Kariuki v Makone (The Statutory Manager)Concord Insurance Co Ltd & another [2023] KEHC 24260 (KLR)

Kariuki v Makone (The Statutory Manager)Concord Insurance Co Ltd & another (Civil Suit 534 of 2014) [2023] KEHC 24260 (KLR) (Commercial and Tax) (27 October 2023) (Ruling)

Neutral citation: [2023] KEHC 24260 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Civil Suit 534 of 2014

FG Mugambi, J

October 27, 2023

Between

George Ngure Kariuki

Plaintiff

and

Charles Osoro Makone (The Statutory Manager)Concord Insurance Co Ltd

1st Defendant

Charles Peter Mwangi

2nd Defendant

Ruling

Brief Facts 1. This ruling determines the application dated 19th April 2022. It is brought under Order 8 rule 3 of the Civil Procedure Rules, section 3A of the Civil Procedure Act and all enabling provisions of the law seeking leave to amend the 2nd defendants’ Statement of Defence and have the annexed copy be deemed as duly filed. The application was premised on the grounds stated on the face of it and the supporting affidavit sworn by Dominic Njuguna Mbigi. The applicant filed written submissions dated 19th July 2022 and further submissions dated 5th August 2022.

2. The application was opposed by the respondent vide grounds of opposition dated 7th June 2022 and substantiated by the written submissions dated 29th July 2022.

3. The background to the dispute is that the plaintiff and the 2nd defendant were co-directors of Concord Insurance Company, where the 1st defendant was appointed as statutory manager. The present suit was instituted by the plaintiff vide a plaint dated 14th November, 2014 against the 1st defendant, claiming a refund of monies and re-transfer of a property transferred to the 1st defendant in consideration for shares which were never transferred to the plaintiff.

4. The 2nd defendant was eventually enjoined in the proceedings and filed his Statement of Defence dated 9th October, 2015. The 2nd defendant’s claim was against the 1st defendant, for indemnity on account of disbursements and costs and for reimbursement of funds held in escrow by the advocates of the plaintiff and the 1st defendant.

5. Consequently, the dispute between the plaintiff and the 1st defendant was settled vide a consent recorded on 27th January 2021 and the said consent has been partially implemented, with the remaining issue being the retransfer of the property.

6. The 2nd defendant’s application rests on the fact that the plaintiff and the 1st defendant having settled their case against each other without involving him, meant that he had to pursue his claim against the plaintiff and not the 1st defendant. The 2nd defendant therefore sought to amend the statement of defence for the purposes of reflecting the change and realigning the counterclaim.

7. The plaintiff opposed the application on the grounds that it had been filed after an inordinately long time, having been filed 1 year 4 months after the consent order. It was the plaintiff’s case that it would be highly prejudiced if the application for amendment is allowed since the consent order was entered into on the basis that the claim by the 2nd defendant was against the 1st defendant and not the plaintiff. The consent had therefore ended the claim filed by the plaintiff against the 1st defendant.

Analysis 8. I have carefully considered the pleadings, evidence and submissions raised by rival parties in support of their cases. The main issue is whether the applicant should be granted leave to amend his statement of defence.

9. Section 100 of the Civil Procedure Act and Order 8 rule 3 of the Civil Procedure Rules, 2010, gives the court discretion to allow parties to amend pleadings at any time, and on such terms as to costs or otherwise as it may think fit. The cardinal consideration is that amendments should serve the purpose of determining the real issues in dispute, as was echoed by the court in KK Lodgit LimitedvGeminia Insurance Company Ltd &another, [2021] eKLR.

10. The Court of Appeal has further set out the principles which the Court should consider in granting leave to amend pleadings in Joseph Ochieng andothers vFirst National Bank of Chicago Civil Appeal Number 147 of 1 (unreported) and in Elijah Kipngeno Arap BiivKenya Commercial Bank Limited [2013] eKLR. These are that:i.the power of the court to allow amendments is intended to determine the true substantive merits of the case;ii.the amendments should be timeously applied for;iii.power to amend can be exercised by the court at any stage of the proceedings;iv.that as a general rule however late the amendment is sought to be made it should be allowed if made in good faith provided costs can compensate the other side;v.the plaintiff will not be allowed to reframe his case or his claim if by an amendment of the plaint the defendant would be deprived of his right to rely on limitations Act subject however to powers of the court to still allow an amendment notwithstanding the expiry of current period of limitation.

11. I have perused the draft Amended Statement of Defence and 2nd Defendant’s Counterclaim which is dated 19th April 2022. The amendments that the 2nd defendant seeks is to mainly claim against the plaintiff on the terms that if the funds held in escrow by advocates for the plaintiff and 1st defendant, have already been released to the plaintiff, the 2nd defendant is entitled to recover it from the plaintiff.

12. The amendments in question arise out of the same facts as the cause of action in respect of which relief has already been claimed against the 1st defendant in the same suit. The amendment is justified arising from the consent judgment as between the plaintiff and the 1st defendant and I find that the plaintiff would not suffer any injustice that cannot be compensated by costs.

13. In any case, the plaintiff will also be at liberty to respond to the issues raised by the 2nd defendant. The fact that the application is made 1 year and 4 months after the consent judgment was entered does not in itself, in the absence of any other evidence impute bad faith on the 2nd defendant and take away his right to have the dispute determined on merits.

Determination 14. For all the foregoing reasons, the application to amend the statement of defense is merited. The same is allowed as prayed subject to the directions of the Court which parties shall comply with for purposes of preparing the matter for hearing. The costs of the application shall await the outcome of the suit.

DATED, SIGNED AND DELIVERED IN NAIROBI THIS 27TH DAY OF OCTOBER 2023. F. MUGAMBIJUDGE