[2022] KEHC 14612 (KLR)

Hasham Lalji Properties Limited & 3 others v Lalji & 2 others; Lalji (Applicant); Lalji & another (Respondent) (Civil Case E148 of 2019) [2022] KEHC 14612 (KLR) (Commercial and Tax) (13 October 2022) (Ruling)

Neutral citation: [2022] KEHC 14612 (KLR)

Republic of Kenya

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

Commercial and Tax

Civil Case E148 of 2019

WA Okwany, J

October 13, 2022

Between

Hasham Lalji Properties Limited

1st Plaintiff

Hasham Lalji and Sons Limited

2nd Plaintiff

Diamond Hasham Lalji

3rd Plaintiff

Ahmed Hasham LaI-Ji

4th Plaintiff

and

Sultan Hasham Lalji

1st Defendant

Bahadurali Hasham Lalji

2nd Defendant

Estate of Esmail H. Lalji Nurahi

3rd Defendant

and

Bahadurali Hasham Lalji

Applicant

and

Diamond Hasham Lalji

Respondent

Ahmed Hasham Lalji

Respondent

Ruling

1. The applicant herein, Bahadurali Hasham Lalji, filed the application dated 29th May 2020 seeking the following orders;-1. Spent.2. Pending the hearing and determination of this Application inter partes, and in order to ensure full and due compliance with the Orders of this Honourable Court issued on 10th February 2020, the 2nd and 3rd Plaintiffs be ordered to desist from collecting rent from the 1st and 2nd Plaintiff's properties and to allow SEDCO Consultants full access to the properties;3. This Honorable Court be pleased to find that the 2nd and 3rd Plaintiffs herein, Diamond Hasham Lalji and Ahmed Hasham Lalji are in contempt of Court for disobeying and/or willfully disregarding the Orders and Directions given herein on the 10th February 2020. 4.Accordingly, appropriate punishment be meted by this Honourable Court for the said contempt.5. Sequestration and/or attachment do issue for the properties of Diamond Hasham Laljiand Ahmed Hasham Lalji, and the same be attached for the amount to be determined pending the purging of their contempt of this Honourable Court in disobeying and/or willfully disregarding the Orders and Directions given herein on 10th February 2020. 6.That the court be pleased to substitute Grant Thornton with PSJ Consultants Limited as the Receiver Managers for the 1st and 2nd Plaintiffs herein.7. The Honourable Court be pleased to issue such other or further or consequential orders as may seem just and expedient.8. The costs of and occasioned by the contempt of Court proceedings herein be met by the Respondent and in default thereof execution to issue forthwith.

2. The application is brought under Section 5 of the Judicature Act, Sections 1A, 1B and 34 and 63 of the Civil Procedure Act, Order 40 rule 3 and 10 of the Civil Procedure Rules.

3. The application is supported by the affidavit of the 1st respondent’s attorney Mr. Alif Lalji Nurani and is based on the following grounds;-1. Thaton 10th February 2020, this Honourable Court made the following Orders;2. Thatin the 1st instance and pending the determination of this application and thereafter pending the determination of the suit, or dispute before the Arbitrator, Grant Thornton or any other company chosen by this court be appointed as Receiver Managers of the 1st and 2nd Plaintiffs to; Manage the 1st and 2nd Plaintiff's properties.3. ThatSedco Consultants Limited be appointed as Estate Agents to manage, maintain and collect rent accruing from the 1st and 2nd Plaintiffs properties listed herein above, and any other properties that may be owned by the 1st and 2nd Plaintiffs"4. Thatthe order was duly extracted and served upon the Respondent's Advocates who acknowledged service.5. Thatin blatant breach of and disobedience to this Honourable Court's Orders, the 3rd and 4th Plaintiffs have frustrated every effort by Sedco Consultants Limited to collect rent from the 1st and 2nd Plaintiffs' properties. In attempting to justify the disobedience of the court order, the 2nd and 3rd Plaintiff's Advocates wrote a letter dated 2nd and 20th April 2020 advising tenants not to comply with the court order for the reason that the Chief Justice had given a directive suspending the execution of court orders issued before the closure of courts.6. Thatthe above interpretation is totally deceptive. No such directive was issued by the Chief Justice and appeals by Advocates on record and SEDCO Consultants limited to the 2nd and 3rd Plaintiffs to adhere to the court order fell on deaf ears.7. Thatthe 2nd and 3rd Plaintiffs have been issuing invoices and collecting rent from the properties in blatant disobedience to the court order.8. Thatthe 2nd and 3rd Plaintiffs have continually made allegations against SEDCO Consultants Limited and even used the police to frustrate their agents. Unless the court order is varied, the 2nd and 3rd Plaintiffs have no authority whatsoever to take the law in their hands and overrule the court order on account of their convenience and perceived bias.9. Thatthe 2nd and 3rd Plaintiffs have frustrated the attempts by Grant Thornton to take over their role as Receiver Managers forcing them to withdraw from the assignment due to lack of cooperation and threats from the 2nd and 3rd Plaintiffs.10. ThatIt is therefore necessary to appoint a new Receiver Manager of which all the Defendants (the Majority Shareholders are unanimous on the appointment of PSJ Advisory Services.11. ThatIn view of the imminent danger of diversion of funds given the blatant acts of impunity of the 2nd and 3rd Plaintiffs and disobedience to the Orders of this Honourable Court, this matter is of extreme urgency and requires the prompt intervention of this Honourable Court in order to promote justice and fairness, restore the dignity of the Court and the administration of justice in accordance with the law.12. Thatif this Honourable Court does not intervene, there is a real risk and likelihood that the rent money shall be diverted and the dignity, honour and authority of this Honourable Court brought into disrepute.13. That a contempt of Court application is by its own very nature an urgent application since it concerns the promotion of the principles the rule of law, observance and respect of due process of law and the preservation of an effective and impartial system of justice in order to maintain public confidence in the administration of justice by the Court;14. In the circumstances, the 2nd and 3rd Plaintiff herein are in willful and blatant breach and contempt of the Orders of this Honourable Court and the Applicant has no other means of enforcing the said Orders except through the further assistance and intervention of this Honourable Court.15. It is therefore in the interests of Justice and for the purposes of upholding the dignity, authority and honour of this Honourable Court and promoting the fair administration of justice that the orders sought herein ought to be granted.

4. The application was canvassed by written submissions which I have considered. The main issue for determination is whether the applicant has made out a case for the orders sought.

5. The applicant’s case is that the contemnors disobeyed the court orders issued on 10th February 2020 thus frustrating the efforts by SEDCO consultants to collect rent from the 1st and 2nd respondents’ properties. The applicant averred that the contemnors instructed tenants occupying the suit properties not to comply with the court order on rent collection.

6. The respondents, on the other hand, contended that the order in question was issued in default of attendance and without disclosure of material facts. It was the respondent’s case that they were waiting for the Receiver to receive the company so that they could hand over the Company’s affairs to him. They argued that they are entitled to continue managing the Company since the court appointed receiver declined the appointment.

7. The law governing contempt of court in Kenya is provided for under Section 5 of the Judicature Act which provides that:-“(1). The High Court and the Court of Appeal shall have the same power to punish for contempt of court as is for the time being possessed by the High Court of justice in England, and that power shall extend to upholding the authority and dignity of the subordinate courts.”

8. The orders issued on 10th February 2020 were as follows:-“2. Thatin the 1st instance and pending the determination of this application and thereafter pending the determination of the suit, or dispute before the arbitrator, Grant Company or other company chosen by this court be appointed as receiver managers of the 1st and 2nd plaintiffs to manage all the 1st and 2nd plaintiff properties….3. ThatSedco consultants limited be appointed as estate Agents to manage, maintain and collect rent accruing from all the 1st and 2nd plaintiffs properties listed herein above, and any other properties that may be owned by the 1st and 2nd plaintiffs…”

9. A simple reading of the court’s order shows that rent collection was a task solely left to the estate agents, Sedco Consultants. I note that the cited contemnors did not deny the claim that they continued to collect rent on the properties but explained that that they instructed the tenants to pay rent to the Company’s bank account.

10. My considered view is that the mere fact that the appointed Receiver declined the appointment did not give the cited contemnors the liberty to disobey the clear court order on rent collection as the parties ought to have moved the court to appoint another receiver. In my considered view, the absence of the Receiver cannot affect the rent collection by the duly appointed estate managers and neither did it create an opportunity for the respondents to continue acting as managers.

11. In the case of Sam Nyamweya & Others vs Kenya Premier League Ltd and Others [2015] eKLR it was held that:-“contempt of court is constituted by conduct that denotes willful defiance of or disrespect towards the court or that wilfully challenges or affronts the authority of the court or the supremacy of the law, whether in civil or criminal proceedings.”

12. In view of the foregoing, I find that the respondents/alleged contemnors willfully disobeyed the court orders issued on 10th February 2020 and are therefore in contempt of the said orders.

13. On the prayer for the substitution of Grant Thorton with PSJ Consultants Limited as the Receiver Managers, I am of the view that the purpose of the Receiver is to preserve the assets that are the subject of the litigation.

14. In conclusion, I find merit in the instant application and I therefore allow it in the following terms:-a.That Notice to show cause is hereby issued against the Respondents to appear before this court to show cause why they should not be punished for failure to obey the orders of this court.b.PSJ Consultants Limited is hereby appointed as the receiver manager for the 1st and 2nd plaintiffc.Costs of the application be borne by the respondents.d.Mention on 17th November 2022 for the Notice to Show cause.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 13TH DAY OF OCTOBER, 2022. W. A. OKWANYJUDGEIn the presence of: -Mr. Bwire for Limo for alleged contemnorsMs Dave for 1st DefendantMs Dave for Obuya for 2nd Defendant/ApplicantCourt Assistant- Sylvia