[2004] KEHC 2520 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI (MILIMANI COMMERCIAL COURTS)

Civil Case 205 of 2000

INDUSTRIAL & COMMERCIAL

DEVELOPMENT CORPORATION..................................... PLAINTIFF

-VERSUS-

BARASELL CO. LTD............................................... 1st DEFENDANT

RODAH JEPTUI CHEBON..................................... 2nd DEFENDANT

JULIUS KIPROP CHEBON.................................... 3rd DEFENDANT

RULING

This is a motion on notice brought under O.XXXV rules 2 and 3of the Civil Procedure Rules and section 3A of the Civil Procedure Act.It was dated and filed in court on 5th June, 2003, and seeks ordersthat summary judgment be entered against the defendants forKsh.5,556,003. 85 with interest at 24% per annum from the date offiling of this suit, and that the costs of this application and the suit bein the cause.

The application is founded on the grounds that the defendantsare truly indebted to the plaintiff in the sum of Ksh.5,556,003. 85

advanced to them by the plaintiff and were indebted at thecommencement of this suit; that the defendants have no defence inthis suit and that their defence is a sham and raises no triable issues.It is supported by the annexed affidavit of ISAAC B. MOGAKA, theCorporation Secretary of the Plaintiff/applicant. In the said affidavit,Mr. Mogaka reiterates that the defendant's defence herein is a sham.To his affidavit are attached copies of a loan agreement, guarantees,disbursement slips, demand notices, statements of account and acheque register. He avers that the defendants in their defence haveadmitted taking the loan and are only delaying the plaintiff fromtrying the suit to recover the money they owe it. He also avers thaton 9th June, 2000 the defendants paid Ksh.5,000/= in loanrepayment and said they would pay the balance in due course. Acopy of the receipt is attached as exhibit IBM 7.

At the hearing of this application on 25th March, 2004, Mr.Kinyanjui appeared for the plaintiff's/applicants whereas there was noattendance for the defendants. By an affidavit sworn by one MokuaOtara, a court process server, and filed in court on 29th July, 2003,the defendant's advocates, M/s Mwangi Gachoka and Co. were

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served on 21st July, 2003. By another affidavit sworn and filed by thesame process server on 24th March, 2004, the process server aversthat he served a HEARING NOTICE for this matter due for hearingon 25th March, 2004 upon Mr. Mwangi advocate, personally. Mr.Mwangi accepted service but refused to sign and stamp at the backof any copy, remarking that he has filed an application to withdrawfrom acting and that he is looking for the defendants personally toserve them.

The court notes from the court file that the advocates for thedefendant herein filed an application dated 3rd June, 2003 for anorder for leave to withdraw from acting for the defendants. It wouldappear that to-date, that application has not been heard. UnderO.lll rule 12 (1) of the Civil Procedure Rules, unless and until anadvocate has served on every party to the cause or matter a copy ofthe court order to the effect that the advocate has ceased to beadvocate acting for the party, such advocate shall be considered theadvocate of the party to the final conclusion of the cause or matterincluding any review or appeal. As matters stand now, MessrsGachoka Mwangi & Co., advocates, are still on record for the

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defendants and are therefore considered to be the defendants'advocates. On 15th March, they were served with a hearing notice tothe effect that this application would come for hearing on 25th March,2004. They were therefore served in sufficient time to attend, and intheir absence, the court proceeded ex parte.

Mr. Kinyanjui for the applicant argued that there were twoloans. The first loan agreement was made on 13th April, 1995 andthe sum borrowed was Ksh.1,330,000. 00. This agreement wassigned by the first defendant. The second loan agreement wasmade on 29th June, 1995 and sum borrowed was Ksh. 670,000/=.On both loans, the rate of interest was 24%. This was not a fixedrate, as it was liable to revision by the plaintiff. Both loanagreements were signed and sealed by the company, and for each ofthe two loans, the second and third defendants each provided apersonal guarantee for repayment of the loans. The first defendantdefaulted in the repayment of the loans, and made a few scatteredpayments. The default continued in spite of persistent demands. Allthe clauses in the defence consist of mere denials and someadmissions. At the end of the day they know all about the loan and

non payment but they don't pay. Counsel thereupon urged the courtto enter summary judgment against the defendants for the sum ofKsh.5,556,003. 85, interest at 24% from the date of filing this suit,and costs of the application and the suit.

The plaint filed herein is very definite and specific. It seeks therecovery of the amounts of money advanced by the plaintiff to thefirst defendant, while the second and third defendants are sued intheir capacities as guarantors. The plaintiff has exhibited copies ofthe loan agreements dated 13th April, 1995 and 29th June, 1995,andthe duly executed personal guarantees of the two defendants alsodated 13th April, 1995 and 29th June, 1995. Also attached to theapplication are copies of the disbursement slips, demand notices, andstatements of account. On that basis, the plaintiffs have establishedsuch a prima facie case as would entitle them to summary judgmentunder O.XXXV rule 1 of the Civil Procedure Rules. Order XXXV rule2, however, accords the defendant(s) the right to demonstrate byaffidavit, or by oral evidence or otherwise that he (they) should haveleave to defend the suit. As the defendants have not, however, filedany replying affidavit or grounds of opposition to the application forsummary judgment, the court will have recourse to the defenceherein in order to ascertain whether it raises any triabal issues.

The defendant's statement of defence is dated 2nd April, 2000and was filed in court on 3rd April, 2000. In paragraphs 2 and 4 ofthat statement, the defendants admit that there were agreementsbetween the plaintiff and the 1st defendant for the sums ofKsh.1,330,000/= and Ksh.670,000/= to be advanced by the plaintiffto the first defendant by way of loans. However, the defendantsdeny that the money was disbursed to the first defendant. Amongthe plaintiff's bundle of documents attached to the supportingaffidavit are copies of two letters dated 3rd May, 1995 and 3rdAugust,1995. The letters were both addressed by the plaintiff to thefirst defendant, and they were forwarding cheques No.102214 forKsh.1,330,000/= and No.103710 for Ksh.670,000/=, respectively, infavour of the first defendant. This disposes off the defendants' denialthat any money was advanced and/or disbursed to the firstdefendant.

In paragraph 3 of the defence, the 2nd and 3rd defendants denyever executing a guarantee in favour of the first defendant as alleged

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in paragraph 5 of the plaint. Again, in exhibit IBM 2A and 2B of thebundle of documents attached to the plaintiff's application are copiesof the personal guarantees duly signed by the 2nd and 3rd defendants.

Paragraph 5 of the defence then states that if any monies wereadvanced by the plaintiff to the 1st defendant, then the 2nd and 3rddefendants were discharged of their liabilities as guarantors after theplaintiff made numerous variations of the loan between her and thefirst defendant. Let it suffice to say that this allegation isunsubstantiated as there is no evidence to support it.

In paragraph 6, the defendants deny ever having received thenotice dated 18th November, 1999 and/or any other noticeasking them to repay the money as alleged in the plaint. Copies ofthe letters dated 18th November, 1999 addressed by the plaintiffs toeach of the three defendants are exhibited in this application asexhibit No. IBM 4A, B and C.

The defence also alleges that the defendants have severallyrequested for a full statement of accounts showing how the plaintiffarrived at the figures demanded but the plaintiff failed and/or hasrefused to supply the same. A copy of the statement of accounts isalso attached to the application, and covers the period from 2nd May,1995 up to 30th June, 2002. During that period, the first defendant'saccount is credited with payments of Ksh.100,000/= on 26th April1996; another Ksh.100,000/= paid on 7th March, 1997; a sum ofKsh.2,000/= paid on 24th May, 1999; a sum of Ksh.70,050 paid on24th January, 2000; and a sum of Ksh.5,000/= paid on 9th June, 2000a copy of the receipt whereof is attached as exhibit No. IBM 7. Thestatement is interspersed with copies of annual statements for theyears 1995, 1996, 1997, 1998 and 1999. I don't see why theplaintiffs would refuse to supply copies of those statements ofaccounts when such a statements are so elaborate and unchallenged.I don't accept the defendant's allegation as factual.

In total, I find that on a balance of probabilities, the defenceherein is not only a sham, but a hollow sham, and the plaintiff hasestablished its claim against the defendants as pleaded in the plaint.Although the plaintiff's application seems to be grounded on rules 2and 3 instead of rule 1 of O.XXXV of the Civil Procedure Rules, thecourt has power to effect the correction under s.99 of the CivilProcedure Act, which correction is hereby effected. The court,

therefore, hereby enters judgment for the plaintiff against thedefendants, jointly and severally, for-

(a) the sum of Ksh.5,556,003. 85

(b) interest thereon at the rate of 24% per annum

(c) costs of the suit together with interest thereon at court ratesfrom the date of filing of the suit until payment in full.

(d) Costs of this application.

Dated and delivered at Nairobi this 2nd day of April 2004.

L. NJAGI

JUDGE