Nyariki v Mogusii Farmers Group Company Limited; New Oshwal Distributors Limited (Respondent); Hezron Getuma Onsongo Trading as Hegeons Auctioneers (Proposed Interested Party) [2023] KEHC 23604 (KLR)

Nyariki v Mogusii Farmers Group Company Limited; New Oshwal Distributors Limited (Respondent); Hezron Getuma Onsongo Trading as Hegeons Auctioneers (Proposed Interested Party) (Civil Case 2 of 2019) [2023] KEHC 23604 (KLR) (5 October 2023) (Ruling)

Neutral citation: [2023] KEHC 23604 (KLR)

Republic of Kenya

In the High Court at Nyamira

Civil Case 2 of 2019

WA Okwany, J

October 5, 2023

Between

Wesley Mokua Nyariki

Plaintiff

and

Mogusii Farmers Group Company Limited

Defendant

and

New Oshwal Distributors Limited

Respondent

and

Hezron Getuma Onsongo Trading as Hegeons Auctioneers

Proposed Interested Party

Ruling

1. The plaintiff herein sued the Defendant through the plaint dated 28th February 2019 seeking the payment of the sum of Kshs. 28,387,579. 60 for the architectural services that it allegedly rendered to the Defendant.

2. On 17th May 2019, default judgment was entered against the Defendant for failure to enter appearance or file a defence. The Plaintiff thereafter executed the decree by attaching the Defendant’s property, namely; L.R No. Kisii Municipality/Block II/79 (hereinafter “the Suit Property”) to a third party one New Oshwal Distributors Limited at a consideration of Kshs. 34 Million.

3. Through an application dated 14th November 2019, the Defendant sought orders to set aside the default judgment and to stay the execution. The said application was allowed by this court, differently constituted, through a ruling delivered on 6th February 2020. The said ruling of 6th February 2020 can however be said to have been a pyrrhic victory for the Defendant as the suit property was sold, by public auction, on 29th November 2019, long before the said orders were issued.

4. Through an application dated 11th January 2022, the third party purchaser of the suit property, Ms New Oshwal Distributors, sought orders, inter alia, that the sale of 29th November 2019 be made absolute; that an order be issued making the auction/sale complete; a certificate of sale be issued in its favour; that the Respondent, Mogusii Group Company Limited do deliver up vacant possession of the suit property to the Applicant and; that the Deputy Registrar be authorised to execute all the requisite documents for the transfer of the suit property to the Applicant.

5. In a ruling delivered on 6th July 2022, Ochieng J. (as he then was) rendered himself as follows: -“In this case, the defendant was the judgement debtor. It has not made any application to set aside the sale at which the subject matter was sold-off. Therefore, this court has no basis for declining the issuance of an order that would make the sale absolute.And by dint of Section 48 of the Civil Procedure Act“Where immoveable property is sold in execution of a decree and the sale has become absolute, the property shall be deemed to have vested in the purchaser from the time when the property is sold and not from the time when the sale becomes absolute.”As the sale was conducted at a time when the Decree was in force; and because the defendant failed to obtain a Court Order to stop the sale, I find that the sale herein became absolute at the time when the auction was conducted.Therefore, actions which took place long after the sale had become absolute cannot, with respect, undo the sale.My said finding is emboldened by the Ruling of the Court of Appeal in Wesley Mokua Nyariki v Mogusii Farmers Group Limited, Civil Application No. 32 of 2020, in which the court stated as follows: -“From the circumstances of this case and the motion dated 14th November 2019, seeking to set aside the interlocutory judgement entered herein on 17th May 2019, having been allowed, it is our considered opinion that there is nothing to stay and the intended appeal will not be rendered nugatory as the execution process has already been completed; the respondent’s property having been sold by public auction on 29th November 2019 and as such, the instant application has been overtaken by events.”In the event, I order that the sale by public auction herein be and is hereby made absolute.I further order that a Certificate of Sale of the Land Parcel No. L. R. Kisii Municipality/Block 11/79 be issued in favour of the applicant.The Learned Deputy Registrar of this court is mandated to execute all the documents requisite for the transfer of the said parcel of land to the applicant.Finally, I order that the defendant shall, within the next 7 days, deliver up vacant possession of the said parcel of land, to the applicant.Costs of the application dated 11th January 2022 are awarded to the applicant, and shall be paid by the Defendant.”

6. The ruling of 6th July 2022 precipitated the filing of an application dated 28th September 2022 wherein the Defendant sought the following orders: -a.The honourable court be pleased to admit Hezron Getuma Onsongo t/a Hegeons Auctioneers as an interested party in the proceedings herein.b.The honourable court be pleased to set aside the purported sale of the defendant's property, the same being L.R. No. Kisii Municipality/Block 11/79 and the buildings thereon by Hegeons Auctioneers to New Oshwal Distributors Limited vide a public auction purportedly conducted on the 29th day of November, 2019. c.The honourable court be pleased to discharge, set aside, vary and/or discharge the orders made and/or issued by the honourable Justice Fred A. Ochieng vide a ruling rendered on the 6th day of July, 2022 directing inter alia that the sale by public auction of the defendants parcel of land L.R Kisii Municipality/Block 11/79 and the building erected thereon, by Hegeons Auctioneer to New Oshwal Distributors Limited on the 29th day of November, 2019 be made absolute, together with all the consequential orders arising therefrom.d.The honourable court be pleased to order that this matter be heard and determined on merit.e.The honourable court be pleased to issue a mandatory order of injunction compelling Hezron Getuma Onsongo t/a Hegeons Auctioneers to file before this court the true and just accounts of all proceeds received as a result of the purported auction conducted on the 29th day of November, 2019 and how the balance was utilized.f.The honourable court be pleased to issue a mandatory order of injunction compelling Hezron Getuma Onsongo Hegeons Auctioneers to file before this court details pertaining to the public auction, including but not limited to the date, time and records of the alleged auction, copies of bids received, notification notices served upon the defendant prior to the sale of L.R Kisii Municipality/block 1 1/79. g.The plaintiff herein, Wesley Moki-ja Nyariki be ordered to deposit the entire decretal amount received from the public auction purportedly carried out on the 29th day of November, 2019 in court, pending the hearing of the main suit.h.The Honourable Court be pleased to set aside, cancel and or nullify the transfer (if any) of L.R Kisii Municipality/Block 11/79 to New Oshwal Distributors Limited and revert the same to its original status.i.Costs of and incidental to this Application be borne by the Respondents herein.

7. In a ruling rendered on 2nd March 2023, this court dismissed the application dated 28th September 2022 and pronounced itself, in part, as follows: -“……it is clear that as at the time that the sale of the suit property was conducted, there was neither a stay of execution of the decree order nor had the default judgement been set aside. In my considered view nothing stood in the way of the auctioneer in executing the decree through the public auction.I note that the order setting aside the default judgment was made in February 2020 almost 3 months after the sale by public auction. In essence therefore; the order of 6th February 2020 can be said to have been superfluous and of no consequence as it sought to set aside a judgment that had already been executed through the sale.It is curious to note that the Defendant/Applicant herein despite having been aware that the sale was slated for 29th November 2019, did not take any precipitate action to set it aside in time or at all and did not take any concrete measures to stop the tide against until 28th September 2022, almost 3 years after the sale, and long after the purchaser had obtained orders for vacant possession and perfection of the sale.This court is of the view that the Applicant is guilty of laches as it sat on its laurels until it was too late in the day. The Applicant had ample time to move the court to set aside the sale which action it did not take.…….. it is clear that the Applicant herein could still challenge the sale before it was made absolute an opportunity that it squandered. The Applicant has not tendered any reasons for the delay in applying to set aside the sale.My finding is that it is not in the place of this court to set aside the sale outside the set time limits and after it has been made absolute. In the same vein, this court lacks the power to set aside the orders of 6th July 2022 making the sale absolute as doing so would be akin to sitting on appeal on the decision of a Judge of concurrent jurisdiction.Turning to the prayer to enjoin the Auctioneer to these proceedings and for the deposit of the proceeds of the sale in court, I find that the Auctioneer became functus officio the moment the sale was made absolute and the proceeds of the sale transmitted to the decree holder. The decree holder similarly received the proceeds of the sale pursuant to decree that was valid at the time the sale was conducted.Consequently, I find that there is no basis for the prayer that the proceeds of the sale be deposited in court.”

8. The ruling of 2nd March 2023 precipitated the filing of yet another application that is the subject of this ruling: -

The Application 9. This ruling is in respect to the Application dated 11th April 2023 wherein the Defendant seeks the following orders: -a.The Honourable Court be pleased to grant leave to the Defendant to amend its statement of defence in terms of the annexed Statement of Defence.b.The annexed draft Statement of Defence be deemed as duly filed upon payment of the requisite court fees.c.Costs of this Application be in the cause.

10. The application is supported by the affidavit of Mr. Charles Ondari Mokua and is premised on the following grounds: -1. That its current advocate on record has advised that there are necessary details which are not in the original statement of defence and are essential in defending the instant claim.

2. That it is also necessary to file a counterclaim to seek compensation for the unlawful sale of the of the suit property which initially belonged to the Defendant.

3. That the amendments in the statement would bring clarity of issues in controversy

4. That the application is brought in good faith and timeously.

11. The Plaintiff/Respondent opposed the Application through the Grounds of Opposition dated 16th April 2023 wherein he listed the following grounds:1. That the application as taken out is incompetent and fatally defective as it is premised on the wrong provision of the law, (Order 1 Rule 1 and 10(2) of the Civil Procedure Rules, under which the court is to exercise its discretion to grant leave to amend.2. That the proposed amendments seek to introduce a new and inconsistent cause of action involving land which would change the action herein into one of a substantially different character.3. That in any event, this Honourable Court lacks jurisdiction to handle land matters such as the one that would be brought about by the proposed amendments, as the same would fall under the jurisdiction of the Environment and Land Court.4. That this application is frivolous, vexatious and otherwise an abuse of the process of the court.

12. The Application was canvassed through written submissions. A summary of the Applicant’s submissions were that the proposed amendments are necessary as they relate to the real issues in controversy. Reference was made to the provisions of Section 100 of the Civil Procedure Act which provides that amendments can be made at any stage of proceedings subject to the court’s discretion. The Defendant also relied on Order 8 Rule 3 of the Civil Procedure Rules which provides that: -1. Subject to Order 1, rules 9 and 10, Order 24, rules 3, 4, 5 and 6 and the following provisions of this rule, the court may at any stage of the proceedings, on such terms as to costs or otherwise as may be just and in such manner as it may direct, allow any party to amend his pleadings.2. Where an application to the court for leave to make an amendment such as is mentioned in subrule (3), (4) or (5) is made after any relevant period of limitation current at the date of filing of the suit has expired, the court may nevertheless grant such leave in the circumstances mentioned in any such subrule if it thinks just so to do.3. An amendment to correct the name of a party may be allowed under subrule (2) notwithstanding that it is alleged that the effect of the amendment will be to substitute a new party if the court is satisfied that the mistake sought to be corrected was a genuine mistake and was not misleading or such as to cause any reasonable doubt as to the identity of the person intending to sue or intended to be sued.

4. An amendment to alter the capacity in which a party sues (whether as plaintiff or as defendant by counterclaim) may be allowed under subrule (2) if the capacity in which the party will sue is one in which at the date of filing of the plaint or counterclaim, he could have sued.5. An amendment may be allowed under subrule (2) notwithstanding that its effect will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the suit by the party applying for leave to make the amendment.

13. The defendant/applicant argued that the amendments do not introduce a new cause of action involving land but relate to the plaintiff’s suit and the execution/sale of the suit property to a 3rd party. The Applicant added that the counterclaim is intertwined with the sale of the suit property.

14. The defendant/applicant maintained that since the execution proceedings have given rise to the amendments, the suit and counterclaim fall squarely within the jurisdiction of this court and not the Environment and Land Court (ELC). The Applicant cited the decision in the case of Eastern Bakery v Castellino [1958] EA 461 where the court stated:“…..Amendments to pleadings sought before the hearing should be freely allowed if they can be made without injustice to the other side, and that there is no injustice if the other side can be compensated by costs….The court will not refuse to allow an amendment simply because it introduces a new case….The Court will refuse leave to amend where the amendment would change the action into one of a substantially different character….or where the amendment would prejudice the rights of the opposite party existing at the date of the amendment, e.g. by depriving him of a defence of limitation accrued since the issue of the writ….The main principle is that an amendment should not be allowed if it causes injustice to the other side”

15. The Plaintiff/Respondent, on the other hand, argued that the amendments to the defence seek to introduce a new claim as the counterclaim seeks a nullification of the sale and reversion of title back to the defendant/applicant. He relied on the decision in the case of Central Kenya Limited v Trust Bank Kenya Limited & 5 Others [2000] eKLR where the Court of Appeal had this to say: -“…a party is allowed to make such amendments as may be necessary for determining the real question in controversy or to avoid a multiplicity of suits, provided there has been no undue delay, that no new or inconsistent cause of action is introduced, that no vested interest or accrued legal right is affected and that the amendment can be allowed without injustice to the other side”

16. The Plaintiff also relied on the provisions of Section 13 (1) & (2) of the Environment and Land Court Act which provides for the jurisdiction of the said court as follows: -1. The Court shall have original and appellate jurisdiction to hear and determine all disputes in accordance with Article 162(2) (b) of the Constitution and with the provisions of this Act or any other law applicable in Kenya relating to environment and land.2. In exercise of its jurisdiction under Article 162(2)(b) of the Constitution, the Court shall have power to hear and determine disputes—a.relating to environmental planning and protection, climate issues, land use planning, title, tenure, boundaries, rates, rents, valuations, mining, minerals and other natural resources;b.relating to compulsory acquisition of land;c.relating to land administration and management;d.relating to public, private and community land and contracts, choices in action or other instruments granting any enforceable interests in land; ande.any other dispute relating to environment and land.

17. The Plaintiff/Respondent maintained that the proposed amendment relates to the title to the suit land and also challenges the sale and subsequent transfer of the title. He added that the remedies sought are in the nature of a nullification the sale and transfer as they seek a reversal the title back to the defendant/applicant.

18. I have carefully considered the application, the previous rulings that have been made in this suit and the submissions by the parties herein. The main issues arising for determination are as follows:a.Whether this court has jurisdiction to determine the said application?b.Whether the orders sought can be granted?

a. Jurisdiction 19. The Respondent’s case was that all the prayers sought in the counterclaim fall within the jurisdiction of the Environment and Land Court as prescribed in Section 13 of the Environment and Land Court Act. According to the Respondent, the Applicant’s claim on alleged illegal sale of the suit property, reversal of the suit property and compensation fall within the domain of the ELC.

20. The Applicant, on its part, argued that its counterclaim and proposed amendments arise from the illegal execution and sale of the suit property which arose directly from execution in this case.

21. I note that the Applicant seeks the following orders in the proposed counterclaim: -a.A declaration that the sale of the counter-claim’s land parcel L.R Kisii Municpality BlockII/79 through a public auction was unlawfully perpetuated by the Defendant by filing and or instituting a fictitious claim.b.An order be issued setting aside, cancelling and or nullifying the sale of counter claimer’s parcel of land, L.R Kisii Municipality Bock II/79 through a public auction and the transfer of the same to any third party and the reversion of the same to the counter-claimer.c.In the alternative to order (b) above, the honourable Court be pleased to award the Counter-claimer the sum of Kenya Shillings Eighty-Five Million, as compensation, which is equivalent to the current market value of the subject parcel of land.d.The honourable court be pleased to award General damages to the counter-claimer for the unlawful and illegal sale of its subject parcel of land.e.Such further and/or reliefs as the Honourable Court may deem fit and expedient to grant.f.Costs of the suit to be borne by the Defendants.

22. My finding is that in as much as the Defendant is aggrieved by the manner in which the execution and sale of the suit property was conducted, the truth of the matter is that the said sale and execution happened in response to a valid judgment of this court. The execution in question was ratified by this court, differently constituted, through a ruling rendered on 6th July 2022 when the said sale was made absolute.

23. As I have already stated in this ruling, the default judgment entered against the Defendant has already been executed through the sale of the suit property to a third party. The sale was made absolute by an order of this court and the new owner of the said property has already acquired title to the said property. The question that this court has to grapple with is whether the suit between the Applicant and the Respondent is still pending so as to warrant the making of an order for amendment of pleadings.

24. My finding is that while this court has a wide discretion to order for an amendment of pleadings at any time before judgment, in this case, it was undisputed that the default judgment entered against Applicant was executed through the sale of the suit property. It is also not disputed that the sale was made absolute through the court order of 6th July 2022. I therefore find that the Plaintiff’s claim against the Defendant is settled/spent and it is therefore not open for the Applicant to seek an amendment of its Defence at this stage.

25. My take is that the Applicant’s claim that the Respondent sold the suit land through a public auction that was unlawfully perpetuated by instituting a fictitious claim are issues that this court cannot revisit at this juncture. I say so because the issue of whether the Respondent’s claim was fictitious or not are issues that could only have been determined had the Applicant filed its Defence within the stipulated timelines. In the present case however, it is to be noted that the sale of the suit property arose from the default judgment entered in favour of the Respondent.

26. Considering the prayers sought by the Applicant in the proposed counterclaim, one gets to the irresistible conclusion that the Applicant seeks to challenge the execution proceedings that arose from the judgment of this court. In effect, the Applicant is challenging the execution of a valid judgment of this court through what has been coined as an amendment of the Defence.

27. Having found that the suit between the Plaintiff and the Defendant has been settled/resolved through the entry of default judgement, execution, sale and transfer of the suit property, I find that the intended amendment of the Defence is not only misconceived but will also be an academic exercise. Such an amendment will amount to reopening the case through what can be termed, for lack of a better word, an unorthodox means.

28. Needless to say, the Civil Procedure Rules provides for avenues through which a Judgment Debtor can object to execution through attachment and sale of property and clearly, amendment of pleadings to file for a counterclaim is not one of the methods through which such an objection can be made.

29. In conclusion, I am not satisfied that the Applicant has made out a case for the granting of the orders sought to amend the Defence and I therefore dismiss the application dated 11th April 2023 with costs to the Respondent.

30. It is so ordered.

RULING DATED, SIGNED AND DELIVERED AT NYAMIRA VIA MICROSOFT TEAMS THIS 5TH DAY OF OCTOBER 2023. W. A. OKWANYJUDGE