Veleo (K) Limited v Barclays Bank of Kenya Ltd [2022] KEHC 16457 (KLR)

Veleo (K) Limited v Barclays Bank of Kenya Ltd (Civil Case 1483 of 2000) [2022] KEHC 16457 (KLR) (Commercial and Tax) (6 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16457 (KLR)

Republic of Kenya

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

Commercial and Tax

Civil Case 1483 of 2000

DO Chepkwony, J

December 6, 2022

Between

Veleo (K) Limited

Plaintiff

and

Barclays Bank of Kenya Ltd

Defendant

Ruling

1. For determination is an application by way of a Notice of motion dated May 5, 2022 expressed in terms of Section 3(1) of the Judicature Act, Part 81. 1 of the English Civil Procedure Rules, Rules 81. 1 to 81. 10 and Sections 1A, 1B and 3A, all of the Civil Procedure Act. The application is filed by the Plaintiff/Decree Holder. The prayers in the application are that:-a.Spent;b.That this Honourable court be pleased to issue directions for the hearing and determination of the contempt proceedings, and particularly in the following manner;i.The Defendant/Judgment Debtor is directed to file a written statement on oath, sworn by a representative of the Defendant/Judgment debtor of the Rank of Director-Legal Services or of an equivalent role, in response to the present Notice of motion application (Contempt of court proceedings), within seven days of service of the subject of application and emanating orders;ii.Further to (a) above, the Defendant/Judgment debtor is directed/mandated to ensure the personal attendance of a representative of the Defendant/ Judgment debtor of the rank of Director-Legal services or of equivalent role, during the pendency of the contempt proceedings, or the hearing and determination of the present Notice of motion application;iii.Upon the direction of the Honourable court, the representative of the Defendant/Judgment debtor of the rank of Director-Legal Services or of an equivalent role shall be examined orally in court on the content of the sworn statement filed before the court, and matters touching on the contempt of court proceedings;iv.This Honourable court be pleased to convene a hearing of the present Notice of motion application, on a date to be afforded on a priority basis.c.That upon hearing and determination of the present Notice of Motion application, the Honourable court be pleased to enter a finding that the Defendant/Judgment debtor is in contempt of court by breach, ignorance, or failure to comply with the Orders of this Honourable Court (Havelock, J.) issued on December 20, 2012. d.That upon hearing and determination of the present Notice of motion application, and further upon entering a finding in the nature of Order (c) above, the Honourable Court be pleased to impose a punitive fine upon the Defendant/Judgment debtor assessed at Kshs 1,000,000. 00 for each year of default.e.That upon hearing and determination of the Notice of Motion application, the Honourable court be pleased to mandate the Defendant/Judgment debtor to purge the contempt of court within a reasonable period of time, and in any case within three (3) months of entering a finding of contempt of court as against the Defendant/Judgment debtor.f.That costs of the proceedings arising from the present Notice of motion application be awared to the Plaintiff/Decree Holder.

2. The application is premised on the grounds on itse face and further supported by the annexed affidavit of Paresh Kapoor, who describes himself as the Director of the Plaintiff/Decree Holder. According to the said deponent, it is deponed that:-a.that the Plaintiff/Decree Holder in its application is seeking a finding that the Defendant/Judgment debtor is in contempt of court for disregard or disobedience if the order issued by this Honourable court on December 20, 2012. b.This matter has since been determined vide a judgment delivered on December 20, 2012 and amongst the final orders was the discharge of the charge and a further charge registered as IR No 14046/20 and IR 14046/21 in relation to LR No 209/5253 by the Defendant and return of the Title documents to the Plaintiff.c.the Defendant/Judgment debtor was represented during the delivery of the judgment on December 20, 2012 and has been aware of the subsisting orders issued in the present matter.d.even after delivery of the Judgment, the Defendant/ Judgment debtor made an application for this Court to expound/demystify on the question of interest awarded in the Judgment. This goes further to show that the Defendant/Judgment debtor is fully aware of the Judgment and the Order of the Court.e.there has been no appeal preferred against the judgment and orders of the Court issued. He avers that to date in excess of nine years, the Defendant/Judgment debtor has not fully complied with the Orders of the Court and particularly on the discharge of the Charge and Further charge.f.the Plaintiff/Decree Holder has on multiple occasions attempted to secure the full compliance of the orders of the court and realize the fruits of its Judgment, to no success. It is his contention that the conduct of the Defendant/Judgment debtor is disobedient, disrespectful and contemptuous to this Honourable Court which conduct erodes the public confidence bestowed upon this Court and the remedies afforded by the Court.g.despite indulging the Defendant/Judgment debtor for a period of over nine years, the Plaintiff/Decree holder is constrained to approach the Honorable court to enforce the orders lawfully granted.h.that the Defendant’s/Judgment debtor’s conduct is inexcusable as the present action could have been avoided but the Defendant/Judgment debtor has chosen to neglect compliance with the Orders of the court.It is in the interest of justice that this Court comes out strongly to condemn the actions of the Defendant/Judgment debtor and shield the Plaintiff/Decree holder.

Response by Defendant/Judgment Debtor 3. In objection to the application, the Respondent filed a Replying Affidavit sworn by Michael Massawa dated June 22, 2022, in which he deposed that:-a.he is a Legal Counsel in the Legal & Compliance function at the Bank and in the course of his duties had access to the records kept by the Defendant in the normal course of business.b.not only is this application premature but no order or Penal Notice has been served upon the Bank or upon any of its officers, it lacks merit as can be discerned from the desposition.c.on December 20, 2012, this Court entered judgment in favour of the Plaintiff/Decree holder and granted prayer (iii) of the plaint and order the discharge of the charge and further charge being registered as IR No 14046/20 and IR No 14046/21 in relation to LR No 209/5352. The Defendant will execute Memoranda of complete satisfaction of the said charges being companies form No 246. The Defendant will also discharge the said debenture dated April 26, 1995. d.the Defendant has been unable to trace or locate the title in relation to LR No 209/5352 and as a result it is necessary to apply for a replacement title from the Ministry of lands.e.though ready and willing, the Defendant has been unable to discharge the encumbarence registered against the title to the said properties for the reasons that after the delivery of the Judgment, with a view of obtaining a replacement title and thereafter complying with the Judgment. Vide an email dated May 9, 2016, Messers Oraro & Company advocates advised on the documents required to facilitate the replacement of the title and Mr Rajesh Kapoor response was that he would avail the said documents.f.the Defendant has been unable to proceed with the application for issuance of a provisional title as the application must be supported by a statutory declaration by the registered owner, an affidavit by an officer of the Defendant explaining the circumstances leading to the loss of the title., a police abstract pursuant to a report of a missing title lodged by the registered owner of the suit property and an affidavit from one of the Directors of the Plaintiff Company.g.Lastly, the Defendant deposed that with the cooperation of the plaintiff, the Defendant in compliance with the judgment dated 20th December, 2012, is ready able and willing to advance the exercise of replacement of the title and the discharge of the charge and further charge registered as IR No 14046/20 and IR No 14046/21 in relation to LR No 209/5352.

4. Pursuant to directions of this court issued on July 4, 2022, parties agreed to canvass the application by way of written submissions. The applicant’s/Decree Holder’s written submissions are dated August 16, 2022 while the Defendant’s/Judgment Debtor’s written submissions are dated September 20, 2022.

Analysis and Determination 5. I have considered the applicant’s/Decree Holder’s application dated May 5, 2022, the affidavit in support and opposition thereof, and the written submissions filed by both parties alongside the cited authorities. The issue arising for determination before this Honourable Court is whether or not the applicant/ Decree Holder has made out a case to warrant the grant of the Orders being sought.

6. In an application for contempt proceedings, the primary question is whether the person against whom the orders are sought was served with the order alleged to have been disobeyed.

7. I have perused the record and in particular the annexures to the Notice of Motion application dated May 5, 2022 but there is no evidence on record to confirm that the order alleged to have been disobeyed was ever served upon the Defendant. In short, there is no return of service by a Process Server which has been filed in court in proof of service upon the Defendant/Judgment Debtor.

8. All the Plaintiff/Decree Holder has stated in the supporting affidavit is that the Defendant/Judgment debtor was represented during the delivery of the Judgment on December 20, 2012 and therefore has been aware of the subsisting orders issued in the matter. It should be noted that contempt of court proceedings are quasi criminal in nature and more has to be done by the applicant than what was done in this current application.

9. The law on contempt has been explained in several judicial decisions in our jurisprudence. For instance in the case of Samuel MN Mweru & Others vs National Land Commission & 2 Others(2020) eKLR, the Court stated that;“The applicable law as regards contempt of court existing before the enactment of the Contempt of Court Act was restated by the Court of Appeal in Christine Wangari Gachege vs Elizabeth Wanjiru Evans & 11 Others, [2014] eKLR. In that case the Court found that the English law on committal for contempt of court under Rule 81. 4 of the English Civil Procedure Rules, which deals with breach of judgment, order or undertakings, was applied by virtue of Section 5(1) of the Judicature Act which provided that:“The High Court and the Court of Appeal shall have the same power to punish for contempt of court as is for the time being possessed by the High Court of Justice in England, and that power shall extend to upholding the authority and dignity of subordinate courts.”This Section was repealed by Section 38 of the Contempt of Act of 2016, and as the said Act has since been declared invalid, the consequential effect in law is that it had no legal effect on, and therefore did not repeal Section 5 of the Judicature Act, which therefore continues to apply. In addition, the substance of the common law is still applicable under Section 3 of the Judicature Act.This Court is in this regard guided by the applicable English Law which is Part 81 of the English Civil Procedure Rules of 1998 as variously amended, and the requirement for personal service of court orders in contempt of Court proceedings is found in Rule 81. 8 of the English Civil Procedure Rules.”

10. From above authority, the interpretation I gather from the finding is that since the Act that repealed Section 5 of the Judicature Act was declared unconstitutional, it therefore follows that on matters contempt of court proceedings, we revert back to Section 5 of the Judicature Act which provides that;-“1)The High court and the Court of appeal shall have the same power to punish for contempt of court as is for the time being possessed by the High court of Justice in England, and such power shall extend to upholding the authority and dignity of subordinate courts.2)An order of the High court made by way of punishment for contempt of court shall be appealable as if it were a conviction and sentence made in the exercise of the ordinary original criminal jurisdiction of the High court.”

11. I am in agreement with the reasoning of the Court that the applicable law in this case is Section 5 of the Judicature Act and the provisions of English Civil Procedure Rules.

12. In the aforementioned decision of Samuel MN Mweru & Others vs National Land Commission & 2 Others (supra), the Court held that;“It is an established principle of law that in order to succeed in civil contempt proceedings, the applicant has to prove (i) the terms of the order, (ii) knowledge of these terms by the respondent, (iii) failure by the Respondent to comply with the terms of the order. Upon proof of these requirements the presence of wilfulness and bad faith on the part of the Respondent would normally be inferred, but the Respondent could rebut this inference by contrary proof on a balance of probabilities”.

13. The most comprehensive of the elements of civil contempt was succinctly stated by the learned authors of the Book “Contempt in Modern New Zealand” as follows:-“There are essentially four elements that must be proved to make the case for civil contempt. The applicant must prove to the required standard (in civil contempt cases which is higher than civil cases) that:-a.the terms of the order (or injunction or undertaking) were clear and unambiguous and were binding on the Defendant;b.the Defendant had knowledge of or proper notice of the terms of the order;c.the Defendant has acted in breach of the terms of the order; andd.the Defendant’s conduct was deliberate.

14. The court in the case ofSamwuel MN Mweru & Others vs National Land Commission, went on to state:-“…….two principles emerge. The first is liberty:-it is basic to our Constitution that a person should not be deprived of liberty, albeit only to constrain compliance with a court order, if reasonable doubt exists about the essentials. In this regard, I am not satisfied that willful disregard of the court order has been established.The second reason is coherence. It is practically difficult, and may be impossible, to disentangle the reasons why orders for committal for contempt are sought and why they are granted. In the end, whatever the applicant’s motive, the court commits a contempt respondent to jail for Rule of Law reasons; and this high public purpose should be pursued only in the absence of conclusive proof of the essential elements. The requisite elements must be established beyond reasonable doubt. In such a prosecution the alleged contemnor is plainly an ‘accused person.’Third, accidental or unintentional disobedience is not sufficient to justify one for holding guilty of contempt. It is further relevant to bear in mind the settled law of contempt that casual or accidental or unintentional acts of disobedience under the circumstances which negate any suggestion of contumacy, would amount to a contempt in theory and does not render the contemnor liable for punishment.It should be noted that developing the common law does not require the prosecution to lead evidence as to the accused’s state of mind or motive: once the three requisites mentioned ealier have been proved, in the absence of evidence raising a reasonable doubt as to whether the accused acted wilfully and mala fide, all the requisites of the offence will have been established.And as O’Regan J pointed out, the power to imprison for coercive and non-punitive purposes is ‘an extraordinary one’:-“‘The power to order summary imprisonment of a person in order to coerce that person to comply with a legal obligation is far reaching.There can be no doubt that indefinite detention for coercive purposes may involve a significant inroad upon personal liberty. Clearly it will constitute a breach of s 12 of the Constitution unless both the coercive purposes are valid and the procedures followed are fair. In this case there seems no doubt that the purpose is a legitimate one. It also seems necessary and proper, however, for the exercise of the power to be accompanied by a high standard of procedural fairness.’Contempt of court is not merely a mechanism for the enforcement of court orders. The jurisdiction of the superior courts to commit recalcitrant litigants for contempt of court when they fail or refuse to obey court orders has at its heart the very effectiveness and legitimacy of the judicial system. That, in turn, means that the court called upon to commit such a litigant for his or her contempt is not only dealing with the individual interest of the frustrated successful litigant but also, as importantly, acting as guardian of the public interest.”

15. From the above excerpt there are four elements that require to be proved beyond reasonable doubt by the applicant in an application seeking to cite an alleged contemnor for contempt of court. These are:-a.The terms of the order (or injunction or undertaking) were clear and unambiguous and were binding on the Defendant;b.The Defendant had knowledge of or proper notice of the terms of the order;c.The Defendant has acted in breach of the terms of the order; andd.The Defendant’s conduct was deliberate.

16. In the instant application before court the Plaintiff/Decree Holder is seeking to commit the Defendant/Judgment Debtor’s officers for contempt for disobeying the order of this Courtvidea Judgment of this Court delivered on December 20, 2012.

17. This Court finds that the Applicant/Decree Holder has not shown a prima facie case to warrant the Respondent to be held for contempt of Court and therefore the Plaintiff’s/Decree Holder’s application for contempt fails for that reason.

18. Also the court has relied on the cases of Clerk, Nairobi City County Assembly vs Speaker, Nairobi City County Assembly & Another; Orange Democratic Party & 4 Others (Interested Parties) (2019)eKLR, where the courts cited the case of Christine Wangari Gachege vs Elizabeth Wanjiru Evans & 11 Others (2019) eKLR, where the Court of Appeal held that:“An application under Rule 81. 4 (breach of judgment, order or undertaking) now referred to as “application notice” (as opposed to a notice of motion) is the relevant one for the application before us. It is made in the proceedings in which the judgment or order was made and must identify sepratelyand numerically, each alleged act of contempt and be supported by affidavit(s) containing all the evidence relied upon. The application notice and the affidavit or affidavits must be served personally on the Respondent unless the court dispenses with service if it considers it just to do so, or the court authorizes an alternative method or place of service.”

19. The Respondent’s counsel has submitted that efforts have been made to have the file reconstructed by the Applicant who has not cooperated so as to have the process expedited and concluded to enable the Respondent comply with the order of this Court.

20. Clearly, having read through the said Judgment and perused the court record, I find that there is no evidence that the Respondent/Judgment debtor was ever served with the Order or decree emanating from the Judgment of this court. There is no proof of service of the order upon the Respondent has been attached on the pleadings. The Applicant has only stated in its pleadings that the Respondent was represented during the delivery of judgment on December 20, 2012. In my considered view, the Respondent being represented in court is not a reason enough to support an application for contempt of court proceedings. It is difficult for this court to find the Defendant/Judgment Debtor has been in breach of the said orders since the Applicant has not met the conditions precedent for the grant of contempt of court orders against the Respondent.

21. It therefore follows that the Plaintiff’s/Decree Holder’s Notice of Motion application dated May 4, 2012 is devoid of merits and is therefore fatally defective and is hereby dismissed. However, I make no orders as to costs as the decree still remains unsettled.Orders accordingly

RULING DELIVERED VIRTUALLY, DATED AND SIGNED AT NAIROBI THIS 6THDAY OF DECEMBER , 2022. D. O. CHEPKWONYJUDGEIn the presence of:Mr. Mwangi counsel for Plaintiff/Decree Holder/ApplicantMr. Asino Kwaka counsel for Defendant/Judgment Debtor/RespondentCourt Assistant - Sakina