Vehicle and Equipment Leasing Limited v Kingdom Bank (Formerly Jamii Bora Bank) [2023] KEHC 26897 (KLR)

Vehicle and Equipment Leasing Limited v Kingdom Bank (Formerly Jamii Bora Bank) (Civil Case 295 of 2017) [2023] KEHC 26897 (KLR) (Commercial and Tax) (6 December 2023) (Ruling)

Neutral citation: [2023] KEHC 26897 (KLR)

Republic of Kenya

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

Commercial and Tax

Civil Case 295 of 2017

DO Chepkwony, J

December 6, 2023

Between

Vehicle And Equipment Leasing Limited

Plaintiff

and

Kingdom Bank (Formerly Jamii Bora Bank)

Defendant

Ruling

1. Before the court for determination is the Notice of Motion application dated 16th March, 2023 filed under order 40 rule 2 and order 51 of the Civil Procedure Rules seeking the following orders:-a.Spent;b.Spent;c.That pending the hearing and final determination of this Application, this Honourable Court be pleased to issue a temporary injunction restraining the Defendant/Respondent either by itself, its servants, agents, or employees attaching, selling or disposing of the Plaintiff/Applicant’s Motor Vehicles Registration Numbers KCD 914Y, KCE 283L, KCE 284L, KCE 881T, KCE 014N, KCE 258S, KCE 314L, KCE 467U, KCE 794F, KCE 779M, KCE 469U, KCC 155K, KCE 468U, KCE 778M, KCE 775M, KCE 732M, KCE 730H, KCE 728M, KCE 726M, KCE 987M, KCE 932M, KCE 910L, KCE 908L, KCE 908M, KCE 903L, KCE 901L, KCE 542U, KCE 259H, KCD 249P, KCD 602H, KHMA 463J, KHMA 464J, KHMA 465J, KHMA 466J, KHMA 467J, KMDS 185R, KMDS 194R, KMDS 200R, and KMDS 201R; and videojets 1523383C23ZH, 17293004 C23ZH, 17293005C23ZH, 17293006C23ZH, 1518205C23H, 1518206C23H, 1518207C23H, and 1130309C122H.d.That this Honourable Court be pleased to set aside the consent filed on 31st August, 2021 between the Plaintiff/ Applicant and Defendant/Respondent and/or any consent judgment issued pursuant to that consent, and order that the plaintiff/Applicant be at liberty to proceed with all matters between the parties.e.That this Honourable Court be pleased to order that the Plaintiffs Application dated 26th August, 2021 filed under certificate of urgency be heard and determined in limine subsequent to this application.f.That the cost of this application be provided for.

2. The Application is based on the grounds set out on its face of it and the Supporting Affidavit of Wangombe Gathondu, the Plaintiff’s Director, sworn on 16th March, 2022. The Plaintiff/Applicant holds that it was advanced a credit facility of Kshs. 600,000,000. 00 which was secured by several motor vehicles as listed above based on various accounts held with the Respondent. That he repaid most of the loan accounts leaving only account 114177503722 with an outstanding loan balance of Kshs. 57,640,322/=. Thus the Applicant has repaid more than 2/3 of the advanced loan facility.

3. The Applicant contends that on 24th August, 2021 the Respondent instructed agents to repossess, attach and dispose off the motor vehicles offered as security. This prompted the Applicant to file a Notice of Motion application dated 26th August, 2021 seeking injunctive orders to protect its interests in the motor vehicles.

4. The Applicant added that on 27th August, 2021 the Respondent cheated the Applicant into signing a consent alleging that it had sight of the motor vehicles listed above and would repossess the same if the consent was not signed. The Applicant holds that since it was a Friday and its application dated 26th August, 2021 had not yet been heard and or considered by court, it instructed its Advocates to sign the consent which was later filed in court on Monday, 30th August, 2021. According to the Applicant, the said consent was obtained through coercion and duress but was in any event adopted as an order of the court on 13th October, 2021.

5. It is the Applicant’s contention that the Respondent did not abide by the terms of the consent which was only aimed at having the application filed by the Plaintiff against it to be marked as settled. This is so because the Respondent refused to restructure the loan and it would therefore be in interest of justice to set aside the consent orders.

6. The Respondent filed a Replying Affidavit sworn by its Head of Legal Services, Jackson Kimathi on 6th April, 2022. He has deponed that the Applicant has not provided full disclosure of facts. He has confirmed that the Applicant was granted various credit facilities but holds that the Applicant failed to repay the loan which then compelled the Defendant to initiate the process of realizing the securities hence the present suit.

7. The Respondent has also confirmed having executed a consent which had been prepared by the Applicant’s Counsel and it abided by the terms of the same by granting the Applicant a rebate of Kshs. 20,000,000/=. That the Respondent then issued the Applicant an offer letter on the terms of the consent. The Respondent has added that the terms of the Consent were that the Applicant was required to effect payment of the outstanding facility in 60 successive monthly instalments in the sum of Kshs. 859,783. 32 payable on or before 5th day of every successive month which the Plaintiff/Applicant failed to comply with as it had only paid Kshs. 468,245/=. Therefore, the Respondent contends that the application is bad in law and seeks the court to dismiss it with costs.

8. The Court directed that the application be disposed off by way of written submissions. The Applicant filed its submissions dated 3rd October, 2022 while the Respondent’s submissions dated 5th December, 2022. I have read through the two sets of the said submissions and since they reiterate the above summary, find no need of reproducing the same.

Analysis and Determination 9. Having considered the application, affidavits sworn in support and opposition of the application alongside the submissions filed by each party, in my considered opinion, the main issue for consideration is whether the consent orders should be set aside and the application dated 26th August, 2021 slated for hearing.

10. It is trite law that consent orders are binding and can only be discharged where there is demonstrated fraud, duress or collusion. This was the decision made by the court in the case of Flora N. Wasike –vs- Destimo Wamboko [1988] eKLR, where Hancox JA cited Setton on Judgments and Orders (7th edition) Vol 1 page 124, and held;“Any order made in the presence and with the consent of counsel is binding on all parties to the proceedings or action, and those claiming under them… and cannot be varied or discharged unless obtained by fraud or collusion or by an agreement contrary to the policy of the court…; or if the consent was given without sufficient material facts, or in general for a reason which would enable a court set aside an agreement.”

11. Similarly, the Court of Appeal in the case of Kenya Commercial Bank Ltd –vs- Specialized Engineering Co. Ltd(1982) KLR P. 485 also held that:“A consent order entered into by counsel is binding on all parties to the proceedings and cannot be set aside or varied unless it is proved that it was obtained by fraud or by an agreement contrary to the Policy of the Court or where the consent was given without sufficient material facts or in misapprehension or ignorance of such facts in general for a reason which would enable the Court to set aside an agreement.

12. According to the Applicant, the consent order dated 31st August, 2021 was signed through duress and coercion because the Respondent had threatened to tow away the motor vehicles. As such the Applicant connotes that the consent was signed only with a view of saving the vehicles from being towed away.

13. In common law, duress and coercion means and connotes actual violence or threat to violence to the person. Say for example, threat calculated to cause fear of life or property or bodily harm which gives to the threatened no option but to enter into an impugned agreement. However, in my view, a threat to prosecute and or to recover an outstanding debt is not of itself illegal. Thus defence of coercion or duress does not lie where a just and bonafide debt actually existed and or where there is good consideration for giving a security. In my opinion, the threat to repossess the motor vehicles owing to a just and bonafide debt did not necessarily vitiate the consent signed by the parties. To this court even reading through the consent order, the purpose for which the Plaintiff entered into the consent cannot be termed coercive or duress. Similarly, the fact that the consent was entered into on 31st August, 2021 and the present application alleging duress filed about 2 years later, that is on 16th March, 2023, casts more doubts on whether the Plaintiff was really coerced on as to vitiate the consent.

14. In the circumstances, this court finds that the Notice of Motion application dated 16th March, 2023 lacks merit and it is therefore dismissed with costs to the Respondent.

It is so ordered.

RULING DELIVERED VIRTUALLY, DATED AND SIGNED AT KIAMBU THIS 6TH DAY OF OCTOBER , 2023. D. O. CHEPKWONYJUDGE