'1. The plaintiffs’/applicants’ Notice of Motion dated 12/2/2025 prays for an order that the counterclaim contained in the defendant''s/respondent’s statement of defence and counterclaim dated 23rd January 2025 be disallowed or excluded and costs of the application and counterclaim be awarded to the plaintiff.
2. The application is filed under section 1A, 1В, 3, ЗA & 63(e) of the Civil Procedure Act (Cap 21) Laws of Kenya and Order 7 rule 12 of the Civil Procedure Rules 2010.
3. The grounds in support of the application as laid out on the face thereof and supported by the affidavit of Benson Musili, sworn on 13th February 2025, are that whereas the defendant, in answer to the plaintiffs’ suit, has averred that it holds a valid charge against the 2nd defendant’s property known as LR. No. 209/136/250 and therefore has a right to exercise its statutory power of sale, in respect to a sum of KShs 500 million advanced to the 1st plaintiff and guaranteed by the 3rd and 4th plaintiffs, it nevertheless filed a defence to the plaintiff’s suit and at the same time, a counterclaim seeking a liquidated sum of KShs. 500 million against the plaintiffs. It is the plaintiff’s contention in the present application that the defendant does not hold any valid contracts with the plaintiffs and therefore does not have any cause of action in contract against the plaintiffs.
4. Further that, section 90 of the Land Act (Cap. 280) Laws of Kenya, precludes the defendant from concurrently pursuing its power of sale of a charged property and suing for the outstanding amount under the charge. The plaintiff further contends that, in seeking to recover the amounts allegedly owing by way of a liquidated claim, the defendant is conceding that it does not hold a valid charge capable of conferring a statutory power of sale upon itself. Otherwise, the defendant can pursue its right to receive the alleged outstanding amounts from the plaintiffs, only by way of defence to the suit and not a counterclaim at the same time, so that the plaintiffs do not incur extra costs in defending the counterclaim.
5. The defendant has opposed the application by filing grounds of opposition dated 28th April 2025. In summary, the grounds are that the counterclaim is an independent cause of action by the defendant against the plaintiffs, and it is for liquidated damages. That, whereas the plaintiffs’ suit is for a non-liquidated claim, the two claims are based on the same cause of action; for this reason, the counterclaim is meant to avoid a multiplicity of claims and therefore save on judicial time and resources, which purpose Order 7 Rule 3 of the Civil Procedure Rules is designed to serve.
6. A brief background to the application is that the plaintiffs filed the suit herein against the defendant, claiming that the defendant, established under section 9(1) of the Crops Act (Cap. 318) Laws of Kenya, lacked capacity to enter into a contract with the plaintiffs. In the impugned contract, the defendant advanced to the 1st plaintiff a loan of KShs 500,000,000/= through a letter of offer dated 18th July 2017 and a deed of variation of the loan agreement dated 25th November 2022. As security for the loan, the 2nd plaintiff offered its property LR No. 209/136/250, and a charge dated 3rd August 2017was created thereon in favour of the defendant. Further, the defendant obtained personal indemnity and guarantees dated 1st August 2017 from the 3rd and 4th defendants, the 1st plaintiff’s directors. The contract documents were signed for the defendant by its managing trustee. It is the plaintiffs’ case that the contract was invalid and unenforceable because the defendant, the Commodities Fund, is not a legal entity capable of entering into the said contract, as the law creating it was not enacted at the time. The plaintiffs contend that for that reason the defendant was at best an unincorporated body and could only act through its Board of Trustees, which exercises a delegated power and which could not delegate such power to the managing trustee. Secondly, that the charge was not executed in accordance with sections 44 and 48 of the Land Registration Act (Cap. 300) Laws of Kenya.
7. The plaintiffs claim further that in purported exercise of its power of sale under sections 90 and 96 of the Land Act, the defendant had initiated the process of selling the 2nd plaintiff’s property, the security for the loan, by sending a 40-day statutory notice dated 18th October 2023, to the 1st plaintiff but not to the 2nd plaintiff as the chargor. Furthermore, in the statutory notice, the interest chargeable on the loan is indicated as 10%, contrary to what was provided for in the letter of offer and the deed of variation, which states 5% p.a. with a default rate of 1% p.a.
8. Further that, the 1st plaintiff failed to service the loan at all, which ought to have been serviced in full by August 2022, thereby effectively discharging the 2nd, 3rd, and 4th defendants from their respective obligations under the contract. Yet without reference, knowledge or information to the 2nd, 3rd and 4th plaintiffs, the 1st plaintiff and the defendant entered into the deed of variation of the loan agreement, dated 25th November 2022, thereby materially varying the terms of the initial contract. For that reason, the 2nd, 3rd, and 4th plaintiffs are entitled to be discharged from the initial contract.
9. Further that, the defendant is simultaneously pursuing different remedies against the plaintiffs, in that, besides the notices to exercise the statutory power of sale, it has sent notices to the 3rd and 4th defendants dated 30th October 2023, threatening to enforce action against them when it should elect a single remedy to pursue to recover the outstanding amount. That the said actions by the defendant are therefore in breach of the doctrine of election and prejudicial to the plaintiffs.
10. The plaintiffs pray for various orders against the defendant.
11. In response to the claim in the plaint, the defendant filed its statement of defence dated 23rd January 2025, insisting that the plaintiffs had failed to service the loan and to repay the outstanding amount and therefore they were liable under the contract. It also filed a counterclaim, seeking that the defendants in the counterclaim, as they appear in the suit as plaintiffs, pay the sum of KShs 500,000,000/= advanced to the 1st defendant by the plaintiff, with all interest accruing, less the amount paid, together with interest at 10% p.a. of the loan due, damages for breach of contract and costs of the suit.
12. The plaintiffs have now filed the present application praying for the orders as set out above. The application was disposed of on written submissions filed by both parties. The same are considered in the analysis that follows.
13. The plaintiffs submit that the application seeks to determine whether a charge can pursue all the remedies available to it under section 90 of the Land Act (Cap. 280) Laws of Kenya. The plaintiffs submit that the power to disallow a counterclaim is akin to the power to strike out a pleading and in support thereof, cites the case of Fremar Construction Co. Ltd v Minakshi Navin Shah [2005] KECA 101 (KLR) where the Court of Appeal stated that:
“This Court has stated many times before, and the learned Judge of the superior court was conscious of it, that striking out a pleading is a drastic remedy and the powers of the Court are to be exercised with great caution and only in clear cases. But the power is clearly donated in the rules, and exists inherently, for the court in the interests of justice, to reject manifestly frivolous and vexatious pleadings or suits and to protect itself from abuse of its process. A defence which is a sham should not be left to remain in the record otherwise it will cause undue delay and expense in the determination of the suit.”
14. The plaintiff further submits that the counterclaim by the defendant is frivolous and vexatious. The plaintiff submits that the powers given to a charge under section 90(3) of the Land Act are disjunctive and so cannot be exercised simultaneously as the defendant is doing in this case, defending its right to exercise its power of sale but also seeking to recover the sums claimed by way of the counterclaim. The plaintiffs have cited the cases of Gehlot & another v African Banking Corporation Limited [2022] KEHC 96 (KLR) and Mohamed v Diamond Trust Bank Kenya Limited [2024] KEHC 766 (KLR). In the later case, the court considering the doctrine of election stated that:
“The principle of election thus requires parties to choose one cause of action or another. The choices involved in an election are inconsistent and paths divergent. Choices have inconsistent rights and remedies. Choice does not always involve good and bad or evil and good. Sometimes it involves choosing from two bad situations or two good decisions. When confronted with such an election, parties must choose which right or remedy to pursue. Choices have to be explicit. Once the choice is made, it is generally binding, and the party is precluded from pursuing the alternative option.”
15. The plaintiff submits that the doctrine of election promotes fairness and this court should not allow the counterclaim to be pursued alongside the suit by the plaintiffs.
16. The defendant on its part, through learned counsel, submits that the plaintiff has not offered any reason why the issues raised in the counterclaim ought to be considered in an independent suit. It submits further that the issues raised in the application are contested and disputed and can only be determined at the trial.
17. The defendant cites the case of Kenya Commercial Bank Ltd v James Karanja [1981] KECA 25 (KLR) where the Court of Appeal stated that:
“A counterclaim is a fresh suit, and the defendant instituting it becomes plaintiff for all intents and purposes. The counterclaim is combined in the plaintiff’s proceedings for convenience, to enable the court to pronounce a final judgment in one set of proceedings, both on the original and on the cross claim.”
18. The defendant disputes that excluding a counterclaim in the manner suggested by the plaintiff is similar to striking out of a pleading. Further that such draconian power should be exercised sparingly and judiciously as was stated in the Court of Appeal in D.T. Dobie & Company (Kenya) Limited v Joseph Mbaria Muchina & another [1980] KECA 3 (KLR)
19. The defendant submits that the counterclaim should not be struck out as it raises significant issues that should be interrogated by this court on merit. The defendant relies on the case of Wachira v Maina & another (Environment and Land Appeal E003 of 2022) [2024] KEELC 3701 (KLR) (7 May 2024) where the court said:
“In law a counterclaim is filed as part of the Defendant’s answer to a Plaint. It is an independent cause of action asserted by the Defendant against the Plaintiff’s claim essentially raising issues that the defense would have raised had he the first chance Filed on: - No Paid- - BY: State Law Office - Reference: E4EUD4ZR - KSH. 0.00 to go to Court. The Court has to pronounce Judgement on both the Plaint and the counterclaim as both contain the claims of the Plaintiff and the Defendant. The rules relating to a defence by a Defendant apply to a defence in answer to a counterclaim so that the Plaintiff must respond likewise to a Defendant just like claim in the Plaint.”
20. The defendant submits further that the rationale of a counterclaim as provided for under Order 7 Rules 3, 7, and 8 of the Civil Procedure Rules is to avoid multiplicity of proceedings and claims based on the same or different causes of action as between the parties to the suit as was held in the case of Bilha Njeri Kabiru & another v Onesmus Karina & 3 others [2017] KEELC 560 (KLR).
21. I have considered the application, the grounds in support thereof, the submissions for and against this application and cited cases. The issue for determination is whether the counterclaim filed herein by the defendant cannot be conveniently disposed of in the pending suit, or ought not to be allowed as provided for under Order 7, Rules 3 and 12 of the CPR.
22. The submission by the plaintiff that the defendant is proceeding on multiple causes of action, thus offending the doctrine of election, is not correctly called into issue here. Although the defendant herein issued a notice to the 1st plaintiff that it would proceed to realize the charged security and also called upon the guarantors, the 3rd and 4th plaintiffs, to pay, the cause of action crystallized when it filed the counterclaim. The defendant only took this step, in response to the plaintiff’s suit. Otherwise, it was pursuing its right as chargee to realise the security offered for the loan. The counterclaim simply calls upon all the defendants (plaintiffs in the main suit) to pay the sum advanced and the interest thereon. There is no different cause of action being pursued by the defendant against the plaintiffs simultaneously. Therefore, the issue of election does not arise.
23. Order 7 rule 3 of the Civil Procedure Rules under which the present application if filed states as follows;
“A Defendant in a suit may set-off, or set-up by way of counterclaim against the claims of the Plaintiff, any right or claim, whether such set-off or counterclaim sound in damages or not, and whether it is for a liquidated or unliquidated amount, and such setoff or counterclaim shall have the same effect as a cross-suit, so as to enable the Court to pronounce a final judgment in the same suit, both on the original and on the cross-claim; but the Court may on the application of the Plaintiff before trial, if in the opinion of the Court such set-off or counterclaim cannot be conveniently disposed of in the pending suit, or ought not to be allowed, refuse permission to Defendant to avail himself thereof.”
24. Order 7 rule 12 of the Civil Procedure Rules states as follows;
“Where a Defendant sets up a counterclaim, if the Plaintiff or any other person named in the manner aforesaid as party to such counterclaim contends that the claim thereby raised ought not to be disposed of by way of counterclaim, but in an independent suit, he may at any time before reply, apply to the Court for an Order that such counterclaim may be excluded, and the Court may, on the hearing of such application, make such Order as shall be just”.
25. My understanding of rule 3 is that for as long as the plaintiff has filed suit against the defendant, the later has a right to file a counterclaim, if the court can try both and dispose of them in the same suit at once, the only limiting factor being that the counterclaim should be capable of being “conveniently disposed of in the main suit.” It is upon the court to determine this convenience. The plaintiff is given the leeway under rule 12 to apply for a counterclaim to be excluded from the hearing of its suit, if it can demonstrate that it cannot be conveniently disposed of in the suit. Again, the court has a discretion to make orders as shall be just.
26. As submitted by the defendant through its learned counsel, the rationale of Order 7 rule 8 in my considered view, is to avoid a multiplicity of proceedings and claims based on the same or different causes of action between the parties to the suit. The plaintiff’s (Commodities Fund) claim against the defendants in the counterclaim stems from the same cause of action as the claim by the plaintiffs against the defendant in the main suit and therefore it is a claim that can be canvassed in one suit to avoid multiplicity of proceedings and suits. I see no difficulty in trying the counterclaim together with the plaintiffs’ claims.
27. Considering these provisions of the rules in the case of County Government of Kilifi v Mombasa Cement Limited [2017] KECA 633 (KLR) the Court of Appeal first explained these provisions as follows:
“In our view, a plain reading of the above provision allows or gives a defendant in a suit permission or a carte blanche, to raise a counterclaim based on any right or claim against a plaintiff. That provision says nothing to the effect that such counterclaim must be related to the original subject matter of the suit and neither does it attract such an implication. That position is supported by Halsbury’s Laws of England, Fourth Edition, vol. 42, which defines a counterclaim as follows:-
“When A has a claim of any kind against B and brings an action to enforce that claim, and B has a cross-claim of any kind against A which by law he is entitled to raise and have disposed of in the action brought by A, then B is said to have a right of counterclaim.”
Further that,
“Any claim in respect of which the defendant could bring an independent action against the plaintiff may be enforced by counterclaim subject only to the limitation that it must be such as can conveniently be tried with the plaintiff’s claim. Thus not only claims for money but also other claims such as a claim for an injunction or for specific performance or for a declaration may be the subject of a counterclaim.”
The appellant has also cited the case of Sh. Jag Mohan Chawla & Another v Dera Radha Swami Satsang & Ors (supra) in which the Indian Supreme Court grappled with the interpretation of the equivalent of our Order 7 rule 3 of the Civil Procedure Rules couched in similar terms. It rendered itself thus:-
“………The counter-claim expressly is treated as a cross suit with all the indicia of pleadings as a plaint including the duty to aver his cause of action and also payment of the requisite court fee thereon. Instead of relegating the defendant to an independent suit, to avert multiplicity of the proceeding and needless protection, the legislature intended to try both the suit and the counter- claim in the same suit as suit and cross suit and have them disposed of in the same trial. In other words, a defendant can claim any right by way of a counter-claim in the same suit as suit and cross suit and have them disposed of in the same trial. In other words, a defendant can claim any right by way of a counter-claim in respect of any cause of action that has accrued to him even though it is independent of the cause of action averred by the plaintiff and have the same cause of action adjudicated without relegating the defendant to file a separate suit……”
In view of the foregoing, it is safe to conclude that a defendant is permitted to raise a counterclaim against a plaintiff on any right and claim he may have against the plaintiff even where the subject matter or cause of action maybe different from the original suit. The rationale is to avoid multiplicity of proceedings and claims based on same or different cause of action between parties to the suit to enable a court to pronounce a final judgment in the suit both on the original claim and on the counter claim. At the same time, Order 7 rule 3 of the Civil Procedure Rules gives court a wide discretion such that, on the application of the plaintiff, the court may reject a counterclaim where it would not be convenient or where in the opinion of the court, the counterclaim ought not to be allowed. No doubt, that is a wide discretion and the reasons as to why a court would disallow a counterclaim would be many and varied to be decided on a case-by-case basis.”
28. The Court of Appeal went on to state that it is trite law that the discretion exercised under Order 7 Rule 3 must be exercised judicially and never capriciously or whimsically.
29. In their submissions, the plaintiff stated that the counterclaim offends the provisions of section 90(3) of the Land Act insofar as the defendant is pursuing the remedy of a suit besides that of exercising the statutory power of sale. As stated above, the defendant filed the counterclaim in response to the plaintiffs’ suit, to have a wider cushion for itself against the plaintiffs’ claim, inasmuch as it is also an independent claim.
30. Under the provisions of the law cited above, the court has the discretion, subject to application of the parties, either to admit or reject the counterclaim where it would, in the opinion of the court, not be convenient or where the counterclaim ought not to be allowed. As held by the Court of Appeal in the case of County Government of Kilifi, above, the test is to consider the facts of each case before exercising the discretion to exclude the counterclaim. In the instant case, the counterclaim arises out of the same facts as the claim by the plaintiffs against the defendant and I am satisfied that the two are logically related and can be conveniently tried in a single litigation.
31. For the foregoing reasons, I find that this application is without merit and the same is dismissed with costs to the defendant/respondent.
32. Orders accordingly.
Written, dated, signed and delivered this 29th day of September 2025.
ANDAYI W. F.
JUDGE
In the presence of:
Ekapoli, holding brief for Kongere for the plaintiffs/applicants.
Kiprono, holding brief for Lang’at for the Respondent.
Ummu: Court assistant.
'
2. The application is filed under section 1A, 1В, 3, ЗA & 63(e) of the Civil Procedure Act (Cap 21) Laws of Kenya and Order 7 rule 12 of the Civil Procedure Rules 2010.
3. The grounds in support of the application as laid out on the face thereof and supported by the affidavit of Benson Musili, sworn on 13th February 2025, are that whereas the defendant, in answer to the plaintiffs’ suit, has averred that it holds a valid charge against the 2nd defendant’s property known as LR. No. 209/136/250 and therefore has a right to exercise its statutory power of sale, in respect to a sum of KShs 500 million advanced to the 1st plaintiff and guaranteed by the 3rd and 4th plaintiffs, it nevertheless filed a defence to the plaintiff’s suit and at the same time, a counterclaim seeking a liquidated sum of KShs. 500 million against the plaintiffs. It is the plaintiff’s contention in the present application that the defendant does not hold any valid contracts with the plaintiffs and therefore does not have any cause of action in contract against the plaintiffs.
4. Further that, section 90 of the Land Act (Cap. 280) Laws of Kenya, precludes the defendant from concurrently pursuing its power of sale of a charged property and suing for the outstanding amount under the charge. The plaintiff further contends that, in seeking to recover the amounts allegedly owing by way of a liquidated claim, the defendant is conceding that it does not hold a valid charge capable of conferring a statutory power of sale upon itself. Otherwise, the defendant can pursue its right to receive the alleged outstanding amounts from the plaintiffs, only by way of defence to the suit and not a counterclaim at the same time, so that the plaintiffs do not incur extra costs in defending the counterclaim.
5. The defendant has opposed the application by filing grounds of opposition dated 28th April 2025. In summary, the grounds are that the counterclaim is an independent cause of action by the defendant against the plaintiffs, and it is for liquidated damages. That, whereas the plaintiffs’ suit is for a non-liquidated claim, the two claims are based on the same cause of action; for this reason, the counterclaim is meant to avoid a multiplicity of claims and therefore save on judicial time and resources, which purpose Order 7 Rule 3 of the Civil Procedure Rules is designed to serve.
6. A brief background to the application is that the plaintiffs filed the suit herein against the defendant, claiming that the defendant, established under section 9(1) of the Crops Act (Cap. 318) Laws of Kenya, lacked capacity to enter into a contract with the plaintiffs. In the impugned contract, the defendant advanced to the 1st plaintiff a loan of KShs 500,000,000/= through a letter of offer dated 18th July 2017 and a deed of variation of the loan agreement dated 25th November 2022. As security for the loan, the 2nd plaintiff offered its property LR No. 209/136/250, and a charge dated 3rd August 2017was created thereon in favour of the defendant. Further, the defendant obtained personal indemnity and guarantees dated 1st August 2017 from the 3rd and 4th defendants, the 1st plaintiff’s directors. The contract documents were signed for the defendant by its managing trustee. It is the plaintiffs’ case that the contract was invalid and unenforceable because the defendant, the Commodities Fund, is not a legal entity capable of entering into the said contract, as the law creating it was not enacted at the time. The plaintiffs contend that for that reason the defendant was at best an unincorporated body and could only act through its Board of Trustees, which exercises a delegated power and which could not delegate such power to the managing trustee. Secondly, that the charge was not executed in accordance with sections 44 and 48 of the Land Registration Act (Cap. 300) Laws of Kenya.
7. The plaintiffs claim further that in purported exercise of its power of sale under sections 90 and 96 of the Land Act, the defendant had initiated the process of selling the 2nd plaintiff’s property, the security for the loan, by sending a 40-day statutory notice dated 18th October 2023, to the 1st plaintiff but not to the 2nd plaintiff as the chargor. Furthermore, in the statutory notice, the interest chargeable on the loan is indicated as 10%, contrary to what was provided for in the letter of offer and the deed of variation, which states 5% p.a. with a default rate of 1% p.a.
8. Further that, the 1st plaintiff failed to service the loan at all, which ought to have been serviced in full by August 2022, thereby effectively discharging the 2nd, 3rd, and 4th defendants from their respective obligations under the contract. Yet without reference, knowledge or information to the 2nd, 3rd and 4th plaintiffs, the 1st plaintiff and the defendant entered into the deed of variation of the loan agreement, dated 25th November 2022, thereby materially varying the terms of the initial contract. For that reason, the 2nd, 3rd, and 4th plaintiffs are entitled to be discharged from the initial contract.
9. Further that, the defendant is simultaneously pursuing different remedies against the plaintiffs, in that, besides the notices to exercise the statutory power of sale, it has sent notices to the 3rd and 4th defendants dated 30th October 2023, threatening to enforce action against them when it should elect a single remedy to pursue to recover the outstanding amount. That the said actions by the defendant are therefore in breach of the doctrine of election and prejudicial to the plaintiffs.
10. The plaintiffs pray for various orders against the defendant.
11. In response to the claim in the plaint, the defendant filed its statement of defence dated 23rd January 2025, insisting that the plaintiffs had failed to service the loan and to repay the outstanding amount and therefore they were liable under the contract. It also filed a counterclaim, seeking that the defendants in the counterclaim, as they appear in the suit as plaintiffs, pay the sum of KShs 500,000,000/= advanced to the 1st defendant by the plaintiff, with all interest accruing, less the amount paid, together with interest at 10% p.a. of the loan due, damages for breach of contract and costs of the suit.
12. The plaintiffs have now filed the present application praying for the orders as set out above. The application was disposed of on written submissions filed by both parties. The same are considered in the analysis that follows.
13. The plaintiffs submit that the application seeks to determine whether a charge can pursue all the remedies available to it under section 90 of the Land Act (Cap. 280) Laws of Kenya. The plaintiffs submit that the power to disallow a counterclaim is akin to the power to strike out a pleading and in support thereof, cites the case of Fremar Construction Co. Ltd v Minakshi Navin Shah [2005] KECA 101 (KLR) where the Court of Appeal stated that:
“This Court has stated many times before, and the learned Judge of the superior court was conscious of it, that striking out a pleading is a drastic remedy and the powers of the Court are to be exercised with great caution and only in clear cases. But the power is clearly donated in the rules, and exists inherently, for the court in the interests of justice, to reject manifestly frivolous and vexatious pleadings or suits and to protect itself from abuse of its process. A defence which is a sham should not be left to remain in the record otherwise it will cause undue delay and expense in the determination of the suit.”
14. The plaintiff further submits that the counterclaim by the defendant is frivolous and vexatious. The plaintiff submits that the powers given to a charge under section 90(3) of the Land Act are disjunctive and so cannot be exercised simultaneously as the defendant is doing in this case, defending its right to exercise its power of sale but also seeking to recover the sums claimed by way of the counterclaim. The plaintiffs have cited the cases of Gehlot & another v African Banking Corporation Limited [2022] KEHC 96 (KLR) and Mohamed v Diamond Trust Bank Kenya Limited [2024] KEHC 766 (KLR). In the later case, the court considering the doctrine of election stated that:
“The principle of election thus requires parties to choose one cause of action or another. The choices involved in an election are inconsistent and paths divergent. Choices have inconsistent rights and remedies. Choice does not always involve good and bad or evil and good. Sometimes it involves choosing from two bad situations or two good decisions. When confronted with such an election, parties must choose which right or remedy to pursue. Choices have to be explicit. Once the choice is made, it is generally binding, and the party is precluded from pursuing the alternative option.”
15. The plaintiff submits that the doctrine of election promotes fairness and this court should not allow the counterclaim to be pursued alongside the suit by the plaintiffs.
16. The defendant on its part, through learned counsel, submits that the plaintiff has not offered any reason why the issues raised in the counterclaim ought to be considered in an independent suit. It submits further that the issues raised in the application are contested and disputed and can only be determined at the trial.
17. The defendant cites the case of Kenya Commercial Bank Ltd v James Karanja [1981] KECA 25 (KLR) where the Court of Appeal stated that:
“A counterclaim is a fresh suit, and the defendant instituting it becomes plaintiff for all intents and purposes. The counterclaim is combined in the plaintiff’s proceedings for convenience, to enable the court to pronounce a final judgment in one set of proceedings, both on the original and on the cross claim.”
18. The defendant disputes that excluding a counterclaim in the manner suggested by the plaintiff is similar to striking out of a pleading. Further that such draconian power should be exercised sparingly and judiciously as was stated in the Court of Appeal in D.T. Dobie & Company (Kenya) Limited v Joseph Mbaria Muchina & another [1980] KECA 3 (KLR)
19. The defendant submits that the counterclaim should not be struck out as it raises significant issues that should be interrogated by this court on merit. The defendant relies on the case of Wachira v Maina & another (Environment and Land Appeal E003 of 2022) [2024] KEELC 3701 (KLR) (7 May 2024) where the court said:
“In law a counterclaim is filed as part of the Defendant’s answer to a Plaint. It is an independent cause of action asserted by the Defendant against the Plaintiff’s claim essentially raising issues that the defense would have raised had he the first chance Filed on: - No Paid- - BY: State Law Office - Reference: E4EUD4ZR - KSH. 0.00 to go to Court. The Court has to pronounce Judgement on both the Plaint and the counterclaim as both contain the claims of the Plaintiff and the Defendant. The rules relating to a defence by a Defendant apply to a defence in answer to a counterclaim so that the Plaintiff must respond likewise to a Defendant just like claim in the Plaint.”
20. The defendant submits further that the rationale of a counterclaim as provided for under Order 7 Rules 3, 7, and 8 of the Civil Procedure Rules is to avoid multiplicity of proceedings and claims based on the same or different causes of action as between the parties to the suit as was held in the case of Bilha Njeri Kabiru & another v Onesmus Karina & 3 others [2017] KEELC 560 (KLR).
21. I have considered the application, the grounds in support thereof, the submissions for and against this application and cited cases. The issue for determination is whether the counterclaim filed herein by the defendant cannot be conveniently disposed of in the pending suit, or ought not to be allowed as provided for under Order 7, Rules 3 and 12 of the CPR.
22. The submission by the plaintiff that the defendant is proceeding on multiple causes of action, thus offending the doctrine of election, is not correctly called into issue here. Although the defendant herein issued a notice to the 1st plaintiff that it would proceed to realize the charged security and also called upon the guarantors, the 3rd and 4th plaintiffs, to pay, the cause of action crystallized when it filed the counterclaim. The defendant only took this step, in response to the plaintiff’s suit. Otherwise, it was pursuing its right as chargee to realise the security offered for the loan. The counterclaim simply calls upon all the defendants (plaintiffs in the main suit) to pay the sum advanced and the interest thereon. There is no different cause of action being pursued by the defendant against the plaintiffs simultaneously. Therefore, the issue of election does not arise.
23. Order 7 rule 3 of the Civil Procedure Rules under which the present application if filed states as follows;
“A Defendant in a suit may set-off, or set-up by way of counterclaim against the claims of the Plaintiff, any right or claim, whether such set-off or counterclaim sound in damages or not, and whether it is for a liquidated or unliquidated amount, and such setoff or counterclaim shall have the same effect as a cross-suit, so as to enable the Court to pronounce a final judgment in the same suit, both on the original and on the cross-claim; but the Court may on the application of the Plaintiff before trial, if in the opinion of the Court such set-off or counterclaim cannot be conveniently disposed of in the pending suit, or ought not to be allowed, refuse permission to Defendant to avail himself thereof.”
24. Order 7 rule 12 of the Civil Procedure Rules states as follows;
“Where a Defendant sets up a counterclaim, if the Plaintiff or any other person named in the manner aforesaid as party to such counterclaim contends that the claim thereby raised ought not to be disposed of by way of counterclaim, but in an independent suit, he may at any time before reply, apply to the Court for an Order that such counterclaim may be excluded, and the Court may, on the hearing of such application, make such Order as shall be just”.
25. My understanding of rule 3 is that for as long as the plaintiff has filed suit against the defendant, the later has a right to file a counterclaim, if the court can try both and dispose of them in the same suit at once, the only limiting factor being that the counterclaim should be capable of being “conveniently disposed of in the main suit.” It is upon the court to determine this convenience. The plaintiff is given the leeway under rule 12 to apply for a counterclaim to be excluded from the hearing of its suit, if it can demonstrate that it cannot be conveniently disposed of in the suit. Again, the court has a discretion to make orders as shall be just.
26. As submitted by the defendant through its learned counsel, the rationale of Order 7 rule 8 in my considered view, is to avoid a multiplicity of proceedings and claims based on the same or different causes of action between the parties to the suit. The plaintiff’s (Commodities Fund) claim against the defendants in the counterclaim stems from the same cause of action as the claim by the plaintiffs against the defendant in the main suit and therefore it is a claim that can be canvassed in one suit to avoid multiplicity of proceedings and suits. I see no difficulty in trying the counterclaim together with the plaintiffs’ claims.
27. Considering these provisions of the rules in the case of County Government of Kilifi v Mombasa Cement Limited [2017] KECA 633 (KLR) the Court of Appeal first explained these provisions as follows:
“In our view, a plain reading of the above provision allows or gives a defendant in a suit permission or a carte blanche, to raise a counterclaim based on any right or claim against a plaintiff. That provision says nothing to the effect that such counterclaim must be related to the original subject matter of the suit and neither does it attract such an implication. That position is supported by Halsbury’s Laws of England, Fourth Edition, vol. 42, which defines a counterclaim as follows:-
“When A has a claim of any kind against B and brings an action to enforce that claim, and B has a cross-claim of any kind against A which by law he is entitled to raise and have disposed of in the action brought by A, then B is said to have a right of counterclaim.”
Further that,
“Any claim in respect of which the defendant could bring an independent action against the plaintiff may be enforced by counterclaim subject only to the limitation that it must be such as can conveniently be tried with the plaintiff’s claim. Thus not only claims for money but also other claims such as a claim for an injunction or for specific performance or for a declaration may be the subject of a counterclaim.”
The appellant has also cited the case of Sh. Jag Mohan Chawla & Another v Dera Radha Swami Satsang & Ors (supra) in which the Indian Supreme Court grappled with the interpretation of the equivalent of our Order 7 rule 3 of the Civil Procedure Rules couched in similar terms. It rendered itself thus:-
“………The counter-claim expressly is treated as a cross suit with all the indicia of pleadings as a plaint including the duty to aver his cause of action and also payment of the requisite court fee thereon. Instead of relegating the defendant to an independent suit, to avert multiplicity of the proceeding and needless protection, the legislature intended to try both the suit and the counter- claim in the same suit as suit and cross suit and have them disposed of in the same trial. In other words, a defendant can claim any right by way of a counter-claim in the same suit as suit and cross suit and have them disposed of in the same trial. In other words, a defendant can claim any right by way of a counter-claim in respect of any cause of action that has accrued to him even though it is independent of the cause of action averred by the plaintiff and have the same cause of action adjudicated without relegating the defendant to file a separate suit……”
In view of the foregoing, it is safe to conclude that a defendant is permitted to raise a counterclaim against a plaintiff on any right and claim he may have against the plaintiff even where the subject matter or cause of action maybe different from the original suit. The rationale is to avoid multiplicity of proceedings and claims based on same or different cause of action between parties to the suit to enable a court to pronounce a final judgment in the suit both on the original claim and on the counter claim. At the same time, Order 7 rule 3 of the Civil Procedure Rules gives court a wide discretion such that, on the application of the plaintiff, the court may reject a counterclaim where it would not be convenient or where in the opinion of the court, the counterclaim ought not to be allowed. No doubt, that is a wide discretion and the reasons as to why a court would disallow a counterclaim would be many and varied to be decided on a case-by-case basis.”
28. The Court of Appeal went on to state that it is trite law that the discretion exercised under Order 7 Rule 3 must be exercised judicially and never capriciously or whimsically.
29. In their submissions, the plaintiff stated that the counterclaim offends the provisions of section 90(3) of the Land Act insofar as the defendant is pursuing the remedy of a suit besides that of exercising the statutory power of sale. As stated above, the defendant filed the counterclaim in response to the plaintiffs’ suit, to have a wider cushion for itself against the plaintiffs’ claim, inasmuch as it is also an independent claim.
30. Under the provisions of the law cited above, the court has the discretion, subject to application of the parties, either to admit or reject the counterclaim where it would, in the opinion of the court, not be convenient or where the counterclaim ought not to be allowed. As held by the Court of Appeal in the case of County Government of Kilifi, above, the test is to consider the facts of each case before exercising the discretion to exclude the counterclaim. In the instant case, the counterclaim arises out of the same facts as the claim by the plaintiffs against the defendant and I am satisfied that the two are logically related and can be conveniently tried in a single litigation.
31. For the foregoing reasons, I find that this application is without merit and the same is dismissed with costs to the defendant/respondent.
32. Orders accordingly.
Written, dated, signed and delivered this 29th day of September 2025.
ANDAYI W. F.
JUDGE
In the presence of:
Ekapoli, holding brief for Kongere for the plaintiffs/applicants.
Kiprono, holding brief for Lang’at for the Respondent.
Ummu: Court assistant.
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