[2023] KECA 1332 (KLR)

Assets Recovery Agency v Hamed (Civil Application E090 of 2023) [2023] KECA 1332 (KLR) (10 November 2023) (Ruling)

Neutral citation: [2023] KECA 1332 (KLR)

Republic of Kenya

In the Court of Appeal at Nairobi

Civil Application E090 of 2023

K M'Inoti, HA Omondi & GWN Macharia, JJA

November 10, 2023

Between

The Assets Recovery Agency

Appellant

and

Khalid Jameel Saeed Jameel Ahmad Hamed

Respondent

(An application for stay of execution of the ruling and order of the High Court at Nairobi (E. N. Maina, J.) delivered on 15th December, 2022 in Anti- Corruption and Economic Crimes Division in Civil Suit No. E017 of 2022 Anti-Corruption and Economic Crimes Civil Suit E017 of 2022 )

Ruling

1. The application before us is dated February 22, 2022, and is brought pursuant to sections 3, 3A and 3B of the Appellate Jurisdiction Act, the Judicature Act and rule 5(2)(b) of the Court of Appeal Rules, 2022.

2. The background to the application is that the applicant herein filed an application in the High Court dated May 17, 2022, seeking orders that funds amounting to USD 977,095, found in the possession of the respondent were proceeds of crime and liable to forfeiture to the government, and that the said funds be forfeited to the applicant on behalf of the government.

3. The respondent opposed the application, averring that he was the President and Chief Executive Officer (CEO) of the World Seas Shipping Services located and registered in the Kingdom of Bahrain, and that he had been contracted in the year 2021 by the Pakistani Navy to offer services along the African Coast for various countries, namely Kenya, Tanzania, Ghana, South Africa and Namibia; that on January 17, 2022 while in Kenya, he provided the services upon which he issued respective invoices; that he was accordingly paid a total of USD 1, 006,815. 97 in cash and a certificates of payment; that the money that was seized from him was the balance he remained with after paying his outgoings, including expenses to local agents; that he made various attempts to bank the cash, but he was unsuccessful; and that he was subsequently arrested at the airport and the money was confiscated. He asserted that the money proceeds of legitimate earnings and should be released to him.

4. The High Court in its judgment held that the applicant had the legal burden to prove that the funds seized from the respondent were proceeds of crime; that the respondent on his part had adduced documents showing that he had provided services for which the monies were paid; that he exhibited invoices, letters of acknowledgment, tax invoices and correspondences in this regard; that he had adduced an Affidavit showing that he tried to use the legal financial channel in transacting with the funds, but he did not succeed; and that on a balance of probability, he discharged the burden of proffering a plausible explanation of the source of the funds. The court dismissed the application and ordered that the seized funds be released to the respondent.

5. Aggrieved, the applicant filed the instant application, which is premised on the grounds on the face of it and an Affidavit sworn on even date by Corporal Isaac Nakitare, an investigator with the applicant. He states that the respondent is a Bahranian national and a holder of the Kingdom of Bahrain Passport number [particulars witheld]; that on January 28, 2022, he attempted to leave the country with funds amounting to USD 977,075 which he had not declared upon entry into Kenya nor provided any documentation to show their source; that there is eminent danger that the funds will be transferred out of the jurisdiction of the court; and that unless the orders sought are granted, the intended appeal will be rendered nugatory and an academic exercise.

6. The applicant further contends that there is reasonable suspicion that the respondent intended to launder the money so as to avoid financial system checks that are in place in the country. On this, reference is made to section 12(1) as read with the second schedule of the Proceeds of Crime and Anti- Money Laundering Act (POCAMLA) which requires that a person intending to convey a monetary instrument in excess of USD 10,000 into or out of Kenya, has to declare it to an authorized officer at the port of entry or exit.

7. It is contended that the intended appeal is arguable and has high chances of success; that there is imminent risk that the funds will be withdrawn and/or transferred out of the country; and that it is in public interest that the stay sought be granted so as to preserve the subject matter of the appeal. Finally, the applicant contends that no prejudice will be occasioned to the respondent if the orders sought are granted.

8. The respondent opposed the application vide a Replying Affidavit sworn on March 15, 2023 by Jared O. Magolo, an advocate who has the conduct of the matter on his behalf. He contends that the application is bad in law, defective and an abuse of the court process; that the applicant was ordered by the trial court to release the funds, but it blatantly ignored the orders; that as a result, he wrote letters to the applicant asking for compliance with the court orders, and again, there was no response; that this compelled him to file an application in the trial court seeking compliance with the orders, and that this is what prompted it (applicant) to move to this Court with the instant application; and that therefore, the application is an afterthought. He also contends that the failure to release the funds has occasioned immense hardship to him; and that furthermore, the appeal has little chances of success and it ought to be dismissed.

9. The application came up for hearing before us on a virtual platform on June 13, 2023. Learned counsel Ms. Gitiri appeared for the applicant while learned counsel Mr. Magolo appeared for the respondent. The application was canvassed by way of Written Submissions with limited oral highlights. The submissions for the applicant are dated March 6, 2023 and those of the respondent are dated March 15, 2023.

10. In brief, Ms. Gitiri submitted that the intended appeal was arguable as the applicant had demonstrated before the trial court the grounds upon which it believed that the funds seized were proceeds of crime. She placed reliance on the case of Joseph Gitahi Gachau & another vs Pioneer Holdings (A) Ltd & 2others [2009] eKLR where this Court held that an arguable appeal is not one that must necessarily succeed but one that ought to be argued fully before the Court. On why the appeal may be rendered nugatory if the orders sought are not granted, counsel submitted that the respondent is a foreigner who is not domiciled in Kenya, and that the funds are likely to be moved outside the Court’s jurisdiction, consequent to which the appeal will be a mere academic exercise. Further, that the funds are in cash, and if returned in the same form, it would be impossible to recover them if the appeal succeeds. She thus prayed that the application be allowed.

11. On enquiry from the Court, counsel admitted that despite the trial court making an order for the release of the funds to the respondent on December 15, 2022, the applicant was yet to comply with the orders. She justified this by stating that the applicant had already filed a Notice of Appeal, and that subsequently requested for certified copies of the proceedings which were only received on February 20, 2023. She added that the applicant did not apply for a stay of execution in the High Court because under section 97 of POCAMLA, a forfeiture order issued pursuant to section 92(1) of the Act automatically remains in force pending the outcome of any appeal against the decision concerned; and that the application herein was only made for purposes of good order.

12. Mr. Magolo submitted that POCAMLA or any other law does not authorize the applicant to disobey court orders, and as a result, the applicant ought not to benefit from this Court’s discretion. Counsel submitted that the application only seeks an order of stay of execution pending the hearing of this application and not the appeal and, thus, any order issued by the Court would only last until the end of the hearing of the application. It was his view that the intended appeal had no chance of success as the learned Judge was satisfied that the money was lawfully earned and paid in cash; and that there was no indication at all that there was any crime either committed or initiated with the money. He urged us to dismiss the application.

13. In rebuttal, Ms. Gitiri urged us to consider that the matter was of public interest, and that there was no undue delay on the part of the applicant in filing the record of appeal; and that therefore, the applicant is deserving of the Court’s exercise of its discretion in granting the orders sought.

14. We have considered the application, the response, the respective submissions, both written and oral and the law. The principles that guide the Court in consideration of an application of this nature are well established. An applicant must, firstly, demonstrate that the appeal, or intended appeal, is arguable, which is the same as saying that it is not frivolous. Secondly, the applicant must in addition show that the appeal would be rendered nugatory absent an order of stay of execution. See Stanley Kang’ethe Kinyanjui vs Tony Ketter & 5 others [2013] eKLR (Civil Application No Nai 31 of 2012).

15. With respect to the first limb, the applicant has filed a Memorandum of Appeal dated February 22, 2023 which raises six grounds of appeal. The pertinent ones are that it believes that the funds seized from the respondent are proceeds of crime and liable for forfeiture; and that the learned Judge disregarded the provisions of section 12(3) and (6) of the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA).

16. The above section provides as follows:12. Conveyance of monetary instruments to or from Kenya(3)A person who willfully fails to report the conveyance of monetary instruments into or out of Kenya, or materially misrepresents the amount of monetary instruments reported in accordance with the requirements of subsection (1) commits an offence.6)An authorised officer, other than Agency Director, shall immediately but not later than five days surrender monetary instruments seized under subsection (4) to the Agency Director in such manner as the Agency Director may direct.

17. From our understanding of the above provision, it makes it an offence for one to wilfully fail to report the conveyance of monetary instrument(s) into or out of Kenya, or to materially misrepresent the amount of monetary instrument(s) reported to a person authorised by the regulations for that purpose.

18. The rule of evidence is clear that,"He who alleges must prove”, and on our analysis of what transpired before the trial court, this maxim tilted in favour of the respondent. We say so because it was upon the applicant not only to prove that the respondent never declared his monetary instrument as per the law, which is not in dispute, but to further prove that the said monetary instrument was gained during the course of a criminal activity. It was not sufficient for the applicant to denounce the respondent’s documentary evidence with the comment that “they looked suspicious”. It was upon it to discharge the legal burden of proof laid upon it before shifting it to the respondent to prove the alternative.

19. This Court differently constituted held as follows in the case Mbuthia Macharia vs Annah Mutua &another [2017] eKLR when discussing the burden of proof:“(16)The legal burden is discharged by way of evidence, with the opposing party having a corresponding duty of adducing evidence in rebuttal. This constitutes evidential burden. Therefore, while both the legal and evidential burdens initially rested upon the appellant, the evidential burden may shift in the course of trial, depending on the evidence adduced. As the weight of evidence given by either side during the trial varies, so will the evidential burden shift to the party who would fail without further evidence? In this case, the incidence of both the legal and evidential burden was with the appellant.”

20. Flowing from the foregoing, it is clear to us that, prima facie, the respondent demonstrated that the funds that were seized from him were not proceeds of crime. Thus, without delving into the merits of the appeal, lest we embarrass the bench that will finally determine it, we believe we have said enough to demonstrate why the appeal is not arguable in the least.

21. Whereas we would rest our ruling at this juncture, as the twin principle must apply conjunctively, we think it is important to mention that the second limb too is premised on no sound basis. It is hinged on the argument that the respondent is a foreigner who is not domiciled in Kenya, and that the funds are likely to be moved outside the Court’s jurisdiction, rendering the appeal an academic exercise. It is further contended that the funds were in cash, and if returned in the same form, it would be impossible to recover them if the appeal succeeds. To us, this argument is not evidence of the respondent’s inability to refund the money. At the very least, he has stated that he is ready to offer security at any terms set by the Court.

22. However, the issue of security is moot, and we cannot delve into it as the first limb of the twin principle has not been met.

23. Before giving the final orders, we wish to address our minds to the conduct of the applicant in this matter. Judgment herein was rendered on December 15, 2022, by which the High Court ordered that the seized funds be released to the respondent forthwith. As at the time of hearing the application, which was six months down the line, the applicant was yet to comply with the trial court’s order. The explanation that was proffered by learned counsel, Ms. Gitiri cannot suffice. The High Court’s order was not ambiguous, uncertain or vague, and we find no justifiable reason for the applicant’s failure to comply with it. We reiterate that court orders are sacrosanct and must be obeyed. It is not an option accorded to a party to choose whether or not to comply with a court order. Court orders are a command, and a command has no choice but a call to strictly obey it. This Court in Shimmers Plaza Limited vs National Bank of Kenya Limited [2015] eKLR held that:“We reiterate here that court orders must be obeyed. Parties against whom such orders are made cannot be allowed to trash them with impunity. Obedience of Court orders is not optional, rather, it is mandatory and a person does not choose whether to obey a court order or not ”

24. Finally, Ms Gitiri argued that this matter was of public interest, to support the submission that we should nonetheless exercise our discretion in favour of the applicant. However, this position cannot just be wielded at the applicant’s convenience as the onerous duty of the Court is to ensure that the best interest of the parties in a dispute is protected. Without any court order allowing the applicant to withhold the funds from the respondent, the applicant is no doubt acting ultra vires, going beyond its powers and mandate, and in contravention of the law.

25. In conclusion, we find that the applicant has failed to establish the twin principles for consideration in an application under rule 5(2) (b) of this Court’s Rules for grant of an order of stay of execution. Accordingly, the applicant’s Motion is hereby dismissed with costs being in the appeal.

DATED AND DELIVERED AT NAIROBI THIS 10TH DAY OF NOVEMBER 2023. K. M’INOTI....................................JUDGE OF APPEALH. A. OMONDI....................................JUDGE OF APPEALG. W. NGENYE-MACHARIA....................................JUDGE OF APPEAL....................................I certify that this is a true copy of the originalSignedDEPUTY REGISTRAR