REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL & ADMIRALTY DIVISION

CIVIL SUIT NO.169 of 2016

EQUATORIAL COMMERCIAL BANK LIMITED……………………………………....PLAINTIFF/RESPONDENT

VERSUS

PARAMOUNT UNIVERSAL BANK ……. 1^ST DEFENDANT/APPLICANT

JAMES MWANGI KANYI T/A

MIRAGE SUPPLY& CONTRACTOR……2^ND DEFENDANT/APPLICANT

R U L I N G

1. The   Application  that  now  comes  before  the  Court  par  resolution  was  filed  by  the Defendant. The  timing  is  interesting as  it  was made  immediately  after  the   Plaintiff’s  Application  to  Cross  -examine  the  Deponent  of  the  Replying  Affidavit.  The  Application was  filed  on 16^th  June,  2016  and  is brought   Under  Section  7 of   the Magistrate’s  Court  Act Number. 26  of  2015,  Section  1 A,  1 B  and  3A  of   The  Civil  Procedure  Act, Cap  21  and  Order  51  Rule 1  of  the  Civil Procedure  Rules,  2010.  The  Application   seeks  the  following  Orders:

(1) THAT   Honourable Lady Justice F. Amin be pleased to recuses herself from this   matter.

(2) THAT   this matter  be  placed  before  the  Presiding  Judge  of  the  Division  for  issuance  of  directions  on  transferring  the  matter  to  the Magistrate’s   Court  to hear  and  determine  the matter.

(3)  THAT  the costs  of  this  application  be  provided  for.

        The Application is brought on the following Grounds:

(1) THAT  the  1^st  Defendant/ Applicant  has  reasonable  apprehension  that  the  Honourable  Judge  is  not  able  to  handle  this matter  dispassionately.

(2) THAT  the  Honourable  Judge  has  shown  open  bias  in  the  conduct  of  this  matter.

(3) THAT   the  Judge’s  prejudicial  statement  in  open  Court  accusing  the   1^st  Defendant/ Applicant  of  ‘money laundering’  even  before  the  Applicant  had  responded  to  pleadings  filed  against  it,  indicates that  the  Judge  has  a  prejudiced  mind as against  the  1^st Defendant.

(4) THAT   the  Judge’s  prejudicial  statement  in  open  Court accusing  the  1^st  Defendant/Applicant of  ‘money  laundering’  even  before  the  Plaintiff’s  Interlocutory / Application  dated  11^th May, 2016  has been canvassed  indicates  that  the  Judge  has  a  prejudiced  mind  as  against  the   1^st  Defendant.

(5) THAT  the  Pleadings  filed  by  the  Plaintiff/ Respondent  have not  alleged  that the  1^st Defendant/ Applicant  has  been  involved  in ‘Money Laundering’  which  the  Learned  Judge has  openly  accused  the  1^st  Defendant/ Applicant  of.

(6) THAT  by  her  actions,  the  Learned Judge  has become  an  active  litigant  in  this  matter  by  being  an  accuser,  prosecutor  and  Judge  in  the  matter  which  offends  the  trite   principles  of  Natural Justice.

(7) THAT   the  1^st  Defendant/ Applicant  herein  thus  has reasonable  apprehension  that  it  is  unlikely  to get  a  fair  hearing  before the    said   Judge.

(8) THAT   justice must not only be done but must manifestly be seen to be done.

(9) THAT  it  is  in  the  interest  of   Justice  that  the  Honourable  Judge  recuses  herself   from   this matter.

(10) THAT   further, the  Magistrate’s  court  by  law  is  empowered  to hear  and  determine  this  matter  and  the  same  ought  to  be  transferred  to  the  said Court  for  determination.

2. On  the  same  day  the  Plaintiff / Respondent  filed it Grounds of Opposition.  They  oppose  the   application  on  Grounds  that:

(1) The  Applicant  has not  disclosed  any  ground  to merit  the  granting  of  the  orders  sought  in   the  application.

(2) There  has  been  no  bias  exhibited  in  the  handling  of  the  matter   before   the  Court.

(3) The  Application  is  a  disguise  form  of  forum  shopping  and  thus  offends  the  duty  of  the  Applicant  and  its  counsel  to  the  Court  under  section  1B  of  the  Civil  Procedure Act, Chapter 21 Laws  of  Kenya.

(4) The   filing  of  the  Application  does  confirm  the  need for  an  inquiry  as  to  the  affidavit  of  Timothy  Kimani  and  his  conduct  in  the  matter  both  as Counsel  and  the  Legal  Officer  of  the   1^st Defendant.

(5) The  Application  offends  the  Practice Notes  issued  with   respect to  the  transfer of matters  from  the  High Court  to  the  Chief Magistrate’s Court.

(6) The  claim  is  both  monetary  and  non-monetary  and  the  damages  sought  shall  be  in  excess of  the monetary  jurisdiction  of  the  Chief  Magistrate’s  Court,  and

(7) Such  other  grounds  and  reasons  to be  adduced  at  the  hearing   hereof.

          The Plaintiff also provided   the Court   with a   copy of Gazette Notice Number 1756. 

“All   High Court   stations  are  hereby  directed  to  observe  the  provisions  of  Order XLVI  of  the  Civil  Procedure  Rules  with  regard  to  the  filing  and  hearing  of  suits  in  the High  Court  Central  Registry  and  in  the  District  Registries   and  to  ensure  their  compliance   and  enforcement.

The parts  the  Plaintiff  relies  on  are  Section 11 which provides:

‘Every  suit  shall  be  instituted  in  the  court  of  the  lowest  grade  competent  to  try I t,  except  that  where  there  are more  sub-ordinate  courts   than  one  with  jurisdiction  in  the  same  district  competent  to  try  it,  a  suit  may,  if  the  party  instituting  the  suit  or  his  advocate  certifies  that  he  believes  that  a  point  of  law  is  involved  or  that  any  other  good  and  sufficient  reason  exists,  be  instituted  in any  one  such  sub-ordinate  courts.’

Section  18 (1 a)  on  the  other  hand  provides  thus ‘ On  the  application  of  any  of  the  parties  and  after  notice  to  the  parties  and  after  hearing such  of  them  as  desire  to  be heard,  or  of  its  own  motion  without   such notice,  the  High  Court  may  at  any  stage  transfer  any  suit,  appeal  or  other  proceeding  pending  before  it  for  trial  or  disposal  to  any  court  sub-ordinate  to  it  and  competent  to  try  or  dispose  of  the same.’

Magistrates Act Section 7.

7(i)  A  magistrate’s  court  shall  have  and  exercise  such  jurisdiction  and  powers  in  proceedings  of  a  civil  nature  in  which  the  value  of  the  subject  matter  does  not  exceed …[the amounts therein listed]

3. The  ghist  of  the  Defendants  application  is  firstly,  that  the   Judge  currently  hearing   the matter  recuse  herself.  The  second  prayer  - it  is  not  clear  whether  this  should  be  concurrent  consecutive  - that  is   after  the  supposed  recusal.

4. On  15^th  June, 2016,  the  Court gave  directions  for  the  Cross-examination  of  the  Deponent  of  the  Replying   Affidavit   Mr. Kimani.   The  Direction  was  for  the  matter  to  be  heard  on  20^th   June, 2016  at  2.30p.m.  Unfortunately,  the  Registry   listed  the  matter  as  a  mention  at  9.00am.  The  Parties attended   ( save  the  aforesaid   Deponent  and  Counsel   with  conduct )for the Mention but as the matter was supposed to be heard in the afternoon it proceeded then.   The   day after the directions for hearing was given the  Defendant  filed  its  application.

5. On  20^th  June, 2016  although  the  Parties  were  aware  of  the  Application,  there  was  no  copy  on  the  Court  File.  The  Court  was  informed  that ‘Mr Wachira  was not  ready  to  proceed  because  he  was  in  the  Meru  High  Court  in  Hcc. No. 60 of  2015’   no doubt, signifying  the  relative  importance  of  the   two matters.  Counsel  for  the  Plaintiff  asked  for  the  order  for  Cross-examination  of  the  Deponent  to  extend  to  the  Supporting  Affidavit.  The Court ordered the matter to proceed at 2.30p.m.  On 20th June 2017,  as previously directed.  At  that   point  it  was  resolved  that  the  Application   for  recusal  should  be  heard  first.    However, as  argued  by  Plaintiffs’  counsel,  the  Supporting  Affidavit   refers  to facts  and matters  that  took  place  when  the   Deponent  was  not  in  Court,  therefore  the  cross –examination   becomes  part  of  the  hearing  for  recusal  application.  The  matter  was  relisted  on  13^th July, 2016.  The  Interim  orders  were  extended  but  have never  been  complied  with.

6. A  further  issue  arose  on  20^th June, 2016  and  that  related to  service  on the  second  Defendant.  The  Plaintiff  requested  the  1^st  defendant  to  provide  those  details  because of  the  Bank – customer  relationship.  The  1^st  defendant  declined.

7. On  13^th July, 2016,  the  witness  was  said  by  Mr. Wachira  to be  unwell  and  needed  to  go to  hospital.  In  fact  the  witness  was  present  in  Court.  It  is recorded  that  the  Court  and  Plaintiff  were  ready  to  proceed.  Mr. Wachira  asserted  for  the  record  that  he  too  was  ready  to  proceed.  The matter was re-listed for 7^th  September 2017.  On  that  occasion,  the  Plaintiffs  counsel   made  request  to  the Court  that  the  matter  be mentioned  before  the   Presiding  Judge  to expedite  the matter.   The  court  declined  that  request on the basis of the principles of independence of the judiciary.  Mr. Wachira  responded  by  withdrawing  his  application  for  recusal  and  the   cross-examination  proceeded  then,  and after  being   adjourned  part heard  resumed  on  24^th  October, 2016.   On  that  date   Counsel   for  the  Defendant  wanted  to  interrupt   the  cross-examination  for  the  file  to be  transferred  to  the  Lower  Court.   The   Court  decided  that  it  was  better  use of   resources  for  the  decision  on transfer  to be  made  after  it  had recorded  the  oral   evidence. Thereafter   the Application was heard.   The  1^st  Defendant  asked  for  the  file  to be  transferred  to the  Presiding   Judge  for  him  to decide  the  issue  of  transfer.   The Plaintiff argued that   was an attempt to forum   shop.

8. The  Defendant  argued  that  the  Court    should  apply  the  hierarchy    of norms   and   the  Plaintiff  argued  for  application  of  the  Practice Direction  as  set  out  in  the  Gazette notice.

9. Counsel for the 1^st Defendant sought leave to withdraw his application for recusal again but wished for the matter to proceed with the Application for transfer starting with transfer to the presiding  judge of the Division.  That Application was objected to by the Grounds filed by the Plaintiff on 16^th June 2016 and also in argument.  In summary the Plaintiff accuses the 1^st Defendant of forum shopping and being in breach of Practice Notes.  Counsel for the Plaintiff argued forcefully for the court not to entertain the Defendant’s shenanigans which are simply an exercise in delaying these proceedings.

10. The Plaintiff’s Claim, in substance, seeks restitution of funds transferred to the Defendant Bank either by mistake and/or  due to a fraudulent transaction.  The ins and outs of those concerns are yet to be decided.  The evidence before the Court is that the allegations were serious enough to institute an inquiry by the Banking Fraud Unit.  Their findings have not been placed before the Court.  Secondly the Defendant Bank was fully aware of the allegations almost immediately after the transfer was made.  It seems the Defendant Bank failed to put in place any restrictions on the use of the funds by the 2^nd Defendant and the funds were dissipated.

11. The Plainitiff seeks repayment of the monies paid.  Both Parties were aware by 2^nd September 2015 that the sum of KShs9,450,2010/= were paid by mistake and the Plaintiff was seeking a refund.  The relationship between the two Banks is not strictly contractual but is one that is governed by practice and usage as well as the good faith of the proponents.  The Plaintiff’s Application in substance seeks restitution of funds transferred to the Defendant Bank either by mistake and/or due to a fraudulent transaction.  The ins and outs of those concerns are yet to be decided.  The evidence now before the Court is that the allegations were serious enought to institute an inquiry by the Banking Fraud Unit.  Their findings have not been placed before the Court.  Secondly, the Defendant Bank was fully aware of the allegations almost immediately after the transfer was made.  It seems the Defendant Bank failed to put in place any restrictions on the use of the funds by the 2^nd Defendant and the funds were dissipated.  The Court made interim orders that were not complied with by the Defendant Bank.

12. The Plaint as pleaded seeks repayment of the monies paid in the sum of KShs.9,450,210 therefore it seeks rescission and damages that are neither particularised nor quantified.  Although the Plaint does not quantify the damages, Counsel informed the Court that the Plaintiff is claiming damages in the region of KShs30,000,000/= (30 million shillings).  That is a very large sum and the Court is not in a position at this stage of the proceedings to evaluate the likelihood of that being reached or not.  It is this Court’s view that pleadings need to quantify the potential damages being claimed whatever the quantum, rescission of KShs9,450,210/= will not amount to a final resolution IF the Plaintiff is successful.

13. In oral argument Counsel for the 1^st Defendant withdrew his Client’s Application for recusal again but wished to proceed with the Application for transfer.  That Application was objected to by Grounds of Opposition filed by the Plaintiff on 16^th June 2016 together with oral argument.  In summary the Plaintiff accuses the 1^st Defendant of forum shopping and being in breach of the Practice Notes.   Counsel for the Plaintiff argued forcefully for the Court not to entertain the Defendant’s shenanigans as they are simply an exercise in delaying these proceedings.

14. On the 1^st Defendant’s Application for the matter to be transferred either to the Lower Court or a different Judge of this Division, notwithstanding the inconsistency, this Court is of the view that such application is premature until the Plaintiff has definitively set out – by direction if necessary – the quantum of its claim.  Any decision resting on those considerations cannot be final until that is done to avoid re-transfer at a later stage.

15. For those reasons the Application is dismissed by the Plaintiff is hereby granted leave to renew the Application once the Plaint has been particularised.  In any event, as regards the second limb of the Application providence has smiled on the 1^st Defendant as this matter must proceed before a different judge due to the transfer of the incumbent to a different Division.  In the circumstances, it is also ordered that this file be mention before the Presiding Judge of the Division for re-allocation.

Costs follow the event.  The Applicant/1^st Defendant to pay the Plaintiff’s costs of the Application.

8^th February

Ruling delivered in Open Court.

ORDER:

1. Plaintiff   is  directed  to  file   Further  and better  particulars  of  its  Quantum  of  damages

2. Leave   to  Appeal   the  refusal   to  transfer

3. Place before the Presiding Judge for mention and allocation. 

Order accordingly

FARAH S. AMIN

JUDGE

Signed and Delivered on the 8^th day of February 2016.

In the Presence of:

Court Assistant:  Mr Keplalah

Applicant/1^st Defendant:  Mr Wachira

Defendants/Respondents:  Mr Salumi