Shiva Carriers Ltd v Synergy Industrial Credit Limited & another [2019] KEHC 1876 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT MOMBASA

CIVIL SUIT NO. 2 OF 2017

SHIVA CARRIERS LTD................................................................PLAINTIFF/APPLICANT

VERSUS

SYNERGY INDUSTRIAL CREDIT LIMITED..........1ST DEFENDANT/RESPONDENT

LEAKEY AUCTIONEERS............................................2ND DEFENDANT/RESPONDENT

RULING

1. The Plaintiff/Applicant   filed a Notice of Motion application dated 12th  July, 2018, brought under the provisions of Order 40 Rules 1 (a), 2  and 4 and Order 51 Rules 1 and 3 of the Civil Procedure Rules, 2010,  section 1A, 1B 3, 3A and 63 (c) and (e) of the Civil Procedure Act and  all other enabling provisions of the Law. In this application, the  Applicant seeks for t following orders:

(a) Spent;

(b) Spent;

(c) spent;

(d) Spent;

(e) Spent;

(f) That  the Respondents be and are hereby restrained from harassing, intimidating , threatening, the plaintiff/Applicant , their agents and servants to the effect that they will sell. Dispose   of the applicant’s property by way of a public auction or however   and/or dispose off, alienating, transferring and/or otherwise interfering with the plaintiff/Applicants   interest in the said property

( g) This application  be  heard inter-partes on such date an at such time as this honourabe court may direct.

(h) The costs of this application be awarded to the   Plaintiff/applicant.

2. The application is premised on the grounds on the face of it and  supporting affidavit of RAJEEV SONI, a General Manager of the  Plaintiff company sworn on 12th July, 2018 which are as follows;

(a) That  the Respondents actions are in direct an blatant breach   of , Section 15 of the Hire Purchase Act as well as Sections 20 (1),   61 (1)  (a) and (b), Sections 66 (1) (2)  of the customer   protection Act and more so further contravenes the terms of  the   consent entered into between the parties herein.

(b) That on or about the 31st of May 2017, the parties herein entered into a consent wherein the Applicant herein   acknowledged owing the 1st Defendant a cumulative sum of Kenya shillings Thirty Million three hundred and seventy seven thousand six Hundred and fifty Four (Ksh 30,377,654) as per the   statements of accounts as at 30th April, 2017 for agreement No .20116. 02/3299 served upon and acknowledged as received by the plaintiff.

(c) That  it was a further term of the consent that the said amount   would be rescheduled and an associate company of the plaintiff would issue post-dated cheques for the rescheduled twenty four (24)  monthly instalments.

(d) That  the said post-dated cheques were duly issued and the outstanding  balance paid off and/or reduced by a sum of Kenya   shillings Eleven million five hundred and fourteen thousand two   hundred and twenty six ( Ksh 11,514,226/= ) which payments have been duly acknowledged by the 1st Respondent.

(e) That  the plaintiff  and /or  is associate company always endeavored despite its  tight financial constrains to pay its monthly installments up to  and until February  this year when the plaintiff as well as its associate company being transport companies experienced some major financial crisis  due  to the commissioning of the Standard Gauge Railway.

(f) That  on or about the 2nd  of July 2018 the plaintiff was served   with a proclamation notice by the 2nd defendant  for and on behalf of the  1st defendant/respondent  calling for a total of Kenya shillings thirty million,Three hundred and seventy  seven   thousand six hundred and fifty  four (Ksh 30,377,654/=) being the full outstanding sum as  at the time when the consent was entered into and adopted and despite the said decretal amount having had  drastically been reduced by Kenya shillings  approximately twenty million ( Ksh 12,000,000/= thereby leaving a balance of approximately Kenya  shillings eighteen million ( Ksh 18,000,000/=).

(g) The actual monthly instalments due as a to the 15th of July shall be Kenya  shillings  seven million seven thousand and Forty two thousand  nine hundred and seven (Ksh 7,742,907/=)   being the outstanding sums/arrears inclusive of  interest  and penalties.

(h) That by the time the said instructions and proclamation notices were issued ninety percent (90%) of the facility /trucks had been fully paid for.

(l) That the plaintiff/Applicant that at all material times been willing to offset and settle the rightful amounts that may be due to the 1st Respondent in lieu of the arrears for the facility  granted by the 1st Defendant /Respondent a long as the same is  properly reconciled and agreed upon between the   plaintiff/Applicant and the 1st Defendant /Respondent.

(j) That  the plaintiff/applicant  is ready able and willing to offset   the entire outstanding  amount in lieu of the  monthly instalment   arrears within the next twenty one (21) days and is willing to give   an undertaking to that  effect.

3. Upon being served with the said application, the   Defendant/Respondent filed a replying affidavit sworn by JACOB  MBAE MEEME on 30th August, 2018 in which he deponed that:

(a) That the Plaintiff/Applicant  (hereinafter referred to as “the Applicant” requested the 1st Respondent vide  its letter dated 10th   February 2016 to reschedule the previous agreements they had entered into for credit facilities. The 1st Respondents offer letter dated 13th Februayr2016 was accepted and they entered into a rescheduling agreement No. 3411/02/16 dated 15th March 2016 which was duly executed. The said letter was annexed and marked as JMM1.

(b) That the Applicant herein had defaulted in payment and had   issued bad cheque in an attempt to pay its due monthly  instalments. That the Applicant’s account had started being in arrears since the month of august 2016 and in view of this the 1st   respondent had arrears and late   payments charges as per the agreement which had accumulated to Ksh 6,036,155/= as at 31st   December,  2016.

(c) That the Applicant filed the present suit on 17th January,2017   which was compromised  by a consent dated 31st May,2017;filed in court on 5th June,2017 and adopted as proceedings of the court   on even date he annexed a copy of the  consent thereto.

(d) That the said consent expressly provided among others under   paragraph (e ) that in the  event of any default the 1st defendant  shall be a liberty to take any measures including but not  limited   to recovery of the subject securities; by themselves or through their duly authorized agents and depose the same off through private treaty or a public auction.”

(e) That  the Applicant herein had defaulted in payment and had   issued bad cheques in an attempt to pay its due monthly    instilments. That  the Applicant’s  account begun to fall in arrears   in the  month of  July ,2017 only two months after the adoption of the consent and in view of the late payment, charges started accruing as provided in the  agreement  referred  and such arrears had accumulated  bringing the closing balance of Ksh 8,511,203. 00  at 31st July,2018. The annexed copies of the allegedly bad cheques.

(f) That the current month’s instalment  due is Ksh 13,860,180/-   making  the total outstanding on account of the Applicant as at 31st August,2018 Ksh 22,371,833/= and late charges continue  to   accrue until  payment in full of the sums due.

(g)  That the irrevocable undertaking dated 15th May 2017 by the   Applicant further was that in the  event of default and or any kind   of breach the 1st Respondent  had the express right to invoke the   scheduled hire purchase agreement or any  other previous agreement and immediately and  expressly reposes the security motor  vehicles and sell by either itself or by its agents to recover the outstanding payments, late payment charges, costs and charges incurred thereto.

(h) That several demands have been made by the 1st Respondent to the Applicant to regularize the account which were duly served   and acknowledged by the Applicant. Copies of the demand correspondences  attached thereto.

(I) That in view of the forgoing and the failure of the  Applicant to regularize its account which  had accumulated arrears the 1st  Respondent then  instructed its auctioneers the 2nd Defendant/ Respondent  ( hereinafter referred to as the “2nd Respondent  ) to   invoke the terms of the  undertaking and consent dated 15th May   2017 and 31st May, 2017 respectively and/or  the  agreement and   repossess al the motor vehicles of the Applicant with a view of recovering the  arrears that had greatly accumulated and the overall outstanding balance.

(j) That the applicant once again ran to this Honourable court with tainted hands and without disclosing material facts seeking to stay the execution process.

(k) That the applicant was granted a conditional order of stay of execution by justice P J Otieno dated 13th  July,2018 and at paragraph 3 thereof to wit; that the applicant pays all  instilments   due and to be due within 21 days from the said date. The  court order dated 13th July, 2018 was annexed thereto.

(l) That the Applicant’s account continued to be in arrears and its advocates were notified and were served with the statement  of accounts as at 31. 7.2018 meaning the applicant failed and/ refused to clear the arrears and cheques which fell due within the   21 days as ordered were banked and returned unpaid.

(m) That  indeed aware  that the 2nd Respondent repossessed motor vehicle registration No KBY 552K before  service of the order dated 6th  August, 2018 was effected and the 2nd  Respondent informed us that  they were unable to trace the remaining motor vehicles. That further the Applicant was being mischievous with an aim of frustrating us from recovering the outstanding amounts.

(n) That Mr  Rajeev at paragraph 11 of his supporting affidavit sworn on 2nd August, 2018 reiterates the applicant’s commitment   to clear all the outstanding arrears as per the conditional  order of court of 13th July,2018.

(o) That  the applicant did not honour the said court order as it only  make  a payment of Ksh 800,000 on 18th July 2018 leaving   the account in arrears to the tune of  Ksh 8,511,203/= as at 31st July, 2018.

(p) That the Applicant  herein  has without colour of right filed omnibus applications as a strategy of defeat the repossession process which it succeeded in by not disclosing  all material facts   to the court.

(q) That  further the Applicant has blatantly lied to this  Honourable court that the twelve (12) cheques from jagged Alliance Limited dated from 30th  august, 2018 to 30th July, 2019   each of  Ksh 608,628/= respectively referred to at paragraph 21 of the supporting affidavit of RAJEEV SONI sworn on 2nd  Augusut,2018 have been delivered to the 1st Respondent.

4. When the application dated 12th July, 2018 came up for hearing on   22nd October, 2018, the parties opted to dispose of the same via written  submissions. However, the Applicant did not  file  their written  submissions  be that as it may, the court will rely on what is deponed  in its supporting affidavit.

THE RESPONDENTS’ SUBMISSIONS.

5. M/s Kagu, learned counsel for the Respondent submitted that the   Applicant/Plaintiff has all along admitted its dishonestness to the 1st  Respondent and has on  numerous  occasions issued  bad cheques  which upon  encashment have been returned  unpaid. M/s Kagu also  states that  the Plaintiff/Applicant  has made  numerous payments  proposals among them, and email dated 5th January, 2016 and all  of them have never been honored.

6. According to the Respondent’s counsel, the parties  vide a consent  dated 31st May, 2017 filed in court on the 5th June, 2017 and adopted   as proceedings of the court in which the plaintiff/applicant  admitted  owing the Respondent  Ksh 30,377,654/- as  at 30th April, 2017. The  consent was annexed as annexture JMM-3 of the 1st Respondent’s  replying affidavit dated 30th August, 2018.

7. The Respondent’s counsel submits that at paragraph 11 of his  supporting affidavit sworn in  2nd  August, 2018, the Applicant admits  their accounts is in arrears and makes a commitment for regularization  within  21 days in fulfilment of the conditional order  of court issued on  the 13th July, 2018 counsel  for the Respondent  contends that  the 1st respondent has  dutifully sent the statement  of accounts to the  Applicant/Plaintiff informing them of the outstanding balances so that  the request by the Applicant/Plaintiff for audited statements of  accounts is just a smokescreen. She relied on the decision in the case   of KOILEKEN OLE KIPOLONKA ORUMOI VRS MELECH  ENGINERING & CONSTRUCTION LIMITED & 2 OTHERS (2015) to  drive this point home.

8. Further, the  Respondent counsel submitted that the  Applicant  /Plaintiff has blatantly lied to this Honourable court that the twelve  cheques  from its  associates Jagged Alliance dated 30th August,2018  to 30th July, 2019, each of Ksh 600,628/= have been delivered to the  1st Respondent and there being annexed was with the sole  intention of  deceiving this Honorable court. The 1st respondent annexed true  compiles of the bad cheques as  annexure JMM-4 including the  Applicant’s statement as at 31st July, 2018 . The counsel relied on the  case of KOILEKEN OLE KIPOLONKA ORUMI VRS MELECH  ENGINEERING & CONSTRUCTION LIMITED (Supra).

9. In conclusion the 1st Respondent’s counsel submitted that the  Applicant/Plaintiff’s application is a play to obtain another order with  tainted hands and without  full  disclosure, so that  it is therefore  unjust  and an abuse of the court process to prolong the suit when clearly there  is no  suit in the first place. She prayed that the application together  with the suit be dismissed with costs for the reasons she has advanced.

ANALYSIS AND DETERMINATION.

10. In determining the application dated 12th July, 2018, I have read  through the ground upon which it is premised, the replying affidavit  other pleadings (application) on record. I have also considered that  submissions by the Respondent, cited authorities and the relevant law  in regard to the issue(s) in question.

11.  I find that it is not in dispute that the Applicant/Plaintiff is in indebted  to the Respondent and that the debt account is in arrears.  It is also not  in dispute that the parties entered into a consent dated 31st May, 2017  wherein the Applicant/Plaintiff acknowledged  owing the 1st  Respondent Ksh 30,377,654/= as at 30th April, 2017 and rescheduled  the  facility for a period of twenty four ( 24)  months with a penalty  clause.

12. What is therefore left for determination is whether the Respondents  have beached the provisions of section 15 of the Hire Purchase Act as  well as sections 20 (1), 61 (1) (a) and (b) section 66 (1), (2) and (3) of  the Consumer Protection Act, hence contravened the terms of the  consent to warrant its adoption as and order of the court set aside.

13. In the case of HIRANI –VRS- KASSAM ( 1952) 19 EACA 131, the   court  with approval quoted the following passage from the book of  SECTION on JUDGMENTS AND ORDERS (7th EDITION) Vol. 1 page  124 where  the position on when a consent judgment or order can be  set aside.:

“Prima facie, any order made I the presence and with the consent of counsel  is binding on all parties to the proceedings or actions, and on those  claiming under them cannot be varied  or discharged unless   obtained by fraud or collusion, or by an  agreement  contrary to the  policy of  the court or if consent was given without sufficient material facts, as in   misapprehension or in ignorance of material facts, or in general for a reason would  enable the court  to set aside and agreement”.

14. In the case of FLORA WASIKE VRS DESTIMO WAMBOKO  (1982-1988) I KAR 625, HANCOX J A (as he then was) said in his  judgment at page 626:

“ It is  now  settled law that a consent  judgment or order   has   contractual effect and can only be set aside  on grounds which would justify setting a contract aside, or   if certain conditions remain  to be fulfilled, which are not carried out”.

15 The court in the case of BROOKE BOND LIEBIG VRS MALLYA  (1975) E.A 266 held;

“A consent judgment may only be set aside for fraud collision, for any other reason which would enable the court to set aside and agreement”.

16. At paragraph 3 of the supporting affidavit, the plaintiff avers that the  parties entered into a consent wherein they acknowledged owing the  1st Respondent a cumulative sum of Ksh 30,377,654/= as per the  statement of account as at 30th April, 2017 for Agreement No  2016/02/3299/. This same positions echoed by the plaintiff at  paragraph 6 of its replying affidavit dated 30th August, 2018.

17. I have looked at the consent dated 31st May, 2017, on record and find  that the same originated from the Plaintiff/Applicant’s advocate and  was signed by the 1st Respondents counsel. It is worth noting that the  Applicant/Plaintiff has not demonstrated to this court that they had no   authority to enter into the said consent and or that they were forced   to do so.

18. They have also not applied to have the same received and or set aside.  The Applicant/Plaintiff  have alleged that despite financial  challenges,  they  endeavored to pay their instalments  until  February, 2018 when  their  associate company experienced  financial constrains as a result  of the  launce of the Standard Gauge Railway. This assertion is in itself  and admission that the Applicant/Plaintiff is already in arrears.

19. At paragraph 11 of the Applicant/Plaintiff’s  supporting affidavit, the  Applicant /Plaintiff’s General manger avers that he is readily, able and  willing to offset the entire outstanding  amount in  lieu of the monthly  instalments arrears within the next 21 days and that he is willing to   give an undertaking  to that effect. This was however not done since the  Applicant/Plaintiff has not complied with the conditional order issued  by Hon Justice P.J. Otieno on the 13th July, 2018.

20. From the forgoing, it is clear that the Applicant/Plaintiff has  approached this court seeking orders of equity with tainted hands and  is therefore not a good candidate for the equitable remedy of and  injunction.

I find that the Respondent has the right to enforce the terms of the  consent dated 31st May 2017, filed and adopted as an order of this  Honourable court on 5th June, 2017.

21. In the upshot, equity will not suffer a wrong without a remedy. This  court cannot be a bystander while seated in the driving seat of justice.  It is therefore order that the 1st Respondent furnishes the Applicant/  Plaintiff with the full statement of account of the Applicant/Plaintiff’s  arrears within seven (7) days and the Respondent is at liberty to  enforce its rights under the consent dated 31st May, 2017 adopted as  and order of this court on 5th June, 2017.

The Applicant/Plaintiff application dated 12th July, 2018 is thereby  dismissed with costs to the Respondent.

It is so ordered.

Ruling delivered this 17th day of July, 2019.

LADY JUSTICE D. O. CHEPKWONY