Muki Sacco Society Limited v Julius Ndirangu Wahome; Ojiambo & Company Advocates (Garnishee) [2021] KECPT 605 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.385 OF 2018

MUKI SACCO SOCIETY LIMITED.............................................CLAIMANT

VERSUS

JULIUS NDIRANGU WAHOME..............................................RESPONDENT

AND

OJIAMBO & COMPANY ADVOCATES...................................GARNISHEE

RULING

What is before us for consideration and determination is the Decree Holders Application dated 16. 3.2020. It seeks for the following Orders:

1. Spent;

2. That the firm of Ojiambo & Company Advocates be restrained from releasing to the Judgment Debtor the sum of kshs.819,202/= or any part thereof being the proceeds of NAKURU ELRC NO. 48 OF 2017 JULIUS NDIRANGU WAHOME VS MUKI SACCO SOCIETY LIMITED pending the hearing and determination of this Application;

3. That the Honourable Court be pleased to order that all and/or any part of debts owing from the law firm of Ojiambo & Company Advocates, the Garnishee to the Judgment Debtor herein be attached to answer the decree together with costs of the garnishee proceedings;

4. That the Honourable court do fix the date when the garnishee shall appear before the Honourable court to show cause why it should not pay the decree –holder the debt due to it from the Judgment Debtor or so much there of as may be sufficient to satisfy the decree together with costs;

5. That the Honourable court be pleased to grant any further orders as it deems fit and proper to grant.

6. That the costs of this Application be provided for.

The Application is supported by the grounds on its face and the following Affidavits:

(a) Supporting Affidavit sworn by Violet Wanjiru Ndung’u on 16. 3.2020; and

(b) Supplementary Affidavit sworn by the said Violet Wanjiru on 28. 8.2020.

The Garnishee has opposed the Application vide the following Affidavits both sworn by Colbert Ojiambo.

a. Replying Affidavit sworn on 20. 5.2020;

b. Further Affidavit sworn on 21. 9.2020.

Vide the directions given on 6. 8.2020, the Application was canvassed by way of written submissions. The Decree Holder filed its written submissions on 10. 9.2020 while the Garnishee did so on 4. 11. 2020.

Decree Holders Contention

Vide the instant Application, the Decree Holder contend that it has a Decree of Kshs.3,718,825/= which remains unsatisfied to date. That the Judgment Debtor has a Decree emanating from ERL NO. 48/ 2017 (Nakuru) for Kshs.819,202/=. That upon executing the Decree emanating from the said decision, the Judgment Debtor in ELRC NO. 48/17 released the said sum to the Judgment Debtor’s Advocates on record on 12. 3.2020. That it now wants the said monies to be attached to satisfy the Decree in the instant claim.

Garnishee’s Contention

Vide the Replying Affidavit sworn by Colbert Ojiambo on 20. 3.2020, the Garnishee confirmed that indeed the ELRC court awarded the Judgment Debtor a sum of Kshs.819,202/=. That upon extraction and presentation of a decree upon the Decree Holder, the Decree Holder declined to honour the same arguing that the Judgment Debtor owed it a loan of Kshs.5,672, 021/=.

That on 29. 1.2020, the Garnishee instituted Garnishee proceedings against the Decree Holder. That while responding to the said Garnishee proceedings the Decree Holder enclosed a Decree emanating from this claim for Kshs.3,143,876/=. That the Garnishee Applications was allowed on 4. 3.2020. That on 12. 3.2020, the Garnishee in ELRC NO. 48 /17 released the sum of Kshs. 819,202/= to the Garnishee. That upon receipt of the said amounts the Judgment Debtor collected the same on 18. 3.2020. That by the time the instant Application was served upon the Garnishee, the said funds had been released to the Judgment Debtor. That in the circumstances, the Garnishee does not owe the Judgment Debtor any sums of money as alleged in these proceedings.

Decree Holder’s Supplementary Affidavit sworn on 28. 8.2020

Vide this Affidavit, the Decree Holder contend that on 19. 3.2020, this Tribunal issued a Decree Nisi barring the Garnishee from releasing to the Judgment Debtor the decretal sum of Kshs.843,787/=. That the Garnishee was served with the Decree Nisi on 19. 3.2020. That the Garnishee has not attached evidence that is, by way of a bank statement to show that s at 19. 3.2020, the Decretal sum in ELRC No. 48/17 had been released to the Judgment Debtor.

Garnishee’s further Affidavit sworn by Colbert Ojiambo on 21. 9.2020

Vide this Affidavit, the Garnishee confirmed that the Decree Nisi in the instant claim was served upon it on 19. 3.2020. That following the government’s directive and the Nationwide lockdown, its office had scaled down operations and only got to see the decree as a week after service. That it would thus not have been reasonably possible for it to stop payment of the cheque it had drawn in favour of the Judgment Debtor. That the process of stopping payments entailed a lot of paper work to wit filing of physical forms and submitting the same to the paying bank. That because of Covid, it would not have been reasonably possible to commence and complete the process of stoppage of the cheque within a period of less than 30 minutes without adequate Notice. That the earliest the Decree Order would have been acted upon would have been on 20. 8.2020. That the cheque cleared on 20. 8.2020 at 8. a.m. That the Garnishee cannot therefore be said to have acted in bad faith to defeat the court Order.

Issues for determination

The instant Application has presented the following issues for determination:

a. Whether the Garnishee has funds sufficient the satisfy the Decree in the claim; and

b. Who should meet the costs of this Application?

Garnishee proceedings

The law Governing Garnishee proceedings is Order 23 of the Civil Procedure Rules. Order 23 Rule1 provides in this regard thus:

“ A court may upon the ex-parte Application by the 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 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 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 be ordered to pay the decree holder the debt due to him to the Judgment debtor or so much thereof as may be sufficient to satisfy the decree together with costs aforesaid.....”.

From this provision, it is manifest that for a party to succeed in an Application for Garnishee proceedings, he/she must demonstrate that the Garnishee is indebted to the judgment debtor and that he/she has funds respecting to the said debtor. This way the holding of the court in the case of Ecobank Limited - vs- True North Construction Company Limited & Another [2018]eKLR in the pertinent part, the court hold thus:

“ The object of Garnishee proceedings is to enable a decree Holder to reach a debt due to the judgment debtor from the Garnishee as may be sufficient to satisfy a Decree crucial thereof is that the Garnishee is indebted to the judgment Debtor.”

As was held by the court in the case of Invesco Assurance Company Limited - vs- Chief Magistrate Court at Tawa & 3 Others, [2019]eKLR,that:

“ It is also noteworthy that service of Order Nisi upon the Garnishee automatically binds the debt on possession of the Garnishee (Order 23 Rule 3). It is therefore improper for the Applicant to refer to the Orders as excessive, arbitrarily and punitive because the Garnishee’s accounts are automatically “frozen” upon service and this is not something that can be attributed to an act or omission of a Judicial Officer.”

Further the same position is bolstered by the decision of the court in the case of Nyagwa Ngigi & Kibet Advocates - vs- Invesco Assurance Company Limited ; Diamond Trust Bank [2020] eKLR in the pertinent part, the court held;

“ As soon as the Garnishee Nisi is served, on the bank, it operates as an injunction it prevents the bank from paying the money to its customer until the Garnishee Order is made absolute or its discharged as the case may be. It binds the debts in the hands of the Garnishee, that (s) creates a charge in favour of the judgment creditor.”

Looking at the foregoing principles in light of the circumstances, of this Application, we deduce the following:

a.That the Garnishee was indebted to the Judgment Debtor by the time the instant Application was originated on 17. 3.2020;

b. That the Garnishee had a sum of Kshs.819, 202/= in favour of the Judgment Debtor as at 17. 3.2020;

c. That the Garnishee still held the sums referred to in (a) above as at 19. 3.2020 when the Decree Nisi Order was made;

d. That the Decree Order Nisi issued on 19. 3.2020 was duly served upon the Garnishee on even date on 19. 3.2020; and

e. That the Decree Order Nisi issued and served upon the Garnishee on 19. 3.2020 operated as an injunction stopping the Garnishee from paying out the Garnishee amounts to the Judgment Debtor.

The Garnishee has put up a spirited effort to explain the intricacies that made it impossible for it not to stop its bank from cashing the cheque it had drawn in favour of the Judgment Debtor’s on 18. 3.2020. That it was served with the Decree Nisi Order on 19. 3.2020 and by this time, it had scaled down operations as a result of Covid- 19. That it only came to know about it when the deponent of the Replying and further Affidavit had returned to the office a week after. What the Garnishee is conveniently avoiding is the fact that it became aware of the Decree Nisi on 19. 3.2020 yet it did not take steps to stop the bank from cashing the cheque on 20. 3.2020.

Whilst the Garnishee wants to make us belief that the process of recalling a cheque from being cashed is a rigorous one, we also take judicial Notice that an email communication or a phone call is enough to stop a bank from processing the said cheque. The Garnishee has not stated whether it took the said initiatives it has only made reference to filing and presentation of forms.

We find the Garnishee’s justification of not recalling cheque No. 000542 for Kshs.503,787/= a classic and convenient way of disobedience of valid court Orders.

Instead, it gives us the impression that it worked in cahoots with the Judgment Debtor to avoid any Orders which could emanate with the Tribunal in moment it got wind of the fact that this Application had been filed.

Better still, the Garnishee has not given an explanation as regards the whereabouts of the balance of the Garnished amounts. The Decree Nisi is for Kshs.819,202/=. The cheque released to the judgment debtor is for Kshs.479,2020/= the difference of kshs.315,415/=.

Conclusion

The effect of the foregoing is that we find merit in the Decree Holder’s Application dated 16. 3.2020. However, as is apparent, the only available monies as per the Decree Nisi issued on 19. 3.2020 is the difference between Kshs.819,202/= and 479,202/= that is Kshs.340,000/=. We thus issue a Decree absolute for this amount that is, Kshs.340,000/= since the aspect of disobedience of the Order of 19. 3.2020, is not before us, we cannot make any definitive finding on the status of Kshs.479,202/= released to the judgment debtor. The Garnishee and the Judgment Debtor to jointly meet the costs of this Application.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY THIS 7TH DAY OF JANUARY, 2021.

Hon. F. Terer Deputy Chairman Signed 7. 1.2021

Mr. P. Gichuki Member Signed 7. 1.2021

Mr. B. Akusala Member Signed 7. 1.2021

In the presence of

Mr. Getange for Claimant present

Respondent absent

Court assistant Maina

Hon. F. Terer Deputy Chairman Signed 7. 1.2021.