Shah v Kenya Canvas Limited & another [2023] KEHC 25428 (KLR)

Shah v Kenya Canvas Limited & another (Civil Suit E252 of 2022) [2023] KEHC 25428 (KLR) (Commercial and Tax) (17 November 2023) (Ruling)

Neutral citation: [2023] KEHC 25428 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Civil Suit E252 of 2022

FG Mugambi, J

November 17, 2023

Between

Mahesh Meghji Shah

Plaintiff

and

Kenya Canvas Limited

1st Defendant

Jayantilal Meghji Shah

2nd Defendant

Ruling

1. The plaintiff instituted this suit by way of a plaint dated 29th June 2022, seeking a declaration that he is the shareholder of 13,143 shares in the 1st defendant company and an order that the Registrar of Companies do rectify the shareholding by registering him as shareholder. The plaintiff averred that the Court recognized his shares as having been held by the late Ramesh Meghji Shah in HCSC No. 840 of 2012.

2. The 1st and 2nd defendants filed a Notice of Preliminary Objection dated 17th February 2023 against the plaintiff's suit, raising three (3) grounds of objection. First, the defendants stated that the court lacked jurisdiction to hear and determine the suit as it was res judicata. Secondly, the defendants argued that the present suit was barred under the provisions of Order 25 Rule 4 of the Civil Procedure Rules. Finally, the defendants averred that the suit was time-barred as it was filed outside the 6-year statutory window in breach of section 4 of the Limitations of Actions Act.

3. The plaintiff opposed the PO through a replying affidavit sworn on 28th March, 2023 and denied all three assertions by the defendants. The PO was eventually canvassed by way of written submissions filed on 17th May 2023 and 25th May 2023 by the plaintiff and the defendants respectively.

Analysis 4. I have carefully considered the pleadings and the rival submissions as well as the authorities cited by Counsel in support of their depositions. As I stated earlier, three (3) issues render themselves for determination:i.Whether this suit is res judicata;ii.Whether this suit is time barred; andiii.Whether the present suit offends the provisions of Order 25 rule 4 of the Civil Procedure Rules.

i. Whether this suit is res judicata. 5. It is well settled that a PO must be on a pure point of law and cannot be raised if any fact has to be ascertained. This principle was clearly captured in Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696, where the East African Court of Appeal held as follows:“…A Preliminary Objection consists of a point of law which has been pleaded, or which arises by clear implication out of the pleadings, and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the jurisdiction of the Court, or a plea of limitation, or a submission that the parties are bound by the contract giving rise to the suit to refer the dispute to arbitration. ... A Preliminary Objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion.”

6. I disagree with the plaintiff on the submission that an issue of res judicata cannot be raised as a preliminary objection. The argument of res judicata raises a pure point of law. So long as the facts are readily ascertainable from the pleadings without the requirement for the Court to get into evidential enquiries to determine whether a matter is res judicata or not, then the same can be rightly argued as a preliminary objection. The facts herein are not contended and therefore this is an issue that can be rightfully determined as a preliminary objection.

7. Having said that, the doctrine of res judicata is provided for under Section 7 of the Civil Procedure Act which reads as follows:“No Court shall try any suit or issue 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.”

8. The elements of res judicata were further enunciated by the Court of Appeal in the decision of the Independent Electoral and Boundaries Commission v Maina Kiai & 5 Others, [2017] eKLR. The Court stated as follows:“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.”

9. The defendants argue that the plaintiff filed a suit at the High Court, being HCCC 70 OF 2014, against the defendants, relating to the same cause of action. In the same year, the defendants allege that the suit was settled. Besides these assertions, the defendants did not bother to provide any evidence whatsoever in support of their claim. The Court has been left groping in the dark and the best that I can do is to rely on the pleadings before me.

10. It does not appear to be contested that there was a previous suit to wit HCCCOMM. 70 of 2014 Mahesh Meghji Shah v Kenya Canvas Limited and Jayantilal Meghji Shah and that the suit involved the same parties in the present suit. It is further not contested that the suit was withdrawn. The plaintiff avers at para. 11 of the plaint dated 29th June 2022, that HCCCOMM. 70 of 2014 was withdrawn to attempt amicable settlement, which failed.

11. At paragraph 11 (ii), (iii) and (iv) of the 2nd defendant’s statement of defence, the 2nd defendant acknowledges that following a family mediation, the parties agreed to settle HCCCOMM 70 of 2014 amicably and the plaintiff withdrew the suit. The bone of contention is whether the plaintiff was fully compensated as alleged by the defendants. The plaintiff strongly denied these allegations. Needless to say, the defendants have not brought any proof of such settlement before the Court.

12. Assuming therefore that the conditions a, b, c and e as enlisted by the Court of Appeal in the Independent Electoral and Boundaries Commission case were met, the bone of contention is whether condition (d) was met. The parties in their pleadings and submissions are clear about the fact that the suit previously filed was not heard and finally determined and as such does not meet the threshold of a matter that is res judicata.

13. The 1st and 2nd defendants submitted that the fact that the matter was withdrawn from Court in itself suggests that it was settled amicably. They then asserted that if the suit was not settled out of court, the plaintiff ought to have reinstated HCCCOMM. 70 of 2014 instead of filing a fresh suit.

14. My understanding of Order 25 is in concurrence with the Court, (Kasango, J) in Bahati Shee Mwafundi v Elijah Wambua, [2015] eKLR. The Court found that:“Order 25 envisages that once a party withdraws or discontinues a suit such a party may file another suit and such withdrawal or discontinuation cannot be raised as a defence in a subsequent suit.”

15. This position was reaffirmed in Hezron Kamau Gichuru & 6 Others v Richardson Kipkoech Bundotich & 5 Others, [2021] eKLR, where the Court observed as follows:“(i)It is evident that a notice of withdrawal has the legal effect of bringing a suit to an end.(ii)A party who withdraws/ discontinues a suit may file another suit.(iii)The withdrawal of a suit cannot be raised a defence in a subsequent suit.(iv)Once a suit is withdrawn/ discontinued the court shall enter judgement for costs against the Plaintiff.”

16. For all these reasons I am therefore not persuaded that the suit is res judicata by virtue of having been withdrawn.

ii. Whether the present suit offends the provisions of Order 25 rule 4 of the Civil Procedure Rules. 17. Order 25 Rule 4 of the Civil Procedure Rules provides as follows:“If any subsequent suit shall be brought before payment of the costs of a discontinued suit, upon the same, or substantially the same cause of action, the court may order a stay of such subsequent suit until such costs shall have been paid.”

18. The 1st and 2nd defendants have not produced any evidence to show that they obtained costs of the withdrawn suit so as to be entitled to a stay of proceedings until the payment of the costs. Even if, presumably, the court did order such costs, as would be the norm, there is still no evidence that the defendants have been in pursuit of such costs (if any). This ground therefore fails.

iii. Whether this suit is time barred. 19. The defendants argued that the instant suit is time barred as it offends Section 4 of the Limitation of Actions Act, which provides that:“The following actions may not be brought after the end of six years from the date on which the cause of action accrued—a.actions founded on contract;b.actions to enforce a recognizance;c.actions to enforce an award;d.actions to recover a sum recoverable by virtue of a written law, other than a penalty or forfeiture or sum by way of penalty or forfeiture;e.actions, including actions claiming equitable relief, for which no other period of limitation is provided by this Act or by any other written law.”

20. The defendants besides stating in their submissions that there was a delay of 8 years, from 2014 to 2022, have not clearly pinpointed when the cause of action herein arose, this being a case of transmission of shares. It is not for the Court to fill gaps for a party whose pleadings are ambiguous and not succinct.

Determination 21. The upshot of all this is that the Notice of Preliminary Objection dated 17th February 2023 fails; the same is dismissed with costs to the plaintiff. Parties shall proceed to take directions on the expeditious disposal of the suit.

DATED, SIGNED AND DELIVERED IN NAIROBI THIS 17TH DAY OF NOVEMBER 2023. F. MUGAMBIJUDGE