Patrick Olindah Aswani v Assets Recovery Agency; Norren Chege (Interested Party) [2020] KEHC 1139 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

ANTI CORRUPTION AND ECONOMIC CRIMES DIVISION

MISCELLANEOUS APPLICATION NO. E025 OF 2020

IN THE MATTER OF: THE ASSETS RECOVERY AGENCY FOR ORDERS UNDER SECTION 69, 81, 82 AND 87 OF THE PROCEEDS OF CRIME AND ANTI-MONEY LAUNDERING ACT READ TOGETHER WITH ORDER 51 OF THE CIVIL PROCEDURE RULES TO PROHIBIT THE TRANSFER AND DISPOSAL  OF OR OTHER DEALINGS (HOWEVER DESCRIBED) WITH THE PROPERTY REGISTERED UNDER AUTOBIZ SOLUTIONS LIMITED KNOWN AS MOTOR VEHICLES REGISTRATION NUMBERS KCS 293J S. WAGON, KCZ 289J S. WAGON  KCZ 287J, S.  WAGON KCZ 286J, S. WAGON S. WAGON KCZ 286K, S. WAGON KCZ 523G, S. WAGON, KCZ 190D S WAGON, KCZ 436D S. WAGON.

AND

IN THE MATTER OF: THE ASSETS RECOVERY AGENCY FOR ORDERS UNDER SECTION 69, 81, 82 AND 87 OF THE PROCEEDS OF CRIME AND ANTI-MONEY LAUNDERING ACT READ TOGETHER WITH ORDER 51 OF THE CIVIL PROCEDURE RULES  TO PROHIBIT  THE TRANSFER AND DISPOSAL  OF OR OTHER DEALINGS (HOWEVER DESCRIBED) WITH THE PROPERTY REGISTERED UNDER SECTION  PARTRICK ASWANI KNOWN AS MOTOR VEHICLES REGISTRATION NUMBERS; KCX 860Z S. WAGON, KCX 522M S.WAGON, KCW 547R  S. WAGON, KCW 605N S. WAGON, KCV 003G S. WAGON, KCT 033X S. WAGON, KCT 332U VAN, KCT 996G SALOON, KCS 864C S. WAGON, KCR 418Q S.WAGON, KCQ 211H VAN, KCP 547P S. WAGON, KCB 619A S. WAGON.

IN THE MATTER OF AN APPLICATION BY

PATRICK OLINDAH ASWANI.....................................................................................APPLICANT

VERSUS

ASSETS RECOVERY AGENCY...............................................................................RESPONDENT

NORREN CHEGE..........................................................................................INTERESTED PARTY

RULING

1. By a Notice of Motion under certificate of urgency dated 11/9/2020, the applicant moved the court for the following orders: -

1) Spent

2) The Honourable Court be pleased and do hereby order the Respondent to remove the caveats registered on 17th August, 2020 prohibiting the applicants from transferring and disposing off or conducting other dealings with the motor vehicle registered under the Applicant’s name and Autobiz solutions Ltd where he is a director.

3) The Honourable Court be pleased and do hereby allow the applicant  to transfer, dispose and conduct any other dealings with motor vehicle registered  under the Applicant’s name and Autobiz Solutions Ltd where he is a director

4) Costs of the application.

2. The application was supported by his own affidavit wherein he deponed that on 17th August, 2020 the Respondent registered caveats intended to prohibit him from transferring and disposing of or conducting other dealings with the motor vehicle herein, without following the procedures provided for under the Evidence Act and Proceeds of Crime and Anti-Money Laundering Act (PROCAMLA).

3. It was deposed further, that the Respondent failed to furnish him with any notice, cogent reason or proof to raise reasonable suspicion with regard of fraudulent transactions related to the subject motor vehicles, KCT 332U and KCT 996G which had already been repossessed by Baraka Credit Ltd, KCX 522M by MWANANCHI CREDIT LTD and KCQ 211H by RAFIKI MICRO-FINANCE BANK.

4.  It was deposed that the other motor vehicles had been sold and because of the caveats registered against their title, the applicant was unable to transfer them to the beneficial owners, thereby causing the same great prejudice, including being deprived of the means to provide for his reasonable living expenses and missed potential business opportunities.

5. It was finally contended that the applicant’s fundamental constitutional rights had been blatantly violated through the Respondents arbitrary and oppressive illegalities.

6. In response to the application, the respondent filed a replying affidavit sworn by Cpl. FREDRICK MURIUKI, in which he stated that the Respondent received complaints vide letters dated 16th July, 2020 from Alphonce Otieno Odar and Stephen Okunu Handa, to the effect that they had given the applicant funds to import on their behalf tractors and accessories as well as motor vehicles, which the applicant failed to do so.

7. It was deposed further that an inquiry file was opened to investigate and inquire into the proceeds of crime contrary to Section 3(a) of the Proceeds of Crime and Anti-Money Laundering Act relating to assets held by applicant, associates and representatives, which were presumed to be proceeds of crime and preliminary investigations established that the applicant was one of the Director  of Autobiz Solutions Ltd, leading to his request to the National Transport Safety Authority, to put restrictions/caveats on all motor vehicles registered in the name of the applicant, his wife, Autobiz solutions  and Zaida Garden, to prohibit the sale, transfer, disposed of all motor vehicles registered in their names pending the conclusion of the   investigations.

8. It was further stated that on 20/8/2020 and 28/8/2020, he obtained court order vide Nairobi Chief Magistrate Court Misc. NO. 1800/2020 1801/2020 and 1925/2020 authorizing the investigations and inspection of books of accounts, held at Standard Chartered Bank and Rafiki Microfinance Bank in the name of the applicant and his associates, upon  analysis of which he confirmed that the applicant had received funds from the complainants in respect of the intended sale and supply of a tractor, accessories and motor vehicles under false pretense.

9. It was deposed further that on 10/9/2020 he summoned the applicant to appear at the respondent office on 15/9/2020, to provide information on the ongoing investigations but the same failed to honour the summons.  It was therefore contended that investigations involving the applicant were still ongoing having not been concluded and that the restrictions were placed on the motor vehicles registered in the applicant’s name, following information that he had received money by false pretense and through the investigating power provided under the National Police Service Act, to prohibit the applicant from selling, transferring or disposal of the said motor vehicles pending the conclusion of investigations.

10. It was further contended that there was no evidence tendered by the applicant to support the allegations that some of the motor vehicles herein had been repossessed and others sold, as no details thereof were provided for by the applicant. It was therefore deposed that the Applicant had been receiving money under false pretense, thereby providing compelling grounds to register the said caveats, to maintain the status quo until investigations are completed.

11. The applicant in response filed supplementary affidavit in which he admitted having received funds from the two named complainants, which was the subject to criminal case No. 42/2019 together with a defence filed in respect of Civil Case No. 9147/2019 PARTRICK OLINDAH ASWANI v BARAKA CREDIT LTD in respect of two motor vehicles Reg. No. KCT 996G and KCT 332G.

SUBMISSIONS

12. Directions were given that the application herein be heard by way of written submissions which have been duly filed.  It was submitted by the applicant that there were only two issues for determination; - whether the caveats/restrictions on the subject motor vehicles were properly placed by national Transport and Safety Authority as requested by CPL. Fredrick Muriuki and whether the same should be removed.  It was submitted that the caveats placed were illegal, unconstitutional and lacked nexus with the allegations raised by the complainants as stated in the affidavit by Cpl. Fredrick Muriuki and that the matter   raised therein were live in court, and therefore not proceeds of crime or money laundering.

13. It was submitted that the subject motor vehicles did not belong to the applicant, since they had been sold and their transfers pending at the time when these prohibitions were placed, thereby inhibiting the transfer to beneficial owners.  It was submitted that the Respondent had failed to show that the motor vehicles were acquired from proceeds of crime, the applicant having shown how they were imported and sold.  Reliance was placed on the case of ASSET RECOVERY AGENCY v ROSE MONYANI MUSANDA, SIDIAN BANK LTD [2020] eKLR where the court held that it was necessary for the Respondent to prove reasonable suspicion that the subject matters were proceeds of crime.

14. It was submitted that the allegations against the applicant were actuated by malice, in a bid to frustrate his business of importing motor vehicles and were therefore not placed in good faith.  It was therefore submitted that having provided an account of the transaction as regards the said motor vehicles, the placement of caveats/restrictions lacked nexus with the allegations by the Respondent and therefore the application should not be allowed.

15. On behalf of the Respondent, it was submitted that the restrictions were placed to maintain the status quo of the subject matter of investigations, under Section 24 of the National Police Services Act, and that there was no evidence that the Respondent acted arbitrarily without following due process of the law.  It was submitted that the investigations were still ongoing which may take time for which the case of MAPE BUILDING & GENERAL ENGINEERING v A.G AND OTHERS PETITION No. 437/2015 was submitted in support.  It was submitted further that the applicant had been charged with the offence of obtaining money by false preens in Milimani Criminal Case No. 41/2020 and 42 of 2020.

16. It was contended further that if there were owners of the subject motor vehicles as stated by the applicant, then he should have enjoined them as parties to this proceeding.  It was contended that ASSETS RECOVERY AGENCY v ROSE MONYANI MUSANDA (supra)submitted by the applicant was in respect to preservation proceedings which is not applicable, since the respondent had not instituted any recovery proceedings.  It was concluded that the removal of caveats will interfere with the ongoing investigations.

17. On the issue of breach of the applicant’s constitutional right: - it was submitted that the burden was upon the application as stated in MEME v REPUBLIC & ANOTHER [2004] eKLR.  It was stated further that the applicant’s alleged rights under Article 31 of the Constitution were not absolute and can only be enjoyed in light of right of others.  The applicant, it was submitted had failed to set out details of contravention of the constitutional rights as was stated in the case of ANARITA KARIMI NJERU v REPUBLIC (No. 1) (1978) KLR 134 as affirmed in the case of MUMO MATEMU v TRUSTED SOCIETY for HUMAN RIGHTS ALLIANCE & 5 OTHERS [2013] eKLR.

18. It was finally submitted that the right to fair Administrative Action was accorded to the applicant, when he was summoned to appear at the Asset Recovery Agency to respond to the inquiries but he failed to honour the summons.  It was contended that conducting investigations into the complaint received by the Respondent did not amount to violation of their rights under Article 47 of the Constitution.  It was further stated that the court will not interfere with State organs mandate unless it can be shown and demonstrated that they violated the rights under the Constitution, for which the case of COMMISSIONER OF POLICE AND THE DIRECTOR OF CRIMINAL INVESTIGATIONS DEPARTMENT & ANOTHER v KCB LTD & 4 OTHERS [2017] eKLRwas submitted in support.

ANALYSIS AND DETERMINATION

19. For the purposes of this ruling, I must state that the factual basis herein are not disputed.  It is clear that the applicant is in the business of importing and selling motor vehicles, for which he received several sums of money from various individuals including two named herein, and as is common in that trade in Kenya failed to deliver the motor vehicles, who reported him to the Asset Recovery Agency, which then placed a caveat and restriction upon certain motor vehicles, registered in his name and those of his associate company.

20. It is also not in dispute that the complainants must  have reported to the police  who commenced investigations  therein, as confirmed by the Respondent under Section 24 of National Police Service Act, which resulted into the Applicant being charged with the offence of obtaining money by false pretense in Milimani Criminal case number 41 of 2020 and 42 of 2020 and further that the Respondent upon receipt of the complaint against the applicant obtained court orders for the purposes of investigating  and inspection of books of accounts in the name of the  applicant and others.

21. The Respondent has further confirmed that they were not investigating the complaint herein under the provisions of PROCAMLA (Proceeds of Crime and Anti Money Laundering Act) which provides an electorate condition of the procedure to be followed including notices to be issued within given timelines.

22. The issue therefore for this court to answer as regards the application herein, is whether the restrictions herein were lawfully placed by the Respondent in exercising of their mandate under the Act?  This issue can only be answered if one looks at the Act creating the Respondent which at its preamble, it is stated as follows: -

“An act of parliament to provide for the offence of money laundering and to introduce measures of combating the offence, to provide for the identification, tracing, freezing, seizure and confiscation of the proceeds of crime and the connected purposes”

23. The proceeds of crime under the Act are defined under Section 2 to mean:-

“Any property or economic advantage derived or realized directly or indirectly as a result of or in connection with an offence irrespective of the identity of the offender, and includes on a proportional basis, property into which any property derived or realized directly from the offence which later successively converted, transferred or intermingled, as well as income, capital or other economic gains or benefits denied or realized from such property from the time the offence was committed.”

24. The functions of the Respondent as set out in part vii-xi of the Act and for the purpose of the applicant Section 68 of the Act, provides for the procedure for obtaining restraining orders, which the Respondent has admitted in its affidavit in reply is not applicable to this application.

25. Whereas the  definition of proceeds of crime is  wide, having confirmed that the applicant herein was being investigated for the known offence of obtaining money by false pretense, which offence lies in the domain of the Directorate of Criminal Investigations, who upon their investigations have preferred criminal charged against the applicant, I am  satisfied that the placement of the restriction  on the subject motor vehicles by the Respondent  was  an abuse of  the process and whereas the court agrees with the Respondent, that it should not interfere with the investigation process, as stated in  Commissioner of Police and the Director of Criminal Investigations Department & another  v KCB [supra], I find and hold that the orders sought herein do not amount to interference with investigations.

26. Whereas the court appreciates the need for inter-Agency Corporation in combating crime, when an agency acts in excess of its powers and without following due process and in a manner which is akin to assisting a complaint to forum shop for a favourable agency, the court will not  fold its hands and just say that it should  not interfere  with investigations, as can be seen in this matter as  it is clear that having reported to the DCI, the complainants, to put pressure upon the Applicant, sought the assistant of the  Respondent.

27. I am therefore satisfied that the applicant has established a threshold to enable this court to grant an order  directed to the Respondent to remove  the caveat registered on 17th August, 2020 restricting  the applicant from transferring  and disposing of the subject motor vehicles, since the same has been charged with a criminal offence and the complainants named  by the Respondent herein  have an adequate remedy either  based on the outcome of the criminal proceedings or in the alternative  in a civil court for the recovery of the sums of money  paid to the applicant which he has not denied.

28. On the issues of the breach of the fundamental rights of the applicant, it is not disputed that the restrictions were placed to aid into the investigation and that the applicant had been given an opportunity to appear before the respondent, which he failed to do and I am therefore of the considered opinion that at this stage and in this application the applicant’s claim of breach of constitutional right is premature as the same has not moved the court properly.  There is further no evidence that the investigations against him was actuated with malice and without merit.

29. I therefore find merit in the applicant’s application and hereby allow the same as limited to the removal of the restrictions on the named motor vehicles only.

30. On the issue of costs, it is clear that the applicant is not an innocent party, having admitted that he received money from the complainants for the supply of motor vehicle which he has not honoured and has therefore not come to court with clear hands.  He who seeks equity as it is must come to the seat of justice with clear hands. He is therefore not entitled to cost.

31. In the final analysis I make the following orders: -

a) The Respondent is hereby ordered to remove the caveats registered on 17th August, 2020 prohibiting the applicant from transferring or disposing of or conducting other dealings with motor vehicles registered under his name and Autobiz Solutions Ltd unless restrained by the trial court.

b) The applicant is here by allowed to transfer, dispose and conduct other dealings with motor vehicles registered under his name and Autobiz Solutions Ltd.   In the ordinary course of his business unless restricted by the trial court.

c)  There is no order as to cost.

Dated, Signed and Delivered at Nairobi This 9th Day of December, 2020 Through Microsoft Teams.

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

J. WAKIAGA

JUDGE