Maxam Limited, Modern Lane Limited & Olepasu Tanzania Limited v Heineken East Africa Import Co Ltd, Heineken Brouwerijen B V & Heineken International B V [2017] KEHC 5414 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL & ADMIRALTY DIVISION

CIVIL CASE NO. 29 OF 2016

MAXAM LIMITED ……….............….......……………..1ST PLAINTIFF

MODERN LANE LIMITED ………..………....…….…..2ND PLAINTIFF

OLEPASU TANZANIA LIMITED………....……………..3RD PLAINTIFF

VERSUS

HEINEKEN EAST AFRICA IMPORT CO. LTD.....….1ST DEFENDANT

HEINEKEN BROUWERIJEN B. V. ….......…...…….2ND DEFENDANT

HEINEKEN INTERNATIONAL B.V. ………....………3RD DEFENDANT

RULING

1. This Ruling relates to two Notice of Motion Applications. The Application dated 17th August and 29th August 2016, filed by the Plaintiffs and Defendants respectively.

2. The Application dated 17th August 2016 is brought under Order 2 Rule 2, Order 8 Rule 2, and Order 6 of the Civil Procedure Rules 2010, Section 3A, of the Civil Procedure Act, (Cap 21), Laws of Kenya and all the enabling provisions of the law.

3. The Application dated 29th August 2016 is brought under Section 1A, IB, 3A and 95 of the Civil Procedure Act, Order 8 Rules 5 and 8, Order 50 Rule 6 of the Civil Procedure Rules 2010, and all the enabling provisions of the law.

4. The Applicants in the Notice of Motion Application dated 17th August 2016, are seeking for orders as herein reproduced.

That pending the hearing and determination of this Application inter-parties, a temporary stay of any further proceedings in this suit and in particular the filing of a reply to defence to each of the three (3) separate and distinct statements of defence dated 10th August 2016 and filed in Court on 11th August 2016 by the Defendants respectively and all other proceedings consequential thereto be and is hereby issued.

That the three (3) amended defences all dated 10th August 2016 and filed in Court on 11th August 2016 by the three (3) Defendants respectively be and are hereby struck out.

That consequently, judgement be and is hereby entered against all the three (3) Defendants jointly and severally in the sum of Kshs.5,377,979,755. 00 together with interest thereon from the date of filing suit till payment in full.

That in the alternative, the three (3) amended defences dated 10th August 2016 and filed in Court on 11th August 2016 by the three (3) Defendants respectively be and are hereby struck out and the Plaintiffs do proceed with formal proof in respect of prayers I (a-d), ii – iv of the amended Plaint dated 12th May 2016.

That this Honourable Court do issue any such orders further and/or directions as it deems fit and appropriate in the circumstances of this case.

That the costs of this Application be provided for.

5. The Applicants in the Notice of Motion Application dated 29th August 2016 are seeking for orders that:

The Court do deem as duly filed and properly on record, the Amended Statements of Defence by the 1st, 2nd and 3rd Defendants dated 10th August 2016 and filed on 11th August 2016.

In the alternative, this Honourable Court be pleased to grant enlargement of time for the 1st, 2nd and 3rd Defendants to file the Amended Defences.

Costs of this Application be provided for.

6. The Applications are based on the grounds thereto, and the affidavits sworn in support thereof.

7. The Applicants in the Notice of Motion Application dated 17th August 2016, averred that, the suit herein commenced by way of a Plaint dated 5th February 2016, and filed in Court on 8th February 2016. The Plaint was filed together with a Notice of Motion Application seeking for an injunction order to temporarily stop the Defendants, from terminating:

(i) The distribution of Heinneken Larger Agreement dated 21st May 2013, between the 1st Plaintiff and the 1st Defendant,

(ii) The letters of appointment of distribution of Heinneken Larger Beer dated 28th February 2013 and 11th August 2014, between the 2nd Plaintiff and the 2nd Defendant, and

(ii) The letter of appointment of distribution of Heinneken Larger dated 11th August 2014 between the 3rd Plaintiff and the 2nd Defendant. That Application was heard interparties and the Court delivered it’s ruling thereon on 21st April 2016 issuing the order of injunction accordingly.

8. On 9th February 2016, the defendants filed a Memorandum of Appearance through the firm of Messrs Anjarwalla and Khanna Advocates and a joint Statement of Defence on the 18th February 2016.

9. Subsequently, through a Notice of Motion Application dated 29th April 2016, the Plaintiff sought for leave to amend their Plaint dated 5thFebruary 2016. That Application was heard and allowed on 9th May 2016 granting the leave sought.  The Court also gave directions as to the timelines of filing of the Amended Plaint, and Amended Statement of Defence.

10. The Plaintiffs filed and served their Amended Plaint on 13th May 2016. The Defendants were to file and serve their Amended Statement of Defence twenty-one (21) days of service of the Amended Plaint. The Defendants did not comply.  On the 3rd June 2016, the Defendants filed an Application seeking for extension of time within which to file their Amended Statement of Defence.  That Application was heard and allowed on 16th June 2016, granting the Defendants a further thirty (30) days effective 16th June 2016. Thus the Statement of Defence was to be filed and served by the 17th July 2016. That was not done. On the 9th August 2016, the Defendants’ Counsel wrote to the Plaintiff’s Counsel seeking for indulgence to file the said Statement of Defence out of time.

11. The Plaintiffs Counsel did not reply. Pending the said reply, the Defendants proceeded and filed the three Amended Statements of Defence.

12. According to the Plaintiff, the filing of the three “Separate, distinct and different” Statements of Defences, did not amend the Statement of Defence dated 17th February 2016, and filed on 18th February 2016.

13. The Plaintiffs argued that the three Statements of Defence were filed in breach of Order 8 Rule 7(2) of the Civil Procedure Rules 2010, and pursuant to the provisions of the same Order therefore the Plaintiffs cannot file any reply thereto. Therefore the three purported Statements of Defence should be struck out. In the alternative they should be struck out as they were filed without the leave of the Court, as required by Order 8 of the Civil Procedure Rules. The Plaintiff averred that, no explanation has been given by the Defendants for failing to file the said Statement within the stipulated time.

14. The Applicant prayed that, once the said Statement of Defence are struck out, judgement should be entered against all the three Defendants jointly and severally in the sum of Kshs.5,377,979,755. 00 together with interest from the date of filing the suit till payment in full. In the alternative, the three Amended Defences should be struck out, and the plaintiff be allowed to proceed with formal proof in respect to prayers (i) (a-d), (ii), (iv) of the Amended Plaint dated 12th May 2016.

15. The Applicant further argued that, the subject Statements of Defence are not an amendment of the joint defence filed on 18th February 2016, per se, but rather they are entirely new and separate pleadings filed without leave and contrary to the law. That the Rules of amendment of pleadings do not provide for filing of separate Statements of Defence where a joint Statement of Defence was initially filed. In the given circumstances, the said Statements are fatally and incurably defective, incompetent, misconceived and therefore an abusive of the Court process. In the alternative, the said Statements are a sham, and contains a mere denial without sufficient reasons and do not raise triable issues or defence in law.

16. The Application was opposed vide the Replying Affidavit sworn by Uche Unigwe, the General Manager of the 1st Defendant Company. He swore the Affidavit on his own behalf and on behalf the other Defendants. He averred that, on 5th February 2016, the Plaintiffs advocate served on the 1st Defendant, with three sets of Plaints and three sets of Summons to enter Appearance. On the 18th February 2016, the Defendants filed their Statement of Defence to the three Plaints. He joined issues on the events that followed in relation to leave sought and granted to amend the Plaint, and the Defence, as deposed by Mr. Ngugi Kiuna, in support of the Application. Mr. Uche deposed that, upon being granted thirty (30) days within which to file an Amended Statement of Defence, the Defendants decided to instruct a lead counsel in the matter. Mr. James Singh Gitau, was then appointed as a Lead Counsel and upon his advice the Defendants instructed it’s advocates to file the three separate Defences to enable the issues as between the Parties to come out clearly and enable the Court to determine the real issues between the Parties.

17. That, the Defendants sought the Plaintiffs lawyer’s indulgence vide a letter dated 9th August 2016, to file the Amended Statements of Defence out of time, subject to the Plaintiff being granted additional time to file and serve their Reply to the Amended Statements of Defence. As the Plaintiff did not respond, the Defendants filed the three Defences on 11th August 2016 and served the Plaintiff’s Advocates on the same day. The Defendants then filed an Application to deem the filed Statements as duly filed and properly on record and/or for enlargement of time for the Defendants to file/serve the Statements of Defence. The Defendant argued that the Statements constitute proper Amended Statements and are in accordance with order 8 of Civil Procedure Rules. The Plaintiff have not demonstrated any breach of law by the Defendants in amending their defences.

18. The Defendant opposed the Plaintiff prayer for judgement, and argued that, there is a Defence on record, and therefore the matter should proceed to a full hearing. That, nothing in the Civil Procedure Rules 2010 prevents Defendants who have filed a joint Defence to later on file independent defences upon amending their pleading. The amendments herein contains averments that will assist the Court determine issues between the parties. It is therefore not correct to argue that the Amended Statement of Defences contains mere denials without sufficient reasons and they  do not raise any bonafide triable issues. The Defendant argued that if the Application is not allowed, the Defendants will suffer immense prejudice by not being allowed to ventilate their defences to the case in so far as these proceedings stand.

19. The Defendant further argued that the Plaintiff’s Application lacks merit and is an abuse of Court process as the Plaintiff have not been prejudiced. They have not suffered by the delayed filing of the Defendants Statements of Amended Defences. The Defendant averred that, they are ready, willing and able to abide by such terms as the Court may deem fit in order for the Amended Statements of Defences to be deemed as being properly on record.

20. The Parties disposed of the Application through written submissions and orally highlighted the same. I have considered the said submissions, alongside the grounds and affidavits in support of the respective Applications, and the responses there. I raise the following issues for determination in relation to the Notion of Motion Application dated 3rd August 2016.

(i)  Whether the three Amended Statements of Defence are fatally and incurably defective, incompetent or misconceived.

(ii)   If so, should they be struck out.

(iii)  If struck out, should judgement subsequently be entered for the Plaintiff as prayed in the Plaint.

(iv)  In the alternative, if the three Amended Defences are struck out, should the plaintiff be allowed to proceed with  formal proof in respect of prayers (i) a – d, (ii) – (iv), of the Amended Plaint dated 12th May 2016.

(v)    Who should bear the costs.

21. The statutory provisions of Section 100 of the Civil Procedures Act gives the Court general Power to amend proceedings.

“The court may at any time, and on such terms as to costs or otherwise as it may think fit, amend any defect or error in any proceeding in a suit; and all necessary amendments shall be made for the purpose of determining the real question or issue raised by or depending on the proceeding.”

22. According to Order 8, rule 5 of the Civil Procedures Rules:

(1)  “For the purpose of determining the realquestion in controversy between the parties, or of correcting any defect or error in any proceedings, the court may either of its own motion or on the application of any party order any document to be amended in such manner as it directs and on such terms as to costs or otherwise as are just.

(2) This rule shall not have effect in relationto a judgment or order.”

23. Plaintiff’s Submission

“Three separate and distinct” Amended statement of defence

is not an amendment of joint defence filed on 18/02/2016.

Is an entire new and separate pleadings filed without court’s leave

24. According to Civil Procedures Act Order 8 Rule 7(2)–(3) Emphasis

“All amendments shall be shown by striking out in red ink all deleted words, but in such a manner as to leave them legible, and by underlining in red ink all added words.

Colours other than red shall be used for further amendments to the same document”.

Therefore:

Defendants can only lodge one statement of defence

It’s unprocedural, improper, irregular, unlawful to file 3 distinct/separate defences

And without leave

Strike them out

In the absence of a proper Amended Statement of Defence all prayers in Application filed by the Defendant cannot be granted.

21. In the alternative without prejudice as per Order 8 Rule 6  of the Civil Procedure Rules

“Where the court has made an order giving any party leave to amend, unless that party amends within the period specified or, if no period is specified, within fourteen days, the order shall cease to have effect, without prejudice to the power of the court to extend the period.”

Conduct of Defendants through failure to comply with timelines set by the court amounts to disregard for the mandatory rules of procedure/timelines set.

Engagement of Senior Counsel not plausible or reasonable at all.

Provisions of Section 95, which gives the court the discretion power to extend time should be exercised judicially and not be used as a tool to aid an indolent litigant.

22. See Fidelity (online submissions)

Wilfred Dickson (online submissions)

23. The respondents/Defendants submissions

(see paragraph 59,60,61)

See paragraph 18 – the amendment done in accordance with Section 100 of Civil Procedure Act, and Order 8 Civil Procedure Rules.

The Amended statements of Defence not new arise from some facts as the plaintiff’s cause of action (Paragraph 19).

The sum sought in the plaintiff clearly demonstrates Defendants prejudice (Paragraph 21)

Paragraph 31 – delay explained. Delay not excessive, reasons understandable/no prejudice to the Plaintiff.

24. The Defendant has constitutional right to be heard. Article 50/48 of Constitution (Paragraph 36).

Free amendment of pleading anytime before judgement (Order 8 Rule 5 Civil Procedure Rules).

See Paragraph 44 – The Amended Defences see do not introduce new or inconsistent line of defence.

Paragraph 44 – Endline 7 clarifies issues

Section 47 – stands original defence 18th February 2015.

Paragraph 50, any prejudice compensated in monetary terms/costs.

Paragraph 53 – Blue flag Trading Ltd VS –

Paragraph 54

25. (See finding Number 1).

26. Issue 2: Should the statements be struck out (Plaintiff’s Submissions)

(Defendant’s Submissions).

Plaintiff not met requirements of Order 2 Rule 15 Civil Procedure Rules

Law on Striking out

(a) Saudi Arabia Airlines (See paragraph 57; 59)

(b) Mavuno’s Case

(c) See Paragraph 62,

Amended defence be sustained.

27. Finding:

Strike out for reasons stated on issue (1)

28. Effect of striking out the three statements of defence.

Plaintiffs submissions

Paragraph 19 – No amendment special damages claim 5, 377,979,553. 00 uncontested.

No valid defence in respect thereof.

Judgement/Formal proof

Order 2/Rule 15(1)

Paragraph 22 – does not arise cannot consider merit or lack of it/pleading not on record.

See Paragraph 25 – Elijah Sikuna

Paragraph 26,

29. See finding No. 3.

The 3 defence are struck out

But original defence on record

Must be addressed before judgement

Application silent on that

With that defence on record

No judgement/No formal proof

COURT

The upshot of all this is that the both applications fail. Each party to meet it’s own costs. The case to be set down for hearing on priority basis.

Orders accordingly.

G. L. NZIOKA

JUDGE

Dated, Signed, Delivered on this 17th March 2017 in the presence of both parties.

G. L. NZIOKA

JUDGE

In the presence of:

Mr. Singh for the Applicant.

…………………….. for the Respondent.

Teresia Court Assistant.

NOTE

Judgement can only be entered if original defence is struck out.

Findings No.1

(i) Provisions that allow amendment of pleadings (Order 6)

(ii) Manner of amendment Order 8 Rule 7(2) (3) Civil Procedure Rules mandatory.

Envisages – striking out in red all deleted words; “Leave them legible” underline added words.

How does an effect this in a separate/distinct statement.

(iii) These three (3) do not comply with Order 8 Rule 7(2).

(iv) Even if they did comply – they were filed without leave.

(v) Having been granted leave twice, the Defendants was fully aware, they required leave; to ban the three statements without leave is not only unprocedural, but unprofessional

(vi) Ratist Ratification thereof would encourage sheer breach of procedures therefore encourage bad practice.

FINDING NO.2

Strike out the three amended statement of defence.

FINDING NO. 3

No judgement/No formal proof because original defence on record.

Needs to be dealt with first

Matter proceed for hearing

Mr. Singh

We seek for leave to file an appeal on the ground and finding of the court on the issue of the three distinct defences.

G. L. NZIOKA

JUDGE

Court

In the meantime the parties are at liberty to apply. The file to go back to the registry.

G. L. NZIOKA

JUDGE