M/S Synergy Industrial Credit Limited v Tenderwood Industries Limited, John Speke Mongare & Jane Wahu Karanja Garnishee Diamond Trust Bank (Kenya) Limited [2022] KEHC 1728 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KEYA AT KISII

CIVIL CASE NO 153 OF 2009

M/S SYNERGY INDUSTRIAL CREDIT LIMITED...................PLAINTIFF/APPLICANT

VERSUS

TENDERWOOD INDUSTRIES LIMITED...................1ST DEFENDANT/RESPONDENT

JOHN SPEKE MONGARE............................................2ND DEFENDANT/RESPONDENT

JANE WAHU KARANJA...............................................3RD DEFENDANT/RESPONDENT

AND

DIAMOND TRUST BANK (KENYA) LIMITED.............................................GARNISHEE

RULING

1. The application before this court is by the plaintiff/applicant dated 28th September 2021 seeking the following orders:

1. Spent

2. Spent

3. A garnishee order absolute do issue that funds held in Bank Account No. 048xxxxxxx in the name of John Speke Mongare and in Bank Account No. 048xxxxxxx in the name of Tenderwood Industries Limited at Diamond Trust Bank (Kenya) Limited Kisii Branch, be and are hereby attached and be paid out of the Plaintiff’s advocates, Nyamurongi & Company Advocates by the garnishee, Diamond Trust Bank (Kenya) Limited towards the satisfaction of the decree passed herein (balance being Kshs. 10,025,456. 52) together with costs of garnishee proceedings in the approximate sum of Kshs 150,000/=, making in all Kshs. 10, 175,456. 52.

4. Consequent upon prayer (c) above, the Garnishee do forthwith pay out to the plaintiff’s advocates, Nyamurongi & Company Advocates all attached funds in default of which execution proceedings do issue against the Garnishee.

5. Costs of this application ne paid by the defendant/respondents.

2. The application is premised on the grounds on the face of the application and the affidavit deposed by Jacob Mbae Meeme, a legal officer in the applicant’s company. It is the applicants case that judgment was entered against the respondents jointly and severally condemning them to pay the sum of Kshs 8,080,368/=, cost of the suit and interest thereon.

3. The respondents neglected to pay the said sums together with interest wherefore there is an outstanding sum of Kshs. 10,025,456. 52/- due and owing.

4. It was averred that the applicant has established that the 1st and 2nd respondents respectively hold Bank Account No. 048xxxxxxx and Bank Account No. 048xxxxxxx with the garnishee. According to the applicant it is only fair and just that available credit found in the bank accounts be attached towards satisfaction of the debt herein.

Response

5. The application was opposed by the respondents. According to the replying affidavit filed on 15th October 2021 by John Speke Mong’are, the application was mischievous as the applicants had concealed material facts. He explained that the outstanding sum of Kshs. 10,025,465. 52/- owed to the applicant with respect to the HP Agreement Ref. No. 2004/03/1898A for motor vehicle registration No. KAG 658Z was fully paid and the vehicle transferred to the 1st Defendant.

6. The 1st respondent contend that it sold motor vehicle registration No. KAG 658Z to Pasha Enterprises and used part of the proceeds being Kshs. 700,000/- to pay arrears with respect to the decree of this court issued on 23rd August 2012. It was advanced that the respondents have been paying the applicants advocate as follows:

a) On 29th June 2012 repossession of motor vehicle KAQ 250W valued at Kshs. 2,500,000/-

b) 12th January 2018 vides cheque No 000143 for Kshs. 500,000/-

c) 31st January 2018 vides cheque No 000144 for Kshs. 500,000/-

d) 28th February 2018 vides cheque No 000145 for Kshs. 200,000/-

e) 24th April 2018 vides cheque No 001966 for Kshs. 400,000/-

f)  30th April 2018 vides cheque No 000147 for Kshs. 200,000/-

g) 15th March 2019 vides cheque No 002076 for Kshs. 500,000/-

h) 19th July 2019 vides cheque No 000309 for Kshs. 500,000/-

i)  5th December 2019 cash deposit of Kshs. 180,000/-

j)  2nd March 2020 vides cheque No 2178 for Kshs. 200,000/-

k) 23rd October 2020 vides cheque No 2207 for Kshs. 300,000/-

7. The respondent claim that the applicant has failed to account for the monies already paid. According to the respondent the balance due to the applicant is only Kshs 2,100,368/-. They advanced that the applicant should render proper accounts of what they have been paid with respect to realization of this court’s decree before proceeding with the execution.

Rejoinder

8. The applicant in its supplementary affidavit averred that as at 28th September 2021 when the garnishee application was filed the correct indebtedness of the respondents stood at Kshs. 16,694,495/- together with taxed costs of Kshs 346,364 to make Kshs 17,040,859/- not considering further costs herein incurred in the course of recovery proceedings as opposed to the sum of Kshs. 10,175,456. 52/- erroneously set out in the garnishee order nisi.

9. It was explained that the sum of Kshs. 2,500,000 assigned as the value of motor vehicle KAQ250W at paragraph 10(a) of the Replying Affidavit of Speke was illusory as no valuation report had been attached to support the value. Secondly, the applicant claimed that it was common knowledge between the parties that the said vehicle was sold by public auction. It was averred that the monies realized from the public auction was Kshs. 800,000/- which was credited to the respondents’ account. According to the applicant the respondents had paid a total of Kshs 4,080,000/- only.

Further Response

10. The respondents alleged that the applicants had not satisfied the court that motor vehicle KAQ 250W was sold in a public auction for Kshs 800,000/-

11.  The Applicant thereafter filed a further affidavit dated 12th November 2021 produced a letter from the 1st respondent promised that it will surrendered the vehicle KAQ 250W which had developed an engine breakdown to the applicant’s yard.

12. The Garnishee has also responded to the application through the Replying Affidavit of Francis Kariuki, its legal officer. According to the garnishee upon perusal of its records it confirmed that the 1st and 2nd respondents respectively hold Bank Account No. 048xxxxxxx and Bank Account No. 048xxxxxxx with the garnishee. It noted that the 1st respondent had Kshs 29,617. 34/- in its account while the 2nd respondent had Kshs. 2,701,489. 81/- and that thee amounts were not sufficient to satisfy the decretal sum.

Analysis and Determination

13. The procedure for garnishee proceedings is regulated by Order 23 of the Civil Procedure Rules. Order 23 provides as follows:

1. Order for the attachment of debts [Order 23, rule 1. ]

(1) A court may, upon theex parteapplication of a decree-holder, and either before or after an oral examination of the judgment-debtor, and upon affidavit by the decree-holder or his advocate, stating that a decree has been issued and that it is still unsatisfied and to what amount, and that another person is indebted to the judgment-debtor and is within the jurisdiction, order that all debts (other than the salary or allowance coming within the provisions of Order 22, rule 42 owing from such third person (hereinafter called the “garnishee”) to the judgment-debtor shall be attached to answer the decree together with the costs of the garnishee proceedings; and by the same or any subsequent order it may be ordered that the garnishee shall appear before the court to show cause why he should not pay to the decree- holder the debt due from him to the judgment-debtor or so much thereof as may be sufficient to satisfy the decree together with the costs aforesaid.

(2)……….

3.  Effect of garnishee order [Order 23, rule 3. ]

Service of an order that debts due to a judgment-debtor liable under a decree shall be attached, or notice thereof to the garnishee in such manner, as the court may direct, shall bind such debts in his hands.

4.  Execution against garnishee [Order 23, rule 4. ]

If the garnishee does not dispute the debt due or claimed to be due from him to the judgment-debtor, or, if he does not appear upon the day of hearing named in an order nisi, then the court may order execution against the person and goods of the garnishee to levy the amount due from him, or so much thereof as may be sufficient to satisfy the decree, together with the costs of the garnishee proceedings; and the order absolute shall be in Form No. 17 or 18 of Appendix A, as the case may require.

14. This court already issued an order for garnishee nisi and the garnishee appeared before the court and did not dispute the debt. It is not contested that this court awarded the applicant Kshs. 8,080,368 together with interest. There is also no doubt that the judgment debtor is yet to fully satisfy the decree. The judgment debtor made several payments through Cheque No. 000143, 000144, 000145, 001966, 000147, 000309, 2178, 2207 and cash deposit of Kshs. 180,000.

15. Before considering whether the garnishee order nisi should be made absolute, this court will consider whether it is proper for the respondent/judgment debtor can oppose the application through a replying affidavit. The Court inNgaywa Ngigi & Kibet Advocates v Invesco Assurance Co. Ltd; Diamond Trust Bank (Garnishee) [2020] eKLR observed as follows:

“I have perused the proceedings prior to the granting of the garnishee nisi and I find that Order 23 Rule 1 provides that it is not obligatory to examine the judgement debtor. I also find that the Garnishee bank was given an opportunity to show cause why it should not pay the decretal sum…. the Garnishee bank had an opportunity to show cause why the Garnishee nisi should not be made absolute, but they instead kept mum and made no response.  I disagree with counsel for the respondent that the court can review the order nisi in the instant proceedings. At this stage, what was required is the Garnishee to show cause why the Garnishee Order Nisi should not be made absolute. The judgment debtor has no locus to apply to seek to dismiss the garnishee order in the instant proceedings as the judgment debtor is not a party to the Garnishee proceedings. Garnishee proceedings are separate proceedings between the judgment creditor and the Garnishee, regardless of the fact that the judgment debtor may be examined before or after the making of an order for attachment of debts. Counsel was aware of the order nisi that was served on them on 23. 9.2019 and the procedure for them if they were aggrieved was to file and application to set aside the same and not leverage in the instant proceedings to air their concerns. In this regard, the decree nisi issued by this court remains valid unless and until set aside.” [Emphasis mine]

16. I agree with the findings inNgaywa Ngigi & Kibet Advocates case (supra) that the respondents/judgment debtors were required to file their own separate application on the sums already paid and therefore challenging the debt due to the applicant. The object of garnishee proceedings is to attach the judgment debtor’s property that is in the custody of the garnishee as may be sufficient to satisfy the decree. Garnishee proceedings are thus proceedings between the judgment holder and the garnishee, regardless of the fact that the judgment debtor may be examined before or after the making of an order for attachment of debts.

17. I now turn to consider whether the applicant is entitled to garnishee order absolute. The garnishee in court confirmed that they indeed hold accounts for the 1st and 2nd respondents.

18. According to the statement of accounts produced by the garnishee, the 1st respondent’s Bank Account No. 048xxxxxxx and the 2nd respondent’s Bank Account No. 048xxxxxxx had balances of Kshs 29,617. 34 and Kshs 2,701,489. 81 respectively. They informed court that they are working on releasing the sum and had no objection to the garnishee order nisi.

19. Accordingly, there is merit in the application dated 28th September 2021.  I therefore order that a garnishee order absolute should issue forthwith in the terms set out in the application only to the extent of the monies held by the garnishee.

20. The applicant is awarded costs.

DATED, SIGNED AND DELIVERED AT KISII THIS 4TH DAY OF MARCH 2022.

R. E. OUGO

JUDGE

IN THE PRESENCE OF:

MISS KEBUNGO H/B MR. NYAMURONGI FOR THE APPELLANT

MR. OKARI H/B MR. GETANDA FOR THE RESPONDENT

KEVIN COURT ASSISTANT