[2022] KEHC 16368 (KLR)

Patel v Wakhungu (Civil Case E212 of 2022) [2022] KEHC 16368 (KLR) (Commercial and Tax) (7 October 2022) (Ruling)

Neutral citation: [2022] KEHC 16368 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Case E212 of 2022

DAS Majanja, J

October 7, 2022

Between

Sundip Kumar Jagdishroy Patel

Plaintiff

and

Grace Sarapay Wakhungu

Defendant

Ruling

1. Before the court for consideration are two applications by the parties seeking to strike out each other’s respective pleadings under order 2 rule 15 of the Civil Procedure Rules.

2. The plaintiff’s application is dated August 2, 2022 and is supported by plaintiff’s undated affidavit. The defendant’s application is dated September 15, 2022. The parties agreed that the applications be heard together and that they be deemed as a response to each other.

3. In order to deal with the application, an appreciation of the facts as is evident from the pleadings is necessary.

4. The plaintiff’s case is set out in the plaint dated June 10, 2022. The plaintiff states that the defendant was introduced to him in 2004 and in the same year she approached him to assist her with a loan to finance a government tender. He claims that he advanced the loan on agreed terms as to the period of payment and interest but that despite the agreement, the defendant did not repay the money lent.

5. The plaintiff avers that in 2012, the defendant was charged with others by the Ethics and Anti-Corruption Authority for their role in maize export supplies to the National Cereals and Produce Board (NCPB) via a company called Erad Supplies Limited. When the plaintiff demanded the money, the parties engaged in negotiations which resulted in a written agreement dated May 3, 2017 in which the defendant stated that she owed Kshs 179,530,246. 00 of which Kshs 90,530,246. 65 was to be paid in 10 installments between May 5, 2017 and January 30, 2018. It was agreed that the balance of Ksh 89,000,000. 00 was to be paid out of the account of Erad Supplies Limited once the case surrounding it was finalized with a guarantee that if the same was not effected on January 30, 2018, the defendant would undertake to pay the amount through her sources as per the agreed terms.

6. The plaintiff avers that the agreement was later accompanied by the defendant’s handwritten letter of apology dated June 9, 2017 for failing to adhere to the payment terms making extensive reference to their friendship. She also confirmed to him by telephone that she would pay some amount by May 20, 2022.

7. The plaintiff therefore prays for judgment in the sum of Kshs 179,530,246. 50 with interest at court rates.

8. In her statement of defence dated July 19, 2022, the defendant denied the claim. Although she admits that she knew the plaintiff, she denies that the plaintiff advanced her any monies as alleged or at all and in any case, such lending is not supported by any written agreement.

9. As regards the contract for the supply of white maize to the NCPB by Erad Supplies Limited, she states that it was frustrated by supervening events not caused by the defendant. She states that in 2013, Erad Supplies Limited was awarded Kshs 297,086,505. 00 against NCPB being the cost of storage of 40,000 metric tonnes of white maize incurred by Chelsea Freight. The arbitral award was adopted as a judgment by the High Court. Following the award, criminal charges were preferred against the defendant and others in Milimani Anti-Corruption Case No 31 of 2018,Republic v Grace Sarapay Wakhungu. After a full trial, the defendant was found guilty.

10. Notwithstanding the conviction, the defendant denies that she owes the plaintiff Kshs 179,530,246. 50 or that she admitted that she would pay the sum as alleged. She avers that the plaintiff has laid down a scheme for unjust enrichment and purports to enforce the same without any colour of right.

11. The defendant pleads that the plaintiff’s cause of action is time barred under section 4(1)(a) of the Limitation of Actions Act (chapter 22 of the laws of Kenya) and section 24 thereof does not apply to the suit. She avers that the court lacks jurisdiction and the suit should be dismissed.

12. Turning to the plaintiff’s application, it is grounded on the fact that the defendant has admitted the debt and in view of the continued admission of the debt, the claim is not time barred particularly in view of the written acknowledgment by the defendant dated May 3, 2017.

13. In her application, the defendant contends that the plaint as presented arises from an illegal contract that is a well-orchestrated scheme for unjust enrichment. It invokes the principle of ex turpi causa non oritur actio; that no court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal if the illegality is duly brought to the notice of the court, and if the person invoking the aid of the court is himself implicated in the illegality. The defendant further states that the suit does not disclose any cause of action as there is no letter of credit evidencing the loan. She claims that the suit is weak and is beyond redemption and is incurable by amendment and no amendment can inject life into it.

14. In considering the applications, the court is guided by well settled principles. The power of the court to strike out a claim must be exercised with great circumspection and in clear and obvious cases. Further, where the claim can be saved by amendment, the court may grant leave. This principle is encapsulated in the following observation by the Court of Appeal in DT Dobie & Company (Kenya) Ltd v Muchina [1982] KLR 1 where it stated as follows:"No suit ought to 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 suit shows a 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 the full facts of a case before it."

15. From the pleadings on both sides, both parties admit that they were in some form of relationship. The plaintiff has produced a written payment agreement dated May 3, 2017 signed by the plaintiff and the defendant titled “Payment agreement between Mr Sundip S Patel And Mrs Grace Sararay Wakhungu.” In the agreement, the plaintiff agrees to pay the defendant Kshs 90,530,246. 65 in installments and the balance of Kshs 89,000,000. 00 on a later date. Further to the agreement, the parties exchanged correspondence in the form of letters and telephone messages over the matter tending to confirm that indeed there was an agreement.

16. From the pleadings there are two issues for determinations. The first is whether the agreement is an illegal agreement. The defendant argues that the agreement is implicated by illegal conduct and is intended to unjustly enrich the plaintiff. On his part, the plaintiff asserts that the parties entered into a lending legal agreement which the court must enforce. On this issue, the question arises whether the agreement between the plaintiff and the defendant is itself illegal or whether the action by the defendant in Erad Supplies Limited is a matter which concerned the defendant and third parties. In my view, the issue of illegality is a question of fact and cannot be determined without taking evidence.

17. The second issue is whether the suit is statute barred under section 4(1) of the Limitation of Actions Act. In response to this defence, the plaintiff states that the debt was acknowledged in writing by the agreement dated May 3, 2017. Whether the agreement and subsequent communication on the matter amounts to acknowledgements under section 23(3) of the Limitation of Actions Act is a matter of evidence.

18. For the reasons I have given, I find that there are triable issues that should be settled at the trial. I decline to strike out the plaint and the statement of defence. Consequently, I dismiss the plaintiff’s application dated August 2, 2022 and the defendant’s application dated September 15, 2022. There shall be no order as to costs.

DATED AND DELIVERED AT NAIROBI THIS 7TH DAY OF OCTOBER 2022. D. S. MAJANJAJUDGECourt Assistant: Mr M. OnyangoMr Wambugu instructed by Phillip Henry Associates Advocates for the Plaintiff.Mr Musyoka instructed by Okubasu, Munene and Kazungu Advocates LLP for the Defendant