Multiple ICD (Kenya) Limited v Zakheem International Construction Limited; Kenya Pipeline Company Limited (Garnishee); Standard Chartered Bank (Interested Party) [2025] KEHC 65 (KLR) | Garnishee Proceedings | Esheria

Multiple ICD (Kenya) Limited v Zakheem International Construction Limited; Kenya Pipeline Company Limited (Garnishee); Standard Chartered Bank (Interested Party) [2025] KEHC 65 (KLR)

Full Case Text

Multiple ICD (Kenya) Limited v Zakheem International Construction Limited; Kenya Pipeline Company Limited (Garnishee); Standard Chartered Bank (Interested Party) (Civil Suit E132 of 2020) [2025] KEHC 65 (KLR) (Commercial and Tax) (16 January 2025) (Ruling)

Neutral citation: [2025] KEHC 65 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Civil Suit E132 of 2020

A Mabeya, J

January 16, 2025

Between

Multiple ICD (Kenya) Limited

Decree holder

and

Zakheem International Construction Limited

Judgment debtor

and

Kenya Pipeline Company Limited

Garnishee

and

Standard Chartered Bank

Interested Party

Ruling

1. Before Court is the application dated 25/10/2024. It was brought under Order 22 rule 1(b)& Order 23 rule 1& 2 and Order 51 rule 1 of the Civil Procedure Rules 2010. It sought that the garnishee order nisi against Kenya Pipeline Company Limited be made absolute with respect to the account number 8704023872500 domiciled at Standard Chartered Bank to satisfy the decree issued on 13/8/2021 against the judgment debtor.

2. The application was premised on the grounds set out on the face of it and the supporting affidavit of Manvir Singh Baryan sworn on 25/10/2024. It was the decree holder’s contention that this suit was compromised and settled by way of a consent dated 13/8/2020 and the same was adopted as an order of the Court on 18/8/2020.

3. The consent was to the effect that judgment was entered against the defendant in the sum of USD 3,286,590. 80 together with costs and interest. That the said amount would be paid from a judgment amount awarded to the judgment-debtor in Milimani HCCC No. E322 of 2019- Zakhem International Construction Limited vs. Kenya Pipeline Company Limited.

4. That the judgment debtor had not paid the said amount or at all. That it had come to the attention of the applicant that the garnishee had paid the judgment-debtor USD 25,000,000 and there was due and owing to the judgment debtor a sum of USD 6,000,000 under the said judgment. That the judgment-debtor was not keen on settling the decretal sum.

5. That the judgment debtor and the garnishee had conspired to defeat justice by refusing the decree the fruits of its judgment. That the judgment debtor being a multinational company has no traceable assets within the jurisdiction of the court. That it would therefore be in the interests of justice to grant the orders sought.

6. The application was opposed by the judgment debtor in a replying affidavit dated 8/11/2024 sworn by Ibrahim Zakhem. He deposed that the decree-holder was guilty of filing garnishee applications and had since filed such 3 applications. That on 7/11/2024 the Court had dismissed the decree holder’s application and conclusively determined that the garnishee did not hold any funds on behalf of the judgment debtor.

7. The garnishee filed a replying affidavit dated 9/11/2024 sworn by Nelson Nyaduwa. He deponed that the garnishee was not privy to the consent between the decree-holder and the judgment-debtor regards the settlement of the decree. That the garnishee did not hold any funds on behalf of the judgment debtor and the decree holder did not prove that the garnishee held any funds on behalf of the decree holder. It was contended that the Court had earlier dismissed the decree holder’s application stating that the garnishee did not hold any funds.

8. I have considered the contestations by the parties. Garnishee proceedings are governed by Order 23(1) of the Civil Procedure Rules which provides that: -“Court may, upon the ex parte application 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.”

9. In Mengich t/a Mengich & Co. Advocates & Another vs Joseph Mabwai & 10 Others [2018] eKLR, the court laid out the procedure in garnishee proceedings as follows: -“Garnishee proceedings is done in two different stages. The first stage is for the garnishee order nisi, while the second stage is for the garnishee order absolute. At the first stage, the judgment creditor makes an application ex-parte to the court that the judgment debt in the hands of the third party, the garnishee, be paid directly to the judgment creditor unless there is an explanation from the garnishee why the order nisi should not be made absolute. If the judgment creditor satisfies the court on the existence of the garnishee who is holding money due to the judgment debtor, such third party (garnishee) will be called upon to show cause why the judgment debtor’s money in its hands should not be paid over to the judgment creditor, and if the court is satisfied that the judgment creditor is entitled to attach the debt, the court will make a garnishee order nisi attaching the debt.The essence of the order nisi is to direct the garnishee to appear in court on a specified date to show cause why an order should not be made upon him for the payment to the judgment creditor of the amount of debt owed to the judgment debtor. It is a requirement that a copy of the order nisi must be served on the garnishee and judgment debtor at least 7 days before the adjourned date for hearing. The second stage is for the garnishee order absolute, where on the adjourned date, the garnishee fails to attend court or show good cause why the order nisi attaching the debt should not be made absolute, the court may subject to certain limitations make the garnishee order absolute. The garnishee, where necessary also have an option of disputing liability to pay the debt.The primary object of a garnishee order is to make the debt due by the judgment debtor available to the decree holder in execution without driving him to the suit.”

10. In view of the foregoing, the Court acknowledges the nature of garnishee proceedings, which involve the decree holder's application to enforce a judgment by compelling a garnishee, to either acknowledge or dispute the debt owed by the judgment-debtor. It is clear that a garnishee is obligated to respond to the court’s order, providing evidence to confirm or dispute the claim that he holds assets or owes the judgment debtor.

11. The Court notes that the decree holder has previously filed similar applications for garnishee orders. In the application dated 14/12/2024, the decree holder moved the Court seeking to have the decree nisi be made absolute. Similarly, another application was filed on 7/3/2024 seeking similar orders. The court dismissed the application in the ruling dated 7/11/2024 on account that the applicant did not demonstrate that the garnishee held any monies belonging to the judgment debtor.

12. Despite this, it is important to clarify that the applicant is not precluded from seeking further execution of the judgment if new evidence or information comes to light that warrants such action. Under Order 23 of the Civil Procedure Rules, a decree holder is not restrained on any number of garnishee proceedings he can make. All that he needs to show is that; there exists a valid decree in his favor which has not been satisfied, that the judgment-debtor is owed by a garnishee for sums that can be applied to satisfy the decree.

13. In the present case, it is not disputed that there was a consent judgment between the decree holder and the judgment-debtor that resulted in the decree dated on 13/8/2021, that in that consent, the parties thereto agreed that the said decree was to be settled from proceeds that would or may be due to the judgment-debtor from Milimani HCCC No. E322 of 2019 Zakhem International Construction Limited vs. Kenya Pipeline Limited and that the decretal sum was payable to the decree-holder directly by the judgment-debtor or the garnishee.

14. It is also not in dispute that previously the decree-holder had made garnishee applications and the Court found once that the garnishee was not holding any funds for the judgment-debtor.

15. In the present application, the decree holder pleaded that part of the consent that resulted in the aforesaid decree, read that: -“2. That the decretal amount referred in paragraph (1) be paid to the Plaintiff herein either directly by Kenya Pipeline Company Limited from the judgment amount awarded to the defendant herein in Milimani HCCC No. E322 of 2019- Zakhem International Construction Limited v Kenya Pipeline Company Limited or directly by the defendant once it has received the aforesaid judgment amount from Kenya Pipeline Company Limited whichever event is earlier.”

16. Then the decree-holder deposed in the affidavit of Manvir Singh Baryan sworn on 25/10/2024 as follows: -“6. The applicant is aware that out of the award contemplated under Order No.2 of the decree referred to hereinabove, Kenya Pipeline Company Limited has since paid out to the Judgment Debtor a sum in excess of USD 25,000,000 none of which the Judgment Debtor has utilized to settle the decree. (Copies of correspondence to this effect are annexed hereto and marked as “MSB-4”).7. That the only amount remaining that is owed to the judgment debtor is USD 6,000,000. 00 as demonstrated by the payment advise contained in the above annexure.”

17. In support of the above averments, the decree holder attached correspondences from the Principal Secretary for the National Treasury demonstrating that the budget for Kenya Pipeline Company Limited was approved for payment to the judgment debtor of the alleged amount. In a letter dated 26/5/2023 to the Principal Secretary, Ministry of Energy and Petroleum Ref: TNT/CONF/60/01, the Principal Secretary, Treasury wrote: -“iii)The parties (KPC and ZIC) negotiated and amicably resolved the dispute out of court. Subsequently, KPC paid US$ 24,124,990. 20 leaving a balance of US$31,308,249/90. The balance was not settled due to court cases on the part of the contractor and….In making the payment of US$31,308,249. 90, the Board and Management of KPC should be advised to ensure that the negotiated and agreed amount of interest on unpaid contractual sum based on the contractual rate of interest of 6% as guided by the AG’s advisory is registered in Court as Full and Final settlement of the claim of verified and certified works”.

18. The net effect of the said correspondence was that the garnishee held monies at least to the tune of US$31m due to the judgment-debtor. It is on this that the decree-holder alleged in the aforesaid affidavit that a sum of US$25m had been paid to the judgment-debtor and there was a balance of US$6m.

19. In answer to the above positive averments, both the judgment-debtor and the garnishee were evasive. The judgment-debtor only stated that the Court had in an earlier ruling found that the garnishee held no funds on behalf of the judgment-debtor, which is correct. On its part, the garnishee denied the averments and put the decree-holder to strict proof thereof. It stated that the suit between it and the judgment debtor had been withdrawn.

20. In the ruling dated 7/11/2024, the Court had found that there was no evidence that there was any money owing from the garnishee to the judgment debtor. That ruling was in respect of an application dated 14/12/2023. That application predated the correspondences produced by the decree holder in the present application. Those letters, in the view of this Court show that indeed the garnishee held monies on behalf of the judgment-debtor and Treasury was advising how the same should be settled.

21. With the said correspondence in mind, it is essential that the garnishee should have shown whether the said US$31m had been paid out as alleged by the decree or not. It was incumbent upon the garnishee to explain and show that in the face of the new evidence relied on by the decree-holder, it did not hold the said funds or it did not owe the judgment debtor.

22. In this regard, it was insufficient for the garnishee to merely state that it did not possess the funds in question. In order to discharge its burden of proof the garnishee is required to provide concrete evidence showing the absence of such funds. This is not merely a matter of denial but a factual assertion that needed to be substantiated. If the garnishee claims not to hold any funds belonging to the judgment debtor, it is its responsibility to produce evidence, such as account statements, financial records, or other relevant documents, that demonstrate that the claimed sums are either not due or is not in its possession.

23. In Lesinko Njoroge & Gathogo Advocates v Invesco Assurance Co; Co-operative Bank of Kenya (Garnishee) [2020] eKLR, the court stated as follows: -“Garnishee proceedings are in their very nature proceedings whereby the garnishee is required to prove whether or not the garnishee is indebted to the judgment-debtor. Ordinarily, the judgment-creditor only makes allegations of the garnishee’s indebtedness based on sound evidence whereby the burden of proof shifts to the garnishee to prove otherwise. In this regard, to discharge that burden, the garnishee has to produce strong, sufficient and convincing evidence that the funds in its hands or the debt is not due or payable”

24. By failing to produce the necessary evidence to substantiate its claim of not holding the funds, the garnishee has not discharged the burden of proof. It never disputed the correspondences produced by the decree-holder that showed that it owed the judgment-debtor. That explanation lacking, the Court, is bereft with no alternative than to hold that the garnishee has failed to properly challenge the decree-holder’s assertions and as such, cannot be absolved from liability based solely on an unsupported denial.

25. The present application is distinguished from the previous one that resulted in the ruling of 7/11/2024 in that, there is introduction of the letters from the National Treasury which were not been disputed.

26. In this regard, the Court finds the application to be meritorious. The decree order nisi is hereby made absolute and the application allowed in terms of prayer nos. 6 and 8. It is so ordered.

SIGNED AT NAIROBI THIS 14TH DAY OF JANUARY, 2025. A. MABEYA, FCI ArbJUDGEDATED AND DELIVERED AT NAIROBI THIS 16TH DAY OF JANUARY, 2025. F. GIKONYOJUDGE