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Court of AppealPartially AllowedCivil Appeal No. 94 of 2003· [2014] KECA 409 (KLR)

Coffee Board of Kenya v Thika Coffee Mills Limited & 2 others [2014] KECA 409 (KLR)

Court of Appeal of Kenya
25 July 2014
EGE. M. GithinjiRNR. N. NambuyeMartha Karambu KoomeMartha Koome
6,845 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal overturned a huge summary judgment, ruling defendants must be allowed to amend defences and admissions must be clear before judgment.

What this practically means

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Executive summary

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This first appeal challenged a ruling of the High Court (Rimita, J.) dated 28th February 2003, which granted Thika Coffee Mills Limited (TCM) leave to further re-amend its plaint against the Coffee Board of Kenya (CBK) and, simultaneously, entered judgment on admission against CBK in the sum of USD 5,862,595.77. CBK contended it had been condemned unheard: it was denied corresponding leave to re-amend its defence in response to fresh allegations of admission, the re-amended plaint was deemed filed without payment of filing fees or service, and the purported admissions in its letters of 5th July 2002 and 12th September 2002 were written in error and were not clear and unambiguous. TCM defended the ruling as a judicious exercise of discretion grounded on unequivocal admissions. The Court of Appeal, guided by Rule 29(1) of its Rules and the established principles on amendments of pleadings, held that the Judge properly exercised his discretion in allowing the re-amendment itself, since the new cause of action arose out of substantially the same facts. However, the Court parted company with the trial Judge on procedure: the re-amended plaint was never properly introduced on record (no filing fees, no stamping, and it purported to have been re-amended before leave was granted), CBK was entitled as of right to corresponding leave to amend its defence, and the admissions were not clear and unambiguous, leaving numerous questions answerable only at a full trial, including a risk of double payment given parallel suits. The Court allowed the appeal in part: the order granting leave to re-amend stands on condition the re-amended plaint be filed and served within seven days, parties may file re-amended defences within seven days of service, the summary judgment on admission was set aside and the suit ordered to be set down for hearing on priority basis, with costs of the appeal to abide the outcome of the suit.

Key legal issues

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01

Whether the re-amendment of the plaint introducing a new claim based on alleged admissions should have been allowed

Holding

The Judge properly exercised his discretion in allowing the re-amendment, since a new cause of action arising out of the same or substantially the same facts may be introduced by amendment

Reasoning

Order VIA rule 3(5) permits an amendment adding or substituting a new cause of action if it arises out of the same or substantially the same facts already claimed. The proposed amendments were based on the same facts as the original and amended plaint and were necessary for the effectual determination of the issues in dispute. Merits of a proposed amendment are not a consideration at the interlocutory stage.

p. 8
02

Whether CBK was entitled to corresponding leave to amend its defence

Holding

Yes; leave to amend a statement of claim carries with it, without mention, an assumption of leave to amend the defence consequentially, and the Judge fell into error by entering judgment before allowing CBK to file a re-amended defence

Reasoning

Relying on Halsbury's Laws of England and Squire v Squire, the Court held that when a plaintiff obtains leave to amend, leave will be assumed for the defendant to make consequential amendments. Denying CBK the opportunity to respond to fresh allegations of admission offended the constitutional right to be heard and rendered the judgment on admission irregular.

p. 8
03

Whether the re-amended plaint was properly on record

Holding

No; there was no evidence of payment of filing fees or stamping, and the plaint purported to have been re-amended on 8th November 2002 before leave was granted on 28th February 2003

Reasoning

Under Order 3 rule 2, a plaint must be presented to the registry with the fee payable and date-stamped. The record contained no payment receipts or stamped copy, and the 1st respondent offered no answers to these competency questions, leading to the inference that the re-amended plaint was not properly on record.

p. 8
04

Whether summary judgment on admission was properly entered

Holding

No; the letters and minutes relied on raised numerous unanswered questions, so the admissions were not clear and unambiguous and judgment was entered prematurely

Reasoning

Judgment on admission is discretionary and requires clear, unambiguous and unconditional admissions. The CBK letters and meeting minutes left unresolved questions about the loan agreements, currency, amounts and CBK's capacity to admit debts on behalf of farmers' societies, and there was a risk of double payment given other suits over the same funds. These matters required a full trial.

p. 11

Legal principles established

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  • A defendant is entitled as of right to corresponding/consequential leave to amend its defence when a plaintiff is granted leave to amend a plaint, before judgment on admission can be entered
  • Final judgment on admissions may only be entered where the admissions are clear, unambiguous and unconditional; judgment on admission is discretionary, not a matter of right
  • An amendment pleading must be properly introduced on the record by payment of the requisite filing fees and service on the other parties before judgment can be founded on it
  • On a first appeal, the Court of Appeal is mandated to re-appraise the evidence and draw inferences of fact

Court orders

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  1. 1.The appeal is allowed to the extent that the order allowing TCM leave to re-amend the plaint still remains
  2. 2.The order allowing re-amendment remains on condition that the re-amended plaint shall be filed and served within seven (7) days from the date of the judgment
  3. 3.CBK and other parties are at liberty to file and serve their re-amended defence (if any) within seven (7) days of service
  4. 4.The order entering summary judgment on admission against CBK is set aside and substituted with an order that the suit be set down for hearing before the High Court on priority basis
  5. 5.Costs of this appeal shall abide the outcome of the suit

Authorities

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Legislation

  • Civil Procedure Rules (former Civil Procedure Rules / current Civil Procedure Rules)Order VIA rule 3(1) (current Order 8 rule 3(1))
  • Civil Procedure RulesOrder VIA rule 3(5) (current Order 8 rule 3(5))
  • Civil Procedure RulesOrder VI A rule 5(1) (current Order 8 rule 5(1))
  • Civil Procedure RulesOrder 3 rule 2
  • Civil Procedure RulesOrder XII rule 6 (current Order 13 rule 2)
  • Civil Procedure RulesOrder 8 rule 8 (current Order 6A rule 8)
  • Coffee Act2001
  • Constitution of Kenyaright to be heard (referred to as entrenched in the Constitution)

Cases cited (7)

  • Selle & Another v. Associated Motor Boat Co. Limited
    [1986] EA 123
  • Eastern Bakery –vs.- Castelino
    (1958) E.A. 461
  • Wareham t/a AF Wareham & 2 others –vs- Kenya Post Office Savings Bank
    Civil Appeal Nos. 5 & 48 of 2002
  • Sajjan Kumar –vs.- Ram Kishan
    (2005) 13 SCC 89
  • Squire –vs- Squire & Others
    (1972) 1 ALL ER 891
  • Agricultural Finance Corporation –vs- Kenya National Assurance Company Ltd.
    Civil Appeal No. 271 of 1996
  • Choitram –vs- Nazari
    (1982-88) 1 KAR 437
On appeal from
High Court of Kenya at Nairobi
H.C.C.C No. 1068 of 1998
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's Rules (Rule 29(1) of the Court's Rules, re-appraisal of evidence on a first appeal)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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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, "Coffee Board of Kenya v Thika Coffee Mills Limited & 2 others [2014] KECA 409 (KLR)", Case Analysis (2014). Civil Appeal No. 94 of 2003. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2014/409/eng@2014-07-25

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