Fairlake Estate Limited v Housing Finance Corporation Limited [2022] KEHC 16589 (KLR)

Fairlake Estate Limited v Housing Finance Corporation Limited (Civil Case E683 of 2021) [2022] KEHC 16589 (KLR) (Commercial and Tax) (8 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16589 (KLR)

Republic of Kenya

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

Commercial and Tax

Civil Case E683 of 2021

WA Okwany, J

December 8, 2022

Between

Fairlake Estate Limited

Plaintiff

and

Housing Finance Corporation Limited

Respondent

Ruling

1. This ruling is in respect to the application dated September 27, 2021 wherein the applicant seeks orders to strike out the defendant's statement of defence and for the entry of judgment in its favour.

2. The application is supported by the affidavit of the plaintiff’s director prof Githu Muigai and is premised on the grounds that:-a)The statement of defence filed by the defendant has failed to adequately respond, traverse or give proper defence or at all to the claims made by the plaintiff in its plaint.b)The defendant's statement of defence largely comprises of admissions of the facts recounted in the plaint while any denials set forth therein are of a general nature and do not specifically traverse the allegations of fact raised in the plaint in that:-i)The defendant expressly admits to the occurrence of an auction sale at paragraph 2 and 3 of the statement of defence;ii)The defendant admits that the plaintiff was the successful bidder at paragraph 4 of the statement of defence;iii)The defendant admits that the completion period under the auction sale was contemplated to be 90 days after the fall of the hammer at paragraph 6 of the statement of defence.iv)The defendant admits to issuing a completion notice requiring the plaintiff to complete the sale at paragraph 9 of the statement of defence;v)the defendant admits to receiving the proceeds of the auction at paragraph 10 of the statement of defence;vi)The defendant admits to the non-existent of title for each individual lot put up for auction and admits to their failure to deliver the title to the auction property at paragraph 11 of the statement of defence;c)Consequently, the defendant's statement of defence consists of mere denials which cannot amount to a defence in law as they do not raise any triable issues;d)In as much as the defendant is entitled to make its defence, the plaintiff is equally entitled to prompt and efficacious determination of its claim which will be defeated if this honourable court entertains this vexatious defence;e)The sham defence filed by the defendant will unreasonably prolong the determination of this suit to the plaintiff's detriment and is therefore an abuse of the court process;f)It is in the interest of justice that the defence be struck out and there be a speedy resolution to this dispute.

3. The respondent opposed the application through the replying affidavit of its litigation manager Ms Christine Wahome who states that the entire application is based on material misrepresentation, non-disclosure, is misconceived, mischievous, unmeritorious, frivolous, and vexatious and should be dismissed on the grounds that:-a)The sustainability and tenacity of the defence or otherwise is an issue on merit for the trial and the same cannot be determined on an application before evidence is tendered and tested.b)The plaintiff's application, just like the plaint, does not give full disclosure of the facts of the transaction between the plaintiff and the defendant, which is an attempt to mislead the court, and is otherwise an abuse of the process of the court.c)Considering the plaintiff's non-disclosure and dishonesty, the defendant/respondent has in the relying affidavit and the defence disclosed the material facts of the transaction in question supported by material evidence which renders the plaintiff's application and main suit a non-starter.d)It is not in dispute that the plaintiff purchased the suit properties (apartments) in a public auction where one Mr Koome Kiragu bidder no 142 placed the highest and successful bid for Mr Daniel Murigi Nderi on behalf of the Plaintiff.e)It is also not in dispute that the plaintiff proceeded to pay the purchase price as pleaded in the defendant's detailed defence.f)The plaintiff sole claim in the plaint is that the defendant has refused/declined to transfer the suit properties to the plaintiff, which is not true for reasons detailed in the defence and the replying affidavit and which the defendant summarized as follows:a.)It is not in dispute as detailed in the defence that after the plaintiff tendered the balance of the purchase price, by an email of August 21, 2020, the plaintiff's advocates took control of the transaction and proceeded to propose the "best way" to effect transfer of the property to the plaintiff and the plaintiff's advocates advised that leases be prepared for each of the 14 units and the defendant bank to execute as the lessor. This crucial communication has been concealed by the plaintiff but has now been disclosed and produced by the defendant.b)By a letter dated September 29, 2020, the defendant's advocates forwarded to the plaintiff's advocates all the requisite completion documents including original title deed, leases and requested the plaintiff to confirm via email such additional documents the plaintiff may require in relation to the registration process.c)On October 12, 2020 the plaintiff proceeded to book the documents for registration (see page 7 to 10 of the exhibit) and by an email of November 9, 2020, the plaintiff's advocates advised the defendant that "the lease registration process for the apartment units in favour of our client is currently ongoing and that the sectional planner at the lands registry has requested for a PDF version of the architectural drawings for the entire property to enable him finalize on the sectional plan."d)Again, by an email of November 9, 2020, the plaintiff's advocates confirmed that: The lease registration process for the apartment units in favour of the plaintiff was currently ongoing.

That however, the plaintiff had opted for the creation of sectional titles for the units as this option would entail less administrative processes at the land's registry. See page 13 and 14 of the respondent's exhibit.

On June 7, 2021, the plaintiff's advocates informed the defendant that that the title deeds for the apartments were ready (save for sealing and signing) and proceeded to request for the transfer by chargee for the respective units purchased by the plaintiff. The said transfers were duly forwarded to the plaintiff's advocates on June 15, 2021. See page, 31, 32 33 and 37 of the respondent's exhibit.

Finally on June 17, 2021, the plaintiff's advocates acknowledged receipt of the duly executed Transfer instruments for all the apartments and confirmed that they were proceeding to submit the documentation to the land registry for registration and that "We note to keep you posted on the developments as they arise. "

Instead of the plaintiff updating the defendant on the progress of the registration, the plaintiff filed this suit in court despite having received all the completion documents and being solely in charge of the registration process. There can never be a better example of abuse of court the process.

Analysis and Determination 4. Parties canvassed the application by way of written submissions. The main issue for determination is whether the plaintiff has made out a case for the striking out of the statement of defence and by extension, whether judgment should be entered in favour of the plaintiff.

5. The court’s jurisdiction to strike out pleadings is provided for under order 2 rule 15(1) of the Civil Procedure Rules, 2010 which provides as follows:-(1)At any stage of the proceedings the court may order to be struck out or amended any pleading on the ground that-(a)it discloses no reasonable cause of action or defence in law; or(b)it is scandalous, frivolous or vexatious; or(c)it may prejudice, embarrass or delay the fair trial of the action; or (d) it is otherwise an abuse of the process of the court, and may order the suit to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

6. The gist of the plaintiff’s case was that the statement of defence is devoid of any triable issues since the defendant has admitted all the critical aspects of its case as listed in ground No 2 of the application.

7. The defendant, on its part, maintained that the plaintiff is guilty of material non-disclosure of all the facts of the case especially with respect to the fact that the defendant had availed to it all the documents required to facilitate the transfer of the suit property to the plaintiff. According to the defendant, it had fully performed its obligations under their agreement after which the plaintiff took over the task of effecting the registration of the titles.

8. Courts have taken the position that the jurisdiction to strike out pleadings is discretionary but must be exercised judicially. In Postal Corporation of Kenya vs IT Inamdar & 2 Others [2004] 1 KLR 359, it was held that: -“The law is now well settled that if the defence filed by a defendant raises even one bona fide triable issue, then the defendant must be given leave to defend.

9. In Olympic Escort International Co Ltd & 2 Others v Parminder Singh Sandhu & Another [2009] eKLR, the court opined that a triable issue is not necessarily one that the defendant would ultimately succeed on but it need only be bona fide.

10. In the Co-operative Merchant Bank Ltd v George Fredrick Wekesa (Civil Appeal No 54 of 1999) the Court of Appeal stated:“Striking out a pleading is a draconian act, which may only be resorted to, in plain cases...Whether or not a case is plain is a matter of fact...Since oral evidence would be necessary to disprove what either of the parties says, the appellant’s defence cannot be said to present a plain case of a frivolous, scandalous, vexatious defence, or one likely to prejudice, embarrass or delay the expeditious disposal of the respondent’s action or which is otherwise an abuse of the process of the court.”

11. In Yaya Towers Limited v Trade Bank Limited (In Liquidation) (Civil Appeal No 35 of 2000) the court expressed itself thus:-“A plaintiff (defendant) is entitled to pursue a claim in our courts however implausible and however improbable his chances of success. Unless the defendant (plaintiff) can demonstrate shortly and conclusively that the plaintiff’s claim is bound to fail or is otherwise objectionable as an abuse of the process of the court, it must be allowed to proceed to trial...It cannot be doubted that the court has inherent jurisdiction to dismiss that, which is an abuse of the process of the court. It is a jurisdiction, which ought to be sparingly exercised and only in exceptional cases, and its exercise would not be justified merely because the story told in the pleadings was highly improbable, and one, which was difficult to believe, could be proved.

12. Similarly, in DT Dobie & Company Kenya Limited v Joseph Mbaria Muchina & Another [1980] eKLR, Madan JA, stated:-“No suit ought to be summarily dismissed unless it appears so hopeless that it plainly and obviously discloses no reasonable cause of action, and is so weak as to be beyond redemption and incurable by amendment. If a suit shows a mere semblance of a cause of action, provided it can be injected with real life by amendment, it ought to be allowed to go forward for a court of justice ought not to act in darkness without the full facts of a case before it.”

13. In the present case, I note that the defendant does not deny that it entered into an agreement with the plaintiff for the purchase of the suit property at an auction and that the plaintiff paid the full purchase price thereby setting the process of the transfer of the said property to the plaintiff in motion. The defendant’s case is that it fully performed it part of the bargain in the agreement availing and signing all the requisite transfer documents to the plaintiff.

14. The defendant was categorical that the sale of the apartments to the plaintiff by public auction is complete in the sense that:-a)The hammer fell on the successful bid.b)The purchaser paid the deposit.c)The balance of the purchase price was paid in the escrow account.d)The bank released all its documents to the purchaser.e)The purchaser booked the transfer documents for registration.f)The purchaser informed the bank that the title deeds for the apartments are now ready (save for sealing and signing).g)There was nothing further to be done by the bank to complete the sale.

15. The defendant maintained that it was at a loss at to what else it was expected to do in the entire transfer process which the plaintiff undertook to solely spearhead.

16. My finding is that considering the totality of the evidence presented by the parties in support/opposition of the application, it is clear that all was well between the parties from the time of the auction up to the tail end of the deal when it appears that there could have been a hitch. In the circumstances of this case, I am unable to find that the defence tendered by the defendant herein can be said to be frivolous or vexatious.

17. I note that the defendant has laid bare all the facts of the case before the court. This court is not, at this interlocutory stage, expected to determine the merits of each parties’ case but it suffices to state that such a decision can only be made by the trial court after considering the evidence to be tendered at the hearing.

18. For the above reasons, and without considering the merits of the defence, which falls within the, ambit of the court that will try the case, this court finds that the defence raises triable issues which can only be unpacked at the hearing.

19. In sum, I find that the application dated September 27, 2021 is not merited and I therefore dismiss it with orders that costs shall abide the outcome of the mains suit.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 8TH DAY OF DECEMBER 2022. W. A. OKWANYJUDGEIn the presence of: -Mr. Kyalo for Kamau Karuri Senior Counsel for plaintiff/applicant.Mr. Kimani for defendant.Court Assistant- Sylvia