[2004] KEHC 2638 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

CIVIL CASE NO. 620 OF 2003

KARIUKI .......................................................................................... PLAINTIFF

VERSUS

MBATARU ................................................................................... DEFENDANT

RULING

This is a ruling on a preliminary issue raised by the defendant in relation to the plaintiff’s Originating Summons dated 20th June 2003. The application was brought under order XXXVI, rule 4 of the Civil Procedure Rules. The plaintiff sought the dissolution of a partnership which she claimed had existed between her and her former husband. She sought orders that the defendant do account to her fully in respect of monies received for and on behalf of the partnership during the period running from 1986 to 1995. She sought the appointment of independent accountants to draw up the partnership accounts. She prayed that the defendant be required to submit to such accountants all books of accounts and other documents and records in respect of the partnership, as well as to present himself for interview before the accountants. She prayed that the accounts when prepared, be submitted to the Court for certification, and the balance of any monies after payment of liabilities, be divided equally. She prayed that the burden of costs be borne by the respondent.

Mr Kamau for the respondent had a lengthy preliminary objection which was based on grounds of objection dated and filed on 13th April 2004.

Counsel argued that the plaintiff ’s Originating Summons was misconceived, bad in law and an abuse of court process, being the third consecutive such application filed on similar grounds, and the previous ones having been dismissed, namely HCCC No 6010 of 1991 (OS) and HCCC No 793 of 1995 (OS). He submitted that the plaintiff’s suit was res judicata, and was out of time and barred by the Limitation of Actions Act (cap 22). He maintained that the suit was scandalous, frivolous and vexatious and meant to prejudice and embarrass the defendant. He contended that the suit disclosed no reasonable cause of action against the defendant.

Mr Kamau observed that the suit was premised on the existence of a partnership; but the respondent had sworn an affidavit which avers that there had not been any partnership between the parties. Counsel stated that the plaintiff had all along been aware that the existence of any partnership at all had been disputed by the respondent, who had maintained that the entity that once existed between the parties was a family business but not a partnership. He referred to exhibit “JBB3” annexed to his replying affidavit of 23rd April, 2004. This was a certificate of registration under the Registration of Business Names Act (cap 499), dated 2nd August 1986. It is in the name of Joel Mbataru (defendant) and Lucy Wambui w/o Joel Mbataru (ie, the plaintiff) – Registration No 119028. He remarked that the plaintiff’s identity had been shown on that certificate in her capacity as a wife, but that no partnership had been created. There had been, counsel stated, no partnership deed to constitute a partnership.

Counsel questioned the veracity of the depositions in the plaintiff’s affidavit of 20th June, 2003 for not disclosing her status at the time of her involvement in the business. She had only claimed that she had contributed Kshs 60,000/= towards the business, and that she had not been kept fully informed of matters relating to the conduct of the business.

Noting that the marriage between the parties had been dissolved in 1994, counsel submitted that the right course of action would have been for the plaintiff to make a claim under the Matrimonial Causes Act (cap 152), rather than through Originating Summons as she had done. Counsel noted that in the Divorce Cause, No 88 of 1992, the Court had determined the property issues and the family properties had been distributed. Relying on the replying affidavit (para 10), counsel contended that the plaintiff was seeking orders of dissolution of a business that had long ceased to exist.

Counsel submitted that the suit was out of time and was barred by the provisions of section 4(1)(a) and (3) of the Limitation of Actions Act (cap 22). He argued that the plaintiff’s first application in 1991 marked the accrual of the cause of action; and today, some 13 years later, it was no longer possible to sue on the same cause of action. Counsel submitted that the governing principle in respect of causes of action in partnership matters was contract; and the limitation period for such is six years. Under section 6(3) of the Limitation Actions Act, the limitation period in respect of actions for account is six years – and an account which is more than six years of age can no longer be sought under the law – unless leave is first granted (and this had not been sought). Counsel contended that the earlier Originating Summons suits which had been dismissed, had abated as no attempts had been made to reinstate them. Counsel noted that the suit after being filed on 20th June, 2003 was served only some eight months later, and contended that this was a sign of bad faith.

In her response, Mrs Tongoi for the plaintiff insisted that there was a business partnership between the parties, and that it remained in existence to-date. She contended that, even if the business had collapsed in 1995, this would not terminate the partnership, as there still remained issues involving money, profits, losses. So long as these matters remained unresolved, the partnership remained alive.

Counsel sought to establish partnership on the basis of the certificate of registration, which carried the names of both parties. She contended that the plaintiff did not cease to be a partner by the sheer fact that she ceased to be a wife.

Mrs Tongoi disputed the suggestion that she should have proceeded by virtue of the Matrimonial Causes Act (cap 152). In her words:

“We do not believe this was a matter of the Matrimonial Causes Act. This is not matrimonial property; its dissolution should lead to a sharing, whether of assets or liabilities”.

She argued that the questions substantially in issue have not ever been determined by the Court; and consequently, they are not res judicata.

With regard to limitation, Mrs Tongoi maintained that the cause of action is still arising; it is continuous, as it has been to date. The plaintiff was still suffering the injury to date, as a result of the non-dissolution of the partnership – it was submitted. Counsel stated that a notice of cessation of business had not been filed at the business registry.

Mrs Tongoi submitted that the defendant had not shown that the partnership had expired. Counsel urged that there must be a proper dissolution process, with assets and liabilities being shared out. She urged the Court to hear the Originating Summons, for the reason that the matters raised had never ever been heard and determined by any Court.

Mrs Tongoi submitted that the Partnerships Act (cap 29) defined the relationships between persons carrying on a business in common, with a view to profit; and that partners may get into a partnership agreement where individual intentions are expressly set out. She stated that section 36 of the Act provided for the circumstances in which the life of a partnership comes to an end –

(i) expiry of the term of a partnership, where the same had been fixed;

(ii) termination of a venture or undertaking;

(iii) where notice to dissolve the partnership is given, and it had previously been for an undefined time period;

(iv) where a partner died;

(v) where a partner fell into bankruptcy;

(vi) supervening unlawfulness;

(vii) on account of court orders.

Counsel stated that in the present instance, it was being sought to determine the life of a partnership through an order of the Court. And in these circumstances the Court may decree the dissolution of the partnership. The reason was that a partner (the defendant) has been guilty of such conduct as is calculated to affect prejudicially the conduct of the business; and so the Court should make orders dissolving the partnership.

Counsel submitted that the plaintiff’s case did not run afoul of the Limitation of Actions Act: because the cause of action in relation to the life of a partnership arises at the time when one partner suffers injury, to such an extent that that partner is seeking legal redress.

Counsel contended that the suit was not res judicata, since the earlier applications had been dismissed for want of prosecution; and so the issues of merit had not yet been determined. She argued that, despite legion interlocutory applications being brought before the Court on any matter, for as long as the issues in the main suit remained undetermined, the effect of the determination of those suits does not go to the root of the substantive case. I think this would, in general, be a correct statement of legal principle – even though counsel did not, with respect, entirely succeed in showing how it did cover the specific circumstances of the present matter.

On the implication of the certificate of registration which referred to the plaintiff as wife of the defendant, counsel submitted that the defendant did have the option of registering as sole proprietor, but he had not done this. She contended: “The registration of the business in both their names was well-intentioned, to run the business together as partners and not necessarily as husband and wife”.

In reply, Mr Kamau submitted that Originating Summons under order XXXVI rule 4, is an expeditious procedure used only when issues are not in dispute. Counsel doubted that such a procedure was suitable for the present purpose, bearing in mind that several things were in dispute: the existence of the partnership; rights to partnership assets; dissolution. Counsel contended that the Originating Summons is intended for summary and ad hocdetermination of a point of law; for obtaining direction; etc – but not for bringing lengthy and disputed questions involving serious matters of law and fact. In support of this proposition counsel cited the case, Wakf Commissioners v Mohammed bin Umeija bin Abdulmaji bin Mwijabu & Another[1984] KLR 346, in which the Court of Appeal noted:

“….. Madan, J as he then was, refused to deal with that which he referred to as a mass of facts in dispute by way of Originating Summons”.

Also referred to in that case was the English case, Re Sir Lindsay Parkinson’s Trust Deed, Bishop v Smith[1965] 1 ALL ER 609, in which Buckley, J had said (p 610)

“I desire to say that in my view, clearly, proceedings by beneficiaries against trustees of a contentious nature, charging the trustees with breach of trust or with default in the proper performance of their duties, whether the matters with which the trustees are charged are matters of commission or omission, ought normally to be commenced by writ and not by Originating Summons; for in such proceedings it is most desirable that the trustees should know before trial precisely what is alleged against them. The appropriate form of proceedings therefore, in my view, are proceedings by writ in which the parties can, if they wish, seek further and better particulars of the matters alleged by their opponents, and in which there is full discovery, for where allegations of this kind are made against trustees, it is right that they should have available to them the full machinery which exists in the case of proceedings instituted by writ and conducted on pleadings, to discover precisely what charges are leveled against them.”

Counsel also cited the case, Kibutiri v Kibutiri[1983] KLR 62. In this Court of Appeal decision, the following passage in the judgment of Law, JA is relevant (p 64):

“…….the scope of an inquiry which could be made on an Originating Summons and the ability to deal with a contested case was very limited. When it becomes obvious that the issues raise complex and contentious questions of fact and law, a judge should dismiss the summons and leave the parties to pursue their claims by ordinary suit. The instant summons is very much in point; it occupied seven full hearing days, spread over three years, many witnesses were called and exhibits produced, and the hearing was followed by a long ‘judgment’ (which should have been a ruling) and a ‘decree’ (which should have been an order) the effect of which was to dissolve the partnership entirely (which was not a relief claimed in the summons) and to partition the land on which the firm carried on its farming activities amongst the two plaintiffs and the defendant. This purported partition was completely irregular

…………

The jurisdiction of a court on an Originating Summons taken out by a partner under order XXXVI rule 4 is specifically limited ……”.

From these authorities it is quite clear that elaborate and complex, contentious matters would not very well lend themselves to resolution through actions initiated by Originating Summons.

Thus counsel for the respondent has a valid point when he says:

“There are many serious and contentious issues in the present matter which could not even be the subject of disposition”.

His examples are as follows:-

(i) there is no express written or oral agreement supporting the existence of a partnership;

(ii) there is no contract or deed which implies partnership;

(iii) the plaintiff has found it convenient to imply a partnership just because there is a business name registered in which the names of both parties appear;

(iv) whereas a partnership seeks by its definition to make a profit,

• did the business in question make any profits?

• Was there a sharing formula, and was there ever any sharing at all?

• Was there any agreement on sharing?

• If the business was terminated in 1995, was any new business undertaken?

Counsel contended that since the plaintiff had only sought accounts from 1986 – 1995, she must have been aware that the partnership ceased to exist in 1995 – in which case that would be the time of accrual of the cause of action. Therefore, counsel submitted, the plaintiff was caught by the limitation period; the six-year limitation period for causes of action based on contract expired about three years ago.

I think counsel for the defendant has shown persuasively that the plaintiff’s Originating Summons suit is now time-barred. The partnership issues involved are issues in contract, and for the relevant cause of action, the limitation period is six years. All the evidence shows that if at all a partnership did exist, then even the plaintiff has acknowledged that it came to an end in 1995, in which case that is the latest date during which the cause of action would have arisen; and six years from then takes us to the year 2001. The suit was filed on 20th June, 2003 – rather too late.

More persuasive still is the propriety of such a contentious matter being brought by Originating Summons. It is clear from the relevant authorities that the Originating Summons is an expeditious procedure, designed for relatively fast relief without the complications of the procedure of the normal full trial. It should not, in general, be resorted to where the claims lack certain common bases of agreement, and where the trial process is destined to be highly contentious. The design of the Originating Summons is thus delineated in Osborn’s Concise Law Dictionary, 6th Ed (London: Sweet and Maxwell, 1976), at p 242:

“Proceedings suitable for commencement by Originating Summons are where the principal question is the construction of an Act, statutory instrument, deed, will, contract or other document or some other questions of law, and where there is unlikely to be any substantial dispute of fact.

Originating Summons issue in the Queen’s Bench Division as well as in the Chancery Division, except that claims in tort (other than trespass to land) or for fraud, infringement of patents, personal injury, and fatal accidents cases must be begun by writ…….”.

The unresolved issues in the claim that there exists a partnership which this Court should issue orders to dissolve, are so numerous that a proper suit can only be one brought by plaint; and I hold that the Originating Summons is an inappropriate way of moving the Court.

After hearing the detailed preliminary proceedings I have come to the decision that I must dismiss in liminethe plaintiff’s suit by Originating Summons dated and filed on 20th June, 2003 with costs to the defendant – for the reasons already stated herein. It is so ordered.

Dated and Delivered at Nairobi this 12th day of November 2004.

J.B.OJWANG

Ag. JUDGE