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Court of AppealAllowedCivil Appeal No. 109 of 2005

Said Hamad Shamisi v Diamond Trust of Kenya Ltd [2010] KECA 396 (KLR)

Court of Appeal
5 March 2010
ROR. S. C. OmoloSBS. E. O. BosireJNJ. G. Nyamu
2,638 words in judgment
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The bottom line

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Kenya's Court of Appeal ruled that a lawsuit can only be thrown out early if it is completely hopeless; claims of fraud must go to a full trial.

What this practically means

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Executive summary

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The Court of Appeal allowed the appellant's appeal against a ruling of Mwera, J (High Court, Mombasa) of 24th February 2005 striking out the appellant's plaint against Diamond Trust of Kenya Ltd in H.C.C.C. No. 21 of 1998. The plaint alleged that the appellant was the registered owner of two buses, KAG 088P and KAG 062T, sold under an oral agreement to the first defendant, and that their transfer to the first and second defendants and the subsequent hire purchase financing by the respondent involved fraud, conversion, breach of contract and illegality. The High Court struck out the plaint on the sole ground that there was no privity of contract between the appellant and the respondent under the hire purchase agreements. Allowing the appeal, the Court of Appeal held that the pleadings disclosed numerous triable issues beyond privity - including contestable allegations of fraud particularised in the plaint, conversion and illegality - and that the summary process of striking out is drastic and should be used sparingly, only in plain and obvious cases, restating D.T. Dobie v Muchina and the English authorities Dyson v Attorney General and Hubduck & Sons Ltd v Wilkinson. The court declined to make any findings on the merits to avoid embarrassing the trial. It set aside the ruling and order of 24th February 2005, awarded costs to the appellant, and remitted the matter for hearing on merit before any judge of the superior court other than Mwera J.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the superior court was right to strike out the plaint as against the respondent on the ground of absence of privity of contract
  2. 2.Whether the pleadings disclosed triable issues (fraud, conversion, illegality, breach of contract) requiring a full trial
  3. 3.Whether the summary process of striking out was properly exercised on the facts

Key legal issues

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01

Ambit of the court's power to strike out pleadings

Holding

Striking out is a drastic summary remedy reserved for plain and obvious cases; where pleadings disclose contestable issues such as fraud, conversion and illegality, the suit must go to full trial.

Reasoning

The court restated the D.T. Dobie principle that because striking out is done without discovery or oral evidence, it must be used sparingly. The pleadings here revealed many issues for adjudication, including fraud particulars and the circumstances of the vehicle transfers. Summarily determining only the privity issue while excluding conversion, fraud and illegality deprived the appellant of a hearing on those issues, amounting to a failure to accord equality of hearing and a fundamental miscarriage of justice.

p. 3
02

Duty of courts to adjudicate on all issues raised in the pleadings

Holding

Courts, like parties, are bound by the pleadings and must consider all issues raised; failure to do so is a fundamental miscarriage of justice.

Reasoning

While endorsing the respondent's submission that parties are bound by their pleadings, the court held the converse: courts must adjudicate in terms of the issues raised. The trial court determined only privity of contract and ignored conversion, fraud and illegality. That selective summary treatment denied the parties equality of hearing and justified appellate intervention remitting the matter for plenary hearing.

p. 4

Legal principles established

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  • The power to strike out pleadings must be exercised sparingly because it is exercised without the court being fully informed on the merits.
  • A plaint should only be struck out where the case is plain and obvious; allegations of fraud and other contestable issues must go to trial.

Court orders

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  1. 1.Appeal allowed
  2. 2.Ruling and order of the superior court dated 24th February 2005 set aside
  3. 3.Costs of the appeal and below to the appellant
  4. 4.Matter remitted for hearing on merit before any judge of the superior court except Mwera J

The bench

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One judgment of the whole court — no separate or dissenting opinions.

RO
majority
SB
majority
JN
majority
On appeal from
High Court of Kenya at Mombasa
H.C.C.C. No. 21 of 1998
Jurisdiction invoked
First appellate jurisdiction over appeals from the High Court under the Constitution and the Civil Procedure Act (not expressly cited in the judgment text)

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

We accordingly allow the appeal and set aside the ruling/order of 24th February 2005 with costs to the appellant. In the result, the matter is remitted for hearing on merit before any judge of the superior court except Mwera J.
p. 5Final orders - disposition
As the power to strike out pleadings is exercised without the court being fully informed on the merits of the case through discovery and oral evidence, it should be used sparingly and continuously
p. 4Striking out pleadings - sparing exercise
the court will exercise its coercive powers by summary process to terminate proceedings without a trial only with the greatest care and circumspection and only in the clearest case
p. 4Summary process - clearest cases only
when a court fails to consider important issues raised, this reflects its failure to accord the parties equality of hearing which is itself a fundamental miscarriage of justice
p. 4Fair hearing - equality of hearing

Issues in the judgment

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minor

Internal inconsistency: the judgment attributes the Hubduck passage to 'Lord Pearson' although Hubduck v Wilkinson is a Court of Appeal decision; the name appears as printed.

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Said Hamad Shamisi v Diamond Trust of Kenya Ltd [2010] KECA 396 (KLR)", Case Analysis (2010). Civil Appeal No. 109 of 2005. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2010/396/eng@2010-03-05

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