Wanjiru (Suing on her behalf and on behalf of and representing and for the benefit of all persons interested in and being past, present and future account holders with specified banks/institutions in Kenya) v Standard Chartered Bank Limited & 3 others [2022] KEHC 11586 (KLR)

Wanjiru (Suing on her behalf and on behalf of and representing and for the benefit of all persons interested in and being past, present and future account holders with specified banks/institutions in Kenya) v Standard Chartered Bank Limited & 3 others (Civil Case 433 of 2003) [2022] KEHC 11586 (KLR) (Commercial and Tax) (13 May 2022) (Ruling)

Neutral citation: [2022] KEHC 11586 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Commercial and Tax

Civil Case 433 of 2003

DAS Majanja, J

May 13, 2022

Between

Rose Florence Wanjiru (Suing on her behalf and on behalf of and representing and for the benefit of all persons interested in and being past, present and future account holders with specified banks/institutions in Kenya)

Plaintiff

and

Standard Chartered Bank Limited

1st Defendant

Habil Olaka (The Executive Director (Secretary) of the Kenya Bankers Association being sued on behalf of Kenya Bankers Association)

2nd Defendant

Central Bank of Kenya

3rd Defendant

IDB Capital Limited

4th Defendant

Ruling

1. What is before the court for determination is the 2nd Defendant’s Notice of Motion dated 21st September 2021 made, inter alia, under Order 1 Rule 10(2) and Order 2 Rule 15 (1) (b)(c) and (d) of the Civil Procedure Rules seeking orders that the 183rd, 184th, 187th and 188th Plaintiffs, their claims and all statements and documents filed by them be struck out. The application is supported by the affidavit of James Mwaniki, the Assistant Manager, Credit Administration of KCB Bank Kenya Limited, the successor of Kenya Commercial Bank Limited(“KCB”) sworn on 21st September 2021.

2. The application is opposed by the 183rd and 184th Plaintiffs though the replying affidavit of the 183rd Plaintiff, Kenneth Kimani Wanyoike sworn on 24th November 2021 and by the 187th Plaintiff through the Replying Affidavit of Joseph Kariuki Ngigi, one of the Administrators of the Estate of Peter Joseph Ngigi, sworn on 17th December 2021. The parties have also filed written submissions in support of their respective positions.

3. This suit has had a chequered history. In 2003, the representative Plaintiff filed suit against the 1st, 2nd and 3rd Defendants accusing them of illegally increasing ledger fees and ATM withdrawal commissions without ministerial approval and contrary to section 44 of the Banking Act and to the detriment of its account holders and members of the public in general. After the suit was filed, the said Defendants filed applications to have the suit struck out against them for varied reasons. In a ruling dated 6th November 2003, the court struck out the suit against them on the ground that it was not brought in accordance with Order 1 Rule 8 of the Civil Procedure Rules (Repealed).

4. The Plaintiff lodged an appeal to the Court of Appeal which by a judgment dated 8th October 2013 was allowed. The result was that the suit was reinstated. On 25th June 2014, the court allowed the Plaintiff to give notice of institution of this suit by public advertisement to allow parties seeking to be joined in this suit. The Plaintiff, then filed an application dated 15th August 2014 seeking to join 185 persons as Plaintiffs. Kenneth Kimani Wanyoike, Datini Mercantile Limited, Joseph Kariuki Ngigi (suing as Administrator of the Estate of Peter Joseph Ngigi) and Kenya Shoe Company Limited also filed applications dated 18th August 2014 and 12th August 2018 respectively for joinder. The court granted all the application for joinder on 27th August 2015 except the application by applicant No. 159. The court also allowed the joinder of the 4th Defendant.

5. Kenneth Kimani Wanyoike, Datini Mercantile Limited, Joseph Kariuki Ngigi (suing as Administrator of the Estate of Peter Joseph Ngigi) and the Kenya Shoe Company Limited are now listed as the 183rd, 184th, 187th and 188th Plaintiffs respectively. The 187th and 188th Plaintiffs have filed suits against KCB, a member of the 2nd Defendant whereas the 183rd and 184th Plaintiffs have filed statements and a bundle of documents also against KCB. These are what the 2nd Defendant is seeking to have struck out and forms the basis of the instant application.

The Application 6. The 2nd Defendant avers that the claims and reliefs sought by the 183rd and 184th Plaintiffs are directly and substantially in issue in HCCC No. 411 of 2008 (Datini Mercantile Limited v Kenya Commercial Bank and Others) contrary to section 6 of the Civil Procedure Act and that those of the 187th and 188th Plaintiffs have already been determined in HCCC No. 102 of 2004 and the claims are therefore res judicata under section 7 of the Civil Procedure Act.

7. The 2nd Defendant’s deponent swears that due to the age of the transactions of the accounts operated by the aforementioned Plaintiffs, he has been unable to obtain full information on the operation of those accounts as KCB’s core banking system has gone through several changes and upgrades over the years and it is difficult to obtain information which is more than 6 years old.

8. He further depones that HCCC No. 411 of 2008 had been dismissed by Kimondo J., on 8th February 2012 but that order for dismissal was set aside by Ngetich J., on 16th March 2018 and that the said suit is still pending in this division and had been fixed for hearing on 28th September 2021. That in that suit, the plaintiff therein alleges breaches of section 44 of Banking Act and illegally increasing bank lending rates and raises them as issues for determination. Further, it relies on the same report dated 19th November 2019 from the Interest Rates Advisory Centre as is relied on in this case.

9. On the 187th and 188th Plaintiffs’ suit, the 2nd Defendant avers that the 188th Plaintiff filed suit in the court against KCB in HCCC No. 102 of 2004 (Kenya Shoe Company Limited v Kenya Commercial Bank Limited) and judgment was entered in favour of the company on 12th August 2004 for KES. 2,529,629. 00. That KCB is unable to trace its documents or files in connection with this case, but has obtained a copy of the judgment from the Kenya Law website and it is clear from the first paragraph of the judgment that the 188th Plaintiff claimed in that case that its account was wrongfully debited with excessive and illegal amounts of interest amounting to KES 2,529,629. 00 as at 31st August 2002 and that it was compelled to sell its properties at an undervalue thereby suffering loss and damage. The 2nd Defendant contends that this is exactly the same claim that the 187th and 188th Plaintiffs are now putting forward in this suit and that the matters have therefore been finally determined by the judgment in HCCC No. 102 of 2004 and the 187th and 188th plaintiffs should not be allowed to relitigate these matters in this suit.

10. The 2nd Defendant therefore urges the court to dismiss the claims by the 183rd, 184th, 187th and 188th Plaintiffsagainst KCB as these claims are scandalous, vexatious, may prejudice or delay the fair trial and otherwise an abuse of the process of the court.

The 183rd and 184th Plaintiffs’ Reply 11. The 183rd and 184th Plaintiffs oppose the application and aver that the 2nd Defendant’s application is an attempt to delay the conclusion of this matter and frustrate them and ultimately force them to abandon their claims.

12. They state that they have disclosed to the court that there was another matter in court and the court allowed their application to be joined as plaintiffs. They urge that the court would have never allowed their application had it concluded that their joining of the suit would be sub judice. They also submit that the reliance on the same report does not mean that the issues are the same and should not be a basis for striking out their claims.

13. They also contend that the proceedings and matters in issue in this suit and HCCC No. 411 of 2008 are not similar and they do not involve the same parties as the issues for determination in HCCC No. 411 of 2008 is whether a valid auction took place on 19th September 2002 while the issue for determination in this suit is illegal and/or fraudulent increment of interest rates. Further, that the two matters do not arise from the same cause of action and are not seeking the same relief.

14. They aver that this is a second attempt by the 2nd Defendant to lock them out from the seat of justice as the 2nd Defendant had initially filed an application dated 23rd September 2019 which similarly sought to strike out their claims on procedural grounds but it was dismissed on 28th February 2020.

The 187th and 188th Plaintiffs’ Reply 15. The 187th and 188th Plaintiffs reiterate that this suit is based on the illegal conduct by banks to increase contractual lending rates without approval from the Finance Minister as required under the Banking Act. The 187th Plaintiff states that it lost property (LR NO 170/7 Redhill) as a direct consequence of illegal variations in interest rates by KCB. They aver that the question of whether the 187th Plaintiff's case is properly a part of this representative suit is not open to be re-litigated because this Court, in its ruling of 27th August 2015 had already found that the 187th Plaintiff was owed a duty of care by KCB and hence has an interest in these proceedings.

16. They deny that their claim is res judicata for the reasons that the 187th Plaintiff, which is suing through the legal administrator Joseph Kairuki Ngigi was not a party to the cited case NRB HCCC No. 102 of 2004 and that the 187th Plaintiff's claim is based on the loss of their property L.R No. 170/7 Red Hill Kiambu, through a forced under sale, which belonged to the late Peter Joseph Ngigi (Deceased) as a result of illegal increments of interest by KCB, and that the property and claim were not part of NRB HCCC 102 of 2004. They further state that from the judgment in NRB HCCC 102 of 2004, the parties in the case were Kenya Shoe Company Limited and Kenya Commercial Bank and that the 187th Plaintiff is nowhere in the said suit.

17. They aver that the 187th and 188th Plaintiffs are separate legal entities and therefore cannot be viewed as one and the same parties. That the 187th Plaintiff is not a Director or employee of the 188th Plaintiff and therefore had no knowledge of existence of the suit as filed by the 188th Plaintiff company.

18. The 187th and 188th Plaintiffs urge the court to look at the 2nd Defendant’s dilatory conduct in these proceedings. They depone that on 29th March 2019, the Court ordered that the Plaintiffs do file their Particulars of Claim and that the Defendants do file their Defence documents within 90 Days thereafter.The 187th Plaintiff filed their Particulars of Claim on 16th September 2019 and served the same upon the 2nd Defendants on the same day. They state that the 2nd Defendant has to date not filed any defence and it cannot be that the 2nd Defendant just discovered that the suit is allegedly res judicata, which it is not. Thus, they urge the court to dismiss the application with costs.

Analysis and Determination 19. I have gone through the application, the parties’ arguments and submissions and as stated, the main issue for determination is whether the 183rd, 184th, 187th and 188th claims, statements and documents that have been filed ought to be struck out for reasons of being res judicata and res sub judice.

20. Res judicata is anchored in section 7 of the Civil Procedure Act. It provides that, ‘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.’ Thus the following elements must all be satisfied for the doctrine of res judicata to apply; the issue was directly and substantially in issue in the former suit; the former suit was between the same parties or parties under whom they or any of them claim; the parties were litigating under the same title; the issue was heard and finally determined in the former suit; and the court that previously heard and determined the issue was competent to try the suit in which the issue is raised (see Gichuki v Gichuki [1982] KLR 285).

21. The 2nd Defendant stated that the claims and relief sought by the 187th and 188th Plaintiffs have already been determined in HCCC 102 of 2004. That suit was between the 188th Plaintiff and KCB and was based on alleged breach by KCB of the bank/client relationship between them, particulars whereof were given in the plaint. The 188th Plaintiff had also pleaded fraud and given particulars where as a result of the breaches and fraud, the 188th Plaintiff claimed that its account with KCB was wrongfully debited with excessive and illegal amounts of interest amounting to KES. 2,529,629. 20 as at 31st August 2002. Further, that the 188th Plaintiff was compelled to sell its properties charged to KCB on a forced-sale basis and at an undervalue, and thereby suffered loss and damage. The court, in a judgment dated 12th August 2004 entered judgment in favour of the 188th Plaintiff for the sum of KES. 2,529,629. 00 plus interest thereon at court rates from the date of filing suit until payment in full.

22. In this suit, the 188th Plaintiff’s Plaint dated 24th March 2017 is against KCB just like in HCCC 102 of 2004, it also pleads fraudulent illegal interest increases just like it pleaded excessive and illegal amounts of interest amounting to KES. 2,529,629. 20 in HCCC 102 of 2004. Going through the elements of res judicata, I have no doubt that the 188th Plaintiff’s suit against KCB is res judicata as it relates to the same parties and involves the issue of interest that was directly and substantially in issue in the former suit NRB HCCC 102 of 2004 and that this issue was heard and finally determined in NRB HCCC 102 of 2004 when the 188th Plaintiff’s claim was allowed and judgment entered in its favour by this court which was competent to try that suit. I therefore find and hold that the 188th Plaintiff’s suit against the Bank is res judicata.

23. However, I cannot say the same about the suit by the 187th Plaintiff which is anchored on a guarantee that was recalled by the Bank and was not subject to the suit in NRB HCCC 102 of 2004. A guarantee is a separate but collateral contract which forms the basis of a separate cause of action. I therefore find that the 187th Plaintiff’s suit against the Bank is not res judicata.

24. I now turn to the 183rd and 184th Plaintiff’s statements and documents which the 2nd Defendant stated were res sub judice NRB HCCC No. 411 of 2008. The principle of res sub judice is grounded under section 6 of the Civil Procedure Act which provides that “No court shall proceed with the trial of any suit or proceeding in which the matter in issue is also directly and substantially in issue in a previously instituted suit or proceeding between the same parties, or between parties under whom they or any of them claim, litigating under the same title, where such suit or proceeding is pending in the same or any other court having jurisdiction in Kenya to grant the relief claimed.”

25. The Supreme Court in Kenya National Commission on Human Rights v Attorney General; Independent Electoral & Boundaries Commission & 16 others (Interested Parties) SCK Adv. Ref. No. 1 of 2017 [2020] eKLR held that:The purpose of the sub-judice rule is to stop the filing of a multiplicity of suits between the same parties or those claiming under them over the same subject matter so as to avoid abuse of the Court process and diminish the chances of courts, with competent jurisdiction, issuing conflicting decisions over the same subject matter. This means that when two or more cases are filed between the same parties on the same subject matter before courts with jurisdiction, the matter that is filed later ought to be stayed in order to await the determination to be made in the earlier suit. A party that seeks to invoke the doctrine of res sub-judice must therefore establish that; there is more than one suit over the same subject matter; that one suit was instituted before the other; that both suits are pending before courts of competent jurisdiction and lastly; that the suits are between the same parties or their representatives.

26. HCCC No. 411 of 2008 is between the 184th Plaintiff and KCB together with five others. In its amended Plaint in that suit, the company accused KCB of abusing their powers and fiduciary relationship and charged it exorbitant fees, interest rates and penalties irregularly. The 184th Plaintiff goes on to specifically plead that sections 44 and 44a of the Banking Act were flouted as interest was charged on a daily basis and also applied monthly where at the end of the month, interest was charged and after six months, interest was charged and another compound interest was charged annually.

27. It is thus clear that section 44 of the Banking Act that is in issue in this suit, is also an issue in NRB HCCC 411 of 2008 which is mainly between the 184th Plaintiff and KCB. I find that in both suits, the issue of whether section 44 of the Banking Act was flouted will come up and both courts, exercising competent jurisdiction will be obligated to determine the same. To avoid a multiplicity of suits and issuance of conflicting orders by courts of concurrent jurisdiction and similar competence, it is only proper that the latter suit is stayed. In as much this suit was filed before HCCC 411 of 2008, the 184th Plaintiff’s statements and documents in this suit were filed later, meaning that its claim in this suit is the one that ought to be stayed pending the hearing and determination of HCCC 411 of 2008.

28. Further, looking at the witness statement of the 183rd Plaintiff, he seeks to stake a claim on behalf of the 184th Plaintiff rather than himself and he is essentially seeking to exercise a right that belongs to the 184th Plaintiff Company. I find his participation in this suit unnecessary as he has no claim against the Bank and thus ought to be struck out as a plaintiff.

Disposition 29. For the reasons I have set out, the 2nd Defendant’s Notice of Motion dated 21st September 2021 partly succeeds on the following terms:(a)The 183rd Plaintiff’s suit against Kenya Commercial Bank Limited is hereby struck. The 183rd Plaintiff shall bear the costs of the suit.(b)The 184th Plaintiff’s suit against Kenya Commercial Bank Limited is res sub judice NRB HCCC No. 411 of 2008 and it is therefore stayed pending the hearing and determination the said NRB HCCC No. 411 of 2008. The 184th Plaintiff shall bear the costs of the application.(c)The 188th Plaintiff’s suit against Kenya Commercial Bank Limited is res judicata NRB HCCC No. 102 of 2004 and is hereby struck. The 188th Plaintiff shall bear the costs of the suit.(d)The 187th Plaintiff’s claim against Kenya Commercial Bank Limited is not res judicata NRB HCCC No. 102 of 2004 and shall proceed for trial.(e)The 183rd, 184th and 188th Plaintiffs should bear the costs of this application.

DATED AND DELIVERED AT NAIROBI THIS 13TH DAY OF MAY 2022. D. S. MAJANJAJUDGECourt Assistant: Mr M. Onyango