Gulf African Bank VS Signon Corporation Limited AND Philip Ndegwa Owino AND 1 Others

1. The Plaintiff filed the Notice of Motion dated 5^th September 2023, under Order 13, Rule 2 Civil Procedure Rules, seeking the following orders:
2. THAT judgment on admission be entered in favour of the Plaintiff against the 1^st, 2^nd and 3^rd Defendants for the admitted sum of Kshs. 21,364,155.35 contained in the Statutory Notice dated 29^th September 2020.
3. THAT pursuant to order (1) above, the Plaintiff be awarded with default damages at 20% per annum from 29^th September 2020 until payment in full.
4. THAT hearing to proceed on the residue of the Claim.
5. THAT costs of this application be borne by the 1^st, 2^nd and 3^rd Defendants.
6. The application is premised on the grounds on its face, the supporting affidavit sworn by the Plaintiff’s legal officer, Lawi Sato on 5^th September 2023. The Plaintiff also filed primary and supplementary written submissions dated 10^th January 2024 and 7^th February 2024 respectively.
7. The application is opposed through a replying affidavit sworn by Philip Ndegwa Owino on 6^th November 2023 and written submissions dated 2^nd February 2024.
8. In brief, the background to the application is that the Plaintiff at the request of the 1^st Defendant offered a finance facility vide the letter of offer dated 12^th June 2019 and 28^th June 2019 and supplemental letter dated 13^th March 2020 by extending a Tawarruq Finance Facility to a maximum principal of Kshs. 17,500,000/-. The 2^nd and 3^rd Defendants guaranteed to pay the amount borrowed by the 1^st Defendant up to the principal sum of Kshs. 17,500,000/- together with profit, fees, commission, costs, charges and expenses upon demand.
9. The 1^st Defendant defaulted on the repayment obligations under the facility, prompting the Plaintiff to file the instant suit seeking judgment for the liquidated sum of KES 25,153,784/-, contractual default damages, and costs, among other final orders through a Plaint further amended on 5^th December 2022. In response, the 1^st, 2^nd and 3^rd Defendants filed a Defence and Counterclaim further amended on 10^th July 2023.

Analysis and determination

1. I have considered the application, the grounds and the parties’ respective affidavits, evidence, written submissions and authorities. The issue for determination is whether the Plaintiff has established a case for the entry of judgment on admission against the Defendant.
2. The application is made under Order 13 Rule 2 of the Civil Procedure Rules which provides that:

“2. Any party may at any stage of a suit, where admission of facts has been made, either on the pleadings or otherwise, apply to the court for such judgment or order as upon such admissions he may be entitled to, without waiting for the determination of any other question between the parties; and the court may upon such application make such order, or give such judgment, as the court may think just.”

1. In determining whether to enter judgment on admission, the guiding principles are as set out by the Court of Appeal in Choitram v Nazari [1984] eKLR, as follows:

“…admissions can be express or implied either on the pleadings or otherwise, e.g. in correspondence. Admissions have to be plain and obvious, as plain as a pikestaff and clearly readable because they may result in judgment being entered. They must be obvious on the face of them without requiring a magnifying glass to ascertain their meaning. Much depends upon the language used. The admissions must leave no room for doubt that the parties passed out of the stage of negotiations onto a definite contract. It matters not if the situation is arguable, even if there is a substantial argument, it is an ingredient of jurisprudence, provided that a plain and obvious case is established upon admissions by analysis. Indeed, there is no other way, and analysis is unavoidable to determine whether admission of fact has been made either on the pleadings or otherwise to give such judgment as upon such admissions any party may be entitled to without waiting for the determination of any other question between the parties.”

1. The instant application is based on an alleged admission at para. 10 of the 1^st, 2^nd and 3^rd Defendants’ Further Amended Defence and Counterclaim dated 10^th July 2023. The Plaintiff contends that they have admitted that the 1^st Defendant has defaulted in paying the principal amount and have prayed that the Plaintiff be restricted to recover the loan amount together with interest as per the statutory notice dated 29^th September 2020.
2. The 1^st, 2^nd and 3^rd Defendants contended that they refuted the figure presented by the Plaintiff as it was grossly exaggerated. They further contended that the mere assertion that the loan had not been paid cannot be construed in any way that they had admitted to any debt as the proper account had not been rendered.
3. Paragraph 10 of the Defence and Counterclaim further amended on 10^th July 2023, reads as follows:

‘That whereas the 1^st Defendant defaulted in the payment of the principal amount, the Plaintiff has in complete negation of its full contractual obligation declined to exercise its right to sell the charged property opting to have the loan continue accruing interest and costs to the detriment of the Defendants and contrary to the charge agreement.’

1. Prayer 3 of the Defence and Counterclaim further amended on 10^th July 2023, reads as follows:-

‘The Plaintiff be restricted to recover only the loan amount together with interest as per the statutory notice dated 29^th September 2020.’

1. I note that the 1^st, 2^nd and 3^rd Defendants refuted the figure presented by the Plaintiff as it was grossly exaggerated. However, it is evident from the above that the 1^st, 2^nd and 3^rd Defendants have admitted that the 1^st Defendant defaulted on the repayment of the principal amount and that the Plaintiff should be limited to recovering only the amount specified in the statutory notice dated 29^th September 2020. Thus, the 1^st, 2^nd and 3^rd Defendants cannot be heard to say that the above shows no clear and or unequivocal admission of indebtedness.
2. Accordingly, I am satisfied that the Plaintiff has met the threshold for entry of judgment on admission. However, I am not persuaded that prayer 2 of the Plaintiff’s application is grantable at this stage. The same seeks default damages at 20% per annum from 29^th September 2020 until payment in full. I find that the same has not met the threshold. Amounts over and above the amount specified in the statutory notice dated 29^th September 2020 have been refuted by the 1^st, 2^nd and 3^rd Defendants. These shall proceed to hearing together with the residue of the Claim.

Final disposition

1. The application dated 5^th September 2023 is allowed in the following terms:
2. Judgment on admission be and is hereby entered in favour of the Plaintiff against the 1^st, 2^nd and 3^rd Defendants for the admitted sum of Kshs. 21,364,155.35 contained in the Statutory Notice dated 29^th September 2020.
3. Hearing to proceed on the residue of the Claim.
4.     Costs of this application to be borne by the 1^st, 2^nd and 3^rd Defendants.

RULING delivered virtually, dated and signed at NAIROBI

This 7^th day of November 2024.

P. MULWA

JUDGE

In the presence of:

Mr. Evans Ochieng for plaintiff

Ms. Anyango for 1^st, 2^nd & 3^rd defendants

Mr. Mugambi for 4^th & 5^th defendants

Ms. Chiloba for 6^th, 7^th & 8^th defendants

Court Assistant: Carlos