[2022] KEHC 12930 (KLR)

Aexcel Auto Spares Limited v Siyama Company Limited; Al Buraq Limited (Objector) (Civil Case 663 of 2012) [2022] KEHC 12930 (KLR) (Commercial and Tax) (9 September 2022) (Ruling)

Neutral citation: [2022] KEHC 12930 (KLR)

Republic of Kenya

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

Commercial and Tax

Civil Case 663 of 2012

A Mabeya, J

September 9, 2022

Between

Aexcel Auto Spares Limited

Plaintiff

and

Siyama Company Limited

Defendant

and

Al Buraq Limited

Objector

Ruling

1. Before court is an application dated June 2, 2021. It was brought pursuant to order 22 rule 51(1) (2) and (3) and order 22 rule 51 of the Civil Procedure Rules.

2. It sought the raising of the warrants of attachment against the objector/applicant’s business premises on May 28, 2021 by Sure Auctioneers on plot No M.N./VT/2348 where the objector carries out metal fabrication business. It also sought the stay of execution of the warrant of attachments and sale as per the proclamation dated May 28, 2021.

3. The application was supported by the affidavit of Fatima Mohammed Ahmed dated June 2, 2021. The grounds for the application were that on May 28, 2021, the applicant’s goods were proclaimed. The applicant contended that it did not owe the decree holder any money and that the judgment debtor/defendant was not in any way related to it. The applicant thus prayed that there be a stay of execution of the proclamation.

4. The respondent opposed the application vide grounds of opposition dated July 19, 2021. It contended that the application was an abuse of court process as Abubakar Mohamed Ahmed, who was the defendant’s director (Siyama Company limited) and had sworn affidavits before this Court including the affidavit sworn on May 26, 2014, was a close relation to Fatuma Mohammed Ahmed and Leyla Mohammed Ahmed, the directors of the objector’s directors.

5. That the application was filed in bad faith by concealing material facts and that the copy of CR12 filed in court was addressed to Abubakar Mohamed Ahmed. That the applicant’s intention was to curtail the plaintiff from realizing the fruits of judgment made in its favor on May 8, 2019.

6. The applicant filed its submissions on October 12, 2021 wherein it submitted that the stay of execution was on grounds that the proclaimed properties did belonged to the objector. It also submitted that the plaintiff failed to comply with order 22 rule 51 and 52 of the Civil Procedure Rulesdespite being served with a notice of objection by the applicant on June 4, 2021.

7. That upon being served with the applicant’s notice of objection, the plaintiff ought to have intimated to the court whether or not it would be proceeding with the said attachment. That pursuant to order 22 rule 53, where an attaching creditor fails to give such response to the court and to the objector, the court has no other option but to raise the attachment.

8. The plaintiff filed its submissions on November 20, 2021. It submitted that judgment was entered against the defendant for Kshs 15,101,715. 98 and Kshs 46,500. 00/= together with interest from the date of filing suit till payment in full plus costs of the suit.

9. That the plaintiff obtained warrants of attachment with the help of Sure Auctioneers who were given notice by the court on May 21, 2021. That the said auctioneers went to the defendant’s premises on plot No M.N/VT/2348 in Mombasa to proclaim the assorted goods of the metal fabrication company.

10. It was submitted that under order 22 rule 51, the objector bore the burden to proof that he is entitled to or has a legal or equitable interest in the whole or part of any property attached in execution of the decree. That the objector had failed to discharge this burden. That it only provided CR12 records and business licence for the year 2021 from the county government and other documents. That those documents did not proof ownership of the goods that were attached which included office tables, computers, printers, office chairs, assorted metal rows and 10 units of tipping trailers.

11. That the documents relied on by the objector only showed the business of the objector and not ownership of the attached goods. The plaintiff quoted several authorities including Zingo Investment LimitedvMiema Enterprises Limited(2015) Eklr in support of its submissions.

12. The Court has considered the affidavits and the submissions of the parties. Order 22 rule 51 of the Civil Procedure Rulesprovides: -“Any person claiming to be entitled to or to have a legal or equitable interest in the whole of or part of any property attached in execution of a decree may at any time prior to payment out of the proceeds of 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.”

13. On the other hand, order 22 rule 52 of the Civil Procedure Rules provides: -“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.”

14. Order 22 rule 53 of theCivil Procedure Ruleson its part states: -“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.”

15. Further, order 22 rule 54 of the Civil Procedure Rules stipulates: -“If the attaching creditor proposes to proceed with the attachment pursuant to rule 52, the intimation shall be accompanied by a replying affidavit and the court shall proceed to hear the application expeditiously.”

16. The applicant/objector submitted that by virtue of the fact that the plaintiff did not issue its intention to proceed with the attachment, the proceedings were fatally defective and the court has no option but to raise the attachments. The plaintiffs answer was grounds of opposition dated July 19, 2021, though the proper document ought to have been a replying affidavit accompanying the notice. .

17. In Mwaniki Gitau & Co Advocate v Esther Wambui Njoroge; Kambusu Ole Pakine (objector) [2020] eKLR, the court held: -“However, it was mandatory for the notice under order 22 rule 52 of the Civil Procedure Rules to be issued by the court. This was not done. The applicant did not also file a notice of intention to proceed with the attachment as provided under order 22 rule 53 of the Civil Procedure Rules and it therefore appeared that the procedure of the objection proceedings was not completely adhered to. The above notwithstanding, this court deemed it fair and in the interests of justice not to dwell on the form over substance. A very substantive issue was raised by the objector and the court could not ignore the same. It therefore proceeded to address its mind to the merits or otherwise of the present application.”

18. In this regard, the court having not issued any notice to the plaintiff as the attaching creditor and the plaintiff therefore not having issued the requisite notice of intention to proceed, the procedure was defective. The parties cannot be penalized for it. The court will proceed to consider the merit of the application.

19. On the merits, objector pleaded that it did not owe the decree holder any money and that the judgment debtor/defendant was not related to it in any way. Further, in its submissions, it submitted the proclaimed properties did not belong to the attaching creditor but to the objector.

20. Though the objector claimed that it had not relation with the defendant, the plaintiff countered that Abubakar Mohamed Ahmed, who was the defendant’s director (Siyama Company Limited) and had sworn affidavits before this court including the affidavit sworn on May 26, 2014, was a close relation to the directors of the objector Fatuma Mohammed Ahmed and Leyla Mohammed Ahmed.

21. This court has seen attachment FMA-III produced by the objector. This was a CR12 indicating who the officials of the objector were. The same CR12 was addressed to Abubakar Mohamed Ahmed, the defendant’s director.

22. As regards the allegation that the attached properties belonged to the objector, the plaintiff submitted that it was upon the objector to proof ownership of that property. This court agrees with that submission. The court carefully went through the documents produced by the objector in its application. None of those documents established ownership of the attached goods. The applicant itself produced a list of the attached goods, but did not provide anything to allude to its ownership over the goods. Not even a copy of the lease to show that the premises from which the goods were attached from belonged to the objector.

23. Attachment FMA-VI reflected goods which had been imported by the objector. However, there was no connection between them and the attached goods. While the objector may not be related to the defendant, as they are different and distinct entities, the objector did not produce any evidence to prove its beneficial or legal right to the attached items.

24. In Zingo Investment LimitedvMiema Enterprises Limited(2015) Eklr, it was held: -“I am satisfied that the objection has no legal basis. I hold that there is no evidence to show that the 2nd objector owns the machinery that was attached by the plaintiff. I am satisfied beyond doubt that the goods attached are the property of the defendant disguised in a manner to defeat the claim of the plaintiff. It is my decision that the objection is based on distortion, deceit and deception with a view to obstruct the cause of justice.... Indeed, the assets of the defendant company is (sic) held by this dummy company called Zingo Investment Limited in order to defeat or derail the liabilities that had accrued to the company. The way Mr Muthara and his wife are changing and setting up companies is a clear reflection or manifestation of persons engaged in unlawful activities ... There are two vehicles i.e. KAL 644V and KAL 645 V which were proclaimed by the auctioneer. The two objectors have not shown any evidence to show the ownership of the two vehicles. As things stand, there is no valid objection against the proclamation done by the auctioneer.... I hold the attachment of the two vehicles to be valid hence the plaintiff is at liberty to proceed as it deems fit.”

25. In objection proceedings, an objector must produce evidence of the legal and/or equitable interest in the whole or part of any property attached in execution of decree (see, Akiba Bank Ltd v Jetha& Sons Ltd (2005) eKLR). Basically, the burden of proof is always on the objector to establish ownership. The objector failed to discharge this burden.

26. In this regard, I find that the application dated June 2, 2021 lacks merit and the same is dismissed with costs.It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 9TH DAY OF SEPTEMBER, 2022. MABEYA, FCIArbJUDGE