REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
(MILIMANI COMMERCIAL COURTS)
CIVIL SUIT NO. 806 OF 2003
PIEDMONT INVESTMENTS LIMITED …………………….……….PLAINTIFF
VERSUS
STANDARD ASSURANCE KENYA LTD…...……………..….1ST DEFENDANT
UFANISI CAPITAL AND CREDIT LIMITED ……….....……..2ND DEFENDANT
SUPERIORFONE COMMUNICATIONS LIMITED….......…..3RD DEFENDANT
AND
EQUITY BANK (KENYA) LIMITED.........................................……..PROPOSED 4TH DEFENDANT/APPLICANT
RULING
1. The application brought by Equity Bank (K) Limited dated 17th March, 2023 has been brought under Sections 1A, 1B, 3A and 63(e) of the Civil Procedure Act, Order 1 Rule 10 (2) and Order 51 Rule 1 of the Civil Procedure Rules, 2010. The applicant prays for orders that:
(i) Spent
(ii) Spent;
(iii) The applicant Equity Bank (Kenya) Limited be admitted to join these proceedings as the 4th defendant;
(iv) Pursuant to the order in prayer 3 above, this Court be pleased to grant leave to the applicant to file a defence and any other documents in response to the plaintiff’s suit;
(v) Any other order the Court may deem fit; and
(vi) Costs of the application be in the cause.
2. Mr. Kariuki King’ori, the Manager Legal Services for Equity Bank swore an affidavit on 17th March, 2023 in support of the application.
3. The genesis of the matter according to the applicant is that it advanced a commercial mortgage loan of Kshs 200,000,000/= to Saika Two Estate Developers Ltd for the acquisition of suit property known as L.R. No. 209/2582 Delta Hotel. That upon successful transfer of the title, the applicant caused a first legal charge to be registered in its favour. It is stated that the Saika Two Estate Developers Ltd is still servicing the loan and the said property is yet to be discharged and continues to be held as security. That the applicant has an interest in the matter and has just learned of the existence of this suit.
4. The plaintiff in its replying affidavit, sworn on 13th July, 2023, by Eng. Maxwell Otieno Odongo, the director of the plaintiff company, averred that the applicant has not advanced a good reason to be joined as a defendant. He deposed that at the time the applicant took charge the property, there existed a Court order barring any further dealings with the suit property and the title in possession of the applicant has been cancelled. He attached a copy of the Court order and search marked as MOO1. He stated that the applicant acted in breach of the Court order. It is averred that joining the applicant in this case will prejudice the plaintiff as the matter is at an advanced stage as the plaintiff has already closed its case and the only outstanding defence is that of the 3rd defendant. He averred that joinder of the applicant will delay the matter. He stated that the only remedy available to the applicant is to pursue Saika Two Estate Developers Ltd for repayment of the loan.
5. In the supplementary affidavit filed by the applicant sworn on 24th July, 2023 by Kariuki King’ori, he argued that the search adduced by the plaintiff is incomplete and misleading to the Court and the net effect of the Court order of 29th March, 2010 was that the title transferring the suit property to the 2nd and 3rd respondents was cancelled and the title was transferred back to the plaintiff which was under receivership. Mr. King’ori deposed that the said order only restrained the 1st defendant from interfering with the plaintiff’s possession and not any dealings with the suit property, and the 1st defendant was at liberty to transfer the property to the 3rd defendant.
6. The applicant argued that the charge created on 29th August, 2013 was legal and it is in the interest of justice for the application to be allowed.
7. At the hearing of the application, Ms Akoth, learned Counsel for the 3rd defendant, and Mr. Njenga, learned Counsel for the Official Receiver were not opposed to the application.
8. The said application was heard by way of submissions with the plaintiff and the applicant complying by filing their written submissions.
Applicant’s submissions
9. Mr Mbaji, learned Counsel for the applicant submitted that the law governing joinder of a defendant is Order 1 Rule 10 of the Civil Procedure Rules, 2010, which allows a Court to join a defendant either on its own motion or on application by a party. He argued that the applicant has a direct and substantial interest in the matter by holding the title of the property known as L.R. No. 209/2582 as security for the loan advanced to Saika Two Estate Developers Ltd, as the loan is yet to be repaid and the title discharged.
10. Counsel argued the rights of the applicant may be directly affected by the outcome of the case in issue and it is in the interest of justice that the applicant protects its rights. He opined that failure to join the applicant to the suit may result in a partial and incomplete adjudication of the dispute. He urged this Court to find the application as being merited and proceed to allow the same.
Plaintiff’s submissions
11. Mr. Amuga, learned Counsel for the plaintiff submitted that the applicant has failed to demonstrate that it ought to have been joined as a defendant to this suit but it was not, or that its presence is necessary to enable the Court to effectually and completely to adjudicate upon and settle all questions involved in this suit.
12. Counsel contended that the title in possession of the applicant was cancelled by the Court on 25th March, 2010, and that the applicant purported to take charge of a party who did not own or have a valid title to the suit property. The plaintiff argued that its claim in this suit has nothing to do with the transaction between the applicant and Saika Two Estate Developers Ltd in 2018, as the suit dates back to the year 2003.
13. It was submitted that the applicant has not disclosed the kind of defence it intends to file if the application is allowed, which is a crucial omission. Counsel contended that joinder of the applicant to this suit is not in the interest of justice, as it will clog the proceedings. He urged this Court to dismiss the application.
ANALYSIS AND DETERMINATION.
14. I have considered the application, the affidavits in support and opposition and the submissions made by the parties’ Advocates. The issue for determination is whether the applicant should be joined as the 4th defendant in this suit.
15. A party seeking joinder as a defendant must demonstrate the following as was held in the case of Meme v Republic [2004] 1 EA 124:
“(i) Joinder of a person because his presence will result in the complete settlement of all the questions involved in the proceedings;
(ii) Joinder to protect the rights of a party who would otherwise be adversely affected in law;
(iii) Joinder to prevent a likely course of proliferated litigation.”
16. This suit concerns the ownership of the property known as L.R. No. 209/2582 Delta Hotel between the plaintiff and the defendants herein.
17. The applicant seeks to be joined as the 4th defendant in this suit. It argues that it has a vested interest in the suit property as it holds the title to the said property which was charged by Saika Two Developers Ltd and the security has not been discharged.
18. The plaintiff opposes the joinder on the basis that the alleged title held by the applicant is a nullity, and that the actions of the applicant in acquiring title to the suit property were in breach of the Court orders issued on 25th March, 2010, and any transactions dealt with in the year 2018 are void and unenforceable.
19. It is also argued that the current application will occasion delay as the plaintiff has closed its case. In Sammy Kanyi Kareithi vs. Barclays Bank of Kenya & 2 others; Ross Xavier Whithey (Applicant) [2021] eKLR, the Court held that:
“Firstly, the court is empowered to join a party to a suit at any stage of the proceedings with or without an application by any party. Secondly, the mere delay in applying joinder is not fatal. The pending suit is yet to be heard and the Plaintiff has not demonstrated what prejudice it has suffered by the late filing of the application. In the case of Central Kenya Limited v Trust Bank Limited and 5 Others [2000] eKLR, the High Court had declined to grant leave to the Appellant to amend its plaint and to join additional Defendants to the suit. In allowing the appeal, the Court of Appeal held that mere delay was not sufficient ground for declining leave unless such delay was the kind which could prejudice the adverse party beyond compensation in costs.”
20. In the instant application the plaintiff despite having closed its case has not demonstrated the prejudice it will suffer if the applicant is joined as a party to the suit. Order 1 Rule 10 of the Civil Procedure Rules, 2010 deals with joinder of parties to a suit. The discretionary remedy by the Court to join a party can be done at any stage of the proceedings.
21. In Civicon Limited vs. Kivuwatt Limited and 2 others [2015] eKLR, the Court observed stated as follows:
“Again the power given under the Rules is discretionary which discretion must be exercised judicially. The objective of these Rules is to bring on record all the persons who are parties to the dispute relating to the subject matter, so that the dispute may be determined in their presence at the time without any protraction, or inconvenience and to avoid multiplicity of proceedings. Thus, any party reasonably affected by the pending litigation is a necessary and proper party, and should be enjoined…from the foregoing, it may be concluded that being a discretionary order, the court may allow the joinder of a party as a defendant in a suit based on the general principles set out in Order I rule 10 (2) bearing in mind the unique circumstances of each case about the necessity of the party in the determination of the subject matter of the suit, any direct prejudice likely to be suffered by the party and the practicability of the execution of the order sought in the suit, if the plaintiff should succeed. We may add that all that a party needs to do is to demonstrate sufficient interest in the suit, and the interest need not be the kind that must succeed at the end of the trial.”
22. In the instant case, the applicant who is the intended 4th defendant claims a legal interest in the suit property known as L.R. No. 209/2582 Delta Hotel having obtained a legal charge in favour of Saika Two Developers Ltd. The ownership of the suit property being the central dispute, the applicant is apprehensive that its interest will be defeated if the title to Saika Two Developers Ltd is cancelled.
23. Further the Mutunga Rules, the Constitution of Kenya (Protection of the rights and fundamental freedoms) Practice and Procedure Rules, Legal Notice No.117 of 2013, define an interested party as “A person or an entity that has an identifiable stake or legal interest or duty in the proceedings and may be directly involved in the litigation”.
24. Although the applicant herein has not applied to join this suit as an interested party, it has demonstrated that it has an identifiable stake in the case, as it is holding the title for the property known as L.R. No. 209/2582 Delta Hotel as security for the loan it advanced to Saika Two Developers Ltd.
25. After due consideration of the proceedings, this Court notes that once joined as a party to the proceedings, the applicant will enable the Court to determine the matters effectually and to completely settle all the issues in controversy. The orders that the Court will issue will greatly affect the intended 4th defendant, taking into consideration that the issue in dispute revolves around the ownership of the property known as L.R. No. 209/2582 Delta Hotel. It will therefore be in the interest of justice and with the aim to avoid multiplicity of suits to have Equity Bank (K) Limited joined as the 4th defendant to this suit.
26. The application dated 17th March, 2023 is merited. The same is allowed as prayed. The applicant is to file its statement of defence within 21 days and serve the same on all the parties. The costs of the application will follow the outcome of the case.
It is so ordered.
DATED, SIGNED and DELIVERED at NAIROBI on this 9th day of February, 2024. Ruling delivered through Microsoft Teams Online
Platform.
NJOKI MWANGI
JUDGE
In the presence of:
Mr. Mbaji for the applicant/proposed 4th defendant
Mr. Amuga for the plaintiff/respondent
Ms Kauma h/b for Mr. Njenga for the 1st defendant
No appearance for the 2nd and 3rd defendants
Ms B. Wokabi – Court Assistant.