[2022] KEHC 16175 (KLR)

Brown (Suing on his own behalf and as Administrator of the Estate of Sharon Brown & Catherine Brown) v Castle Forest Lodge Limited & 2 others; Createc Consultancy (Objector); Dancy Auctioneers (Auctioneer) (Civil Suit 130 of 2012) [2022] KEHC 16175 (KLR) (8 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16175 (KLR)

Republic of Kenya

In the High Court at Nyeri

Civil Suit 130 of 2012

FN Muchemi, J

December 8, 2022

Between

Jeffrey Brown

Plaintiff

Suing on his own behalf and as Administrator of the Estate of Sharon Brown & Catherine Brown

and

Castle Forest Lodge Limited

1st Defendant

Kenya Wildlife Service

2nd Defendant

Kenya Forest Service

3rd Defendant

and

Createc Consultancy

Objector

and

Dancy Auctioneers

Auctioneer

Ruling

1. The applicant filed a notice of objection and application dated February 22, 2021 seeking for orders allowing the objection against attachment in execution of the judgement delivered in favour of the plaintiff/decree holder against the 1st defendant.

2. In opposition decree holder filed replying affidavits sworn on March 25, 2021 respectively. The judgement debtor supported the objector’s case in his affidavit sworn on March 5, 2021.

The Objector’s Case 3. It is the objector’s case that it is the creditor to the judgement debtor. The applicant contends that on January 3, 2018, it entered into a consultancy agreement with the judgment debtor for the purposes of improving the management skills of the judgment debtor’s employees and developing new activities. Consequent to the said agreement, the objector states that the judgment debtor and itself entered into a loan agreement dated February 14, 2019 and an agreement for lien of assets to which the judgment debtor accepted to transfer all of its assets to the objector as a lien for the payment of the services rendered then and in the future.

4. Upon the lapse of the said agreement for lien of assets, the objector contends that the parties entered into a further agreement for the extension of the terms in the initial agreement.

5. The objector further contends that although the judgment debtor uses the attached property, the same does not belong to it as it holds the same on behalf of the objector. Further, the applicant states that as per the schedule of assets in their possession, some of the moveable assets listed by the auctioneer in the proclamation are non-existent and hence their attachment is irregular.

6. The objector is apprehensive that should the moveable properties be attached and auctioned, they would suffer substantial loss and prejudice as the debt owed by the judgment debtor is yet to be realized. The objector further contends that they have lodged an objection to the said attachment and pray that the same be allowed.

The Judgment Debtor’s Case 7. The judgment debtor states that on January 3, 2018, the objector and itself entered into a consultancy agreement for purposes of improving the management skills of the judgment debtor’s employees and developing new activities. Consequent to the said agreement, the judgment debtor and the objector entered into a loan agreement dated February 14, 2019 and an agreement for lien of assets to which the judgment debtor accepted to transfer all its assets to the objector as a lien for the payment of the services rendered then and in future.

8. Upon the lapse of the said agreement for lien of assets, the judgment debtor and the objector entered into a further agreement for the extension of the terms in the initial agreement. The judgment debtor contends that though it uses the attached property, the same does not belong to it as it holds the same on behalf of the objector.

9. The judgment debtor avers that on February 18, 2021, Dancy Auctioneers under the instruction of the decree holder’s advocates proclaimed various items on its premises and the judgment debtor immediately informed the objector who filed a notice of objection and an application for stay of execution. The judgment debtor avers that they do not have attachable interest in the said property.

The Decree Holder’s Case 10. The decree holder states that on June 22, 2018, this court entered judgment in its favour against the judgment debtor whereby the judgment debtor moved the court of appeal seeking an order of stay of execution. The court allowed stay on condition that the judgment debtor deposits within forty five (45) days from the date of the ruling the sum of USD 150,000 (one hundred and fifty thousand dollars) or its equivalent in Kenya shillings in a joint account in the name of the advocates’ firms representing the parties. In default, the court held that the application for stay automatically stood dismissed.

11. The decree holder states that the judgment debtor’s hands are tainted as during the proceedings in the court of appeal, they did not mention that they had a creditor to whom they had ceded over the entirety of their assets and thus disenabling them from meeting their obligations. The decree holder states that had such information been revealed to the court at the earliest opportunity it would have rendered a different decision and made provisions for both the parties in the circumstances.

12. The decree holder avers that this amounts to material non-disclosure and calculated to defeat the ends of justice. The decree holder further contends that the advocates for the judgment debtor have never contacted his advocates to set up a joint interest earning account. As such, the nonchalance of the judgment debtor’s breach of conditional stay of execution is to be credited to the fact that the judgment debtor was well aware that it had by way of a series of pre-meditated agreements, secured itself from being exposed to execution. Therefore, the decree holder contends that the judgment debtor is using the objector to subvert the order issued by the court of appeal on December 4, 2020 and the ends of justice by stealing a match on the execution.

13. The decree holder argues that the judgment debtor has conspired with the objector and has even filed an affidavit stating that although it uses the attached property, the same belongs to the objector. The decree holder further argues that he has a legitimate expectation to expeditiously recover compensation as decreed by the court, yet the judgment debtor has opted to subvert this process by introducing the objector who was never a part of the court of appeal process.

14. The decree holder states that he finds it odd that whereas the judgment debtor in the Court of Appeal deposed that the sums awarded to him were extremely high, it has by virtue of the consultancy services offered by the objector, managed to rack up a significant debt which it has now conveniently secured through a purported surrender of its assets through the series sham agreements. Nevertheless, the decree holders avers that a lien is a right at common law for one to retain that which is rightfully and continuously in his possession belonging to another until the present and accrued claims of the person in possession are satisfied. Furthermore, a lien is a possessory right as opposed to a proprietary right and thus the said Agreement for lien of assets by the objector does not fall within this mould. In any event, the decree holder argues that a lien as envisaged in the impugned agreements does not constitute a recognizable form of security in Kenya as informed by the scope of the Moveable Property Security Rights Act 2018.

15. The decree holder states that in the unlikely event the court considers the series of agreements between the objector and judgment debtor, the same all point towards concealment, subversion and are ultimately a sham. With respect to the agreement for lien of assets signed by the parties in Amsterdam on 14th and February 15, 2019, for a lien to actually exist, the goods claimed for the benefit of clearing either present and accrued claims must be in possession of the supposed creditor. In the present circumstances, the agreement makes an exception not known in law, to retain both substantive and constructive possession with the debtor thus rendering the agreement a sham ab initio.

16. A further derivation from law is found at clause 6. 1 which grants the objector a right to sale of the debtor’s assets as an execution of his pledge without requiring a court order. A lien only secures a right to seize and hold an asset until the debtor fulfils its obligations but does not confer a right of sale as envisaged. Further, clause 4. 5 obligates the debtor to inform the objector of any events or circumstances, in its knowledge, that are important regarding the assets yet the judgment debtor knew that judgment was entered against it on June 22, 2018 and that imminent execution was upon it proceeded to enter into an agreement which ultimately ensured that its assets were removed from the reach of the court for the purposes of execution.

17. The judgment debtor further states that with respect to the extension of agreement for lien of assets, the said agreement is substantively void for want of proper execution/validation. The said agreement whilst signed by the parties on February 10, 2020, in Amsterdam, is supposedly witnessed by an advocate in Kerugoya as opposed to a requisite notary public in the country where the parties consented to and signed off on the terms. In the circumstances, the said lien agreement is not only void for breach of the most basic tenets prescribed under common law but also in breach of the provisions of the Moveable Property Assets Act2017.

18. The decree holder states that in the foregoing circumstances, the purported agreements whether cumulatively or individually cannot be said to wield a preferential right to the objector over those accorded to him by the court of appeal on December 4, 2020. Further, the decree holder argues that the objector is a foreign company whose company registration details are unknown. Save for the fact that it has been described as Createc Consultancy, it has no registered office in Kenya, a known agent and/or subsidiary within the court’s jurisdiction. The decree holder is apprehensive that if the objection proceedings fail, he shall have no recourse as to the costs of the proceedings.

19. The decree holder further argues that though the objector is a foreign company, the replying affidavit has been sworn by its managing director and has been witnessed within this jurisdiction as opposed to notarization in his country of residence. Indeed, no proof has been afforded to inform the court of his presence in Kenya, more so in Kerugoya, within the period of preparation and filing of the supporting affidavit.

20. The decree holder relies on order 26 rule 1 of the Civil Procedure Rulesand states that should the objector curtail the enjoyment of the fruits of the judgment, the court can order the objector to furnish security for costs should the objection proceedings fail. Furthermore, in the event the court orders for security of costs, it should commensurate the subject matter, or be in line with the Court of Appeal’s ruling of December 4, 2020, a sum of USD 150,000 (one hundred and fifty dollars). Moreover, this court ought to subject the objector to the terms issued by the Court of Appeal in light of the evident collusion between the objector and judgment debtor to subvert the ends of justice.

21. The objector filed a supplementary affidavit dated May 10, 2021 and states that when he swore the affidavit on February 22, 2021, he was in Kerugoya and he annexed his passport in support of his aerment. He further states that he is not a party to the suit herein and therefore has no liability to the judgment creditor. He avers that the objection proceedings only relate to the properties in the loan agreement and the agreement for lien of assets with the judgment debtor. The objector reiterates that he is the beneficial owner of the proclaimed properties that are in the loan agreement and agreement for lien of assets and therefore the properties are not available for attachment.

22. The objector avers that the terms of the loan agreement and the agreement for lien of assets were negotiated between the objector and judgment debtor and are clear. Further, he contends that the agreements are legal and enforceable under the law of contracts. Moreover, the objector avers that the allegations that he colluded with the judgment debtor to remove the assets from the reach of the court for the purpose of execution is untrue and far-fetched and he puts the judgment debtor to strict proof thereof.

23. The objector states that Createc Consultancy is duly registered and annexes a registration certificate to that effect. He further avers that the extension of agreement was executed in the presence of an advocate at Kerugoya and is therefore valid and legal.

24. The objector states that it is illogical for the judgment creditor to apply that he deposits a security of USD 150,000 while there is no decree for the said amount against him. The objector avers that he has no interest in the appeal or in the execution of the decree as long as it respects the assets he has a beneficial interest in.

25. The judgment debtor filed a further affidavit and states while applying for stay of execution in the Court of Appeal, he was only required to fulfil the tests of arguability and nugatory principle and thus the no mention of liens at the Court of Appeal is neither here nor there and the same does not fall within the aura of material non-disclosure. Being aggrieved with the conditional stay orders, the judgment debtor avers that he filed an application for review and served the judgment creditor.

26. The judgment debtor states that the loan agreement which subsequently informed the lien agreement was entered into way before the judgment was delivered by this court. Further, the same was not tainted with illegality and was voluntarily made. Therefore there was no ill intended premeditation on account of the judgment debtor.

27. The judgment debtor states that the allegation by the judgment debtor that he is using the objector to subvert the administration of justice and the execution process fails to appreciate the basic tenets of objector proceedings which entitles a party with a legal or equitable interest in a property to object to such execution. Furthermore, the judgment debtor states that he has filed his affidavit as a matter of its natural justice right to be heard and more so in recognition of the lien agreements executed with the objector. The exercise of its right cannot then be said to establish a conspiracy aimed at defeating the interests of the judgment creditor.

28. The judgment debtor avers that parties have the autonomy and freedom of contract to arrange their economic and financial operations as they wish to do. The judgment debtor further avers that they entered into agreements with the objector which are within the precincts of law and not tainted with any illegality or fraud. Moreover, the dispute of the lien on possession, fails to appreciate that a lien can take various forms and therefore not limited to the operation of Common Law. Nothing whatsoever in the Moveable Security Rights Act of 2017 denies parties to enter into lien agreements in securing their debts. The object of the Act was intended to promote and enhance access to credit using moveable assets. In fact, Section 4 (2)(e) of the Act expressly exempts liens from the application of the Actexcept as maybe otherwise provided.

29. The judgment debtors avers that the subject lien is a contractual lien and established within the terms of the objector and judgment debtor. The same is valid and no any vitiating factors have been established to render the lien as invalid and null. Furthermore, the lien being contractual, parties agreed that the judgment debtor would continue to use the assets but the objector was clothed with the contractual right of a right of sale. The said sale was not subject of a court order.

30. The judgment debtor states that its assets were at all material times free from any encumbrance and therefore nothing stopped it from its rightful dealing with them. The judgment entered against the judgment debtor is the subject of an appeal. The Court of Appeal in granting conditional orders of stay recognized that the judgment debtor has an arguable appeal. Moreover, the judgment debtor states that conspiracy and collusion are serious allegations which must be proved.

31. The judgment debtor states that the objector raises serious issues of law and fact which are arguable and thus it is in the interests of justice that the orders sought by the objector are granted.

32. Parties hereby disposed of the application by way of written submissions.

The Objector’s Submissions 33. The objector submits that it has an equitable interest in the proclaimed items. It further relies on the case of Mwaniki Gitau & Co Advocates v Esther Wambui Njoroge; Kambuse Ole Pakine (Objector)[2020] eKLR and submits that it has proved its equitable interest in the proclaimed assets. The objector further refers to the cases of Stanley Livindo v Raila Amollo Odinga & 2others [2013] eKLR; Electrowatts Limited v Country side Suppliers Limited & another; Mary W Kamau (objector) [2021] eKLR and Arun C Sharma vs Ashana Raikundalia t/a Raikundalia & Co Advocates & 4others [2014] eKLR to support its contention. The objector further submits that it has annexed a copy of the proclamation to its application that granted it beneficial and/or equitable rights to some assets belonging to the judgment debtor.

34. The objector argues that the judgment creditor has not adduced any evidence to challenge its equitable claim to attached assets. The objector contends that the judgment debtor has merely raised issues of form of the agreement between the objector and the judgment debtor, yet the judgment debtor has admitted the objector’s interests in the assets. The objector submits that the judgment creditor has not done enough and relies on the case of Kenyaririr & Associates Advocates vs Hans Jurgen Langer [2016] eKLR to support its contention.

The Judgment Debtors’ Submissions 35. The judgment debtor relies on order 22 rule 5 of the Civil Procedure Rules and the cases of Precast Portal Structures v Kenya Pencil Company Ltd & 2 others [1993] eKLR; Arun C Sharma v Ashana Raikundalia t/a A Raikundalia & Co Advocates & 4others [2014] eKLR; Chotabhai M Patel v Chaprabhi Patel [1958] EA 743 and David Muhenda & 3 others v Margaret Kamuje Succession Cause No 9 of 1999 and submits that the burden of proof lies with the objector in an application for objection proceedings. In line with the burden of proof, the judgment debtor contends that the objector has availed a lien agreement which was entered into before judgment was entered by this court. The judgment debtor further contends that the parties entered into the agreement voluntarily and therefore it was not tainted with any illegalities. The judgment debtor further contends that the was no ill intended premeditation and the judgment creditor has not provided any evidence to show that there was an intention to escape the judgment of this honourable court.

36. The judgment debtor submits that parties have the autonomy and freedom of contract to arrange their economic and financial operations as they so wish. As such, the judgment debtor contends that the arrangements and operations of the judgment debtor and the objector were made in full recognition of this principle. The same was done within the precincts of the law and therefore not tainted with any iota of illegality or fraud.

37. The judgment debtor further submits that the lien is a contractual lien and established within the terms of the judgment debtor and the objector. The judgment debtor argues that the same is valid and no any vitiating factors have been established to render the lien as invalid and null. Furthermore, parties agreed that the judgment debtor would continue to use the assets but the objector was clothed with the contractual right of a right of sale. The said sale was not subject of a court order.

38. The judgment debtor submits that its assets were at all material times free from any encumbrance and therefore nothing stopped the judgment debtor from its rightful dealings with them. In light of the foregoing, the judgment debtor submits that as at the date of the attachment there was a legal or equitable interest to the objector in the assets of the judgment debtor.

39. The judgment debtor argues that the judgment creditor has not provided any evidence in rebuttal other than a mere affidavit stating that the agreement was made to defeat justice and the execution process.

The Decree Holder’s Submissions 40. The decree holder relies on the case of Precast Portal Structures v Pencil Company Limited & 2 others [1993] eKLR and submits that the objector has not proved its case to the required threshold. In any event, it is the decree holder’s case that the judgment debtor and the objector entered into various agreements to deprive him the benefit of judgment issued in his favour. The decree holder further submits that at the time of entering the agreement for lien of assets on February 14, 2019, the judgment debtor had knowledge and notice of the decree holder’s interests of executed his judgment and costs. The decree holder further relies on clause 4. 5 of the agreement for lien of assets and submits that the agreement ensured that the judgment debtor’s assets were secured from the reach of the decree holder as well as the court.

41. The decree holder further submits that upon the lapse of the agreement for lien of assets, the judgment debtor entered into a further agreement dated February 10, 2020, with the objector which extended the terms of the initial agreement. Notably, this extension was to last until February 14, 2022.

42. The decree holder relies on the case of Prd Rigs Kenya Limited v County Government of Machakos [2019] eKLR and submits that a lien gives the lien holder the right to retain possession of the property until the lien obligation is satisfied; there is no right to sell the property and importantly, a lien does not create an interest in the property. The decree holder further contends that the impugned agreement for lien of assets claims to create a novel construction of law with respect to liens, that is, where the judgment debtor maintains the use of all the assets to continue running its business but the said assets allegedly remain the property of the objector. The decree holder contends such an agreement creates a notional lien and the court’s rationale in the above cited case clearly rebuts the existence or subsistence of a right to lien in such terms.

43. The decree holder argues that the objector has no possession of the proclaimed assets. The judgment debtor’s business is hinged entirely on the use of all the assets listed in the lien agreement or there would be no business otherwise, unless it is the judgment debtor’s assertion that it has transferred title by way of sale of its business and consequently the entirety of its assets and is in the event operating the business on behalf of the objector thus asserting constructive possession. The decree holder submits that there is no such evidence that has been tendered to support this.

44. The decree holder further submits that the objector cannot assert an equitable interest where such interest is originated and tainted by fraud. The timeline within which the Agreement for Lien of Assets was entered into leaves no doubt to the mind of the reasonable interpreter of facts that the judgment debtor having knowledge and notice of the decree holder’s interests fraudulently transferred its assets to evade any impending execution. As such, the decree holder argues that the objector’s equitable interest is extinguished through this act of sheer folly. The decree holder submits that the judgment debtor has been in the continuous possession, custody and control of the attached property, the conditions precedent of the right of lien. As such, the objector did not retain possession and has had no control (whether at the time of attachment or now) over any part of the attachable assets.

45. The decree holder submits that the consultancy agreement was to expire on February 14, 2022, and thus the date having lapsed there are no further agreements that exist and that all the assets have since reverted to the judgment debtor. In any event, the decree holder argues that no further agreement between the judgment debtor and the objector has been tendered to either evidence an encumbrance to the attachable assets in the execution proceedings.

The Law Whether the Objector is Entitled to the Orders Sought 46. It is trite law that an objector seeking to object to an attachment of goods should essentially prove ownership of the goods. Order 22 rule 51 of the Civil Procedure Rulesstipulates that one must claim to be entitled to or to have a legal or equitable interest in the attached goods. Order 22 rule 51 states:-(1)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 all the parties and to the decree holder of his objection to the attachment of such property.

47. These principles were enunciated in the case of Stephen Kiprotich Koech vs Edwin K Barchilei; Joel Sitienei (Objector) [2019] eKLR where the court held:-"The core of objection proceedings, the objector must adduce evidence to show that as the date of the attachment there was a legal or equitable interest in the property (s) attached. For this purpose, he may raise an objection on the ground, inter alia, that he has some beneficial interest in the property. A beneficial interest is as much as an interest within the meaning of the rules as a legal interest in the property attached. So, a mortgagor can bring an objection on the ground that his interest in the property, vix the equity of redemption cannot be attached and sold in execution of a decree against the mortgagee. See Precast Portal Structures vs Kenya Pencil Company Ltd & 2 others [1993] eKLR:-The burden is on the objector to prove and establish his right to have the attached property realized from the attachment. On the evidential material before the court, a release from attachment may be made if the court is satisfied:-a.That the property was not, when attached held by the judgment debtor for himself, or by some other person in trust for the judgment debtor; orb.That the objector holds that property on his own account."

48. Further in Arun C Sharma v Ashana Raikundalia t/a A Raikundalia & Co Advocates & 4 others [2014] eKLR the court held:-"The objector bears the burden of proving that he is entitled to or has a legal or equitable interest on the whole or part of the attached property. The key words are, entitled to or have a legal or equitable interest in the whole or part of the property. Has the objector proved it is entitled to or to have a legal or equitable interest in the whole or part of any property attached in execution of a decree?”

49. The objector’s case is that it entered into a consultancy agreement with the judgment debtor on January 3, 2018 for purposes of improving the management skills of the judgment debtor’s employees and developing new activities. Consequent to the said agreement, the judgment debtor and the objector entered into a loan agreement dated February 14, 2019 and agreement for lien of assets to which the judgment debtor accepted to transfer all of its assets to the objector as a lien for the payment of the services rendered then and in future. Upon the lapse of the said agreement for lien of assets, the judgment debtor and the objector entered into a further agreement for the extension of the terms in the initial agreement. To support its contentions, the objector has annexed the respective agreements as proof.

50. The decree holder contends that the judgment debtor and the objector entered into the said agreements in a bid to deprive him the benefit of judgment issued in his favour. He argues that by the time the parties were entering into the agreements the judgment debtor was well aware of decree holder’s interests. The decree holder further argues that in any event, a lien does not create an interest in property but it only gives a lienholder the right to possession of the property until the lien obligation is satisfied.

51. In the instant case, it is not in dispute that the judgment debtor owes the judgment creditor a sum of Kshs 86,961,521/- by virture of the judgment, costs and interest, in the instant suit. It is also not in dispute that the Court of Appeal granted stay of execution on December 4, 2020 on condition that the judgment debtor deposits within forty five (45) days from the date of the ruling the sum of USD 150,000/- or its equivalent in Kenya shillings in a joint account in the name of the parties advocates. In default, the application for stay automatically stood dismissed. The judgment debtor did not adhere to the conditions of stay of execution and the decree holder proceeded with the execution.

52. Upon attachment of goods, the objector has raised an objection arguing that it entered into an agreement with the judgment debtor on January 3, 2018 for purposes of improving the management skills of the judgment debtor’s employees and developing new activities. The parties thereafter entered into a loan agreement dated February 14, 2019 and an agreement for lien of Assets to which the judgment debtor accepted to transfer all of its assets to the objector as a lien for the payment of the services rendered then and in future. Upon the lapse of the said agreement for lien of assets, the objector and the judgment debtor further entered into an agreement for the extension of terms in the initial agreement. The objector argues that although the judgment debtor uses the property, the same does not belong to it as it holds the same on behalf of the objector. I have perused the annexed documents by the objector and noted that the objector has annexed the consultancy agreement dated January 3, 2018, the loan agreement dated February 14, 2019, the Agreement for Lien of Assets dated February 14, 2019 and an accompanying schedule of assets.

53. Notably, the schedule of assets clearly indicates that the assets belong to the judgment debtor. The agreement for lien stipulates that the objector has a lien over the assets of the judgment debtor until the judgment debtor makes good of their claim. The issue that arises is whether a lien creates ownership interest in the property.

54. The Halsbury’s Laws of England (4th Ed) para 502 at 221 describes a lien as follows:-A general lien and a particular lien are both categories of a legal lien and a lien is a right at common law in one man to retain that which is rightfully and continuously in his possession belonging to another until the present and accrued claims of the person in possession are satisfied.

55. In the case of Unibilt Kenya Ltd (Under Receivership) v Mukhi and Sons Ltd[2004] 2 EA 340 the court held:-A legal lien is a right of defence and not a right of action and saving special cases does not give any right to sell the thing retained…..The doctrine of election would apply if the filing of suit would substitute the defendant’s lien on the plaintiff’s cargo or if the filing of the suit would be inconsistent with the defendant’s lien on the cargo.

56. In light of the above, it is evident that a lien is a possessory right as opposed to a proprietary right. Both the objector and the judgment debtor have confirmed that there is an agreement for lien of assets of the judgment debtor’s. Further, the objector has not demonstrated any right of ownership over the assets. Moreover, both the judgment debtor and the objector have averred in their respective affidavits that the assets are in possession of the judgment debtor. Particularly it is alleged that although the judgment debtor uses the goods, the judgment debtor is holding the same for the objector. In actual fact, the possession of the goods is not under the objector which legally speaking means the lien is non-existent. This was stipulated in the case of Prd Rigs Kenya Limited vs County Government of Machakos [2019] eKLR where Odunga J (as he was then) cited with authority the case of Dhanji v Machani Dar-es-Salaam HCMCC No 34 of 1969 where Georges, CJ held:-The right conferred by Section 173 is a right of retention of things received by an agent and there can be no retention unless there has been possession in the first place. Therefore under Section 173, as under the English Law, a lien cannot exist unless the lien holder is in possession. A legal lien is lost if possession is lost, so that redelivery of the goods to the owner or his agent destroys the lien and when once made cannot be recalled, even if made by mistake; but if redelivery is induced by fraud or otherwise wrongfully obtained the lien revives if possession is recovered, even though the recovery is affected by a stratagem. There is no such thing as a notional lien and the court has no power to allow an applicant to part with possession while retaining his rights as a holder of a legal lien….It would appear that a lien can be based only on possession of the property over which it is claimed and the right to retain it. It confers no right to sell the property and if the owner takes possession by fraud the lien holder would have the right to retake possession and, if successful, could not be sued in detinue by the owner.

57. The law is crystal clear that a lien once created cannot be recalled even if made by mistake. The equitable interest in the lien is realized through possession of the asset and the lien will only be discharged once the interest for which it was created has been satisfied. The legal position is that once possession of the asset is lost, then lien is lost. In this matter, the objector has never taken possession of the assets in question for they are still in the physical possession of the judgement debtor. In the absence of possession, the objector has no lien under the law over the assets.

58. It is not in dispute that a lien by its nature does not confer a right to sell the asset. The objector and the judgement debtor cannot purport to confer upon themselves a right that is not donated by the law. This is because of the clause in their agreement that allows the objector have the assets transfer to him in which case, he will have a right to dispose of them. The agreement of the objector and the judgement debtor is nothing but a mockery of a lien.

59. The decree holder claims that the judgement debtor’s act and conduct in creating the so called lien is fraudulent in that he is hell-bent to avoid settling the decretal amount. Judgement in this case was delivered on June 22, 2018 whereas the judgement debtor filed an application for stay in the Court of Appeal. Orders of stay were granted on condition that the judgement debtor deposits USD 150,000/= which he has not deposited since December 4, 2020, when the ruling was delivered. In his evidence herein, the judgement debtor said he has applied for review of the said orders in the same court. This was not true in that the judgement creditor said he has never been served with any such application. The judgement debtor provided no evidence of service on the decree holder. Execution and stay there of are very important issues between the judgement debtor and the judgement creditor. As such, it can be rightly concluded that no application for review was filed or served. This does not reflect positively on the credibility of the judgement debtor.

60. The agreement for lien of assets was entered into on February 14, 2019 after the judgement in this case was delivered on June 12, 2018, The judgement debtor was therefore aware of his legal obligation to satisfy the decree in favour of the judgement creditor. The agreements on lien of assets on part of the judgement debtor was therefore fraudulent and designed to deprive the decree-holder his right of enjoyment of his judgement.

61. The first Lien agreement expired and was renewed on February 10, 2020 for a period of two years which period expired on February 14, 2022. Even assuming that at the time of the attachment of goods, there existed a valid lien between the parties which view I do not hold, the renewal agreement has already expired and no evidence of a second renewal has been produced. As we stand, no agreement of lien of assets exist for this court to consider herein. The supplementary affidavit of the objector made no mention of a renewal of the agreement. In my view, if such renewal agreement existed, the objector would have included that information in the said affidavit.

62. The decree holder urged the court to rely on the provisions of order 26 rule 1 which provides that an objector may be ordered to deposit security thus urging the court to order the objector to deposit USD 150,000/= as security for costs as the Court of Appeal had ordered the judgement debtor to do. However, owing to the facts of this application, I do not find grant of such an order appropriate in the circumstances.

63. The Lien agreements were purportedly executed in Amsterdam on the dates indicated therein but were witnessed by an advocate in Kerugoya in this country. The judgement debtor and the objector failed to explain how this happened which raises doubt on the authenticity of the said instruments. Although the objector attached a copy of his passport showing that he had travelled to Kenya during that period, the endorsement on the agreement that execution took place in Amsterdam was not explained.

64. In conclusion, it is my considered view that the objector has not demonstrated that he holds a valid lien over the assets proclaimed for execution to justify granting the orders sought.

65. I find no merit in the objection and application dated February 22, 2021. I hereby dismiss it with costs to the decree – holder. The judgement debtor will meet his costs of this application.

66. It is hereby so ordered.

DATED AND SIGNED AT NYERI THIS 8TH DAY OF DECEMBER, 2022. F MUCHEMIJUDGERuling delivered through video link this 8th day of December , 2022