Ecobank Kenya Limited v Amreen Kutbuddin Mukadam & Another
The bottom line
#Kenya's Court of Appeal restored Ecobank's defence, ruling that a court cannot strike out a defence that raises genuine questions needing a full trial.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the High Court judge properly exercised his discretion in striking out the bank's defence, counterclaim and set off
- 2.Whether the defence, counterclaim and set off disclosed bona fide triable issues, including whether the respondents were guarantors and whether the Fixed Deposit was offered as security
Key legal issues
#Whether striking out the defence, counterclaim and set off was justified
The strike-out was improper because the pleaded guarantor relationship and alleged lien over the fixed deposit raised substantial triable issues.
The bank pleaded that the respondents stood as joint and several guarantors of the principal debtor's facilities and that the Fixed Deposit Receipt was offered as security. Those allegations, if bona fide, meant the deposited funds were not freely available to the respondents. Such questions of fact and documentary proof could only be resolved at trial, and the judge erred by assessing evidential sufficiency at an interlocutory stage and by striking out the claim against the principal debtor without reasons.
The applicable principles for striking out pleadings
The D.T. Dobie principles apply with equal force to striking out a defence: act cautiously, avoid deciding merits, sustain suits curable by amendment.
The court adopted Madan JA's cautionary guidance in D.T. Dobie v Muchina and the Crescent Construction statement that the striking-out power is discretionary and must not drive any litigant from the seat of justice, while acknowledging it is unfair to drag a party to trial over a non-starter. Summary process is reserved for the clearest of cases.
Legal principles established
#- The power to strike out a pleading is discretionary and must be exercised with the greatest care and caution; a defence raising bona fide triable issues should not be struck out.
- On a striking-out application the court considers only whether bona fide triable issues arise, not the merits or conclusiveness of proof.
Court orders
#- 1.Appeal allowed
- 2.Order striking out the appellant's defence, counterclaim and set off set aside
- 3.Judgment entered in favour of the respondents by the High Court ruling set aside
- 4.Substituted order dismissing the respondents' chamber summons dated 23rd December 2009
- 5.Suit to proceed to full hearing
- 6.Respondents to pay the costs of the appeal and the application in the High Court
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court
- Civil Case No. 775 of 2009
- Jurisdiction invoked
- First appellate jurisdiction over appeals from the High Court (Constitution/Court of Appeal jurisdiction); appeal against discretionary ruling striking out pleadings
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In our view, the defence counterclaim and set off put forward by the appellant raised substantial questions to be tried.
The power to strike out a pleading is a discretionary one. As we have already stated it is to be exercised with the greatest care and caution as Madan J.A. stated in the D.T. Dobie (supra) case.
Fixed Deposit Receipts are often offered and accepted as security by financial institutions.
We set aside the order striking out the appellant’s defence, counterclaim and set off and set aside the judgment entered in favour of the respondents against the appellant vide the High Court ruling dated 12th November, 2011.
We order that the suit shall proceed to full hearing. The respondents Amreen Kutbuddin Mukadam and Noreen Ashiq Hassan Sheikh will pay the costs of the appeal and the application in the High Court.
Issues in the judgment
#Date of the High Court ruling appears as 17th November 2011 in the title but 12th November 2011 in the final orders.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ecobank Kenya Limited v Amreen Kutbuddin Mukadam & Another", Case Analysis (2016). Civil Appeal No. 122 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2016/840/eng@2016-01-22
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.