Edward Muriu Kamau v Jijenge Credit Limited & 1 other

5. According to the Applicant, between October and December 2023, the 1st Defendant paid interest and a partial capital sum of Kshs. 1,329,623.93, leaving an outstanding sum of Kshs. 23,670,376.07. 6. By correspondence and emails dated 7th February 2024, 2nd March 2024, and 6th March 2024, the 2nd Defendant, in his capacity as a guarantor to the 1st Respondent for the benefit of the Applicant, is said to have acknowledged indebtedness and/or offered to repay by instalments. 7. According to the Applicant, the Respondent failed to liquidate the debt, leading to the institution of the instant suit by the Plaintiff against the Respondents, vide a plaint dated 8th July 2024, and the instant application dated 13th February 2025, seeking judgment on admission as against the Respondents, under Order 13, Rule 2 of the Civil Procedure Rules. 8. The Applicant's case is essentially on the assertion that the Defendants have made clear and unequivocal admissions of the outstanding debt of Ksh. 23,670,376.07 arising from a Master Private Placement Agreement. The Applicant cites, among others, the issuance of the cheques which were later dishonored, and the written acknowledgments of the debt by the Respondents. 9. The Application is opposed by the Respondent vide a replying affidavit sworn on 28th February 2025 by Peter Macharia Kamau, the 2nd Respondent herein, who is also the Managing Director of the 1st Respondent. According to the Respondents, the Plaintiff’s application for Judgment on Admission is not merited since there has been no clear and unequivocal admission on the part of the Respondents. 10. The Respondent maintains that, on the contrary, the Respondent in his pleadings denied any indebtedness to the Applicant; that the cheques relied upon by the Applicant as evidence of admission were invalid, inconsistent, and recalled due to discrepancies between the figures and words, and therefore cannot form the basis of a judgment on admission. 11. The 1st Defendant/1st Respondent filed a Notice of Preliminary Objection dated 16th May 2025 challenging the entire suit on the ground that it is premature, having been instituted before the parties exhausted the arbitration mechanism provided for under the subject agreements. 12. The Application was canvassed by way of written submissions. The Plaintiff filed his submissions dated 25th April 2025, whilst the Respondents filed theirs dated 19th May 2025. Analysis and Determination 13. Upon consideration of the instant application, the affidavits filed in support thereof, the Replying Affidavit and Grounds of Opposition by the Defendants, and the written submissions by Counsel for parties, the issues that arise for determination are: – i. Whether the application is premature or otherwise barred by the arbitration clause ii. Whether the conditions for judgment on admission under Order 13 Rule.2 of the Civil Procedure Rules have been satisfied; and iii. Whether the Plaintiff should be granted leave to execute the decree prior to taxation of costs Whether the suit is premature 14. The 1st Defendant, in its Notice of Preliminary Objection, relies on Clause 16 of the Master Placement Agreement requiring negotiation and, if unsuccessful, arbitration. It is the Defendant’s position that the suit is premature, the same having been instituted before the parties had exhausted the dispute resolution mechanism expressly provided for under the subject agreements. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16529/eng@2025-10-02 2

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15. The 1st Defendant contends that the agreements contain an arbitration clause mandating that any dispute arising thereunder be referred to arbitration in the first instance. It is therefore argued that, on the authority of Section 6 of the Arbitration Act, 1995, this Court lacks jurisdiction to entertain the suit prior to compliance with the said arbitration clause. 16. In answer to the Preliminary Objection, the Applicant, on the other hand, contends that the Defendants waived their right to invoke the arbitration clause under the Master Agreement by failing to apply for a stay of proceedings at the earliest opportunity, as required by Section 6(1) of the Arbitration Act, 1995. 17. In support of his position, the Applicant cited, among others, the case of Adrec Ltd v Nation Media Group Ltd [2017] eKLR, for the proposition that a party who wishes to rely on arbitration must apply for stay promptly and at the earliest opportunity, which the Defendant failed to do in the instant case. The Applicant therefore asserted that this delay in seeking stay on the part of the Respondent amounted to waiver of the arbitration agreement. 18. Section 6 of the Arbitration Act, Cap. 49 Laws of Kenya provide that: “ 6. Stay of legal Proceedings 1. 19. A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than the time when that party enters appearance or otherwise acknowledges the claim against which the stay of proceedings is sought, stay the proceedings and refer the parties to arbitration unless it findsa. That the arbitration agreement is null and void, inoperative or incapable of being performed; or b. That there is not in fact any dispute between the parties with regard to the matters agreed to be referred to arbitration. 2. Proceedings before the court shall not be continued after an application under subsection (1) has been made and the matter remains undetermined. 3. If the court declines to say legal proceedings, any provision of the arbitration agreement to the effect that an award is a condition precedent to the bringing of legal proceedings in respect of any matter is of no effect in relation to those proceedings.” In the present case, there is no dispute that Clause 16 of the Master Placement Agreement dated 5th July 2022, which forms the basis of this dispute, directs the parties to engage in negotiations followed by arbitration in case of any dispute. The Clause also directs the parties to the Arbitration Act of 1995. The Clause provides as follows: “ 16. This Agreement shall be governed by and construed in accordance with the Laws of Kenya. In the event of any dispute with respect to the construction and performance of the Agreement, the parties shall first resolve the dispute through amicable negotiations. However, if the parties fail to reach an https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16529/eng@2025-10-02 3

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agreement within fourteen (14)days of commencement of the negotiations, the dispute shall upon application by any party, be referred for arbitration to a single arbitrator appointed by agreement between the parties and in the absence of an agreement of the parties within fourteen (14) days of the notification of a dispute, upon the application of any party, by an arbitrator appointed by the Chairman for the time being of the Kenya Branch of the Chartered Institute of Arbitrators. The provisions of the Arbitration Act, 1995 (as amended) shall apply to such arbitration proceedings. The arbitration proceedings shall be held in Nairobi and the language of arbitration shall be English. Notwithstanding the foregoing, a party is entitled to seek preliminary injunctive relief or interim or conservatory measures from any court of competent jurisdiction pending the final decision or award of the arbitrator.” 20. The Court of Appeal in Adrec Limited v Nation Media Group Limited [2017] KECA 106 (KLR), while interpreting Section 6 of the Arbitration Act, stated in part as follows: “ …..Once a defendant, in a suit founded on contract containing an arbitral clause, enters appearance or causes a notice of appointment of advocates to be filed on its behalf and prior thereto or contemporaneously with such of the notice of appointment or entering of appearance files an application for stay of proceedings, the court is statutorily obligated to stay the proceedings and to refer the parties to arbitration as referred to in (a) and (b) of Section 6 (1) of the Arbitration Act. It should be emphasized that the right to seek and obtain stay of proceedings under section 6(1) of the Arbitration Act is lost the moment a defence is filed in the proceedings. By dint of the defence, the party filing it subjects itself to jurisdiction of the court and cannot thereafter resile from that position.” 21. Additionally, in Scales And Software Limited v Web Commercial Systems Limited & another [2021] KEHC 9060 (KLR) stated that: “ The import of the aforesaid provision is that the court will ordinarily stay an action if the pre-conditions for grant of stay are met (see UAP Provincial Insurance Company Limited v Michael John Beckett NRB CA Civil Appeal No. 26 of 2007 [2013] eKLR and Eunice Soko Mlagui v Suresh Parmar and 4 Others NRB CA Civil Appeal No. 276 of 2014 [2017] eKLR). In the present case, the Plaintiff does not allege that the 1st Defendant has waived its right to stay the proceedings and refer the matter for arbitration or that there is in fact no dispute.” 22. It is clear from the law and as confirmed in the Adrec Limited case (supra) that the provision of section 6 requires the parties to make an application for referral of a dispute to arbitration at the earliest opportunity and before taking any other action, and that ‘the right to seek and obtain stay of proceedings under section 6(1) of the Arbitration Act is lost the moment a defence is filed in the proceedings. By dint of the defence, the party filing it subjects itself to jurisdiction of the court and cannot thereafter resile from that position.’ 23. In this case, the Defendants did not make an application for stay at the earliest opportunity. They raised the arbitration clause in pleadings and the replying affidavit, but did not promptly move to stay the proceedings in accordance with section 6(1). On the material before Court, there is no satisfactory explanation for the delay in invoking arbitration. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16529/eng@2025-10-02 4

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24. Having considered the authorities and the conduct of the parties, I find that the Defendants have, by their conduct, waived the right to stay proceedings and cannot successfully rely on the arbitration clause to defeat the present application. The application is therefore not premature on the ground advanced. Whether conditions for judgment on admission have been satisffed 25. Judgment on admissions is provided for under Order 13 Rule 2 of the Civil Procedure Rules, 2010, which provides that – “ Any party may at any stage of a suit, where admission of facts has been made, either on the pleadings or otherwise, apply to the court for such judgment or order as upon such admissions he may be entitled to, without waiting for the determination of any other question between the parties; and the court may upon such application make such order, or give such judgment, as the court may think just. 26. The applicable legal test is well settled in Kenyan jurisprudence, notably, in the case of Choitram & another v Nazari [1984] KECA 47 (KLR), where the Court emphasized that: “ To entitle a party to judgment admissions must be clear. Judgment should be given under order XII rule 6 only in a very plain case. For the purpose of order XII rule 6, admissions can be express or implied either on the pleadings or otherwise, eg in correspondence. Admissions have to be plain and obvious, as plain as a pikestaff and clearly readable because they may result in judgment being entered. They must be obvious on the face of them without requiring a magnifying glass to ascertain their meaning. Much depends upon the language used. The admissions must leave no room for doubt that the parties passed out of the stage of negotiations onto a definite contract. It matters not if the situation is arguable, even if there is a substantial argument, it is an ingredient of jurisprudence, provided that a plain and obvious case is established upon admissions by analysis. Indeed, there is no other way, and analysis is unavoidable to determine whether admission of fact has been made either on the pleadings or otherwise to give such judgment as upon such admissions any party may be entitled to without waiting for the determination of any other question between the parties. In considering the matter, the judge must neither become disinclined nor lose himself in the jungle of words even when faced with a plaint such as the one in this case. To analyse pleadings, to read correspondence and to apply the relevant law is a normal function performed by judges which has become established routine in the courts. We must say firmly that if a judge does not do so, or refuses to do so, he fails to give effect to the provisions of the established law by which a legal right is enforced. If he allows or refuses an application after having done so that is another matter. In a case under order XII rule 6 he has then exercised his discretion for the order he makes falls within the court’s discretion. The only question then would be whether the judge exercised his discretion properly either way. If upon a purposive interpretation of either clearly written or clearly implied, or both, admissions of fact the case is plain and obvious there is no room for discretion to let the matter go to trial for then nothing is to be gained by having a trial. The court may not exercise its discretion in a manner which renders nugatory an express provision of the law.” https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16529/eng@2025-10-02 5

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27. It is trite that before the Court can grant a judgment on admission, the admission has to be unequivocal. See the Court of Appeal decision in Cassam v Sachania [1982] KLR 19, where it held that – “ Granting judgment on admission of facts is a discretionary power which must be exercised sparingly in only plain cases where the admission is clear and unequivocal.” 28. In support of the application, the Plaintiff/Applicant relies on the following as evidence of admission of liability by the Defendants: i. That the 1st Defendant issued to the Applicant twenty-five (25) cheques dated 31st October 2023 amounting to Kshs. 24,999,975, which, upon presentation, were dishonoured; ii. Correspondence and email communication from the Defendants dated 7th February 2024 expressly acknowledging liability, as well as subsequent repayment proposals contained in letters dated 2nd March 2024 and 6th March 2024; iii. Part payment by the Defendants amounting to Kshs. 1,329,623.93 between October and December 2023. 29. The Defendants, on the other hand, submitted that there was no admission of the Plaintiff’s claim. According to the Defendants, the cheques in question were invalid and were, in fact, recalled by the Defendants on account of inconsistencies and errors in the amounts as to figures and words. The Defendant submitted that the Plaintiff was duly advised to return the said cheques, but disregarded this advice and proceeded to bank them, leading to their dishonor. The Defendants maintain that such erroneous cheques cannot form a proper basis for establishing or determining any alleged indebtedness. 30. The Defendants further submitted that, while certain payments had indeed been made on account of the alleged debt, the Plaintiff has failed and/or refused to render a proper account of such repayments. The Defendants therefore asserted that the matter raises substantive issues of fact which can only be resolved through a full trial to conclusively determine the question of indebtedness. 31. Regarding the Defendants’ letters of 2nd November 2023, 7th February 2024, and that of 2nd March 2024, it is their position that the said correspondences do not amount to an acknowledgment of indebtedness since no specific figure is communicated therein. They further contend that such letters have been overtaken by events, in light of subsequent payments allegedly made after those dates. 32. Finally, the Defendants raised a procedural mismatch in the Applicant’s pleadings. It is alleged that whereas the Plaint was anchored on a claim of misrepresentation in the issuance of cheques, the instant application seeks judgment for indebtedness/breach of the Master Agreement, thus constituting an unpleaded claim which, if entertained, would violate the Defendants’ right to a fair hearing. 33. I have duly considered the arguments by both parties in their respective submissions. The central issue for determination is whether the Defendants’ denials and explanations raise a bona fide triable issue sufficient to defeat the Plaintiff’s claim for judgment on admission. 34. Evidence on record clearly demonstrates that the 2nd Defendant, in his capacity as a director of the 1st Defendant, signed a letter dated 2nd November 2023 addressed to the Plaintiff, in which he stated in part:“ This regards your investment with us that matured on 3rd November 2023. We are yet to pay out the principal amount as per your request. This is due to the challenges we have had in our cash fiows in the past few months. In the last couple of weeks, we have been in conversations with our bank to obtain funds to boost our working capital. We are finalizing https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16529/eng@2025-10-02 6

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the process, which we expect to close in two weeks’ time. Then we will be able to settle your payments in full.” 35. I have also perused the subsequent correspondence, including the email dated 7th February 2024 by the 2nd Defendant to the Plaintiff’s Advocates, promising to clear the balance plus interest immediately upon receipt of a disbursement from their bankers. Further, in its letter of 7th February 2024 to the Plaintiff’s Advocates, signed by the 2nd Defendant, the 1st Defendant stated:“ We are keen to fully settle your client’s debt and we are at a very advanced stage of obtaining funds from our financiers to settle the Placement Amount and interest thereof. ……we have further procured another funding from Family Bank, which, once processed, the funds shall be utilized to settle your debt.” 36. The above correspondences, which propose repayment and/or seek time to source financiers, are properly characterized as acknowledgments of liability. Such communications amount to admissions “otherwise” for the purposes of Order 13 Rule 2 of the Civil Procedure Rules, 2010. In my view, these correspondences amount to a clear and plain acknowledgment by the Defendants of their indebtedness to the Plaintiff and do not therefore require any further trial to determine liability. 37. On the effect of admissions, Mativo J (as he then was) In Synergy Industrial Credit Limited v Oxyplus International Limited & 2 others [2021] eKLR, observed that: “ A clear and unequivocal admission of fact is conclusive, rendering it unnecessary for the one party (in whose favour the admission was made) to adduce evidence to prove the admitted fact, and incompetent for the other party making the admission to adduce evidence to contradict it.” 38. Additionally, the issuance by the 1st Defendant of twenty-five (25) post-dated cheques totaling Kshs. 24,999,975.00 to the Plaintiff is corroborative evidence of admission. The Applicant has demonstrated that those cheques were presented and dishonoured. The Defendants’ claim that the cheques were "invalid, inconsistent, and recalled" is unconvincing since they failed to provide cogent documentary proof of such inconsistencies or that the cheques were, in fact, recalled. 39. The law is clear that the issuance of a cheque may, in itself, amount to an admission of indebtedness, while its dishonour does not automatically negate the admission. In Jondu Enterprises v Royal Garments Industries EPZ [2014] eKLR, Kanyi Kimondo J held: “ Regarding the amounts owed, doubt is removed completely by the postdated cheques the defendant issued to the plaintiff for supply of the furnace oil. A number of cheques issued between 19th September 2013 and 31st January 2014 were dishonoured. They total Kshs. 3, 424, 000. I then ask myself a rhetorical question. Why was the defendant issuing these cheques to the plaintiff? It was for the furnace oil, never mind its disputed quality. I have then studied the invoice marked ‘JN 2’ dated 2nd January 2014. It itemizes the goods supplied, delivery notes and payments made leaving a balance of Kshs. 4, 065, 300. When I consider the admission at paragraph 5 of the defence, the correspondence I have mentioned, the details of dishonoured cheques and invoices, I am satisfied that the defence set up in relation to the claim of Kshs. 4, 065, 300 is bogus. Judicial time should not be wasted pursuing it. Churanjilal & Company Vs. Adam [1950] 17 EACA 92. The admission in my view is unequivocal, Choitram Vs. Nazari [1984] KLR 327.” https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16529/eng@2025-10-02 7

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40. The Defendants’ argument that the cheques contained inconsistencies between figures and words is not persuasive. A debtor cannot rely on self-generated technical defects in their own instruments to escape liability under a binding contractual obligation. The alleged inconsistencies were of the Defendants’ own making and cannot absolve them of responsibility. 41. Similarly, the contention that the Plaintiff has failed to account for subsequent RTGS payments is insufficient to resist judgment on admission. The Defendants neither specified the quantum of such payments nor demonstrated how the Plaintiff’s claimed amount of Kshs. 23,670,376.07 is inaccurate. Bare assertions, without credible documentary proof on record, cannot defeat an otherwise plain admission. 42. As for the procedural argument that the Plaint pleads misrepresentation while the application seeks judgment on indebtedness, I find this to be a mere technicality. The misrepresentation pleaded relates to issuance of cheques without funds, which is but a particular of the underlying breach of contract — namely, failure to repay the Placement Amount under the Master Agreement. 43. The admitted fact is the debt itself, which aligns with the substantive claim in the suit. The court shall not allow such a procedural technicality to shield a defendant from an obvious and proven debt. Whether to grant leave to execute the decree prior to taxation of costs 44. The Applicant prayed that upon entry of the judgment, leave be granted to it to execute pending determination/taxation of costs. The Respondents objected that execution should not be allowed because of unresolved issues and outstanding accounting. 45. Section 94 of the Civil Procedure Act allows the Court, in the exercise of its discretion, to order execution of a decree before costs are taxed if the court considers execution necessary, reserving the costs question for taxation. The Section provides that: “ Where the High Court considers it necessary that a decree passed in the exercise of its original civil jurisdiction should be executed before the amount of the costs incurred in the suit can be ascertained by taxation, the court may order that the decree shall be executed forthwith, except as to so much thereof as relates to the costs; and as to so much thereof as relates to the costs that the decree may be executed as soon as the amount of the costs shall be ascertained by taxation.” 46. The Court of Appeal (Shah JA) in Bamburi Portland Cement Co Ltd v Hussein [1995] LLR 1870 (CAK) stated as follows: “ Section 94 of the Civil Procedure Act requires that for execution of a decree before taxation, leave must be obtained from the High Court, such leave may be sought informally at the time judgment is delivered but if that is not done then it must be made by way of a notice of motion. The motion must be served on the other party and heard inter partes…..” 47. In the present case, having found that the Plaintiff is entitled to judgment on admission, I am satisfied that the Court should grant leave to execute the decree forthwith. Accordingly, execution shall be permitted except as to costs, which shall be taxed if not agreed. Conclusion 48. In the premises, the Court finds that the admissions made by the Defendants, both through the formal issuance of the cheques and the subsequent correspondence seeking to settle the outstanding amounts, https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16529/eng@2025-10-02 8

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are plain, obvious, and unequivocal and therefore meet the threshold required by Order 13, Rule 2 of the Civil Procedure Rules, 2010. 49. 50. On the other hand, the Respondents' defense consists of bare denials and unsubstantiated technical arguments that do not disclose a bona fide triable issue. Accordingly, I allow the Plaintiff/Applicant's application, and issue the following orders: i. The Plaintiff/Applicant's Notice of Motion dated 13th February 2025 is hereby allowed. ii. Judgment on admission is hereby entered against the 1st Defendant, Jijenge Credit Limited, and the 2nd Defendant, Peter Macharia Kamau, jointly and severally, for the sum of Kshs. 23,670,376.07. iii. The said sum shall attract interest at the contractual rate provided for in the Master Private Placement Agreement from the date of the suit until payment in full. iv. Pursuant to Section 94 of the Civil Procedure Act, the Applicant is granted leave to execute the decree forthwith as to the principal sum, with execution for costs to follow after taxation. v. The costs of this application shall be borne by the Defendants/Respondents. It is so ordered. SIGNED, DATED, AND DELIVERED IN VIRTUAL COURT THIS 2ND OCTOBER 2025. ADO MOSES JUDGE In the presence of: C/A – Moses Ms. Muthee h/b Kenneth Wilson.………….….. for the Plaintiff/Applicant Agoi...………….…..... for the Defendant/Respondent EDWARD M. KAMAU https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16529/eng@2025-10-02 9

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