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Fitidis Group of Companies Ltd & another v Civicon Company Limited; Equity Bank (K) Limited Lavington Branch (Garnishee) (Civil Suit 56 of 2015) [2023] KEHC 18250 (KLR) (25 May 2023) (Ruling)

Fitidis Group of Companies Ltd & another v Civicon Company Limited; Equity Bank (K) Limited Lavington Branch (Garnishee) (Civil Suit 56 of 2015) [2023] KEHC 18250 (KLR) (25 May 2023) (Ruling)
Citation
Fitidis Group of Companies Ltd & another v Civicon Company Limited; Equity Bank (K) Limited Lavington Branch (Garnishee) [2023] KEHC 18250 (KLR)
Media Neutral Citation
[2023] KEHC 18250 (KLR)
Court
High Court
Court station
High Court at Machakos
Outcome
Court issues further directions
Case number
Civil Suit 56 of 2015
Judges
MW Muigai
Judgment date
25 May 2023
Language
English
Type
Judgment
Original source file
Download DOCX (69.3 KB)
Collections
Date published
22 July 2023
Case action
Ruling
Court division
Civil
Filing county
Machakos
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Certificate Of Urgency 18/10/2022
1.The Certificate of Urgency filed on 18/10/2022, the Applicant/Garnishee deposed as follows;That the Court by Ruling of 27/6/2022 dismissed the Applicant’s application of 13/9/2021.
2.Subsequently, the Applicant filed application for review on 5/7/2022 and was granted status quo orders pending hearing of the Application on 14/12/2022.
3.The Decree holder irregularly, unprocedurally and illegally proceeded to issue Proclamation Notice of 14/10/2022 subject to status quo order.
4.The Decree holder instructed Upstate Kenya Auctioneers to the auction of equipment owned by Garnishee in realization of Ksh 53,594,179/-.
5.The Proclamation Notice of 14/10/2022 and Warrant of Attachment would greatly prejudice the Applicant, a banking Institution if left to be effected would cause anxiety to its customers and possible further embarrassment.
Notice Of Motion
6.Notice of Motion filed on 18/10/2022 under certificate of urgency the Applicant sought the following orders;
1.Spent
2.Spent
3.That an order be granted to stay the execution of the proclamation notice dated 14th October, 2022 pending the hearing and determination of the Review Application dated 5th July, 2022.
4.That an order be granted citing the Decree Holder for contempt of court and abuse of the court process.
5.That costs of this application be provided for.
7.The application is based on the grounds set out in the affidavit by Samuel Wamaitha as follows;-a.The Ruling delivered on 27th June 2022 dismissed the Applicants Notice of Motion dated 13th September, 2021.b.Subsequent to the said Ruling the Applicant filed an application for Review of the said Ruling dated 5th July, 2022 and was granted status quo orders pending the hearing and determination of the said application which was/is due for mention on 14th December, 2022.c.The Decree Holder irregularly, unprocedurally and illegally proceeded to issue the Proclamation Notice dated 14th October, 2022 and instructed Joseph Kahoro Mundia T/A Upstate Kenya Auctioneers to conduct the auction of equipment owned by the Garnishee in realization of Kshs.53,594,179/-.d.The Proclamation Notice dated 14th October and warrant of attachment served upon the applicant to recover the sum of Kshs.53,594,179 is likely to prejudice the Applicant who stands discharged and free from any obligation appurtenant to recovery of the decretal amount from the judgment debtor.e.The Applicant is a banking institution and any execution therefore premised on the said Ruling in addition to being illegal and irregular threatens to cause anxiety to its customers and possible bank run to the applicant’s further embarrassment.f.The Applicant’s Review Application which is yet to be heard and determined has a great chance of success and thus protecting the property of the Garnishee who does not hold any funds on behalf of the Judgment Debtor and should therefore not be condemned unheard to bear the said debt.g.The Applicant is apprehensive that the Auctioneer instructed by the decree holder is likely to execute the instructions upon the applicant based on the proclamation notice and the Applicant has exhausted its obligations and ought to be discharged as a Garnishee.h.Without the timely intervention of this Court and the grant of orders for stay this application will be rendered nugatory, to the irreversible detriment and prejudice of the Applicant.
Grounds Of Objection Dated 3/11/2022
8.The Decree Holders/Respondents herein opposed the application dated 18th October, 2022 on the following grounds;-a.The Applicant continues to come to this court with unclean hands having failed and/or refused to comply with previous orders as issued by this Court.b.The matters which are the subject of this application have been heard and determined and therefore the matter is res judicata.c.There is no order staying the execution of the decree absolute as issued by this court and therefore any claim of contempt is unfounded and lacks merit.d.The order dated 25th February, 2021 a garnishee order nisi was made absolute on the applicant due to a material omission of the Respondent’s accounts.e.By a subsequent order dated 21st of September, 2021 on an application by the garnishee to set aside the order given on the 25th day of February, the court restated its position and made the garnishee order absolute.f.The Ruling issued on 27th June, 2022 considered the actions of the Garnishee in totality and found that the application lacked any merit.g.The current application lacks merit and should be dismissed with costs.h.The application is aimed at delaying the execution and restricting the decree holders from enjoying the fruits of their judgment.
Written Submissions
Garnishee’s Written Submissions Dated 2/02/2023
9.On the issue of whether the decree holder flagrantly and wilfully defied the status quo order issued by this court it is submitted that at all material times the Decree holder was represented by Adogo & Company Advocates therefore they were fully aware of the court order at the time of issuing the irregular and illegal proclamation against the applicant.
10.Reliance is on the case of Katsuri Limited v Kapurchand Depar Sash [2016] eKLR which sets out an established principle of law that in defiance of court orders, certain conditions must be demonstrated to court beyond reasonable doubt. The court stated as follows;-“Writing on proving the elements of civil contempt, learned authors of the book Contempt in Modern New Zealand have authoritatively stated as follows:-“There are essentially four elements that must be proved to make the case for civil contempt. The applicant must prove to the required standard (in civil contempt cases which is higher than civil cases –(a)the terms of the order (or injunction or undertaking) were clear and unambiguous and were binding on the defendant;(b)the defendant had knowledge of or proper notice of the terms of the order;(c)the defendant has acted in breach of the terms of the order; and(d)the defendant's conduct was deliberate.'
11.See also the case of Republic v Attorney General Ex parte Evalyene Khamasi Amboyi [2021] eKLR and Kristen Carla Burchell v Grant Burchell (Eastern Cape Division Case No. 364 of 2005.
12.The Applicant stated that at all material times, its role in these proceedings has been that of a Garnishee, not indebted in any manner whatsoever to the Decree Holder.
13.The Applicant further submits that no entity known as a Registry can issue warrants, this is squarely within the purview of the court.
14.Finally, the Review application by the Applicant dated 5th July, 2022 is still active and the gross misapprehension on the part of the Decree Holder as to its stay does not warrant or justify the contempt by it, or any party to the suit.
Decree Holder/respondents Submissions Dated 3/12/2022
15.On the issue of whether the Court should grant the orders prayed for in the application dated 18th October 2022, it is submitted that the Applicant herein filed an application for review on 5/07/2022 but no orders for stay of execution were issued for the matters ventilated in the said application. This matter had been properly decided in the Ruling of Hon. Justice Odunga of 27/06/2022. Therefore, in the absence of any stay orders the Registry was in a position to issue warrants as it did and the same was due for execution.
16.By engaging the Auctioneers to proclaim against the Garnishee, the Respondent herein did not act against any prevailing court orders for stay of execution therefore the issue of contempt of court or abuse of the process does not arise.
17.The Garnishee did not appeal or seek to set aside the Ruling by Justice G.V. Odunga but only made an attempt to rectify an error on the face of the record which was found to be immaterial and/or of no merit by the Hon. Analo DR MHC.
18.The initial stay orders issued by this Court lapsed when the matter was canvassed before the Trial Court.
19.The issue of whether the Garnishee should pay the Decree Holder is a matter that was also determined by the Trial Court.
20.On the issue of whether the matter is res judicata and abuse of Court process, Section 7 of the Civil Procedure Act the law states as follows; -“Section 7. No court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such court.”
21.The Applicant made similar prayers in the application before and is seeking to appeal the Ruling of Hon. Analo DR MHC through the back door.
22.Finally, it is submitted that the subject of the instant application was properly litigated and determined in the Ruling dated 1st September, 2021 and further in the Ruling by Justice Odunga dated 27th June, 2022 and should therefore be dismissed with costs to the Respondent herein.
23.The execution as stated by Upstate Auctioneers should be allowed to proceed and the Decree Holders are entitled to realize and enjoy the fruits for the judgement.
Determination
24.The Court considered the pleadings and submissions by parties through respective Counsel but more importantly the Court record as this Court took over the matter recently at the tail-end and has had to familiarize with the matter as a whole.
Background As Per The Court Record
25.The Plaintiffs filed suit through Plaint on 19/11/2015, based on a contract Purchase Order of 21/1/2015 and subcontracted the Plaintiffs services at USD 317,665. The Plaintiffs commenced the works as per the Bills of Quantities presented by the Defendants.In the meantime, in June 2015, Plaintiffs entered into an oral contract for additional works for USD165.084.20 and in July 2015 additional works of USD 53,658 with the defendants.
26.On 15/10 2015, the Defendant through CEO informed Plaintiffs of termination which was followed by termination letter of 22/10/2015 and the Defendant undertook to settle outstanding invoices and claims by the Plaintiff.
27.The Plaintiffs outlined particulars of breach of contract(s) and Particulars of loss and damage and Particulars of Special damages. The Plaintiffs sought against the Defendants General damages, Special damages, Interest and Costs of the suit.
28.The Plaintiffs also sought an injunction against 3rd Parties taking over from where they left unless and until their debt was settled. Court Orders were granted by Hon. E. Muriithi J on 19/11/2015.
29.The Defendants entered Appearance through Memorandum of Appearance by Advocates on record and Notice of Appointment on 2/12/2015.
30.The Defendants filed Statement of Defense & Counter-Claim on 8/1/2016 and admitted engaging the 1st Plaintiff as a Sub Contractor in roofing, walling and sealing on its site in Sultan Hamud Machakos County but denied terms and conditions set out in the Plaint. The Defendant denied that it engaged the 2nd Defendant as alleged and put the 2nd Plaintiff on strict proof thereof.
31.The Defendants deposed that the 1st Plaintiff reneged on agreed terms and instructions from the Defendant with regard to the quality of work, the 1st Plaintiff’s works were substandard and led to substantial loss and damage. The Defendant alleged that the 1st Defendant left the site unilaterally and/or deliberately, was not committed to delivering materials on site timeously as instructed and the Plaintiff presented overstated and /or exaggerated invoices with the aim to committing fraud. The Defendant was within contractual and Constitutional mandate to terminate the contract to complete the contract on time.
32.The parties at the close of pleadings attended Pre-Trial Proceedings on 30/1/2018 before the DR MHC and exchanged witness statements and documents save for list of agreed issues.
33.After oral hearing of Plaintiff’s case, the Defendant offered no evidence. On 5/2/2020, the Trial Court Hon G.V. Odunga J (as he then was) delivered Judgment and granted USD 292,041.88 interest at Court Rates and costs for plaintiffs against Defendant. The Counterclaim was dismissed.
34.Garnishee proceedings commenced and decree nisi was granted on 22nd December 2020 and Orders by Hon Ondieki DR MHC of 21/9/2020 Hon. Analo DR MHC of 1/9/2021granted decree absolute against the Garnishee.
Application-1
35.The Defendant filed Notice of Motion of 16/9/2021 for stay of execution pending the hearing and determination of the application. Upon issuance of the judgment, a decree was extracted of 20/7/2020 and duly served on the Counsel on record for the Judgment Debtor.
36.On 27/1/2022, by Ruling delivered the Trial Court /Judge Hon G.V.Odunga J found as outlined in part below;(51)Taking into account all the circumstances of this case I am satisfied that the justice of the case mandates that the Defendant be given an opportunity of being heard. A Court of justice, it has been held, has no jurisdiction to do injustice…………………(52)……Accordingly, the judgment entered herein is hereby set aside. However, being a regular judgment, this Court is required to do so upon terms that are not only just to the Defendant but to the Plaintiff as well….(53)…….I further direct that the Applicant deposits 1/2 of the decretal sum in a joint interest earning account in the names of the parties or to secure a bank guarantee from a reputable financial institution to cover the said sum pending the finalization of the suit within 45 days from the date of the Ruling and in default the application shall be deemed to have been dismissed with Costs.
Application-2
37.The Garnishee filed Notice of Motion dated 13/9/2021and sought an order be granted discharging the Applicant upon remitting to the Decree holder all the monies collectively held by the Applicant on behalf of the Judgment debtor.
38.The Court issued orders of 2/9/2021 declaring the decree nisi issued on 22/12/2020 absolute and the Applicant/ Garnishee to release the funds held by/for the Judgment- debtor in the 6 bank accounts listed in the application. Relying on Order 23 CPR 2010 the Trial Court dismissed the application on 27/6/2022.
39.The Garnishee made another application for review of the DR MHC order of decree absolute before DR MHC, the matter was placed before Court for hearing and determination and status quo was/is maintained.
IssuesThe Court considered the pleadings and submissions on record and the issue(s) that emerge for determination are;1.What was /is the effect of status quo orders of 5/7/20222.Was/has the Defendant & Garnishee granted Fair Hearing?3.Is contempt of Court committed by the Respondent/ Garnishee through its agent Auctioneer who issued the roclamation?4.What is the position/liability attached to the Defendant?
Status Quo
40.The Duty Court granted orders maintaining status quo so as to safeguard the subject-matter pending inter partes hearing and determination of the substantive application for review. The status quo order does not effectively determine parties rights, claims over the subject-matter but preserves the same pending hearing of the rival claims and/or rights by the Respondent(s)In the case of Prisillah Wanja Kibui v James Kiongo Kibui & Charles Wambugu Gitonga ELC 170 of 2011 it was held as follows;"Status quo is defined in Black’s Law Dictionary as ‘’the situation as it exists’’ In my view an order to status quo to be maintained is different from an order of injunction both in terms of the principles for grant and practical effect of each. While the latter is an substantive equitable remedy granted upon establishment of a right, or at interlocutory stage, a prima facie case, among other principles to be considered, the former is simply an ancillary order for preservation of the situation as it exists in relation to pending proceedings before hearing and determination thereof.
41.The Proclamation Notice of 14/10/2022 was pursuant to a valid regular, legal judgment of the Court vide Judgment delivered on 5/2/2020 and which was set aside on the conditions set out in the Ruling of 27/1/2022 to pave way for interpartes hearing of the dispute/claim/rights by Plaintiffs and Defendant. The Proclamation was premature and an overreach as the parties had a mention date 14/12/2022 of the Certificate of urgency/application for review filed on 18/10/2022 and if delay occurred it could have prompted the Court vide Certificate of Urgency application to vacate the status quo orders.
Fair Hearing
42.By the Ruling of 27/1/2022, the Trial Court granted the Defendant a chance to be heard and not condemned unheard but with conditions as there was a regular judgment on record that was set aside.
43.In Pinnacle Projects Ltd v PCEA Ngong Parish PCEA Foundation HCCC 21 of 2012 Hon Nyakundi J reiterated;“Fair Trial in civil cases includes; the right of access to Court, the right to be heard by a competent, independent, impartial tribunal, the right to equality of arms, the right to adduce and challenge evidence, the right to legal representation, the right to be informed of the claim in advance before the suit filed, the right to public hearing and right to be heard within reasonable time………..I have this to say it is important that in any judicial process adjudication parties involved be given an opportunity to present their case and have a fair hearing before the decision against them is made by the respective judge or magistrate. It is not lost that procedural fairness is deeply ingrained in our administration of justice system.”
44.Instead of the Defendant pursuing the Trial Court for variation of the conditions to facilitate the hearing inter partes, the Defendant failed to comply with the conditions set out for setting aside the regular judgment and left the Garnishee to settle part of the debt from funds in the Defendant’s accounts held by the Bank/Garnishee. The Defendant did not pursue the interpartes hearing sought for and granted by the Trial Judge on 27/01/2022.
Contempt Of Court
45.In North Tetu Farmers Co. Ltd v Joseph Nderitu Wanjohi [2016] eKLR the Court observed;“Section 5 of the Judicature Act provides as follows:-(1)The High Court and the Court of Appeal shall have the same power to punish for contempt of court as is for the time being possessed by the High Court of Justice in England, and that power shall extend to upholding the authority and dignity of subordinate courts.
46.In Econet Wireless Kenya Ltd v Minister for Information & Communication of Kenya & Another Ibrahim J (as he then was) [2005] eKLR stated as follows:-To demonstrate the importance and seriousness with which the courts will deal with any conduct that may be deemed or found to be in contempt of court or judicial process, it may be necessary to look at some decisions on the subject.In Gulabchand Popatlal Shah & Another Civil Application No. 39 Of 1990, (unreported), The Court of Appeal said:-““…… It is essential for the maintenance of the Rule of Law and good order that the authority and dignity of our courts are upheld at all times. This court will not condone deliberate disobedience of its orders and will not shy away from its responsibility to deal firmly with proved contemnors ……”In Hadkinson v Hadkinson (1952) 2 All ER. 567, it was held that: “It is plain and unqualified obligation of every person against or in respect of, who an order is made by a court of competent jurisdiction to obey it unless and until that order is discharged. The uncompromising nature of this obligation is shown by the fact that it extends even to cases where the person affected by an order believes it to be irregular or even void.”
47.The case of Ochino & Another v Okombo & $ Others [1989] KLR C.A. sets conditions to be met in a case of Contempt of Court as follows;1)The person must abstain from doing a certain act.2)The Court order ought to be served with a Penal Notice.3)The Court order shall be clear and unambiguous.4)The fact of service of the Court order must be proved beyond reasonable doubt.5)The Contemnor ought to have actual personal knowledge of the Court order.6)The tim elines for filing application for contempt of Court and when the Court order in issue was made should be 6 months.
48.In the case of Sam Nyamweya & Others v Kenya Premier League Ltd And Others [2015] eKLR) the Court stated that:-“contempt of court is constituted by conduct that denotes wilful defiance of or disrespect towards the court or that wilfully challenges or affronts the authority of the court or the supremacy of the law, whether in civil or criminal proceedings.”
49.The ingredients that comprise of contempt of Court have not been put in finding the Respondent in contempt of Court orders. There is still a valid judgment against the Defendants to date awaiting compliance and/or execution save for the review of the application.
Garnishee
50.In Ecobank Kenya Ltd v True North Construction Company Limited & Another [2018] eKLR the court held:“…The starting point in deciding this matter are the provisions of Order 23 Rule (1) of the Civil Procedure Rules;-A court may, upon the ex parte application of a decree-holder, and either before or after an oral examination of the judgment-debtor, and upon affidavit by the decree-holder or his advocate, stating that a decree has been issued and that it is still unsatisfied and to what amount, and that another person is indebted to the judgment-debtor and is within the jurisdiction, order that all debts (other than the salary or allowance coming within the provisions of Order 22, rule 42 owing from such third person (hereinafter called the “garnishee”) to the judgment-debtor shall be attached to answer the decree together with the costs of the garnishee proceedings; and by the same or any subsequent order it may be ordered that the garnishee shall appear before the court to show cause why he should not pay to the decree- holder the debt due from him to the judgment-debtor or so much thereof as may be sufficient to satisfy the decree together with the costs aforesaid.The object of Garnishee Proceedings is to enable a Decree Holder to reach a debt due to the Judgment Debtor from the Garnishee as may be sufficient to satisfy a Decree. Crucial thereof is that the Garnishee is indebted to the Judgment Debtor…”
51.In the case of Kenya Commercial Bank v Daniel Kimutai Rono & Another[2013]eKLR the court held that, in Order 23 Rule 4 CPR 2010 which states ;“that if the garnishee disputes liability, the court instead of making an order that execution be levied, the court may order that any issue or question necessary for determining his indebtedness be tried and determined in the manner in which an issue or question in a suit is tried and determined.”
52.Ngaywa Ngigi & Kibet Advocates versus Invesco Assurance Company Limited; Diamond Trust Bank [2020] eKLR“I agree with the contention of counsel for the applicant that in terms of Order 23 Rule 4 of the Civil Procedure Rules, It is the position of the law that in garnishee proceedings the Garnishee Banks are only required to appear before the court to acknowledge or dispute the debts. In the present case, the Garnishee Bank did not appear or file a response and in the absence of evidence to the contrary, I find that they acknowledged that the respondent held accounts with them and it was not necessary for court to question them and cross examine them as they did not have any objections in relation to the attachment.”
53.The Garnishee filed Replying Affidavit on 20/5/2021but did not appear in Court to agree or dispute that the debt against judgment debtor could be satisfied from funds in the Defendant’s accounts held by Garnishee Bank. When decree nisi became absolute the Garnishee filed Application to Court whose Ruling of 27/6/2022 dismissed the application.
54.The Garnishee failed to inform the Court of the Account deposits/funds to defray debt due and owing by the Defendant.
Defendant
55.As outlined above, from the Court record the Plaintiffs filed suit almost 9 years ago 2015 to date. The Plaintiffs served the Defendant who filed appearance Defense & Counterclaim. The Defendant failed to attend after Pre-trial directions for hearing. During the hearing the Plaintiff presented 2 witnesses. The Defendant did not tender any evidence. The Trial Court then arrived at the Judgment of 5/2/2020. The Defendant Judgment-Debtor made no attempt to settle the debt outstanding, file for review or appeal against the decision. However, the Defendant filed application seeking fair hearing which was granted on conditions that the Defendant failed to fulfil and hence the Plaintiffs reverted to the judgment of the Court which is valid as it was not set aside, varied, reviewed and/or successfully appealed against.
Conclusion
56.From the chronology of evidence on record outlined above, this Court finds that the evidence on record fails to disclose contempt of Court as prescribed by law, the steps to be proved by the Applicant against the Respondent in finding contempt are not complied with especially no evidence of service of the Penal Notice served was adduced and showed in the Court record.
57.Obedience of Court Orders is mandatory to/by ALL parties/Counsel and not by one/some /any parties to a suit. In the instant case, there is on record valid, regular and legal judgment of the Court that the Defendant has not complied with to date.
58.The Duty Court granted the Applicant maintenance of status quo in July 2022 pending hearing of the application for review and it is not clear what transpired in/on 14/12/2022 when the matter was scheduled for mention /further directions.
59.The interim /temporary orders were not to operate ad infinitum but to preserve subject-matter for hearing and determination of the pending application.
60.From July 2022, it is almost heading to a year in a space of 2 months, the parties/Counsel ought to move the Court appropriately to canvass the pending matter.
61.From the above circumstances, the Plaintiffs have not committed contempt of court as they are pursuing the fruits of their judgment as the matter was delayed when status quo orders were granted awaiting determination of the pending application by the Court.
62.The Defendant and/or Garnishee have not come to Court with clean hands as there is a judgment that has not been satisfied yet.
Disposition1.The Application filed on 18/7/2022 part on Contempt of Court against the Plaintiffs/Respondents is dismissed.2.The Status quo orders shall remain in force for the next 30 days on condition3.The Proclamation Notice of 14/10/2022 is stayed pending hearing and determination of the review of Ruling of 27/6/2022 para23 of 5/7/2022.4.Each party Plaintiffs, Defendant & Garnishee file Written Submissions and serve5.14 days for the Plaintiffs and 14 days for Defendant and/or Garnishee.6.Further mention for directions/compliance shall be on 15/06/2023.It is so ordered.
DELIVERED DATED & SIGNED IN OPEN COURT IN MACHAKOS ON 25/5/2023 (VIRTUAL/PHYSICAL CON-FERENCE).M.W. MUIGAIJUDGEIn The Presence OfNyaberi H/B Muturi for Garnishee -ApplicantNo Appearance - For the RespondentsGeoffrey/Patrick - Court Assistant(S)
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