https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12121

 **REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **COMMERCIAL AND TAX DIVISION** **HCCOMM NO. E592 OF 2023** **PRODIGY PROPERTIES LIMITED……………………………………..……PLAINTIFF** **-VERSUS-** **THE CO-OPERATIVE BANK OF KENYA LIMITED……………….……DEFENDANT** **-AND-** **MUTEITHIA KIBIRA ADVOCATES LLP………...…………………..……..3RD PARTY** **RULING** **Introduction** 1. For determination is the Notice of Motion dated 7th June 2024 filed by the Third Party/Applicant, brought under Order 2 Rule 15(b), (c) and (d), Order 51 Rules 1 and 3 of the Civil Procedure Rules and Article 159(2)(d) of the Constitution of Kenya, 2010. 2. The Applicant seeks two substantive orders: *first*, that the Third-Party Notice dated 27th March 2024, taken out against it by the Defendant, **The Co-Operative Bank of Kenya Limited** (“the Bank”), be struck out; and *second*, that the costs of the Application, as well as the costs on the Third-Party Notice, be borne by the Bank. 3. The Application is opposed by the Bank, through the Replying Affidavit of its Legal Officer, John A. Nono, sworn on 23rd July 2024, and written submissions dated 30th July 2024. The Plaintiff, Prodigy Properties Limited, though on record and duly served, filed no response of its own and has not participated in the Application. **Background** 1. The dispute traces back to a mortgage finance facility of Kshs. 350,000,000/- advanced by the Bank to the Plaintiff in 2010 for a real estate development, secured by legal charges over LR Nos. 12715/515 and 12715/516. 2. By a letter dated 28th February 2012, the Bank instructed the Applicant to act in the transaction, a role that came to include the release and handling of the original titles for purposes of registering partial discharges of charge and leases as the residential units developed on the land were progressively sold to various buyers. 3. It is common ground that Title No. 12715/515 has long since been discharged and delivered to the Plaintiff. The record shows that the Applicant forwarded both original titles to the Plaintiff’s advocates, Messrs Kimondo Gachoka & Co. Advocates (“Kimondo Gachoka”), as far back as March 2012; that the Bank thereafter discharged the charge over Title No. 12715/515 directly through Kimondo Gachoka; and that the Plaintiff collected that discharged title from its own advocates in August 2014, without any recourse whatsoever to the Applicant. 4. Title No. 12715/516, the subject of the present suit, remained charged, the Plaintiff having elected to retain the security in anticipation of further borrowing. Its original title likewise remained with Kimondo Gachoka for over a decade – save, on the Applicant’s account, for a brief interlude of some five months between mid-June 2023 and 28th November 2023, when it was forwarded to the Applicant pending settlement of professional fees, before being returned to Kimondo Gachoka. 5. The Plaintiff’s case in the substantive suit is that, notwithstanding full settlement of its indebtedness, the Bank has failed and/or neglected to discharge Title No. 12715/516, thereby occasioning it loss for which it claims special damages and consequential orders. In its Statement of Defence, the Bank pleaded that its failure to discharge the title is attributable to the fact that the title is held by the Applicant as lien over unpaid professional fees, and that the Applicant ought to be joined to explain this retention and to indemnify the Bank for any liability that may ultimately be found against it. It is on that footing that the Bank took out the impugned Third-Party Notice dated 27th March 2024. 6. Aggrieved, the Applicant now moves to strike out that Notice, principally on the ground that its factual premise – that the Applicant retains the title as lien – is demonstrably false, and was known by the Bank to be false at the time the Notice was taken out. **The Applicant’s Case** 1. The Applicant’s case, as developed in its Supporting Affidavit sworn by S. Muteithia Kibira, its Submissions and Further Submissions, is that the Third-Party Notice is scandalous, frivolous, vexatious and an abuse of the process of the Court. 2. It contends, first, that both the Plaintiff and the Bank have at all material times been aware that Title No. 12715/516 has, save for the brief interlude in 2023, remained in the custody of Kimondo Gachoka, the Plaintiff’s own advocates, and not the Applicant, a fact borne out by a documented chain of correspondence: the Applicant’s letter of 8th March 2012 forwarding the titles to Kimondo Gachoka; the Bank’s own email of 25th May 2023 to Kimondo Gachoka inquiring whether the title was in their custody; Kimondo Gachoka’s letter of 14th June 2023 confirming that it was; the Applicant’s letter of 28th November 2023 returning the title to Kimondo Gachoka; and, critically, the Applicant’s own email of the same date notifying the Bank that the title had been so returned. 3. Secondly, the Applicant contends that the question of who bears liability for its professional fees in respect of the transaction was conclusively determined by this Court in Milimani ELC Miscellaneous Application No. 38 of 2014, which held the Bank – not the Plaintiff – solely responsible for payment. That decision has never been appealed. The Applicant adds that it has since sued the Bank for those very fees in Milimani CM COMMSU Case No. E970 of 2023, and obtained judgment in default of defence, a fact which it contends makes it perverse for the Bank now to assert an indemnity claim running the other way. 4. Thirdly, the Applicant contends that discharge of a charge is an act of the chargee alone, requiring neither the consent nor the participation of the Applicant, so that the pendency of the fee dispute affords no legal excuse for the Bank’s failure to discharge the title. Fourthly, it contends that no demand or notice of intention to sue preceded the Notice, and that a simple inquiry would have revealed the true position. On this basis, the Applicant urges that the Notice serves no purpose beyond vexing an advocate who is, if anything, a judgment-creditor of the Bank on the self-same fee question, and that it ought to be struck out with costs. **The Bank’s Case** 1. The Bank’s response, filed through the Replying Affidavit of John A. Nono and the accompanying submissions, is comparatively narrow. It avers that the Applicant “admitted having Title LR No.12715/516 in their possession” and confirmed, by an email of 15th June 2023, that it would release the title upon settlement of legal fees. 2. It maintains that the Plaintiff’s claim discloses special damages arising from non-discharge of the title, that the Applicant is a necessary party to explain why it continues to retain the title if fees were indeed cleared, and that the Applicant ought to indemnify the Bank for any liability found. 3. It further avers, in relation to the fee dispute, that it was never a party to the Applicant’s earlier Miscellaneous Application, and that it has since applied to set aside the default judgment entered against it in CMCC No. E970 of 2023 on jurisdictional grounds, which application remains pending. 4. Counsel for the Bank places central reliance on the principle that a third-party notice ought not to be struck out where the third party’s dispute is intertwined with the main suit, invoking the Court of Appeal decision in *Kenya Wine Agencies Limited v Technomatic Limited & another [2014] eKLR*, where the Court of Appeal, upholding a High Court refusal to strike out third-party proceedings, is recorded as having found that the relevant claim was *“intertwined with the disputes between the appellant and the 2nd respondent”*, and that no prejudice arose from allowing the third-party proceedings to continue. 5. Counsel also cites *Hass Petroleum (K) Limited v Iota Engineering and Construction Limited; White Lotus Projects Limited (Third Party) [2021] eKLR*, and the passage from *Kenya Commercial Bank Limited v Suntra Investment Bank Limited [2015] eKLR* cited with approval therein, to the effect that *“a third party is enjoined in a suit at the instance of the Defendant”* through the procedure in Order 1 Rules 15 to 22 of the Civil Procedure Rules, and that liability as between the defendant and the third party is a matter properly resolved between them once the court is satisfied a proper question falls to be tried. **Issues for Determination** 1. Having considered the Application, the rival affidavits, the annexures thereto and the submissions of the parties, the Court identifies the following issue as dispositive of the Application: 1. ***Whether the Third-Party Notice dated 27th March 2024 is scandalous, frivolous, vexatious and/or an abuse of the process of the Court within the meaning of Order 2 Rule 15(1)(b), (c) and (d) of the Civil Procedure Rules, such that it ought to be struck out; and, if so, on what terms as to costs.*** **Analysis and Determination** 1. The starting point must be the purpose and limits of third-party procedure. Order 1 Rule 15 of the Civil Procedure Rules permits a defendant to issue a third-party notice where the third party is, in substance, (a) a person from whom the defendant claims contribution or indemnity; (b) a person entitled to some relief or remedy relating to or connected with the original subject matter, and substantially the same as some relief claimed by the plaintiff; or (c) a person against whom a question or issue substantially the same as that between the plaintiff and defendant ought properly to be determined. 2. The procedure exists, as the Court held in **Kenya Commercial Bank Limited v Suntra Investment Bank Limited [2015] eKLR**, to enable a defendant to bring in, *“a third party … enjoined in a suit at the instance of the Defendant”*, through the structured procedure of Order 1 Rules 15 to 22, so that liability between defendant and third party may be resolved once the court is satisfied that a proper question falls to be tried between them. 3. It is, in other words, a mechanism for avoiding multiplicity of suits over genuinely connected claims, not a licence to draw a stranger, or a party with no rational stake in the outcome, into litigation merely because it once had some association with the underlying transaction. 4. Equally settled is the standard governing an application, as this one is, to strike out a pleading (which, for present purposes, includes a third-party notice) under Order 2 Rule 15(1)(b), (c) and (d). The jurisdiction is one of the most far-reaching available to a court short of trial, and Kenyan courts have, since **D.T. Dobie & Company (Kenya) Limited v Joseph Mbaria Muchina & Another [1982] KLR 1**, consistently insisted that it be exercised with restraint. Madan JA’s guidance, that the power is to be exercised only *“in plain and obvious cases and the jurisdiction exercised sparingly and with care”*, remains the touchstone: a claim will only be struck out where it is so weak, on the material properly before the court, that it is beyond redemption and no amendment or evidence could rescue it. 5. It is equally settled, however that this restraint operates differently depending on the ground invoked. Under Order 2 Rule 15(2), no evidence is admissible where a pleading is impugned solely under paragraph (a) of subrule (1), for want of a reasonable cause of action apparent on its face; but that evidentiary bar does not extend to applications under paragraphs (b), (c) and (d), which the Applicant invokes here. 6. The Court is therefore not confined to the four corners of the Third-Party Notice; it is entitled, indeed obliged, to examine the affidavit evidence placed before it to determine whether the Notice is scandalous, frivolous, vexatious, or an abuse of process. 7. It is against that backdrop that the Bank’s reliance on Kenya Wine Agencies and the associated authorities must be tested. Those authorities undoubtedly state good law: where a third party’s dispute with the defendant is genuinely bound up with the facts giving rise to the plaintiff’s claim, a court will ordinarily decline to pre-empt that dispute by striking out the third-party notice, preferring instead to let the question of liability proceed to trial or to directions under Order 1 Rule 22. 8. The question, however, is not whether the Applicant was ever connected to the transaction but whether the specific claim for indemnity pleaded against it in the Notice, tested against the material properly before this Court, discloses a rationally arguable basis. It is on this narrower question that the Bank’s case runs into difficulty. 9. Two planks support the Third-Party Notice, on the Bank’s own pleaded case: first, that the Applicant is retaining Title No. 12715/516 as lien over unpaid fees and must be made to explain that retention; and second, that the Applicant ought to indemnify the Bank for any liability arising from the delay in discharging the title. Each falls to be examined in turn. 10. On the first, the Bank’s Replying Affidavit rests entirely on a single document: an email of 15th June 2023 in which the Applicant told the Bank’s legal officer that Title No. 12715/516 was *“in our possession”* and offered to release it upon settlement of fees. 11. Standing alone, that email might well found a reasonable belief, as at June 2023, that the Applicant held the title. But it does not stand alone. The Applicant’s own account places that email in a fuller context: the title had been forwarded to the Applicant only shortly before, on or about 14th June 2023, by Kimondo Gachoka, who had held it since March 2012; the Applicant held it for some five months; and on 28th November 2023 it returned the title to Kimondo Gachoka under cover of a letter received and stamped by that firm, and notified the Bank of that very fact by email the same day. 12. That the Bank received this notification is not seriously in dispute: the Applicant’s Supporting Affidavit, sworn and filed on 7th June 2024 exhibited both the letter and the notifying email. Yet the Replying Affidavit is silent on this correspondence. 13. It neither disputes receipt of the 28th November 2023 email, nor offers any competing account of the title’s whereabouts as at the date the Third-Party Notice was issued some four months later, on 27th March 2024. Selective reliance on a superseded email, in the face of a later, more specific and unrebutted communication placing the title back with the Plaintiff’s own advocates well before the Notice issued, cannot found a rationally arguable claim that the Applicant was, as at the date of the Notice, retaining the title. 14. It is trite that at the interlocutory stage a court must be slow to resolve genuinely disputed questions of fact on affidavit, for that is properly the province of a trial. But this is not such a case. The Bank has not filed a shred of contrary evidence to place the custody of the title in genuine dispute; it has simply not engaged with the Applicant’s documentary account at all. 15. Where one party’s narrative is built on a document superseded by later, more specific correspondence that the opposing party had in hand and chose not to answer, the court is not embarking on a trial of disputed fact by saying so, it is simply reading the record as it stands. 16. On that record, the premise that the Applicant retains the title as lien is not merely weak; it is affirmatively contradicted by evidence the Bank itself received and has not challenged. 17. The second plank fares no better, and for an independent reason. The question of who bears liability for the Applicant’s professional fees on this very transaction is not, on this record, an open one. 18. It was determined by this Court in Milimani ELC Miscellaneous Application No. 38 of 2014 to which, on the Bank’s own admission in its Replying Affidavit, it was a party, where it was held that the Bank, and not the Plaintiff, was solely liable for those fees, there being no retainer between the Applicant and the Plaintiff. 19. That determination has never been appealed. The Applicant has since sued upon it, obtaining default judgment against the Bank for the very fees in Milimani CM COMMSU Case No. E970 of 2023. A defendant is, of course, ordinarily entitled to have questions connected with a plaintiff’s claim tried once, and Order 1 Rule 15 exists precisely to further that end; but it cannot be a legitimate use of third-party procedure to re-open, in the guise of an indemnity claim, a question of liability for fees already finally determined against the party seeking to reopen it, and by the very court asked to hear the fresh notice. 20. To permit that would offend the policy underlying Section 7 of the Civil Procedure Act and the broader doctrine against re-litigation of settled issues, and would itself constitute an abuse of the process the third-party procedure is meant to serve, not undermine. 21. There is a further, more prosaic difficulty with the Notice which reinforces this conclusion rather than standing alone: discharge of a legal charge is an act of the chargee. Nothing on this record suggests that the Bank required the Applicant’s consent, involvement, or even physical custody of the title, to execute and register a discharge, a proposition made the more compelling by the undisputed fact that the Bank discharged the identical form of charge over Title No. 12715/515 by dealing directly with Kimondo Gachoka, without any recourse to the Applicant at all. 22. If the Bank could discharge one title without the Applicant’s involvement, it is not readily apparent, and the Bank has not explained, why the Applicant’s alleged possession of the second title should stand as any obstacle to discharging that one too. 23. The Applicant’s further complaint, that no demand or notice of intention to sue preceded the Notice, adds little of independent legal weight; the Civil Procedure Rules do not make such a demand a jurisdictional precondition to third-party proceedings. But it is not irrelevant either: taken together with the Bank’s failure to make the simplest of inquiries of the Applicant, or indeed of Kimondo Gachoka, before dragging an advocate before this Court, it colours the character of the Notice as one issued in haste, on a premise the Bank’s own subsequent silence in the face of contrary correspondence has done nothing to dispel. 24. Drawing the threads together, this is not a case, as in **Kenya Wine Agencies Limited v Technomatic Limited & another [2014] eKLR** or **Hass Petroleum (K) Limited v Iota Engineering and Construction Limited; White Lotus Projects Limited (Third Party) [2021] eKLR,** where the third party’s claim to be excused was genuinely contested on the papers, such that only a trial, or directions under Order 1 Rule 22, could fairly resolve it. It is, rather, one of those comparatively rare instances contemplated in **D.T. Dobie(supra)** where the claim against a party is, on a fair reading of the whole of the material properly before the Court so lacking in any rational foundation that allowing it to proceed to trial would serve no purpose beyond visiting needless cost, delay and inconvenience on a firm of advocates who, far from owing the Bank anything, hold an unsatisfied default judgment against it on the identical fee question. 25. A third-party notice founded on a premise contradicted by the issuing party’s own unanswered correspondence, and on a fee dispute already finally decided against that party, is not a notice raising a genuine question of contribution or indemnity; it is, within the meaning of Order 2 Rule 15(1)(b), (c) and (d), scandalous, frivolous, vexatious and an abuse of the process of this Court. **Disposition** 1. For the foregoing reasons, the Court finds that the Notice of Motion dated 7th June 2024 is merited and accordingly makes the following orders: 1. The Notice of Motion dated 7th June 2024 is hereby allowed. 2. The Third-Party Notice dated 27th March 2024 issued by the Defendant/1st Respondent against the Third Party/Applicant is hereby struck out. 3. The costs of this Application and the costs occasioned by the Third-Party Notice and proceedings shall be borne by the Defendant. It is so ordered. **DATED, SIGNED AND DELIVERED AT NAIROBI THIS 30th DAY OF JULY 2026.** **MURUNGA, J** *Delivered on virtual platform in the presence of:* *Ms Binah h/b Ngaruiya for the Applicant* *Ekisa for the Defendant* *Ms Nderitu for the Third Party* *Kevin Babu - Court Assistant*