1. Before me for determination is the Notice of Motion Application dated 30th July 2024 filed pursuant to Order 1 Rule 10(2), Order 51 of the Civil Procedure Rules, Section 1, 1A, 1B, 3, and 3A of the Civil Procedure Act by the 2nd and 3rd Defendants seeking to have their names struck out from the proceedings.
2. The grounds of the application are that by a Plaint dated 6th October 2021, the Plaintiff wrongly sued the Applicants as the 2nd and 3rd Defendants. The Applicants maintained that they are improperly enjoined to the Suit since they have a separate and distinct legal personality from BY GRACE FARM FEEDS, the 1st Defendant herein, and that they cannot be held liable for the liabilities incurred by the company.
3. The Application is further supported by the affidavit sworn on 30th July 2024 by Patrick Kithuka Mailang’a, the 2nd Defendant herein. In the affidavit, the 2nd defendant depones that both he and the 3rd Defendant are merely directors of the 1st Defendant company against which the Plaintiff herein has a claim.
4. Mr. Mailang’a asserted that from the plaintiff’s plaint dated 6th October 2021 and documentation in support thereof, it is clear that the transaction from which the dispute arose was purely one between the Plaintiff and the 1st Defendant. That the 1st Defendant, being a separate legal entity, no liability ought to attach to the Applicants herein.
5. The Applicant therefore urged this court to find in their favour and have their names struck out from these proceedings.
6. The Plaintiffs/Respondents opposed the Application vide the affidavit of Peter Ndirangu, a director of the 1st Plaintiff/Respondent, sworn on 30th January 2025.
7. In the affidavit, the Mr. Ndirangu deponed that they filed the instant suit against the Defendants to recover debt arising from the Supply Chain Finance Credit Facility Agreement dated 27th March 2018, by which the 2nd Plaintiff/Respondent agreed to advance to the 1st Defendant a credit facility of a maximum aggregate principal sum of Kenya Shillings Thirty Million (Kes. 30,000,000).
8. According to the Plaintiffs, the subject agreement was duly executed by the 2nd and 3rd Defendants/Applicants as directors of the 1st Defendant, confirming acceptance of the terms therein.
9. The Plaintiffs asserted that in addition to the Supply Chain Finance Credit Facility Agreement between the 2nd Plaintiff and the 1st Defendant, the Applicants in their personal capacity executed the Deed of Guarantee and Indemnity dated 4* May,2018, which spells out their obligations as guarantors, particularly clause 24 which enjoins the Applicants to jointly and severally make good the advanced credit facilities on behalf of the 1st Defendant in the event of a default.
10. The application was canvassed by way of written submissions. The Applicants filed joint submissions dated 4th March 2025. The Respondent’s submissions is dated 6th March 2025.
Analysis and determination:
11. I have considered the application, the replying affidavit, and submissions filed by the parties in support of their respective positions. The only issue for determination is whether the 2nd and 3rd Defendants have made a case to have their names struck from the proceedings.
12. Order 1 Rule 10 (2) of the Civil Procedure Rules provides as follows:-
“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.”
13. The Court in the case of Werrot & Company Ltd & Others V Andrew Douglas Gregory & Others, [1998] eKLR addressed the issue 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.”
14. In Pizza Harvest Limited V Felix Midigo, [2013] eKLR the Court citing Delvin, J. in Amon v Raphael Tuck & Sons Ltd (1956) 1 All ER 273, stated as follows on the subject:
“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.”
15. In the present case, I note from the pleadings and documents on record that the dispute has its basis in a Supply Chain Finance Credit Facility Agreement dated 27th March 2018, wherein the 1st Respondent agreed to extend a credit facility of Kshs. 30,000,000/- to the 1st Defendant. The principal amount advanced together with interest accrued was to be due on or before the lapse of 90 days from the date when the Respondents finance the invoices.
16. Further, it is also evident from the record that by a Deed of Guarantee and Indemnity dated 4th May, 2018 the Applicants jointly and severally guaranteed, in to pay the advanced credit facility together with all accrued interests, commissions, penalties and charges on behalf of the 1st Defendant on demand by the Respondents.
17. There was a default on the part of the Applicants, and the Respondents issued a demand letter dated 4th August, 2020, recalling the entire loan facility. The Applicant still failed to honour the demand letter, which then led to the instant suit.
18. The 2nd and 3rd Defendants (Applicants herein) having signed a Deed of Guarantee and Indemnity dated 4th May, 2018, in which they individually and jointly guaranteed the payment of the amounts advanced to the 1st Defendant by the Respondents under the Supply Chain Finance Credit Facility Agreement dated 27th March 2018, this Court agrees with the Respondent’s submissions that the Applicants herein (2nd and 3rd Defendants) are necessary parties in the instant suit.
19. The upshot is that the 2nd and 3rd Defendant’s application dated 30th July 2024 fails and is hereby dismissed with costs to the Respondents.
20. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
5TH DAY OF JUNE, 2025
ADO MOSES
JUDGE
In the Presence of:
Moses – C/A
Ms. Langat h/b for Omiti……………..for Defendant
Yala h/b for Nyaosi………….............for the plaintiff
2. The grounds of the application are that by a Plaint dated 6th October 2021, the Plaintiff wrongly sued the Applicants as the 2nd and 3rd Defendants. The Applicants maintained that they are improperly enjoined to the Suit since they have a separate and distinct legal personality from BY GRACE FARM FEEDS, the 1st Defendant herein, and that they cannot be held liable for the liabilities incurred by the company.
3. The Application is further supported by the affidavit sworn on 30th July 2024 by Patrick Kithuka Mailang’a, the 2nd Defendant herein. In the affidavit, the 2nd defendant depones that both he and the 3rd Defendant are merely directors of the 1st Defendant company against which the Plaintiff herein has a claim.
4. Mr. Mailang’a asserted that from the plaintiff’s plaint dated 6th October 2021 and documentation in support thereof, it is clear that the transaction from which the dispute arose was purely one between the Plaintiff and the 1st Defendant. That the 1st Defendant, being a separate legal entity, no liability ought to attach to the Applicants herein.
5. The Applicant therefore urged this court to find in their favour and have their names struck out from these proceedings.
6. The Plaintiffs/Respondents opposed the Application vide the affidavit of Peter Ndirangu, a director of the 1st Plaintiff/Respondent, sworn on 30th January 2025.
7. In the affidavit, the Mr. Ndirangu deponed that they filed the instant suit against the Defendants to recover debt arising from the Supply Chain Finance Credit Facility Agreement dated 27th March 2018, by which the 2nd Plaintiff/Respondent agreed to advance to the 1st Defendant a credit facility of a maximum aggregate principal sum of Kenya Shillings Thirty Million (Kes. 30,000,000).
8. According to the Plaintiffs, the subject agreement was duly executed by the 2nd and 3rd Defendants/Applicants as directors of the 1st Defendant, confirming acceptance of the terms therein.
9. The Plaintiffs asserted that in addition to the Supply Chain Finance Credit Facility Agreement between the 2nd Plaintiff and the 1st Defendant, the Applicants in their personal capacity executed the Deed of Guarantee and Indemnity dated 4* May,2018, which spells out their obligations as guarantors, particularly clause 24 which enjoins the Applicants to jointly and severally make good the advanced credit facilities on behalf of the 1st Defendant in the event of a default.
10. The application was canvassed by way of written submissions. The Applicants filed joint submissions dated 4th March 2025. The Respondent’s submissions is dated 6th March 2025.
Analysis and determination:
11. I have considered the application, the replying affidavit, and submissions filed by the parties in support of their respective positions. The only issue for determination is whether the 2nd and 3rd Defendants have made a case to have their names struck from the proceedings.
12. Order 1 Rule 10 (2) of the Civil Procedure Rules provides as follows:-
“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.”
13. The Court in the case of Werrot & Company Ltd & Others V Andrew Douglas Gregory & Others, [1998] eKLR addressed the issue 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.”
14. In Pizza Harvest Limited V Felix Midigo, [2013] eKLR the Court citing Delvin, J. in Amon v Raphael Tuck & Sons Ltd (1956) 1 All ER 273, stated as follows on the subject:
“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.”
15. In the present case, I note from the pleadings and documents on record that the dispute has its basis in a Supply Chain Finance Credit Facility Agreement dated 27th March 2018, wherein the 1st Respondent agreed to extend a credit facility of Kshs. 30,000,000/- to the 1st Defendant. The principal amount advanced together with interest accrued was to be due on or before the lapse of 90 days from the date when the Respondents finance the invoices.
16. Further, it is also evident from the record that by a Deed of Guarantee and Indemnity dated 4th May, 2018 the Applicants jointly and severally guaranteed, in to pay the advanced credit facility together with all accrued interests, commissions, penalties and charges on behalf of the 1st Defendant on demand by the Respondents.
17. There was a default on the part of the Applicants, and the Respondents issued a demand letter dated 4th August, 2020, recalling the entire loan facility. The Applicant still failed to honour the demand letter, which then led to the instant suit.
18. The 2nd and 3rd Defendants (Applicants herein) having signed a Deed of Guarantee and Indemnity dated 4th May, 2018, in which they individually and jointly guaranteed the payment of the amounts advanced to the 1st Defendant by the Respondents under the Supply Chain Finance Credit Facility Agreement dated 27th March 2018, this Court agrees with the Respondent’s submissions that the Applicants herein (2nd and 3rd Defendants) are necessary parties in the instant suit.
19. The upshot is that the 2nd and 3rd Defendant’s application dated 30th July 2024 fails and is hereby dismissed with costs to the Respondents.
20. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
5TH DAY OF JUNE, 2025
ADO MOSES
JUDGE
In the Presence of:
Moses – C/A
Ms. Langat h/b for Omiti……………..for Defendant
Yala h/b for Nyaosi………….............for the plaintiff