[2022] KEHC 16507 (KLR)

Watts Dynamics Limited v German African Energy Council GMBH (GAEC) & 6 others (Commercial Case 359 of 2017) [2022] KEHC 16507 (KLR) (Commercial and Tax) (9 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16507 (KLR)

Republic of Kenya

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

Commercial and Tax

Commercial Case 359 of 2017

DAS Majanja, J

December 9, 2022

Between

Watts Dynamics Limited

Plaintiff

and

German African Energy Council GMBH (GAEC)

1st Defendant

Petschow & Thiel Projektmanagement GMBH

2nd Defendant

Thika Way Investments Limited

3rd Defendant

Equinox Energy Capital Limited

4th Defendant

The Honourable Attorney General

5th Defendant

The Ministry of Energy and Petroleum

6th Defendant

County Government of Homabay

7th Defendant

Ruling

1. The application for consideration by the court is the plaintiff’s Notice of Motion dated May 31, 2022 made, inter alia, under order 8 rule 3 and 5 of the Civil Procedure Rules(“the rules’’). The plaintiff seeks leave to amend the plaint in terms of the draft of the amended plaint. The application is supported by the affidavit of Donald B Kipkorir, the plaintiff’s advocate, sworn on May 3, 2022. It is opposed by the 1st, 2nd and 3rd defendants (“the defendants”) through Grounds of Opposition and a replying affidavit their advocate, Peter Waiyaki, sworn on dated July 27, 2022.

2. In the application, the plaintiff seeks to add its director, Alex Thiru, as the 2nd plaintiff for the effective and complete adjudication of the issues in the suit. In its opposition, the defendants claim that that the proposed claim by the said Alex Thiru is time barred under the Limitation of Actions Act (chapter 22 of the Laws of Kenya). They state that the application has been brought after inexcusable and unexplained delay and is intended to delay the conclusion so the suit. They aver that the intended party does not have any interest in the subject of the suit and that the application obfuscates matters between a director and a limited liability company which are in law distinct and separate persons. The defendants contend that there are no rights against the defendants for the 35% shareholding.

3. In order to resolve the application, it is necessary to understand the background of the parties’ dispute as is apparent from the plaint dated August 30, 2017. The plaintiff claims that it conceptualized the idea of a power plant to run on hyacinth and developed the same between 1998 and 2008. After carrying out laboratory tests, it sought out partners to undertake feasibility for the Biomass Power Plaint. It provided the technical information to the 1st and 2nd defendants whereupon the formal Expression of Interest (‘’EOI’’) was lodged with the 6th defendant. In order to implement the project, the plaintiff, 1st and 2nd defendant agreed to and did incorporate the 3rd defendant as a special purpose vehicle which thereafter secured approval of the EOI from the 6th defendant.

4. The plaintiff’s complaint is that unknown to it, the 1st and 2nd defendants fraudulently incorporated and or changed the directorship of the 3rd defendant without allocation of the 35% shareholding that the parties had initially agreed upon. Further, that in February 2015, the 1st and 2nd defendants walked out on the arrangements agreed upon with the plaintiff after the 3rd defendant had obtained all the approvals and permits. It accuses the 1st and 2nd defendants of fraud and breach of contract and therefore seeks a declaration that it is a bonafide 35% shareholder of the 3rd defendant, USD 132,300,000 expected earnings from the Bomass Power Plant for 25 years, an injunction against the 5th, 6th and 7th defendants from issuing statutory and regulatory approvals, general damages for breach of contract, costs and interest.

5. The application was disposed by way of submissions which I have considered. Order 8 rule 3 and 5 of the Civil Procedure Rules empowers the court to amend the pleadings at any stage of the proceedings. In addition, and of relevance to the application is order 1 rule 10 of the rules under which the court may at any stage order that any person to substituted or added as plaintiff upon such terms as the court deems fit.

6. This issue for resolution is whether the plaintiff has made out a case for the amendment it seeks. The plaintiff’s application is not merely for amendment of the plaint; it seeks to join its director as a party to the suit. Its position is that the director had initially engaged the defendants before incorporation of the Plaintiff, a fact which it contends is not disputed. In my view, the plaintiff ought to have invoked order 1 rules 1 and 2 of the rules since the application is for joinder and that the proposed amendment is merely consequential. Nevertheless, I do not have consider this omission fatal to the application.

7. Turning to the essence of joinder of a party, inZephir Holdings Ltd v Mimosa Plantations Ltd And Others NRB HCOMM MISC APP NO. 248 of 2012 [2014]eKLR, Gikonyo J., elaborated the general principle as follows:A proper party is one who is impleaded in the suit and qualifies the thresholds of a plaintiff or defendant under order 1 rule 1 and 2 respectively, or as a third party or as an interested party and whose presence is necessary or relevant for the determination of the real matter in dispute or to enable the court effectually and completely adjudicate upon and settle all questions involved in the suit. And the court has a wide discretion to even order suo moto for a party to be impleaded whose presence may be necessary to enable the court effectually and completely adjudicate upon and settle all questions involved in the suit. Accordingly, a suit cannot be defeated for mis-joinder or non-joinder of parties.

8. The thrust of the proposed amended Plaint is that it is the plaintiff’s director who conceptualized the idea of the Biomass Power Project, negotiated for and obtained the EOI for approval as well as obtaining the land for the plant. Further, that it is the plaintiff’s director rather than the plaintiff who took all the active steps until the 3rd defendant was incorporated.

9. I have considered the application and the arguments by the parties. The application is supported by an affidavit sworn by counsel for the plaintiff. While an advocate is not strictly prohibited from swearing an affidavit on behalf of his client based on information and knowledge he has, he may not do so in case of factual and contested matters (see Kamlesh Manshuklal Damji Pattni v Nasir Ibrahim Ali and 2 Others[2005] eKLR). The deposition by Mr Donald Kipkorir does not set out the factual basis of knowledge and belief that Mr Alex Thiru is a necessary party to these proceedings bearing in mind that he is a director of the plaintiff. If the issue is whether the court will ensure the necessary and effective determination of the suit, the fact that the proposed plaintiff is a director of the plaintiff neither adds nor subtracts from the substance of the suit, as the directors effectively represent the plaintiff in the litigation.

10. The plaintiff seeks to join its director as the 2nd plaintiff to the suit on the ground that he engaged with the defendants before formation of the plaintiff. In the event the application is allowed, it constitutes a fresh cause of action by the 2nd plaintiff as the new plaintiff seeks relief on his own behalf. The only document in support of the application is the draft amended plaint. There are no documents annexed to the application that support the plaintiff’s contention regarding the involvement of its director in the subject cause of action. In considering an application for joinder and amendment, the court must be satisfied that there is sufficient material to warrant grant of the orders sought. An applicant has the burden of putting before the court sufficient material to enable the court exercise its discretion. Bare statements of fact made by the advocate on record without disclosing out the factual or material basis of the facts is insufficient to sustain this court’s discretion.

11. As the Plaint shows, the cause of action commenced between 1998 and 2008 when, according to the proposed amended plaint, the plaintiff’s director alleges that he conceptualized the project. It is in February 2015 when it is alleged that the 1st and 2nd defendants walked out of the arrangements with the plaintiff. It is these contractual arrangements that would entitle the director to his shareholding and other consequent relief. This means that under section 4(1) of the Limitation of Action Act(chapter 22 of the Laws of Kenya), the cause of action based on any contractual arrangements accrued in February 2015 and the proposed joinder ought to have been instituted within the prescribed 6-year period, that is latest by February 2021. I find therefore that the proposed claim would be statute barred.

12. While the court may allow an amendment to introduce a claim that is statute barred, I decline to exercise my discretion in the plaintiff’s favour for several reasons. First, as I have stated there is no material basis upon which the court may conclude that there is in fact a cause of action that can be sustained by the proposed plaintiff. Second, there has been undue and unreasonable delay in presenting the application given that the facts upon which the application is made are well known and are within the knowledge of the plaintiff’s director and no reasons have been furnished in the deposition to demonstrate that the delay is justified or may be excused.

13. In summary, I am not satisfied that the plaintiff has placed sufficient material before the court to enable it exercise discretion. Further, the application is not merely one for amendment, it is for joinder of an additional plaintiff who presents his own cause of action by seeking relief for his benefit. Such a claim, I hold is time barred. Since the proposed plaintiff is a director of the plaintiff, the court will still be in a position to determine the claim before it effectively.

14. I do not find any merit in the plaintiff’s application dated May 31, 2022. It is dismissed with costs to the 1st, 2nd and 3rd defendants.

DATED AND DELIVERED AT NAIROBI THIS 9TH DAY OF DECEMBER 2022. D S MAJANJAJUDGECourt assistant: Mr M OnyangoMs Anyango instructed by KTK Advocates for the plaintiff.Mr Omuganda instructed by Mboya Wang’ong’u and Waiyaki Advocates for the 1st, 2nd and 3rd defendants.