Samuel Maina Karanja t/a Kittony Maina Karanja Advocates v Caroline Jepkemboi Kittony Waiyaki t/a Kittony Waiyaki Advocates [2017] KEHC 10074 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

MILIMANI LAW COURTS

COMMERCIAL AND TAX DIVISION

CIVIL CASE NO. 10 OF 2011

SAMUEL MAINA KARANJA T/A

KITTONY MAINA KARANJA ADVOCATES....PLAINTIFF

VERSUS

CAROLINE JEPKEMBOI KITTONY WAIYAKI T/A

KITTONY WAIYAKI ADVOCATES................DEFENDANT

RULING

[1]Before the Court for determination is the Notice of Motion dated 12 March 2013. The application was filed herein by the Plaintiff, Samuel Maina Karanja T/A Kittony Maina Karanja Advocates, pursuant to Order 36 Rules 1 and 2 of the Civil Procedure Rules and all other enabling provisions of the law, for orders that Judgment be entered for the Plaintiff as prayed for in the Plaint dated 20 January 2011; and that the costs of the application be awarded to him. The grounds upon which the application was hinged are that the Defendant is truly and justly indebted to the Plaintiff; and that the claim is for a liquidated sum in respect of which the Defendant has no defence.

[2] In the Supporting Affidavit sworn by the Plaintiff on 12 March 2013, he averred that he is an Advocate of the High Court of Kenya, and that by a Partnership Agreement dated 1 October 2006 between him and the Defendant, Caroline Jepkemboi Kittony Waiyaki, they established a partnership to carry on the practice of law under the name and style of Kittony Maina Karanja Advocates. They were later joined by Churchill Omondi Midwa, who thereafter resigned from the Partnership on 1 February 2008. The Defendant subsequently resigned from the Partnership on 31 August 2012, whereupon they reconciled the Partnership Accounts and executed an Agreement dated 17 September 2010, for the repayment of the liabilities of the Partnership.

[3] The Plaintiff further averred that, in the said Agreement, the Defendant admitted and acknowledged that she was personally liable to pay the firm of Kittony Maina Karanja Advocates the sum of Kshs. 9,879,942. 70; but that in breach thereof, she failed to honour her obligations under the contract after paying Kshs. 2,152,151/= only. Having filed this suit and caused process to be served on the Defendant, the Plaintiff moved the Court for Summary Judgment under Order 36 Rule1 and 2 of the Civil Procedure Rules. At that point in time, the Defendant had not filed any Defence, despite having entered appearance in the suit on 9 February 2011.

[4] The Defendant opposed the application vide her Replying Affidavit sworn on 12 June 2013. Her contention was that, upon being served with the pleadings and Summons to Enter Appearance, she instructed the firm of Kyalo & Associates to enter appearance and file a Defence on her behalf. Thereafter, a Memorandum of Appearance was indeed filed along with a Chamber Summons application dated 9 February 2011; and that the Plaintiff also filed an application dated 7 April 2011 and both applications were argued and a Ruling delivered on 17 January 2013. She thus averred that she was all along under the impression that her erstwhile Advocates had filed a Defence on her behalf; and that upon discovering that no Defence had been filed, she immediately instructed the firm of Henia Anzala & Associates, who proceeded to take over the matter and to file a Defence, Counterclaim and Set-off on 26 April 2013.

[5] Along with her Replying Affidavit, the Defendant also filed her application by way of the Notice of Motion dated 12 June 2013, for orders that the Court be pleased to enlarge the time within which to file her Defence; and that the Defence, Counterclaim and Set-Off dated 18 April 2013 and filed in Court on 26 April 2013, be deemed duly filed. She similarly filed and served a Witness Statement and a List Documents, copies of which were annexed to her Notice of Motion dated 12 June 2013. The court record shows that that application was disposed of by consent on 20 November 2012 and was accordingly allowed as prayed.

[6] Pursuant to the directions given herein on 20 November 2012, the parties filed and exchanged written submissions pertinent to the instant application. In his written submissions filed on 31 July 2017, the Plaintiff reiterated his posturing that the Defendant is truly and justly indebted to him, and that she does not have any defence to the claim, which is for a liquidated amount. He relied on the cases of Lalji T/A Vakkep Building Contractors vs. Carousel Ltd [1989] KLR 386 and AAT Holdings Limited vs. Diamond Shields International Limited [2014] eKLR on what constitutes a triable issue. He thus posited that this is not the sort of suit that the Court should waste its time hearing, more so given the Ruling earlier delivered herein, dated 17 January 2013, wherein the Court (Njagi, J), in dismissing the Defendant's application for injunction, came to the conclusion that the Defendant had admitted and acknowledged her indebtedness in the subject Agreement dated 17 September 2010.

[7] It was further argued by the Plaintiff that the Defendant partially honoured the Agreement by making partial payment, leaving a balance of Kshs. 7,727,791. 70outstanding; and admitted as much in Paragraph 15 of her Witness Statement. Thus, on the authority of Quaker Ventures vs. Equity Bank [2015] eKLRthe Court was urged not to allow the Defendant to temporize this case for no good reason. Counsel for the Plaintiff recalled that this suit was filed on 20 January 2011and that the Plaintiff is yet to recover the sums that have been admitted as owing to him. Article 159(2)(b) of the Constitution was cited as authority for the precept that justice shall not be delayed and to underscore the Plaintiff's argument that he stands to suffer prejudice by any further delay in the disposal of this suit, hence the application for Summary Judgment.

[8] The Defendant's written submissions were filed on 18 December 2013. She asserted that, in her Defence, Counterclaim and Set-Off as well as her Replying Affidavit, she set out in extenso, the circumstances surrounding the signing of the subject Agreement. Her version was that they agreed with the Plaintiff as partners to purchase an office suite, and that the purchase price was Kshs. 20,000,000/=. That the arrangement was that the purchase would be made through a facility negotiated by the Plaintiff with his bankers, Bank of India, and that the she would pay off her obligation by monthly instalments towards the loan account; and that she would then be entitled to a 50% share of the office suite upon full payment, granted that the office suite was the property of the Partnership.

[9] It was further submitted by the Defendant that the Plaintiff subsequently sold the office suite on 20 May 2011 without any reference to her, and is therefore not entitled to any further payment from her. According to her, her Defence, Counterclaim and Set-Off does raise several triable issues that can only be resolved at the hearing, namely:

[a] Whether the Plaintiff and the Defendant had a meeting of the minds at the time of signing the Agreement as to their respective interests in the office suite;

[b] Whether the Agreement is binding on the parties;

[c] Whether the Defendant owes the Plaintiff any money;

[b] Whether the Plaintiff owes the Defendant any money.

[10] The case of Lalji T/A Vakkep Building Contractors vs. Carousel Limited [1989] KLR 386 was relied on by the Defendant to support her argument that Summary Judgment is a draconian measure that should be resorted to only in the clearest of cases, and that where a triable issue is found to exist, a trial should ensue regardless of the possible result. It was further submitted, on the authority of Doge vs. Kenya Canners Limited [1985] KLR 942 and Provincial Insurance Co. of East Africa Ltd vs. Kivuti [1995-1998] 1 EA 283 that the Counterclaim further gives her further justification to leave to defend. The Court was accordingly urged to dismiss the Plaintiff's application with costs.

[11] From the foregoing, there is no dispute that the parties hereto were partners in the law firm of Kittony Maina Karanja Advocates or that the Defendant retired from the partnership in accordance with the terms and conditions of their Partnership Deed dated 1 October 2006 (marked Annexure SMK-1 to the Supporting Affidavit). The parties are further in agreement that upon the retirement of the Defendant from the partnership, the parties hereto made an Agreement for the repayment of liabilities owed to the firm by the Defendant. That Agreement was exhibited as Annexure SMK-5 to the Supporting Affidavit, and is dated 17 September 2010; and there is no gainsaying that the Defendant thereby covenanted to pay the Plaintiff Kshs. 7,888,479/= by 15 November 2010. This was in addition to the Defendant settling the liabilities owed by the firm to its clients, for which she issued two postdated cheques.

[12] It is apparent from the pleadings and the averments in the affidavits filed herein that the Defendant did not honour her obligations under the Agreement dated 17 September 2010, thereby precipitating the institution of this suit, which is clearly premised on a liquidated demand, for the purposes of Order 36 Rule 1 of the Civil Procedure Rules, of whichRule 1(1)(a)provides thus:

"(1) In all suits where a plaintiff seeks judgment for:-

(a) a liquidated demand with or without interest; or

(b) ...

Where the defendant has appeared but not filed a defence the plaintiff may apply for judgment for the amount claimed, or part thereof, and interest, or for recovery of the land and rent or mesne profits."

[13]It is nevertheless also trite law that to justify Summary Judgment, the matter must be plain and obvious and where it is not plain and obvious, there would be no justification for a party to a civil litigation to be deprived of his right to have his case subjected to a proper trial and determination on the merits. Thus, in Lalji T/A Vakkep Building Contractors vs. Carousel Limited [1989] KLR 386, Court of Appeal held thus:

"Summary judgment is a draconian measure and should be given in only the clearest of cases. And a trial must be ordered if a triable issue is found to exist or one which is fairly arguable. The Court should avoid the temptation to anticipate the ultimate result of the trial."

And in Kenya Trade Combine Limited Vs Shah Civil Appeal No. 193 of 1999, the Court of Appeal took the same stance thus:

“In a matter of this nature all a defendant is supposed to show is that a defence on record raises triable issues which ought to go for trial. We should hasten to add that in this respect, a defence which raises triable issues does not mean a defence that must succeed.”

[14] Whereas the application was filed before the Defendant filed a Defence, it so happened that she did file not only a Defence, but also a Counter-claim and Set-Off, albeit out of time. The record further shows that the filing was regularized by the Consent Order of 20 November 2013. That would have sufficed to dispose of the application as having been overtaken by events. Indeed in Doge vs. Kenya Canners Limited [1985] KLR 942, the position taken by the Court of Appeal was that if the counterclaim appears to be bona fide, then unconditional leave to defend should be given.

[15] However, the Plaintiff was of the conviction that even where there is a Defence filed, the Court would still be under obligation to look at the merits thereof, with a view of determining whether it raises a good defence to the claim. He relied on the persuasive authority of Quaker Ventures vs. Equity Bank [2015] eKLR in which the following view was taken:

"...Order 36 of the Civil Procedure Rules has bred various interpretations by judges, legal counsels as well as other commentators. I believe the source of contention is the words "...but not filed a defence..." It is therefore not surprising that counsel for the Plaintiff has taken the view that the rule envisages filing of an application for summary judgment before defence is filed...it will be dangerous to prescribe as a rule of law that a belated defence should make a properly filed application under Order 36 of the Civil Procedure Rules to be incompetent or barren. I think in such scenario, the court should examine the belated defence within the framework of Order 36 to discern whether it raises any bona fide triable issue worth trial...such defence should be treated within rule 2 and be seen only as a means to ...show...that he should have leave to defend the suit...I should think also that a party who files a defence just to delay a case should never be allowed the luxury to do so, lest the court should be assisting a belligerent defendant to temporize the case for no good reason. The court should be able to enter summary judgment on clear and plain cases which do not require a trial to prove."

[16] My own view of the matter is that the summary procedure provided for in Order 36 Rule 1 of the Civil Procedure Rules is restricted to the window of opportunity between the filing of an appearance and the filing of Defence; and whereas a Defence subsequently filed, even if belatedly, would fall under the category of documents envisaged by the words "or otherwise" in Rule 2 of Order 36 of the Civil Procedure Rules, the moment the belated Defence is admitted as having been properly filed as was done herein, that window under Rule 1 would be thereby closed. Indeed this must be why separate provisions exist in the Civil Procedure Rules, by dint of Order 2 Rule 15andOrder 10 Rule 4and10 of the Civil Procedure Rules, for striking out of Defence for, inter alia, disclosing no reasonable defence and the entry of judgment in default of defence.

[17] Indeed, it is instructive to bear in mind the mischief behind Order 36 Rule 1(1)(a) of the Civil Procedure Rules as well articulated in the case of James Juma Muchemi & Partners Ltd vs. Barclays Bank of Kenya & Another, HCCC No. 339 of 2011 (UR),which I entirely agree with:

"It is clear that the subrule provides that the application is to be made where a defendant has appeared "but not filed a defence." This particular provision as read together with Rules 2 and 4 of Order 36, shows that the intention of the drafters of that Order was that no application may be made for Summary Judgment after a defence has been filed. The mischief sought to be addressed is quite clear, that a Plaintiff who has a genuine bona fide claim against a defendant does not have to wait until he sees the defence filed by the Defendant to decide that the Defendant has no defence to his claim. Under the new Rules, the proviso to Order 36 Rule 1(1) is very clear unlike the previous rule which did not have the words "...but not filed a defence...". This means that the drafters of the Civil Procedure Rules 2010 intended to completely bar applications under Order 36 being brought after the defence has been filed."

[18] Hence, on the basis of the Consent Order aforementioned, and the admission out of time of the Defendant's Defence, Counter-claim and Set-Off, as well as Witness Statement and Bundles of Documents, I would find and hold that this is a matter that ought to proceed to hearing for a determination on the merits, noting that there are indeed triable issues raised thereby that would warrant such determination. One of the issues is whether the money that was due to the Plaintiff was in respect of the purchase of the office suit and therefore part of the partnership assets. In this regard, the Defendant contended that she was entitled to 50% stake in the ownership of the office suite; and therefore that the Plaintiff had no right to dispose of the same without any reference to her. She added that this disposal occurred subsequent to the making of the subject Agreement and therefore changed the respective position of the parties as negotiated. That, to my mind is a valid triable issue that would best be resolved by a trial.

[19] It is to be remembered that a triable issue is not necessarily one that must succeed; a point well made in Shah Vs Padamshi (1984) KLR 531 thus:

“Except in the clearest of cases, which this one is not, it is inadvisable for the Court to prefer one affidavit to another in order to enter Summary Judgment. Summary Judgment is a drastic remedy to grant, for inherent in it is a denial to the Respondent of his right to defend the claim made against him. A trial must be ordered if a triable issue is found to exist, even if the Court strongly feels that the Defendant is unlikely to succeed at the trial. The Court must not attempt to anticipate that the Defendant will not succeed at the trial…”

[20] Finally, it was the Plaintiff's argument that the Court is bound by the Ruling of Njagi, J delivered herein on 17 January 2013, by which the Defendant's application for injunction was dismissed. In particular, Counsel relied on the finding that the parties had settled the issue of sharing the partnership property and that the Agreement was entered into subsequently and therefore that the Defendant was under obligation to comply with the agreement for the payment of Kshs. 6,389,000/=to the Plaintiff. My view of the matter is that this Court is not bound by any expressions made by the Court in the earlier application, but must apply its own mind to the issues raised by the application before it and decide the same based on the law and the facts availed before it in connection with the said application.

[21] I find succour in this posturing from the decision of the Court of Appeal in Uhuru Highway Development Ltd vs. Central Bank of Kenya & Others [1996] eKLR thus:

"The ratio decidendi of the KANSHI RAM case is that opinions expressed on the merits of a case at the stage of interlocutory proceedings for the issuance of a temporary injunction are not binding on the trial court. By trial court is meant the court which finally hears the suit on merits. It would be convenient to set out the head-note in that case:

“In every application for an interim injunction in a pending suit it is necessary for the court to enter, to some degree, into the merits of the case in order to determine whether a prima facie case exists. To what degree the court will enter will vary with the facts of each case. When the court declares that prima facie case exists it intends to say that the case of the plaintiff is not without merits. Any opinion expressed by the court, whether it be of the trial court or an appellate court or revisional court cannot in law preclude the trial court from considering the issue afresh...and for that purpose it must have regard to all the material then before it. In deciding that issue, it will properly have no regard to the finding rendered on the point while disposing of the application for interim injunction. No matter how superior the court rendering that finding including High Court, the trial court is bound in the proper discharge of its duties to ignore the finding when it proceeds to dispose of the suit and to apply its mind independently to the decision of the issue.”

Stated simply, a trial court, as opposed to a judge sitting in chambers hearing a interlocutory application, applies and must apply its own mind to facts on evidence before it without regard to what may have been expressed by the judge or an appellate court in regard to the merits of a case in determining whether or not there is a prima facie case. We have no quarrel with that. That is what we said in Civil Appeal No. 126 of 1995 in which the parties were the same and litigating under the same title. We said that to express a concluded view on the merits of the case would hamstring the decision by the High Court. It is for this reason that views expressed by us at an interlocutory stage are not binding on the trial court as facts may emerge in a different light then, or views may change, decisions may change or this court may not follow its own decision when found to be wrong. Concluded views can only be expressed on facts not in dispute or not disputable facts which stand out as clear as day light."

[22]In the light of all the reasons aforestated, it is my finding that this is not an apt case for disposal under Order 36 Rules 1 of the Civil Procedure Rules. Thus, I would dismiss the Plaintiff's application dated 12 March 2013 and direct that this matter be progressed to hearing for a determination on the merits. Costs of the application to be in the cause.

It is so ordered.

DATED, SIGNED AND DELIVERED AT NAIROBI THIS 3RD DAY OF NOVEMBER 2017

OLGA SEWE

JUDGE