Tula General Contractors Ltd v The Registered Trustees of Regina Pacis University College (RPUC); Standard Chartered Bank Kenya Ltd (Garnishee); Assumption Sisters of Nairobi Registered Trustees (Interested Party) [2023] KEHC 24371 (KLR)

Tula General Contractors Ltd v The Registered Trustees of Regina Pacis University College (RPUC); Standard Chartered Bank Kenya Ltd (Garnishee); Assumption Sisters of Nairobi Registered Trustees (Interested Party) (Civil Suit 36 of 2015) [2023] KEHC 24371 (KLR) (Commercial and Tax) (24 October 2023) (Ruling)

Neutral citation: [2023] KEHC 24371 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Suit 36 of 2015

A Mabeya, J

October 24, 2023

Between

Tula General Contractors Ltd

Plaintiff

and

The Registered Trustees of Regina Pacis University College (RPUC)

Defendant

and

Standard Chartered Bank Kenya Ltd

Garnishee

and

Assumption Sisters of Nairobi Registered Trustees

Interested Party

Ruling

1. By its Motion on Notice dated 12/10/2023, the Interested Party applied for the stay of the attachment and Garnishee order against A/C No. 010-8033-611300 at Standard Chartered Bank Westlands Branch. The application was made under order 1Rule 8 (3) of the Civil Procedure Rules.

2. The grounds for the Motion were that; a Garnishee order had been issued garnishing its said account in execution of a decree of this court against the defendant/judgment debtor. That the Interested Party is registered under the Trustee Act Cap 167 of the Laws of Kenya. That the subject account belongs to it. That it does not hold any funds on behalf of the Judgment debtor.

3. It produced its certificate of Registration dated 17/6/2011, a letter from the bank showing the ownership of the subject account and a bank statement for the period 1/12/2022 and 31/12/2022.

4. The application was opposed by the decree holder vide the replying affidavit of Ibrahim Somo sworn on 19/10/2023. He swore that the judgment debtor and the Interested Party are one and the same entity. That in the case of William Charles Fryda vs Assumption Sisters of Nairobi Registered Trustees & Another [2017] eKLR, the Interested Party had admitted that it runs and operates the judgment debtor. That on 27/6/2023, the Judgment Debtor share a cheque No. 307250 with regard to the subject account and the same was prepared by the Interested Party. That the decretal sum has accrued interest and now stands at Kshs. 11,687,625/60.

5. What is before me are Garnishee proceedings. The application for Garnishee dated 25/9/2023 still remains unprosecuted. Pursuant to that application, the court Garnisheed the account specified in the application. Before the Garnishee could appear and answer the Summons, the Interested Party filed the present application stating that the account Garnisheed does not belong to the Judgment Debtor but itself. That it is a separate and independent entity from the Judgment Debtor. It sought the setting aside of the Garnishee Order.

6. The answer by the Decree Holder is that the Interested Party and the Judgment Debtor are one and the same. That a cheque had been issued by the Interested Party for the Judgment Debtor in the month of June, 2023 on the same bank account.

7. Garnishee Proceedings are proceedings where a Judgment Creditor seeks to establish that while a decree in his favor has not been satisfied, the Garnishee owes or is indebted to the Judgment Debtor. On the prima facie allegation, the court issues a garnishee order to attach the debt and calls upon the Garnishee to answer whether he/it owes the Judgment Debtor where it is shown that the Garnishee is indebted to the Judgment Debtor, the court makes the Garnishee order absolute whereby the Garnishee becomes liable to pay to the Judgment creditor the amount decreed.

8. In the present case, I have considered the submissions of the learned counsel and the authorities relied on.

9. It would seem that the decree holder is confusing garnishee proceedings with proceedings to lift corporate veil. It is clear to my mind that the judgment debtor and the Interested Party are related. However, they are not one and the same entity. If they were, nothing would have been easier than the decree holder to have sued the proceedings naming the Judgment Debtor by name and add AKA the interested party.

10. As already stated, Garnishee proceedings are concerned with finding whether a Garnishee owes a Judgment Debtor to be able to attach such debt for the benefit of the decree holder. In the case at hand, it does not matter that the Judgment Debtor and the Interested Party are related. The account with Standard Chartered Bank belong to an entity that is different from the Judgment Debtor. Both entities exist in their own right. Let the decree holder pierce the veil rather than achieve that goal by way of garnishee proceedings.

11. In view of the foregoing, I find the application dated 12/10/2023 to be meritorious and allow the same in terms of Prayer Nos 4 & 5 of the Motion. Since the Garnishee application dated 25/9/2023 was in respect of the Account which the Court has found to belong to a different entity than the Judgment Debtor, that application has not basis and is hereby struck out so as not to waste more time.It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 24TH DAY OF OCTOBER, 2023. A. MABEYA, FCI ArbJUDGE