Moss Enterprises Limited v Equity Bank (K) Limited [2022] KEHC 11495 (KLR)

Moss Enterprises Limited v Equity Bank (K) Limited (Civil Case E090 of 2020) [2022] KEHC 11495 (KLR) (Commercial and Tax) (3 June 2022) (Ruling)

Neutral citation: [2022] KEHC 11495 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Case E090 of 2020

DAS Majanja, J

June 3, 2022

Between

Moss Enterprises Limited

Plaintiff

and

Equity Bank (K) Limited

Defendant

Ruling

1. The plaintiff by its Notice of Motion dated May 28, 2022 seeks judgment on admission against the defendant (“the bank”) for kes 239,882,306. 31 together with interest thereof at court rates of 14% from the date of filing suit until payment in full under order 13 rule 2 of the Civil Procedure Rules. The application is opposed by the bank through the affidavit of its credit administrator, Cyrus Atandi, sworn on May 26, 2022.

2. The thrust of the application is that the bank has unequivocally admitted kes 239,882,306. 00 in its amended statement of defence dated October 12, 2021 hence the court should enter judgment thereon. The grounds of the application are set out on the face of the application. It states that the sum is pleaded in the further amended plaint and is based on an overdraft facility agreement between the plaintiff and the bank dated August 30, 2018. The plaintiff contends that when the overdraft facility expired, the plaintiff was required to regularize the facility by depositing kes 23,618,703. 09 and that it deposited kes 263,501,009. 04 into the said account. The plaintiff further states that it is entitled to kes 239,882,306. 31 being the difference between the deposit of kes 263,501,009. 4 and kes 23,618,703. 09 that was outstanding as the date of expiry of the overdraft facility.

3. On its part, the bank denies that it has admitted what the plaintiff seeks. It contends that in its amended statement of defence it admits the terms of the overdraft agreement facility of kes 30,000,000. 00 and avers that upon its expiry, the plaintiff was still indebted to it. It contends that the grounds on which the plaintiff seeks judgment are not plain and obvious as stated by the plaintiff.

4. I have considered the oral and written submissions by the respective advocates. They agree with the principles upon which the court acts when determining an application for judgment on admission. They cited various authorities whose common thread is illustrated by the case of Choitram v Nazari [1984] KLR 327 in which Madan JA, observed 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 judgment being entered. They must be obvious on the face of them without requiring a magnifying glass to ascertain their meaning. Much depends upon the language used. The admissions must leave no room for doubt that the parties passed out of the stage of negotiations onto a definite contract. It matters not if the situation is arguable, even if there is a substantial argument, it is an ingredient of jurisprudence, provided that a plain and obvious case is established upon admissions by analysis. Indeed, there is no other way, an analysis is unavoidable to determine whether admission of fact has been made either on the pleadings or otherwise to give such judgment as upon such admissions any party may be entitled to without waiting for the determination of any other question between the parties.

5. In this case, the plaintiff refers to various averments in the Statement of Defence which it contends amount to an admission. As the plaintiff relies on the averments in the Further Amended Plaint dated October 10, 2021 and the Amended Statement of Defence dated October 12, 2021 only, the court’s consideration is confined to the pleadings only in order to determine whether the admission alleged by the plaintiff is plain and obvious. In resolving this issue, it is important to understand the cause of action and the defence as a whole.

6. At all material times, the plaintiff was an authorised distributor of alcoholic beverages manufactured by Kenya Breweries Limited and UDV (Kenya) Limited in Nakuru and its environs. In that regard, it entered into a distributorship agreement under which the proceeds of the distribution business were deposited in a collection account held at the bank. In the meantime, the bank also provided the plaintiff an overdraft facility for kes 30,000,000. 00 secured by several of the director’s properties.

7. The plaintiff’s case as set out in the Further Amended Plaint is that the overdraft facility expired on September 10, 2019 and as at that date, the outstanding debt was kes 23,618,703. 09 which the plaintiff was required to pay. That between September 10, 2019 and November 30{,2019, it credited 263,501,009. 40 into the collection account operated between it and Kenya Breweries Limited and that the same account was debited with kes 280,059,158. 04 during the same period.

8. The plaintiff therefore contends that it is not indebted to the bank. It accuses the bank of negligence, breach of its duty of care and skill and fiduciary duties in the manner it operated the account. It states that the bank allowed unauthorized debits and bank charges thereby causing the account to reflect a debit balance without it knowledge and authority. It claims that it is entitled to a refund of kes 239,882,306 being the difference between the kes 263,501,059,009. 04 deposited into the collection account by the plaintiff less kes 23,618,703,09 that was outstanding at the time of expiry of the overdraft facility. In the alternative, the plaintiff avers that it is entitled to reversal of kes 280,059,158. 04 debited/overdrawn or charged on the collection account between September 10, 2019 and November 30, 2020 without its authority. The plaintiff therefore seeks the following reliefs:a.A declaration that the debits and bank charges loaded on the collection account no 026******850 between September 10, 2016 and November 30, 2020 are null and void.b.A declaration that the plaintiff is not indebted to the bank in the sum of kes 40,876,956. 20 reflected on the collection account as at November 30, 2020. c.That the bank refund the plaintiff kes 239,882,306 being the difference between the kes 263,501,009. 4 credited into the collection account between September 10, 2019 and November 30, 2020 less the kes 23,618,703,09 that was outstanding at the date of expiry of the facility.d.In the alternative, the bank reverse the unlawful overdraws of the kes 280,059,158. 04 that were loaded on the collection account between September 10, 2019 and November 30, 2020. e.The bank to forthwith discharge all the securities and guarantees used by the plaintiff to secure the overdraft facility.

9. The bank denies the plaintiff’s allegations and avers that the plaintiff is still indebted to it. In its Amended Statement of Defence, the bank admits the distributorship agreement and the overdraft facility. It however states that the plaintiff failed to pay the kes 36,723,171. 10 with arrears of kes 2,172,326. 14 due as at February 12, 2020 overdrawn from the collection account and kes 37,047,608. 29 on the overdraft account which sums continue to accrue interest. The bank further states that the default has been persistent and that as a result it commenced realization of the securities supporting the overdraft facility. The defendant argues that the Amended Statement of Defence does not contain any clear and unequivocal admission warranting the grant of judgment and in fact raises triable issues.

10. Having looked at the Further Amended Plaint and the Amended Statement of Defence, I hold that while the bank admits the distributorship agreement and overdraft facility, the bank does not admit that it owes the plaintiff kes 239,882,306. 31. On the contrary, the pleadings and in particular, the prayers which I have summarized above raise at least two triable issues; Whether the plaintiff is indebted to the bank and whether the bank is indebted to the plaintiff as alleged in the Further Amended Plaint. I therefore find and hold that the plaintiff has not met the threshold for grant of judgment on admission.

11. The Notice of Motion dated May 28, 2022 is dismissed with costs to the defendant.

DATED and DELIVERED AT NAIROBI THIS 3RD DAY OF JUNE 2022. D S MAJANJAJUDGECourt assistant: Mr M OnyangoMr Masila instructed by Ndegwa and Sitonik Advocates for the plaintiff.Ms Ochieng instructed by Makori and Karimi Advocates for the defendants.