Showcase Properties Limited v Kenya Commercial Bank Limited & another [2022] KEHC 10567 (KLR) | Res Judicata | Esheria

Showcase Properties Limited v Kenya Commercial Bank Limited & another [2022] KEHC 10567 (KLR)

Full Case Text

Showcase Properties Limited v Kenya Commercial Bank Limited & another (Civil Case 305 of 2013) [2022] KEHC 10567 (KLR) (Commercial & Admiralty) (10 June 2022) (Ruling)

Neutral citation: [2022] KEHC 10567 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Admiralty

Civil Case 305 of 2013

A Mshila, J

June 10, 2022

Between

Showcase Properties Limited

Plaintiff

and

Kenya Commercial Bank Limited

1st Defendant

Bamburi Special Products

2nd Defendant

Ruling

Background 1. The applicant filed notice of motion dated July 28, 2021 under order 40 rules I & 2 of theCivil Procedure Rules, sections IA, 1B and of the Civil Procedure Act and article 159 of the Constitution of Kenya for the following orders;a.Pending the hearing and determination of this application the 1st defendant it's servants and/or agents and especially their agents, Keysian Auctioneers be restrained by an order of injunction from offering for sale, selling, dealing, interfering, alienating or disposing by way of public auction that parcel of land known as land reference number 2/61, located in Kilimani along Kirichwa Road, Nairobi county.b.Pending the hearing and determination of this suit the 1st defendant it's servants and/or agents be restrained by an order of injunction from offering for sale, selling, dealing, interfering, alienating or disposing by way of public auction that parcel of land known as land reference number 2/61, located in Kilimani along Kirichwa Road, Nairobi county.c.Pending the hearing and determination of the appeal filed at the Court of Appeal at Nairobi against the judgment inHCCC No 577 of 2011 the 1st defendant it's servants and/or agents be restrained by an order of injunction from offering for sale, selling, dealing, interfering, alienating or disposing by way of a public auction that parcel of land known as land reference number 2/61, located in Kilimani along Kirichwa Road, Nairobi county.d.In the alternative to prayer 3 above the statutory notice to sell issued by the 1st defendant under section 96(2) of the Land Act be temporarily postponed and the 1st defendant be restrained from undertaking any sale by public auction or private treaty of the property known as land reference number 2/61 for a period of twenty-four (24) months to enable the plaintiff prosecute his appeal at the Court of Appeal.

2. The application was supported by the sworn affidavit of Francis Muhoro Gachanja who stated that the plaintiff/applicant is the registered owner of the property known as land reference number 2/61 located in Kilimani area, Nairobi county and the defendant has moved to foreclose on the property by issuing a statutory notice to sell under section 96(2) to the plaintiff.

3. The plaintiff had filed another suit which matter touches on the suit property herein namely Milimani HCCC No 577 of 2011 and the said suitHCCC No 577 of 2011 is currently on appeal at the Court of Appeal.

4. The applicant further stated that should the defendant proceed to sell the suit property it will greatly prejudice the plaintiff’s appeal at the Court of Appeal since the evidence located at the property must be preserved pending hearing of the appeal otherwise it will be rendered nugatory.

Applicant’s Case 5. The applicant submitted that this court issued directions on August 1, 2021 as to the hearing of the application as follows;i.That the application be served upon the defendants by close of the day, August 2, 2021. That upon service, the defendants do file their respective response within 3 days with corresponding leave upon the plaintiff to file a supplementary affidavit within 3 days of service of the reply(ies) by the defendants.ii.That thereafter parties to file and exchange brief submissions with the plaintiff filing and serving by close of day on August 12, 2021 and the defendants by close of day on August 16, 2021.

6. The applicant pointed out that the only defendant that has filed a replying affidavit in opposition to the application is the 2nd defendant, Bamburi Special Products Limited, yet in the application dated July 28, 2021 the plaintiff is not seeking any orders against the said 2nd defendant.

7. The applicant reiterated that the only orders sought in the application dated July 28, 2021 are against the 1st defendant, Kenya Commercial Bank who although having been duly served with the application dated July 28, 2021 have not filed any papers in opposition to the same.

8. It was the applicant’s submission that the application having not been opposed by the 1st defendant, the same should be allowed as prayed in terms of prayers number 3 & 4 thereof. Prayer No 5 was in the alternative and it is therefore no longer necessary to be granted by the court.

Respondents’ Case 9. The 1st respondent submitted that the application is res judicata and it is an abuse of the court process. The respondent relied on the decision of the Court of Appeal in John Florence Maritime Services Limited & another v Cabinet Secretary for Transport and Infrastructure & 3 others [2015] eKLR, while addressing the issue of res judicata held that the rationale behind res judicata is based on the public interest that there should be an end to litigation coupled with the interest to protect a party from facing repetitive litigation over the same matter.

10. In considering the issue of res judicata the respondent asked the court to determine; first, 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. Second, 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.

11. In the instant case, the plaintiff filed an application on July 17, 2013 seeking for injunctive orders barring the 1st defendant from exercising their statutory power of sale over the suit property. The application was dismissed on March 13, 2014 but the court granted the plaintiff a grace period of 10 months after which the plaintiff was required to start making repayments towards the loan. The plaintiff filed another application on December 8, 2014 seeking to review the ruling of March 13, 2014. This latter application was also dismissed.

12. The instant application is res judicata because the issues raised herein were raised against the 1st defendant in the application dated July 17, 2013 (see page 8 of the 1st defendant's replying affidavit). This court delivered a ruling on the issues on March 13, 2014. Under section 7 of the Civil Procedure Act, the plaintiff is estopped from prosecuting the instant application because it is res judicata.

13. In addition to the application being res judicata, the respondent submitted that the it is an abuse of court process because the issues raised herein, have not only been determined by this court, but also form the subject of the plaintiff's application dated July 29, 2020 that is pending before the court. All these applications were filed by the plaintiff who has full knowledge of the existence of the court's rulings on the same issues. Yet the plaintiff failed to disclose these material facts when it filed the instant application seeking injunctive orders.

14. The plaintiff has failed to establish that it has a prima facie case with high chances of success. The plaintiff does not dispute that the 1st defendant advanced a loan to it. The plaintiff admits that it has defaulted. It is also not disputed that the loan remains in arrears.

15. In addition, the plaintiff has failed to establish any harm that he may suffer that cannot be compensated by way of monetary damages. The suit property can always be valued and if the plaintiff is found to have suffered any loss, an order of monetary compensation can be made. The balance of convenience is in favour of the 1st defendant.

16. The 1st defendant is a business which is being affected by the colossal sum which the plaintiff has defaulted in repayments. It is exercising it statutory rights under section 90 of the Land Act to salvage the security. The 1st defendant would be greatly prejudiced if the injunction herein is granted as opposed to the inconvenience that would be suffered by the plaintiff.

17. The 2nd respondent submitted that although the plaintiff in its submissions stated that they are not seeking orders against the 2nd defendant, the grounds that the plaintiff sought to rely on relate to allegations against the 2nd defendant. In this regard, the plaintiff stated in its application that the delay in construction and completing the project was orchestrated by the 2nd defendant. Further, the plaintiff stated that it has reached out to the 2nd defendant's parent company to have the 2nd defendant's investigated for misconduct. As a result, the plaintiff averred that the sale of the property will hamper the investigations to be conducted by the 2nd defendant's parent company.

18. Further, that throughout the application, the plaintiff has sought to lay blame on the 2nd defendant for delaying the construction project which has resulted in its failure to fulfil its obligations under the loan facility. The said allegations of misconduct are false and misleading. The plaintiff has not provided any evidence in support of such allegations and has therefore failed to discharge its burden of proof.

19. The claims by the plaintiff against the 2nd defendant arising from the alleged breach of contract of sale for the supply of ready mix concrete are res judicata. The 2nd defendant stated that pursuant to an amended plaint dated November 14, 2014, the plaintiff herein instituted legal proceedings against the 2nd defendant in High Court commercial case No 577 of 2011 Showcase Properties Limited v Bamburi Special Products Limited (hereinafter referred to as 'HCCCNo 577 of 2011') for inter alia alleged breach of contract for the supply of ready-mix concrete. In the suit, the plaintiff also sought for the 2nd defendant to be held liable for the interest accruing from a loan facility between the plaintiff and defendant. On June 29, 2020, the High Court delivered its judgement in HCCC No 577 of 2011 wherein it dismissed the plaintiffs claims in respect of the alleged breach of contract. Further, the court held that the plaintiff to be negligent for its failure to mitigate its own losses and responsible for its own predicament. The court did not in its judgment make any finding that the 2nd defendant was liable for any delay in respect of the completion of the project.

20. Thus, the 2nd defendant submitted that the claims against the 2nd defendant areres judicata as they were fully determined by the court in HCCC No 577 of 2011. Therefore, the claims are res judicata having been fully determined by this court. In respect thereof, the 2nd defendant relied on the Court of Appeal case of Kenya Commercial Bank Limited v Muiri Cofee Estate Limited & 3 others [2013] eKLR where the court relied on Pop-in (Kenya) Ltd and 3 others v Habib Bank, A.G Zuric CA No 80 of 1988 and held that;“that a matter will be res judicata not only on points upon which the court was actually required by parties to form an opinion and pronounce judgment but also on every point which properly belonged to the subject matter of litigation.”

21. It was the respondent’s submission that the main contention between the plaintiff and the 1st defendant revolves around the existence of a loan facility which it is not privy to the terms and conditions thereof, as such, the 2nd defendant stated that it is a stranger to the loan facility and cannot have any liabilities and/ or obligations arising from the loan facility enforced against it.

22. The respondent submitted that since it is not a party to the loan facility no suit or cause of action can be maintained against it. Further, that the 2nd defendant is in the process of filing an application to strike out the suit herein as the plaintiff has no reasonable cause of action.

23. The claims against the 2nd defendant in respect of the alleged breach of contract of sale are sub judice as both parties have appealed the judgment in HCCC No 577 of 2011 and the matter is currently pending before the Court of Appeal in civil appeal No E420 of 2020 Showcase Properties Limited v Bamburi Special Products Limited. As such, the 2nd defendant averred that this court lacks the jurisdiction to re-litigate and re-open the issues against the 2nd defendant as the issues are pending before the Court of Appeal.

24. There is no correlation or nexus between the proceedings herein and the current ongoing appeal proceedings in civil appeal No 11420 of 2020. The 2nd defendant stated that the appeal relates to a claim in respect of a breach of contract of sale of goods whereas the current proceedings relate to a loan facility between the plaintiff and the 1st defendant.

25. The 1st respondent filed a replying affidavit dated August 13, 2021 in opposition to the applicant’s application.

Issues For Determination 26. After considering the application, the responses therewith and the written submissions by the parties the court has framed the following issues for determination;a.Whether the application isres judicata?b.Whether there is a nexus between the proceedings herein and the current ongoing appellate proceedings in civil appeal No 11420 of 2020.

Analysis Whether the application is res judicata? 27. It is noteworthy that the 1st respondent filed its replying affidavit on August 12, 2021 contrary to the court directions issued on August 1, 2021. However, the same is admitted in line with article 159 (2) (d) for Constitution of Kenya 2010 which prohibits undue regard to procedural technicalities in litigation.

28. The doctrine of res judicata is set out in the Civil Procedure Act at section 7 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 can 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.”

29. The Civil Procedure Act also provides explanations with respect to the application of theres judicata rule. Explanations 1-3 are in the following terms:Explanation. (1)—The expression “former suit” means a suit which has been decided before the suit in question whether or not it was instituted before it.Explanation. (2)—For the purposes of this section, the competence of a court shall be determined irrespective of any provision as to right of appeal from the decision of that court.Explanation. (3)—The matter above referred to must in the former suit have been alleged by

30. In summary,res judicata will successfully be raised as a defence if the issue(s) in dispute in the previous litigation or suit were between the same parties as those in the current suit; the issues were directly or substantially in issue in the previous suit as in the current suit and they were conclusively determined by a court of competent jurisdiction.

31. In that respect, the Court of Appeal held in the Independent Electoral and Boundaries Commission v Maina Kiai & 5 others, [2017] eKLR, that:“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.

32. The court went on to state on the role of the doctrine:“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.”

33. It was the 1st respondent’s position that the instant application is res judicata because the issues raised herein were raised against the 1st defendant in the application dated July 17, 2013. This court delivered a ruling on the issues on March 13, 2014. The plaintiff is estopped from prosecuting the instant application because it isres judicata.

34. The suit or issue was directly and substantially in issue in the former suit-The issues raised in the application dated July 17, 2013 were as follows;i.That an order for injunction be issued restraining the defendant from intermeddling with the suit property either by selling, advertising for sale and or alienating and or disposing off, selling by public auction or completing any conveyance or transfer or any sale of land known as LR No 2/61 situated in Kilimani along Kirichwa road.ii.That an order to be issued restraining the defendant from foreclosing on the suit property by relying on the statutory notice dated April 4, 2013 and/or any notices allegedly served upon the plaintiff.iii.That an order be made extending the period of time for compliance by the chargor with the statutory notice served by the respondent and dated April 4, 2013, under section 90 of the Land Act 2012. iv.That the court in the alternative substitutes a different remedy for the one applied for or proposed by the respondent, with a more suitable remedy like appointment of a receiver in view of the prevailing circumstances and in line with section 140 (2) (c) of the Land Act 2012.

35. On the face of it these are the same issues raised in the present application. The former application was between the same parties and they were litigating under the same title. In the court’s ruling the plaintiff was granted a grace period of 10 months after which the plaintiff was required to start making repayments towards the loan. The plaintiff filed another application on December 8, 2014 seeking to review the ruling of March 13, 2014 which application was also dismissed.

36. The upshot is that this court is satisfied that the application fits the criteria of res judicata.Whether there is a nexus between the proceedings herein and the current ongoing appellate proceedings in civil appeal No 11420 of 2020.

37. On the issue of appeal at Nairobi against the judgment in HCCC No 577 of 2011, the applicant stated that should the defendant proceed to sell the suit property it will greatly prejudice the plaintiff’s appeal at the Court of Appeal since the evidence located at the property must be preserved pending hearing of the appeal otherwise it will be rendered nugatory.

38. The applicant has not shown that there is a nexus between the proceedings herein and the current ongoing appeal proceedings in civil appeal No 11420 of 2020. On the other hand, the 2nd defendant stated that the appeal relates to a claim in respect of a breach of contract of sale of goods whereas the current proceedings relate to a loan facility between the plaintiff and the 1st defendant.

39. This court is satisfied that the instant application has no bearing to the appellate proceedings in civil appealNo 11420 of 2020.

Findings and Determination 40. For the foregoing reasons this court makes the following findings and determinations;i.This court finds that the application has all the elements of res judicata; and is therefore found to be incompetent.ii.This court finds the instant suit has no bearing to the appellate proceedings in civil appeal No 11420 of 2020. iii.The only order that commends itself to this court is to strike out the application with costs;iv.The applicant shall bear the costs;Orders accordingly

DATED. SIGNED AND DELIVERED ELECTRONICALLY AT NAIROBI THIS 10TH DAY OF JUNE, 2022. HON. A. MSHILAJUDGEIn the presence of;Miss Kithinji holding brief for Mr. Opiyo for the 2nd DefendantAngwenyi Biko for the 1st DefendantMungai for the plaintiff/ApplicantLucy------------------------------Court Assistant