REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL & TAX DIVISION
HCCOMM NO. E724 OF 2021
PETTYGAS AND LUBES LTD ….......………..1ST PLAINTIFF/APPLICANT
UNICITY SERVICE STATION……….………2ND PLAINTIFF/APPLICANT
VERSUS
NATIONAL OIL CORPORATION OF KENYA........................DEFENDANT/ RESPONDENT
RULING
1. The plaintiff filed a Notice of Motion application dated 25th October, 2022, under the provisions of Order 51 Rule 1, Order 2 Rule 15(a) & (b) of the Civil Procedure Rules, 2010. The plaintiff prays for the following orders-
(i) That the defendant’s statement of defence dated 16th June, 2022, be struck out;
(ii) That judgment be entered in favour of the plaintiffs against the defendant as prayed for in the plaintiffs’ amended plaint dated 1st September, 2021 and
(iii) That the applicant be awarded costs of this application.
2. The application is supported by the affidavit by Lucy Kinya Mwiti, a director of the plaintiffs, sworn on 25th October, 2022. The defendant filed grounds of opposition on 8th March, 2023.
3. In the supporting affidavit to the instant application, the applicants deposed that the statement of defence is nothing but an assembly of denials, whereby the defendant simply denies all the plaintiffs’ averments in the amended plaint without offering an alternative explanation to the facts pleaded.
4. The plaintiffs averred that their amended plaint raises three causes of action, namely, breach of contract, unconscionable bargain and abuse of dominant position. The plaintiffs contended that the defendant has not pleaded any facts in support of the defence or offered any narrative that can even be considered as a defence.
5. The defendant in its grounds of opposition asserts the following-
(a) That the defendant’s statement of defence dated 16th June, 2022 raises triable issues and as such this matter should proceed to full hearing;
(b) That the said statement of defence clearly indicates that the terms of the contract as provided in paragraph 5B of the amended plaint were not express which is a triable issue that requires further interrogation;
(c) That the said statement of defence clearly brings out the fact that the defendant is under no obligation to compensate the plaintiffs for any loss suffered which is another triable issue that requires further interrogation;
(d) That the said statement of defence brings out the fact that they did not introduce any new fee but only consolidated the existing fees and the same was done in accordance with the agreements, which is also a triable issue that requires further interrogation;
(e) That the defence clearly challenges the existence of unconscionable bargain in the agreement due to the existence of clause 43.2 of the service level agreement between the parties, which is also a triable issue that requires further interrogation by the Court;
(f) That the right to a fair hearing is provided for under the Constitution of Kenya, 2010 and each party should be accorded an opportunity to be heard on its case/position /issues on merit;
(g) That the right to a fair hearing cannot be limited by dint of Article 25 of the Constitution, particularly when it is clearly established that the dispute herein can be determined by application of the law;
(h) That striking out of pleadings is a drastic remedy that should only be resorted to where a pleading is a complete sham;
(i) That in the premises this Court cannot entertain or grant the prayers sought by the applicant in the application dated 25th October, 2022 as against the defendant; and
(j) That the prayers sought against the defendant are a nullity, lack factual merit and ought to be dismissed with costs to the defendant.
6. The plaintiffs’ written submissions were filed on 1st June, 2023 by the law firm of Shapley Barrett & Co. Advocates. The defendant’s submissions were filed on 22nd June, 2023 by Meritad Law Africa LLP.
7. Mr. P. Maina, the plaintiffs’ Counsel submitted that the burden of proof lies with the defendant to prove that its statement of defence raises triable issues. Counsel relied on the case of Job Kilach v Nation Media Group & others [2015] eKLR, to support his submission. He also relied on the decision in Peeraj General Trading & Contracting Company Ltd & others v Mumias Sugar Company Limited [2016] eKLR, to show that a mere denial by the defendant is not a sufficient defence.
8. Counsel also relied on the Court of Appeal decision in Mungunya General Stores v Pepco Distibutors Ltd [1987] eKLR, where the Court stated that a mere denial is not a sufficient defence and it is not sufficient therefore simply to deny liability with no reason being given.
9. Mr. Mwaura, the defendant’s Counsel submitted that the power to strike out pleadings is a discretionary and not a mandatory one and the said power should only be exercised where the pleadings are untenable and beyond redemption, as the import of striking out pleadings is driving away someone from the seat of justice. He relied on the case of Michael Kalani Muatha v Kyalo Mwikya & another [2022] eKLR, to buttress his submission.
10. Counsel stated that contrary to what the plaintiffs contend, the defendant’s statement of defence contains triable issues. He urged this Court to give the defendant a chance to rebut the plaintiffs’ case.
11. In making reference to paragraph 5H of the amended plaint, the defendant stated that the plaintiff claims Kshs. 24,622,882.25 in line with clause 27.2.3 of the Dealer Licence Agreement, which claim is rebutted at paragraph 13 of the defendant’s statement of defence by stating that the said clause is subject to clause 27, and that the said clauses relate to compensation being made to the respondent and not the applicant as pleaded.
12. Counsel submitted that the statement of defence challenges the issue of unconscionable bargain in paragraph 29 of the Dealer Licence Agreement by indicating that any changes in that agreement made by the respondent had to be consented to in writing by both parties before being implemented in line with clause 43.3 which is a rebuttal of the plaintiffs’ case hence a triable issue to be determined by way of trial.
13. Mr. Mwaura contended that the statement of defence at paragraph 16 shows that the defendant did not introduce new fees but consolidated the existing fees as per the agreement between the parties, which issues need to be properly determined in trial. He relied on the case of the Postal Corporation of Kenya v I.T. Inamdar & 2 others [2004] 1 KLR 359 as quoted with approval in Simon Kirima Muraguri & another V Equity Bank (Kenya) Ltd & another [2021] eKLR, where the Court stated that if the defence filed by a defendant raises even one bonafide triable issue, the defendant must be given leave to defend.
14. In citing the case of Olympic Escort International Co. Ltd & 2 others v Parminder Singh Sandha & another [2009] eKLR, Counsel for the defendant stated that the Court in the said case held that a triable issue is not necessarily one that the defendant would ultimately succeed on, but it need only to be bonafide.
15. He submitted that the defendant has the right to be heard under the provisions of Article 50 of the Constitution. He stated that the sum of Kshs.24,622,882.25 is a substantial amount, which claim the defendant ought to be given a chance to defend as its claim is not frivolous, vexatious or scandalous, as the statement of defence raises triable issues for determination by the Court.
ANALYSIS AND DETERMINATION
16. I have considered the application filed herein, the depositions made in support of the plaintiffs’ application, the grounds of opposition filed by the defendant and the written submissions filed by Counsel for the parties. I must hasten to add that instead of filing a replying affidavit the defendant filed grounds of opposition which should have been restricted to issues of law only and not to both the law and averments of factual issues.
17. The issues for determination is if the statement of defence is frivolous and should be struck out and if judgment should be entered in favour of the plaintiffs.
18. Striking out of pleadings is provided for under Order 2 Rule 15 of the Civil Procedure Rules, 2010, in the following words-
“At any stage of the proceedings the Court may order to be struck out or amended any pleading on the ground that –
(a) It discloses no reasonable cause of action or defence in law; or
(b) It is scandalous, frivolous or vexatious; or
(c) It may prejudice, embarrass or delay the fair trial of the action; or
(d) It is otherwise an abuse of thee process of the Court;
And may order the suit to be stayed or dismissed or judgment to be entered accordingly, as the case may be.”
19. I have read the amended plaint filed on 1st September, 2021, where they have made several allegations against the defendant for undersupplying the quantities of fuel needed at the petrol stations run by them, of trying to engage in unconscionable bargain and trying to alter the terms of the dealership agreements between them and the defendant without any consultation with the plaintiffs.
20. In the case of Isaac Awuondo v Surgipharm Limited & another [2011] eKLR, the Court of Appeal had the following to say:
“The law is now settled that if the defence raises even one bona fide triable issue, then the Defendant must be given leave to defend…We must however hasten to add that a triable issue does not mean one that will succeed. Indeed, in Patel vs. E.A. Cargo Handling Services Ltd. [1974] E.A. 75 at P. 76 Duffus P. said:-
“In this respect defence on the merits does not mean, in my view a defence that must succeed, it means as SHERIDAN, J put it “a triable issue” that is an issue which raises a prima facie defence and which should go to trial for adjudication.”
21. I have gone through the statement of defence and I agree with the plaintiffs’ Counsel that it contains a recital in almost all paragraphs by the defendant stating that it puts the plaintiffs to strict proof of their allegations. In some paragraphs the denials do not give an alternative explanation of what the defendant’s position to the allegations is. It is however my finding that in paragraphs 13, 15, 16, 21, 22, 29, 33 and 35 of the statement of defence, the defendant has responded to some of the allegations made by the plaintiffs.
22. In Baldev Raj vs. Kamel Kishore Aggarwal (Nairobi Civil Appeal No. 48 of 1985 (UR) the Court therein stated thus:
“It is our view that it is more unjust to shut out a defendant with a good defence than to require a Plaintiff to wait a little longer to prove his claim against such a defendant on the merits.”
23. Having considered the allegations by the plaintiffs in the amended plaint and the statement of defence, I am persuaded that the said defence is not so hopeless that it can be termed as not raising any bonafide triable issues. In my considered view, more life can be injected into it by way of amendment.
24. In conclusion, the application dated 25th October, 2022, is hereby dismissed. The defendant is given 21 days to amend, file and serve its amended statement of defence. Costs of the instant application shall be borne by the plaintiffs.
It is so ordered.
DELIVERED, DATED and SIGNED at NAIROBI on this 1st day of DECEMBER, 2023. Ruling delivered through Microsoft Teams Online Platform.
NJOKI MWANGI
JUDGE
In the presence of:
Mr. Paul Maina for the plaintiffs/applicants
Mr. Rweya h/b for Mr. Saende for the respondent
Ms. B. Wokabi – Court Assistant.
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL & TAX DIVISION
HCCOMM NO. E724 OF 2021
PETTYGAS AND LUBES LTD ….......………..1ST PLAINTIFF/APPLICANT
UNICITY SERVICE STATION……….………2ND PLAINTIFF/APPLICANT
VERSUS
NATIONAL OIL CORPORATION OF KENYA........................DEFENDANT/ RESPONDENT
RULING
1. The plaintiff filed a Notice of Motion application dated 25th October, 2022, under the provisions of Order 51 Rule 1, Order 2 Rule 15(a) & (b) of the Civil Procedure Rules, 2010. The plaintiff prays for the following orders-
(i) That the defendant’s statement of defence dated 16th June, 2022, be struck out;
(ii) That judgment be entered in favour of the plaintiffs against the defendant as prayed for in the plaintiffs’ amended plaint dated 1st September, 2021 and
(iii) That the applicant be awarded costs of this application.
2. The application is supported by the affidavit by Lucy Kinya Mwiti, a director of the plaintiffs, sworn on 25th October, 2022. The defendant filed grounds of opposition on 8th March, 2023.
3. In the supporting affidavit to the instant application, the applicants deposed that the statement of defence is nothing but an assembly of denials, whereby the defendant simply denies all the plaintiffs’ averments in the amended plaint without offering an alternative explanation to the facts pleaded.
4. The plaintiffs averred that their amended plaint raises three causes of action, namely, breach of contract, unconscionable bargain and abuse of dominant position. The plaintiffs contended that the defendant has not pleaded any facts in support of the defence or offered any narrative that can even be considered as a defence.
5. The defendant in its grounds of opposition asserts the following-
(a) That the defendant’s statement of defence dated 16th June, 2022 raises triable issues and as such this matter should proceed to full hearing;
(b) That the said statement of defence clearly indicates that the terms of the contract as provided in paragraph 5B of the amended plaint were not express which is a triable issue that requires further interrogation;
(c) That the said statement of defence clearly brings out the fact that the defendant is under no obligation to compensate the plaintiffs for any loss suffered which is another triable issue that requires further interrogation;
(d) That the said statement of defence brings out the fact that they did not introduce any new fee but only consolidated the existing fees and the same was done in accordance with the agreements, which is also a triable issue that requires further interrogation;
(e) That the defence clearly challenges the existence of unconscionable bargain in the agreement due to the existence of clause 43.2 of the service level agreement between the parties, which is also a triable issue that requires further interrogation by the Court;
(f) That the right to a fair hearing is provided for under the Constitution of Kenya, 2010 and each party should be accorded an opportunity to be heard on its case/position /issues on merit;
(g) That the right to a fair hearing cannot be limited by dint of Article 25 of the Constitution, particularly when it is clearly established that the dispute herein can be determined by application of the law;
(h) That striking out of pleadings is a drastic remedy that should only be resorted to where a pleading is a complete sham;
(i) That in the premises this Court cannot entertain or grant the prayers sought by the applicant in the application dated 25th October, 2022 as against the defendant; and
(j) That the prayers sought against the defendant are a nullity, lack factual merit and ought to be dismissed with costs to the defendant.
6. The plaintiffs’ written submissions were filed on 1st June, 2023 by the law firm of Shapley Barrett & Co. Advocates. The defendant’s submissions were filed on 22nd June, 2023 by Meritad Law Africa LLP.
7. Mr. P. Maina, the plaintiffs’ Counsel submitted that the burden of proof lies with the defendant to prove that its statement of defence raises triable issues. Counsel relied on the case of Job Kilach v Nation Media Group & others [2015] eKLR, to support his submission. He also relied on the decision in Peeraj General Trading & Contracting Company Ltd & others v Mumias Sugar Company Limited [2016] eKLR, to show that a mere denial by the defendant is not a sufficient defence.
8. Counsel also relied on the Court of Appeal decision in Mungunya General Stores v Pepco Distibutors Ltd [1987] eKLR, where the Court stated that a mere denial is not a sufficient defence and it is not sufficient therefore simply to deny liability with no reason being given.
9. Mr. Mwaura, the defendant’s Counsel submitted that the power to strike out pleadings is a discretionary and not a mandatory one and the said power should only be exercised where the pleadings are untenable and beyond redemption, as the import of striking out pleadings is driving away someone from the seat of justice. He relied on the case of Michael Kalani Muatha v Kyalo Mwikya & another [2022] eKLR, to buttress his submission.
10. Counsel stated that contrary to what the plaintiffs contend, the defendant’s statement of defence contains triable issues. He urged this Court to give the defendant a chance to rebut the plaintiffs’ case.
11. In making reference to paragraph 5H of the amended plaint, the defendant stated that the plaintiff claims Kshs. 24,622,882.25 in line with clause 27.2.3 of the Dealer Licence Agreement, which claim is rebutted at paragraph 13 of the defendant’s statement of defence by stating that the said clause is subject to clause 27, and that the said clauses relate to compensation being made to the respondent and not the applicant as pleaded.
12. Counsel submitted that the statement of defence challenges the issue of unconscionable bargain in paragraph 29 of the Dealer Licence Agreement by indicating that any changes in that agreement made by the respondent had to be consented to in writing by both parties before being implemented in line with clause 43.3 which is a rebuttal of the plaintiffs’ case hence a triable issue to be determined by way of trial.
13. Mr. Mwaura contended that the statement of defence at paragraph 16 shows that the defendant did not introduce new fees but consolidated the existing fees as per the agreement between the parties, which issues need to be properly determined in trial. He relied on the case of the Postal Corporation of Kenya v I.T. Inamdar & 2 others [2004] 1 KLR 359 as quoted with approval in Simon Kirima Muraguri & another V Equity Bank (Kenya) Ltd & another [2021] eKLR, where the Court stated that if the defence filed by a defendant raises even one bonafide triable issue, the defendant must be given leave to defend.
14. In citing the case of Olympic Escort International Co. Ltd & 2 others v Parminder Singh Sandha & another [2009] eKLR, Counsel for the defendant stated that the Court in the said case held that a triable issue is not necessarily one that the defendant would ultimately succeed on, but it need only to be bonafide.
15. He submitted that the defendant has the right to be heard under the provisions of Article 50 of the Constitution. He stated that the sum of Kshs.24,622,882.25 is a substantial amount, which claim the defendant ought to be given a chance to defend as its claim is not frivolous, vexatious or scandalous, as the statement of defence raises triable issues for determination by the Court.
ANALYSIS AND DETERMINATION
16. I have considered the application filed herein, the depositions made in support of the plaintiffs’ application, the grounds of opposition filed by the defendant and the written submissions filed by Counsel for the parties. I must hasten to add that instead of filing a replying affidavit the defendant filed grounds of opposition which should have been restricted to issues of law only and not to both the law and averments of factual issues.
17. The issues for determination is if the statement of defence is frivolous and should be struck out and if judgment should be entered in favour of the plaintiffs.
18. Striking out of pleadings is provided for under Order 2 Rule 15 of the Civil Procedure Rules, 2010, in the following words-
“At any stage of the proceedings the Court may order to be struck out or amended any pleading on the ground that –
(a) It discloses no reasonable cause of action or defence in law; or
(b) It is scandalous, frivolous or vexatious; or
(c) It may prejudice, embarrass or delay the fair trial of the action; or
(d) It is otherwise an abuse of thee process of the Court;
And may order the suit to be stayed or dismissed or judgment to be entered accordingly, as the case may be.”
19. I have read the amended plaint filed on 1st September, 2021, where they have made several allegations against the defendant for undersupplying the quantities of fuel needed at the petrol stations run by them, of trying to engage in unconscionable bargain and trying to alter the terms of the dealership agreements between them and the defendant without any consultation with the plaintiffs.
20. In the case of Isaac Awuondo v Surgipharm Limited & another [2011] eKLR, the Court of Appeal had the following to say:
“The law is now settled that if the defence raises even one bona fide triable issue, then the Defendant must be given leave to defend…We must however hasten to add that a triable issue does not mean one that will succeed. Indeed, in Patel vs. E.A. Cargo Handling Services Ltd. [1974] E.A. 75 at P. 76 Duffus P. said:-
“In this respect defence on the merits does not mean, in my view a defence that must succeed, it means as SHERIDAN, J put it “a triable issue” that is an issue which raises a prima facie defence and which should go to trial for adjudication.”
21. I have gone through the statement of defence and I agree with the plaintiffs’ Counsel that it contains a recital in almost all paragraphs by the defendant stating that it puts the plaintiffs to strict proof of their allegations. In some paragraphs the denials do not give an alternative explanation of what the defendant’s position to the allegations is. It is however my finding that in paragraphs 13, 15, 16, 21, 22, 29, 33 and 35 of the statement of defence, the defendant has responded to some of the allegations made by the plaintiffs.
22. In Baldev Raj vs. Kamel Kishore Aggarwal (Nairobi Civil Appeal No. 48 of 1985 (UR) the Court therein stated thus:
“It is our view that it is more unjust to shut out a defendant with a good defence than to require a Plaintiff to wait a little longer to prove his claim against such a defendant on the merits.”
23. Having considered the allegations by the plaintiffs in the amended plaint and the statement of defence, I am persuaded that the said defence is not so hopeless that it can be termed as not raising any bonafide triable issues. In my considered view, more life can be injected into it by way of amendment.
24. In conclusion, the application dated 25th October, 2022, is hereby dismissed. The defendant is given 21 days to amend, file and serve its amended statement of defence. Costs of the instant application shall be borne by the plaintiffs.
It is so ordered.
DELIVERED, DATED and SIGNED at NAIROBI on this 1st day of DECEMBER, 2023. Ruling delivered through Microsoft Teams Online Platform.
NJOKI MWANGI
JUDGE
In the presence of:
Mr. Paul Maina for the plaintiffs/applicants
Mr. Rweya h/b for Mr. Saende for the respondent
Ms. B. Wokabi – Court Assistant.