[2023] KEHC 23193 (KLR)

Shah v Shah & 2 others (Commercial Case E105 of 2022) [2023] KEHC 23193 (KLR) (Commercial and Tax) (6 October 2023) (Ruling)

Neutral citation: [2023] KEHC 23193 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Commercial Case E105 of 2022

FG Mugambi, J

October 6, 2023

Between

Nurish Chandulal Shah

Plaintiff

and

Manish Shah

1st Defendant

Kalpna Manish Shah

2nd Defendant

Vinit Manish Shah

3rd Defendant

Ruling

1. Before the court are two applications. Both applications arise from what the plaintiff alleges was a contract entered into on diverse dates between 21st January 2014 and 31st August 2018, with the defendants, who are family members. It is said to have been partly oral, written and by conduct.

2. By the contract the plaintiff advanced Kshs. 64,490,163. 34/= to the defendants. The monies would be utilized towards payment of university fees, airfare and accommodation for the 3rd defendant, a BUPA medical cover, monthly expenses and to fund the 2nd defendant’s import business. It had been agreed that the defendants would repay the loan from the proceeds of the sale of House No 24D situated on LR No 27754 Waridi Gardens Kihingo village Nairobi (the property).

3. The gravamen of the dispute is that the defendants disposed of the property without the plaintiff’s knowledge and paid to the plaintiff Kshs. 29,249,996/= leaving a balance of Kshs. 35,240,167. 34.

Application dated 29th June 2022 4. The application was brought under sections 1A, 1B and 3A of the Civil Procedure Act, Order 36 Rule 1 of the Civil Procedure Rules. It seeks to strike out the defence filed by the defendants for being a sham and a mere denial. It further prays for summary judgment against the defendants.

5. The application was opposed by the defendants who insisted that the defence raised triable issues. They denied having entered into any contract either written or oral with the plaintiff with respect to advancement of monies to the defendants. They also denied any transactions with the plaintiff or the firm of Harit Sheth Advocates in their professional capacity. In explaining the relationship, it was stated that the 1st defendant and Mr. Harit Sheth had their personal businesses where they would buy and resale property at a profit.

6. While it was acknowledged that the property subject matter of the suit was sold, the defendants state that it was sold for Kshs. 110,000,000/= whereby Kshs. 99,000,000/= was paid directly to I&M Bank and the rest utilized in transactional costs.

7. It was the defendants’ submission that they ought to be given a chance to cross examine the plaintiffs witness since the contract relied upon was oral.

Application dated 30th June 2022 8. The application was brought under Order 1 rule 10(2), Order 51 rules 3&5 of the Civil Procedure Rules, section 1A & 3A of the Civil Procedure Act, CAP 21 and all other enabling provisions of the law. It seeks to have the names of the 2nd and 3rd defendants/applicants be struck out of the suit.

9. The basis of the application was that the 2nd and 3rd defendants were not necessary parties to the suit and had not entered into any contract with the plaintiff and as such no cause of action had been disclosed against them. Further, that the 2nd defendant and 3rd defendants were the wife and son of the 1st defendant and had only been enjoined in the suit to blackmail the 1st defendant. Counsel submitted that the documents relied on by the plaintiff to prove his case did not show that the 2nd or 3rd defendants were addressed in the same and that the same correspondences had been signed or received by the 2nd and 3rd defendants.

10. The plaintiff opposed the application stating that the 2nd defendant received sums from the plaintiff through his advocates to improve her cloth importation business and for her transport and accommodation. The plaintiff submitted that the property in question was registered in the name of the 2nd defendant and she was aware that the same would be used to offset the loan. He also noted that the 3rd defendants travel, accommodation and tuition fees were covered using the money loaned, totaling to Kshs. 11,000,000/=. The plaintiff stated that in view of the above transactions, the 2nd and 3rd defendants were well aware of the debt.

Analysis 11. I have considered the pleadings, the written submissions and the authorities presented before court. Two issues arise for determination from the two applications namely;i.Whether the plaintiff has made out a case for striking out the defenceii.Whether the 2nd and 3rd defendant should be struck out from the suit.

12. On the first issue, Order 2 Rule 15 of the Civil Procedure Rules which deals with striking out of pleadings provides as follows:“At any stage of the proceedings the court may order to be struck out or amended any pleading on the ground that—a.It discloses no reasonable cause of action or defence in law; orb.It is scandalous, frivolous or vexatious; orc.It may prejudice, embarrass or delay the fair trial of the action; ord.It is otherwise an abuse of the process of the court, and may order the suit to be stayed or dismissed or judgment to be entered accordingly, as the case may be.”

13. These parameters have been a subject of judicial interpretation and are now well crystalized. In D.T. Dobie & Company Kenya Limited V Joseph Mbaria Muchina & Another [1980] eKLR, Madan JA, 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.”

14. The circumspection with which a Court must act in striking out a pleading was also emphasized in The Co-Operative Merchant Bank Ltd. V George Fredrick Wekesa (Civil Appeal No. 54 of 1999). The Court of Appeal stated as follows:“Striking out a pleading is a draconian act, which may only be resorted to, in plain cases...Whether or not a case is plain is a matter of fact...Since oral evidence would be necessary to disprove what either of the parties says, the appellant’s defence cannot be said to present a plain case of a frivolous, scandalous, vexatious defence, or one likely to prejudice, embarrass or delay the expeditious disposal of the respondent’s action or which is otherwise an abuse of the process of the court.”

15. I have considered the statement of defence filed by the defendants against the background of the law and the pronouncements as set out above. I am satisfied that the defence raises triable issues. I note that the defendants have challenged the agreement on which the plaintiff’s case lies. In order to ascertain the truth of the matter and in the interests of justice, there will be need to allow the parties to test the veracity of the evidence produced in Court. It would be draconian to set aside the defence as it would condemn the defendants unheard. I find no merit in the application and is therefore dismissed with costs.

16. On the second issue, Order 1 Rule 10 (2) of the Civil Procedure Rules gives the court the discretion to strike out a party who is not necessary in a suit. It provides that:“The court may at any stage of the proceedings, either upon or without the application of either part, and on such terms as may appear to the court to be just, order that the name of any party improperly joined, whether as plaintiff or defendants, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all questions involved in the suit, be added.”

17. In addressing this issue, the court in the case of Werrot & Company Ltd & Others V Andrew Douglas Gregory & Others, [1998] eKLR stated that:“For determining the question of who is a necessary party there are two tests;(i)there must be a right to some relief against such a party in respect of the matter involved in the proceeding in question and(ii)it should not be possible to pass an effective decree in the absence of such a party.”

18. I would consider the above requirements alongside the case of AmonvRaphael Tuck & Sons Ltd, (1956) 1 All ER 273, cited in Pizza Harvest Limited V Felix Midigo, [2013] eKLR where the Court elaborated on who a necessary party is. Devlin, J stated as such at p. 286-287:“What makes a person a necessary party? It is not of course, merely that he has relevant evidence to give on some of the questions involved; that would only make him a necessary witness. It is not merely that he has an interest in the correct solution of some question involved and has thought of relevant arguments to advance and is afraid that the existing parties may not advance them adequately … the Court might often think it convenient or desirable that some of such persons should be heard so that the court could be sure that it had found the complete answer, but no one would suggest that it would be necessary to hear them for that purpose.The only reason which makes it necessary to make a person a party to an action is so that he should be bound by the result of the action, and the question to be settled, therefore, must be a question in the action which cannot be effectually and completely settled unless he is a party.”

19. Again, drawing from the law and the decisions mentioned, in order for the court to strike out the 2nd and 3rd defendants from the suit, it must be satisfied that the plaint does not disclose a cause of action against them. I have considered the plaint dated 24th March 2022 and the plaintiffs cause of action is as against the three defendants.

20. The plaintiff alleges to have disbursed the money to all the three defendants and has attached documentation he intends to use to prove the transfer of money to the 1st, 2nd and 3rd defendants. He seeks reliefs from all the three. They will be bound by the decision of the Court and they are necessary for purposes of settling the dispute before the Court.

Determination 21. In conclusion, I find that the applications dated 29th June 2022 for striking out defence and the application dated 30th June 2022 for striking out the names of the 2nd and 3rd defendants from the suit are not merited. The two applications are hereby dismissed. No orders for costs.

DATED, SIGNED AND DELIVERED IN NAIROBI THIS 6TH DAY OF OCTOBER 2023. F. MUGAMBIJUDGE