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JudgmentBARCLAYS BANK OF KENYA LIMITED VS KOM STOKISTS AND EQUITY BANK LIMITED11 min read

BARCLAYS BANK OF KENYA LIMITED VS KOM STOKISTS AND EQUITY BANK LIMITED

High Court at Milimani High Court · · Njoki Mwangi

REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL AND TAX DIVISION
HCCOMM NO. 901 OF 2009
BARCLAYS BANK OF KENYA LIMITED.…….PLAINTIFF/RESPONDENT
-VERSUS-
GEORGE KAMAU GITHERE T/A KOM STOCKISTS………………………......………1ST DEFENDANT/APPLICANT
EQUITY BANK LIMITED……..…………2ND DEFENDANT/RESPONDENT
RULING
1. The 1st defendant/applicant filed a Notice of Motion application dated 30th November, 2021 pursuant to the provisions of Order 40 of the Civil Procedure Rules 2010, Section 3A of the Civil Procedure Act, Article 159 of the Constitution of Kenya, 2010 and all the enabling provisions of the law seeking the following orders –
i) Spent;
ii) That pending the full hearing of the current suit i.e. Nairobi HCCC (COMM) No. 901 of 2009 (Barclays Bank of Kenya v George Kamau Githere t/a KOM Stockists And Equity Bank Limited) proposed to be consolidated with suit number HCC No. Eldoret ELC No. 643/2012 (formerly Suit No. 123 of 2010) (Virginia Wanjiku Mwangi v Barclays Bank Limited, Garam Investments & George Kamau Githere) Kamau Githere) there be and is hereby issued a stay of further steps towards the hearing and the determination of the suits as proposed to be consolidated for the ends of justice; and
iii)  That there be and is hereby made an order that the intended consolidation of the two suits is not merited as the cause of action in both suits is quite different and unrelated and the parties are also different hence the same should proceed for hearing and determination separately for the ends of justice.
2. The application is premised on the grounds on the face of the Motion and is supported by an affidavit sworn by George Kamau Githere, the 1st defendant herein. In opposition thereto, the plaintiff filed a replying affidavit sworn on 7th June, 2022 by Joseph Muli, the plaintiff’s Manager Corporate Recoveries, Business Support & Corporate Recoveries Corporate Credit.
3. The instant application was canvassed by way of written submissions. The 1st defendant’s submissions dated 3rd July, 2023 were filed by the law firm of K. Moseti & Company Advocates, whereas the plaintiff’s submissions were filed by the law firm of Walker Kontos Advocates on 22nd July, 2023.
4. Mr. Getanda, learned Counsel for the 1st defendant submitted that this Court has no jurisdiction to hear land matters pursuant to the provisions of Article 162 of the Constitution of Kenya, 2010. He stated that this suit is commercial in nature involving the sale/repossession of motor vehicles, whereas Eldoret ELC No. 643 of 2012 (formerly Suit No. 123 of 2010) is a land matter hence they should not be consolidated.
5. Mr. Wafula, learned Counsel for the plaintiff submitted that Nairobi HCCOMM No. 232 of 2019 formerly Eldoret ELC No. 643 of 2012 and this suit were consolidated by the ELC Court in Eldoret on 24th September, 2019. He relied on the case of Civicon Limited v Kenya Revenue Authority & another [2014] eKLR and submitted that the orders sought in the application herein cannot be granted since the aforementioned order for consolidation was made by a Court of competent and equal jurisdiction to this Court.
6. Counsel referred to the case of Korean United Church of Kenya & 3 others v Seng Ha Sang [2014] eKLR and asserted that the consolidation of this suit with Nairobi HCCOMM No. 232 of 2019 formerly Eldoret ELC No. 643 of 2012 is proper as the two suits arose from one transaction which is the financial facility advanced to the 1st defendant and that the securities for the said facility were offered interalia by the plaintiff in Nairobi HCCOMM No. 232 of 2019 and the subject motor vehicles in this suit.
ANALYSIS AND DETERMINATION.
7. I have considered the application herein, the grounds on the face of the Motion and the affidavit filed in support thereof, the replying affidavit by the plaintiff and the written submissions by Counsel for the parties. The issue that arises for determination is whether the consolidation of Nairobi HCCOMM No. 232 of 2019 and this suit is merited.
8. In the affidavit filed by the 1st defendant, he deposed that he took a financial facility from the plaintiff in the form of an asset finance sometime in the year 2006. That thereafter, the plaintiff secured for him two trailer lorries which he was using in the normal course of his business.
9. He averred that he serviced the financial facility substantively but due to fluctuation of business, he defaulted in payment of some instalments which resulted to the plaintiff repossessing the two trailers and selling them by auction.
10.  He further averred that he later learnt that the plaintiff had also irregularly auctioned the collateral he had been issued by the plaintiff in Eldoret ELC No. 643 of 2012 to secure a loan facility with the plaintiff in a totally different transaction, and which loan account had long been settled. He deposed that as a result, the plaintiff in Eldoret ELC No. 643 of 2012 instituted the said suit against the plaintiff herein for damages.
11.  The plaintiff in its replying affidavit sworn by Joseph Muli deposed that in the year 2001, the plaintiff in Nairobi HCCOMM No. 232 of 2019 charged her parcel of land known as L.R. No. Kapsaret/Kapsaret Block 1 (Yamumbi) 661 to the plaintiff in this suit as collateral for a loan of Kshs. 1,400,000/= plus interest, fees, commissions, charges, costs and expenses advanced to the 1st defendant by the plaintiff in this suit. That Clause 11 of the aforesaid charge provided that the charge was a continuing security thus allowing the plaintiff in this suit to make further lending to the 1st defendant on the strength of the said charge.
12.  It further averred that by a guarantee dated 14th December, 2000, the plaintiff in Nairobi HCCOMM No. 232 of 2019 guaranteed the payment of all debts by the 1st defendant up to a maximum of Kshs.1,400,000/= plus interest, fees, commissions, charges and costs thereon. That the said guarantee was also a continuing security and was not to be satisfied, discharged or affected by any intermediate payment or settlement of accounts.
13.  It was stated by the plaintiff that on the strength of the aforesaid securities, the plaintiff in this suit gave the 1st defendant the following facilities; overdraft and loan of Kshs. 4,949,990.00, an overdraft facility of Kshs. 600,000/=, asset finance facilities of Kshs. 11,700,000/= and Kshs. 10,260,000/=, and an overdraft and loan of Kshs. 6,650,000/=.
14.  It was further stated that the asset finance facility of Kshs. 10,260,000/= was meant to purchase motor vehicle registration no. KAZ 835Q Renault Prime Mover, but the 1st defendant defaulted in his repayment obligations and the plaintiff in this suit realized L.R. No. Kapsaret/Kapsaret Block 1 (Yamumbi) 661. That subsequently, the plaintiff in Nairobi HCCOMM No. 232 of 2019 filed the said suit in Eldoret challenging the said realization, and the suit was thereafter transferred to Nairobi and consolidated with this suit.
15.  Mr. Muli, the plaintiff’s deponent averred that the plaintiff in this suit also sought to repossess motor vehicle registration no. KAZ 835Q Renault Prime Mover but was unable to, thus it filed the present suit. He asserted that from the foregoing, it is clear that two suits arose from the same cause of action.
Whether the consolidation of Nairobi HCCOMM No. 232 of 2019 and this suit is merited.
16.  The Supreme Court in the case of the Law Society of Kenya v Center for Human Rights & Democracy & 12 others [2014] eKLR, addressed the issue of consolidation of suits and held as follows-
“The essence of consolidation is to facilitate the efficient and expeditious disposal of disputes and to provide a framework for a fair and impartial dispensation of justice to the parties.  Consolidation was never intended to confer any undue advantage upon the party that seeks it, nor was it intended to occasion any disadvantage towards the party who opposes it.”
17.  It is not disputed that the plaintiff in Nairobi HCCOMM No. 232 of 2019 formerly Eldoret ELC No. 643 of 2012 charged her parcel of land known as L.R. No. Kapsaret/Kapsaret Block 1 (Yamumbi) 661 to the plaintiff in this suit as collateral for a loan advanced to the 1st defendant by the plaintiff in this suit. The plaintiff in this suit averred that by a guarantee dated 14th December, 2000 the plaintiff in Nairobi HCCOMM No. 232 of 2019 also guaranteed the payment of all debts by the 1st defendant up to a maximum of Kshs.1,400,000/=. It further averred that the aforesaid guarantee and Clause 11 of the charge instrument provided that the said securities were continuing securities and were not to be satisfied, discharged or affected by any intermediate payment or settlement of accounts.
18.  It was stated by the plaintiff in this suit that on the strength of the aforesaid securities, it advanced to the 1st defendant a number of financial facilities including an asset finance facility of Kshs. 10,260,000/= to purchase motor vehicle registration No. KAZ 835Q Renault Prime Mover, but the 1st defendant defaulted in his repayment obligations and it realized L.R. No. Kapsaret/Kapsaret Block 1 (Yamumbi) 661 leading to the filing of Nairobi HCCOMM No. 232 of 2019 by the plaintiff therein to recover damages for an alleged illegal and/or fraudulent sale of the said property by the plaintiff in this suit, and in turn, the plaintiff in this suit filed this suit since it was unable to repossess motor vehicle registration no. KAZ 835Q Renault Prime Mover from the defendant after he defaulted in his loan repayments.
19.  Given the said circumstances, I am persuaded that this suit and Nairobi HCCOMM No. 232 of 2019 formerly Eldoret ELC No. 643 of 2012 arise from the same cause of action. In the case of Nyati Security Guards & Services Ltd v Municipal Council of Mombasa [2000] eKLR, the Court when dealing with an application for consolidation of suits held thus-
“The situations in which consolidation can be ordered include where there are two or more suits for matters pending in the same court where
a) Some common questions of law or fact arises in both or all of them;
b) The rights or reliefs claimed in them are in respect of the same transactions;
c) For some other reasons, it is desirable to make an order for consolidating them.”
20.  From the foregoing, this Court is of the considered view that in order for the Court to determine whether the sale of the plaintiff’s parcel of land in Nairobi HCCOMM No. 232 of 2019 was legal and/or regular, the Court will have to look at the charge instrument and the letter of offer dated 5th September, 2007 which enabled the plaintiff in this suit to advance the 1st defendant Kshs. 10,260,000/= to purchase motor vehicle registration No. KAZ 835Q Renault Prime Mover. Therefore, it is evident that there exists a common question of law and fact in this suit and in Nairobi HCCOMM No. 232 of 2019, and the reliefs claimed in the two suits are in respect of the same transactions.
21.  Consequently, this Court finds that the consolidation of Nairobi HCCOMM No. 232 of 2019 and this suit is not only proper but will also facilitate the efficient and expeditious disposal of the disputes between the parties herein. The 1st defendant’s submission that Nairobi HCCOMM No. 232 of 2019 is a land matter thus this Court has no jurisdiction to hear and determine it pursuant to the provisions of Article 162 of the Constitution of Kenya, 2010 is misguided. The Court of Appeal in the case of Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others [2017] eKLR, held as hereunder in respect to a similar issue –
“By definition, a charge is an interest in land securing the payment of money or money’s worth or the fulfillment of any condition (see Section 2 of the Land Act). As such, it gives rise to a relationship where one person acquires rights over the land of another as security in exchange for money or money’s worth. The rights so acquired are limited to the realization of the security so advanced (see Section 80 of the Land Act). The creation of that relationship therefore, has nothing to do with use of the land (as defined above). Indeed, that relationship is simply limited to ensuring that the chargee is assured of the repayment of the money he has advanced the chargor…
…the assertion that a charge constitutes use of land within the meaning of Article 162 of the Constitution fails.”
22.  Nairobi HCCOMM No. 232 of 2019 was instituted as a result of the plaintiff in this suit exercising its statutory power of sale over all that property known as L.R. No. Kapsaret/Kapsaret Block 1 (Yamumbi) 661 belonging to the plaintiff therein. The said property had been offered as security for a financial facility advanced to the 1st defendant by the plaintiff in this suit. It is not disputed that there is no contest on the use, occupation of, and title to the said parcel of land in Nairobi HCCOMM No. 232 of 2019. In the end, this Court finds that the dispute between the parties in Nairobi HCCOMM No. 232 of 2019 falls within the purview of this Court’s jurisdiction as opposed to that of the Environment and Land Court.
23.  The above notwithstanding, the Court in Nairobi HCCOMM No. 232 of 2019 formerly Eldoret ELC No. 643 of 2012 on 24th September, 2019 made an order whose effect was transferring the said suit to Nairobi for consolidation with this suit. The Court further held that the issue of which file will be the lead file was to be agreed on before the Trial Court. Since a Court of competent and equal jurisdiction to this Court had already made an order for consolidation of the aforementioned suits, the 1st defendant’s instant application amounts to asking this Court to sit on appeal of an order made by a Court of competent and equal jurisdiction to one, which is an abuse of the Court process.
24.  The upshot is that the 1st defendant’s application dated 30th November, 2021 is not merited and it is hereby dismissed with costs to the plaintiff.
It is so ordered.
DATED, SIGNED and DELIVERED at NAIROBI on this 19th day of December, 2023. Ruling delivered through Microsoft Teams Online Platform.
NJOKI MWANGI
JUDGE
    In the presence of:
    Mr. George Odera h/b for Mr. Paul Wafula for the plaintiff in HCCOMM No. 
    901 of 2009 and the defendant in HCCOMM No. 232 of 2019
    Ms Otieno h/b for Mr. Olubayi for the plaintiff in HCCOMM No. 232 of
    2019
    Mr. Moseti h/b for Mr. Getanda for the 1st defendant in HCCOMM No. 901
    of 2009
    Ms. B. Wokabi – Court Assistant.