Dar Iman Limited v Clasico Builders (K) Limited; Melek Holdings Limited (Objector) [2022] KEHC 18108 (KLR)

Dar Iman Limited v Clasico Builders (K) Limited; Melek Holdings Limited (Objector) (Miscellaneous Application E113 of 2021 & Arbitration Cause E007 of 2021 (Consolidated)) [2022] KEHC 18108 (KLR) (Commercial and Tax) (10 June 2022) (Ruling)

Neutral citation: [2022] KEHC 18108 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Miscellaneous Application E113 of 2021 & Arbitration Cause E007 of 2021 (Consolidated)

DAS Majanja, J

June 10, 2022

Between

Dar Iman Limited

Applicant

and

Clasico Builders (K) Limited

Respondent

and

Melek Holdings Limited

Objector

Ruling

1. On July 30, 2021, the court allowed the respondent’s application for recognition and enforcement of the final award dated January 15, 2021 together with the post-award clarifications and corrections dated February 16, 2021. The respondent has since obtained the decree and commenced the process of execution.

2. On April 1, 2022, through its appointed auctioneers Betabase Auctioneers, it proclaimed the following properties in the property known as Villa No 3 Dar Iman, Lower Kabete situated on land reference number 8527/9 (IR 181198/1)(“Villa No 3”) claiming the same to be owned by the applicant; a television set, office chairs, fridge, coffee table, printer, compute desktop, laptops, all vehicles, water dispenser and a sofa set and, ‘’all properties belonging to the same judgment debtor including houses and land parcels.’’

3. The objector has now moved the court by the notice of motion dated April 6, 2022 and made, inter alia, under order 22 rule 51 of Civil Procedure Rules 2010 (“the rules”) claiming that the applicant has neither legal nor equitable rights over the proclaimed goods. It seeks to have the court declare that the proclamation of attachment dated April 1, 2022 by Betabase Auctioneers (“the proclamation”) and any subsequent attachment or sale or action arising from the said decree and proclamation illegal, irregular and unlawful and therefore set it aside.

4. The objector supports its application through the grounds set out on its face together with the affidavits sworn on April 6, 2022 and May 24, 2022 respectively by its director, Jeremy Peter Kamau. The application is opposed by the respondent through the replying affidavit of its director Naran Hirani sworn on May 18, 2022 together with a statement of grounds of opposition of the same date.

5. I do not think it is in dispute that an application in the nature of objection proceedings such as the present one and its determination is provided for under order 22 rule 51 of the rules which states that:Objection to attachment51. (1)Any person claiming to be entitled to or to have a legal or equitable interest in the whole of or part of any property attached in execution of a decree may at any time prior to payment out of the proceeds of sale of such property give notice in writing to the court and to all the parties and to the decree-holder of his objection to the attachment of such property.(2)Such notice shall be accompanied by an application supported by affidavit and shall set out in brief the nature of the claim which such objector or person makes to the whole or portion of the property attached.(3)Such notice of objection and application shall be served within seven days from the date of filing on all the parties.

6. It trite that the onus is squarely on the objector to demonstrate a legal or equitable interest in the whole or part of any of the attached property and it is not for the decree-holder to prove that the goods belong to the judgement debtor. This position was affirmed by Waki J, (as he then was) in Simba Colt Motors Ltd v Lustman & Co (1990) Msa HCCC No 729 of 2002 when he stated that,“The purpose of rule 57 is to provide the objector with an opportunity to establish his claim to the attached moveable property. The rule casts the onus of proof on the objector to prove that the property belonged to him and not, as submitted before me, for the decree-holder to prove that the property belonged to the judgement-debtor.”

7. In as much as the respondent claims that it only seeks to attach the applicant’s moveable properties, the proclamation indicates that it seeks to attach the moveable property indicated therein and, “all properties belonging to the same judgment debtor including houses and land parcels”. The auctioneer does not specify whether these land parcels and houses include the said Villa No 3. Likewise, the registration numbers of the motor vehicles are not stated. The specificity is necessary enable any proposed objector to raise its objection in relation to definite properties. If the motor vehicle registration numbers are not stated, how is the objector to make its claim on properties unknown? I must of course emphasize that the level of specificity depends on the nature of the property and the circumstances of the cases. As regards the immoveable property, I further hold that the process of execution governed by order 22 rule 10 and 11 of the rules has not been complied with. I shall therefore deal with the enumerated moveable properties which the objector claims.

8. The objector’s position is that it owns Villa No 3 and that neither the applicant nor the respondent have any legal and equitable interest in the moveable goods that were attached. The objector states that by way of a lease agreement dated May 3, 2018, it obtained a long-term lease title over Villa No 3 from one Caroline Wamuyu. That it obtained a loan facility from HFC Bank of USD$ 407,746. 80 and surrendered the title to HFC Bank. On or about September 13, 2020, it approached KCB Bank to take over the loan facility from HFC Bank which request was granted and Villa No3 was charged to KCB Bank for USD$ 720,000. 00. The original title was transferred from HFC Bank to KCB Bank which it continues to hold.

9. The objector insists it is the owner of Villa No 3 from June 28, 2018, has never been a party to these proceedings and does not owe any money to the applicant or respondent to warrant the attachment of its property in the satisfaction of the decree issued. The objector reiterates that the applicant has no interest and/or claim whatsoever over Villa No 3 and the goods therein hence the same cannot be attached in satisfaction of the decree issued against the applicant.

10. The respondent opposes the application. It contends that the objector has failed to attach evidence to show that at the date of the attachment it had a legal and/or equitable interest in the property attached. The respondent depones that the movable property is that of the applicant and that the individual, Caroline Wamuyu Wainaina, owns 8 out of the 12 shares in the objector in her capacity as director/shareholder. That the said Caroline Wamuyu Wainaina, is also a director/shareholder of the applicant owning 500 out of the 1000 shares.

11. The respondent contends that the said lease dated May 3, 2018, from Caroline Wamuyu Wainaina to the objector is exempted from paying stamp duty, as stamped on the face of the lease, under the legal notice No 92 of June 14, 2007 which exempts any instrument that is executed in respect of transfer of a family property to a limited liability company whose shares are wholly owned by the family. The respondent states that the instrument creating a charge over Villa No 3 shows that the said Caroline Wamuyu is the borrower, where she also signed as a Director of the Chargor as well and that evidently, she effected the transfer of Villa No 3 in favour of the objector that is wholly owned by Caroline Wamuyu Wainaina and her family.

12. The respondent states it is aware that payments were made by and for Caroline Wainaina and the applicant for Villa No 3 on October 5, 2014 and December 2, 2015,to one Vihar Enterprises Limited and the fact that Caroline Wainaina is a director/shareholder of both the objector and the applicant, and payments were previously made by and for Caroline Wainaina and the applicant for Villa No 3, then the burden falls on the objector to demonstrate that the applicant has no legal or equitable interest in the proclaimed movable properties.

13. In response to the averments above, the objector depones and reiterates that VillaNo 3 is part of six villas on LR No 8527/9 and that the developed estate has a common gate and is collectively called Dar Iman and that the applicant does not own Dar Iman Estate and the objector contends that the objector is under a mistaken belief that Dar Iman Estate and the applicant are one and the same.

14. The objector’s deponent avers that in June 2018, soon after the objector bought VillaNo 3, he personally bought the household goods listed in his previous deposition on behalf of the company and he categorically states that they belong to the objector. However, he depones that he cannot trace the receipts after a diligent search and he has completely lost his recollection as to where he kept them, which was way back in 2018 when he could not anticipate any dispute touching on them.

15. The parties’ argument centre on the ownership of Villa No 3. The mere fact that the shareholders or directors of an objector are related, or operated from the same premises as the judgement-debtor, is not reason enough to justify the attachment of an objector’s goods, property or assets. Even if the objector is a relative to the proprietors of a judgment-debtor, if the objector proved ownership to the attached property, to the exclusion of the judgment-debtor, the attachment would be lifted (see Cyprian Masafu Wanyonyi Wekesa v Jaswinder Singh Enterprises Ltd [2006] eKLR).

16. It is not in dispute, at any rate from the documents, that the objector is the legal owner of Villa No 3 where the moveable properties were attached. Mr Kamau, the objector’s deponent, concedes that he does not have any documentary evidence to show that the objector owns the said properties. The reason for this is that although he purchased the attached moveable properties in 2018, he cannot locate the receipts thereof despite diligence.

17. The objector need only establish its claim on a balance of probabilities (see Clearspan Construction Co, Ltd v East Africa Gas Limited and another Msa HCCC No1 of 2004 [2015] eKLR). Having considered the evidence, I hold that the objector has established a legal and equitable interest in the moveable properties. It has shown that it owns and is in possession of the Villa No 3 where the moveable properties were attached. That the judgment debtor or any other person does not own or possess Villa No 3 hence it is more likely than not that the objector owns the property and the chattels in the house. While receipts of purchase are proof of ownership, the lack thereof does not mean that the claim for ownership must fail. The explanation given by the objector as to the lack of the receipts is not unreasonable or implausible in the circumstances of this case given the time it states that it has occupied the property.

18. I allow the objector’s notice of motion dated April 6, 2022 and order that the attachment contained in the proclamation dated April 1, 2022 by Betabase Auctioneers be and is hereby raised. The respondent shall bear the objector’s costs assessed at Kes20,000. 00 only.

DATED AND DELIVERED AT NAIROBI THIS 10TH DAY OF JUNE 2022. D. S. MAJANJAJUDGE