National Bank of Kenya v Data Solve Limited, David Nganga Mukuria & Benson Nganga Gituku [2017] KEHC 2111 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL & ADMIRALTY DIVISION

HCCC NO. 287 OF 2003

NATIONAL BANK OF KENYA................................................PLAINTIFF

VERSUS

DATA SOLVE LIMITED................................................1ST DEFENDANT

DAVID NGANGA MUKURIA........................................2ND DEFENDANT

BENSON NGANGA GITUKU.......................................3RD DEFENDANT

RULING

1. A party will not benefit from certain Defences unless they are specifically pleaded. This is the effect of Order 2 Rule 4 of The Civil Procedure Rules.

2. The Rule provides:-

“(1) A party shall in any pleading subsequent to a plaint plead specifically any matter, for example performance, release, payment, fraud, inevitable accident, act of God, any relevant Statute of limitation or any fact showing illegality —

(a) which he alleges makes any claim or defence of the opposite party not maintainable;

(b) which, if not specifically pleaded, might take the opposite party by surprise; or

(2) Without prejudice to subrule (1), a defendant to an action for the recovery of land shall plead specifically every ground of defence on which he relies, and a plea that he is in possession of the land by himself or his tenant shall not be sufficient.

(3) In this rule “land” includes land covered with water, all things growing on land, and buildings and other things permanently affixed to land”. (my emphasis)

3. The 3rd Defendant herein has in a Notice of Motion dated 21st April, 2015 raised three points of Preliminary Objection. He however insists on two:-

(i) That the suit against him is statute barred under Section 4(1)(a) of the Limitation of Actions Act as the cause of action is said to have arisen in August 1996.

(ii) The principal debtor herein having been discharged and/or forgiven, the suit against him is ill conceived and has no merit.

4. The first objection fails for non-compliance with order 2 Rule 4. In his Statement of Defence dated 3rd October 2003 and filed on the same day, the 3rd Defendant fails to plead the statute of Limitation of Actions Act. For that reason he cannot urge the Court to dismiss the statute on the basis of that bar.

5. The second objection faces a different difficulty. It is common ground that the 3rd Defendant stood as a guarantor to a facility granted by the Plaintiff to the 1st Defendant Company. The suit against the 1st and 2nd Defendant was withdrawn pursuant to a consent order filed herein on 13th January 2012.

6. That second objection is anchored on the proposition that,

“By contrast, there can be no contract of guarantee unless there exists or is contemplated some other, principal, obligation of some other, principal, obligor, to which the guarantee is ancillary and subsidiary. Under a contract of guarantee, the guarantor assumes a secondary liability to the creditor for the default of another who remains primarily liable to the creditor”

(Halsbury laws of England 5th Edition volume 49 paragraph 1090)

7. This no doubt is an attractive argument until one considers that it was already raised in an application dated 18th April 2017 and determined. In that application, the 3rd Defendant sought the dismissal of the Plaintiff’s suit primarily on the argument that the suit against the 3rd Defendant could not stand in view of the Consent recorded between the Plaintiff and the principal debtor marking the matter as settled between them.

8. To this argument Gikonyo J, in a Ruling delivered on 30th September 2014, took the following view:-

“I have considered the submissions of parties and the affidavits filed. This is a case based on a contract of guarantee. The 3rd Defendant guaranteed payment by the 1st Defendant of all sums owing to the Plaintiff. A contract of Guarantee is separate from the Charge. See the decision of Ringera J (as he then was) in the case of Dr. WAIHORO CHEGE v PARAMOUNT BANK LIMITED. Therefore, for as long as the debt is not repaid in full, the Guarantee can institute or proceed with any existing suit against the guarantor for recovery of the balance. What I think is complicating this matter is the kind of order the Plaintiff recorded with the 1st and 2nd Defendants; that the suit against the two defendants was marked as settled. There is a problem there. It could mean that the debt is settled which begs the question whether it would be tenable to sustain a cause of action against the remaining defendant. That lacuna is what apparently the 3rd Defendant is trying to utilize to this favour. But the materials before the Court tell a different story. The 3rd Defendant was a Director of the 1st Defendant when the loan was advanced. The 3rd Defendant is aware of the impecunious status and the collapse of the 1st Defendant. He then parted ways with the co-director ie. The 2nd Defendant and left the 1st Defendant Company to crumble. The 3rd Defendant knows that the 1st Defendant has not repaid the entire sum advanced. The balance is what the Plaintiff seeks to recover from him as a guarantor. The consent did not, therefore, mean the debt has been settled. Thus, the suit against the 3rd Defendant as the Guarantor will subsist independently. Accordingly, I find the application by the 3rd Defendant to be self-seeking rather being out of love for expeditious disposal of cases under the overriding objective principle. And when a party comes to court with unclean hands, it should not expect a five-star hotel treatment. The door will be slammed at them and equity would deny relief sought”.

9. The circumstances have not changed and this second limb of objection is res judicate that decision and is certainly an audacious abuse of Court process. The attempt must fail.

10. The Preliminary Objections raised by the Notice of 21st April, 2015 and filed on 29th April 2015 are not meritous. The same are dismissed with costs.

Dated, Signed and Delivered in Court at Nairobi this 5th day of October,2017.

F. TUIYOTT

JUDGE

PRESENT;

Obonyo h/b for Onyango for Plaintiff

Wambui h/b for Maitai for 3rd Defendant

Alex - Court Clerk