Japheth Mutisya Masila t/a Japhy Commercial Enterprises v Kwale International Sugar Co. Limited [2018] KEHC 5124 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT MILIMANI (NAIROBI)

COMMERCIAL AND TAX DIVISION

CIVIL SUIT NO.245  OF 2016

JAPHETH MUTISYA MASILA T/A

JAPHY COMMERCIAL ENTERPRISES......................................PLAINTIFF

VERSUS

KWALE INTERNATIONAL SUGAR CO. LIMITED...............DEFENDANT

RULING

1. The Defendant/Applicant KWALE INTERNATIONAL SUGAR Co. LTD through an application dated 24th May 2018 brought pursuant to order 9 Rule 9, order 21 Rule 12, Order 22 Rule 22 and order 51 (1), of the Civil Procedure Rules 2010 and section 3A of Civil Procedure Act seeks the following orders:-

i. That this matter be certified as urgent and service be dispensed with in the first instance.

ii. That the court be pleased to stay execution of the judgment and decree entered herein pending the hearing and determination of this application.

iii. That leave be granted to the firm of Waithaka & Partners Advocates to come on record for the Defendant in place of Igeria & Ngugi Advocates.

iv. That this Honourable Court be pleased to allow the Defendant/Judgment-debtor to satisfy the debt owed in monthly instalments of Kshs. 500,000.

v. The costs of this application be provided for.

2. The application is based on the grounds on the face of the application inter-alia:-

a. The Plaintiff’s Auctioneers proclaimed the Defendant’s assets, to wit, nine (9) motor vehicles on 11th May 2018 and the Defendant is threatened with imminent vehicles on 11th May 2018 and the Defendant is threatened with imminent attachment and sale of its business assets which will cripple its business;

b. That the Plaintiff has failed to give credit for the sum of Kshs. 10,633,383/- paid in partial settlement of the decree herein;

c. That the Plaintiff has frustrated settlement of the decretal amount by engaging a multiplicity of auctioneers who have to date being paid a sum of Kshs.2,590,567/- thus unnecessarily escalating costs and diverting funds that would have gone towards settlement  of the decree;

d. That the Defendant is desirous of liquidating the debt owed in monthly instalments of Kshs. 500,000/-;

e. That the Defendant is not in a position to immediately settle the full debt owed at once because it has been undergoing cash flow problems due to low crushing capacity occasioned by a squatter problem at the Defendant’s fields at Ramisi, Mswambeni, Kwale County as well as delay in maturation of sugar cane in the Defendant’s fields occasioned by the biting dry spell that had affected the country earlier last year;

f. That unless the orders sought is granted the Defendant will suffer irreparable harm, loss and damage as the intended attachment of the Defendant’s goods, without giving credit for payments made, will cripple its business operations and substantially dent its reputation;

g. It is in the interest of justice that the intended attachment is stayed to enable amicable resolution of the matter and give room for alternative dispute resolution on the matter;

3. The application is supported by affidavit of GIBSON KABUE, a legal officer of the defendant company who has deponed inter-alia:-that on 11th May 2017 the plaintiff’s Auctioneers, Clear Real Auctioneers proclaimed the Defendant’s business assets, inter alia, motor vehicles registration numbers KBM 133G, KBT 279M, KAS 333L, KBB 920K, KBE 247E, KAC 860M, KBT 456S, KBN 057Y and a tractor KTCB 408P; that the Proclamation Notice expired on 18th May 2018 and the Defendant is threatened with imminent attachment and sale of its business assets which is likely to cripple the Defendant’s business operations; that the proclamation and imminent attachment of the Defendant’s business assets is irregular since the Plaintiff has failed to give credit for the sum of Kshs.10,633,383/- paid by the Defendant in partial fulfilment of the decretal sum; that the plaintiff has further acted in bad faith and has frustrated settlement of the decretal amount by engaging multiplicity of auctions to attach defendant’s property resulting un unnecessary escalation of cost (annexed and marked ‘GK 3’ sum of payments made by the defendant to the customer); that the plaintiff has non-engaged clear auctions who are claiming Auctioneer, pay of Kshs. 2,328,568/- which will further unnecessary escalation costs (annexed and marked "G 1 & 4" is a fee noted issued by auctioneer dated 11th May 2018); that the defendant is desirous to liquidate the debt owed in monthly instalment of Kshs.500,000; and that the defendant is not in a position to immediately settle the full debt owed at once because it has been undergoing cash flow problems due to low crushing capacity occasioned by a squatter problem at the defendant fields at Ramisi Msambweni, Kwale County as well as delay in maturation of sugarcane in defendant’s filed occasioned by hits dry spell that has affected the country earlier in the year and lack of sugarcane to crush at defendant’s factory which remains closed.

4. It is further deponed:- that unless the orders sought is granted the Defendant will suffer irreparable harm, loss and damage to its business and reputation in the event that the Plaintiff proceeds with execution and/or attachment of the Defendant’s goods without giving credit for payments made by the Defendant; that it is in the interest of justice that the judgment and decree herein be stayed to enable amicable resolution of the matter and give room for alternative dispute resolution on the matter and that it is also urged that the court has powers to order payment by instalment and that this is a first and proper case to have orders sought being granted.

5. The application is opposed. The Plaintiff/Respondent filed an affidavit through JAPHETH M. MASILA, the Plaintiff/Respondent deponing inter-alia:-that the applicant has come to court with unclean hands as it consented to payment of the decretal amount herein by instalments of Kshs. one million per month the same which was recorded in court on the 16th November 2016 as per the record which the Respondent relies on; that the application reneged on the said consent leaving the Plaintiff/Respondent with the alternative but to instruct the firm of Base Auctioneer who attached the applicant’s goods; that after the said auction, auctioneers recovered only a fraction of the decretal amount, they stopped following up the matter and I withdrew instructions from them after I realized they were not acting in the best of my interests and instructed the firm of Eshikoni Auctioneers who took up the matter; that the said firm of Eshikoni auctioneers collected part of the decretal sum but not as alleged in paragraph 4 of the supporting affidavit and the applicant should provide full proof thereof; that the applicants assertion that I have used a multiplicity of auctioneers firms is not only irrelevant, but it holds no legal basis as the plaintiff has the right to appoint whomsoever he wishes to execute warrants of attachment; that the application is an abuse of the process of the applicant has not set aside the consent judgment of paying instalment which was recorded in 2016; that the Applicant is using subsidiary companies to frustrate the process of execution herein and its conduct since the consent judgment was recoded makes it unworthy of being granted the orders which it has sought; and that the application of 24th May 2016 be struck out with cost.

6. At the hearing of the application Mr. Njoru; learned Advocate appeared for the Defendant/Applicant whereas Mr. Mwamba; learned Advocate appeared for the Plaintiff/Respondent.  I have very carefully considered the application, Replying affidavit and counsel rival submissions.  The issues arising thereto for consideration can be summed up as follows:-

a. Whether court can grant the application to postpone payment or order payment by instalment?

b. Whether parties consented to payment by consent and whether the consent can be set aside?

c. Whether the Applicant’s application is Res Judicata and an abuse of the court process?

A. Whether court can grant the application to postpone payment or order payment by instalment?

7. Order 21 rule 12 (1) and (2) of Civil Procedure Rules provides:-

(1) Where and in so far as a decree is for the payment of money, the court may for any sufficient reason at the time of passing the decree order that payment of the amount decreed shall be postponed or shall be made by instalments, with or without interest, notwithstanding anything contained in the contract under which the money is payable.

(2) After passing of any such decree, the court may on the application of the judgment-debtor and with the consent of the decree-holder or without the consent of the decree-holder for sufficient cause shown, order that the payment of the amount decreed be postponed or be made by instalments on such terms as to the payment of interest, the attachment of the property of the judgment-debtor or the taking of security from him, or otherwise, as it thinks fit."

8. In view of the above mentioned section the court has discretion to postpone payment or order payment by instalment of a decree.  For the court to grant such orders the applicant must show sufficient cause and demonstrate bona fides by arranging payment of a fair proportion of the decree.

9. The test to be applied is well settled.  In Keshavji Jethabhai & Brothers Ltd Vs. Saleh Abdulla (1959) E.A. 260the East African Court of Appeal cited with approval to decision in Sawatram Ramprasad Vs. Imperial Bank of India (1933) AIR Nag.33; stating the primary consideration for postponing payment of a decree by instalments is for a judgment debtor to demonstrate bona fides by payment of a fair proportion of the debt.

10. In addition to the above the judgment-debtor is required to show sufficient cause.  There must be a genuine and reasonable cause why the decree can’t be met immediately in full. The judgment-Debtor cannot be heard to offer unreasonable instalments proposals for postponement of payment of the decree, as merely being hard pressed, is not enough, for no one would admit that he is not hard pressed, when it comes to matters of parting with  money, in settling genuine and overdue debts.

11. The cardinal rule on the exercise of discretion as regard payment of the decretal sum by instalment, must be exercised in a judicial and not an arbitrary manner.  In the case of A. Rajabalil Vs. Ramtulla Alidina & Another (1961) E.A. 565, Law J A, (as he then was), detailed that:-

"All commentators on the Civil Procedure Code agree that the court’s discretion to order payment of the decretal amount in instalments is one which must be exercised in a judicial and not an arbitrary manner.  The onus is on the defendant to show that he is entitled to indulgence under this rule."

As regards what constitutes "for any sufficient reason" as detailed in Order 21 rule 12, Law JA referred to a passage in Woodroffe & Amir Ali’s Civil Procedure in British India, 2nd Edition, P. 869 and quoted as to what constitutes sufficient reason as follows:-

a. The circumstances under which the debt was contracted.

b. The conduct of the debtor.

c. His financial position.

d. His bona fides in offering to pay a fair proportion of the debt at once."

12. In the case of Hildegard Ndalut Vs. Lelkina Dairies Ltd & Ano. (2005) eKLR, Dulu Ag. J. (as he then was) considered the matter as follows:-

"Both parties have referred to the case of Keshavji Jethabhai & Brothers Limited Vs. Saleh Abdulla (1959) EA 260, which is a case from a High Court of Tanganyika.  That case followed the principles laid down in the Indian case of Sawatram Ramprasad Vs. Imperial Bank of India (1933) AIR Nag.33 – that a defendant should be required to saw his bona fides by arranging fair payment of the proportion of the deb – in persuading the court to allow payment by way of instalment.  This, in my view, is the proper test to apply in granting orders for payment of a decretal amount by way of instalments. A judgment creditor is entitled to payment of the decretal amount, which he should receive promptly to reap the fruits of the judgment. The judgment creditor might genuinely be in a difficult position in paying the decretal amount at once.  However, he has to show seriousness in paying the amount.  In that event he should show his bona fides by arranging fair payment proposals to liquidate the amount."

13. I have considered the applicable principles and I have now to turn to consider the applicant’s application for payment by instalments.  The applicant has deponed that the plaintiff has proclaimed the defendant’s business assets as listed under paragraph 2 of the supportive affidavit; that settlement of the decretal amount has been frustrated by plaintiff’s engagement of multiplicity of auctioneers to proclaim against the defendant; that the defendant is not in position to immediately settle the full debt owed at once because it has been undergoing cash flow problem, due to low crushing capacity occasioned by a squatter problem at its fields at Ramisi Msambweni, Kwale County, as well as delay in maturation of sugarcane and that defendant has no sugarcane to crush and the factory remains closed.  The defendant is offering to pay by instalments of Kshs. 500,000/- per month and to clear the decretal amount of Kshs. 11,466,079/- including auctioneers charges of Kshs. 2,328,565/- will take 27 ½ 13 Months.  The defendant by consent dated 23rd November 2016 consented to pay the decretal sum standing at Kshs.17,630,932 by instalment at a rate of Kshs.1,000,000/- and since then the defendant has not honoured the consent fully.  In his application he has not disclosed how much he has paid toward the decretal amount since the consent was entered into.  From the affidavit of the Applicant has deponed that he has difficulties in paying the amount consented to in the consent judgment and that he has difficulty with squatters; in obtaining the raw material and the factory is now closed.  That court is supposed to balance the parties respective and conflicting interests.  It must weigh up the Applicant’s position against the interest of the plaintiff, who is supposed to enjoy the fruits of his judgment.  If this court proceeds to allow the Applicant to pay the decretal sum by monthly instalment in view of his averment in his affidavit and the factory having closed down, there is no guarantee the amount shall be paid and be paid faithfully over a period of 27 ½ month; which in my view would amount to undue hardship for the plaintiff.

14. Considering the cardinal rule on exercise of discretion as regard payment of decretal sum by instalment, I have considered the Applicant’s application and I am satisfied that the Defendant/Applicant has shown that he is entitled to indulgence under this rule having considered his conduct; his financial position and his bona fides in offering to pay but to pay a fair proportion of the debt.

B. Whether parties consented to payment by consent and whether the consent can be set aside?

15. Upon perusal of the court file there is a consent judgment entered by Deputy Registrar on 23/11/2016 as per consent letter dated 10th November 2016.

16. The consent judgment is not in dispute and as per the said consent judgment the Applicant/Defendant was to pay by instalment of Kshs.1,000,000/= per month, which the Applicant, has been unable to comply with leading to the present application, in which the Applicant is seeking payment by instalment of Kshs.500,000/-.  The Applicant is not seeking to set aside the consent judgment nor is he seeking review of the same but is seeking court’s discretion to allow him liquidate the balance of decretal sum by instalment.

C. Whether the Applicant’s application is Res judicata and an abuse of the court process?

17. The Applicant’s application seeks court’s indulgence to be allowed to satisfy the debt owed in monthly instalment of Kshs.500, 000/-.  The plaintiff urges the present application is Res judicata by virtue of the consent judgment entered by the Deputy Registrar.  The Deputy Registrar in entering the consent judgment was exercising Administrative function and not a judicial function. The consent judgment emanated from a consent letter dated 10th November 2016.  The matter has not been heard and determined by Judge nor had the issue been subsequently been raised, heard and finally decided by the Judge between the same parties.  In view of the above, it is my view that the application before court is not Res Judicata nor an abuse of the court process.

18. The upshot is that the application is meritorious.  In the interest of justice and being fair to both parties, I will grant the application for the defendant to pay the decretal sum by monthly instalment of Kshs.750, 000/- until payment in full commencing 8th August, 2018 and on every 8th day of the subsequent months. The Defendant/Applicant to pay auctioneers charges to be agreed or taxed together with 1st instalment before release of the attached goods in default of any single instalment execution to issue.

19. I grant cost of this application to the Plaintiff/Respondent

Dated, signed and delivered at Nairobi this 30th day of July, 2018.

..........................

J .A. MAKAU

JUDGE