Salama Beach Hotel Limited v Ventaglio International SA, Arcuri Ignazio, D.Ssa Dal Moro Magdalena, Avv. De Cesari Patrizia, Isaac Rodrot & Stefano Uccelli [2021] KEHC 7964 (KLR) | Res Judicata | Esheria

Salama Beach Hotel Limited v Ventaglio International SA, Arcuri Ignazio, D.Ssa Dal Moro Magdalena, Avv. De Cesari Patrizia, Isaac Rodrot & Stefano Uccelli [2021] KEHC 7964 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT MALINDI

CIVIL SUIT NO. 10 OF 2019

(FORMERLY MOMBASA HCCC NO. 8 OF 2018)

SALAMA BEACH HOTEL LIMITED....................................PLAINTIFF

VERSUS

VENTAGLIO INTERNATIONAL SA............................1ST DEFENDANT

DR. ARCURI IGNAZIO............................................... 2ND DEFENDANT

D.SSA DAL MORO MAGDALENA......................... 3RD DEFENDANT

AVV. DE CESARI PATRIZIA....................................... 4TH DEFENDANT

ISAAC RODROT............................................................5TH DEFENDANT

STEFANO UCCELLI ....................................................6TH DEFENDANT

CORAM:     Justice Reuben Nyakundi

Kerandi Manduku & Co. Advocates for the Plaintiff

Okoth & Co. Advocates for the 2nd Defendant

Walker Kontos Advocates for the 3rd and 4th Defendants

Munyithya, Mutugi, Umara and Muzna Advocates for the 5th Defendant

Kibunja & Associates Advocates for the 6th Defendant

RULING

This Ruling is a determination on the twin issues of whether the instant suit, Civil Suit No. 10 Of 2019 (Formerly Mombasa HCCC No. 8 Of 2018)is Res Judicata; and whether the notice of withdrawal filed in this suit and dated 5th March 2018 is valid. It stems from directions to this effect issued by the Court of Appeal at Mombasa in Civil Appeal No. 2 of 2019 as consolidated with Civil Appeal No. 3 of 2019 Stefano Uccelli & another v Salama Beach Hotel Limited & 8 others [2019] eKLRin its judgement of 17th July 2019.  The relevant excerpt of the Judgement is reproduced hereunder:

“22. In this matter, we have made a determination that a court must first determine the issue of its jurisdiction before determining any other matter. With this in mind, the upshot is that the consolidated appeals in this matter have merit. The learned Judge erred in law in determining the application for joinder before determining the jurisdictional issue. For this reason, we hereby set aside in entirety the ruling and order made on 19th October 2018. We remit this matter back to the High Court for the hearing and determination of the preliminary issues of jurisdiction of the High Court to hear and determine Mombasa HCCC No. 8 of 2018. The twin issues of res judicata and validity of the Notice of Withdrawal are to be heard and determined as a jurisdictional issue. We direct the hearing of the jurisdictional question be heard by any other judge excluding the Hon. Justice Dorah Chepkwony and Hon. Justice P. J. Otieno.

23. We allow the consolidated appeals with costs.”

The matter was canvassed by way of written submissions which were highlighted by the respective advocates. The 5th Defendant filed submissions dated 26th November 2019 on 28th November, 2019. The Plaintiff filed its written submissions dated 23rd January 2020 on 27th January 2020. The 6th Defendant filed skeleton arguments dated 24th January 2020 on 27th January 2020. Finally, the Plaintiff filed further submissions dated 14th February 2020 on the same day.

The Submissions

The Advocate for the 5th Defendant begins by giving a brief outlay of the case. He submits that there exists a case, Malindi HCCC No. 118 of 2009 in which the parties are: Accredo AG - Plaintiff vs Salama Beach Hotel Ltd/1st Defendant; Hans Juergen Langer/2nd Defendant; Zahra Langer/3rd Defendant; Stefano Uccelli/4thDefendant; and Isaac Rodrot/5th Defendant.

It is submitted that in HCCC No. 118 of 2009, the 4th Defendant filed a Notice of Motion dated 20th April 2014 which was heard and determined by a Ruling of Chitembwe J dated 30th of April 2015. By this Ruling, it is submitted, the management and ownership of the Plaintiff herein, which was the 1st Defendant in that matter, was materially altered. That the said Ruling gave the 5th and 6th Defendants herein (4th and 5th Defendants in HCCC No. 118 of 2009) the rights and power to take possession of the administration, management, and control of Salama Beach Hotel Ltd; including all the assets of Ventaglio International S.A, the 1st Defendant herein. This Ruling, it is further submitted was affirmed on appeal in Civil Appeal No. 36 of 2015 in a Ruling rendered on 15th December 2017.

Counsel submits that on 8th January, 2018, the Plaintiff herein filed this suit contemporaneously with an application dated 8th January, 2018 seeking inter alia an interim injunction against the 4th 5th Defendants barring them from taking possession, altering, removing, selling, disposing off, alienating or in any other way dealing with the 1st Defendant’s properties or status pending the hearing and determination of this suit. That the 5th Defendant took out a notice of preliminary objection under protest dated 9th January, 2018 pleading res judicata in relation to the application dated 8th January, 2018. That in addition, the 5th Defendant filed a notice of withdrawal of the suit dated 5th March, 2018. Following a Ruling allowing Temple Point Limited a proposed 3rd Party to be enjoined in the suit, the matter was appealed against in Stefano Uccelli & another v Salama Beach Hotel Limited & 8 others [2019] eKLRwhere the Court of Appeal held that the matter revert to the High Court for the resolution of the twin issues of res judicata and validity of the notice of withdrawal of suit dated 5th March 2018.

Having given the above outlay, Counsel for the 5th Defendant proceed to submit on the issue of the validity of the withdrawal of the suit. It is submitted that by the orders issued by Chitembwe J in Malindi HCCC 118 of 2009 on 30th April 2015 and affirmed by the Court of Appeal on 15th December 2017 in Malindi Civil Appeal No. 36 of 2015, Hans-Jurgen Langer and Zahra Langer were removed from the directorship of Salama Beach Hotel Limited.Therefore, they could not purport to have passed a resolution to file suit or do anything else lawful as Directors of Salama Beach Hotel Ltd.

It is submitted that Isaac Rodrot and Stefano Uccelli, the 5th and 6th Defendants’, utilizing the authority conferred by the aforementioned decisions of 30th April 2015 and 15th December 2017, convened a board of directors meeting and passed a resolution to withdraw this suit. That this Board resolution, filed in court, has not been challenged by any other Board of the Plaintiff company. Further that the decisions of the Courts have not been set aside. Hence, it is submitted, the suit is properly withdrawn.

In support of these arguments, Counsel refers the Court to Iris Properties Limited & another y City Council of Nairobi 2016 KLR; Para 38, 39 of Teachers Service Commission vs. Kenya National Union of Teachers & 2 Others Petition No. 23 of 2013and Para. 16 of Sammy Ndungu Waity & another v Independent Electoral and Boundaries Commission & 3 others [2017] eKLR.

Next to be submitted on is the issue of res judicata. Counsel summarizes the Prayers sought by the Applicants in the application contemporaneously filed with the Plaint in this suit to be one for injunctive orders. That the import of these orders, should they be granted, would be to block the 4th and 5th Defendants from taking possession of the management and properties of the 1st Defendant. That further, the injunctive orders would stop the 4th and 5th Defendants from dealing with the shares and directorship of the 1st Defendant. Such an effect, it is submitted, would be tantamount to overturning the judgments of the court not only in HCCC 118 of 2009 but also of the Court of Appeal in Civil Appeal 36 of 2015.

It is therefore submitted that this court has no jurisdiction to deal with the issue of share owning and status of the company as these matters were already decided and are res judicata. As Counsel fronts this argument, he cites Uhuru Highway Development Limited v Central Bank of Kenya & 2 others [1996] eKLR; John Florence Maritime Services Limited & another v Cabinet Secretary for Transport and Infrastructure & 3 others [2015] eKLR and Owners of The Motor Vessel “Lillian Caltex Oil (Kenya) Ltd [1989] eKLR.

In concluding, Counsel urges the Court to dismiss the application and uphold the submissions that firstly the issues before court touches on issues that have been decided and the suit does not exist and secondly the 5th and the 6th Defendants/Respondents acted within the law to withdraw the suit. He also prays for costs.

For the 6th Defendant/Respondent, it is submitted that they have had the benefit of reading the submissions by the 5th Defendant and fully agree with them and the attendant authorities. It is submitted that the suit filed by the Plaintiff in Mombasa was clearly an attempt at forum shopping, reasoning that the orders sought had clearly been rejected by the Court in Malindiin HCC. No. 118 of 2009. That Justice Weldon Korir had in a ruling dated 17th May 2018 rejected an application by Temple Point Limited as an interested party. The same application was presented in Mombasa and Justice D. Chepkwony allowed the same. That the matters in this case are Res judicata and the court has no jurisdiction to entertain the matter.

After giving some background, the Advocate for the Plaintiff point out that this suit was commenced by way of a Plaint dated 23rd February 2019 and filed on the same date, the said plaint was drawn and filed by the firm of Kerandi Manduku & Company Advocates and was verified by an affidavit sworn by Hans Juergen Langer a Director and Shareholder of the Plaintiff Company. That the Notice of withdrawal was neither drawn by the Plaintiff’s Advocates nor the plaintiff himself and therefore has no effect whatsoever as it was filed by a person who does not have the proper locus standi or authority to file the same, Isaac Rodrot.

It is submitted that by Isaac Rodrot purporting to file such notice when he is neither Director nor shareholder of the Plaintiff Company and as such has no authority to act for and on behalf of the Plaintiff, was an action of bad faith and an effort to defeat the ends of justice. That it is further an affront to the Natural Justice principle of the right to be heard and this court cannot allow for the Defendants to take it upon themselves to terminate suits against themselves.

Refuting the 5th Defendant’s submission that the authority to convene a board meeting and pass a resolution to withdraw this suit was derived from the order of Chitembwe J. in Malindi HCC 118 OF 2009 and the ruling of the court of Appeal in Malindi Civil Appeal No. 36 of 2015, it is submitted that none of the said rulings gave and Directorship and or shareholding to the 5th Defendant. The 5th Defendant can therefore not purport to act as a Director and or Shareholder of the Plaintiff company.

Reference is made to Order 25 Rule 1 of The Civil Procedure Rules 2010 on who may withdraw a suit and the Black's Law Dictionary for a definition of a Plaintiff. It is hence submitted that any document filed on behalf of the Plaintiff by any other party other than the advocates on record is inadmissible and should be expunged from the court record.  In support Counsel cites Beijing Industrial Designing & Research Institute Vs. Lagoon Development Ltd (2015) eKLR for the submission that it is only the Plaintiff that can initiate the process of withdrawing a suit and not any other party to the suit.

It is submitted that the order of Chitembwe J in the Malindi HCC 118 of 2009 suit reverted shareholding of Salama Beach Hotel Ltd to the position as of 14th December 2009, these orders have not been set aside. This means, according to Counsel for the Plaintiff, that the 5th and 6th Defendants are not shareholders of Salama Beach Hotel Ltd as they were not so in 2009 and therefore they cannot purport to have resolved to withdraw this suit as they have no capacity to do so in the first place.

On res judicata, Counsel begins by citing the law on res judicata, being Section 7 of the Civil Procedure Act.Taking cue from John Florence Maritime Services Limited & Another V Cabinet Secretary for Transport and Infrastructure & 3 Others [2015] eKLR and Karia & Another v the Attorney General and Others [2005] 1 EA 83. it is submitted that the ingredients of res judicata are firstly, that the issue in dispute in the former suit between the parties must be directly or substantially be in dispute between the parties in the suit where the doctrine is pleaded as a bar. Secondly, that the former suit should be the same parties, or parties under whom they or any of them claim, litigating under the same title and lastly that the court or tribunal before which the former suit was litigated was competent and determined the suit finally. Counsel submits that the claim for res judicata in this matter does not lie as the 5th Defendant has failed to meet the threshold to uphold the doctrine of res judicata.

As the Plaintiff’s argument goes, there is no final judgement or decision that has been rendered in Malindi HCC 118 of 2009. According to Counsel, the 5th Defendant in an attempt to bring an element of finality to the orders of Chitembe J. of 30th April 2015 in HCC NO. 118 of 2009 has described the ruling as "judgement" while in true sense the same was a ruling on an interlocutory application and not a judgement of the main suit as the 5th Defendant attempts to claim. In addition, that Malindi Civil Appeal No. 36 of 2015 was an appeal on the ruling of Chitembwe J. in Malindi HCC 118 of 2009 and therefore cannot be in any way a final judgement or decision in the matter. Reference is made to Maina Kiai & 2 Others V Independent Electoral and Boundaries Commission & 2 Others [2017] eKLR.

It is submitted that Malindi HCC 118 OF 2009 is yet to be set down for hearing and therefore is still pending full hearing and determination. That since the 5th Defendant is yet to file a Defence in the matter, it is quite surprising for him to claim that the matter has been fully determined and therefore this matter is res judicata. It is also submitted that the Ruling of Chitembwe J. on 30th April 2015 in HCC NO.118 of 2009 Malindi and the Court of Appeal judgement issued on 15th December 2017 in Civil Appeal No. 36 of 2015 Malindi did not determine the issue of shareholding and directorship of Salama Beach Hotel Ltd but only returned the status of the Company to 14th December 2009 pending the hearing and determination of the entire suit. Moreover, that the issue of who should be the proper managers/directors of Salama Beach Hotel Ltd as well as the issue of shareholding ought to be settled after full adjudication by all the parties involved and affected by the Plaintiff's operations and the 5th Defendant cannot lay reliance on interlocutory orders as being final decisions of the court. The case relied upon here is that of Cosmas Mrombo Moka V Co-Operative Bank ff Kenya Limited & Another [2018] eKLR.

According to the Plaintiff’s Advocate, the parties in Malindi HCC 118 of 2009 and this instant suit different.  That the Parties in the former case are:  Accredo AG -Plaintiff versus Salama Beach Hotel Ltd/1st Defendant; Hans Juergen Langer/2nd Defendant; Zahra Langer/ 3rd Defendant; Stefano Uccelli/4th Defendant; and Isaac Rodrot/5th Defendant.

It is submitted that a plain reading of the parties involved in the two suits shows that the Plaintiff, the 2nd Defendant the 3rd Defendant in Malindi HCC 118 of 2009 are not parties to this suit; the 1st, 2nd, 3rd and 4th Defendants who are the principal Defendants in this instant suit are not parties to Malindi HCC 118 of 2009. Further, whereas Salama Beach Hotel Ltd is the Plaintiff in this, it is a Defendant in Malindi HCC 118 of 2009. The doctrine of res judicata cannot be invoked in this instance as the parties in the two suits are not similar. The case in support of this argument is cited as Kenya Commercial Bank Ltd v Benjoh Amalgamated Ltd [2017] eKLR.

It is an argument of the Plaintiff that the causes of action and the reliefs sought in this suit and in Malindi HCC 118 of 2009 are different. This instant suit, it is submitted, is a derivative suit seeking damages and the payment of the sum of Kshs. 63,689,464. 63 together with costs and interest and permanent injunctions stopping the Defendants from interfering with the business and operations of the Plaintiff.  The definition of a derivative claim contained in Section 238 of the Companies Act 2015 is also cited.

Counsel refers the Court to Juletabi African Adventure Limited & Another v Christopher Michael Lockley, Civil Appeal 25 Of 2016 Mombasa,and submits that this suit falls within the description of circumstances that appertain to the nature of a derivative claim. It is argued that the fact in issue in this instant suit is yet to be hear and determined. Malindi HCC NO.118 of 2009 is a suit challenging the validity of a consent order, the issue of the shareholding and directorship of Salama Beach Hotel Ltd is not an issue for determination in this suit. The matters being totally different with regards to the cause of action and reliefs sought, the issue of res judicata does not arise, it is submitted. Reliance is placed on Republic v Registrar of Societies – Kenya & 2 Others Ex-Parte Moses Kirima & 2 Others [2017] eKLR

Per Counsel, the issue of shareholding and directorship of Salama Beach Hotel are issues of fact which can only be determined at full hearing. That the issues of ownership of Salama Beach Hotel Ltd are issues of fact which need to go to full hearing for final determination; matters of ownership and fraud cannot be determined at an interlocutory stage. In this regard, the case of Telcom Sacco Society v Mary Nyaguthii Ngigi [2016] eKLRis cited.

Counsel urges that having outlined that the Defendants’ have no capacity to withdraw this suit and having outlined that the threshold for dismissing this matter on grounds of res judicata have not been met, the Court ought to order that this matter and Malindi HCCC 118 of 2009 proceed to full hearing for final determination on their merit as it is in the best interest of justice that suits be heard and determined on merit rather than be determined through interlocutory applications. Reliance is placed on Article 50(1) of the Constitutionas well as on Wachira Karani v Bildad Wachira [2016] eKLRand Sebei District Administration v Gasyali & Another (1968), E.A 300

Counsel also submits on the issue of compliance with the Orders of Chitembwe J of 30th April 2015 in Malindi HCC NO 118 of 2009 with respect to the Notice of Withdrawal dated 5th March 2018. It is submitted that while the 5th Defendant claims that through a purported board meeting held on 3rd March 2018 it was resolved that the instructions given to the firm of Kerandi Manduku & Co. Advocates to act for the Plaintiff be withdrawn and also that this suit to also be withdrawn, this purported meeting and all the resolutions derived from it are null and void and have no effect whatsoever in law as the people who participated in the said meeting had no capacity to transact such business on behalf of the Plaintiff Company by virtue of the fact that Ventaglio international SA had already been put under receivership at the time the purported meeting was being held. That all the directors of Ventaglio International S.A has already ceased being directors as the Company was under the management of the receivers. The directors could therefore not transact any business with regards to the Plaintiff Company. In support of this, the case of Odera Obar & Co. Advocates v Charter House Bank Limited [2018] eKLR is cited.

It is submitted that the Order by Chitembwe J, was a conditional order which required that certain circumstances are fulfilled before Hans Langer and Zahra Langer were to hand over the Plaintiff Company, these conditions presupposed a process which included rendering of accounts, taking of inventories and other such like process that would have allowed for a smooth handover which conditions have never been initiated and as such making it impossible to enforce the orders by Chitembwe J.in the Malindi HCC 118 of 2009.

It is further submitted that as at 14th  December 2009, Bruno Colombo the CEO of Ventaglio International had already ceded the management and control of the Plaintiff company to Hans Juerger Langer, therefore if the status of the Plaintiff company is to be returned to the status that it was in 14th December 2009, Hans Juergen Langer would still be in control and management of the Plaintiff Company and would therefore still have the proper locus standi to institute and sustain suits on behalf of the Plaintiff Company.

Analysis and Determinations

I have keenly appreciated the competing arguments by the respective advocates in this matter. In following with the directions of the superior court, two issues are ripe for determination.

a.  Whether the Notice of Withdrawal dated 5th March 2018 was valid.

b.  Whether the instant suit is res judicata.

The procedure for withdrawal of suits by a Plaintiff is described under Order 25 Rule 1 of the Civil Procedure Rules, 2010. It is:

“At any time before the setting down of the suit for hearing the plaintiff may by notice in writing, which shall be served on all parties, wholly discontinue his suit against all or any of the defendants or may withdraw any part of his claim, and such discontinuance or withdrawal shall not be a defence to any subsequent action.”

The 5th and 6th Defendants contend that the suit was properly withdrawn. Their argument is that, as Directors of Salama Beach Hotel limited pursuant to the Ruling of this Court delivered by Chitembwe J in Malindi HCCC 118 of 2009 on 30th April 2015 and subsequently affirmed by the Court of Appeal in Malindi Civil Appeal No. 36 of 2015, they called a board meeting of Salama Beach Hotel Limited on 3rd March 2018 and passed a resolution to withdraw the suit.

The Plaintiff strenuously argues that the Notice of withdrawal was neither drawn by the Plaintiff’s Advocates nor by the Plaintiff and therefore has no effect whatsoever. That this suit was commenced by way of a Plaint dated 23rd February 2019 and filed on the same date, the said plaint was drawn and filed by the firm of Kerandi Manduku & Company Advocates and was verified by an affidavit sworn by Hans Juergen Langer a Director and Shareholder of the Plaintiff Company. According to the Plaintiff, neither of the two Rulings gave Directorship and/or shareholding of Salama Beach Hotel Limited to the 5th or 6th Defendants hence they cannot purport to act as a Directors and/or Shareholders of the Plaintiff company.

Inferring from Order 25 Rule 1, the Court of Appeal in Beijing Industrial Designing & Research Institute Vs. Lagoon Development Ltd (2015) eKLRcontemplates withdrawal of suits by the Plaintiff in the illuminative extract to which I wish to associate below:

“The above provision presents three clear scenarios regarding discontinuance of suits or withdrawal of claims. The first scenario arises where the suithas notbeen set down for hearing. In such an instance, the plaintiff is at liberty, at any time, to discontinue the suit or to withdraw the claim or any part thereof. All that is required of the plaintiff is to give notice in writing to that effect and serve it upon the all the parties. In that scenario, the plaintiff has an absolute right to withdraw his suit, which we agree cannot be curtailed. The second scenario arises where the suithas beenset down for hearing. In such a case, the suit may be discontinued or the claim or any part thereof withdrawn by all the parties signing and filing a written consent. In this scenario, the right of the plaintiff is circumscribed by the requirement that he must obtain the written consent of all the other parties. The last scenario arises where the suithas beenset down for hearing but all the parties have not reached any consent on discontinuance of the suit or withdrawal of the claim or any part thereof. In such eventuality, the plaintiff must obtain leave of the court to discontinue the suit or to withdraw the claim or any part thereof, which is granted upon such terms as are just. In this scenario too, the plaintiff’s right to discontinue his suit is circumscribed by the requirement that he must obtain the leave of the court. That such leave is granted on terms suggests that it is not a mere formality.”

In Peter Otieno Karani v Mark Chitelesi [2019] eKLR,the rule is discussed as follows:

“9. How have the courts interpreted and applied Order 25 Rule 1? The general consensus appears to be that once a notice to withdraw is filed the suit is automatically discontinued. The endorsement of or leave by the court for the withdrawal or discontinuance of the suit is not necessary.

10. It was said in Kofinaf Company Ltd & another vs. Nahashon Ngige Nyagah & 20 others [2017] eKLR as follows:

“… the law can be stated to be that as a general proposition the right of a Plaintiff to Discontinue a Suit of or Withdraw a Claim under the provision of order 25 Rule 1 (that is where the suit has not been set down for hearing) is an absolute and untrammelled right. Also again as a general proposition, it takes effect upon the filing of the Notice. No leave of Court is required nor a Court endorsement necessary to give effect to this withdrawal.

21. And it has to be said that unlike some other procedural Rules, The Civil Procedure Rules, in respect to order 25 Rule 1, does not have any provisions requiring the Leave of Court to Discontinue a suit or withdraw a claim.

11. The position then appears to be, which I agree with, that once a notice to withdraw or discontinue a suit under Order 25 Rule 1 is filed, the immediate effect would be that the suit is automatically withdrawn, and in particular when the same is served and brought to the notice of the court. It would appear that such notice does not need to be endorsed by the court, or put differently, there would be need for the court to grant leave for the withdrawal.”

This current suit is yet to be set down for hearing. Drawing from the cited authorities, the Plaintiff ideally ought to have an absolute right to withdraw the case. However, the contestation in this matter is whether the 5th Defendant had the authority to withdraw the suit on behalf of the Plaintiff while purporting to be a Director of the Plaintiff. As already mentioned, the 5th and 6th Defendants’ maintain that they derive their authority from the Ruling of this Court delivered by Chitembwe J in Malindi HCCC 118 of 2009 on 30th April 2015 and subsequently affirmed by the Court of Appeal in Malindi Civil Appeal No. 36 of 2015. The Plaintiff on the other hand is of the view that these Rulings did not give Directorship of the Salama Beach Hotel Limited to the 5th and 6th Defendants but only reverted the Directorship of the Company to the position as at 14th December 2009. Without a doubt, the matter of the shareholding and directorship of the Plaintiff company is a hotly contested subject. This Court takes judicial notice that the matter has been the subject of litigation in a number of cases before the Court including:

1.  Petition No. 6 of 2019

2.  Petition No. 10 of 2020

3.  Petition No. 12 of 2020

4.  HCCC No. 10 of 2020

5. HCCC No. 118 of 2009

6. HCCC No. 10 of 2019

The net effect of this prevailing circumstance is that while it is accepted that the general proposition is that the Plaintiff’s right to withdraw a suit is absolute, there may arise a situation where it ought to be curtailed. As the Learned Judge in Kofinaf Company Ltd & another v Nahashon Ngige Nyagah & 20 Others [2017] eKLR remarks at para. 25, ‘However, even in the midst of that general proposition in respect to Order 25 Rule 1, there would be occasion when the Plaintiffs right to Withdraw or Discontinue ought to be fettered or curtailed.’ Making reference to the decision in Beijing Industrial Designing & Researching (supra), the learned judge further holds; “that case illustrates that a Court will not allow a Plaintiff to use the Right to Discontinue or Withdraw so as to abuse the process of Court or to defeat the ends of justice.” [emphasis mine]

In the circumstances, I find that it would be in the interests of justice that the Plaintiff’s’ right to withdraw the suit in the terms contemplated by Order 25 Rule 1 be interfered with to allow for this case to be heard and determined; however, this contingent upon the determination on whether the matter is res judicata. My conclusion on this issue is that the Notice of Withdrawal of suit dated 5th March 2018 was not properly filed.

Having settled the issue of withdrawal, I turn to the question of whether the matter is res judicata on the basis that a similar matter, Malindi HCCC No. 118 of 2009 has already been settled. The law on res judicata is Section 7 of the Civil Procedure Act.It defines the doctrine of Res Judicata as applying to a suit or issue in which a matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties. The said section is mandatory in its provision and provides that:

“No court shall try any suit in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such court.”

For a matter to be res judicata, the matters in issue must be similar to those which were previously in dispute between the same parties and the same having been determined on merits by a Court of competent jurisdiction. As it was determined in the English case of Henderson v Henderson (1843-60) All E.R.378:

“…where a given matter becomes the subject of litigation in, and of adjudication by a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of a matter which might have been brought forward as part of the subject in contest, but which was not brought forward only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special case, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation and which the parties, exercising reasonable diligence, might have brought forward at the time.”

The Court of Appeal pronounced itself on the test for Res Judicata inKamunye and Others v Pioneer General Assurance Society Ltd [1971] EA 263 at 265opining:

"The test as to whether or not a suit is barred by Res Judicata seems to me to be - is the plaintiff in the second suit trying to bring before the court, in another way and in the form of a new cause of action a transaction which he has already put before a court of competent jurisdiction in earlier proceedings and which has been adjudicated upon? If so, the plea of Res Judicata applies not only to points upon which the first court was actually required to adjudicate but every point which properly belonged to the subject of litigation and which the parties, exercising reasonable diligence might have brought forward at the time.  The subject matter in the subsequent suit must be covered by the previous suit for Res Judicata to apply?”

The Court of Appeal in The Independent Electoral and Boundaries Commission v Maina Kiai & 5 others, Nairobi CA Civil Appeal No. 105 of 2017 ([2017] eKLR), gives the elements that this Court will be relying on, and that have to be satisfied for a matter to qualify as res judicata in the following manner:

“Thus, for the bar of res judicata to be effectively raised and upheld on account of a former suit, the following elements must be satisfied, as they are rendered not in disjunctive but conjunctive terms;

a) The suit or issue was directly and substantially in issue in the former suit.

b) That former suit was between the same parties or parties under whom they or any of them claim.

c) Those parties were litigating under the same title.

d) The issue was heard and finally determined in the former suit.

e) The court that formerly heard and determined the issue was competent to try the subsequent suit or the suit in which the issue is raised.”

It has been held that consideration of the elements of res judicata ought to be done conjunctively as opposed to disjunctively. See Kenya Commercial Bank Limited v Benjoh Amalgamated Limited [2017] eKLR.The import of this is that for a claim based on res judicata to hold water, all the elements alluded to in the referenced authorities above must be present. Res judicata is rationalized by the Court of Appeal in The Independent Electoral and Boundaries Commission v Maina Kiai & 5 others [supra]in the following terms:

“The rule or doctrine of res judicata serves the salutary aim of bringing finality to litigation and affords parties closure and respite from the spectre of being vexed, haunted and hounded by issues and suits that have already been determined by a competent court. It is designed as a pragmatic and commonsensical protection against wastage of time and resources in an endless round of litigation at the behest of intrepid pleaders hoping, by a multiplicity of suits and fora, to obtain at last, outcomes favourable to themselves. Without it, there would be no end to litigation, and the judicial process would be rendered a noisome nuisance and brought to disrepute or calumny. The foundations of res judicata thus rest in the public interest for swift, sure and certain justice.”

With the anterior discussion in mind, what is left is to juxtapose the positions taken by the respective parties as regards res judicata, against the criteria for res judicata and establish whether the criteria have been met.

The thrust of the 5th and 6th Defendant’s argument is that this suit is res judicata by virtue of the existence of Malindi HCCC No. 118 of 2009, which they argue fully settled the matter of the directorship and ownership of Salama Beach Hotel Limited. As their argument goes, this suit pertains to the same issue as in Malindi HCCC No. 118 of 2009and the same parties are litigating. That the import of the orders sought in the instant suit, should they be granted, would be to block the 4th and 5th Defendants from taking possession of the management and properties of the 1st Defendant and from dealing with the shares and directorship of the 1st Defendant. This it is said, would be akin to overturning the judgments of the court not only in HCCC 118 of 2009 but also of the Court of Appeal in Civil Appeal 36 of 2015.

In opposition, the Plaintiff forms the clear opinion that there is no final judgement or decision that has been rendered in Malindi HCC 118 of 2009; that the Ruling of Chitembwe J. on 30th April 2015 in HCC NO.118 of 2009 Malindi and the Court of Appeal judgement issued on 15th December 2017 in Civil Appeal No. 36 of 2015 Malindi did not determine the issue of shareholding and directorship of Salama Beach Hotel Ltd but only returned the status of the Company to 14th December 2009 pending the hearing and determination of the entire suit; the parties in Malindi HCC 118 of 2009 and this instant suit different; and finally that the reliefs sought are different.

To begin with, both Malindi HCCC No. 118 of 2009 and the instant suit are filed in the High Court. The competence of the Court to try both suits is not in question.

As to whether the suit or issue in this suit was directly and substantially in issue in the Malindi HCCC No. 118 of 2009, I am in agreement with the position advanced by Counsel for the 5th and 6th Defendants that denuded, this suit boils down to the ownership, management and control of Salama Beach Hotel Limited. The argument by the Plaintiff that this is a derivative suit seeking to recover damages and to restrain the Defendants from interfering with the business of the Plaintiff is essentially confirms the position that what is in contention is who ought to have control over Salama Beach Hotel Limited.

Is Malindi HCCC No. 118 of 2009 between the same parties litigating under the same title as in this suit? In the former suit, the Parties were:

Accredo AG/Plaintiff

Salama Beach Hotel Ltd/1st Defendant;

Hans Juergen Langer/2nd Defendant;

Zahra Langer/ 3rd Defendant;

Stefano Uccelli/4th Defendant; and

Isaac Rodrot/5th Defendant.

On the other hand, in the instant suit, the Parties are:

Salama Beach Hotel Limited/Plaintiff;

Ventaglio International SA/1st Defendant;

Dr. Arcuri Ignazio/2nd Defendant;

D.Ssa Dal Moro Magdalena/3rd Defendant;

Avv. De Cesari Patrizia/4th Defendant;

Isaac Rodrot/5th Defendant; and

Stefano Uccelli/6th Defendant.

A plain reading of the Parties shows that not only are they different, but they are also litigating under different titles. Where Salama Beach Hotel Limited was the 1st Defendant in the former suit, it is the Plaintiff in the latter. The 2nd to 4th Defendants in the instant suit were not parties in Malindi HCCC No 118 of 2009. Accredo AG is not a party in the instant suit. On closer examination though, some of the Parties in this instant suit do have such a degree of connection to those in the Malindi HCCC No. 118 of 2009 that one would reasonably contend that they may be parties under whom parties in the former suit claim. Case in point being the 1st Defendant herein, Ventaglio International SA purportedly a shareholder of Salama Beach Hotel Limited, the Plaintiff in this case and 1st Defendant in the former case. The 2nd to 4th Defendants herein also maintain they are the duly appointed receivers for the 1st Defendant. Be that as it may, the conclusion to be drawn here is that the parties in this suit are different and litigating under different titles from the parties in Malindi HCCC No. 118 of 2009.

The final criterion I am left to ponder is whether the issue was heard and finally determined in the former suit. I have already held that the dispute in this suit and in Malindi HCCC No. 118 of 2009, stripped bare, is who ought to manage and control the property and affairs of Salama Beach Hotel Limited. The advocate for the 5th and 6th Defendant’s contention is that the Ruling by Justice Chitembwe J made on 30th April 2015 in Malindi HCCC No. 118 of 2009 conclusively determined the dispute. For the Plaintiff’s Counsel, the position — which is in congruence with my own— is that Malindi HCCC No. 118 of 2009 has not been finally determined. Being a matter that is still being actively prosecuted in this Court, and the Court takes judicial notice of this fact, I am inclined to the position that the Ruling of 30th April 2015 by Chitembwe J did not conclusively determine that matter. I say so because my understanding of that Ruling related to an interlocutory application seeking the withdrawal of a Consent order. Had Malindi HCCC No. 118 of 2009 been conclusively determined, would the matter still be within the corridors of justice? I think not.

The long and short of it is that the current suit has not met all the prerequisites that would deem it res judicata and I do not hesitate to hold as much.

Having concluded that this suit is not res judicata, where does that leave us? This Court is enjoined to ensure it efficiently disposes of its business in a manner that ensures a just determination of proceedings and efficient use of scarce judicial resources at a cost affordable to the respective parties. This is the overriding objective of the Court enshrined under Sections 1A and 1B of the Civil Procedure Act. It is my finding that Malindi HCCC No. 118 of 2009 is actively being prosecuted in this Court by the Parties therein. Additionally, I have also held that the matters in issue in this suit are substantially tied to those in Malindi HCCC No. 118 of 2009. In my view, it behoves this Court that the matters be heard together with a view of fulfilling the overriding objectives of facilitating just, expeditious, proportionate and affordable resolution of civil disputes.

Consolidation of suits is provided under Order 11 Rule 3(h) of the Civil Procedure Rules 2010 to wit:

3. (1) With a view to furthering expeditious disposal of cases and case management the court shall within thirty days after the close of pleadings convene a Case Conference in which it shall—

(h) consider consolidation of suits

The authorities on consolidation of suits such as Nairobi ELC Suit No. 1000 of 2012 Joseph Okoyo v Edwin Dickson Wasunna (2014) eKLR, which cited with approval the case of Mombasa HCCC No. 992 of 1994 Nyati Security Guards and Services v Municipal Council of Mombasa enumerate the relevant factors to be considered in the manner below:

“the situations in which consolidation can be ordered include where there are two or more suits or matters pending in the same court where:-

(a) Some common question of law or fact arises in both or all of them; or

(b) The rights or relief claimed in them are in respect of, or arise out of the same transaction or series of transactions, or

(c) For some other reason it is desirable to make an order for consolidating them.”

In Selecta Kenya Gmbh & Co. KG v Chase Bank Kenya Limited & 2 others [2018] eKLR,Nzioka J advances the position, to which is wholly associate, that:

“43.   Similarly, the case law on consolidation of suits as evidenced by the authorities cited above is now settled and the principles that arise there from are that;

(i) that the suits should have common questions of law and facts;

(ii) the reliefs sought in both cases in respect of or arise from the same transactions or a series of transactions; and

(iii)  any other reason desirable to make the order.

44.   It is therefore clear that the purpose of consolidation of suits is to save costs, time, speed up trial, eliminate duplicative trials involving the same parties, issues and evidence, for efficient and proper administration of justice, and expeditious disposal of matters, consequently promote judicial economy, so long as it is not to prejudice any of the Parties.”

While the authorities so far cited relate to where an application for consolidation of suits is made by one of the Parties, this Court is of the view that it can, on its own motion, call for such consolidation where it advances the overriding objectives iterated above. My position finds favour in Selecta Kenya Gmbh & Co. KG v Chase Bank Kenya Limited & 2 others [supra]where the Court further goes on to hold that:

“the Court has a broad discretion to order for consolidation of suits even on its own motion and can consolidate to tie more than one action together for separate individual actions into one and get a single judgment, where the issues and witnesses are the same and the rights of the parties can be determined in one suit.  (See Tommie vs La Chance 412 SO 2nd 439 (Fla 4th DCA 1982).”

Appreciating the need for just, expeditious and cost-effective disposal of suits being a suitable grounding for consolidation of suits, the Court in Korean United Church of Kenya & 3 Others vs Seng Ha Sang (2014) eKLR opines that:

“consolidation of suits is done for purposes of achieving the overriding objective of the Civil Procedure Act, that is, for expeditious and proportionate disposal of civil disputes.  The main purpose of consolidation of suits is to save costs, time and effort and to make the conduct of several actions more convenient by treating them as one action.”

Buttressed by the preceding authorities, the upshot is that this matter is one that is ripe for consolidation. The issue at the heart of this dispute bears an uncanny resemblance to the contestations in Malindi HCCC No. 118 of 2009. Furthermore, it is not lost on this Court that this matter is the subject of hotly contested litigation, a number of matters of which have been referenced elsewhere in this Ruling. Therefore, with a view to ensuring an expeditious resolution, the two matters must be consolidated.

The Court’s disposition in view of the foregoing is that:

a. the Notice of Withdrawal dated 5th March 2018 was irregular and is therefore declared void. Malindi HCCC No. 10 of 2019 is properly within this Court.

b.  Malindi HCCC No. 10 of 2019 is not res judicata.

c.  To enable the just and expeditious determination of the central issues for determination, Malindi HCCC No. 10 of 2019 be consolidated with Malindi HCCC No. 118 of 2009 with the former being the lead file.

d.  That the consolidated suits be subject to a case conference with a view to setting them down for hearing within 30 days of the date of this Ruling.

e.  That having succeeded in its application, the Plaintiff shall have the costs.

Orders accordingly.

DATED SIGNED AND DELIVERED AT MALINDI THIS 6TH DAY OF APRIL, 2021.

……………………………

R NYAKUNDI

JUDGE

NB:

In view of the Public Order No. 2 of 2021 and subsequent circular dated 28th March 2021 by Her Ladyship, The Acting Chief Justice on the declarations of measures restricting court operations due to the third wave of Covid-19 pandemic this ruling has been delivered online to the last known email address thereby waiving Order 21(1) of the Civil Procedure Rules. (kerandimanduku@yahoo.com jpjurists@gmail.com info@okothadvocates.co.ke sk.kibunja@gmail.comwalkerkontos@walkerkontos.com )