In re Paul Kimani [2017] KEHC 10053 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL AND TAX DIVISION

BANKRUPTCY CAUSE NO. 15 OF 2014

IN THE MATTER OF THE BANKRUPTCY ACT

IN THE MATTER OF PAUL KIMANI

EX-PARTE: CALEB KAPTEN

RULING

1. The application dated 20th September 2016 sought the setting aside or the variation of the orders made on 8th September 2016.

2. It is the applicant’s case that the only debt which he owed to the respondent was for the sum of Kshs. 1,420,000/-.

3. He insists that he had never been the cause for any delay in payment, and that therefore he ought not to be penalized by an order for the payment of interest on the principal sum.

4. In the circumstances, the applicant contends that his advocate lacked authority to enter into a consent pursuant to which interest became payable on the principal amount.

5. Therefore, the applicant asks the court to vary the consent order by removing the part which directed that interest was payable.

6. The application was supported by two affidavits which were sworn by the applicant Paul Kimani, and Advocate Justin Nyaberi, respectively.

7. Mr. Nyaberi deponed that his client had expressly instructed him to record a settlement in which the only amount payable was Kshs. 1,420. 000/-.

8. Therefore, as far as the applicant was concerned, any order which incorporated a requirement for the payment of costs or of interest, was beyond the scope of the advocate, to record.

9. In answer to the application, the respondent pointed out that because the order in question had been recorded with the consent of the parties, the court could not set it aside or vary it.

10. The law is well settled on the question concerning the circumstances in which a consent Order or Judgement can be set aside or varied by the court.

11. In BOARD of TRUSTEES NATIONAL SOCIAL SECURITY FUND Vs. MICHAEL MWALO, CIVIL APPEAL No. 293 of 2014, the Court of Appeal said;

“A Court of law will not interfere with a consent judgement except in circumstances such as would provide a good ground for varying or rescinding a contract between parties.  To impeach a consent order or a consent judgement, it must be shown that it was obtained by fraud, or collusion or by an agreement contrary to the policy of Court”.

12. In this case the applicant has not shown that the consent was obtained by fraud or by collusion or that the said consent was contrary to the policy of the court.

13. His basis for seeking the setting aside or variation of the consent order was that Advocate Nyaberi, who was representing him, did not have authority to incorporate interest into the consent.

14. In the case of NSSF Vs Michael Mwalo, Civil Appeal No. 293 of 2014, the Court of Appeal quoted with approval, the following words of Harris J. in KENYA COMMERCIAL BANK LIMITED Vs SPECIALISED ENGINEERING Co. LIMITED [1982] KLR 485;

“A duly instructed advocate has an implied authority to compromise and settle the action and the client cannot avail himself any limitation by him of the implied authority to his advocate unless such limitation was brought to the notice of the other side”.

15. In this case, the applicant has not even suggested that he had brought it to the respondent’s attention, that his advocate had authority which limited him by requiring him to exclude interest from the sums payable by the applicant.

16. Therefore, even if it is true that the applicant had expressly instructed his advocate to exclude interest from the consent, that could not be the basis for setting aside or for varying the consent order.

17. I have perused the court records, and in particular, the terms of the consent order made on 8th September 2016.  It is in the following terms;

“1. The J/D shall liquidate the decretal sum by six (6) equal monthly instalments of Kshs. 420,416/60 each.

2. The J/D will make payment through on current cheque and 5 post-dated cheques.

3. Mention on 26/09/2016 for further Directions”.

18. Clearly, the consent order does not expressly or otherwise make reference to interest which is payable on the principal sum.

19. The parties had carried out their own calculations, and then agreed on how the total would be paid by the applicant.

20. In effect, the consent order did not even identify the principal sum, which could thereafter attract interest.  In the circumstances, the court is unable to determine how the parties arrived at the total sum which the applicant was to pay.  In other words, whether or not the agreed figures had incorporated an element of either interest or any other consideration, is not known.

21. Therefore, when the court is asked to set aside the order or to vary it, with a view to removing the element of interest, it is not possible to do so.

22. In the result, the application is unsuccessful; it is therefore dismissed, with costs to the respondent.

DATED, SIGNED and DELIVERED at NAIROBI this14th day of November2017.

FRED A. OCHIENG

JUDGE

Ruling read in open court in the presence of

Sasaka for Nyaberi for the Debtor

Kinyanjui for Wandabwa for the Creditor

Collins Odhiambo – Court clerk.