[2022] KEHC 10173 (KLR)

CIC General Insurance Limited v Global Trucks Limited (Miscellaneous Civil Application 324 of 2018) [2022] KEHC 10173 (KLR) (Commercial and Tax) (8 July 2022) (Ruling)

Neutral citation: [2022] KEHC 10173 (KLR)

Republic of Kenya

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

Commercial and Tax

Miscellaneous Civil Application 324 of 2018

A Mshila, J

July 8, 2022

Between

CIC General Insurance Limited

Plaintiff

and

Global Trucks Limited

Defendant

Ruling

Background 1. The Notice of Motion dated 16th June 2021 was brought under Order 21 rule 12(2) of the Civil Procedure Rules seeking the following orders;a.A stay be issued to the warrants of attachment and the proclamation by the Plaintiff/ Respondent agents dated the 11th day of June, 2021, pending the hearing and determination of this Application inter-parties;b.An Order be issued allowing the Defendant/ Applicant herein to pay the decretal sum of Kenya Shillings Eleven Million Nine Hundred and Three Thousand and Two Hundred and Twenty-Four (11,903,224/-) in installments;c.Cost of this Application.

2. The Application was supported by the grounds on the face of it and by the sworn Affidavit of Moses Mavokowho stated that the parties herein through a mediation process consented that the Defendant/Applicant herein to pay the Plaintiff/Respondent a sum of Kenya Shillings Thirteen Million (13,000,000) being the final settlement to the suit.

3. The Defendant/Applicant moved the Court in March, 2021 and a consent was recorded allowing the Defendant/Applicant to settle the decretal sum within a period of twelve (12) months. At that time the Defendant/Applicant was certain that twelve (12) months would be sufficient time to settle the decretal sum.

4. The Defendant/Applicant proposes to pay a sum of Kenya Shillings Five Hundred Thousand (500, 000) monthly. The proposal given by the Defendant/ Applicant is a reasonable proposal considering the financial position it is at presently.

5. By conceding to the mediation the Defendant/Applicant has shown good faith and has already paid a substantial amount towards settlement of the decree. It is in the interest of justice that the orders herein be issued as the reverse will just kill the company an action that would not benefit any of the parties

6. The Respondent filed a Replying Affidavit dated 5th July 2021 and stated that the Defendant/Applicant blames its continued failure to comply with court orders and consents on the outbreak of the global pandemic, Covid-19. However, as opposed to the Defendant/Applicant’s claim, the failure on the part of the Defendant/Applicant to comply with the Orders and Consents began way before the outbreak of Covid-19.

7. Notably, the Defendant/Applicant ought to have cleared its debts by 21st February 2020, before the outbreak of Covid-19 in Kenya. Therefore, it is a dishonest claim for the Defendant/Applicant to blame its disobedience of the court orders on the outbreak of Covid-19.

8. The Respondent urged the Court to dismiss the instant Application for reasons that;a.the Application is a scheme to unfairly delay the execution of the Court Order;b.the conduct of the Defendant/Applicant, which is characterized by perfidy, dishonesty, deceit, untrustworthiness, unreliability, and treachery betrays it and estopps it from seeking the Orders sought;c.this is not the first time the Defendant/Applicant is making an Application for stay of execution. It has become the nature of the Defendant/Applicant to use the stay orders to delay execution of the decree;d.there is no guarantee that the Defendant/Applicant will comply with the Court orders in view of its earlier conduct in the matter;e.the Defendant/Applicant has approached the Court with unclean hands. Whoever comes to seek equity must come with clean hands and must also do equity;

9. The parties submitted orally in Court as follows.

Applicant’s Case 10. The Applicant submitted that from the Kshs.13,000,000 it has paid Kshs.1, 100,000 as a sign of good faith. In deed there was a consent recorded however, hardship was caused by the Covid-19 pandemic which caused the transport industry to suffer greatly.

11. Further, the Applicant submitted that Kshs.11, 000,000 is an enormous amount. If the debt is allowed to earn interest no prejudice will be suffered by the Decree Holder. The Applicant prayed that it be allowed to settle the decretal sum in instalments.

Respondent’s Case 12. The Respondent in response submitted that the Application was not made in good faith as the Applicant had concealed material facts to the Court. The Applicant was selling property and failed to disclose to the Court that there is a caveat placed by the court on 14th December 2018 vide the Ruling by Hon. Justice Angote.

13. The settlement agreement was adopted as a judgment of the Court on 21st May 2019 on condition that the Applicant would settle the amount in 120 days and the Applicant failed.

14. The post-dated cheques annexed by the Applicant have never been received by the Decree Holder. The Application herein is a way of frustrating the Decree Holder and should be dismissed with costs.

Issues For Determination 15. After considering the Application and the rival submissions the issue for determination is;a.Whether an order of stay should be issued on the warrants of attachment and the proclamation;b.Whether the Applicant should be granted leave to pay the decretal sum in the instalments proposed of Kshs.500,000.

Analysis 16. The Applicant’s Application is brought under the provisions of Order 21 Rule 12 of the Civil Procedure Rules which provides;12. (1)Where and in so far as a decree is for the payment of money, the court may for any sufficient reason at the time of passing the decree order that payment of the amount decreed shall be postponed or shall be made by instalments, with or without interest, notwithstanding anything contained in the contract under which the money is payable.(2)After passing of any such decree, the court may on the application of the judgment debtor and with the consent of the decree- holder or without the consent of the decree holder for sufficient cause shown, order that the payment of the amount decreed be postponed or be made by instalments on such terms as to the payment of interest, the attachment of the property of the judgment-debtor or the taking of security from him, or otherwise, as it thinks fit.

17. The above provisions of Order 21 Rule 12 (2) of the Civil Procedure Rules, give the court a wide discretion as to whether payment of the amount decreed be postponed or settled by way of installments. However, this discretion must be exercised in a judicial and not an arbitrary manner as was held in A. Rajabali Alidina v Remtulla Alidina & Anor. (1961) EA 565, Law JA where it was stated that: -“All commentators on the Civil Procedure Code agree that the court’s discretion to order payment of the decretal amount in installments is one which must be exercised in a judicial and not an arbitrary manner. The onus is on the defendant to show that he is entitled to indulgence under this rule.”

18. The applicable principles were set out in Botanics Kenya Ltd –Vs- Ensign Food (K) LTD (1959) as below;“a)The circumstances under which the debt was contracted(b)The conduct of the debtor(c)His financial position(d)His bona fides in offering to pay a fair proportion of the debt at once.”

19. In the case of Freight Forwarders Ltd v Elsek & Elsek (K) Ltd (2012) eKLR, the learned Judge narrowed the principles as regards to what amounts to ‘sufficient cause’ to include the following;“a.the debtor is unable to pay in lump sumb.the debtor can pay by reasonable monthly installmentsc.the application is made in utmost good faith”

20. The case of Keshvaji Jethabhai & Bros LimitedvSaleh Abdulla [1959] EA 260 laid down the principles that should guide the court in exercising its discretion:“a)Whilst creditors’ rights must be considered each case must be considered on its own merits and discretion exercised accordingly;b)The mere inability of a debtor to pay in full at once is not a sufficient reason for exercise of the discretion;c)The debtor should be required to show his bona fides by arranging prompt payment of a fair proportion;d)Hardship of the debtor might be a factor, but it is a question in each case whether some indulgence can fairly be given to the debtor without prejudicing the creditor.”

21. On 1st October 2019, the parties through a consent came to a settlement agreement that the Applicant was to pay to the Respondent an all-inclusive sum of Kshs.13,000,000. A sum of Kshs.300,000 was to be paid to the Respondent on or before the date the consent was adopted by Court. Thereafter, the Applicant was to pay Kshs.300,000 for three subsequent months to the Plaintiff/Respondent and the balance to be settled before the lapse of 120 days (from the date the consent was adopted in Court).

22. The Applicant failed to comply with the terms of the Consent Settlement Agreement; consequently, the Respondent applied for Execution of the decree. On 9th March 2020, the Applicant filed a Notice of Motion seeking stay of the execution and promised to dispose off some of its assets to clear the debt and also attached cheques. The Respondent stated that the cheques however were never forwarded to it. The Application was compromised based on that. The Applicant was to pay the balance of Kshs.12, 702,450 within 12 months from 12th March 2020. The Applicant failed to settle the debt after the lapse of the 12 months.

23. The Applicant has argued that its failure to comply with court orders and consents is because of the outbreak of the global pandemic, Covid-19. In addition, that from the Kshs.13, 000, 000 it has paid Kshs.1, 100,000 as a sign of good faith.

24. Guided by the legal principles in the above cases, the Court has considered the circumstances of this case and finds that basically all that the Applicant states is that the amount he is supposed to pay is enormous, and that he blames the Covid-19 pandemic for his failure to comply. The Applicant now avers that it undertakes to pay a sum of Kenya Shillings Five Hundred Thousand (500, 000) monthly.

25. The Respondent on the other hand, submitted that, the Application was not made in good faith as the Applicant concealed material facts to the Court. The post-dated cheques annexed by the Applicant have never been received by the Decree Holder. The Application herein is a way of frustrating the Decree Holder

26. The Respondent is entitled to the fruits of its judgment and notably, the delay in payment by the Applicant is frustrating the Respondent. The default by the Applicant started in 2019 and while it is understandable that the Covid-19 pandemic contributed to the delay; but the Applicant cannot continue using the pandemic as an excuse more than a year thereafter.

27. Nevertheless, this court has taken cognizance of the factor of the hardship caused by the pandemic and the slow economic recovery process and will grant the applicant for the last time provided as a show his bona fides by arranging prompt payment of a fair proportion of the debt.

Findings and Determination 28. In light of the forgoing this court makes the following findings and determinationsi.The application for stay of execution is found to have merit and it is hereby allowed on the following conditions;ii.The Applicant to pay 25% of the outstanding decretal sum as at the date of this ruling (approximately Kshs.3,000,000/-) to the Respondent within 90 days from the date hereof;iii.Thereafter the Applicant to continue repaying the balance in monthly instalments of Ksh.500, 000/- with effect from 31st October, 2022; and thereafter on the last day of each and every succeeding month until payment in full;iv.In default of any one instalment the respondent shall be at liberty to proceed to execution of the decree;v.The applicant shall bear the costs of this application.Orders Accordingly.

DATED, SIGNED AND DELIVERED ELECTRONICALLY AT NAIROBI THIS 8THDAY OF JULY, 2022. HON. A. MSHILAJUDGEIn the presence of;Kwamboka holding brief for Karanja for the decree holderNo appearance for the Judgment debtorJasmin--------------------------Court Assistant