Francis L. Atwoli v Cyrus Shakhalaga Khwa Jirongo [2017] KEHC 2435 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL & ADMIRALTY DIVISION

CIVIL CASE NO. 15 OF 2017

FRANCIS L. ATWOLI…….…………..…………………..PLAINTIFF

VERSUS

CYRUS SHAKHALAGA KHWA JIRONG...……….…..DEFENDANT

RULING

1. The Decision in Choitram Vs. Nazari (1984), KLR 327 is popularly accepted as the locus Classicus for the Principles to be applied in considering an Application for Judgement on Admission.

2. At pages 333, Madan JA rendered himself as follows:-

“For the purpose of order XII rule 6, admissions can be express or implied either on the pleadings or otherwise, eg in correspondence. Admissions have to be plain and obvious, as plain as a pikestaff and clearly readable because they may result in judgement being entered. They must be obvious on the face of them without requiring a magnifying glass to ascertain their meaning”.

Those are the Principles that guide my hand in deciding the Application before me.

3. This suit pits one renowned figure against another. Francis Atwoli (the Plaintiff) sues Cyrus Shakhalaga Khwa Jirongo(the Defendant) for a sum of Khs.110m, Damages for breach of Contract and Interest on the Principle sum of Ksh.110m at 25% with effect from 10th August, 2016 to the date of payment.

4. In a Plaint dated 9th January 2017 and presented to Court on 13th January 2017, the Plaintiff avers that the Principal sum is on account of a friendly loan of Khs. 100 million advanced to the Defendant by the Plaintiff with interest “top up” of Khs.10 million. The loan was advanced vide an agreement of 10th August 2016 and a further written undertaking executed by the Defendant on 10th October 2016 admitting the debt.

5. The Defence to this Claim is that the Defendant executed the undertaking of 10th August 2016 as a Director of Kuza Farm and Allied Limited (hereinafter KUZA) under which KUZA was to pay the sum of USD 1. 1 million to M/S. J.A Guserwa & Co. Advocates on behalf of the Plaintiff in consideration for the loan of USD 1 million advanced by the Plaintiff.

6. In the Defence filed herein on 28th February 2017, the Defendant asserts that the advanced sums were to be secured and paid out of proceeds due to KUZA in HCCC ELC NO. 507 OF 2014 KUZA FAMRS & ALLIED LIMITED VS. THE BOARD OF DIRECTORS OF A.E.F REUBEN PRIMARY SCHOOL, THE NAIROBI CITY COUNTY,THE ATTORNEY GENERAL AND THE NATIONAL LAND COMMISSION(thereinafter “the land case”). Whilst KUZA holds a valid decree of Khs.250 million therein, the County Government has delayed and defaulted in remitting the said sum.

7. The Defendant makes the argument that the Plaintiff should take out garnishee proceedings against the County Government in the Land case for the said amount of Khs.110 million.

8. Unwillingly to await fully-fledged proceedings, the Plaintiff moved Court on 23rd March 2017 through a Notice of Motion for the following substantive prayers:-

1. Spent

2. THAT the Honourable Court be pleased to strike out the defence filed herein as a sham, frivolous, misconceived and lacking in merit.

3. THAT the Honourable Court be pleased to enter Judgement in favour of the Plaintiff/Applicant on admission of the claim.

9. Order 13 Rules 1 and 2 of The Civil Procedure Rules under which the Motion is brought reads as follows:-

“1. Any party to a suit may give notice by his pleading, or otherwise in writing, that he admits the truth of the whole or part of the case of any other party.

2. Any party may at any stage of a suit, where admission of facts has been made, either on the pleadings or otherwise, apply to the court admissions for such judgment or order as upon such admissions he may be entitled to, without waiting for the determination of any other question between the parties; and the court may upon such application make such order, or give such judgment, as the court may think just”.

10. A suitor can launch an Order 13 Rules 1 and 2 Application on the basis of admission on the Pleadings or otherwise. But to be successful in such a bid the admission must be plain and obvious. It must be unequivocal.

11. The Plaintiff here sees admission in two star documents. The first in an acknowledgement and undertaking dated 10th August 2016 in which the Defendant avers as follows:-

J.A GUSERWA & CO. ADVOCATES

5TH AVENUE OFFICE SUITES, 2ND FLOOR

5TH NGONG AVENUE

P.O. BOX 8384-00200

NAIROBI

ACKNOWLEDGEMENT AND UNDERTAKING

I, SHAKHALAGAKHWA JIRONGO I.D NO. 6883221 and Post Office Box No.73179-00200 Nairobi do hereby acknowledge receipt of USD 1 Million (one million) from MR. FRANCIS A. ATWOLI as a friendly loan payable back to him within the next 50 days from the date hereof form the proceeds of damages payable to my Company KUZA Farm Ltd by Nairobi City County under the proceeds of the Consent Order recorded in High Court Case No. 507 of 2014 (KUZA Farms Ltd versus The Board of Directors AEF, REUBEN PRIMARY SCHOOL-NAIROBI CITY COUNTY AND THE HONOURABLE ATTORNEY GENERAL (As per the attached Court Order).

That I acknowledge receipt of these funds on the security of my consent Judgement in the aforesaid case and the undertaking given by the Nairobi City County Lawyers M/S KITHII & COMPANY ADVOCATES to Mr. Francis Atwoli’s Lawyers to repay the said amount to him with a top up of USD 100 Thousand making a total of USD.1. 1 Million payable within the agreed time.

In default of a refund or repayment of the aforementioned monies to Mr. Francis Atwoli within the stipulated period, Mr. Atwoli will be at liberty to attach my Judgement in the above case or to enforce repayment against me personally or any property of mine to recover the full sum due with interest at the rate of 25% pa, costs and incidentals thereto.

DATED AT NAIROBI THIS 10TH DAY OF AUGUST 2016. (my emphasis)

12. The terms of that undertaking are self-speaking. The person who was advanced the loan was the Defendant and not his Company KUZA. Just as clear was that the amount was to be paid within the next 50 days from the date of the acknowledgement and undertaking. Clear as well was that the payment was to come from proceeds of the Decree in HCC CASE NO.507 of 2014. It was also agreed that there would be a “top up” of USD 100,000/=.

13. If there was doubt as to who would be liable to pay the advanced sum, then that would be clarified in the following terms of the undertaking:-

The Defendant had unequivocally accepted that the Plaintiff could enforce repayment against him personally.

14. Counsel for the Defendant submitted that loan was in fact given to KUZA and not the Defendant. It is further argued that, indeed, the repayment would come from the Decretal sum due to KUZA in HCC No. 507 of 2014.

15. The view this Court takes is that in the face of the unequivocal acceptance of 10th August 2016 by the Defendant to be personally liable for the advanced sums, the Defendant cannot shift liability to KUZA.

16. And any firepower in the argument that KUZA is liable is extinguished by the Defendants further undertaking of 21st October 2016. The undertaking is short, plain, obvious and unequivocal. It is as follows:-

I, SHAKHALAGA KHWA JIRONGO I.D NO. 6883221 and of Post Office Box No.73179-00200 Nairobi do hereby give the firm of M/S. J.A GUSERWA & CO. ADVOCATES for and on behalf of MR. FRANCIS ATWOLI an undertaking for the sum of Kshs.110 Million in full and final settlement of my indebtedness to him in respect of monies advanced to me by him.

This undertaking is not revocable.

These monies will be paid on or before the 21st day of October, 2016.

Dated this 10th day of October 2016.

Signed by SHAKHALAGA KHWA JIRONGO

17. In it the Defendant acknowledges that the sums were advanced to him and that he bore the responsibility of repaying a sum of Kshs. 110 million on or before 21st October, 2016.

18. The date of 21st October 2016 is now gone. The Defendant has not paid the said sum and hence this suit. The Defendant indebtedness was plain and obvious in the acknowledgement and undertaking of 10th August 2016. It was even more obvious and unequivocal when the Defendant gave the further undertaking of 21st October 2016. This Court holds and finds that the Defendant has admitted owing Kshs.110 million to the Plaintiff and there can be no defence to that claim.

19. There are however two other limbs to the Plaint. One is for Damages for breach of Contract. There has been no attempt to prove it in the Application before Court and that must await full trial.

20. There is then a claim of interest at 25% with effect from 10th August 2016. In effect the Plaintiff makes a claim for antecedent Interest. There will be instances when a Court will grant antecedent interest and in Highway Furniture Mart Limited v. Permanent Secretary Office of the President & another (2006) eKLR, the Court of Appeal has said this about it:-

“Section 34 (1) of the Indian Code of Civil Procedure is still intact and is in the same language as Section 26(1) of the Civil Procedure Act, (see Mulla – The code of Civil Procedure 16th Edition vol.1 page 505). At page 511 of Mulla (supra) the authors state:

“Interest up to date of suit is a matter of substantive law and the section does not refer to payment of interest under the first head (that is interest accrued prior to the institution of the suit).

……. It has been said the right to interest prior to the suit is a substantive one whereas Pendente Lite, it is one of procedure within the discretion of the court”.

The authors further show that according to the substantive law, interest antecedent to the suit is only claimable where under an agreement there is stipulation for the rate of interest (contractual rate of interest) or where there is no stipulation, but interest is allowed by mercantile usage (which must be pleaded and proved) or where there is statutory right to interest or where an agreement to pay interest can be implied from the course of dealing between parties (see pages 511-514) of Mulla (supra)”.

21. In the undertaking of 10th August, 2016, the Defendant had covenanted to pay interest at the rate of 25% pa in the event of default. However the issue of interest is conspicuously left out in the subsequent document. This latter document is a document of 21st October 2016. This letter document is a document relied on by the Plaintiff to prove the Defendant indebtedness of Kshs.110 million. In fact in paragraph 6 of his Supporting Affidavit he states as follows:-

“THAT as the repayment date came by the Defendant and/or Respondent failed to repay the money, I instruct my Counsel on record to obtain an undertaking from him on repayment which was duly executed on 21st of October, 2016”.

22. It seems to me that by accepting the new undertaking of 21st October 2016 the Plaintiff was not pressing for payment of interest on the defaulted amount. This Court sees no basis therefore for awarding antecedent interest.

23. It is therefore not clear whether the Plaintiff had abandoned the payment of interest as earlier agreed. This issue must await trial.

24. The upshot is that Judgement on Admission for Khs.110million is entered against the Defendant with costs thereon. The Plaintiff shall also have costs of the Notice of Motion of 23rd March 2017.

Dated, Signed and Delivered in Court at Nairobi this 12th Day of October, 2017.

F. TUIYOTT

JUDGE

PRESENT;

Guserwa for Plaintiff

Koyoko for Defendant

Alex - Court clerk