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Court of AppealPartially AllowedCivil Appeal 146 of 2001· [2007] KECA 500 (KLR)

Crescent Construction Co Ltd v Delphis Bank Ltd (Civil Appeal 146 of 2001) [2007] KECA 500 (KLR)

Court of Appeal of Kenya
9 February 2007
ROR.S.C OmoloEGE.M. GithinjiJOJ.W. Onyango Otieno
3,777 words in judgment
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The bottom line

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Kenya's Court of Appeal revived Crescent Construction's lawsuit against Delphis Bank, ruling that courts must strike out a plaint only in the clearest hopeless cases, without looking at evidence.

What this practically means

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Executive summary

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This Court of Appeal judgment (Omolo, Githinji and Onyango Otieno, JJA) allowed Crescent Construction's appeal against a High Court ruling (Ole Keiwua J, 15 December 1998) striking out its plaint against Delphis Bank. The plaint claimed special, general and exemplary damages for loss of business standing and creditworthiness allegedly caused by Delphis Bank's winding-up petition (Winding Up Cause No. 38 of 1993), which had earlier been struck out by Bosire J for failure to establish the petitioner's position as creditor. Delphis Bank's chamber summons under Order VI rule 13(1)(a), (b), (d), Order 35 and section 3A was abandoned in part, leaving only a striking-out application under Order VI rule 13(1)(a). The Court reaffirmed the principles in D.T. Dobie v Muchina: striking out is discretionary, to be exercised with great care; a court must consider the pleadings only, without evidence, assuming the plaint's allegations to be true; and no suit should be summarily dismissed unless it is so hopeless that it plainly and obviously discloses no cause of action and is incurable by amendment. The Court held the learned Judge erred by considering evidence and misreading the plaint, and that remoteness of the alleged damages and entitlement to exemplary damages were matters for trial. The High Court ruling and consequential orders were set aside, with costs of the appeal and of the chamber summons awarded to the appellant. The plaint now proceeds to hearing.

Key legal issues

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01

Correct approach on striking out a plaint under Order VI rule 13(1)(a)

Holding

The D.T. Dobie v Muchina principles apply: the court must act cautiously, not consider the merits, and should not dismiss a suit unless it is plainly hopeless and incurable by amendment.

Reasoning

The Court reiterated that striking out is a discretionary power to be exercised with the greatest care and caution, because rules of natural justice require that no litigant, however weak the case, be driven from the seat of justice. Madan JA's summary in D.T. Dobie v Muchina reflects the correct law and has been consistently followed in this jurisdiction.

p. 5
02

Whether the High Court Judge erred by considering matters beyond the pleadings

Holding

Yes. The Judge considered evidence and the prior ruling striking out the winding-up petition, which was not before him, and misread the plaint as complaining only of publication by the respondent.

Reasoning

The plaint's complaint was that the filing of the unwarranted winding-up petition led to publication reaching the appellant's business contacts, adversely affecting its business; whether the alleged damages were remote or whether exemplary/aggravated damages were suffered required investigation at a hearing. The Judge's conclusions flowed from considering evidence, which he was not obliged or permitted to do at that stage.

p. 6
03

Whether the plaint disclosed a cause of action fit for hearing

Holding

Yes. The plaint did not appear so hopeless that it plainly and obviously disclosed no reasonable cause of action; it was for hearing.

Reasoning

On a plain reading, the plaint alleged that the filing of the winding-up petition for no good cause caused the matter to circulate and reach persons dealing with the appellant, affecting its business standing, reputation and creditworthiness, and claimed exemplary and aggravated damages. These were matters for investigation through evidence at trial.

p. 6

Legal principles established

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  • In an application under Order VI rule 13(1)(a), the court must look at the pleadings only and not at any evidence, whether by affidavit or from the bar.
  • A suit should not be summarily dismissed unless it is so hopeless that it plainly and obviously discloses no reasonable cause of action and is beyond redemption by amendment.
  • Whether a plaint discloses a cause of action is determined on the plaint alone, assuming its express or implied allegations of fact are true.

Court orders

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  1. 1.Appeal allowed
  2. 2.The ruling delivered on 15th December 1998 and all consequential orders set aside
  3. 3.Appellant awarded costs of the appeal and of the chamber summons dated 30th October 1995

Authorities

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Legislation

  • Civil Procedure RulesOrder VI rule 13(1)(a), (b) and (d)
  • Civil Procedure RulesOrder 35
  • Civil Procedure Actsection 3A
  • Civil Procedure RulesOrder XIV rule 2
  • Companies Actsections 130, 131, 220(a)
  • Transfer of Property Actsection 3

Cases cited (3)

  • Kunvarji S. Varshani & another vs. BCCI
    Civil Application No. Nai. 68 of 1992 (CA)
  • D.T. Dobie & Co. vs. Muchina
    (1982) KLR 1; CACA No. 37 of 1978
  • Jevaj Shariff & Co. vs. Chotail Pharmacy Stores
    (1960) EA 374
On appeal from
High Court of Kenya at Milimani Commercial Courts
H.C.C.C No. 4082 of 1994
Jurisdiction invoked
First appeal to the Court of Appeal from the High Court (no specific constitutional/statutory provision stated in the judgment)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (13)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Crescent Construction Co Ltd v Delphis Bank Ltd (Civil Appeal 146 of 2001) [2007] KECA 500 (KLR)", Case Analysis (2007). Civil Appeal 146 of 2001. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/500/eng@2007-02-09

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.