Synergy Industrial and Credit Limited v Khilna Enterprises Limited & 3 others [2022] KEHC 193 (KLR)

Synergy Industrial and Credit Limited v Khilna Enterprises Limited & 3 others (Civil Case 476 of 2016) [2022] KEHC 193 (KLR) (Commercial and Tax) (11 March 2022) (Ruling)

Neutral citation: [2022] KEHC 193 (KLR)

Republic of Kenya

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

Civil Case 476 of 2016

A Mshila, J

March 11, 2022

Between

Synergy Industrial and Credit Limited

Plaintiff

and

Khilna Enterprises Limited

1st Defendant

Jayendra K. Malde

2nd Defendant

Ranjan J. Malde

3rd Defendant

Milan J. Malde

4th Defendant

Ruling

INTRODUCTION 1. The Applicant filed a Notice of Motion Application dated 20th May 2021 under Order 8 Rules 3, and Order 51 Rule 1 of the Civil Procedure Rules, Section 3/4 and 100 of the Civil Procedure Act and Article 153 of the Constitutionof Kenya. The Applicant sought the following orders;a.The Court to grant the Plaintiff leave to amend the Plaint dated 24th November 2016 in the manner shown on the annexed copy of the draft amended Plaint.b.The Court to grant the Plaintiff/Applicant leave to file a further amended witness statement and supplementary list and bundle of documents.c.The Defendants/Respondents be at liberty to file a further amended statement of Defence.d.The annexed draft of the amended Plaint be deemed as duly filed upon payment of the requisite fees.

2. The Application was supported by the grounds on the face of it and by the sworn Affidavit of SUSAN MUTAVA who stated that it is necessary to amend the Plaint dated 24th November 2021 to correctly reflect and address the issue in dispute which after examination of the Plaint on Hire Purchase Agreement No 2010/07/1366 was inadvertently omitted when presenting the facts by the Previous Counsel on Record.

3. That for purposes of determining the debt owed and the cause of action between the parties this Application for leave to amend the Original Plaint is necessary. The Original Plaint is tainted with inadvertent defects, erroneous figures and typographical errors which need to be corrected for clarity purposes.

4. The present Application has been filed on bonafide grounds and no prejudice will be caused to the Defendants rights if the application is allowed. Further, the Application has been made without any delay since the discovery of the anomaly.

5. The Applicant also stated that if this application is not allowed, the Plaintiff will be occasioned substantial loss and hardship thereby suffering grave injustice.

APPLICANT’S CASE 6. It was the Applicant’s case that what is sought, by the proposed amendment, is mainly to include the hire purchase facility under Hire Purchase Agreement reference number; 2009/10/2316A which had an outstanding arrears of Kshs.8, 000, 000 as at 31st October 2010 that was inadvertently omitted in the original Plaint by the Plaintiff/Applicant's erstwhile Advocates. Thus, the proposed amendment seeks to expound more on the cause of action by adding up additional information which was unintentionally left out during drafting of the original Plaint by the Plaintiff/Applicant's erstwhile Advocates. It is also noteworthy that the Plaintiff/Applicant has not proposed to amend the Prayers in the original Plaint dated 24th November 2016.

7. The proposed amendments are not only necessary, but have also been brought in good faith. Necessary because, whereas in the original Plaint, the Plaintiff/Applicant averred that the Defendants/Respondents refused to pay the Plaintiff/Applicant sums of money amounting to Kshs.41,013,114/= as at 31st October 2010 which arose from default in repayment of hire purchase facilities granted to the 1st Defendants under the Hire Purchase Agreements reference numbers; 2008/10/2265A, 2009/10/2314A, 2009/10/2316A and 2010/07/2366, the Plaintiff/Applicant seeks to furnish better and clear particulars of the Plaintiff/Applicant's claim herein. It is therefore plain that the assertion by the 2nd, 3rd and 4th Defendants/Respondents that the proposed amendments are wholly unnecessary, wrong in law and waste of time and money is baseless for reasons set-out in these submissions. In submitting so, the Applicant relied on the case of Phillip Chemwolo & Another v Augustine Kubende [1986] eKLR

8. Further, the Applicant submitted that the proposed amendment does not introduce a new cause of action or change the character of the case but arise from the same set of facts as those set out in the original Plaint dated 24th November 2016 and are necessary to provide clarity of issues that will enable the Court to conclusively determine all issues between the parties to the suit. That Section 100 of the Civil Procedure Act permits the Court to allow amendments of pleadings at any time during the proceedings for the purposes of determining the real questions in dispute. Bosire Ogero v Royal Media Services [2015] eKLR.

9. Under the provisions of Order 8 Rule 3 and 5 of the Civil Procedure Rules, 2010 the Court may at any stage, on such terms as to costs or otherwise as may be just, allow any party to amend its pleadings notwithstanding that such an application is made after the expiry of a period of limitation upon which the other party might be entitled to rely or substitute a party or alter the capacity in which a party sues or even add or substitute a new cause of action.

10. By allowing the Plaintiff/Applicant's Application, the 2nd, 3rd and 4th Defendants/Respondents would not be deprived of the defence of limitation or any other defence.

11. The Summons to Produce Documents dated 18th January 2021 are unwarranted for the reason that the provisions of Order 16 Rule 6 of the Civil Procedure Rules, 2010 as read together with Order 16 Rule 1 of the said rules, allows parties to apply for summons to persons whose attendance is required to produce documents before pre-trial proceedings are completed. Whereas this matter is exempt from the provisions of Order 11 of the Civil Procedure Rules, 2010 which deals with pre-trial proceedings, by dint of the Practice Directions Relating to Case Management in Commercial Division of the High Court at Nairobi, Gazette Notice No. 5179 of 25th July 2014, it is evident that the context in which the 2nd, 3rd and 4th Defendants/Respondents sought documentation by way of Summons to Produce Documents dated 18th January 2021 filed herein is not what is envisaged by Order 16 Rules 1 or 6 of the Civil Procedure Rules, 2010.

12. The Plaintiff/Applicant's application has not been brought with undue delay. In any event mere delay is not itself a reason to deny a party leave to amend his pleadings.

13. The proposed amendments would not prejudice the Defendants/Respondents to the extent which cannot be compensated with costs. The Applicant submitted that the said proposed amendments are necessary for the determination of the real issues in dispute in this suit.

RESPONDENTS’ CASE 14. The Respondents submitted that leave to amend pleading is at the discretion of the court who must apply this discretion arbitrarily as was echoed in the case of Kassam v Bank of Baroda (Kenya) Ltd [2002] eKLR. The general principle while granting leave for amendment is that they should be allowed freely allowed provided that they are not done in bad faith and they do not occasion injustice to the other party.

15. Paragraph 6B of the proposed Amended Plaint wishes to introduce Hire Purchases Agreement with the reference number 2009/10/2316A which was allegedly entered into by the Plaintiff and 1st Defendant on 27th October 2009. The introduction of the Hire Purchase Agreement would create a new cause of action which is time barred and cannot be introduced at this stage because The alleged Hire Purchase Agreement was entered into on 27th October 2009, this is over a decade ago.

16. Further, the Court has no jurisdiction to extend the time for contracts under Section 27 of the Limitation of Actions Act, which is restricted to torts and personal injuries. The consequence of the foregoing is that the Applicant is permanently barred from bringing any cause of action by way of amendment or otherwise based on Hire Purchase Agreement No. 2009/10/2314A entered into on 27th October 2009. This is held in Eunice Chepkorir Soi v Bomet Water Company Ltd [2017] eKLR.

17. The application for leave to amend was not brought in good faith and was only reactionary to the Notice to Produce in order to further waste time and resources. As was aptly held in Kassam v Bank of Baroda (Kenya) Ltd [2002] eKLR, (Supra).

18. Moreover, the Application was filed about five (5) years since the institution of the suit and filing of the defence and was prompted by the 4th Defendant's Notice to Produce.

19. There has been an inordinate, undue and deliberate delay on the part of the Applicant who wishes to use this Application to further delay the proceedings in order to serve their own purposes and not that of the best interest of the court.

20. Five years is an unexplainable amount of time to have passed since the suit was instituted without action to rectify on the part of the Plaintiff and if leave is granted, it would occasion a great injustice to the Defendants.

21. Allowing the Application would greatly prejudice the Respondents by prolonging the main application and increasing the legal fees associated with the Application. The Applicant’s application is mala fide and amounts to an abuse of the process of the court and should therefore be dismissed with costs.

ISSUES FOR DETERMINATION 22. Having considered the Application, response and the written submissions by the respective parties; the following issues are for determination;a.Whether the Applicant should be granted leave to amend the Plaint?b.Whether the amendment changes the course of action?

ANALYSIS 23. In the case of St Patrick’s Hill School Ltd v Bank of Africa Kenya Ltd [2018] eKLR the Court of Appeal set out the principles governing the amendment of pleadings as follows: -a)The power of the court to allow amendments is intended to determine the true substantive merits of the case.b)The amendments should be timeously applied for.c)Power to amend can be exercised by the court at any stage of the proceedings.d)That as a general rule however late the amendment is sought to be made it should be allowed if made in good faith provided costs can compensate the other side.e)The plaintiff will not be allowed to reframe his case or his claim if by an amendment of the plaint the defendant would be deprived of his right to rely on limitations Act subject however to powers of the court to still allow and amendment notwithstanding the expiry of current period of limitation.

24. In Harrison C. Kariuki v Blueshield Insurance Company Ltd [2006] eKLR the court referred to the Court of Appeal decision in Central Kenya Ltd v Trust Bank Ltd [2000] EALR 365 and held that: -“The guiding principle in applications to amend pleadings is that the same will be liberally and freely permitted, unless prejudice and injustice will be occasioned to the opposite party. There will normally be no justice if the other party can be compensated by an appropriate award of costs for any expense, delay or bother occasioned to him. The main this is that it be in the interests of justice that the amendments sough be permitted in order that the real question in controversy between the parties be determined.”

25. The Applicant sought by the proposed amendment to include the hire purchase facility under Hire Purchase Agreement reference number; 2009/10/2316A which had an outstanding arrears of Kshs.8, 000, 000 as at 31st October 2010 that was inadvertently omitted in the original Plaint by the Plaintiff/Applicant's erstwhile Advocates.

26. The Respondent contended that the introduction of the Hire Purchase Agreement would create a new cause of action which is time barred and cannot be introduced at this stage because The alleged Hire Purchase Agreement was entered into on 27th October 2009, this is over a decade ago.

27. The issue of delay was addressed in the case of Central Kenya Limited v Trust Bank Limited (supra) where it was stated that mere delay is not a ground for declining leave to amend, but that such delay must be one likely to prejudice the other party beyond monetary compensation. In this particular case, I am of the view that there is no prejudice that will be caused to the Respondent or one that cannot be compensated by an award of costs to the defendant.

28. With regard to the new cause of action being introduced, in the case of Eastern Bakery v Castelino [1958] EA 462(CAU) it was held at page 462 that:-“The court will not refuse to allow an amendment simply because it introduces a new case….. The Court will refuse leave to amend where the amendment would change the action into one of a substantially different character …….. or where the amendment would prejudice the rights of the opposite party existing at the date of the amendment, e.g. by depriving him of a defence of limitation accrued since the issue of the writ …………..”Further to the above, the Court of Appeal also stated in the case of Central Kenya Limited –v- Trust Bank Limited (2000)2 EA 365 that ;"....... a party is allowed to make such amendments as may be necessary for determining the real question in controversy or to avoid a multiplicity of suits, provided there has been no undue delay, that no new or inconsistent cause of action is introduced, that no vested interest or accrued legal right is affect.

29. It is the Court’s view that the Plaintiff/Applicant has not proposed to amend the Prayers in the original Plaint dated 24th November 2016 and that the amendment seeks to bring clarity to the Plaintiff’s claim for purposes of determining the debt owed and this will in effect avoid a multiplicity of suits and will allow this court to effectively and effectually determine the issues.

30. The main principle is that an amendment should not be allowed if it causes injustice to the other side. The Respondents contended that the Application would greatly prejudice them by prolonging the main application and increasing the legal fees associated with the Application. It is the Court’s opinion that by allowing the amendment there will be no injustice if the Respondents can be compensated by costs.

31. The Application is allowed for the Plaintiff/Applicant to amend the Plaint. The Defendants/ Respondents are at liberty to file a further amended statement of Defence.

FINDINGS AND DETERMINATIONi.This court finds that the application has merit and it is hereby allowed;ii.The Plaintiff/Applicant is hereby granted leave to amend and serve the Amended Plaint within fourteen (14) days. The Defendants/ Respondents are at liberty to file a further amended statement of Defence within fourteen (14) days after service.iii.The Plaintiff/Applicant is hereby granted leave to file a Supplementary Amended Witness Statement and Supplementary List and Bundle of Documents within fourteen (14) days.iv.The Plaintiff/applicant to bear the costs of this application.v.Mention before the Deputy Registrar on 7th April, 2022 for a case management conference.Orders Accordingly.DATED, SIGNED AND DELIVERED ELECTRONICALLY AT NAIROBI THIS 11THDAY OF MARCH, 2022. HON. A. MSHILAJUDGEIn the presence:Mr. Meeme for the plaintiff/ApplicantOngoro holding brief for Munyua Ezekiel for the 2nd, 3rd and 4th defendantsNo appearance for the 1st defendantLucy -------------------------------Court Assistant