Habilhalim Company Limited v Barclays Bank of Kenya Limited [2015] KEHC 1501 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

CIVIL SUIT NO. 13  OF 2014

HABILHALIM COMPANY LIMITED..............................PLAINTIFF

VERSUS

BARCLAYS BANK OF KENYA LIMITED....................DEFENDANT

RULING

1.  Habihalim company Ltd, the Plaintiff herein, took out the motion dated 4th August 2014, in which it sought for the following orders:

1) This Honourable Court be pleased to strike out the Defendant’s Statements of Defence filed herein.

2) In the alternative this Honourable Court be pleased to enter judgement as against the Defendant on admission as prayed in the plaint.

3) The Defendant does pay for the costs of this application.

2. The Plaintiff filed the affidavit of Adan Dahir Ibrahim, its director to oppose the motion.  When served with the motion, Barclays Bank of Kenya Ltd, the Defendant herein, filed grounds of opposition dated 3. 3.15 to resist the motion.  When the motion came up for interpartes hearing, learned counsels recorded a consent order to have the same disposed of by written submissions.

3. I have considered the grounds set out on the face of the motion plus the facts deponed in the supporting affidavit and the grounds of opposition.  Before considering the merits or otherwise of the application, let me state the background in brief of this dispute. The Plaintiff purchased banker’s cheque no. 10072049 on 24. 09. 2013FROM Barclays Bank (K) Ltd, Nkurumah Road Branch for US$29,127/20 in favour of M/s Bollore Africa Logistics Ltd.  It is alleged that at the time of making the request for issuance of a banker’s cheque, the Plaintiff’s bank account was in credit of US$107,001/74.  It is said that the Defendant acted on the Plaintiff’s instructions whereof it debited the Plaintiff’s account of US$29,127/00 plus a commission of US$10/00 leaving a credit balance of US$77,864/54 as of 24. 09. 2013.  On 15. 10. 2013, M/s Bollore Africa Logistics Ltd, the beneficiary of the banker’s cheque, informed the Plaintiff that the bankers cheque had been dishonoured due to insufficient funds.  The Plaintiff appears to have lodged a protest which prompted the Defendant to request m/SBollore Africa Logistics Ltd to re-bank the dishonoured cheque.  It took the Defendant three(3) weeks to clear the cheque despite the same  having been re-deposited in time as requested.  The Plaintiff was unhappy for thIS turn of events hence it was prompted to sue for damages for slander and for breach of the duty of care.  The Defendant filed a defence denying the Plaintiff’s claim.  The Plaintiff has now applied vide the current motion to have the Defence struck out and for entry of summary judgement.

4. It is the submission of the Plaintiff that the Defendant’s defence discloses no reasonable defence in law. It is also stated that the same is scandalous, frivolous and vexatious and that if it is not struck out it may prejudice, embarrass or delay the fair conclusion of this action.  The Defendant on the other hand is of the view that the Defence raised reasonable grounds.  The Defendant avers that at the trial it will show that the delay to clear the banker’s cheque was occasioned by a technical problem which was not of its making but the beneficiary’s bankers.  The Defendant further pointed out that the Plaintiff having responded by a way of reply to the Defendant’s defence means that the Plaintiff acknowledges that the Defence raises triable  issues. The Defendant concluded by stating that a cursory look at the plaint, the defence and reply to defence will reveal that there are factual disputes as to whether the cheque in question was dishonoured for insufficiency of funds or otherwise was it because of technical problems.  For the above reasons the Defendant beseeched this court not to strike out its defence.  It is argued that the defence is neither frivolous nor vexatious nor is it otherwise defective.

5. The principles to be considered before making an order for striking out a pleading are well settled. The beginning point is that the summary procedure is a radical remedy and a court of law should be slow in resorting to this procedure which can only be applicable in plain, clear and obvious cases. In Dhanja/ Investments Ltd = vs = Shabaha Investments Ltd Civil Appeal No. 232 of 1997 (unreported) the Court of Appeal stated inter-alia as follows:

“The law on summary judgement procedure has been settled for many years now. It was held as early as 1952 in the case of Kandnlal Restaurant=vs=Dershi & Co (1952) EACA 77 and followed by the Court of Appeal for Eastern African in the case of Souza Figuerido & Co. Ltd- = vs= Mooring Hotel Ltd  (1952) EW.A 425  that if the Defendant shows a bona fide triable issue he must be allowed to defend without conditions .....”

6. In Kenya Trade Combine Ltd = vs = M. Shah C.A no. 193 of 1999 (unreported), the Court of Appeal expressed itself in part as follows:

“In a matter of this nature, all a Defendant is supposed to show is that a defence on record raised triable issues which out to go for trial. We should hasten to add that in this respect a defence which raised triable issues does not mean a defence that must succeed.”

7. In D. T. Dobie & Co. (K) Ltd = vs = Muchina (1982) K.L.R 1 Madam J. A stated inter-alia

“The court ought to act very cautiously and carefully and consider all facts of the case without embarking upon a trial thereof before dismissing a case for not disclosing a reasonable cause of action or being otherwise an abuse of the process of the court.  At this stage the court ought not to deal with any merits of the case for that is a function solely reserved for the judge at the trial as the court itself is not usually fully informed so as to deal with the merits without discovery, without oral discovery tested by cross-examination in the ordinary way.”

8. The Court of Appeal in Coast Projects Ltd =vs= M. R. Shah Construction (K) Ltd (2004) K.L.R 119 at p. 122 stated in part  as follows:

“The Plaintiff is entitled to proceed with an application for striking out a defence with the consequential entry of judgement for liquidated claim in situations where the defence is frivolous and or vexatious.  It is a procedure, which is intended to give a quick remedy to a party which is being denied its claim by what may be described as a sham defence.  This is, however, a procedure which is to be resorted to in very clear and plain cases.  A mere denial is not sufficient defence in most cases.

9. In Vaiwin Ltd =vs= Rsikbhai Manibhai Patel, C.A 248 of 1999(2000) e KLR the Court of Appeal further stated interalia as follows:

“In a summary judgment application, if the Defendant is able to raise a prima facie triable issue he is entitled in law to unconditional leave to defend.  On the other hand, if no prima facie triable issue is put forward to the claim of the Plaintiff, it is the duty of the court of forthwith enter summary judgment for is as much against natural justice t shut out without proper cause a litigant from defending himself as it is to keep a Plaintiff out of his dues in a proper case.  Prima facie triable issues ought to be allowed to go for trial, just as a sham or bogus defence ought to be rejected peremptorily.”

10. I have considered the background of the dispute plus the applicable principles and the relevant authorities plus the rival written submissions.What comes out clearly from the available authorities is that the striking out of an action is a draconian step.  The Defendant has raised a preliminary issue which is to the effect that the Plaintiff’s motion is defective since no evidence is entertained under Order 2 rule 15(1) (a) of the Civil Procedure Rules.  It is argued that supporting affidavit should not have been filed.  It is trite law that under the aforesaid provisions, no evidence is admissible when one is seeking to have a pleading struck out on the ground that it discloses no reasonable cause of action of defence.  In such a case the court is required to only scrutinise the pleadings and the averments. However where the application is based on the ground that a pleading is frivolous, scandalous or is an abuse of the process of the court like in this case, evidence is admissible.  The Plaintiff’s motion is premised not only on Order 2 rules 15(1)(a) but also under (b), (c ) and (d) of the Civil Procedure Rules.  The motion is therefore found to be properly and competently before this court.

11. The second question to be determined is whether or not the defence no reasonable defence. The Defendant admits that the banker’s cheque it issued was dishonoured. The Defendant alleges that the main reason for the delay in clearing the re-banked cheque was due M/s Bollore Africa Logistics Ltd’s bank.  The Defendant further denied having published the words “insufficient funds”.  The Defendant seems to lay blame on the beneficiary’s bank.  It has not deemed it fit to enjoin the aforesaid bank as a third party.  In the circumstances, I find that the Defendant’s defence does not disclose a reasonable defence in law.  The triable issue set  out of the pleading sin my view is not bonafide but the same was meant to delay the expeditious disposal of the dispute.

12. The third issue to determine is whether or not the defence is scandalous, frivolous or vexatious. In my understanding, a pleading is scandalous if it has no basis nor substance and is meant to cause delay in the fair conclusion of the case.  A vexatious pleading is said to be an action or defence has not chance of succeeding but is meant to annoy.  A pleading is regarded as frivolous if it is merely filed with no serious regard and with no intention of prosecuting or defending it.  There is no dispute that the Plaintiff’s account had sufficient funds at the time when the cheque in question was dishonoured.  So far there are no good reasons given to explain why the cheque was dishonoured and why it took a long time to have the re-deposited cheque cleared.  There is an attempt by the Defendant to blame a third party which is not privy to this suit.  In my humble view, the defence is simply frivolous and vexatious.  The only inference a court can make is that the defence was filed with the sole purpose of delaying a fair conclusion of the dispute.

13. The fourth and final issue is whether judgment should be entered on admission against tithe Defendant.  The Defendant has argued that the Plaintiff is not entitled to judgment on admission because the Defendant has not made an admission of liability in a clear, unambiguous and sufficient manner. It is argued that the Defendant has categorically denied being negligent as claimed by the Plaintiff.  It has also denied dishonouring the Plaintiff’s bankers cheque on account of insufficiency of funds.

14. The provisions of Order 13 rule 2 of the Civil Procedure Rules clearly states that the admission of facts need not be on the pleadings and they may be in form of exchanged correspondences or documents which are already admitted.  I have already stated that the Plaintiff and the Defendant  agree that there were sufficient funds in the Plaintiffs account with the Defendant at the time the banker’s cheque was dishonoured.  There is also no denial that the Defendant asked the Plaintiff t request M/s Bollore Africa Logistics Ltd to re-bank the cheque after it was returned unpaid.  In my view there is no magical way of looking at it. An ordinary reasonable man will regard the Defendant’s conduct in the saga to imply an unequivocal admission of the Plaintiff’s claim.  Consequently, I am convinced that the Plaintiff is entitled to judgment on admission.  What remains is for the case to proceed for formal proof to establish quantum.

15. In the end I find the motion dated 4th August 2015 to be well founded.  It is allowed as prayed in terms of prayers 1, 2 and 3.  The suit to be fixed for hearing as a formal proof to establish quantum of damages.

Dated and delivered in open court this 23rd day of October, 2015.

J. K. SERGON

JUDGE

In the presence of:

……………………….…. for the Plaintiff

……………………..…….for the Defendant