Sunda (Kenya) Construction and Engineering Group Limited v Goldrock Development Limited & another [2022] KEHC 16590 (KLR)

Sunda (Kenya) Construction and Engineering Group Limited v Goldrock Development Limited & another (Commercial Civil Case E005 of 2020) [2022] KEHC 16590 (KLR) (Commercial and Tax) (8 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16590 (KLR)

Republic of Kenya

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

Commercial and Tax

Commercial Civil Case E005 of 2020

WA Okwany, J

December 8, 2022

Between

Sunda (Kenya) Construction and Engineering Group Limited

Plaintiff

and

Goldrock Development Limited

1st Defendant

Setco China Sichuan International Cooperation Limited

2nd Defendant

Ruling

1. This ruling is in respect to the application dated October 13, 2021 wherein the 1st defendant/applicant seeks orders to strike out of its name from these proceedings.

2. The applicant's case is premised on the following principal grounds: -a.the plaintiff/1st respondent's (the 1st respondent) suit does not disclose any reasonable cause of action against the applicant resulting in a clear misjoinder of parties and causes of action, which warrants the striking out of its names from this suit;b.there is no privity of contract between the 1st respondent and applicant and therefore the 1st respondent does not have a claim against the applicant;c.the 1st respondent’s suit against the applicant is scandalous, frivolous, vexatious, and oppressive and is otherwise an abuse of the process of this honourable court; andd.the prayers sough in the Plaint are not available for grant and/or cannot be issued against the applicant.

3. The plaintiff/1st respondent opposed the application through the Replying Affidavit of its director Mr Zhao Ronghai who averred that on June 29, 2012, the 1st defendant/applicant (hereinafter referred to as "employer") and 2nd defendant/respondent (hereinafter referred to as "contractor") entered into an agreement for erection and completion of Office Block on Plot No 2/707 Galana Road; (hereinafter referred to as " main contract").

4. He further states that on June 22, 2012, the plaintiff/1st respondent and 2nd defendant/respondent entered into a cooperation agreement and an addendum to it thereto entered into on December 18, 2012 for the completion of the said office block. He adds that under Clause 27. 0, sub-clause 27. 1 of the main contract, the contractor was only allowed to sub-let the work with approval from the employer and the architect. He explained that the Cooperation Agreement may be terminated by the main contract by virtue of Clause 27 and sub-clause 27. 3 which states that any sub-contract entered into shall terminate immediately when the main contract terminates. According to the plaintiff, this linkage shows that decisions that may be taken by the employer as to the main contract have an arms-length effect against the sub-contractor.

5. The plaintiff maintained that considering the strong relationship between the main contract and the Cooperation Agreement, and its addendum thereto, it is logical to conclude that the sub-contractor is within its rights to seek compensation for non-payment of work done from both the contractor and the employer, who are to be held jointly and severally liable for the sum as prayed for in the sub-contractor's plaint;

6. The applicant submitted that it would only be a necessary party to the suit if the plaintiff has a right to some relief against it and that the decree cannot be passed effectively until and unless the applicant is a party to the proceedings.

7. It was the applicant’s case that the plaintiff’s claim is for payment of money as a result of the performance of a contract it entered into with the 2nd respondent. The applicant submitted that it was not privy to the contract entered into between the 1st and 2nd respondent and that it therefore has no contractual obligation to pay any sums that may be payable under the said contract. According to the applicant, the plaintiff has no probable cause of action against it and it is therefore not a necessary party to the proceedings.

8. The 2nd defendant, on its part, submitted that nexus between the 1st defendant/applicant and the plaintiff is apparent. It explained that under the main contract, the 1st defendant (directly and/or through his agents) was responsible in setting standards, supervising and approving payment for all works to all sub-contractors, the plaintiff included. It argued that for this reason, if there is any alleged non-payment of funds, it is because the 1st defendant did not approve it, hence did not pay it to the 2nd defendant whose only role was to forward the payments as approved by the 1st defendant. The 2nd defendant maintained that the 1st defendant is therefore a necessary party in this suit to ensure the matter is adjudicated effectively and completely and whose presence in the suit will also save judicial time and resources by avoiding multiplicity of suits.

9. The 2nd defendant explained that considering that the 1st defendant, through its agents (Quantity Surveyors and Architects), prepared and approved a breakdown of payments to individual independent contractors, including the plaintiff herein, it follows that its presence is necessary to enable this honorable court effectively and completely adjudicate upon and settle the questions involved in the suit.

10. I have considered the pleadings filed herein together with the parties’ respective written submissions, I find that the main issue for determination is whether the applicant has made out a case for the striking out of its name from these proceedings.

11. The power of a court to strike out the name of a party from a suit is provided for under order 1 rule 10(2) of the Civil Procedure Rules (CPR) which provides as follows: -“(2)The court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all questions involved in the suit be added”

12. For the court to exercise its jurisdiction to strike out the name of a party, it must determine whether the applicant is a necessary party to the suit. The test for determining whether a party is necessary to a suit has been the subject of discussion in many court decisions. In Werrot and Company Ltd & Others vs Andrew Douglas Gregory & Others [1998] eKLR, cited with approval in the case of Boniface Omondi vs Mathare Youth Sports Association & another [2021] eKLR, the court held as follows: -“For determining the question of who is a necessary party there are two tests; (i) there must be a right to some relief against such a party in respect of the matter involved in the proceeding in question and (ii) it should not be possible to pass an effective decree in the absence of such a party."

13. Similarly, Havelock J defined a necessary party in Elisheba Muthoni Mbae vs Nicholas Karani Gichoe and 2 Others (2014) eKLR where the learned judge cited the case of Werrot & Co Ltd case (supra) in which Ringera J observed as follows:-“The guiding principle in deciding whether to add a party is whether the presence of that party is necessary in order to enable the court effectually and completely to adjudicate upon and settle all questions involved in the suit.”

14. Order 1 rule 9 of the Civil Procedure Rules provides that no suit shall be defeated by reason of misjoinder of parties, and the court may in every suit deal with the matter in controversy so far as regards the rights and interests of the parties actually before it.

15. In the case of DT Dobie and Company (K) Ltd vs Joseph Mbaria Muchina & Another (1982) KLR 1 the court stated that:-“The power to strike out should be exercised only after the court has considered all the facts, but it must not embark on the merits of the case itself as this is solely reserved for the trial judge. On an application to strike out pleadings, no opinion should be expressed as this would prejudice fair trial and would restrict the freedom of the trial judge in disposing the case.”

16. In Amon vs Raphael Tuck & Sons Ltd (1956) 1 All ER 273, cited in Pizza Harvest Limited vs Felix Midigo [2013] eKLR sought to establish who a necessary party is. Devlin, J held at p 286-287:-“What makes a person a necessary party? It is not of course, merely that he has relevant evidence to give on some of the questions involved; that would only make him a necessary witness. It is not merely that he has an interest in the correct solution of some question involved and has thought of relevant arguments to advance and is afraid that the existing parties may not advance them adequately …the Court might often think it convenient or desirable that some of such persons should be heard so that the court could be sure that it had found the complete answer, but no one would suggest that it would be necessary to hear them for that purpose. The only reason which makes it necessary to make a person a party to an action is so that he should be bound by the result of the action, and the question to be settled, therefore, must be a question in the action which cannot be effectually and completely settled unless he is a party.”

17. The principle emerging from the above cited case is that the striking out the name of a party from a suit should be approached with caution. The 1st defendant’s position is that it had no dealings with the plaintiff. I however find that the plaintiff and the 2nd defendant have sufficiently explained the applicant’s involvement in the subject matter of the suit through the sub-contract. It is therefore my considered view that the issue of the rights and obligations of the parties under the various contracts is a matter that can only be unpacked at the hearing of the case.

18. I am therefore not persuaded that striking out the name of the applicant from this suit will serve the wider interest of justice. I say so because should it turn out, at the end of the case, that the applicant was wrongly enjoined in the suit, then any inconvenience caused to it can be remedied by an award of cost.

19. For the above reasons, I find that the instant application is not merited and I therefore dismiss it with orders that costs shall abide the outcome of the main suit.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 8TH DAY OF DECEMBER 2022. W A OKWANYJUDGEIn the presence of: -Ms Nganga for 2nd defendant.Ms Kyalo for Ms Athman for 1st defendant.No appearance for applicant.Court Assistant- Sylvia