[2022] KEHC 15216 (KLR)

Njuma v Kenya Women Microfinance Bank Ltd & another (Civil Suit 12 of 2019) [2022] KEHC 15216 (KLR) (6 July 2022) (Ruling)

Neutral citation: [2022] KEHC 15216 (KLR)

Republic of Kenya

In the High Court at Kajiado

Civil Suit 12 of 2019

SN Mutuku, J

July 6, 2022

Between

James Martin Njuma

Plaintiff

and

Kenya Women Microfinance Bank Ltd

1st Defendant

Leah Wanjiru Njuma

2nd Defendant

Ruling

1. The applicant brought this application through a notice of motion dated January 5, 2021 under section 10(2) of the High Court (Organization and Administration) Act2015 as amended by the Statute Law (Miscellaneous Amendments) Act, 2017, rule 3(2) of the High Court (Practice and Procedure) Rules part 1 vacations, section 1A, 1B and 3A of the Civil procedure Act, order 8 rule 3, order 51 rule 1 of the Civil Procedure Rules seeking orders that:i.Spent.ii.Pending the hearing and determination of this application there be a stay of proceedings in this matter.iii.Leave be granted to the 1st defendant/applicant to amend the defence and to include a counterclaim as shown in the annexed draft amended defence and counterclaim.iv.Parties be ordered to cross reference their witness statements to their paginated documents and thereafter, each party to file all pleadings and documents they intend to rely on during trial, within 21days of court order.v.The honourable court do set aside the hearing proceedings so far herein and the hearing to start de novo upon compliance with the above pretrial directions by the parties.vi.That the costs of this application be in the cause.

2. This application was supported by an affidavit sworn by Marion Wasike on January 5, 2021. It is the case for the applicant that it has become necessary to include pertinent issues missed in the earlier defence filed; that the amendment is necessary to enable the court effectively and completely adjudicate and settle all disputes involved in the suit; that the amended plaint raises grave issues of collusion and possible fraud which the bank is desirous of defending vigorously. Further that it is necessary that the 1st defendant raises a counterclaim against the debtors and chargors, who are also guarantors and indemnitors, to avoid being subjected to protracted litigation or institution of various suits over the same loan and with the same parties.

3. The applicant contends that no prejudice will be occasioned to the respondents; that no statement of agreed issues and or case management checklist has been filed/and or served upon the 1st defendant; that the 1st defendants has noted that there are some documents missing from the 2nd defendant; that the 1st defendant stands to suffer irreparable harm and prejudice if this application is not allowed.

4. In response the 2nd defendant filed a replying affidavit dated January 21, 2021. She has denied the contents of paragraph 3 of the applicants supporting affidavit. In response to paragraphs 4,5,6,7,8 she states that the matter has already proceeded to hearing and that the whole time the applicant was always ready to proceed, therefore the application is an afterthought. She states that all parties indicated that their documents were in order and the matter proceeded to hearing and that taking the suit to pre-trial stage will only delay the matter further.

5. The plaintiff/respondent filed his replying affidavit dated January 27, 2021. He has stated that the application is unmerited, frivolous and an abuse of court process brought in bad faith and aimed at delaying the suit; that the time allowed for amendment of pleadings has lapsed; that the proposed amendments are prejudicial to him and that the proposed counter claim doesn’t raise any legitimate claim against him and doesn’t qualify to be a proper counter-claim.

Submissions 6. The matter was canvassed by way of written submissions. The 1st defendants filed submissions dated July 16, 2021 in which 6 issues have been raised for determination, namely:i.Whether the application is merited.ii.Whether the proposed amendments are necessary.iii.Whether leave should be granted to include the counterclaim.iv.Whether prejudice will be occasioned to the plaintiff/respondent.v.Whether the court ought to order that parties consolidate the pleadings.vi.Who bears the costs of the application?

7. On whether the application is merited they relied on section 100 of the Civil procedure Act and also order 8 rules 3 and 18 of the Civil Procedure Rules, arguing that amendment of pleadings is allowed at any stage of the proceedings and cited Institute for Social Accountability & another -vs- Parliament of Kenya & 3 others [2014] eKLR. In this case the court stated that:“The object of amendment of pleadings is to enable the parties to alter their pleadings so as to ensure that the litigation between them is conducted, not on the false hypothesis of the facts already pleaded or the relief or remedy already claimed, but rather on the basis of the true state of the facts which the parties really and finally intend to rely on. The power of amendment makes the function of the court more effective in determining the substantive merits of the case rather than holding it captive to form of the action or proceedings.”Rule 18 of the Rules clearly stipulates that the court may permit an amendment at any stage of the proceedings. The court will normally allow parties to make such amendments as may be necessary for determining the real questions in controversy or to avoid multiplicity of suits, provided there has been no undue delay, no new or inconsistent cause of action is introduced, and no vested interest or accrued legal right is affected and that the amendment can be allowed without an injustice to the other side.”

8. It is the applicant’s argument that the delay was not deliberate; that the amendment is aimed at raising an objection and have the matter dismissed on the grounds that the accounts in this matter belong to Eupen Company, a third party, who is not part of this suit. Further that there are grave issues of collusion and fraud which go to the core of the bank’s reputation and that exposed the bank to a colossal loss of a sum of over Kshs 121,834,749. 56 and that the counter-claim is warranted.

9. On whether the amendments are necessary they relied on Eunice Chepkorir Soi -vs- Bomet Water Company Ltd[2017] eKLR and submitted that the principle of overriding objective calls upon courts to deal with cases justly and at proportionate costs which includes identifying all the issues at hand at the earliest time and avoiding unnecessary expenditure on litigation; that the amendment of its defence is necessary to include comprehensive particulars of the letter dated December 19, 2014 which is core in the determination of this matter.

10. On whether leave should be granted to include the counter-claim, it is argued that the court has power to enlarge time under order 50 rule 5 of the Civil Procedure Rules. The applicant relied on Libya Oil Kenya Limited-vs- Joel Kipkorir Siele & another [2021] eKLR and argued that the counter-claim raises genuine and arguable and bona fide triable issues.

11. On whether prejudice will be occasioned to the plaintiff, it is submitted that the respondents will have an opportunity to canvass their issues to the fullest during trial and that they stand to suffer irreparable harm and prejudice if the application is not allowed.

12. On the issue of consolidation of pleadings, it is argued that the documents are numerous and scattered and that upon diligent perusal of records there are missing documents especially from the 2nd defendant.

13. On the issue of cost, it is submitted that it is trite law that costs follow the event and relied on Jasbir Singh Rai & others -vs- Tarlochan Sing Rai & 4 others [2014] eKLR.

14. Submitting on the same issues the plaintiff submitted that although the provisions of the Civil Procedure Actand the Rules therein provide for amendment of pleadings, there has been inexplicable and inordinate delay in filing this application and that the proposed counter-claim is prejudicial to the plaintiff in that his legal rights are affected.

15. The respondent submitted that the averments made in the proposed counterclaim are an afterthought as it has taken two years to raise them. On justifying the delay, he relied on the Kassam v Bank of Baroda (Kenya) Lit[2002] eKLR, where the court stated that:“The authorities also show, that when it is said that amendment may be allowed however late, the proposed amendment may be…..a late amendment may be done, but the applicant must show why the application is made late and must satisfy the court that the delay is not deliberate.”

16. On whether the proposed amendments are necessary the respondent submitted that while leave to amend pleadings may be granted at any stage of the proceedings, it is fettered by judicial discretion as stated inElijah Kipngeno Arap Bii-vs- Kenya Commercial Bank Limited [2013] eKLR. It is argued that the oxygen principles are not meant to obstruct the course of justice and that the amendments sought should not be granted as it has been brought too late into the case and further that it is not brought in good faith. It is argued that the amendments will prejudice the respondent.

17. On whether leave should be granted to include the counterclaim they argued that the same does not raise any legitimate claim and is a result of an afterthought having been brought 2 years later.

18. On the issue of consolidation of pleadings, it is argued that the suit herein went to a pre-trial conference in accordance with order 11 of the Civil Procedure (amendment) Rules and thereafter the matter was certified ready for hearing and that the application is likely to drag the matter.

19. On the issue of costs, it is argued that costs should follow the event and be awarded to the successful litigant.

20. The 2nd defendant filed her submissions dated October 19, 2021. She submitted on two issues, namely, whether the 1st defendant is entitled to the orders sought in the application and whether the prayers for parties to consolidate pleadings should be allowed.

21. The 2nd defendant relied on Central Bank Ltd-vs- Trust Bank Ltd(2000) 2 EA 365 CAK where the court stated that:“……A party would be allowed to make such amendments of pleadings as were necessary for determining the real issues in controversy or avoiding a multiplicity of suits, provided:i.There had been no undue delay.ii.No new or inconsistent cause of action was introduced.iii.No vested interest or accrued legal right was affected.iv.The amendment could be allowed without injustice to the other side.”

22. She argued that this application was brought 2 years after pleadings were closed and therefore unfair to the parties to take them back to pre-trial stage, when all the other parties want is the matter to be expeditiously adjudicated and determined; that there has been inexplicable and inordinate delay.

23. On whether the parties should consolidate the pleadings, it is argued that the pleadings had been closed and granting this prayer would only cause unnecessary delay.

Determination 24. I have read the notice of motion application and the supporting affidavit. I have read all the submissions tendered by all parties and the intended amended defence and counterclaim. Amendment of pleadings is provided for under section 100 of the Civil Procedure Act (cap 21) laws of Kenya, which states that: -“The court may at any time, and on such terms as to costs or otherwise as it may think fit, amend any defect or error in any proceeding in a suit; and all necessary amendments shall be made for the purpose of determining the real question or issue raised by or depending on the proceeding”.

25. Further order 8 rule 3 of the Civil Procedure Rules, 2010, provide that: -“(1)Subject to order 1, rules 9 and 10, order 24, rules 3, 4, 5 and 6 and the following provisions of this rule, the court may at any stage of the proceedings, on such terms as to costs or otherwise as may be just and in such manner as it may direct, allow any party to amend his pleadings."

26. From the various cited cases it is clear to this court that amendment of pleadings should be freely allowed, if the application seeking that amendment has been brought without delay and the said application does not in any way prejudice the other party to the suit.

27. To grant or decline granting leave to amend is discretionary. To my mind that discretion is not exercised in a vacuum. It is informed by actions of the parties and the manner in which they have approached the court. A party seeking orders to amend the pleadings must satisfy certain conditions as shown in the cited authorities.

28. I have considered the arguments for and against granting the prayers sought. The applicant’s main contention is that the amendment is necessary to bring out all the triable issues so that they can be determined together. The applicant has identified one of the issues they seek to bring out as raising an objection to have the matter dismissed on grounds that the accounts in this matter belong to Eupen Company a third party, who is not a party to these proceedings.

29. I have read the intended amendments and the counterclaim. It is the case for the applicant that it intends to include comprehensive particulars of the letter of offer dated December 19, 2014 which is core to the determination of this matter and other pertinent issues.

30. The application is opposed basing on the main ground that it was brought two years late and that this is inordinate and inexplicable delay meant to prejudice the other parties. The prejudice referred to here, to my mind, is returning these proceedings to the pre-trial stage.

31. I have read the court file. I note that one witness, the plaintiff has testified. He was stepped down before cross-examination was done. These proceedings had not advanced to the stage that would prejudice the parties to an extend that an extend that cannot be mitigated or that may amount to an injustice on their part.

32. I have subjected this application to the conditions set out in the case of Central Bank Ltd v Trust Bank Ltd. In that case the court was of the view that:“The overriding consideration in applications for such leave is whether the amendments are necessary for the just determination of the controversy between the parties. Likewise mere delay is not a ground for declining to grant leave. It must be such delay as is likely to prejudice the opposite party beyond monetary compensation in costs. The policy of the law is that amendments to pleadings are to be freely allowed unless by allowing them the opposite side would be prejudiced or suffer injustice which cannot properly be compensated for in costs.”

33. In my view, the issues raised in the proposed amendments and the intended counterclaim are necessary for the just determination of the controversy between the parties. The delay of 2 years is not likely to prejudice the other parties. The plaintiff is yet to be cross-examined and where it becomes necessary he can be recalled for examination in chief before cross-examination can take place.

34. In my view, the allegations of fraud and collusion are weighty issues. It would be in the interest of justice to afford the applicant an opportunity to defend itself and raise a counterclaim to bring out all the issues between the parties for just determination of the same. I am satisfied that in the interest of justice, the prayers sought in this application ought to issue and consequently allow the notice of motion dated January 5, 2021 as follows:i.That leave do and is hereby granted to the 1st defendant/applicant to amend the defence and to include a counterclaim as shown in the annexed draft amended defence and counterclaim.ii.That the annexed draft amended defence and counterclaim be deemed as duly filed upon payment of filing fees.iii.That parties be and are hereby directed to cross reference their witness statements to their paginated documents and, thereafter, each party to file a single consolidated bundle containing all pleadings and documents they intend to rely on during the trial. This be done within 60 days of this order.iv.That, further to (iii) above, within the same period (60 days), parties shall agree on the issues for determination.v.That this matter shall proceed from where it had reached. The plaintiff is at liberty to adduce further evidence in addition to the evidence already adduced before cross-examination can be done.vi.That costs of this application shall be in the cause.

35. Orders shall issue accordingly.

DATED, SIGNED AND DELIVERED ON 6TH JULY 2022. S. N. MUTUKUJUDGE