Jiwa v Idrata Developers Limited; Wild Catch Limited & 2 others (Objector) [2023] KEHC 19702 (KLR)

Jiwa v Idrata Developers Limited; Wild Catch Limited & 2 others (Objector) (Miscellaneous Application E1119 of 2020) [2023] KEHC 19702 (KLR) (Commercial and Tax) (30 June 2023) (Ruling)

Neutral citation: [2023] KEHC 19702 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Miscellaneous Application E1119 of 2020

EC Mwita, J

June 30, 2023

Between

Najmuden Dhanji Jiwa

Applicant

and

Idrata Developers Limited

Respondent

and

Wild Catch Limited

Objector

Al’s Pride Kenya Limited

Objector

Tariq Nazir Ahmed

Objector

Ruling

1. The objectors filed a notice of objection dated 20th January, 2023, objecting to the attachment of their goods by auctioneers on 18th January 2023 in execution of a decree issued by this court. On the same day the objectors took out a motion on notice under Order 22 rules 51(2) and 52, of the Civil Procedure Rules, seeking to set aside that attachment.

2. The objection is supported by affidavits sworn by Timothy Omala Omenda, on behalf of the objectors.

3. The objectors argue that on 18th January 2023, the 3rd objector was buying fish at the 1st objector’s premises at shop No. 41, Othaya Road in Kileleshwa Nairobi when he was served with the proclamation. The auctioneer purported to proclaim the 1st objector’s tools of trade, the 2nd objector’s motor vehicle registration No. KDD 652W parked outside the shop and alleged/perceived household items belonging to the 3rd objector.

4. The objectors state that Shop No. 41, a fish storage shop belongs to the 1st objector not the judgment debtor. The shop does not also have the household goods listed in the proclamation. The objectors further state that the judgment debtor has no interest or assets in the 1st objector’s premises or the motor vehicle proclaimed. Neither the 1st nor the 2nd objector are subsidiaries of the judgment debtor and no judgment or decree has been passed against any of the objectors. The attachment of their goods is, therefore, irregular and should be set aside.

5. The objectors again contend that no decree has been extracted by the parties to date and, if there is one, it was obtained irregularly and contrary to Order 21 rule 8 of the Rules; that there is no award on quantum of costs by the arbitrator adopted by this court and/ or a certificate of costs issued by this court. There is also no leave of court to execute before ascertainment of costs (under section 94 of the Civil Procedure Act).

6. The objectors also dispute the claim that the decree holder had abandoned its claim for costs because there is an alleged pending Bill of Costs dated 14th April, 2022 which has not been withdrawn.

7. The objectors rely on their documents to argue that the judgment debtor does not own any of the attached goods. They assert that an objector only needs to prove that it was in possession of the attached goods on its own account and not on account of the judgment debtor or some other person.

8. They rely on Joseph Mutenga v Photofocus U Ltd [1996] KLR, 615 Chotabhae M. Patel v Chapraphi Patel [1958] EA 743, Tawakal Airbus Limited v Irene Muthoni Njirato & another (Civil Appeal No. 36 of 2020) [2020] eKLR, Arun C. Sharma v Ashana Raikundalia T/A A. Raikundalia & Co. Advocates & 4 Others [2014] eKLR, Precast Portal Structures v Kenya Pencil Company Ltd & 2 others [1993] eKLR

9. The objectors also argue that there is no legal basis for targeting the 3rd objector in the execution since the judgment debtor is a separate and distinct legal person. They cite the decision in Kolaba Enterprises Ltd v Shamshdin Hussein Varrani & Another (Civil Suit No. 627 of 2005) [2014] eKLR on the doctrine of separate legal personality which cannot be departed from except in instances where the statute (or the law) provides for the lifting or piercing of the corporate veil.

10. The objectors urge, therefore, that the objection should be allowed with cost since they only came to court to protect their interests because of the attachment of their goods. They rely on Morgan Air Cargo Limited v Evrest Enterprises Limited [2014] eKLR.

Response 11. The decree holder opposes the objection through a replying affidavit and written submissions. The decree holder asserts that the goods attached and contained in the proclamation belong to the judgment debtor.

12. The decree holder further asserts that save for motor vehicle registration number KDD 652W, the objectors have not demonstrated any legal or equitable interest in the attached goods. The decree holder argues that the 3rd objector is trying to shield and hide the judgment debtor’s assets to avoid lawful execution, a conduct that calls for lifting of the veil of incorporation.

13. The decree holder denies that the proclamation and attachment is irregular, illegal or contrary to the law (section 94 of the Civil Procedure Act). This is because the claim for costs had been abandoned in the arbitration proceedings. The decree holder argues, therefore, that as the successful litigant, he should not be denied the opportunity to execute the decree in order to enjoy the fruits of his judgment. He urges the court to dismiss the objection with costs.

Determination 14. The objectors have raised an objection to the attachment by the decree holder in execution of a decree issued against the judgment debtor. Their argument is that the attached goods belong to them and not the judgment debtor. The decree holder takes a position that the goods attached belong to the judgment debtor and not the objectors.

15. Order 22, rule 51(1) provides thatAny 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.

16. Rule 51(2) states that the notice is to be accompanied by an application supported by affidavit and should briefly set out the nature of the claim which the objector or person makes to the whole or a portion of the attached property.

17. A reading of rule 51 (1) and (2) yield that in objection proceedings, the objector has the burden to prove and will only succeed, if he shows to the satisfaction of the court, that he had legal or equitable interest over the whole or part of the attached goods at the time of attachment. (See Precast Portal Structures v Kenya Pencil Company Ltd & 2 others [1993] eKLR).In Arun v C. Sharma Astana Raikundaha t/a Raikundaha & Co. Advocates & 4 others [2014] the court stated that.The objector bears the burden of proving that he is entitled to or has legal or equitable interest on the whole or part of the attached property. The key words are, entitled or to have a legal or equitable interest in the whole or part of the property.

18. In these objection proceedings, the objectors state that the attached goods belong to them and not the judgment debtor. This would mean they have legal or equitable interest over the goods.

19. I have read through the notice of objection, the motion and affidavit in support of the objection. There are three objectors in these proceedings. The 1st and 2nd objectors are corporate entities while the 3rd objector is a natural person.

20. Rule 51(2) states that the notice of objection should set out briefly the nature of the claim which the objector makes to the whole or a portion of the attached property. The notice of objection states at ground (a) that the properties enumerated in the proclamation of attachment dated 18th January 2023 were purchased and are wholly owned by the objectors.

20. The notice again states at ground (b) that “the 1st objector...is the exclusive owner of the household items” listed in the proclamation while “the 2nd objector is the exclusive owner of the motor vehicle Registration No. KDD 652W”

21. It is worth noting, that whereas there are three objectors, the notice of objection identifies only two persons who claim ownership of the attached goods. The 3RD objector is not mentioned in the notice of objection and there is no mention of the property he claims to have legal or equitable interest on.

22. The notice of objection is the foundation of objection proceedings. It is the basis on which the notice of motion is filed to prove ownership of the attached goods. In these objection proceedings the 3rd objector is only named in the title but his claim has not been identified in the notice of objection.

23. Turning to the substance of the objection, I have carefully read the affidavit supporting the notice of motion and perused the annexes to that affidavit. One of the attached goods is motor vehicle registration No. KDD 652W. The registration certificate for the vehicle is attached to the supporting affidavit. certificate of registration supports the claim that the vehicle belongs to the 2nd objector, Al’s pride Kenya Limited. The decree holder also concedes as much that the vehicle belongs to the 2nd objector.

24. The claim that the rest of the attached goods belong to the 1st objector remains a statement without proof. The 1st objector states in the notice that it purchased the goods. However, no evidence in form of receipts has been attached to prove this claim.

25. Where the law placed the burden on the objector who claims to have legal or equitable interest in the whole of or part of any property attached in execution of a decree to prove that interest, it means just that. The objector has to prove through evidence the fact of legal or equitable interest in the attached property. This is a legal burden placed on the objector which the objector has to discharge. It is not enough for the objector to merely state that the attached goods belong to his. He must go further and show how.

26. In these objection proceedings, the 1st objector shown to the satisfaction of the court that the attached goods belong to it. The 1st objector has not met the threshold required in proving legal or equitable interest in the attached goods.

27. The objectors have also tried to impugn the legality of the decree and attachment arguing that the decree and warrants of attachment are irregular and illegal because costs had not been taxed or assessed. Well, this argument has no foundation in objection proceedings where objectors’ claim is that they are not parties to the suit and resultant judgment and decree and, therefore, their goods should not have been attached. They would not be interested how the judgment or warrants were issued.

28. In the end I am not satisfied on the merits of the 1st objector’s objection. It is dismissed with costs.

29. Regarding the 2nd objector, I find that the 2nd objector is the owner of Motor Vehicle Registration No. KDD 652W. Not being the judgment debtor, the motor vehicle was wrongly attached. The attachment against Motor Vehicle Registration No. KDD652Wi is set aside. The judgment debtor will bear costs for the 2nd objector.

30. The 3rd objector has not shown any interest legal or otherwise in the attached goods. His objection is dismissed with no order as to costs.

DATED, SIGNE AND DELIVERED AT NAIROBI THIS 30TH DAY OF JUNE 2023E C MWITAJUDGE