The Supreme Court has struck off the missing documents issue as an issue of general public importance for determination in a case where two of tycoon Mohan Galot’s companies and Standard Chartered Financial Services are embroiled in a loan tussle.
Judges Mohamed Ibrahim, Smokin Wanjala, Njoki Ndungu, Isaac Lenaola and William Ouko ruled that the parties consented to the preparation of the judgement by the Court of Appeal in the absence of one volume.
“Having consented to the preparation of the judgment in the absence of one volume of the record of appeal, which record was missing on account of no party’s mistake, the respondents could not later claim that the same infringed upon their right to a fair trial. We say this in full recognition of the fact that the parties were all represented by counsel,” the judges ruled.
Through lawyer Philip Nyachoti, the applicants, Manchester Outfitters Suiting Division Ltd (now called King Woolen Mills Division) and Galot Industries Limited wanted the Supreme Court to declare that the Court of Appeal erred in law in certifying that the matters raised in the 1st respondent’s application dated 20th January 2023 raised questions of general public importance requiring the input of the Supreme Court.
The issue of general public importance that was to be determined by the Superior Court was ” Whether the court can proceed to enter judgment on its own discernment and interpretation of a record of appeal which is inconsistent, illegible, incomplete and/or portions of the same are missing and whether an incomplete record of appeal which obscures evidence denies a party a right to fair hearing and access to justice.
The decision by the Court of Appeal was delivered in absence of volume 5 of the record of appeal which was by consent of the parties.
Nyachoti argued that none of the parties raised any objection or demonstrated any prejudice they would suffer with regard to the missing volume 5 of the record of appeal at the hearing of the appeal.
“The same was also not raised as a question for determination before the two superior courts below and was therefore not a matter of general public importance,” Nyachoti added.
The applicants added that “in view of the age of the matter, the issue of illegible and faded documents was peculiar to the instant matter and could not reasonably fall under the parameters warranting certification as a matter of general public importance.”
The respondents, Standard Chartered Financial Services Limited and A.D Gregory & C.D Cahill argued that the question of faded or illegible documents goes to the Court of Appeal’s jurisdiction since it is a court of record and can only carry out its appellate jurisdiction by reassessing the evidence adduced and render its judgment based on a complete and legible record of appeal.
“In that connection, the respondents alleged that the Court of Appeal has rendered contradicting judgments on this question and there was need for this court to settle the matter,” the judges ruled.
In the case, Standard Chartered Merchant Bank Limited (SCMB) of London advanced 1,300,000 Deutschemarks and 1,050,000 Swiss Francs to Manchester Outfitters vide a Euro-currency loan dated 22nd March 1982.
Manchester Outfitters executed a debenture dated 5th April 1982 in favour of Standard Chartered Financial Services (SCFS) who was its guarantor for the said loan.
The court heard that on 7th October 1986, the 1st applicant (Manchester) and 1st respondent (SCFS) ‘localized’ the Euro-currency loan to Sh 9,000,000 through a facility letter.
SCFS advanced the localized loan to the 1st applicant who in turn offset its dues to SCMB.
Manchester Outfitters defaulted in repaying this loan and the SCFS sought to recover Sh 19,024,522.05 from them by appointing the 2nd respondent (Gregory & Cahill) as receiver and manager over their assets.
The Supreme Court noted that at in the in hearings before the superior courts below, the parties made conflicting arguments as to whether the localized agreement was secured on the existing security or the parties had to execute new securities.
The applicants argued that the localized agreement was unsecured and the respondents urged that the localized agreement was secured based on the existing security under the Euro-currency loan.
When Manchester filed the case in 1990, the High Court ruled that the debenture dated 22nd March 1982 was valid and so was the appointment of the 2nd respondent as receiver and manager for recovery of the amounts owing under the localized agreement.
However, the Court of Appeal overturned the decision by the High Court ruling that the old debenture was invalid for failure to register and execute a new security as per the facility letter and the correspondence exchanged between the parties could not create one.
The Court of Appeal also ruled that the appointment of A.D Gregory and C.D Cahill was invalid and awarded Manchester Sh 251 million plus interest.
