[2022] KEHC 1417 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL DIVISION

CIVIL APPEAL NO. 172 OF 2017

IBRAHIM MWANGI.............................................................................................APPELLANT

VERSUS

NAIROBI BOTTLERS LTD..............................................................................RESPONDENT

(Being an appeal from the ruling of Gesora, CM delivered on 6th April, 2017

in Nairobi CMCC No. 2 of 2015)

JUDGMENT

1. This appeal arises from the ruling of Gesora, C.M delivered on 6th April 2016 in CMCC No. 2 of 2015. By the said ruling the trial Court allowed the a motion seeking judgment on admission. The facts leading up to the motion are that on 7th January, 2015Ibrahim Mwangi, (hereafter the Appellant) filed an amended plaint in the lower court against Nairobi Bottlers Limited (hereafter the Respondent). The suit was for damages for trespass and breach of contract. The cause of action allegedly arose on or about the 28th December, 2014 when the Respondent allegedly unilaterally conducted a stocktaking exercise at, and closed down the Appellant’s business premises located at Kariobangi Light Industries Plot No. 8585/975 Kariobangi.Thereby breaching the contract of distributorship between the parties, and occasioning loss to the Appellant.

2. The Respondent filed a statement of defence and counterclaim denying the key averments in the plaint, especially concerning trespass and breach of contract. By the counterclaim the Respondent sought a sum of Kshs. 5,006,058. 28/- being the amount due and owing from the Appellant on account of products delivered to him under the agreement between the parties. It was averred that by way of part payment, the Appellant had issued cheques in favour of the Respondent which were dishonored on presentation. That as a result the Respondent paid bank charges amounting to Kshs. 15,000/-, also claimed in the counterclaim.

3. The Appellant filed a reply to the counterclaim, wherein he disputed the debt and asserted that he stopped the cheque payments following the alleged closure of his business by the Respondent. Subsequently, the Respondent lodged the motion dated 28th October, 2015 expressed to be brought primarily under Order 2 Rule 15, Order 13 Rule 1 & 2 and Order 51 Rule 1 of the Civil Procedure Rules. The motion sought that the Appellant’s defence to the counterclaim be struck out and judgment be entered in favour of the Respondent and in the alternative judgment on admission be entered in favour of the Respondent as prayed in the counterclaim.

4. The grounds on the face of the motion were amplified in the supporting affidavit of Cyrus Gitauwho deposed that the Appellant and the Respondent had entered into a distributorship agreement pursuant to which the Respondent supplied goods worth Ksh. 5,006,058. 28/- to the Appellant and that receipt of the goods was duly acknowledged by the Appellant on the invoice -cum- delivery notes at the point of delivery at his store. The deponent further asserted that the Appellant had Appellant issued three cheques to the Respondent, in part settlement of the debt, but which were dishonored by Appellant’s bank, as the Appellant stopped the cheques upon receipt of the goods, the Respondent consequently incurring bank charges of Kshs. 15,000/-. He asserted therefore that the Appellant’s defence to the counterclaim disclosed no reasonable defence in law, was vexatious, intended to delay a fair trial and was an abuse of the process of the court.

5. The Appellant opposed the motion through his replying affidavit filed on 29th February, 2016. The key depositions therein reiterate averments in the plaint, assert that the Respondent by closing down the Appellant’s business and detaining goods therein had effectively altered the terms of the contract under which parties operated on a continuing revolving credit, that the Appellant stopped the cheques to the Respondent after the alleged closure of his business and further dispute that the debt in the counterclaim.

6. By a ruling delivered on 6th April, 2017, the lower court allowed the Respondent’s motion by entering judgment on admission in favour of the Respondent as prayed in its counterclaim thereby provoking this appeal. The appeal is based on the following 15 grounds of appeal, some of which appear couched as depositions:

“1. That the Chief Magistrate erred in law by making the decision in favour of the defendant as the suit raises triable issues both in law and fact that ought to be addressed by the honorable court at full trial.

2. That the plaintiff had fully complied with order 11 and was awaiting for a date for full trial.

3. That the learned magistrate erred in not taking into account that the plaintiff had deposited two million shillings with the respondent.

4. That the issue of closing down business is marble (sic- triable) issue.

5. That the Chief Magistrate erred in law by entering judgment in favour of the defendant as the plaintiff’s response/defence to the counterclaim raises and discloses reasonable defence in law.

6. That the defence to the counterclaim is properly within the law and raises tangible and fundamental issues which ought to be addressed by the honorable court at full trial.

7. That the plaintiff response to the counterclaim does not amount to any form of admission by plaintiff and that the honorable court has been misguided on the fundamental aspects of the suit that ought to be addressed by the court at full trial.

8. That the plaintiff has always honored his obligation to the contract between him and the defendant and that there has never been a breach of it at, any particular point, even on issues of payment.

9. That the defendant’s actions towards the plaintiff’s business were aimed at frustrating the plaintiff and that the plaintiff has never renegade on his obligation to pay any debt owing.

10. That the plaintiff has and still reserves the right not to be condemned unheard and that the defence to the counterclaim was not in any way intended delay trial.

11. That there is a pending application in court that has never been heard requesting the honorable court to set up a hearing date for the matter.

12. That the defence to the counterclaim is lawful, fair, justifiable and does not in any way amount to an abuse of the court process.

13. That the decision by the honorable magistrate occasion’s prejudice on the part of the plaintiff as his rights and obligations to the contract have been trampled upon.

14. That the plaintiff is interested in the efficient and effective delivery of justice and did request the honorable court through an application dated… to expedite the full hearing of this suit by setting up a hearing dated.

15. That the application by the defendant is mischievous aimed and evading the claws of the law and circumvent justice before full trial.”(sic)

7. The appeal was canvassed by way of written submissions. Counsel for the Appellant while restating the provisions of Order 13 Rule 2 of the Civil Procedure Rules and relying on the case of Guardian Bank Limited v Jambo Biscuits Kenya Limited [2014] eKLR submitted, referring to paragraphs 3, 4 and 5 to the defence to counterclaim that there was no clear and unequivocal admission by the Appellant of the Respondent’s claim. Citing the dictum in Abyssinia Iron & Steel Limited v Quicksand Steam International Limited [2017] eKLR counsel argued that the lower court erred when it held that the bounced cheques of Kshs. 950,000/- proved admission of a debt of Kshs. 5,006,058. 28 claimed by the Respondent.

8. Further, while relying on Desbro (Kenya) Limited v Polypipes Limited & Another [2018] counsel submitted that the reply to counterclaim and the Appellant’s replying affidavit to the motion raised triable issues that required further interrogation at a full hearing. In conclusion counsel asserted that the lower court’s ruling grossly violated the Appellant’s rights under Article 27(1) and Article 50 (1) of the Constitution of Kenya, 2010 and as such, this court ought to set aside the ruling and allow the appeal with costs.

9. Counsel for the Respondent also restating the provisions of Order 13 Rule 2 of the Civil Procedure Rules, Section 17 & 24 of the Evidence Act and relying on the decision in Jondu Enterprises v Royal Garments Industries EPZ [2014] eKLR argued that there was an unequivocal admission proved by the Appellant’s issuance of the dishonored cheques meant to partly offset a debt owed, and arising from the goods the Appellant had received and acknowledged pursuant to records exhibited. Counsel asserted that the dishonored cheques must be considered together with the signed invoices or delivery notes making and the Respondent is estopped from denying the same.

10. While calling to aid the decision in Choitram v Nazari [1984] eKLR he submitted that admission can either be express or implied; that the dishonored cheques, invoices, and delivery notes speak for themselves and that the trial court properly exercised its discretion. Citing among others the decisions in Nairobi Flour Mills Limited v Johnson Kithete t/a farmers General Stores [2005] eKLR, Magunga General Stores v Pepco Distributors Ltd (1986-89) EA 334, and Margaret Njeri Mbugua v Kirk Mweya Nyaga [2016] eKLR counsel asserted that the Appellant’s reply to defence contained mere denials and that the Appellant did not challenge the authenticity of the invoices and hence no triable issues were demonstrated regarding the counterclaim. Defending the decision of the lower Court, he asserted that the lower court proceeded on the correct principles of law and the appeal ought to be dismissed with costs.

11. The court has perused the record of appeal and considered the material canvassed in respect of the appeal. The duty of this court as a first appellate court is to re-evaluate the evidence adduced in the lower court and to draw its own conclusions, but always bearing in mind that it did not have opportunity to see or hear the witnesses testify while noting to rule on the evidence on record and not to introduce extraneous matters not dealt with by the parties in the evidence. See Peters v Sunday Post Ltd (1958) EA 424; Selle and Anor. v Associated Motor Boat Co. Ltd and Others (1968) EA 123; William Diamonds Ltd v Brown [1970] EA 11and Ephantus Mwangi and Another v Duncan Mwangi Wambugu (1982) – 88) 1 KAR 278.

12. As stated in Choitram v Nazari(supra), in dealing with an application of the nature before it, the lower court was exercising a discretionary power and was therefore required to act judicially. The Court of Appeal in Mashreq Bank P.S.C v Kuguru Food Complex Limited [2018] eKLRobserved as follows: -

“This Court ought not to interfere with the exercise of a Judge’s discretion unless it is satisfied that the Judge misdirected himself in some matter and as a result arrived at a wrong decision, or that it is manifest from the case as a whole that the Judge was clearly wrong in the exercise of discretion and occasioned injustice. Conversely, a court exercising judicial discretion must be guided by law and facts and not ulterior considerations. This much was stated by the Court of Appeal in the case of Mbogo Vs. Shah, (supra):

“….A court of Appeal should not interfere with the exercise of the discretion of a judge unless it is satisfied that the judge in exercising this discretion has misdirected himself in some matter and as a result has arrived at a wrong decision, or unless it is manifest from the case as a whole that the judge has been clearly wrong in the exercise of his discretion and as a result there has been injustice”.”

13. The motion in the lower court was brought under Order 2 Rule 15, Order 13 Rule 1 & 2 and Order 51 Rule 1 of the Civil Procedure Rules and was seeking inter alia that the Appellant’s defence to counterclaim be struck out and judgment be entered in favour of the Respondent, and in the alternative, judgment on admission be entered in favour of the Respondent as prayed in the counterclaim. The lower court allowed the alternative prayer, based on the provisions of Order 13 Rules 1&2 by, stating inter alia that:

“……...From the above the plaintiff concedes that indeed there was a distributorship agreement that was executed between him and the defendant. He further concedes that he issued three cheques in the name of the defendant. These cheques were definitely intended to pay for the goods received. The only reason that the same were not honored is because the plaintiff stopped them after the defendant closed his premises. His action is a clear admission of the plaintiff’s indebtedness to the defendant.......Failure to honor the obligations that go with the issuance of a cheque which includes having sufficient funds in one’s account, having the cheques filled correctly among other failures which there is a direct inference drawn that the drawer has a criminal intent”

“……The action by the plaintiff to move the court by filing the present suit on the backdrop of having failed to honor his obligation to pay the debt is actually frivolous and lacks bonafide. To me the same is a smoke screen meant to make the real issues hazy and the prayers sought in the plaint cannot supersede those in the counterclaim……..As earlier observed the plaintiff herein is truly indebted to the defendants herein and I accordingly allow the application by the defendant in terms of prayer (2) of the same together with costs”

14. Order 13 Rule 1 & 2 of the Civil Procedure Rules provide that:

“1. Any party to a suit may give notice by his pleading, or otherwise in writing, that he admits the truth of the whole or part of the case of any other party.

2. Any party may at any stage of a suit, where admission of facts has been made, either on the pleadings or otherwise, apply to the court for such judgment or order as upon such admissions he may be entitled to, without waiting for the determination of any other question between the parties; and the court may upon such application make such order, or give such judgment, as the court may think just.”

15. The Court of Appeal in Agricultural Finance Corporation v Kenya National Assurance Company Limited (In Receivership) [1997] eKLR while addressing the aforementioned stated;

“Order 12 r 6 empowers the court to pass judgment and decree in respect of admitted claims pending disposal of disputed claims in a suit. Final judgment ought not to be passed on admissions unless they are clear, unambiguous and unconditional. A judgment on admission is not a matter of right; rather it is a matter of discretion of the Court and where a defendant has raised objections which go to the very root of the case, it would not be proper to exercise this discretion.

16. The Court then considered principles enunciated inChoitram V Nazari (1982-88) 1 KAR 437whereMadan, J.A(as he then was) said at pages 441 to 442:

“For the purposes of O.X11 r. 6, can bexpress or implied either on the pleadings or otherwise,eg in correspondence. Admissions have to be plain and obvious, as plain as a spikestaff and clearly readable because they may result in judgment being entered. They must be obvious on the face of them without requiring a magnifying glass to ascertain their meaning. Much depends upon the language used. The admission must leave no room for doubt that the parties passed out of the stage of negotiations on to a definite contract. It matters not even if the situation is arguable, even if there is a substantial argument, it is an ingredient of jurisprudence, provided that a plain and obvious case is established upon admission by analysis.”

17. The Court of Appeal inTea Board of Kenya v Gideon Asirigwa Mbagaya (2015) eKLRfurther elaborated on the above case by stating that:

“Our analysis and understanding of the previous decisions by this court in Herta Elizabeth Charlotte Nazari (supra) is that the learned Judge was expected to analyse the entire pleadings before her and not just portions of any one of them in isolation. There must be a purposive application of the pleadings in order to infer an admission as to enable the court act on it.”

18. The Respondent by its counterclaim averred at paragraphs 2, 3, 4, 5 and 6 that:

“2. On or about the month of November, 2013, the plaintiff made representations to the Defendant that the Plaintiff was capable of performing certain obligations more particularly set out in the various documents and instruments signed and exchanged between the parties, the cumulative effect of which was the creation of a distributorship contract.

3. It was expressly agreed and mutually agreed and understood by the parties herein that the Plaintiff would accept delivery of products supplied by the Defendant and that the Plaintiff would pay the price of such goods as are supplied by the Defendant. Payments for such orders became due and payable upon receipt of the goods by the Plaintiff.

4. During the period that the Plaintiff was so authorized to carry out business as hereinabove stated, the Plaintiff failed to discharge his obligations and he became indebted to the Defendant to the tune of Kshs. 5,006,058. 28 as at 30/12/2014 being the price of the products supplied to him by the Defendant.

5. The Plaintiff has admitted the aforesaid debt and issued the Defendant with the three (3) cheques which have been dishonored by the Plaintiff’s Bankers since the Plaintiff stopped the payment of the cheques after the receipt of goods. The Defendant has incurred bank charges on all the occasions that the Plaintiff’s cheques were dishonored and the Defendant is seeking indemnity/reimbursement from the Plaintiff.

6. The Defendant’s claim against the Plaintiff is for payment of Kshs. 5,006,058. 28 being the value of the goods supplied to the Plaintiff by the Defendant together with the sum of Kshs. 15,000/= being the bank charges incurred by the Defendant as a result of the dishonored cheques issued by the Plaintiff.”

19. The Appellant filed a brief Reply to the counterclaim in which he stated that:

“1. The plaintiff admits paragraph 1 of the counter claim.

2. The plaintiff submits that the defendant entered into a contract with the plaintiff and the contract was not a representation and puts the defendant to strict proof.

3. The plaintiff in reply to paragraph 3 and 4 reiterates the contents of the plaint and areas that the defendant site has the plaintiffs deposit and further the defendant closed down the plaintiff’s business.

4. The plaintiff in reply to paragraph 5 does not admit the debt and further states that I stopped the payment of the cheque after the defendant closed the plaintiff’s shop and put Seneca security guards through an employee of the defendant on Mr. Warui.

5. The plaintiff denies the contents of paragraph 6 and 7 of the counter-claim and avers that the defendant has initiated criminal proceedings against the plaintiff at Makadara Law Courts.”(sic)

20. Several matters arising from the Appellant’s pleadings above and affidavit are pertinent. First, his Reply did not expressly traverse the averments at paragraph 3 and 4 of the counterclaim in any meaningful way. The latter paragraphs relate to the Respondent’s supply to the Appellant of goods worth the sums in the counter claim. The Appellant then proceeds to reiterate the averments in his plaint, none of which relate to the debt but to alleged closing of his premises by the Respondent. The alleged trespass and breach of contract averred in the plaint if intended to show why the debt is not owed to the Respondent are unconvincing, and for the purposes of the counterclaim appear to be a mere red herring.

21. The plaint seeks damages for breach of contract through closure of business and trespass and does not claim any sums in connection with the Plaintiff’s alleged business stock worth Shs. 3. 9 million odd (per the Appellant’s witness statement) at the time of the alleged closure. Further the particulars of the deposit alluded to at paragraph 3 of the Reply are not given in the pleading or replying affidavit. At paragraph 4 of the Reply, the Appellant admits having issued payment cheques to the Respondent but adds that he “stopped the payment of the cheques after the defendant closed the plaintiff’s shop and put Seneca security guards through an employee of the defendant on Mr. Warui “.

22. In view of the implied admission of receipt of goods from the Respondent, and admitted issuance of cheques as payment therefor, one wonders whether this assertion without more, represents a bona fide reason why the debt is not owed, as further asserted at paragraph 5 of the Reply to counterclaim. Similarly, in the replying affidavit sworn in opposition to the motion, the Appellant generally reiterated “the contents, annexures and averments” of his affidavit filed on 7th January 2015. The court has perused that affidavit. It is confined to complaints related to alleged closure of his business and trespass by the Respondent. Depositions at paragraphs 6,9, and 10 of that affidavit merely repeat the statements in the Reply to the counterclaim. And at paragraph 11 of his replying affidavit, the Appellant swore without giving any further details, that “the nature of the business was on a continuous revolving credit which the defendant altered the terms of by closing the business and detaining the stock/removing the stock from the premises”. (sic). This was the first reference to “revolving credit” and removal of goods, as the Reply referred to closure of the business and did not refer to the alleged credit. In any event, no particulars of these assertions are supplied in the replying affidavit.

23. For its part, the Respondent relied on a bundle of invoices and delivery notes and a statement of account (annexure CG-1 (a)-(k)) showing deliveries acknowledged by the Appellant, of goods worth Kshs. 5,006,058. 28. The Appellant while admitting part payment for the goods (cheque copies marked annexure CG-2 (a) (b) &(c)), denies indebtedness without a plausible demonstration of why the sums are not due. Events alleged by the Appellant to have occurred after the deliveries and his issuance of the cheques in payment appear farfetched and tenuous as defences to the counterclaim. As for the alleged revolving credit, not a shred of detail was supplied. It is not surprising that the lower court described the Appellant’s assertions as a “smokescreen”.

24. The Court’s view, upon a consideration of the material before it is satisfied that the Appellant had received goods from the Respondent in the sums pleaded in the counterclaim, stopped payment of cheques therefor and rather than tender a reasonable defence to the counterclaim, had raised inconsistent, extraneous and vague denials and justifications as his defence. The defence presented by the Appellant amounted to a mere denial and was not a reasonable defence that raises a bona fide,hence prima facie triable issue or issues, though not necessarily one that would ultimately succeed. See the Court of Appeal’s definition of a reasonable defence in the case of Olympic Escort International CO. Ltd. & 2 Others –vs- Parminder Singh Sandhu & another (2009) eKLR. On the test laid out in the latter case, the Appellant’s defence appears to approximate to a sham defence, one conjured with a view to obfuscate issues .

25. Earlier, in Magunga General Stores –vs- Pepco Distributor Ltd, EA (1986 – 89) 334 the Court of Appeal had stated the above principle as follows:

“First of all, a mere denial is not a sufficient defence in this type of cases. There must be some reason why the Defendant does not owe the money. Either there was no contract, or it was carried out and failed. It could also be that payment had been made and could be proved. It is not sufficient therefore simply to deny liability without some reason given.”

26. More recently in Margaret Njeri Mbugua –vs- Kirk Mweya Nyaga [2016] eKLRthe Court of Appeal considered several authorities on the point before holding that, in a suit for a liquidated debt or sum, a mere denial is not sufficient. The court proceeded to state that:

“From the above case it is therefore clear that a mere denial or general traverse is not sufficient in an action for a debt or liquidated amount and to that extent, the Appellant’s defence did not provide a reasonable defence. Applying all the principles stated in the above quoted cases to this appeal we are of the view that the trial court was right in striking out the defence. The Plaint contained details of the transaction that took place, however, the respondent rather than giving a fair and substantial answer gave a general denial of the facts. In the replying affidavit sworn by the respondent he more or less admitted having received the money yet demanded proof. In the circumstances there was no reasonable defence proffered, and the striking out of the defence was proper. In the absence of the defence the logical consequence was the entering of judgment in favour of the Appellant.”

27. In view of the foregoing, it my considered opinion that the trial Court applying the relevant principles properly exercised its discretion and arrived at a correct decision. For all the foregoing reasons, the Court finds no merit in this appeal and will dismiss it with costs to the Respondent.

DELIVERED AND SIGNED ELECTRONICALLY AT NAIROBI ON THIS 17TH DAY OF MARCH 2022.

C.MEOLI

JUDGE

IN THE PRESENCE OF:

FOR THE APPELLANT: MR GENGA

FOR THE RESPONDENT: MS. MULONGO H/B FOR MR WATHUTA

C/A: Carol