PETER M. KIGIRA & PHEOBE GLORIA NYAWIRA KIGIRA v NAIROBI OUTPATIENT MEDICAL CENTRE LIMITED & EQUITY BANK LIMITED [2010] KEHC 3603 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI (MILIMANI COMMERCIAL COURTS)

Civil Case 423 of 2007

PETER M. KIGIRA........................................................................1ST PLAINTIFF

PHEOBE GLORIA NYAWIRA KIGIRA...............................................2ND PLAINTIFF

VERSUS

NAIROBI OUTPATIENT MEDICAL CENTRE LIMITED...........1ST DEFENDANT

EQUITY BANK LIMITED ................................................................2ND DEFENDANT

RULING

1. The Chamber Summons dated 13th August 2008 is taken out by the 2nd defendant Equity Bank Limited. They are seeking for an order that an amendment made by the plaintiffs on their plaint on 29th July 2008 whereby the 1st defendant was removed as a party in this suit be disallowed or struck out. They are seeking   that the 1st defendant in the original suit that is Nairobi Outpatient Medical Centre Limited be reinstated as a necessary party in this suit.

2. This application is based on the grounds stated on the body thereto and the matters deposed to in the supporting affidavit sworn by Stanley Kiima on 13th August 2008. Briefly stated, both the plaintiffs are directors of the 1st defendant. By a resolution made by the plaintiffs on behalf of the 1st defendant, the 1st defendant borrowed a sum of Ksh.17,500,000/- from the 2nd defendant. The 1st defendant defaulted in the payment of the said loan and the 2nd defendant realized the security which was held by way of sale of the plaintiff’s property L.R. NO.17/91 (original 17/30/2).

3. The suit in this matter seeks for a declaration that the defendant did not

follow the laid down requirements as per the letter of offer when they sold the suit property to recover the loan granted to the 1st defendant. The plaintiffs are seeking for a sum of Ksh.32. 000. 000/- being damages for the loss of their property. The 2nd defendant contends that the plaintiff removed the 1st defendant as a party through an amendment of the pleadings which will be prejudicial to the 2nd defendant. The 2nd defendant will be required to demonstrate there were transactions done with the 1st defendant with the consent of the plaintiffs. The removal of the 1st defendant as a party will deny the court an opportunity of dealing with the actual matters in controversy. Moreover the amendment was obtained without the leave of the court.

4. This application was opposed by the plaintiffs. They relied on grounds of opposition on points of law. It was argued that the plaint was amended on 28th July 2008 pursuant to the provisions of Order VIA Rule 2 Sub Rules (1), (2) and (3) of the Civil Procedure Rules. The plaintiff sued the bank in their individual capacity because the property was sold at a gross under value of the market price by the 2nd defendant that is why the plaint was amended. There is no claim against the 1st defendant.

5. According to counsel for the plaintiff a party is entitled to plead their own

case and they cannot be forced to sue another party. Moreover there is a consent order recorded by the parties on 30th July 2008 stating that the suit against the 1st defendant be withdrawn. Therefore there is no party as the 1st defendant. The defendant can take out the 3rd party proceedings against Nairobi Outpatients Centre Limited. The directors and shareholders of the 1st defendant are separate legal entities and they cannot be made to bear the cost of this litigation. The property that was sold belonged to the plaintiffs in their own capacity and they were entitled to amend the pleadings to bring out their own claim.

6. This suit was filed on 15th August 2007, the defence was filed on 9th July

2008, and on 16th July 2008 the plaintiff filed a reply to defence. On 17th July 2008, the 2nd defendant also issued a third party notice against the 1st defendant. Then on 30th July 2008, the plaintiffs filed an amended plaint whereby the name of the 1st defendant was removed.

7. The issue which falls for determination is whether this amendment was properly effected as provided for under OrderVIA rule 1(2).    According to order VI r.11

“The pleadings in a suit shall be closed fourteen days after service of the reply or defence to counterclaim, or, if neither is served, fourteen days after service of the defence, notwithstanding that any order or request for particulars has been made but not complied with”

The reply to defence in this case was filed on 16th July 2008. So on the 14th day that is when the amended plaint was filed thus the plaintiff did not require leave of the court.  However, the 2nd defendant claims that the 1st defendant is a necessary party to this suit because the loan was advanced to the 1st defendant and the property which was sold as security was given by the plaintiffs to secure the borrowings by the 1st defendant.

8. Thus according to the 2nd defendant, it will be necessary to have the 1st defendant as a party to this suit in order for the court to decide all the matters in controversy. Moreover, under the provisions of Order I r.3 of the Civil Procedure Rules:-

“All persons may be joined as defendants against whom any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist, whether jointly, severally or in the alternative, where, if separate suits were brought against such persons any common question of law or fact would arise.”

9. Taking all the facts and the law in totality, I find that it will be necessary

for Nairobi Outpatient Centre Limited to be made a defendant in this matter. The 2nd defendant has already issued a third party notice to the Nairobi Outpatient Centre Limited but that was issued according to Order 1 r 21 where a defendant is claiming a co-defendant which is like a third party proceedings. If the Nairobi Outpatient Centre Limited is a third party is it necessary to reinstate them as defendants in this case.

10. The plaintiffs originally filed this suit and cited Nairobi Outpatient Centre Limited as 1st defendant. The consent order filed on 3rd October 2008 was between the advocates for the plaintiffs and the advocates for the 1st defendant. By that time the 2nd defendant had already filed their defence and they were not made party to the consent. I find that it is of no consequence as it does not bind the 2nd defendant.

11. The last matter to address is whether the amendment was made in

good faith, it will not cause prejudice to the other side which can not be compensated by costs, and it was meant to bring the real questions in controversy between the parties for determination by the court. Finally the amendment will avoid multiplicity of suits and will not alter the character of the suit. The amendment in this case will not serve any of the above principles. Firstly, it will prejudice the 2nd defendant; it will not assist the court to determine the real issues in controversy given the connection between the 1st defendant and the plaintiffs. By removing the 1st defendant that would not help the multiplicity of suits because the 2nd defendant would have to institute a suit against the 1st defendant. Lastly, the removal of the 1st defendant altered the character of the suit. This amendment was not brought in good faith. More so because the amendment was sneaked in after consent was filed without involving the 2nd defendant.

12. I allow the application and order that the 1st defendant be reinstated as a party to the suit. The pleadings should be served upon the 1st defendant within fifteen (15) days. The 1st defendant will be at liberty to file their defence within fifteen days of service. Costs of this application shall be in the cause.

RULING READ AND SIGNED ON 1ST MARCH 2010 AT NAIROBI.

M.K. KOOME

JUDGE