Continental Butchery Limited v Nthiwa [1978] KECA 28 (KLR)
The bottom line
#A Kenya Court of Appeal ruled a creditor can win quickly on part of a debt while a genuinely disputed part must go to trial.
What this practically means
#Executive summary
#Key legal issues
#Effect of an affidavit verifying a non-existent pleading on a summary judgment application
Such an affidavit is valueless and deprives the court of jurisdiction to entertain the summary judgment application, though the court may proceed if the defect is assumed cured.
Madan JA held that an affidavit referring to an amended plaint that was never filed cannot support the application; the two pleadings are different documents and no attempt was made to correct the defect. Strictly this alone justified dismissal, but the court proceeded on the assumption that leave to file a supplementary affidavit had been granted, since contents of an affidavit may only be changed by a further sworn statement.
Whether the shs 66,000/- cheque constituted money lent and advanced to the respondent
Yes; by endorsing the cheque in favour of the company, the respondent received the money to his use and cannot deny receipt of the loan.
The respondent, as payee and owner of the cheque, endorsed it so that its proceeds went to the company, which allotted him shares. His endorsement was a receipt for payment to him. Even if the company had failed to allot shares or account for the money, he would still be held to have received the shs 66,000/- so far as the appellant is concerned. All three judges agreed on this point.
Whether the shs 10,000/- cheque raised a triable issue
Yes, by the majority (Wambuzi and Law JJ A); the possibility that the appellant financed the goodwill payment made it a bona fide defence entitling unconditional leave.
Madan JA would have held the goodwill issue incapable of creating a triable issue between these parties, since any goodwill claim lay between the company and the respondent. However, Wambuzi JA and Law JA considered the transaction's involvement meant an arrangement whereby the appellant paid its proportion of the goodwill was understandable and probable, disclosing a bona fide ground of defence. The majority view prevailed on this item.
Nature of the summary judgment procedure under order 35
Order 35 exists to give plaintiffs with liquidated claims quick judgment and to prevent sham defences defeating rights by delay; conditional leave is available where appropriate.
The court traced the purpose of the summary procedure through Anglo-Italian Bank v Wells, Jacobs v Booths Distillery Company and Zola v Ralli Brothers, holding that a defendant raising a sham defence should not be permitted to litigate, but that Kenyan courts should give conditional leave where the circumstances call for it, notwithstanding doubts about Jacobs v Booths as an authority against conditional leave.
Legal principles established
#- Where a bona fide triable issue is raised the defendant must be given unconditional leave to defend; sham defences do not entitle a defendant to leave.
- Conditional leave to defend is available in Kenya where the circumstances call for it, notwithstanding doubts expressed elsewhere about Jacobs v Booths Distillery Company.
- An affidavit verifying a cause of action in a non-existent pleading cannot support an application for summary judgment.
- On a summary judgment application, all pleadings, affidavits and relevant circumstances are proper material for consideration.
- A payee who endorses a cheque and directs its proceeds to a third party is held to have received the money to his use.
Court orders
#- 1.The order of the learned judge granting unconditional leave to defend is set aside
- 2.Unconditional leave to defend is granted in respect of the cheque for shs 10,000/-
- 3.Conditional leave to defend is granted in respect of the sum of shs 66,000/-, subject to the respondent depositing shs 66,000/- in court within thirty days
- 4.In default of the deposit, the appellant may sign judgment only for shs 66,000/- with interest thereon and costs of the application for summary judgment
- 5.Costs of the application for summary judgment to be in the cause
- 6.The respondent must pay the appellant's costs of this appeal
- On appeal from
- High Court of Kenya, Nairobi
- Civil Case No 569 of 1977
- Jurisdiction invoked
- Appeal against an interlocutory order of the High Court refusing summary judgment under Order 35 of the Civil Procedure (Revised) Rules, 1948
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Continental Butchery Limited v Nthiwa [1978] KECA 28 (KLR)", Case Analysis (1978). Civil Appeal from Nairobi High Court Civil Case No 569 of 1977. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1978/28/eng@1978-01-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.