ADNAN MERDIN v HASAN CETIN & HATICE CETIN [2004] KEHC 38 (KLR)

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI (MILIMANI COMMERCIAL COURTS)

Civil Case 234 of 2004

ADNAN MERDIN.......................................................... PLAINTIFF

-  VERSUS-

HASAN CETIN & HATICE CETIN.......................................................... DEFENDANT

RULING

This application is brought by way of a chamber summons

dated and filed on 5th May, 2004.  it is made under O.XXXVIII rules

1,2,5,6 and 12 of the Civil Procedure Rules, and seeks orders-

1.    That this court be pleased to issue a warrant of arrest of the 1st

defendant, Hasan Cetin, and order him to be brought before

this court to show cause why he should not furnish security for

his appearance;

2.   That this court be pleased to order the 1st defendant Hasan

Cetin to deposit in court money or other property or bank

Guarantee or such other security in the sum of US$200,000

for his appearance at any time when called upon while thesuit is pending and until satisfaction of the decree that maybe passed against the defendants in the suit; and3.    That the costs of this application be in the cause.

The application is based on the grounds that the plaintiff hascommenced proceedings against the defendants claimingUS$169,850 plus costs and interest as per the plaint filed herein; thatthe defendants are ordinarily resident outside Kenya but the firstdefendant Hasan Cetin is currently in Kenya; that the said HasanCetin is due to leave Kenya in the next few days without attending tothe plaintiff's claim; that the said Hasan Cetin has no assets in Kenyaother than his investments in a limited liability Company known asNewline Limited; and that the said Hasan Cetin has plans to sell thesaid company and the assets thereof and thereby defeat any decreethat may be passed against him. The application is supported by theannexed affidavit of ADNAN MERDIN, the plaintiff herein.

In his replying affidavit, the first defendant sets out, fromparagraph 5 to paragraph 13, the business relationship between himand the plaintiff.  According to this affidavit, the company known as

Newline Limited was incorporated by the 1 and 2 defendants.Prior to its incorporation, the first defendant had met the plaintiffwho at the time was un-employed and was eager for any formalemployment. The two being fellow Turkish nationals, the firstdefendant considered recruiting the plaintiff as a general manager oftheir company and proceeded to do so by a letter dated 27thNovember, 1998. The plaintiff executed the duties of generalmanager and at no time did he invest in the operations of thecompany. Without authority, he appointed a Mr. Shenga asCompany Secretary of New line Limited. Mr. Cetin further accuses theplaintiff of peddling various falsehoods about his employment byNew line Limited, including a false statement in a tax certificate to theeffect that he is the Managing Director of New line Limited, whereasthe truth is that only the defendants are directors of the company.Upon inquiry, the defendants established that the plaintiff hasengaged himself in other businesses which he attends to during thetime when he should be discharging his duties to New lineLimited, and uses employees of New line Limited to carry out various

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tasks.  Consequently, it was no longer feasible to retain him in theemployment.

It is the defendant's further case that on 27th March, 2004 theplaintiff was formally requested to resign and after detaileddiscussion the parties agreed that the plaintiff's employment wouldbe terminated on 1st April, 2004; that in gratitude for the plaintiff'sservices to the company the defendant would waive a debt ofUS$28,000 which the plaintiff had incurred, and that an ex gratiapayment of US$30,000 would be paid to the plaintiff. Thisagreement was reduced into writing wherein it is acknowledged thatthe plaintiff was at all times an employee of Newline Limited. Therewas never any agreement that the plaintiff would participate insharing profits. Mr. Cetin further avers that the sums pleaded by theplaintiff in the plaint are false. He concludes by stating that theplaintiff was never employed by the defendants in their individualcapacities, and that the alleged partnership and/or right to share inprofits of Newline Limited was created after the plaintiff'semployment was terminated.

Mr. Ojiambo, counsel for the plaintiff/applicant, made a lengthysubmission. In summary, the applicants' case is that the firstdefendant is a Turkish and resides out of the country. He is notresident in Kenya and he was last here in 2001. He only comes on avisitor's pass and then goes away. It is quite possible in thosecircumstances that, with this suit against him, he might chose neverto come back in which case the plaintiff would lose irretrievably. Thedefendants reside in Turkey with which Kenya has no reciprocalarrangement for enforcement of judgments. If any decree is passedagainst them, it will be rendered infractuous because the defendantshave no assets in Kenya except their investment in Newline Limited.

In his response, Mr. Ngatia, counsel for the first defendant,relied entirely on the replying affidavit of the first defendant. He alsomade a lengthy submission whose synopsis is that the foundation ofthe plaintiff's suit is that there was a partnership between the plaintiffand the defendants and yet there is no evidence of a partnership. Allthe documentary evidence points to an employer and employeerelationship, and the employer is a Limited Liability Company which isnot a party to this suit.   He also submitted that there was no

evidence that the business founded in 1998 is about to be sold andall there was is a bare allegation. Before the plaintiff can obtain anorder, he has to establish a cause of action which is unimpeachable,and that has not been done in this case. He finally submitted thatthe court cannot disregard the issue whether this is a litigabledispute, and whether the suit is bona fide. He also said that thecourt cannot order security for less than US$200,000 because that iswhat is requested, otherwise the court cannot order any other sums.

In reply, Mr. Ojiambo submitted that the plaintiff was notrelying on employment otherwise he would have sued the company.Rather, he was relying on a partnership agreement which was madebefore the company was incorporated.

Having heard the submissions of counsel for the respectiveparties, the main issues are whether the first defendant is about toleave the country as feared by the plaintiff, whether the company,Newline Limited, is about to be disposed of, and whether there was,indeed, a partnership agreement between the parties. As for theallegation that the first defendant is about to leave the country, Ican only observe that in the plaintiff's affidavit sworn on 5th May,

2004, the plaintiff averred that the first defendant proposed to leavethe country by 6th May, 2004. Almost a month later, he is still in thecountry. Instead, he has assured this court on oath that the willattend court any time he is required to do so. Otherwise he is inand out of the country as his company is doing a roaring business.

As for the allegation that Newline is about to be disposed of,the plaintiff has relied heavily on hearsay. No evidence has beenadduced before the court in support of the assertion.

The third and most important matter is with regard to the issueof partnership vis-a-vis employment. This court is of the view thatthe plaintiff's suit can succeed only if the issue of a partnershipbetween the plaintiff and the defendants is resolved in favour of theplaintiff. Section 3(1) of the partnership Act defines partnership as"the relation which subsists between persons carrying on business incommon with a view of profit." Even though he plaintiff alleges thathe entered into a partnership agreement with the defendants in July,1998, no prima facie evidence of this agreement has been placedbefore the court.

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Contrary to the plaintiff's allegation, the first defendant avers in

his replying affidavit that the relationship between the parties was,

until the end of March, 2004, that of employer and employee, the

plaintiff, having been employed by Newline Limited, a company all of

whose shares are owned by the two defendants who are also

husband and wife. In support of this position, the first defendant has

produced a copy of a letter dated 27th November, 1998 addressed to

the plaintiff, in part, as follows-

"Dear Adnan

RE: Employment as General Manager

We take this opportunity to engage yourservices within our organization in the abovecapacity.

As regards your terms of employment, you willbe entitled to a monthly salary ofKsh. 15,000/= until confirmation. Uponconfirmation of your employment, thecompany will adjust your salary to an amountagreed between you and the directors. Thiswould depend on the performance of thecompany.

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Any future salary increase on your part will betied up to the cost of living and theperformance of the salary..."

Signed. Hasan Cetin, Director.

The responsibilities of the general manager are enumerated inthe letter. The letter therefore shows that the plaintiff was offeredemployment in the 1st defendants organization, and he was to bepaid monthly salaries.

Mr. Ojiambo for the applicant said that there was no evidencethat the plaintiff accepted the employment. However, thissubmission runs against the tide of the evidence before the court. Bya letter CHC-3" in the first defendant's bundle) dated 11th January,1999, the plaintiff wrote to a Mr. Syata appointing him as a shopattendant. The letter is signed by the plaintiff as a general manger.On 22nd June, 1999 he wrote another letter to the supervisor,Bridgestone Security Services, and signed it as general manager. On29th September, 1999 he wrote yet another letter as generalmanager to Judith and Irene, presumably employees, warning themof their conduct.  He wrote another letter in the same capacity to

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Oyatta and associates, advocates on 21st July, 2000.   This was

followed by yet another one, in the same capacity, to Kencell on 15th

November, 2000. He also wrote another one as general manager on

16th February, 2001 to Kencell Communications.  This would tend to

confirm beyond reasonable doubt that the plaintiff was offered

employment as a general manager at a monthly salary, and that he

accepted it.

The plaintiff has not produced any evidence at all to establish,

prima facie, that there was any agreement for a partnership.  And

yet, the existence of a partnership is the foundation and goes to the

very root of his claim against the defendants.  Order 38 rule 1 (b) of

the Civil Procedure Rules under which this application is made states-

"Where at any stage of a suit... the court issatisfied by affidavit or otherwise... that thedefendant is about to leave Kenya undercircumstancesaffording      reasonable

probability that the plaintiff will or maythereby be obstructed or delayed in theexecution of any decree that may be passedagainst the defendant in the suit, the courtmay issue a warrant of arrest../'

Commenting on this rule, in his treatise on Civil Procedure,

Mulla says-

"Where the defendant is about to leaveIndia(read Kenya), it is not necessary toprove any intent on his part to obstruct ordelay the execution of any decree ...

It is enough if the circumstances afford thatany decree passed against him in the suit willthereby be obstructed. The court musthowever, be satisfied on two points.

(1)that the plaintiff has a cause of actionwhich is prima facie unimpeachable,subject to his proving the allegations inthe plaint and

(2)the court should have reason to believeon adequate materials that unlessjurisdiction is exercised there is realdanger that the defendant will removehimself from the ambit of the powersof the court.

Both these conditions must be satisfied.  I must confess that there is

nothing on record from which this court can infer a partnershipbetween the parties.   In all the documents placed before the court,

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no reference is made to any partnership. Indeed, the issue ofpartnership is first mentioned in the letter from the plaintiff'sadvocate dated 3rd April, 2004. This was a good three days after theplaintiff had signed the conditions of severance agreed upon betweenhim and Hasan Cetin, the first defendant. If there was a partnershipissue, it should have been thrushed out in this agreement, or evenearlier, but it was not. And with the claim for a partnershipagreement coming almost seven years after the company wasformed, this court is not satisfied that there is a cause of actionwhich is prima facie unimpeachable. There is no evidence that thecompany is being sold, and the first defendant has assured the courton oath that he would attend court at all times required. The totaleffect of all the circumstances herein is that this court does not thinkthat the plaintiff is entitled to the orders he has sought. Hisapplication is accordingly dismissed with costs to the first defendant.Dated and delivered at Nairobi this 7th day of June, 2004

L. NJAGIJUDGE

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