JOACKIM MWANDALE OKESSA v THABITI FINANCE CO. LTD [2007] KECA 397 (KLR)

REPUBLIC OF KENYA

IN THE COURT OF APPEAL OF KENYA

AT NAIROBI

Civil Appeal 38 of 2004

JOACKIM MWANDALE OKESSA …………………….… APPELLANT

AND

THABITI FINANCE CO. LTD. ……………..………….. RESPONDENT

(Appeal from the decision and decree of the High Court of Kenya at Milimani Commercial Courts,

Nairobi (Mwera, J.) dated 26th March, 2003

in

H.C.C.SUIT NO. 700 OF 1999)

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JUDGMENT OF THE COURT

This is an appeal from the ruling of the superior court (Mwera, J.)  in which the learned Judge struck out the appellant’s suit as against the respondent herein in High Court Civil Case No. 700 of 1999.  In that suit the appellant herein Joackim Mwandale Okessa (as the plaintiff) filed a suit against Thabiti Finance Co. Ltd. (In Liquidation, Liquidating Agent Deposit Protection Fund Board) (1st Defendant), Christopher Wambugu (2nd Defendant), Crispin Maina (3rd Defendant) and Lawrence Charles Kungu (4th Defendant).  In that suit the appellant as plaintiff sought judgment against the defendants (respondents herein) jointly and severally:

“(a)  A declaring (sic) that in the events that have happened the 1st defendant is bound to account for the full value of the Chattel motor vehicle Reg. No. KAA 738R now retained for itself or sold and the 1st defendant was bound to sell the same and account for the proceeds or value thereof within a reasonable time and further that the 1st defendant was bound to serve a statutory notice and to sell by Public Auction the suit premises and further that sale behind closed doors in a tiny upstairs office was fraudulent and that the sale to the 3rd defendant is fraudulent and the resale to the 4th defendant on 24th February, 1998 without notice and not at a public auction and for a bid not offered is fraudulent and a declaration that the 1st defendant was not entitled to consolidate the mortgage account with any others and an order for accounts to be settled of what is due the mortgage account and an order nullifying the alleged sales of 8th July 1997 and of 24th February 1998 and an injunction restraining the defendants by themselves their servants or agents from selling disposing or alienating charging or anyhowsoever interfering with encumbering the plaintiff right title and interest in the suit premises  either by sale or transfer to themselves or to whomsoever pending determination of suit.

(b)     All necessary and consequential accounts directions and injuries.

(c)     Costs of suit and interest thereon at Court rates.

(d)     Further or other relief within the inherent jurisdiction of this Honourable Court.

Before the suit could proceed any further the 1st defendant filed an application dated 4th November, 2002 under Order VI rule 13(1) (b) (d) of the Civil Procedure Rules and Sections 3A and 7 of the Civil Procedure Act.  The main prayer in that application was that the suit be struck out as against the 1st defendant on the ground that it was vexatious and an abuse of the court process.

When that application came up for hearing before Mwera, J. the learned counsel for the 1st defendant, Mr. Ougo, informed the court that there was a suit HCCC 1375/97 in which the parties were the present appellant and the 1st & 2nd respondents.  In that suit the subject matter centered around parcel L.R. NRI/BLOCK 110/442 and motor vehicle registration No. KAA 738R.  The pleadings were that the appellant herein took a loan from the 1st respondent in which the two assets stated above were pledged as securities and that the appellant had defaulted in repayment of the loan leading to the said assets being sold.  It was further stated that the 2nd  respondent bought the land.  It was the first respondent’s defence that the said sale was regular and proper.  The suit in HCCC 1375/97 was heard and determined by Ole Keiwua J. (as he was then).  In his judgment dated and delivered on 4th December, 1998 the learned Judge stated inter alia:-

“The plaintiff accordingly prays for a declaration that the sale of the charged property was irregular and a nullity.  An order for the taking and settling of accounts is also prayed for.  The court is invited to declare that the plaintiff is not indebted to the defendant in respect of these securities.  General damages are prayed for.

The defendant asserts the plaintiff and the borrower default (sic) in the loan repayment.  That default was admitted by the plaintiff who was a director of the borrower.  In that respect the plaintiff promised to pay Kshs.20,000/= to the defendant by December 16, 1996 and thereafter promised to identify a buyer of the charged property by January 15, 1997 and failing such identification by January 31, 1997 the defendant was to be at liberty to sell the said property.  I am satisfied that the plaintiff admitted all this again during his cross-examination.  I also do not accept the plaintiff’s testimony regarding what he alleges to have transpired at the auction of the charged property.  He has been shown to be lying.  I am also satisfied that the 2nd defendant is wrongly sued as he was not the one who sold the charge property and he is not even an auctioneer.  The suit against him is dismissed with costs to him.  I am also satisfied that the requisite statutory notice has been given.

I am accordingly of the view that in the circumstances of this suit no taking or settling of accounts is warranted as the defendant led sufficiently truthful evidence regarding the true state of the plaintiff’s accounts.  The suit is accordingly dismissed with costs.

In dealing with the application for striking out the appellant’s suit, Mwera J., considered Mr. Ougo’s submission and taking into account the judgment delivered on 4th December, 1998 agreed with Mr. Ougo that the appellant’s suit be struck out.  In his ruling dated 26th March, 2003 striking out the suit Mwera, J. said:-

“The Court is not in doubt that the nature of HCCC 1375/97 as between the plaintiff and the 1st defendant is the same as in the present suit the subject matter(s), the prayers and the reliefs sought.  That the judgment in HCCC 1375/97 disposed of the matter as it did, leaves no doubt that laying this suit against the 1st defendant in the same manner no doubt vexes it.  Indeed that suit having determined what it did, bringing up a similar suit can but be termed an abuse of the process of court and ought to be stopped.

Accordingly the suit herein is struck out as against the 1st defendant in the terms set out in the application under review.”

It is the foregoing ruling that triggered this appeal.  When the appeal came up for hearing before us, Mr. F.N. Wamalwa appeared for the appellant while Mr. Chacha Odera, appeared for the respondents.  In his submissions, Mr. Wamalwa faulted the learned judge of the superior court first on the procedural aspect and then on the issue of res judicata.  It was Mr. Wamalwa’s contention that res judicata could only be raised during the trial and not by way of chamber summons application under Order VI Rule 13(1) (b) and (d) of the Civil Procedure Rules.  Mr. Wamalwa emphasized the point that the Court did not observe the rules of procedure.  On the issue of res judicata, Mr. Wamalwa contended that the learned Judge should have found that these were different causes of action notwithstanding the outcome of the previous suit.

In answer to the foregoing, Mr. Chacha Odera submitted that the procedure adopted in the superior court was correct.  He went on to submit that the issues in both suits related to L.R. NBI/BLOCK 110/442 and a motor vehicle registration No. KAA 738R.  He reminded us that both cases were founded on fraud and collusion and that the reliefs sought were the same.

In dealing with this appeal, we wish to point out that we appreciated the submissions by both counsel appearing for the parties.  We have also considered the authorities cited in support of their respective submissions.  We must, however, consider the issue of procedure adopted in the superior court.  The application to strike out the suit was filed pursuant to Order VI rule 13(1) of the Civil Procedure Rules which provides:-

“13(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 auction or defence; 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.”

Our understanding of the foregoing is that a suit may be struck out for the reasons stated therein.  In the present appeal, it was the respondents’ contention that the suit by the appellant was res judicata in view of the previous suit HCCC NO. 1375/97 which was finally determined by Ole Keiwua, J. (as he then was) in his judgment delivered on 4th December, 1998.  It is our view that the respondents were entitled to bring the application for striking out.

Having so stated, we must now revert to the main issue in this appeal.  Was the appellant’s suit in HCCC NO. 700 of 1999 res judicata?  Section 7 of the Civil Procedure Act provides:-

“No court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such court.”

At the commencement of this judgment, we set out the reliefs sought in HCCC NO. 700 of 1999.  We now wish to consider the previous suit being HCCC NO. 1375/97 in which the plaintiff was the appellant herein (and plaintiff in HCCC 700 of 1999).  The two defendants are the same 1st and 2nd respondents herein.  The reliefs sought by the appellant in his earlier suit (HCCC NO. 1375/97) as per the Amended Plaint were as follows:-

“(a)  A declaration that the sale of Nairobi/Block 110/442 by the 1st defendant to the 2nd defendant at the alleged public auction on 3rd July, 1997 was irregular, unlawful hence a nullity.

(b)  An order for taking and settling of accounts and declaration that the plaintiff is not indebted to the defendant or at all against securities L.R. NBI/BLOCK 110/442 and M/V KAA 738R or personally.

(c)  An order that any action ante the 8th July, 1997 leading to the alleged sale and threatened transfer of the suit property to the 2nd defendant at the alleged public auction on 8thJuly, 1997 be nullified and the property be reinstated to the plaintiff as the registered owner.

(d)  An injunction restraining the defendants whether by themselves, or their servants or agents or auctioneers or advocates or otherwise howsoever from transferring, disposing or interfering with the plaintiff’s peaceful enjoyment and/or quiet possession of the suit property.

(e)  General damages.

(f)  Costs of this suit and interest thereon.”

We have carefully considered the claim and reliefs sought in both HCCC NO. 1375 of 1997 and HCCC NO. 700 of 1999 and it is our observation that both suits are based on fraud and collusion.  They both relate to LR. NBI/BLOCK 110/442 and a motor vehicle registration No. KAA 738R.  The issues relating to the sale of the premises and the motor vehicle were raised in the previous suit and determined by Ole Keiwua, J. (as he then was).  Again the issue of settling of accounts was also considered in that same judgment of the learned Judge.  It is to be observed that the appellant filed a notice of appeal in respect of the ruling by Ole Keiwua, J. but nothing further followed.

Having considered the history of the two suits and the law applicable we are satisfied that the subsequent suit (HCCC NO. 700 of 1999) was res judicata.  We are therefore, in entire agreement with the ruling of Mwera J.  For these reasons we find no merit in this appeal and we order that the same be and is hereby dismissed with costs.

Dated and delivered at Nairobi this 9th day of March, 2007.

E.O. O’KUBASU

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JUDGE OF APPEAL

J.W. ONYANGO OTIENO

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JUDGE OF APPEAL

W.S. DEVERELL

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JUDGE OF APPEAL

I certify that this is a true copy of the original.

DEPUTY REGISTRAR