SGS Kenya Limited v Tracer Limited; Discreet Fleet Managementlid & another (Objector) [2022] KEHC 18134 (KLR)

SGS Kenya Limited v Tracer Limited; Discreet Fleet Managementlid & another (Objector) (Miscellaneous Application 65 of 2018) [2022] KEHC 18134 (KLR) (Commercial and Tax) (14 July 2022) (Ruling)

Neutral citation: [2022] KEHC 18134 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Miscellaneous Application 65 of 2018

WA Okwany, J

July 14, 2022

IN THE MATTER OF ARBITRATION CAT, 1995 AND THE ARBITRATION RULES, 1997 AND IN THE MATTER OF: RECOGNITION AND ENFORCEMENT OF AN INTERNATIONAL ARBITRATION AWARD

Between

SGS Kenya Limited

Applicant

and

Tracer Limited

Respondent

and

Discreet Fleet Managementlid

Objector

Salim Bhimji

Objector

Ruling

Background 1. The judgement debtor and the decree holder herein entered into an agreement dated August 10, 2010 wherein the decree holder agreed to provide electronic container tracking services and the judgement debtor was to provide fleet management services. A dispute arose between the parties that was referred for arbitration. An arbitral award was delivered in favour of the decree holder on April 20, 2015 which award was upheld, recognized and enforced as a judgement of the court. The decree holder initiated the execution of the decree arising out of the award thus precipitating the filing of the application that is the subject of this ruling.

Application 2. This ruling determines the application dated January 28, 2021 wherein the objectors seek the following orders:-1. Spent.2. Spent.3. Thatthe honourable court be pleased to raise the proclamation and/or attachment dated January 21, 2021 of motor vehicles registration numbers KCC 100N and KAT 273C, assorted office chairs, assorted office tables, assorted executive chairs, assorted office printers and photocopying machine, un-named motor vehicles, un-named motor cycles, water dispenser, laptops, assorted car tracking machines, fire extinguisher, conference tables and chairs, carpets proclaimed by Icon Auctioneers in execution of the Decree dated November 6, 2020. 4.That the honourable court be pleased to Order that motor vehicles registration numbers KCC 100N and KAT 273C, assorted office chairs, assorted office tables, assorted executive chairs, assorted office printers and photocopying machine, un-named motor vehicles, un- named motor cycles, water dispenser, laptops, assorted car tracking machines, fire extinguisher, conference tables and chairs, carpets proclaimed by Icon Auctioneers in execution of the Decree dated 6" November 2020 be released forthwith to the 1st and 2nd objector respectively.5. Thatthe costs of this Application be awarded to the 1st and 2nd objector.

3. The application is supported by the affidavits of FirozalI AkbaralI Kassam Jaffer and Salim Bhimji and is premised on the grounds that:-a.On November 6, 2020, the honorable court pursuant to an Application by the applicant recognized an International Arbitration Award in favor of the applicant as against the respondent for the cumulative sum of USD 1,494,174. 75b.In executing the foregoing decree, the Applicant herein instructed Messrs Icon Auctioneers who proceeded to the 1st objector’s leased premises namely Apartment C8, Temple View Apartment erected on L.R. NO. 209/180 on January 21, 2021 and proclaimed assorted office chairs, assorted office tables, assorted executive chairs, assorted office printers and photocopying machine, un-named motor vehicles, un-named motor cycles, water dispenser, laptops, assorted car tracking machines, fire extinguisher, conference tables and chairs carpets and any other items within the premises.c.The 1st objector is the joint registered owner of motor vehicle registration number KCC 100N alongside the financier SMP Capital Limited.d.The 1st objector is not aware of any other motor vehicles and motor cycles that have been proclaimed while the assorted office chairs, assorted office tables, assorted executive chairs, assorted office printers and photocopying machine, un-named motor vehicles, un-named motor cycles, water dispenser, laptops, assorted car tracking machines, fire extinguisher, conference tables and chairs, carpets attached by Icon Auctioneers all belong to the 1st objector and/or its employees as they are within its leased premises.e.The 2nd objector pursuant to a Sale Agreement dated June 10, 2020 acquired motor vehicle registration number KAT 273Cin lieu of salary arrears of Kshs 700,000/= owed to him by the Respondent.f.The 1st and 2nd objectors are separate legal persons from the respondent and since the recognition and enforcement dated November 6, 2020 was entered solely against the respondent, the objectors properties cannot be attached and sold in execution of the said Decree.g.Accordingly, it is in the interests of justice that the Proclamation Notice dated January 21, 2021 be lifted.h.The Application has been filed expeditiously.i.Such other grounds and reasons to be adduced at the hearing hereof.

4. The decree holder opposed the application through the replying affidavit of its Managing Director Mr. Ziad Otey who states that the objectors have colluded with the judgement debtor to hide their assets so as to frustrate the execution of the decree. He avers that the attached properties should be sold to satisfy the decree.

5. Parties canvassed the application by way of written submissions which I have considered. The main issue for determination is whether the objectors have made out a case for the lifting of the proclamation.

6. The threshold for lifting attachment, pursuant to objection proceedings, is set out under Order 22 rule 51(1) of the Civil Procedure Rulesas follows: -“Any person claiming to be entitled to or to have legal or equitable interest in the whole or part of any property attached in execution of a decree may at any time prior to payment out of the proceeds of the 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.

7. Order 22 Rule 52 of the Civil Procedure Rules. The same provides as follows:-“Upon receipt of a valid notice and application as provided under rule 51, the court may order a stay of the execution for not more than fourteen days and shall call upon the attaching creditor by notice in writing to intimate to the court and to all the parties in writing within seven days whether he proposes to proceed with the attachment and execution thereunder wholly or in part.”

8. Order 22 Rule 53 of theCivil Procedure Rules states that:-“Should the attaching creditor in pursuance of a notice issued under rule 52 either fail to reply to the court and the objector within the period prescribed by the notice or intimate in writing to the court and the objector within the period prescribed by such notice that he does not propose to proceed with the execution of the attachment of the whole or of a portion of the property subject to the attachment, the court shall make an order raising the attachment as to the whole or a portion of the property subject to the attachment in accordance with the intimation received from the attaching creditor and shall make such order as to costs as it shall deem fit.”

9. In Precast Portal StructuresvsKenya Pencil Company Limited (1993) eKLR the court held that:-“The burden is on the objector to prove and establish his right to have the attached property released from the attachment. On evidential material before the court, a release from attachment may be made if the court is satisfied:(1)That the property was not, when attached, held by the judgment-debtor for himself, or by some other person in trust for the judgment debtor; or(2)That the objector holds that property on his own account.

10. Similarly, in Arun vs C. Sharma Astana Raikundaha t/a Raikundaha & Co. Advocates & 4others [2014] the court stated as follows:-“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.”

11. The principle arising from the above cited cases is that the objector bears the burden to proving that he has a legal or equitable interest in the attached property. The 1st objector’s case was that it is a joint registered owner of the motor vehicle registration number KCC 100N alongside the financier SMP Capital Limited. The 1st objector further contended that the auctioneer proclaimed the goods from its leased premises.

12. The decree holder, on the other hand, argued that the objectors did not furnish sufficient evidence to show that they had purchased the proclaimed goods. The decree holder observed that the invoice produced by the objectors was not sufficient proof of purchase of the proclaimed furniture. The decree holder maintained that the goods were proclaimed from the judgement debtor’s business premises as its pin certificate and certificate of incorporation were affixed to the said premises.

13. I have considered the evidence produced by the objectors and I note that it is not disputed that the proclamation dated January 21, 2021contains assorted office furniture and equipment, to wit, chairs, tables, printers and photocopying machine, un-named motor vehicles, un- named motor cycles, water dispenser, laptops, car tracking machines, fire extinguisher, conference tables and carpets. The objectors produced an invoice dated June 4, 2018 from one J.M Office Furniture and a cash sale receipt dated June 18, 2018 from one Rizima technologies to demonstrate that they purchased the goods in question.

14. My finding is that the invoice and cash sale receipt do not specify the purchased items or indicate that they form part of the items listed in the proclamation. It is also trite that an invoice, per se, is not sufficient proof of purchase as the same must be supported by receipts (See Total Kenya Ltd formerly Caltex Oil (K) Ltd v Janevams Ltd(2015) eKLR).

15. The objectors’ case was that the judgement debtor was not carrying out its business within the 1st objectors premises and that the 1st objector merely kept the pin certificate and certificate of incorporation for the judgement debtor. The decree holder, however, observed that the auctioneers found the judgement debtor’s pin certificate and certificate of incorporation attached to the 1st objector’s premises.

16. I find the claim that the objector merely kept the judgment debtor’s documents to be peculiar and unconvincing because if indeed the allegation was true, then the objectors would have kept the documents elsewhere without necessarily affixing the same to the wall. This court takes judicial notice of the fact that the documents in question are ordinarily and by law required to be displayed on the business owner’s wall. It is my further finding that the objectors have not provided sufficient reasons to warrant the lifting the proclamation of the said office equipment.

17. With respect to ownership of the proclaimed motor vehicles, I note that the objectors provided a logbook and sale agreement as evidence/proof of ownership of vehicle registration number KCC 100N and KAT 273C respectively. The logbook shows that the 1st objector and the financier SMP Capital Limited are the registered owners of M/v Reg. No. KCC 100N. I am satisfied that the log is prima facieevidence of ownership of the said motor vehicle.

18. The decree holder argued that the sale agreement in respect to motor vehicle registration number KAT 273C was not sufficient proof of ownership. The 2nd objector, on its part, maintained that the judgement debtor sold the said motor vehicle to him in exchange for salary arrears amounting to Kshs 700,000. I have perused the sale agreement and I note that it was executed on 10th June 2020 before the attachment of the properties on 21st January 2021. I also note that the vehicle has already been transferred into the names of the 2nd objector. I am satisfied that the 2nd objector has demonstrated that the motor vehicle belongs to him. I find guidance in the decision in Abdalla Ali Hassan v Clement A. Ojiambo &others CA No 118 of 1997 where it was held as follows:-“Where the decree holder does not intimate his intention to proceed with the attachment the objector may request by way of letter for the attachment to be typed, but where he instead files an application, the court is obliged to investigate the title and make inferences from the material before her……Section 8 of the Traffic Act simply states that unless the contrary is proved, the person in whose name the motor vehicle is registered is deemed to be the owner, in other words, the fact of registration is only prima facie evidence of ownership and contrary facts can show otherwise, that registration was done to defeat the execution of the decree.”

19. In conclusion, I find that the objectors’ application is merited, albeit only in part. The application therefore succeeds but only with respect to the two motor vehicles registration numbers KAT 273C and KCC 100N. I accordingly order the lifting of the proclamation on motor vehicles KAT 273C and KCC 100N only and direct that the same be released the 1st and 2nd objectors.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 14TH DAY OF JULY 2022. W. A. OKWANYJUDGEIn the presence of: -Mr. Shah for the Objectors.No appearance for Decree Holder.No appearance Judgement Debtor.Court Assistant- Sylvia