[2022] KEHC 16383 (KLR)

Assets Recovery Agency v Otieno; Yugni Holdings Limited & another (Interested Parties); Simuong Group Company Limited (Proposed Interested Party) (Anti-corruption and Economic Crimes Miscellaneous 51 of 2019) [2022] KEHC 16383 (KLR) (Anti-Corruption and Economic Crimes) (15 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16383 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Anti-Corruption and Economic Crimes

Anti-corruption and Economic Crimes Miscellaneous 51 of 2019

EN Maina, J

December 15, 2022

Between

Assets Recovery Agency

Applicant

and

Jared Kiasa Otieno

Respondent

and

Yugni Holdings Limited

Interested Party

Cleanen Limited

Interested Party

and

Simuong Group Company Limited

Proposed Interested Party

Ruling

1. Vide a Chamber Summons Application dated March 18, 2022, Simuong Group Company Limited, the Proposed Interested Party seeks to be joined in these proceedings as Interested Party.

2. The Application is made under the provisions of Order 1 Rule 10(2) of the Civil Procedure Rules and Sections 1A,1B and 3A of the Civil Procedure Act and is based on the grounds stated on the face of it as well as on the supporting affidavit of Sounthorn Chanthavong sworn on March 18, 2022 and further affidavit sworn on October 24, 2022.

3. The Applicant avers that the funds used to purchase motor vehicle KCU 966C, Bentley Continental GT were falsely obtained from the Proposed Interested Party. That it is a victim of the funds which were obtained through false pretenses by the Respondent and other criminals in Kenya and as such, it is in the interest of justice that they be joined to these proceedings; that the joinder will result in the complete settlement of the issues in dispute and will prevent a likely course of proliferated litigation. That the proposed interested party will be prejudiced should the application be denied.

The Response 4. The Applicant/Respondent and the Respondent both opposed the Application vide the Replying Affidavit of CPL Sautet Jeremiah sworn on June 17, 2022 and the Respondent’s affidavit sworn on June 13, 2022.

5. The Applicant/Respondent contends that Application lacks merit for failing to meet the conditions of Section 93 of the Proceeds of Crime and Anti-Money Laundering Act; that the Proposed Interested Party has failed to demonstrate an identifiable legal stake in the forfeiture application to warrant joinder. That the Proposed Interested Party has not attached proof of swift transfer or loan agreement referred to in the affidavit; that the dispute between the Proposed Interested Party and the persons identified in the affidavit as Rose Omamo and Benson Mutola is a contractual dispute and the appropriate forum for its resolution is the Commercial Division of the High Court. They also contended that the supporting affidavit of Southorn Chavanthavong was sworn without authority or board resolution of the company contrary to the Civil Procedure Rules.

6. In its written submissions, the Applicant/Respondent contends that the Applicant has not met the threshold for joinder as he has not established an identifiable stake in the subject matter; that the loan agreement attached to the affidavit of the proposed interested party was between them and one Rose Adhiambo Omamo which has no nexus to this matter; they cited Karema & Another v Authority & 2 Others ; Joseph Karanja Kanyi t/a Kanyi J & Company Advocates (Interested Party) Constitutional Petition No 24 of 2015.

7. They submitted further that the court should apply the legal principle of avoidance as held by the Supreme Court in Communication Commission of Kenya & 5 others v Royal Media Services Ltd [2014] eKLR. That the alleged loan is purely a commercial issue which can be canvassed.

8. On his part, the Respondent opposed the Application on the grounds that the Proposed Interested Party lacks legal or beneficial interest in the subject matter, that is motor vehicle KCD 966L; that it has failed to show the nexus between the Respondent and them as the loan agreement referred to in the supporting affidavit was between one Rose Odhiambo Omamo and the Proposed Interested Party. That the Proposed Interested Party is a complainant in Criminal Case No 844 of 2019 and his rights will be adequately protected in the criminal case before the Magistrates Court. That the Application has improperly invoked the court’s jurisdiction and therefore fatally defective.

Analysis and determination 9. The Application, although made under Sections 1A,1B, 3A of the Civil Procedure Act and Order 1, Rule 10 of the Civil Procedure Rules, which law is not applicable to applications for joinder under POCAMLA, the same can be saved by Article 159(2)(d) of the Constitution, which provides that justice shall be administered without undue regard to procedural technicalities.

10. Interested Parties may be joined to forfeiture proceedings under Section 93 (1) of the Proceeds of Crime and Anti-Money Laundering Act which provides as follows:-“93. Protection of third parties(1)Where an application is made for a forfeiture order against property, a person who claims an interest in the property may apply to the High Court, before the forfeiture order is made and the court, if satisfied on a balance of probabilities—(a)that the person was not in any way involved in the commission of the offence; and(b)where the person acquired the interest during or after the commission of the offence, that he acquired the interest—(i)for sufficient consideration; and(ii)without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was, at the time he acquired it, tainted property, the court shall make an order declaring the nature, extent and value (at the time the order was made) of the person’s interest.”

11. The Black’s Law Dictionary, 9thEdition defines a “Necessary Party” as being:-“A party who being closely connected to a lawsuit should be included in the case if feasible but whose absence will not require dismissal of proceedings”

12. It is trite law that enjoinment is not as of right. The proposed interested party must in their application for joinder satisfy three key elements; prove their personal stake in the matter, the likely prejudice to be suffered in the event of non-joinder, and that their case or submissions are not a replication of what the other parties will be making before the court. These key considerations in joinder of interested parties were succinctly stated by the Supreme Court in Francis Karioko Muruatetu & another v Republic & 5 others [2016] eKLR as follows:“(37) From the foregoing legal provisions, and from the case law, the following elements emerge as applicable where a party seeks to be enjoined in proceedings as an interested party:One must move the Court by way of a formal application. Enjoinment is not as of right, but is at the discretion of the Court; hence, sufficient grounds must be laid before the Court, on the basis of the following elements:i.The personal interest or stake that the party has in the matter must be set out in the application. The interest must be clearly identifiable and must be proximate enough, to stand apart from anything that is merely peripheral.ii.The prejudice to be suffered by the intended interested party in case of non-joinder, must also be demonstrated to the satisfaction of the Court. It must also be clearly outlined and not something remote.iii.Lastly, a party must, in its application, set out the case and/or submissions it intends to make before the Court, and demonstrate the relevance of those submissions. It should also demonstrate that these submissions are not merely a replication of what the other parties will be making before the Court.”

13. I have considered the arguments by the proposed interested party and the oppositions thereto. The proposed interested party alleges that he entered into a loan agreement with a company named Global Freight Limited on February 25, 2019 and a second loan agreement with two other persons, Rose Omamo and Benson Mutola on February 25, 2019 who are not parties to these proceedings. That it is on the basis of these agreements that he sent funds to the law firm of Okundi & Company who subsequently paid Rose Omamo the said funds in cash. That it was through this process that he was defrauded by the Respondent, who was also a client of the law firm of Okundi & Company Advocates. That he sent USD 1,000,000 and USD 2,051,281 to the said Okundi & Company Advocates and it is suspected that the Respondent used part of the funds, received from the above parties, to purchase the motor vehicle KCU 966C which vehicle is registered in the name of the 1st Interested Party.

14. It is worth noting that despite this being a dispute arising from alleged loan agreements with Rose Omamo and Benson Mutola and Global Freight Limited, the proposed interested party has not filed a claim for recovery of the funds in the commercial division of the High Court or any other court, against the said parties and/or the Respondent since the occurrence of the dispute in 2019 to date. The Respondent has however been charged alongside 16 others in Nairobi Chief Magistrates Criminal Case No 844 of 2019 with the charges of, inter alia, conspiracy to defraud contrary to Section 317 of the Penal Code and obtaining money by false pretenses contrary to Section 313 of the Penal Code which is currently pending before the Magistrates court.

15. It is apparent that the proposed interested party’s claim is in the nature of a commercial dispute by Rose Omamo, against the parties to the loan agreements and the Respondents. Civil forfeiture proceedings investigate the unlawful origins of the impugned property and not the guilt or liability of the parties in respect of criminal charges or commercial disputes. This court held as much in Assets Recovery Agency v Mubadala Merchants Limited and First Cargo Logistics Limited and Others Civil Application No E023 of 2021. The court in invoking the principle of avoidance deferred the proceedings to the commercial division of the High Court and declined to issue any orders in respect of the rights of the Interested Party in the subject matter as there was a suit pending in the Commercial Division between him and the Respondent in the case. On the said principle of avoidance, this court relies further on the decision of the Supreme Court in Communication Commission of Kenya & 5 Others v Royal Media Services Limited where it held that:(257)Similarly the US Supreme Court has held that it would not decide a constitutional question which was properly before it, if there was also some other basis upon which the case could have been disposed of (Ashwander v Tennessee Valley Authority, 297 US 288, 347 (1936)).(258)From the foundation of principle well developed in the comparative practice, we hold that the 1st, 2nd and 3rd respondents’ claim in the High Court, regarding infringement of intellectual property rights, was a plain copyright- infringement claim, and it was not properly laid before that Court as a constitutional issue. This was, therefore, not a proper question falling to the jurisdiction of the Appellate Court.”

16. The proposed interested party in his further affidavit produced the loan agreements with Rose Omamo ID No xxxx, affidavits sworn by the said Omamo, an Authority to Disburse to the said Rose Omamo a document instructing Okundi to pay Rose Omamo and an acknowledgement from Rose Omamo receiving the money There is however no document showing their interest or ownership of the motor vehicle which is registered in the 1st Interested Party’s name. In any event, it is apparent that the disputes arising from the agreements are commercial in nature and the proper forum for such resolution is the commercial division of the High Court.

17. In order to determine the proposed interested party’s connection to the subject matter, this court would be called to delve into the commercial dispute arising from the loan agreements and the disputed issues pending before the criminal court. The parties to the loan agreements not being parties to these proceedings complicates the issues further. In the forfeiture proceedings, the court, guided by the pleadings and responses will be able to determine the whether or not the vehicle is a proceed of crime liable for forfeiture, which is the main issue in the proceedings. My so saying finds support in the case of Francis Karioko Muruatetu (supra) where the Supreme Court emphasized that:-(41)Having carefully considered all arguments, we are of the opinion that any party seeking to join proceedings in any capacity, must come to terms with the fact that the overriding interest or stake in any matter is that of the primary/principal parties’ before the Court. The determination of any matter will always have a direct effect on the primary/principal parties. Third parties admitted as interested parties may only be remotely or indirectly affected, but the primary impact is on the parties that first moved the Court. This is true, more so, in proceedings that were not commenced as Public Interest Litigation (PIL), like the proceedings now before us.(42)Therefore, in every case, whether some parties are enjoined as interested parties or not, the issues to be determined by the Court will always remain the issues as presented by the principal parties, or as framed by the Court from the pleadings and submissions of the principal parties. An interested party may not frame its own fresh issues, or introduce new issues for determination by the Court. One of the principles for admission of an interested party is that such a party must demonstrate that he/she has a stake in the matter before the Court. That stake cannot take the form of an altogether a new issue to be introduced before the Court.”

18. In my view, this application falls short of the three-pronged elements for joinder applications laid in the case of Francis Karioko Muruatetu (supra), as the proposed interested party has not shown a direct legal or beneficial interest in the subject matter. He has also not shown the manner in which the proceedings would be prejudicial to his claim in the Magistrates court or the Commercial Division of the High Court and to cap it all joinder would introduce a completely new issue to these proceedings.

19. Without delving into the allegations of fraud and interrogation of the loan agreements which in my view are issues falling under the jurisdiction of the criminal court and the commercial court respectively, and having found that the appropriate forum for the resolution of the proposed interested party’s claim lies elsewhere, the proposed interested party shall have an opportunity to ventilate his case against the parties to the contracts and/or the criminal proceedings at the appropriate forums.

20. In the premises, I find that the proposed Interested Party has not demonstrated that they are a necessary party to these proceedings and have further not proved that they will suffer any prejudice should this court refuse to grant the orders sought. The Application is accordingly dismissed.

SIGNED, DATED AND DELIVERED VIRTUALLY ON THIS 15TH DAY OF DECEMBER, 2022. E N MAINAJUDGE