In re Simon Ndungu Mwaura [2022] KEHC 16455 (KLR)

In re Simon Ndungu Mwaura (Bankruptcy Cause E022 of 2022) [2022] KEHC 16455 (KLR) (Commercial and Tax) (7 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16455 (KLR)

Republic of Kenya

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

Commercial and Tax

Bankruptcy Cause E022 of 2022

DO Chepkwony, J

December 7, 2022

IN THE MATTER OF INSOLVENCY ACT, 2015 LAWS OF KENYA RE: SIMON NDUNGU MWAURA

Ruling

1. Before this court for determination is a notice of motion application dated July 28, 2022 seeking for orders that;a.Spent;b.The debtor herein, Simon Ndungu Mwaura be released from civil jail forthwith pending hearing and determination of the insolvency petition by the debtor.c.That there be a stay of execution of the judgment and decree in this matter pending hearing and determination of the insolvency petition by the debtor.d.The costs of this application be provided for.

2. It is premised on the grounds on its face and the depositions in the annexed supporting affidavit of Simon Ndungu Mwaura, the petitioner/applicant sworn on July 28, 2022. His case is that he owes a cumulative debt of Kshs 2,916,143,00 being the decretal amount awarded against him in the Chief Magistrate's Court in Civil Case No 4822 of 2013 between Espedita Muthoni Njuguna –vs- Karen Millers Limited,. Judgment was entered against him in that suit for Kshs 2,110. 823/= on the May 19, 2014 and since the entry of the said judgment, he has managed to repay the decretal amount of about Kshs 700,000/= to the creditor. However, on June 7, 2022, he was arrested and committed to civil jail for a period of six months for failing to pay the debt.

3. That the applicant avers that he has applied for a receiving order seeking to place his estate under the management of the receiver in order to protect his freedom and has since been issued with a compliance certificate. He adds that he is currently unable to raise any monies to liquidate his debts and or repay the decretal amount in the judgment but he is willing to commit to an agreeable amount with the creditor over the payments. In his view, his continued incarceration has inhibited his capacity to make any meaningful arrangements to the creditor and therefore he seeks to be protected by the law until such time he can financially meet his financial obligations. The applicant further prays that this honourable court issues a receiving order and an order staying all execution proceedings against him and order for his release from prison.

4. The application is opposed vide the replying affidavit of Espedita Muthoni Njuguna sworn on August 24, 2022. She depones that she had sued the applicant in CMCC No 4822/2013 (Espedita Muthoni Njuguna - vs - Karen Millers Limited) and an interlocutory judgment was entered on the 19th day of May, 2014 in her favour. That in execution of the decree, her advocates on record made an application dated November 6, 2014 for the lifting of the corporate veil of Karen Millers (K) Limited and the honourable court ordered that the Directors of the defendant (Karen Millers Limited) i.e Caroline Nyokabi Kiiru and Simon Ndungu Mwaura be brought to court for examinatIon of assets and means to satisfy the decree. That on the April 25, 2017, The Judgment debtor entered into a consent recorded in court to pay part of the decretal sum of Kenya shillings two hundred thousand (Kshs 200,000) on or before May 10, 2012. That it was also agreed that the judgment debtor will appear before court on May 24, 2017 for assessment of assets and means or in the alternative do file consent on the balance of the decretal sum. That the judgment debtor paid the Kenya shillings two hundred thousand (Kshs 200,000/=) on the May 24, 2017 on the scheduled date for assessment hence the assessment was rescheduled to July 4, 2017.

5. That on the March 24, 2017 the judgment debtor made an application to stay the court’s order of March 10, 2017 and proposed to settle the decretal balance in installments of Kenya shillings fifty thousand (Kshs 50,000/=) as from April 30, 2017. However, on the August 23, 2017, in the presence of the judgment debtor's Counsel the court instead ordered that the judgment debtor make a further payment of Kenya shillings four hundred thousand (Kshs 400,000/-) before the October 10, 2017. The judgment debtor in any event failed to attend court at anytime ordered for reason that he had travelled to the United States of America and he has also never honoured the proposed payment as directed by court. Consequently, the court issued warrants of his arrest in execution of the decree. He was thereafter arrested and presented to court on December 18, 2018 but opted to enter into a consent judgment, where one of the terms was forfeiture of his personal bond and committal to civil jail in the event of default. The foregoing dis not stricken the judgment debtor since he yet again failed to honor the terms of the consent, but instead sought to review/set aside the said consent. The request for review was however denied and dismissed by the court.

6. It is the respondents case that thereafter, the judgment debtor went into hiding but his arrest was later conducted by the Police Special Services Unit where upon the court made the order for his committal to civil jail until such time as he shall make good of the decree. Aggrieved by such move, the judgment debtor withdrew the title he had deposited with the creditor’s advocates on record as soon as he was committed to civil jail. The respondent thus avers and urges the court to find that the conduct and behavior of the judgment debtor/applicant herein does not satisfy and is not worth grant of the prayers sough in the application. That in any event, the judgement debtor has admitted of his indebtedness to the creditor and he also dishonored summons in the lower court to assess his assets and means.

7. The respondent further acclaimed that the judgment against the applicant was entered on May 19, 2014, eight (8) years ago but has not shown an intent to make any payments. That not once did the applicant mention his inability to settle the decree and that in any case he should have made such applications within the eight (8) years period in order to have his estate managed by an official receiver to which end the respondent/creditor, would have argued his case to be paid first. According to the respondent, the committal of the applicant to civil jail is completely unrelated to his petition before court and in his schemes, he recalled the asset he had deposited with the creditor’s advocates on record after committal then thereafter filed bankruptcy proceedings as a way of completely distancing himself to the decree of court. The respondent is therefore convinced that the applicant has not been truthful to both this honourable court and the trial court and is for some reason that he failed to honour summons for examination as to the assets and means available to satisfy the decree. Therefore he cannot be heard to now ask the court to discharge his committal order without any substantial plan of settling the decree.

8. It is the respondent’s further case that out of his own personal volition, the applicant consented to forfeiture of his personal bond in the event he does not meet his payment obligations and terms of the consent judgment of December 18, 2018. That before his arrest, the applicant had only paid Kenya shillings five hundred and fifty thousand (Kshs 550,000/) as at 17th December, 201 and the decretal sum and interest stood at Kenya shillings one million five hundred and sixty thousand eight hundred and twenty-two (Kshs 1,560,822. 40 as at December 18, 2018 and which the applicant has not paid a single cent since then. That the payable amount and interest as at May 17, 2021 stood at Kenya shillings two million five hundred and twenty-nine thousand two hundred and forty-nine and sixteen cents (Kshs 2,529,249. 161/=). That the creditor cannot vouch or agree to the applicant's prayer that he is agreeable to pay the decree amount in installments for reasons that he has so promised in the past and failed to keep his end of the bargains and that he has failed to attend court summons and gone into hiding before arrest which the creditor spent so much resources to execute. That as a vigilant litigant the creditor believes that though the wheels of justice grind slowly, they do so exceedingly fine to render justice to all parties. That the creditor has been exceptionally patient with both the court and the applicant in a quest to reap the fruits of judgment and that it would be unfair for the court to grant the sought prayers as the creditor will not have had any reprieve. That the applicant had ample time to make arrangements to settle the decree but he opted to run from the hands of the law.

9. The respondent further argued that committal to civil jail is one of the lawful means of execution of judgment hence the court should take into consideration the conduct and behavior of the applicant who bails out on court process and abuses the same. In the respondent’s view, the applicant has approached the court with unclean hands and craves for the dismissal of the prayers sought in the application dated July 28, 2022 with costs.

10. This court on August 5, 2022 directed that the application be canvassed by way of written submissions. Parties herein complied by filing their written submissions which I have read and considered. Since they reiterate the parties summary as above I see no need to repeat and reproduce the same here.

Analysis and Determination 11. Having considered the application and the affidavits sworn in support and rebuttal of the same, the written submissions and cited authorities, I am persuaded that the issue for determination is whether the applicant should be released from civil jail and whether execution of the subject decree should be stayed.

12. On release of a person committed to civil jail before the jail term ends, section 42 of the Civil Procedure Act provides for four instances under which this can be done. It provides:(1)Every person detained in prison in execution of a decree shall be so detained—(a)where the decree is for the payment of a sum of money exceeding one hundred shillings, for a period not exceeding six months; and(b)in any other case, for a period not exceeding six weeks:Provided that he shall be released from such detention before the expiration of the said period of six months or six weeks, as the case may be—(i)on the amount mentioned in the warrant for his detention being paid to the officer in charge of the prison; or(ii)on the decree against him being otherwise fully satisfied, if the court so orders; or(iii)on the request of the person on whose application he has been so detained, if the court so orders; or(iv)on the omission of the person, on whose application he has been so detained, to pay subsistence allowance.(2)A Judgment-debtor released from detention under this section shall not merely by reason of his release be discharged from his debt, but he shall not be liable to be rearrested under the decree in execution of which he was detained in prison”The instant application does not fall within the above instances and of remains a factual issue that the decretal sum has not been settled, the creditor has not made such request nor has she omitted to do anything that would warrant the release.

13. From the above provision of the law, a person who has been committed to a civil jail as a judgment debtor can be released prior to serving or expiry of the period he is serving, if he pays the amount mentioned in the decree or otherwise satisfies the same, at the request of the person whose application he was committed to civil jail, or omission of the person by whose application the applicant is detained to pay subsistence allowance.

14. The applicant was committed to civil jail on June 9, 2022 and he has been in prison to date. Since then, he has not made any payments in satisfaction to the decree in question. The applicant has also not rebutted the assertions that he had some parcel of land whose title was deposited with the respondent’s advocate but withdrawn upon his committal to civil jail. He cannot therefore be considered a man of straw with completely no means to satisfy the decree. The record also reflects that the applicant was previously considered and notices to show cause and where whereby he made several promises but reneged all of them. In my understanding, the Civil Procedure Act and Civil Procedure Rules provide a legal regime for arrest and committal as a means of enforcement of a judgment debt. Once committal to civil jail, the debtor can be released on grounds under order 42(1)(a) of the Civil Procedure Rules unless a bankruptcy order is made. The filing of a bankruptcy petition does not in itself warrant the release of the judgment debtor least the court would open a flood gate and set bad precedence for debt defaulters committed to civil jail to seek their release and evasion of their payment obligation in the guise of having filed insolvency and bankrupt petitions.

15. In view of the foregoing discussion, I am further not persuaded that the applicant has met any conditions for stay of execution of the judgment. Accordingly, no compelling reason has been advanced by the applicant why his application for released from civil jail is otherwise merited and or ought to be granted.

16. For the above reasons, I dismiss the application dated July 28, 2022 with costs.

17. Each party shall bear own costs.It is so ordered.

RULING DELIVERED VIRTUALLY, DATED AND SIGNED AT NAIROBI THIS 7 TH DAY OF DECEMBER, 2022. D. O. CHEPKWONYJUDGEIn the presence of:M/S Gitau counsel for CreditorMr. Gakaria is logged onto the platform but nor respondingCourt Assistant - Sakina