[2013] KEHC 2702 (KLR)

REPUBLIC OF KENYA

High Court at Nairobi (Milimani Law Courts)

Civil Case 409 of 2010 [if gte mso 9]><![endif]

DANIEL NGETICH ……………………………………….… 1ST PLAINTIFF

SAFINA NGETICH ……………………………………….… 2ND PLAINTIFF

VERSUS

K-REP BANK LIMITED ……………………………………… DEFENDANT

R U L I N G

1. The Plaintiffs seek leave to amend their Plaint dated 11 June 2010. The Application is brought by a Notice of Motion before this Court dated 25 September 2012 under the provisions of Order 8 Rule 3 (1), 5 (1), 7 and 8 as well as Order 50 Rule 1 of the Civil Procedure Rules, 2010. They have brought the Application based on the following grounds:

“1. The proposed amendments are intended to bring before this Honourable Court the real matters in controversy between the parties herein so that the same are determined on their true and substantive merits.

2. The proposed amendments are further necessitated by information relevant for the fair and just determination of the real questions in controversy in this suit which came to the Plaintiffs’ knowledge subsequent to the filing of the Plaint herein.

3. The time allowed under the Civil Procedure Act and the Civil Procedure Rules for amendment of pleadings has since expired.

4. The proposed amendments will not occasion any prejudice to the Defendant/Respondent.

5. The proposed amendments arise out of the same facts or substantially the same facts in respect of which relief is claimed by the Plaintiffs in this suit.

2. The Application is supported by the Affidavit of the first Plaintiff sworn on 25 September 2012. The deponent recorded that he originally filed suit along with his wife, the second Defendant in order to stop the Defendant herein from carrying out an auction which was to be conducted on 15 June 2010. Thereafter the parties entered into negotiations and the deponent met with officers of the Defendant bank. He noted that agreement had been reached on the mode of payment but where there was a lack of agreement was with regard to the total amount that the Defendant was claiming. Bearing in mind the position with regard to the cancelling of the auction sale, the deponent felt it necessary for the Plaintiffs to amend their Plaint so as to bring before Court information necessary for the effectual and complete adjudication of the real questions in controversy in this suit.

3. The Application was opposed and the Defendant filed Grounds of Opposition dated 22 October 2012. Those Grounds of Opposition detailed as follows:

“1. The Plaintiff’s said application is mala fides, mischievous, bad in law and is an abuse of the court process.

2. The Plaintiff has not come to court with clean hands and is not deserving of the orders sought.

3. The amendment sought completely and/or substantially change the Plaintiff’s suit as the same seeks to raise new causes of action and reliefs.

4. The amendments sought in the Plaintiff’s said application will greatly prejudice and occasion injustice upon the Defendant.

5. The subject application is devoid of merit, misconceived, frivolous, vexatious and ought to be dismissed with costs.

4. In his submissions before court, Mr. Njoroge for the Plaintiffs maintained that the object of the amendments to the Plaint was to bring before court the real issues between the parties. There had been negotiations between the parties as detailed in the Affidavit in support of the Application. However, he noted that a number of issues had been left unresolved which formed the basis of the Application before Court. Referring to the draft Amended Plaint annexed to the Affidavit in support, counsel pointed out that the parties’ names and representatives had been amended as well as the amount of quarterly payments being made by the Plaintiffs to the Defendant. He further noted that the prayers to the draft Amended Plaint were quite substantial but he did not feel that the Defendant would suffer any prejudice thereby. The Application for amendment to the Plaint had been brought before the pre-trial hearing not late in the day.

5. Mr. Masakila for the Defendant stated that the Application was opposed as it sought to introduce new causes of action which would seriously prejudice the Defendant. He urged the court to look at the proposed amended prayers more particularly the second one, seeking an up-to-date valuation of the suit property in relation to its market price. He maintained that at any stage of the proceedings where an amendment is sought to be made, bringing new relief or a new cause of action, the Court should disallow the same. He noted that the Plaintiffs having received their interim injunction, the only prayer left had been the taking of accounts. The Plaintiffs now claimed to seek prayers which they ought to have included in the Plaint, in the first place. Mr. Njoroge, in a brief response, submitted that the relief being sought flowed from the pleadings and the prayers had been crystallised so as to detail the real issues between the parties. Both counsel submitted a number of authorities for consideration by the Court.

6. In my view, the classic authority in relation to amendment of pleadings, is the case cited to Court by both the Plaintiffs and the Defendant of Eastern Bakery v. Castelino (1958) EA 461 as perO’Connor P. at letter C on page 462 in which he detailed as follows:

“It will be sufficient for purposes of the present case, to say that amendments to pleadings sought before the hearing should be freely allowed, if they can be made without injustice to the other side, and that there is no injustice if the other side can be compensated by costs: Tildesley v. Harper (10 (1878), 10 Ch. D. 393; Clarapede v. Commercial Union Association (2) (1883), 32 W.R. 262. The court will not refuse to allow an amendment simply because it introduces a new case: Budding v. Murdoch (3) (1875), 1 Ch. D. 42. But there is no power to enable one distinct cause of action to be substituted for another, nor to change, by means of amendment, the subject matter of the suit: Ma Shwe Mya vs. Maung Po Hnaung (4) (1921), 48 I.A. 214; 48 Cal. 832. The court will refuse leave to amend where the amendment would change the action into one of a substantially different character: Raleigh v. Goschen (5), [1898] 1 Ch. 73, 81; or where the amendment would prejudice the rights of the opposite party existing at the date of the proposed amendments, e.g. by depriving him of a defence of limitation accrued since the issue of the writ: Weldon v. Neal (6) (1887), 19 Q.B.D. 394; Hilton v. Sutton Steam Laundry (7), [1946] K.B. 65. The main principle is that an amendment should not be allowed if it causes injustice to the other side”.

7. In the Defendant’s Bundle of Authorities, Kuloba J. (as he then was) delivered a detailed Ruling in the case ofKassam v Bank of Baroda (Kenya) Ltd (2002) 1KLR 296 in which the Judge quoted extensively from a number of authorities as follows:

“The court “has power to allow necessary amendments to pleadings at any stage, but the granting or refusal of an application for such leave to amend is a matter within the discretion of the trial judge”. Crabbe, JA, in the Court of Appeal for Eastern Africa, in Khan v Roshan [1965] EA 289, at page 297.

A lot of principles have now been stated at all levels of courts, on how that discretion should ordinarily be exercised. And so you will find it said over and over again, that as a general rule leave to amend pleadings ought not to be refused unless the court is satisfied that the party applying is acting mala fide or that his blunder has caused some injury to the other side which cannot be compensated by the payment of costs or otherwise: McCoy v Allibhai (1938), 5 EACA 70; that the rules of the court should be observed, and a party should be fined for his mistake, but the fine should be measured by the loss to the other side, and not by the importance of the stake between the parties: Bramwll, LJ, in the oft-quoted case of Toldesley v Harper (1875), 10 Ch D 393, at page 397, adopted in Khan v Roshan, supra, that applications for leave to amend, even if necessitated by negligence or carelessness will be granted so as to enable the right question to go to trial unless the party applying was acting mala fide or by his blunder he has done some injury to his opponent which cannot be compensated by costs or otherwise: Patel v Joshi, (1952), 19 EACA 42; that in respect of defences, leave to amend a defence should be given where it is sought at an early stage of the litigation, no reply has been filed and the plaint itself is very vague: Kara v Makan, (1950), 17 EACA 16; that an amendment ought to be allowed if thereby the real substantial question can be raised between the parties and multiplicity of proceedings avoided: Karasan v Raghavjeee (1943), 10 EACA 10; Manji v Singh, [1962] EA 557; that, in particular, amendments sought before the hearing should be freely allowed, if they can be made without injustice to the other side: Eastern Bakery v Castelino, [1958] EA 461; but that amendment may be allowed at a very late stage, where it is necessitated solely by a drafting error and there is no element of surprise or prejudice: General Manager East African Railways and Harbours authority v Thierstein, [1968] EA 354; that unrestricted leave to amend may be given but is generally undesirable in contested cases: Meralli v Javer Kassam & Sons, Ltd, [1957] EA 503; and Meru Farmers Co-operative Union v Suleman, [1966] EA 436.

There are many other propositions in the many cases on the subject, but for our present purposes these ones will do to point the way; always remembering, without saying it, that since an amendment cannot be claimed as of right but is discretionary with the courts which must act judicially in the exercise of their discretion, no hard and fast rule to guide the courts can be laid down, and no ironclad tenet or precept stands stiff as a ramrod, as a rule of the road in all cases: leave to amend a pleading may be granted or refused according to the circumstances of each case and with due regard to the interests of all the parties and the policy and object of the law. Facts differ from case to case, and unless the facts and circumstances and situations are similar, an earlier authority may not apply to a subsequent case. See, for example the distinction between Khan v Roshan [1965] EA 289, and British India General Insurance Co. Ltd v G M Parmar & Co. [1966] EA 172.

Normally the court should be liberal in granting leave to amend a pleading. But it must never grant leave for amendment if the court is of the opinion that the amendment would cause injustice or irreparable loss to the other side or if it is a device to abuse the process of the court. The power to allow amendments is intended to do justice; for, all amendments ought to be allowed which (a) do not work injustice to the other side, and (b) are necessary for the purpose of determining the real question in controversy between the parties; and all the authorities lay down precisely the same doctrine, that amendment should be refused only where the other party cannot be placed in the same position as if the pleading had been originally correct, but the amendment would cause him an injury which could not be compensated in costs. The court must aim at seeing that a multiplicity of suits is avoided, the real matters in controversy between the parties are clearly brought out, the other party is not prejudiced, the character of the suit or defence is not altered, and the object of the amendment is not to abuse the process of the court or unnecessarily delay justice or work a clear injustice”.

8. I have looked at the draft Amended Plaint annexed to the Affidavit in support of Plaintiffs’ Application dated 25 September 2012. There can be no possible complaints from the Defendant as regards the proposed amendments to paragraphs 1 and 2 thereof as such detail the representation of both the Plaintiffs and the Defendant. The proposed amendment to the first sentence of paragraph 9 can also attract no complaint. The particulars of fraud, illegality and irregularity at paragraph 9 of the proposed Amended Plaint sees the inclusion of the allegation as against the Defendant that it breached section 44 of the Banking Act as regards its charge of interest. Further, sub paragraphs (X) and (XI) of the particulars detailed the capricious advertising of the suit properties in the Daily Nation newspaper and averments that the Defendant failed to obtain an updated valuation of the suit properties before embarking upon the attempts to sell the same by auction. Again, I can see nothing of objection to the Defendant in those proposed amendments by the Plaintiffs. Nor can I see any objection to the proposed new paragraph 14A which details the making of quarterly payments in the amount of Shs. 500,000/- by the Plaintiffs to the Defendant from September 2010. However there may be a slight sting in the tail of that proposed new paragraph in the averment that the Defendant has continued to burden the Plaintiffs’ account with what they term: “usurious and unwarranted charges”.

9. From the submissions of the Defendant, it would appear that its main complaint as against the proposed amendments in the draft Amended Plaint to is the prayers thereof. It opines that such amount to new causes of action. Again, I see nothing objectionable to the proposed new first prayer which seeks a declaration that the Defendant’s exercise of its statutory power of sale was irregular and unlawful as regards the public auction of the suit properties that was to be held on 15 June 2010. Indeed the first Particular in relation to the alleged fraud, illegality and irregularity on the part of the Defendant in the original Plaint details that the Defendant failed to serve a statutory notice on the Plaintiffs as regards the proposed sale of the suit properties. I do not see that the first prayer as proposed, in any way amounts to a new cause of action. The second new prayer details a declaration that the Defendant breached its statutory duty to the Plaintiffs to act in good faith when failing to take appropriate steps to obtain a proper market price for the suit properties. Paragraph 10 of the original Plaint contains a statement that the suit properties have not been valued within the last 12 months, a fact that the Defendant vehemently denied in paragraph 16 of its Defence. Whatever the case, I can’t see how the proposed second new prayer can amount to a new cause of action as it is referred to in the original Plaint.

10. The third new prayer contained in the proposed Amended Plaint involves a declaration as regards the proper interpretation of section 44A of the Banking Act (Cap 488, Laws of Kenya). Again, in the Particulars of fraud, illegality and irregularity on the part of the Defendant as contained in paragraph 9 of the original Plaint, particular (IV) details:

“Charging interest on the loan account at a rate notallowed by the law.”

In my view, the applicable law must be the provisions of the Banking Act, so consequently all the Plaintiff is doing with regard to the proposed new prayer 3 is to clarify the issue for determination by Court. There is a tiny amendment to prayer 5 in terms of the Defendant being ordered to provide the Plaintiffs with a statement of account in relation to the principal amounts owed plus the interest thereon and any other charges levied on the account. I see no harm in an amendment adding that the Plaintiffs require details of all sums that they have paid towards the liquidation of the loan.

11. What I surmise from all the above, is that the objections raised by the Defendant against the Plaintiffs’ Application to amend their Plaint are unfounded and, in my opinion, will cause no prejudice to the Defendant. Accordingly, I allow the Plaintiffs’ Notice of Motion dated 25 September 2012 with costs.

DATED and delivered at Nairobi this 4th day of June, 2013.

J. B. HAVELOCK

JUDGE

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