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Court of AppealPartially AllowedCivil Appeal No. 270 of 2012· [2020] KECA 689 (KLR)

African Banking Corporation Limited v Jatco Tours and Taxis Company Limited & 2 others [2020] KECA 689 (KLR)

Court of Appeal
8 May 2020
Mohamed Abdulahi WarsameM. WarsameSKS. Gatembu KairuJMJ. Mohammed
2,277 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that a court cannot use a partial judgment-on-admission to wipe out the rest of a creditor's claim; the balance must go to trial.

What this practically means

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Executive summary

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The appellant bank financed the 1st respondent's purchase of 21 vehicles under an Asset Finance Agreement, guaranteed by the 2nd and 3rd respondents, and sued for a shortfall of Kshs.15,360,215.48 after repossessing and selling 17 vehicles. It applied to strike out the defence and, in the alternative, for judgment on admission for Kshs.4,039,646.00. The High Court (M.G. Mugo, J) declined to strike out the defence, finding triable issues, but granted judgment on admission on terms that the payment be in full and final settlement of the whole claim. On appeal, the Court of Appeal (Warsame, Gatembu Kairu and J. Mohammed, JJ.A) in a single judgment of the court upheld the refusal to strike out, reiterating that striking out is discretionary, to be exercised sparingly, and unavailable where triable issues are raised. However, it held that the judge erred in decreeing that the admitted sum satisfied the entire claim: the claim on the pleadings was for a larger amount, the appellant had never abandoned the balance, and there was no basis to summarily dismiss it. The court distinguished the alternative-relief principle in Olive Mwihaki Mugenda, noting only one prayer had been granted and the balance left unaddressed. The appeal was allowed in part: the 'full and final settlement' order was set aside and the balance of the claim remitted to the lower court for trial, with the appellant awarded half the costs of the appeal. The binding proposition for lower courts is that judgment on admission for part of a claim cannot extinguish the unadmitted balance absent abandonment by the claimant.

Key legal issues

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01

Whether the defence raised triable issues barring striking out and summary judgment

Holding

The defence raised triable issues (wrongful repossession and undervalue sale, failure to render accounts, wrongly levied interest) and could not be struck out.

Reasoning

Whether to strike out a pleading under Order VI is a judicial discretion to be exercised sparingly. The summary procedure does not permit a trial on affidavits with protracted examination of documents. The respondents contested the interest charged, the accounts rendered and the repossession and sale, so those issues required ventilation at trial.

p. 2
02

Whether judgment on admission for part of a claim can be made in full and final settlement of the whole claim

Holding

No. The judge erred; having found triable issues, he was bound to refer the unadmitted balance to trial rather than extinguish it.

Reasoning

The claim on the face of the plaint and application exceeded the admitted sum, and the appellant never abandoned the remainder. There was no factual or legal basis to summarily dismiss the balance. The alternative-relief principle did not assist because both prayers were not granted; only the alternative was granted, leaving the balance unaddressed.

p. 3

Legal principles established

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  • Striking out a pleading is a discretionary power to be exercised sparingly and with circumspection, and a court will not strike out a pleading that raises a triable issue.
  • Where a court grants judgment on admission for part of a claim, it cannot, in the absence of abandonment by the claimant, decree that the payment is in full and final settlement of the whole claim; the unadmitted balance must be referred to trial.

Court orders

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  1. 1.Upheld the decision of the lower court rejecting the prayer to strike out the respondents' defence and enter judgment as prayed in the plaint
  2. 2.Set aside the order directing that payment of the admitted amount of Kshs.4,039,646.00 would be in full and final settlement of the appellant's claim
  3. 3.Substituted an order that the balance of the appellant's claim is referred back to the lower court for hearing and determination
  4. 4.Appellant to have half the costs of the appeal

Authorities

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Legislation

  • Civil Procedure RulesOrder VI Rule 13(1)(b) and (d)
  • Civil Procedure RulesOrder XII Rule 6
  • Civil Procedure RulesOrder VI
  • Civil Procedure ActSection 1A
  • Civil Procedure ActSection 3A
  • Civil Procedure ActSection 63

Cases cited (7)

  • Continental Butchery Limited vs. Nthiwa
    [1978] KLR
  • Gupta vs Continental Builders Ltd
    [1976-80] 1 KLR 809
  • Olive Mwihaki Mugenda & another vs. Okiya Omtata Okoiti & 4 others
    [2016] eKLR
  • Agricultural Finance Corporation vs. Banking Insurance & another
    [2018] eKLR
  • D. T. Dobie & Co (Kenya) Limited vs. Muchina & another
    [1982] KLR 1
  • Kenya Commercial Bank Limited vs. Nicholas R. O. Ombija
    [2015] eKLR
  • Alex Wainaina t/a John Commercial Agencies vs. Janson Mwangi Wanjihia
    [2015] eKLR
On appeal from
High Court of Kenya at Nairobi, Commercial & Tax Division
HCCC No. 481 of 2009
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate mandate (Civil Procedure Act); no specific article invoked 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 (17)

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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, "African Banking Corporation Limited v Jatco Tours and Taxis Company Limited & 2 others [2020] KECA 689 (KLR)", Case Analysis (2020). Civil Appeal No. 270 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/689/eng@2020-05-08

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