[2019] KEHC 12354 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

MILIMANI COMMERCIAL AND ADMIRALTY DIVISION

CIVIL SUIT NO. 347 OF 2017

JOHN FRIENDRICH............................................................PLAINTIFF

VERSUS

PEVANS EAST AFRICA LIMITED

T/A SPORTPESA.........................................................1ST DEFENDANT

BRADLEY LIMITED T/A

PAMBAZUKA NATIONAL LOTTERY..................2ND DEFENDANT

RULING

This ruling relates to a Notice of Motion Application dated 1st February 2018, pursuant to Order 2 Rule 15 (1) (a) and (b) of the Civil Procedure Rules 2010. The applicant is seeking orders;

a) That the Plaintiff’s suit against the 1st Defendant/Applicant be struck out as it discloses no reasonable cause of action;

b) That the Plaintiff’s suit against the 1st Defendant is frivolous and vexatious;

c) That the Plaintiff pays the costs of this application and the suit.

The Application is based on grounds;

a) That at all material times the 1st Defendant was a mere agent for a disclosed principal, being the 2nd Defendant. Its sole role in the transaction-giving rise to this suit was that of selling a lottery ticket for and on behalf of the 2nd Defendant. This fact is clearly acknowledged by the Plaintiff, both in the Plaint and in his demand letter to the 2nd Defendant dated 27th July 2017;

b) That in the circumstances, the suit herein discloses no reasonable cause of action against the 1st Defendant, and is therefore frivolous and vexations;

c) That the continuance of this suit against the 1st Defendant is a waste of judicial time and resources ad defeats the overriding objectives of the Civil Procedure Act.

The Application is supported by an affidavit dated 2nd February 2018 sworn by Ms Laura Kenyani; legal officer of the 1st Defendant. She states that the sole role of the 1st Defendant in the said lottery was merely that of selling agent of lottery tickets for and on behalf of the 2nd Defendant. In that regard, she wishes to repeat and reiterate the contents of the witness statement of Mr. Anthony Mbugua, the 1st Defendant’s IT Manager, filed herein whose contents he confirmed to be true and correct to the best of his knowledge. He deponed that that the 1st defendant’s site is used as an interface to sell tickets on behalf of the 2nd defendant. The implication is that the 1st Defendant is a shop only selling tickets on behalf of 2nd Defendant.

That prior to filing of this suit, the Plaintiff herein was clearly alive to this fact going by the demand letter dated 27th July 2017. In the said letter, the Plaintiff expressly described and acknowledged that the 1st Defendant was an agent for the 2nd Defendant.

PLAINTIFF’S REPLYING AFFIDAVIT

The Plaintiff objected to the instant application specifically on the following basis;

The 2nd Defendant apart from offering vending/retailing services for 2nd Defendant it also acted as custodian of all information pertaining to players; information the Plaintiff wishes to rely on in proving his case, including but not limited to the type of bet placed, date and time the bet was placed, the amount of money placed on the bet and the result of the bet.

SUBMISSIONS

The 1st Defendant /Applicant’s thrust was/is as follows;

Relying on the following cases;

DT Dobie Co Ltd vs Muchina [1982] KLR 1 where it was held;

“No suit should be summarily dismissed unless it appears so hopeless that it plainly and obviously discloses no reasonable cause of action and is so weak as to be beyond redemption and incurable by amendment. If a case shows mere semblance of a cause of action, provided it can be injected with real life by amendment, it ought to be allowed to go forward for a Court of justice ought not to act in darkness without full facts of a case before it.”

The plaintiff did not disclose any cause of action against the 1st Defendant. The Agreement referred to in paragraph 12 of Plaintiff’s Affidavit; the 1st Defendant was not party/ privy to the Agreement. In

Transcend Media Coop vs IEBC [2015] eKLR;the High Court made reference to Court of Appeal decision of Crescent Construction Co Ltd Vs Delphis Bank Ltd Civil Appeal 146 of 2001[2007]eKLR on the same ground for striking out pleadings as in DT Dobie case.

In Victor Mabachi & Anor vs Nurtun Bates Ltd (2013)eKLR

Where Court of Appeal heldthat the Appellants ought not to have been joined to the proceedings because; contrary to submissions made that the Appellants were a Company, the Appellants were a Company with a separate independent identity in law distinct from its shareholders, directors and agents unless there were factors to warrant lifting of the corporate veil.

City Council of Nairobi vs Wilfred Kamau Githua T/A Githua Associates & Anor [2016] eKLR where the 2nd Respondent sought orders from Court to strike out its name from the suit as the 2nd Respondent had no legal interest in the subject of the suit, was not a necessary party to the suit, the relief sought would materially prejudice and embarrass the 2nd Respondent and the Plaint did not disclose any reasonable cause of action against the 2nd Respondent.

The Court relied on definition of privity of contract; Halsbury Laws of England4th Ed;

“The doctrine of privity of contract is that as a general rule, at Common Law a contract cannot confer rights or impose obligations on strangers to it; persons who are not parties to it.”

The plaintiff ought to have set out clearly in pleadings; who he contracted with when he did so and what rights/obligations arise?

In Dunlop Pneumatic vs Selfridgeco Ltdwhere it was held thatthe agreement was entered between the Plaintiff and Respondents only and did not include the Appellants as they were not parties to the to the contract and no consideration moved from them to the Respondents and they therefore could not sue on the said contract.

The Plaintiff did not establish consideration between Plaintiff and 1st Defendant.

The 1st Defendant raised the issue of suing an agent where there is a disclosed principal the 2nd Defendant.

There is no cause of action against 1st Defendant and is embarrassed as the 1st Defendant is accused of fraud.

The Applicant relied on the case of Letang vs Cooper 1961 on definition of cause of action;

“it is simply a factual situation the existence of which entitles one person to obtain from Court a remedy against another person/party.”

The 1st Defendant reiterated the Plaintiff has no cause of action against the 1st Defendant and hence the suit /Plaint be struck off against 1st Defendant.

SUBMISSIONS:

The Plaintiff’s thrust was/is as follows;

The plaint filed on 1st August 2017 at paragraphs 4, 6, 10 & 11 disclose privity of contract between the Plaintiff and 1st Defendant.

He relied on the case of; National Social Security Board of Trustees vs Amkhan Ltd & 2 Others [2006] eKLR

The Plaintiff dealt and communicated with 1st Defendant and circumstances of not declaring him winner from the Betting platform is/are in issue(s) for determination.

The plaintiff contends that the 1st Defendant admitted hosting platform for selling tickets for 2nd Defendant and therefore they are involved in the processes and procedures of accepting and rejecting requests and communicated on the outcome of the tickets. There was no communication on the running of the lottery and therefore it remains a triable issue.

The plaintiff relied on the cases of; Tom Odhiambo Achilo T/A Odhiambo Advocates vs Kenneth Akide T/A Akide Advocats & 3 Others [2015]eKLR; Trust Bank vs Amin Co Ltd & Anor [2000] eKLR

On 13th March 2019 while highlighting submissions Counsel for the Plaintiff undertook to provide a copy of written submissions that were found missing in the Court file through Deputy Registrar Commercial Division. At this point it is noted such written submissions were not availed as agreed and hence only oral submissions by Counsel have been taken into account and filed pleadings.

DETERMINATION

The issue before Court for determination is the Plaintiff’s suit against the 1st Defendant/

Applicant be struck out as it discloses no reasonable cause of action.

I have relied on the case of ;

Tom Odhiambo Achillah T/A Achilla T.O. & Co Advocates vs LSK City Council of Kenya & The People Media Group Ltdand rely on the following excerpts;

“The power to strike out pleadings or a party from the suit, and in the process deprive a party of the opportunity to present his case has been held over the years to be a draconian measure which ought to be employed only as a last resort and even then only in the clearest of cases. That power should only be exercised after the court has considered all facts and not the merit of the case.”

The case of DT Dobie & Company (Kenya ) Ltd –vs- Muchina (1982) KLR espoused the above principle where Madan J.A (as he then was) adopted the findings of sellers L. J. IN Wanlock –vs- Moloney (1965) 1 WLR 1238 where the learned Judge had this to say, while setting out principles to be considered by a court in striking out a pleading:

“this summary jurisdiction of the court was never intended to be exercised by a minute and a protracted examination of documents and the facts of the case in order to see whether the Plaintiff really has a cause of action. To do that is to usurp the position of the trial judge and to produce a trial of the case in chambers, on affidavits only, without discovery and without oral evidence tested by cross-examination in the ordinary way. This seems to me to be an abuse of the inherent power of the court and not a proper exercise of that power”

Further and in the same case, Danckerts L J held;

“the power to strike out any pleading or any part of a pleading under this rule is not mandatory; but permissive and confers a discretionary jurisdiction to be exercised having regard to the quality and all the circumstances relating to the offending pleading”

In Amon –vs- Raphael Tuck & Sons Ltd (1956) 1 ALL ER 273, the court held that:-

“The party to be joined must be someone whose presence before the court is necessary as a party. What makes a person a necessary party”...the only reason which makes a person a party to an action is so that he should be bound by the result of the action, and the question to be settled, therefore, must be aquestion in the action which cannot be effectively and completely settled unless he is a party. It is not enough that the intervener should be commercially or indirectly interested in the answer. The person is legally interested in the answer only of he can say that it may lead to a result that will affect him legally. That is by curtailing his legal rights. That will not be the case unless an order may be made in the action which he is legally interested”

In Yaya Towers Limited –vs- Trade Bank Limited (In Liquidation) Civil Appeal No. 35 of 2000; the same court expressed itself thus:

“A plaintiff is entitled to pursue a claim in our courts however implausible and however improbable his chances of success. Unless the defendant can demonstrate shortly and conclusively that the plaintiff’s claim is bound to fail or is otherwise objectionable as an abuse of the process of the court, it must be allowed to proceed to trial... it cannot be doubted that the court has inherent jurisdiction to dismiss that, which is an abuse of the process of the court.....”

Applying these principles in the present case I have considered the plaintiff’s statement of claim vide the Plaint filed on 14th August 2017 is as follows;

Paragraph 4;

The plaintiff at all times material to this case opened an account in the 1st Defendant’s website where he participated in various betting games and lotteries.

Paragraph 5;

The 1st Defendant hosted various bets, lotteries and games on its own behalf and on behalf of various Companies including the 2nd Defendant’s lotteries.

Paragraph 6;

On or about 26th July 2017 the plaintiff played the 2nd Defendant’s Mzooka lottery that ran in 2 parts…..

The 2nd Defendant hosted the said draw on the 1st Defendant’s website…..

Paragraph 7;

The plaintiff shall aver and demonstrate that on 26th July 2017 .. he purchased a ticket and placed a bet and the 2nd Defendant accepted the said bet for the draw.

Paragraph 8;

The plaintiff shall show… that the 2nd Defendant declared results on the 1st Defendant’s website….

Paragraph 9;

The plaintiff avers he made correct predictions and based on 2nd Defendants terms and conditions he was winner of the draw..

Paragraph 10;

The plaintiff states the Defendants did not call or notify him of his win……hence prompting him to call the 1st Defendant which checked his accounts and referred him to the 2nd Defendant.

Paragraph 11;

The plaintiff states the 1st Defendant’s agents checked and noted the results and noted that the same tallied with his predictions but still refused to declare his predictions as the winning numbers without any explanation at all.

This Court outlined the substance of plaintiff’s claim to demonstrate that there is an intricate and detailed procedure and process of betting and winning lottery. This process and procedure involves both 1st & 2nd Defendants; whose roles and activities seem complimentary and the chain of evidence involves both parties.

This Court is guided by law that a disclosed principal and agent cannot be sued together; the agent ought to be removed from such proceedings as the principal is disclosed; however, in the instant case; in determining liability; it will be a triable issue to consider and confirm the processes and procedures of betting and winning lottery so as to determine who is liable for what and at what juncture in this dispute.

Secondly, it is apparent that from the outline the plaintiff’s claim is hinged on both defendants as at this stage the 1st and 2nd Defendants roles seem intertwined. Unless and until the hearing, where evidence shall be adduced and subjected to cross examination to test its veracity of the evidence and/or credibility of the witness(s); from the complimentary roles of the Defendants in the betting and winning lottery process; it is not obvious and clear at this stage who is responsible for what in the process.

Thirdly, relying on an excerpt from Principles of Commercial Law by Kibaya Imaana Laibuta on Agency at pg 287;

As a general rule; the principal is bound by such acts as are within the agent’s authority defined in the deed or other contractual document or in the terms under which he was appointed. The agent’s conduct must in every respect be in the course of his employment and within the scope of his authority as conferred to him by the Principal, or otherwise presumed or implied in proper cases. Authority is the very foundation or core of every agency relationship and must be either proved or presumed in order to bind the principal.It maybe actual or ostensible. Conversely, absence of authority negatives the existence of any purported agency relationship.

The 1st Defendant relied on the fact that as agent of the disclosed principal the 2nd Defendant; they ought to be struck off the instant suit.

The Court at this stage cannot confirm or deny the agency relationship because the authority and scope of the agency relationship vis a vis the alleged conduct or role of the 1st Defendant shall be confirmed during the hearing. What if for instance the 1st Defendant is severed from these proceedings at this stage and during the hearing it is found that liability was occasioned by 1st Defendant’s conduct beyond the scope of the agency relationship? What recourse would the Plaintiff have? These are triable issues to be determined at the hearing and determination of Plaintiff’s claim.

Fourthly; it is conceded that a valid contract binds the parties to the contract and does confer rights and liabilities to 3rd parties. The 1st Defendant is not privy/party to the contract between Plaintiff and 2nd

Defendant with regard to terms and conditions of betting and winning lottery. However, the process betting and winning lottery was through the 1st Defendant’s platform. The plaintiff also opened an account with 1st Defendant.

For these reasons the Court exercises discretion on striking out the 1st Defendant’s name from the Plaintiff suit by denying the application. At this stage it is not clear and obvious the 1st Defendant is not a necessary party to these proceedings as the dispute cannot be effectively and completely settled in the absence of 1st Defendant. More so as the 1st Defendant established the platform on which the Plaintiff opened an account and participated in the draw and claimed to win the lottery. The chain of evidence as can be deciphered at this stage is as follows; the 1st Defendant is an agent of 2nd Defendant a disclosed principal. The Plaintiff alleged that he opened an account with 1st Defendant, he purchased a valid ticket from 1st Defendant from their platform. The process of determination and announcement of the winning ticket/numbers, winner and collection of the prize of the lottery was by both 1st and 2nd Defendant.

I have considered the material before this Court and I find that the plaint raises triable issues and therefore a reasonable cause of action. There are issues of both law and fact arising from pleadings which cannot summarily allow striking out of the 1st Defendant at this point until evidence is tendered and interrogated during trial. The instant application is dismissed each party to bear own costs. Parties to attend to case management before Deputy Registrar Commercial Division within 30 days and thereafter take a hearing date of the suit.

DELIVERED DATED SIGNED IN OPEN COURT ON 27TH SEPTEMBER , 2019.

M.W.MUIGAI

JUDGE

IN THE PRESENCE OF;

ADVOCATE FOR PLAINTIFF

MS KARIUKI FOR 1ST DEFENDANT

MR KABUGO H/B FOR MR NJENGA FOR 2ND DEFENDANT

COURT ASSISTANT - JASMINE