[2017] KEHC 2139 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL AND ADMIRALTY DIVISION-MILIMANI

HCCC NO.329 OF 2017

JOSEPH GIKONYO T/A GARAM INVESTMENT………PLAINTIFF/APPL.

VERSUS

SIDIAN BANK LIMITED………………………………… DEFENDANT/RESP.

R U L I N G

This is a ruling on Notice of Motion dated 25th September 2017 brought under order 1 Rule 10(2) and 22 of the Civil Procedure Rules 2010. It seeks to join KAMUTHI HOUSING CO-OPERATIVE SOCIETY in this proceedings as interested party. Grounds on the face of the application are that

1. Item no.12 in the bill of costs dated 26th July 2017 has been instituted against wrong parties namely Benard Kungu Maina, James Mungai Wainaina, Moses Ngotho Mwatha and Eliud Perminus Njoroge.

2. That the interested party is the registered owner of the property L.R.280/11 and L.R.280/1728 which is charged to Sidian Bank for sum of Kshs. 300,000,000.

3. That the Applicant seeks to tax on the basis of property being worth 1. 8Billion which is in excess contrary to instructions issued by the bank to recover Kshs. 300,000,000.

4. That the interested party being a public body is likely to suffer substantive loss if the interested party is not in these proceedings for purposes of defended the bill of costs dated 26th July 2017.

5. That any amount taxed by this Court will be debited directly to the interested party’s account.

The application is supported by affidavit sworn by Eliud P. Njoroge on 26th September 2017. He averred that he is the secretary of the interested party and restated the grounds on the face of the application. He attached copies of the titles to the supporting affidavit.

In response the Applicant filed grounds of opposition dated 4th October 2017. The grounds are as follows;

1. That the bill of costs is premised on contractual relationship between Auctioneer and the Respondent Sidian Bank which the interested party is not privy to

2. That the application is incompetent, lacks merit and is not in the interest of justice

3. That joining the interested party would be unlawful and prejudicial to the Respondent

4. That it is intended to delay the determination of bill of costs.

Counsels for the Applicant and interested party proceeded by oral submissions. Counsel for the Respondent did not oppose the application.

Counsel for the Applicant submitted that the bill of costs emanate from aborted repossession and Auction of the intended interested party’s property known L.R.NO.280/11 and 280/1728 which were charged to the Respondent. He submitted that charge of the property to the bank gave the bank a right to realize the property in event of default but the costs will be debited to the interested party’s Account. He submitted that item 12 of the bill seeks to tax against the 4 persons named in the supporting affidavit who were board members of the Applicant at the time the property was charged but have since left the management committee. He submitted that the Applicant is a necessary party as it is a party who will be required to satisfy any taxation that will happen as sidian bank was only an entity that identified the Respondent to carry out a duty but power and authority is created by charge given by the Applicant herein.

Mrs. Okulo for the Respondent submitted that the bill of costs that she has filed for the Auctioneer is instituted against named party, sidian bank limited. She submitted the names given in item 12 is mere reference and that the names given are in the letter of instructions from the bank to the Auctioneer and are named as principal debtors and that the bill is in tandem with letter of instruction. She added that the bill rests on contract between the auctioneer and the bank. She added that there are 40 items in the bill relating to 40 different services rendered to sidian bank relating to different debtors. She submitted that the interested party is not privy to the contract between the Auctioneer and the bank and cannot impose itself to an arrangement between them. She submitted that on the issue as to whether the auctioneer has gone beyond instruction, the only party that can challenge is the bank and that the bank has instructed counsel to represent. She submitted that if any prejudice is to be suffered by the Applicant, they have recourse by suing the bank for giving wrong instructions and in the alternative a party may be compensated if an Auctioneer acts contrary to instructions. She submitted that this being a bill where 40 instructions have been listed, none of the 40 debtors has a right to join issue between the Auctioneer and the bank and the Applicant herein has no exception. She referred to Nairobi HCC.NO.398 OF 2005 Technomatic Limited T/A Promopack company vs. Kenya Wine Agencies Limited and Jaswinder S.Obhrai the proposed interested party where it was held that a party has to show that it is a necessary party, he is a proper party, there is a relief flowing from the proceedings under prayers sought and lastly decree cannot be enforced without the party seeking to be enjoined, she submitted that this bill has 40 items, the Applicant has talked of one item and that they cannot say they must be present when the bill is adjudicated. She submitted that the Applicant is merely busy body.

In response counsel for the Applicant submitted that the Applicant has attached title deeds which show they were charged to the bank and that the auctioneer was given instructions on the basis of those charges. He submitted that the owner of the titles is the Applicant and that is why it is a necessary party to the taxation; that the office bearers are eligible for election and if taxation proceed injustice will not only be occasioned to the Applicant but also to the named persons who do not even have accounts with sidian bank. He submitted that it would be necessary for the Applicant to participate in the taxation as it is clear auctioneer is taxing for 1. 8 Billion yet the interested party’s liability to sidian bank is 300 million and that is an issue which can be conversed before the taxing master. He submitted each of the 40 items has a subject matter and that the Applicant’s subject matter is item 12 which will be debited in the Applicants account. He concluded that the Applicant is a public body and it is the duty of the officials to ensure the Applicant’s property are protected.

I have considered rival submissions by counsels herein. What is in issue is whether the Applicant has demonstrated before this Court that it is an necessary party in the bill of costs dated 26th July 2017. There is no dispute that instruction to the Respondent to reposes and auction property was from Sidian bank and that it arose from a charge of the Applicant’s property to the bank. Upon default by the Applicant the charge crystalized and the bank got a right to sell the property to recover the amount owing. The bank had a right to sell property and that is why the instructions emanated from the bank to the Auctiooneer.The instructing client is therefore the bank. The bank will not however pay the auctioneer from its resources; the cost will be paid by the chargor’s, the Applicant herein; there is no doubt that the bank will debit the chargors account with the certified costs. Counsel for the Applicant has indicated that they have noted an error item 12 which relate to the Applicant and that their participation during taxation before the taxing master will help to bring out facts that will assist the Court arrive at a just decision.

The Respondent submitted that the Applicant has an option of suing the bank for redress if it gave wrong instructions or in the alternate take action against the auctioneer if he acted contrary to instructions given. I however think actions that are likely to follow after taxation may lead to unnecessary additional costs and delay in resolving issues between parties herein. I do not see any prejudice the Respondent is likely to suffer if the Applicant is allowed to participate before the taxing master in respect of item 12. From the foregoing I find that the Applicant has demonstrated before this Court that it is a necessary party in the taxation proceedings as enforcement of certified costs will not be possible without the participation of the Applicant. I see merit in the application and allow it accordingly. The Applicant’s/interested party’s participation is limited to item no.12 in the bill of costs dated 26th July 2017. Each party to bear own costs.

Dated, Signed and Delivered this 10th day of October 2017

………………………………

RACHEL NGETICH

JUDGE

IN THE PRESENCE OF

………………...COURT ASSISTANT

………..……….COUNSEL FOR PLAINTIFF/APPLICANT

…………………COUNSEL FOR DEFENDANT/RESPONDENT