Chui Bing Sun & Checkmate Capital Limited v Chien Hoe Yong, Henco Management Limited, Bruno Otieno Oliende (alias Elijah Murenzi Maliba, Joseph Lugansa, Global Freight Management Limited, Brian Odhiambo, Odhiambo, Talam & Co. Advocates LLP, Osewe Alphonce Collins Odoyo, Odero Osiemo & Co. Advocates, Jonathan Okoth Opande, Kenedy Anyanga & Titus Kamau Ngunjiri Mwangi; National Bank of Kenya Limited, United Bank for Africa Kenya Limited, Credit Bank Kenya Limited & Stanbic Bank Kenya Limited (Interested Parties) [2021] KEHC 6682 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

CIVIL CASE NO. E060 OF 2021

CHUI BING SUN.........................................................................1ST PLAINTIFF

CHECKMATE CAPITAL LIMITED.......................................2ND PLAINTIFF

-VERSUS-

CHIEN HOE YONG.................................................................1ST DEFENDANT

HENCO MANAGEMENT LIMITED....................................2ND DEFENDANT

BRUNO OTIENO OLIENDE

(alias ELIJAH MURENZI MALIBA.......................................3RD DEFENDANT

JOSEPH LUGANSA..................................................................4TH DEFENDANT

GLOBAL FREIGHT MANAGEMENT LIMITED................5TH DEFENDANT

BRIAN ODHIAMBO..................................................................6TH DEFENDANT

ODHIAMBO, TALAM & CO. ADVOCATES LLP.................7TH DEFENDANT

OSEWE ALPHONCE COLLINS ODOYO..............................8TH DEFENDANT

ODERO OSIEMO & CO. ADVOCATES..................................9TH DEFENDANT

JONATHAN OKOTH OPANDE...............................................10TH DEFENDANT

KENEDY ANYANGA.................................................................11TH DEFENDANT

TITUS KAMAU NGUNJIRI MWANGI...................................12TH DEFENDANT

AND

NATIONAL BANK OF KENYA LIMITED.................1ST INTERESTED PARTY

UNITED BANK FOR AFRICA KENYA LIMITED...2ND INTERESTED PARTY

CREDIT BANK KENYA LIMITED.............................3RD INTERESTED PARTY

STANBIC BANK KENYA LIMITED...........................4TH INTERESTED PARTY

RULING

1. Before me for determination are four (4) applications: the first is the Amended Notice of Motion dated 26th February, 2021 (“the first application”) brought by the 1st and 2nd plaintiffs herein and supported by the grounds set out on its face and the facts stated in the affidavit of the 1st plaintiff. The plaintiffs essentially sought the issuance of freezing orders in respect to various accounts belonging to the 7th, 8th, 9th and 11th defendants and held with the interested parties; they further sought orders for the discovery of documents, interrogatories and disclosures by the interested parties in respect to the specific accounts listed in the first application, and an order permitting the plaintiffs to trace the monies deposited into the listed accounts. This court however notes that no copy of the supporting affidavit was in the court file at the time of writing this ruling.

2. In opposing the first application, the 4th interested party filed the replying affidavit sworn by its Senior Legal Counsel-Legal and Governance Department, Elisha Nyikuli.Also opposing the first application is the 3rd defendant, who swore a reply on 26th April, 2021.

3. The second application is the Notice of Motion dated 15th March, 2021 (“the second application”) brought by the 6th and 7th defendants and supported by the grounds presented in its face as well as the facts stated in the affidavit of the 6th defendant. Therein, the aforesaid defendants sought an order discharging, setting aside and/or lifting the ex parte orders issued earlier by this court on 3rd March, 2021 against the said defendants, by unfreezing the 7th defendant’s bank account with the 1st interested party held at Wilson Airport Branch Account No.[xxxxxxxxx] and a further order directing the plaintiffs to deposit security for costs in the sum of Kshs.80,000,000/ pending the hearing and determination of the suit, failing which the suit be dismissed with costs.

4. The second application stands opposed by the plaintiffs, who have filed the replying affidavit sworn by the 1st plaintiff on 20th April, 2021.

5. Subsequently, the 1st interested party filed the Notice of Motion dated 14th April, 2021 (“the third application”) which is supported by the grounds set out on its face and the facts stated in the affidavit of advocate Samuel Mundia. The second application sought the orders hereunder:

(i) Spent.

(ii) Spent.

(iii) Spent.

(iv) THAT this Honourable Court be pleased to order the plaintiffs to submit a draft interrogatories questionnaire for the court’s interrogation, to determine the necessity, appropriateness and relevance of the intended questions to be addressed to and by the enjoined interested party banks.

(v) THAT costs of the application be awarded to the 1st interested party.

6. The plaintiffs opposed the third application by putting in Grounds of Opposition dated 21st April, 2021.

7. The fourth application is the Notice of Motion dated 14th April, 2021 lodged by the 8th and 9th defendants in the suit. The same is supported by the grounds set out on its face and the facts stated in the affidavit of the 8th defendant. The 8th and 9th defendants sought an order discharging and/or setting aside the ex parte orders made on 3rd March, 2021 by this court against the 8th and 9th defendants being to unfreeze the bank account held with the 1st interested party at Wilson Airport Branch Account No. .[xxxxxxxxx]; a further order directing the plaintiffs to deposit security for costs in the sum of Kshs.50,000,000/ pending the hearing and determination of the suit failing which the suit be dismissed.

8. Going by the record, it remains unclear whether any documents were filed in response to the fourth application.

9. When the respective Motions came up for inter partes hearing before this court, the parties were directed to file and exchange written submissions.

10. I have considered the grounds set out on the body of the respective Motions, the facts deponed in the affidavits supporting and opposing the respective Motions, the Grounds of Opposition, and the rival submissions and authorities cited.

11. I will begin by addressing the first application. It is clear that the orders sought therein are three-fold: the issuance of freezing orders in respect to the respective accounts listed therein, the discovery of documents relating to those accounts, and permission to trace the money deposited in those accounts. I will address the three (3) orders contemporaneously.

12. In the absence of a copy of the supporting affidavit to the first application, I relied on the grounds thereto. In essence, the plaintiffs state and submit that they are victims of a cross-border gold trading scam involving the defendants and that on various dates the plaintiffs transferred large sums of money into the various accounts particularized in the plaint and first application. The plaintiffs similarly state that there has been fraud, collusion and misrepresentation by the defendants in the suit, thereby necessitating a granting of the orders sought.

13. It is the averment of the plaintiffs that a large portion of the funds held in the respective accounts has been withdrawn by some of the defendants and that unless the orders sought are granted, the balance thereof is at risk of being misappropriated by the defendants.

14. In response, the 3rd defendant denies having entered into any agreement with the plaintiffs and further denies the allegations or fraud and misrepresentation. The 3rd defendant further avers that the move by the plaintiffs to have his account frozen will be detrimental to his business.

15. Also in response, Elisha Nyikuli in his replying affidavit on behalf of the 4th interested party states that on 31st December, 2019 the 11th defendant opened two (2) personal accounts with the 4th interested party, namely Kenya Shillings Account No. .[xxxxxxxxx]and USD Account No. .[xxxxxxxxx] and that the 4th interested party would debit and credit the aforementioned accounts in accordance with the instructions of the 11th defendant. The deponent goes on to state that the 4th interested party ought to be discharged for the reason that no orders are being sought against it.

16. I note that the 6th and 7th defendants put in written submissions in respect to the first application, essentially arguing they are innocent third parties and ought not to bear any liability for the actions of the 1st and 2nd defendant. The 6th and 7th defendants are of the view that a granting of the freezing orders would prejudice them since the relevant accounts also hold monies belonging to other clients, and go further on to submit that all monies received on account of the 1st and 2nd defendants have since been disbursed and hence the 7th defendant does not hold any funds belonging to those defendants.

17. Upon perusal of the orders sought in the first application and pleadings, I note that contrary to the averments made in the replying affidavit of Elisha Nyikuli, some of the orders are directed at the 4th interested party hence there is no basis on which to have the 4th interested party struck out at this stage.

18. On the subject of freezing of the accounts in question, the court in the case of International Air Transport Association & Another v Akarim Agencies Company Limited [2004] eKLRheld as follows:

“Freezing order is not an interim injunction and the threshold to be attained for it to be issued is also distinct from those attending a temporary injunction set out in GIELLA V CASSMAN BROWN. Freezing order is an order of the court which is usually issued in personam restraining or enjoining a person from dissipating an asset directly or indirectly. It is ordinarily issued ex parte for it is intended to serve a useful purpose of preservation of assets...The basis for freezing order is the inherent jurisdiction of the court although some jurisdictions have enacted freezing-order statutes...”

19. Furthermore, in the case of Andrew Chege Wainaina v David Karanja Mwangi & another [2017] eKLRthe court referenced Goode on Commercial Law 4th Editionat page 1287 on the principles for the granting of a freezing order, in the manner hereunder:

“…….Before granting a freezing injunction the court will usually require to be satisfied that;

(a) the claimant has 'a good arguable case' based on a pre- existing cause of action;

(b) The claim is one over which the court has jurisdiction;

(d) There is a real risk that those assets will be removed from the jurisdiction or otherwise dissipated if the injunction is not granted; and

(e) There is a balance of convenience in favour of granting the injunction.”

20. On the first principle, upon perusal of the pleadings placed before me, I am satisfied that the plaintiffs have established an arguable case with reasonable chances of success. Under the second principle, I am satisfied that this court has jurisdiction over the claim in question. In respect to the third principle, save for the funds purportedly deposited in the accounts held with the respective interested parties, it remains unclear whether the 1st and 2nd defendants have additional assets within the jurisdiction of this court. Nonetheless, in the absence of any evidence to the contrary, I have no reason to find that the assets belonging to the remaining defendants are not within the jurisdiction of this court. This brings me to the fourth principle touching on the risk. From perusal of the pleadings and material placed before me, I am of the view that the plaintiffs have reasonably demonstrated that the assets in question are at a real risk of being removed from their reach; this is reinforced by the arguments brought forth by the 6th to 9th defendants herein that they previously received instructions for disbursement of the funds held on behalf of their clients to other accounts. I have also weighed this against the position that some of the defendants are merely enjoined in the proceedings by virtue of their role as advocates for other defendants and that some of the accounts in question are general client accounts. For the foregoing reasons collectively, I am therefore convinced that in the circumstances of this case, the balance of convenience tilts in favour of the plaintiffs, to entitle them to the granting of freezing orders. I however note that given the nature of the dispute and in the interest of justice, it would be important for the hearing of the suit to be expedited.

21. In respect to the orders touching on discovery of documents relating to those accounts, and permission to trace the money deposited in those accounts, upon consideration of the arguments by the parties, I am satisfied that there is nothing to lead me to decline to grant these orders. Consequently, the first application succeeds in respect to prayers 3, 5, 7 and 9.

22. I will address the second and fourth applications contemporaneously since it is apparent that the orders sought therein are similar. I note therefrom that, save for the orders for deposit of security for costs, the remaining orders touching on the varying of the ex parte orders of 3rd March, 2021 are now spent.

23. In their respective supporting affidavits to the second application, the 6th and 8th defendants echoed each other’s submissions that, at no point did the plaintiffs transact directly with the 6th and 7th defendants and more importantly that, the plaintiffs are foreigners and non-residents of Kenya.

24. In response, the 1st plaintiff states that the aforementioned defendants have not placed any evidence before this court to justify the security for costs sought and that in any event, the sums sought are exaggerated. The 1st plaintiff urges that, should this court be inclined to award security for costs, then the same should not exceed a sum of Kshs.2,000,000/.

25. Order 26, Rule 1 of the Civil Procedure Rules stipulates as follows in respect to security for costs:

“In any suit the court may order that security for the whole or any part of the costs of any defendant or third or subsequent party be given by any other party.”

26. It is clear from the foregoing provision that an order for security for costs is purely discretionary. Moreover, security for costs can be ordered in the following circumstances, espoused in the case of Jayesh Hasmukh Shah v Narin Haira & another (2015) eKLRcited with approval in the case of Aggrey Shivona v Standard Group PLC [2020] eKLR:

“It is now settled Law the order for security for costs is a discretionary one as long as that discretion is exercised reasonably, and having regard to the circumstances of each case. Such factors as absence of known assets in the Country, absence of an office within the jurisdiction of the court, inability to pay costs; the general financial standing or wellness of the plaintiff; the bonafides of the plaintiff’s claim, or any other relevant circumstances or conduct of the plaintiff or defendant may be taken into account.”

27. It is clear from the foregoing that in order for an applicant to succeed in his/her application, he/she ought to demonstrate that the respondent will be unable to pay the costs as a result of poverty. This position was reaffirmed by the Court of Appeal in the case of Gatirau Peter Munya v Dickson Mwenda Kithinji & 2 others [2014] eKLRwhen it held that the onus is on the applicant to prove that the respondent will be unable to pay the costs due to poverty, should the proceedings terminate against such respondent.

28. In the present instance, while I note that the plaintiffs are foreigners, I equally note that the respective defendants did not furnish this court with any evidence or material to show the inability of the plaintiffs to pay the costs of the suit in the event of a dismissal. I am not convinced to exercise my discretion in favour of the aforementioned defendants. Consequently, the second and fourth applications are hereby dismissed for lack of merit, with no order on costs.

29. I am now left with the third application which was brought by the 1st interested party. The substantive order sought is for the submission of a draft interrogatories questionnaire, with advocate Samuel Mundia averring in his supporting affidavit that the interrogatories questionnaire and notice to produce documents availed by the plaintiffs does not comply with legal principles and is oppressive of the 1st interested party’s duty of confidentiality. More specifically, the deponent avers that the interrogatories carry irrelevant questions and tend to incriminate the account holders. This was echoed at the submission stage and which submissions were reaffirmed by those of the 6th and 7th defendants, with the defendants adding that the plaintiffs are on a fishing expedition with the aim of diminishing their defence.

30. In contrast, the plaintiffs contend that the interrogatories and notice to produce are clear and unequivocal and in compliance with the law.

31. The purpose of discovery was enunciated by the court in the case of Concord Insurance Co. Ltd v NIC Bank Ltd [2013] eKLR quoted in the plaintiffs’ submissions in the following manner:

“According to Halsbury’s Laws of England, Volume 13 para 1, the learned authors detail;

“The function of the discovery of documents is to provide the parties with the relevant documentary material before the trial so as to assist them in appraising the strength or weakness of their relevant cases, and thus to provide the basis for the fair disposal of the proceedings before or at the trial. Each party is thereby enabled to see before the trial or to adduce in evidence at the trial relevant documentary material to support or rebut the case made by or against him, to eliminate surprise at or before the trial relating to the documentary evidence and to reduce the cost of litigation.”

32. The court went on to state that discovery does not serve the aim of enabling a party fish for information to enable him/her frame a new case or find new witnesses or exploring irrelevant allegations. A similar finding was made in the case of Rafiki Microfinance Bank Ltd v Zenith Pharmaceuticals Ltd [2017] eKLRcited by the 6th and 7th defendants in their submissions.

33. From my perusal of the interrogatories and notice to produce which were filed by the plaintiffs, I observed that some of the questions listed therein are an attempt to fill gaps in the plaintiffs’ case and are a mere fishing expedition. Moreover, it is apparent therefrom that some of the questions would trigger a breach of confidentiality on the part of the 1st interested party, which will in turn be detrimental to the interest of the 6th and 7th defendants. In the premises, I am satisfied that the third application succeeds in terms of order (iv).

Consequently it is hereby ordered:

a) Freezing orders be and are hereby issued with immediate effect against the account held by the 7th defendant with the 1st interested party at its Wilson Airport Branch and with Account Number .[xxxxxxxxx] prohibiting any and all withdrawals, outgoing transfers and any and all dealings with the money in the account by the 6th and 7th defendants, their agents, nominees or any person claiming any right of interest under or through them, pending the hearing and determination of the suit.

b) Freezing orders be and are hereby issued with immediate effect against the account held by the 8th, 9th and 11th defendants with the 2nd interested party at its Upperhill Branch and with Account Number .[xxxxxxxxx] and Chiromo Branch and with Account Number .[xxxxxxxxx] prohibiting any and all withdrawals, outgoing transfers and any and all dealings with the money in the account by the 6th and 7th respondents, their agents, nominees or any person claiming any right of interest under or through them, pending the hearing and determination of the suit.

c) Pending the hearing and determination of the suit, the discovery of documents, interrogatories and disclosures by the interested parties is hereby allowed in respect to the respective accounts, in line with the legal principles.

d) In respect to c) above, the plaintiffs be and are hereby ordered to submit a draft interrogatories questionnaire for the court’s interrogation, to determine the necessity, appropriateness and relevance of the intended questions to be addressed to and by the interested parties.

e) Pending the hearing and determination of the suit, the plaintiffs be and are hereby allowed to trace the money deposited into the abovementioned accounts with a view to tracing the assets purchased by and proceeds of funds deposited into the said accounts.

f) For purposes of expediting the hearing and determination of the suit, the parties shall appear on a date to be fixed by this court for a mention to confirm compliance with pre-trial directions.

g) The Notice of Motions dated 15th March, 2021 and 14th April, 2021 filed by the 6th and 7th defendants, and the 8th and 9th defendants respectively, are hereby dismissed with no order on costs.

h) Costs of the Amended Notice of Motion dated 26th February, 2021 to abide the outcome of the suit.

DATED, SIGNED AND DELIVERED AT NAIROBI THIS 27TH DAY OF MAY, 2021.

A. MBOGHOLI MSAGHA

JUDGE

In the presence of:

Ms. Mburu and Mr. Obonyo for the 1st and 2nd Plaintiffs

N/A for the 1st Defendant

N/A for the 2nd Defendant

Mr. Waswa for the 3rd ,4th 8th and 9th Defendants

Ms. Maina and Mr. Koceyo for 6th and 7th Defendants

N/A for the 10th , 11th and 12th Defendants

Mr. Andrew Mwango for the 1st Interested Party

Ms. Kiiru for the 2nd Interested Party

N/A for the 3rd Interested Party

Mr. Kiragu h/b for Mr. Kigata for the 4th Interested Party