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Court of AppealAllowedCivil Appeal No. 62 of 2012

Equity Bank Limited v Neptune Credit Management Limited [2016] KECA 385 (KLR)

Court of Appeal of Kenya
22 July 2016
WKW. KaranjaPhilomena Mbete MwiluP. M. MwiluFAF. Azangalala
3,937 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~16 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal ruled that a minor procedural slip in a pleading does not kill a lawsuit; courts should allow amendments instead of striking cases out.

What this practically means

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Executive summary

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Equity Bank sued Neptune Credit Management and simultaneously sought an interim injunction to restrain the presentation of a winding-up petition in respect of a contested debt of Shs.10,200,000. Neptune filed a preliminary objection arguing that the plaint contravened Order VII rule 1(e) of the Civil Procedure Rules, which required an averment that no other suit or proceedings were pending between the parties over the same subject matter. Apondi J upheld the objection and dismissed the suit and application with costs, treating the non-compliance as a nullity. On appeal, the Court of Appeal (Karanja, Mwilu and Azangalala JJ.A) considered whether 'shall' in Order 4 rule 1(f) was mandatory, whether the trial court had jurisdiction to dismiss the entire suit, and whether the overriding objective and Article 159(2)(d) of the Constitution were taken into account. The court held that Order 4 rule 1(f) contains no consequence for non-compliance, sub-rule (6) deliberately excludes sub-rule (1) from striking out, and where the rules are unclear recourse must be had to the Civil Procedure Act itself, including sections 1A, 3 and 3A. A purposive rather than literal approach should have been adopted; the mischief of the rule is multiplicity of suits, and the appellant's affirmation of the pending winding-up proceedings satisfied the rule's objective. Citing Continental Butchery v Nthiwa, the court emphasized that a party should not be deprived of a full trial. The appeal was allowed, the High Court ruling set aside, the appellant given 21 days to file an amended plaint, and the costs of the appeal ordered to abide the determination of the suit.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the word 'shall' as used in Order VII rule 1(e) (Order 4 rule 1(f)) of the Civil Procedure Rules imposed a mandatory obligation
  2. 2.Whether the trial court had jurisdiction to strike out/dismiss the suit in its entirety for failure to comply with Order 4 rule 1(f) of the Civil Procedure Rules
  3. 3.If jurisdiction existed, whether it was properly exercised, including whether the judge considered the overriding objective of the Civil Procedure Act and Article 159(2)(d) of the Constitution

Key legal issues

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01

Whether omission of the Order 4 rule 1(f) averment renders a plaint a nullity and exposes it to striking out

Holding

The omission does not automatically invalidate the plaint; Order 4 rule 1(f) has no stated consequence for non-compliance, and sub-rule (6) deliberately excludes sub-rule (1) from striking out. A purposive approach should have sufficed.

Reasoning

The court contrasted Order 4 rule 1(f) with rule 1(6), which expressly permits striking out for non-compliance with sub-rules (2)-(5) only, showing a deliberate legislative choice to exclude sub-rule (1). The mischief of the rule is multiplicity of suits; the appellant's affirmation of the pending winding-up proceedings acceded to the rule's objective, and amendment, not striking out, was the appropriate remedy.

p. 4
02

Whether the trial court had jurisdiction to decide on the preliminary objection concerning a specific procedural rule

Holding

The court had jurisdiction; where rules are unclear, the court may resort to the Civil Procedure Act's overriding objective, special jurisdiction and inherent powers to fill the void.

Reasoning

The Civil Procedure Rules are made by the Rules Committee under section 81(1) of the Civil Procedure Act and must not be inconsistent with the Act. Sections 1A, 3 and 3A of the Act come into play where the rules are unclear. The court was therefore not persuaded that the trial judge lacked jurisdiction over the preliminary objection.

p. 5
03

Whether the word 'shall' in Order 4 rule 1(f) is mandatory

Holding

'Shall' is to be construed both textually and contextually; the provisions of Order 4 rule 1 are not linked to Order 2 rule 15 by text or context.

Reasoning

The court adopted a textual and contextual construction of 'shall'. Failure to abide by Order 4 rule 1 does not, of itself, make the suit a nullity attractable to Order 2 rule 15 striking out, since the rule lacks a stated consequence for non-compliance and each case must be considered on its own circumstances.

p. 4
04

Scope of the appellate mandate on a first appeal

Holding

The Court on a first appeal may re-appraise evidence and draw inferences of fact, and will not interfere with the exercise of judicial discretion unless the judge misdirected himself or was clearly wrong, occasioning injustice.

Reasoning

Guided by Rule 29(1) of the Court's Rules and Selle v Associated Motor Boat Company Ltd, the Court may subject a first appeal to retrial and come to its own conclusion; per Coffee Board of Kenya v Thika Coffee Mills, interference with discretion requires misdirection or a clearly wrong exercise causing injustice. Here the judge's single-lens literal approach warranted interference.

p. 6

Legal principles established

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  • Non-compliance with Order 4 rule 1(f) on the 'no other suit pending' averment does not automatically render a plaint a nullity; the trial court retains discretion, informed by the overriding objective and Article 159(2)(d), to allow amendment rather than strike out the suit.
  • Where civil procedure rules are unclear or silent on the consequence of non-compliance, recourse is had to the Civil Procedure Act itself, including sections 1A, 3 and 3A.
  • Striking out a plaint deprives a party of the right to have its case tried at a full trial with discovery and oral evidence subject to cross-examination, and should not be done where circumstances permit a purposive approach.

Court orders

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  1. 1.Appeal allowed
  2. 2.High Court ruling and order of Apondi J dated 24th January 2012 and delivered 3rd February 2012 set aside
  3. 3.Appellant to file and serve an amended plaint within 21 days to rectify the anomaly
  4. 4.Matter to proceed before the High Court
  5. 5.Costs of the appeal to abide the determination of the suit

The bench

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One judgment of the whole court — no separate or dissenting opinions.

WK
majority
Philomena Mbete Mwilu
P. M. MwiluJA
Currently serving
majority
FA
majority
On appeal from
High Court of Kenya at Nairobi
HCCC No. 871 of 2009
Jurisdiction invoked
First appeal under the Court of Appeal's appellate jurisdiction (Rule 29(1) of the Court of Appeal Rules; Appellate Jurisdiction Act referenced)

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

From the foregoing, we hold that this was not a proper case for striking out the appellant?s plaint and application.
p. 6Striking out of plaint
A purposive approach to the dispute should have sufficed in our view rather than the literal application of the rules.
p. 5Purposive interpretation of procedural rules
This is evidence of a deliberate intention on the part of the legislature to exclude sub rule (1) from the consequence of striking out of proceedings as contemplated in sub rule (6).
p. 4Statutory interpretation of Order 4 rule 1
a party to a civil litigation is not to be deprived of his right to have his case tried by a proper trial where, if necessary, there has been discovery and oral evidence subject to cross-examination.
p. 6Right to full trial
we allow the appeal, set aside High Court ruling and order of Apondi, J dated 24th January, 2012 and delivered on 3rd February 20102.
p. 7Final orders / disposition
We order that the appellant do within 21 days from the date of this judgment file and serve an amended plaint to rectify the anomaly and the matter do proceed before the High Court.
p. 7Final orders - amendment and remittal

Issues in the judgment

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minor

Typographical error in the final order date: '3rd February 20102' should read '3rd February 2012'.

minor

Appellate citation of Selle v Associated Motor Boat Company Ltd is repeated almost verbatim within the same paragraph.

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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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, "Equity Bank Limited v Neptune Credit Management Limited [2016] KECA 385 (KLR)", Case Analysis (2016). Civil Appeal No. 62 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2016/385/eng@2016-07-22

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