Banque Indosuez v D.J. Lowe & Company Limited
The bottom line
#Kenya's Court of Appeal threw out a summary judgment won by D.J. Lowe, ruling that mixed claims and unproven damages cannot shortcut 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 learned Judge erred in granting summary judgment under Order XXXV rule 1 where the plaint contained a mixed claim of liquidated and unliquidated demands
- 2.Whether the learned Judge erred in striking out the defence under Order VI rule 13(1)(a) when the respondent had abandoned that application and made no submissions on it
- 3.Whether the application before Hayanga J was barred by res judicata having regard to the earlier rulings of Waki J
- 4.Whether the learned Judge erred in holding that the appellant was bound to plead a set-off or counterclaim
- 5.Whether special damages were strictly proved
Key legal issues
#Applicability of Order XXXV summary procedure to a mixed claim
The Judge erred in granting summary judgment because the plaint sought both liquidated and unliquidated relief; the summary procedure was not available and the application should have been refused
Order XXXV rule 1 confines summary judgment to a liquidated demand with or without interest, or recovery of land. The further amended plaint combined liquidated claims with damages for loss of business whose particulars were to be supplied at trial. A mixed claim requires proof, and judgment entered without formal proof was irregular.
Res judicata arising from prior interlocutory rulings
The issues before Hayanga J had already been determined by Waki J in 1997 and 1998 between the same parties on the same subject matter; res judicata applied and Hayanga J was not entitled to try them again
Section 7 of the Civil Procedure Act bars trying an issue directly and substantially in issue in a former suit between the same parties litigating under the same title, heard and finally decided by a competent court. Explanation (3) applied; the earlier rulings determined triability of the same issues, so re-litigation was barred.
Striking out defence under Order VI rule 13(1)(a)
The respondent abandoned the Order VI limb without leave and never urged it in submissions; the Judge erred in dealing with the application as if underpinned by Order VI rule 13(1)(a)
Though no application is defeated by use of a wrong procedural mode, it must be clear under which order and grounds the application was made. In the absence of an election as to which prayers were sought, the Judge misdirected himself by considering matters not raised before him.
Set-off and counterclaim under Order VIII rule 2
The Judge erred in holding the appellant bound to have pleaded set-off or counterclaim; pleading a set-off is optional and a counterclaim is a cross-action
Order VIII rule 2 makes set-off available but not compulsory; a defendant may enforce his claim by independent action. A counterclaim is substantially an independent cross-action governed by the rules of pleading applicable to a plaint, and the court may in appropriate cases direct it to be tried separately.
Proof of special damages
Special damages were claimed but not proved at all; the Judge was wrong to award sums under that heading
Special damages are not the direct natural or probable consequences of the act complained of and may not be inferred; they must be specifically claimed and strictly proved with the degree of certainty and particularity the circumstances require. Figures cannot simply be plucked from the air.
Legal principles established
#- Summary judgment under Order XXXV lies only for a liquidated demand; where the plaint mixes liquidated and unliquidated claims the summary procedure is inapplicable and the application must be dismissed
- A defendant bears the onus under Order XXXV rule 2(1) to show a genuine or arguable defence raising triable issues; a mere denial will not suffice
- Interlocutory rulings finally determining issues between the same parties on the same subject matter give rise to res judicata; a matter need not have been determined after a full hearing
- A defendant cannot be compelled to plead a set-off or counterclaim; it is wrong to give judgment for the plaintiff because of the defendant's failure to plead set-off
- Special damages must not only be specially claimed but strictly proved
Court orders
#- 1.Appeal allowed
- 2.Ruling of the superior court dated 2nd January 2002 vacated and set aside
- 3.Suit to proceed to hearing according to law in the superior court
- 4.Costs of the appeal and in the superior court awarded to the appellant
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Mombasa
- H.C.C.C. No. 35 of 1997
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Constitution/Appellate jurisdiction Act (not expressly stated in the judgment)
Relief refused
#Any view on the remaining grounds of appeal
Inappropriate in view of the orders about to be made
Costs
The costs of this appeal and in the superior court are awarded to the appellant.
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 the result, this appeal is allowed. The ruling of the superior court dated 2nd January, 2002 is hereby vacated and set aside. The suit shall proceed to hearing according to law in the superior court. The costs of this appeal and in the superior court are awarded to the appellant.
The pleadings herein show that the respondent did not seek only a liquidated demand. It sought a mixed claim, both liquidated and unliquidated.
It is clear therefore from explanation (3) that res judicata became applicable.
it would be wrong to suggest that a matter can only be treated as res judicata if a hearing is held.
But a defendant cannot be compelled to plead a set-off, he can if he wishes, enforce his claim by an independent action.
It is trite that special damages must not only be claimed specially but proved strictly for they are not the direct natural or probable consequences of the act complained of and may not be inferred from the act.
Issues in the judgment
#Chronology contradiction on the review application and the Court of Appeal ruling on it
Delivery venue inconsistency
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Banque Indosuez v D.J. Lowe & Company Limited", Case Analysis (2006). Civil Appeal 79 of 2002. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2006/360/eng@2006-10-27
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.