consent Judgment can only be set aside on the same grounds as would justify the setting aside of a contract, for example fraud, mistake or misrepresentation”

In BROOKE BOND LIEBIG (T) LTD vs. MALYYA (1975) E. A at 266 the Court of Appeal held inter alia

(i)A disputed compromise may be challenged in the suit itself

(ii)A consent Judgment may be set aside for fraud, collusion or for any reason which would enable the court to set aside an Agreement.

In this case the Court of Appeal considered the circumstances in which a consent Judgment may be interfered with as set out in HIRANIvs. KASSAM (1952) 19 E. A. C. A 131, where a passage from seton of Judgment and orders was quoted.

“Prima facie, any order made in the presence and with the consent of counsel is binding on all parties to the proceedings or action, and on those claiming under them --- and cannot be varied, or discharged unless obtained by fraud or collusion, or by an agreement contrary to the policy of the court --- or if consent was given without sufficient material facts, or in misapprehension or in ignorance of material facts, or in general for a reason which would enable the court to set aside an agreement.”

The question to ask is whether the application herein meets the standards set above.

It is clear from the facts before the court that the recent event of the Defendant/Respondent be it to sale its business or winding its operation and selling its asset in Kenya is a new matter that was not known to the Plaintiff/Applicant at the point of entering into the consent, indeed to-date the transaction that may see the defendant wind up its affairs in Kenya remains shrouded in secrecy to the misapprehension and frustration of the Plaintiff/Applicant  In an affidavit sworn by Mrs. Edith Mawia Malombe she depones in part in paragraph 19-

“(iv)  The Plaintiff has never requested for or indeed demanded any explanation from the Defendant as regards the nature of its proposed transfer of shares to Total Outre Mer SA, which has led to this assertion that his Judgment, if upheld on appeal will not the recoverable form Total Outre Mer SA if the transaction is completed which is incorrect....”

(V)As it is normally the case in share transfer agreement, due to confidentiality provisions, the specific terms of the transfer agreement cannot disclosed to the Plaintiff or disclosed in the public domain to any other third party, more so when the statutory approvals are yet to be true.

22.  ----------- the entity intending to purchase the defendant’s share and assuming all its liabilities in Kenya. Total Outre Mer SA, as a multinational company and would be in a position to pay the decretal sum awarded together with interest thereon in the event the Defendants appeal is dismissed.”

I find the averments by the said director rather presumptuous.  The Defendant/Respondent does not disclose vital information and expects the Plaintiff/Applicant to be comfortable with the ongoing transaction oblivious of his fate and makes an assurances on behalf of a third party. Nothing would have been easier than a confirmation from the intended purchaser to confirm that it will shoulder the liability should they be called upon, in the event the Defendant/Applicants appeal fails.

In my view this application is meritorious and meets all the relevant standards for reviewing consent and I allow the same with order as follows:-

1.  That the consent order entered into as set out in the letter 29th February, 2008 be and hereby set aside.

2.   That the Defendant/Respondent do deposit in court the outstanding amount less the amount in the joint account with immediate effect.

3. That the costs of the application be awarded to the Applicant/Plaintiff.

Dated and delivered at Nairobi this 16th day of June, 2009.

ALI- ARONI

JUDGE