[2025] KEHC 1760 (KLR)

Hassanali & another v Molnar & Greiner Limited & another (Civil Appeal E015 of 2024) [2025] KEHC 1760 (KLR) (Civ) (17 February 2025) (Judgment)

Neutral citation: [2025] KEHC 1760 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E015 of 2024

AM Muteti, J

February 17, 2025

Between

Moiz Taherali Hassanali

1st Appellant

Raziyah alias Ger Ismail Jee Ezii

2nd Appellant

and

Rocolta Molnar & Greiner Limited

1st Respondent

Royal Trading Company Limited

2nd Respondent

(Being an Appeal from the Ruling and Order of the Chief Magistrate Lucy Ambasi (Mrs) delivered and made on 22nd December 2023)

Judgment

Introduction 1. The appeal in this matter arises out of a Ruling and an Order made on 22nd December 2023 by the learned Honorable Lucy Ambasi CM in Milimani Commercial Courts Civil Suit Number 8262 0f 2016.

2. The appellants have appealed have appealed against the Ruling on the following grounds that: -a.The Honourable Magistrate erred in law in issuing summary and final orders on a mention date;b.The Honorable Magistrate erred in law in failing to hear the Appellants on merit in an unsubstantiated allegation as to failure to comply with Orders that had neither been identified and/or served upon them;c.The Honorable Court erred in exercising jurisdiction as against Legal Representatives of an estate of a deceased director of a company when there had been no orders;i.Objecting to the confirmation of the Grant;ii.Lifting the corporate veil of the judgement debtor; andiii.Finding the Legal Administrators who were not parties to the suit, liable for compliance with Orders issued in the matter without anyorders as to their joinder.d.The Honorable Magistrate erred in deeming the Application dated 14th December 2023 as unopposed when the same had not been served upon the Defendant therein to enable compliance with orders issued when the same was heard ex-parte by the Trial Court;e.The Honorable Magistrate erred in calling for a file that was not listed before her and proceeding to deal with the same when there was already a date issued by the Trial Court with respect to contested matters therein;f.The Honorable Magistrate exhibited bias and malice in the way she conducted herself when;(i)She declined to afford a party who had an issue with his connectivity an opportunity to be heard;(ii)Failed to interrogate the issue of service before issuing arrest orders against a non-party on the last day of or on the eve of Christmas Holidays(iii)Choose when and who was audible during the session that was meant for issuance of directions on an application as opposed to hearing the same;(iv)Retired to consider and deliver a ruling on an application that had not been prosecuted by the Applicant,(v)She placed a non-existent and illegal obligation upon the Appellant to settle a debt owing under a Decree issued against a separate party, the 2nd Respondent, and(vii)Proceeded to sign warrants of arrest of the Applicants that did not conform with the orders sought by the 1st Respondent and thus constituting the Appellants as directors of the 2nd Respondent a fact not pleaded, proved and/or demonstrated before her when the matter merely came up for mention.

3. The Appellants at the hearing of the appeal were represented by Ms Nyabuto who indicated to the court that they had filed submissions dated the 10th June 2034 and a supplementary set of submission dated 13th June 2024 which they sought to rely on in arguing the appeal.

4. Ms Muigai appeared for the 1st respondent while Ms Murithi went on record for the 2nd respondent.

5. The respondents Counsel equally indicated to the court that they had similarly filed their respective submissions and as for Ms. Murithi she did not intend to highlight.

6. The 2nd Respondents counsel effectively left the matter in the hands of the court to determine since in her view the matter revolved around the issue of service which she considered a fairly straightforward matter.

Appellants Case 7. Ms Nyambuto in her brief highlighting submitted that in support of her appeal dated the 18th April 2024, the appellant wished to rely on all the grounds raised in the memorandum of appeal set out above as well as the two sets of submissions which counsel urged the court to consider.

8. According to Ms Nyabuto Judgement and decree in the lower court was issued and dated 24th /7/2020 but the decree was dated the 13/11/2020.

9. The appellant submitted that the decree was against the 2nd respondent in this appeal thus the 1st appellant was under no obligation to settle the same since the 2nd Respondent is a corporate entity.

10. The appellant further submitted that following the decree the 1st respondent instituted post judgment proceedings in the trial court for purposes of executing the decree. According to the appellants those proceedings are still pending in the lower court and the judgement debtor is still the 2nd respondent.

11. There has been no order against the appellant holding them liable to settle that decree personally since those proceedings are still pending.

12. Ms Nyabuto went on to state that the 1st respondent filed an application dated 14/12/2023 before the lower court seeking the arrest of the appellants for alleged failure to comply with the court’s orders.

13. According to counsel the the orders were not specified in the application and that the orders which were allegedly disobeyed were not filed as an annexture in the supporting affidavit.

14. 14 Ms Nyabuto submitted that Hon. Wendy Micheni CM(as she then was) on 15th 12/20/23 made an order directing that that specific application be mentioned on 22/12/2023 for discretions.

15. However, according to Counsel for the appellant on 22nd 12/20/23 when the application was mentioned before the duty court presided over by Honourable Lucy Ambasi, the Honourable court proceeded to determine that application summarily on the mentioned date by issuing orders for the arrest of the appellants.

16. The Warrants of arrest were purportedly issued in execution of the decree. It is the ruling by Honourable Lucy Ambasi that is the subject of this appeal.

17. The appellants’ counsel was clear in her mind that the present appeal had nothing to do with an appeal against the execution of the decree. That issue according to counsel was still live before the subordinate court.

18. The appellants were emphatic that they were aggrieved by the orders issued on 22nd December 2023 which orders counsel maintains were issued on a mention date.

19. According to the appellant, the appeal is basically a challenge on the legality of issuing substantive orders on a mention date which according to the appellants is impermissible in law. The appellants in support of that submission cited the case of Central Bank of Kenya Vs. Uhuru Highway Dev. Ltd. & 3 Others Civil Appeal No. 75 of 1998 where the court of Appeal held;-“We have no doubt that where a matter is fixed for mention, the learned judge has no business determining on that date, the substantive issues in the matter. He can only do so if the parties so agree and of course, after having complied with the elementary procedure of hearing what submissions counsel may wish to make on behalf of the parties.

20. The appellants further cited the case of RAHAB WANJIRU EVANS Vs. ESSO (K) ltd. Civil Appeal No. 13 of 1995{1995-1998} 1 E.A 332 which restated the settled position that a court of law cannot determine substantive matters and issue summary orders on a mention date.

21. The appellants contended that the only exception to that rule is where all the parties consent to the determination of the matter on the mention date and the court hears the parties.

22. According to the appellants there was no consent between the appellant and the respondents to have the matter determined on the mention it and as such the appellants were not accorded an opportunity to respond to the application dated 14 /12/2023.

23. The appellants went further to submit that the 2nd respondent as the Judgment Debtor was also not given an opportunity to respond to the application since they had technical challenges joining the platform.

24. The appellants maintain that the application of 14/12/2023 required a response from the appellant.

25. The court having proceeded to allow the application on the ground that it was not opposed on the mentioned date made an order that was prejudicial to the appellants thus the invitation to this court to set aside the impugned order.

26. The appellants contend that they were not granted an opportunity to file a response to the application and that according to them the mention was for purposes of directions as to how the application would be disposed of. The appellants maintained that that was the order granted by Hon. W. Micheni.

27. The court allowed the application without considering the merit whether or not opposed according to the appellants thus the order of 22nd December 2023 should be reversed.

28. The appellants contend that had the court considered the merits of the application, it would have determined that there was no order from the court requiring the appellant to personally settle the decree.

29. The appellants went on to urge this court to find that the court did not appreciate that the orders allegedly disobeyed orders were not specified and that the application did not contain evidence of the service of the others allegedly disobeyed.

30. The appellants further submitted that the 1st respondent through the affidavit filed in this appeal sought to introduce new evidence on appeal which cannot be allowed without a specific application being made and granted by the court.

31. The affidavit introduced in the appeal was not before Lucy Ambasi when she determined the Application and that the affidavit ought to be disregarded by this court.

32. Ms. Nyabuto in concluding her argument urged the court to find that all the representations made by Ms. Muigai Counsel for the 1st respondent were calculated at misleading this court and as such this court should consider visiting the costs of the appeal on Ms Muigai Advocate in her personal capacity.

33. According to counsel for the appellants if Ms Muigai had not misled Hon. Ambasi , the impugned orders would not have been issued.

34. MS. MUNENE counsel for the 2ND respondent supported the appeal. In doing so counsel relied on her submissions dated 12/6/2024. According to counsel the Orders of 22/12/2023 was issued in contravention on the constitutional rights to a fair hearing.

35. 36 The appellants were not parties to the suit in the Lower court since it was was between the 1st and the 2nd respondent.

36. According to the 2nd respondent before issuance of the order of 22/12/ 2023, the lower court should have satisfied itself as to whether the appellants were parties to the suit.

37. It was the 2nd respondent’s view that the Appellants ought to have been notified of the suit and in support of that submission counsel cited the case of Jeremiah Mganga Msafiri Vs. Millicent Zighe Mwachala & 3 others{ 2021] eKLR to emphasize that a party ought not to be condemned unheard.

38. The 2nd respondent took the view that the order ought not to have been issued against the appellants who were not parties to the suit. The orders were therefore a nullity in the 2nd respondents’ view.

39. The 2nd respondent concluded the brief submission by stating that the order of 22/12/ 2023 was substantive and that the same having been made during a mention, it ought to be reversed.

1st Respondent’s Case 40. Ms. Muigai advocate acting for the 1st Respondent submitted that she had filed her submissions on behalf of the 1st respondent dated the 12th June 2024

41. According to counsel the Suit was first filed as High Court Civil Case No. 266 of 2010 between Racolta Molvar and Greiner Ltd Vs. Royal Trading Co.LTD. the 1st and 2nd respondents.

42. The 1st respondent had supplied paper to the 2nd respondent and the contention was failure to pay for the supplies.

43. The matter number 266/2010 became No. 8262/2016 because of transfer to lower court.

44. It was heard by Honorable Gicheha And judgment rendered on 24th July 2020 in favor of the 1st respondent.

45. Decree extracted in November 2020 pursuant to the judgment.

46. However, according to counsel they could not execute because as at the time judgment was passed the main director of the 2nd respondent had died in 2015.

47. In respect of the estate of the deceased director, the firm of Luseno Majanja filed Succession cause No.308 of 2015 and a grant was issued and confirmed on 27/7/2016.

48. The appellants became the administrators of the estate and beneficiaries.

49. After judgment was rendered on 47 2023 the judgment creditor Racolta Nyolwa 1st respondent filed an application seeking lifting of the veil of 2nd respondent.

50. According to the 1st respondent a ruling was delivered by Honorable H.M Nyaga on 8/4/2022. In the ruling the 2nd respondent- director by the name Shabir Taherali Dawoodvhi Hassan Ali deceased was found to be the one liable for the liabilities of the company as he was the sole mind and body of the company.

51. It is the deceased in respect of whom the grant was issued in favor appellants.

52. The ruling was delivered in the presence of counsel from the firm of Luseno Majanga who representing the brother of the deceased in the execution process.

53. At the hearing of the application before Hon. Nyaga the 1st respondent submitted that the appellants refused to produce a schedule of the properties of the deceased.

54. The 1st respondent went on to submit that in his ruling placed before Court in the record of Appeal at pages 136-142, Honorable Nyaga as he then was, had this to say:“I dismiss the Respondent/Judgment Debtor's argument concerning the party to bear responsibility for the company's liabilities. According to Mr. Charles, one of the directors of the Judgment Debtor, the Estate of Shabbir Taherali Dawoodhai Hassanali (Deceased) should bear the liabilities of the company as he was the mind, soul and body of the company"

55. According to the 1st respondent the soul and body of the 2 Respondent Company in this Appeal, Royal Trading Company Limited, are the Appellants.

56. The 1st respondent urged this court to consider the Notice to show cause issued to the appellants on 8th of November 2023 annexed to the affidavit of Mr. Elmer Noronha for the 1st respondent.

57. The 1st respondent’s counsel took issue with the suggestion by the appellants counsel to have this court order that the advocate bears the costs of the appeal personally. According to Ms Muigai, that proposal by the firm of Luseno Majanja is a clear manifestation of the display of power advocate Luseno Majanja holds on the court. In her view, the submission by counsel for the appellants in regard to the order for costs is tantamount to a direction by counsel to this court on how it should exercise its discretion.

Analysis and Determination 58. In interrogating the Appeal, this Honourable Court is invited to consider the following issues:i.The legality of issuing substantive orders dated 22nd December 2023 on a mention date.ii.Whether there were identifiable court orders referred to in the Application and their service thereof on the Appellants;iii.Legality of the Order dated 22nd September 2023 against non-Parties and in the absence of a court order lifting the 2nd Respondent's corperate veil; andiv.Whether there was demonstrable bias against the Appellants.

59. The first issue highlighted above is bound to determine the outcome of the appeal since that goes to the matter of jurisdiction which is everything and all matters must either fall by the wayside should this court come to the conclusion that the order was illegal and or irregularly issued by the subordinate court.

60. In order for this court to contextualize the analysis of the rival submission by counsel for all the parties, this court deems it fit to set out in ex tenso the order issued by the court on 22nd December 2023 because that is the order that culminated into this appeal.

61. The proceedings of the 22nd December 2023 read as follows;-“22/12/2023Before Hon. L. Ambasi (CM)C/A: Diana Rose/NewtonMs. Muigai for Decree HolderLuseno for Interested PartyDefendant-absentMs. Muigai- for warrant of arrest of the two personal representative of the estate and have been determined to be liable to pay.Orders of 15/9/2022 given by this court. The Respondent was given 3 days to reply and they have not to date.My application is therefore unopposed and pray the same be allowed. Luseno: we were in court on 13/12/2023 and the N.T.S.C was stood over to 12/3/2024. The Application before you was to be mentioned for directions. We replied and served and I know of 12/3/2024. Notice filed on 18/12/2023 and served.Ms. Muigai: these are proceedings for execution and we have established the interested party is liable to pay.The high court is a different issue of grant which was confirmed and rectified and file closed.This is debt to the estate and can only be done in this file and this court, which stated the personal representative is to pay. The orders were issued by this court.On 13/12/2023 we were not in court and I appeared in court in the afternoon and then I filed the certificate of urgency to address the issue. Hon. Micheni directed we serve and mention for further directions.No reply filed.The respondent was to file their response but they did not.Court: Ruling after 30 minutes.Hon. L. Ambasi (CM)22/12/2023Later at 12:16 PMCoram as beforeRulingI have heard the submissions of both parties and the Notice of Motion of 14/12/2023. I have also seen the orders of Hon. Micheni which directed the Respondent to file their response.They have not complied. The Application is unopposed and allowed as prayed.Hon. L. Ambasi (CM)22/12/2023The intended appeal is ours. The orders given against the personal representatives.See your sister's directions.I urge court to exercise discretion for stay pending appeal. The application was opposed.Ms.Muigai : counsel said there are no proceedings to lift the veil and this was done before Hon. Nyaga and the court held the estate liable to pay.The N.T.S.C was issued by court for hearing on 11th. I served the application. The court has done the correct thing. The substantive response and interested party has refused to pay and knew all this time. Do not grant the stay.Luseno :there is no orders lifting the veil. That is why we were given a date. I pray for 14 days.The documents are in the court file. Notice of motion 14/12/2023. RulingThe issues raised by both parties are weighty and I would urge that a ormal application should be filed to canvass these issues.Leave to appeal is granted.Application for stay for stay is not merited.Hon. L. Ambasi (CM)22/12/2023Lusen: I pray for typed proceedings and copy of the Ruling.Court: orders as prayed.Hon. L. Ambasi (CM)22/12/2023”

62. The record of the 22nd December 2023 must be read together with the proceedings of 13th December 2023 in order for the court is to appreciate the purpose for which the file went before Hon. Ambasi C.M on the 22nd December 2023.

63. The record of 13th December 2023 reads:“13/12/2023Before Honorable Wendy K. Micheni CCM in : CollinsMr. Wakumbo & Mr. Luseno for the Respondent.Matter was to come up Notice to show course on 11/12/2023. We responded. There is a High Court matter.Notice to show Course Stood Over12/3/2024”

64. It is clear to this court that on the 13th December 2023 Mr. Wakumbo and Mr Luseno appeared before the HON. Wendy Micheni C.M(as she then was) and indicated to the court that the matter was to come up for a notice to show cause on the 11th December 2023. Counsel went further to inform the court that they had responded and that there was a High Court matter. Notably, the record does not seem to have captured whether or not the applicant was present. However , on the the record of 22nd December 2023 Ms. Muigai recorded as having informed Hon. L.Ambasi that since she was not in court on 13th December 2023 she later appeared before Hon. Micheni under ‘’certificate of urgency to address the issue . Hon Micheni directed we serve and mention for further directions.’’

65. It is not clear from that statement whether the matter brought under certificate of urgency was the one to be mentioned for directions or it was the notice to show cause that was to be mentioned for further directions. The record does not contain any notes of the appearance by Ms Muiagi before Hon. Micheni C.M when counsel say the Hon. Magistrate directed her to serve the application for further directions.

66. It is however clear that the Hon Micheni did not order a hearing in any event.

67. The court on 13th December 2023 fixed the matter for a Notice to show cause on 12th March 2024. The record does not contain any order vacating that order or varying it to read 22nd December 2023.

68. The High Court is a court of record and can only determine an appeal based on the record of the lower court unless a party seeks and obtains an order to adduce additional evidence.

69. The handwritten proceedings of the lower court reflect the proceedings of 22nd December 2023 immediately after the proceedings of 13th December 2023. It is not difficult to tell from the record how the matter found its way before the Hon. Lucy Ambasi.

70. The record of the lower court is crucial in determining this appeal considering the submissions by counsel for the appellants alleging that the 1st respondents counsel misled the Hon. Lucy Ambasi into making the impugned order.

71. On the 22nd December 2023 Ms. Muigai and Mr luseno appeared before the Hon Lucy Ambasi and despite her attention having been drawn to the fact that the matter was coming up for directions by Mr Luseno, the court proceeded to determine that the respondents had not responded to the application so in the circumstances she allowed the application.

72. The parties therefore could not agree before Hon. Lucy Ambasi why they were before her thus the court should, in this courts view, have exercised caution before proceeding to determine the application.

73. The courts have times without number cautioned against the granting of substantive orders on a mention date except where parties agree to a substantive hearing during the mention. In the instant case the parties did not consent to proceeding with the Notice to show cause substantively.

74. The court therefore could not have in the circumstances have proceeded to consider the matter substantively without offending the law and violating the appellants right to a fair hearing considering that what was at stake was the liberty of the appellants. Liberty is precious and should not be taken away lightly without affording a party an opportunity to state his case.

75. The High Court in R v Anti-Counterfeit Agency & 2 others Ex-Parte Surgippharm Limited [2014] eKLR, cited the Court of Appeal in Central Bank of Kenya vs. Uhuru Highway Development Ltd. & 3 Others Civil Appeal No. 75 of 1998 where the Court of Appeal restates the settled law that a court cannot make substantive orders on a mention:“We have no doubt that where a matter is fixed for mention, the learned judge has no business determining on that date, the substantive issues in the matter. He can only do so if the parties so agree and of course, after having complied with the elementary procedure of hearing what submissions counsel may wish to make on behalf of the parties.

76. The question that arises for determination is whether the orders dated 22nd December 2023 were substantive orders i.e. whether they affected the substantive rights of the parties. No doubt the answer to that question is in the affirmative because the effect of granting the application was to immediately see the appellants commence serving term in civil jail.

77. The orders sought in the Application did affect the substantive rights of liberty and freedom of the Appellants protected by Article 29 of the Constitution. The determination of the Application therefore did require substantive responses from the Parties and compliance with the requisite procedures for a hearing.

78. In determining a Notice to show cause a court is called upon to determine the competing right to property under Article 40 of the Constitution against the right to liberty of a of the judgment debtor under Article 29. The fairness of the process in determining the respective rights need not be overemphasized. The Judgment debtor should be examined in the, manner envisaged under Order 21. Rule 36 and Section 38 of the Civil Procedure Act Cap 21 of the laws of Kenya. The liberty of an individual should not be taken away without strict adherence to all due process requirements. See Jayne Wangui Gachoka Vs Kenya Commercial Bank Petition Number 51 of 2010;

79. In Kenya Bus Services Ltd & Others vs. Attorney General and Others [2005] 1 EA 111; [2005] 1 KLR 743 it was held:“Fundamental rights cannot be enjoyed in isolation and by selected few while they trample on others or tread upon their rights since the enjoyment of fundamental rights and freedoms contemplates mutuality and an atmosphere of respect for law and order including the rights of others and the upholding of the public interest…The function of the Court when faced with the task of establishing or determining the rights on the one hand and determining the limitation and restrictions on the other hand is to do a balancing act and in this balancing act are principle values, objectives to be attained, a sense of proportionality and public interest and public policy considerations…There cannot be a cause of action based on a lawful exercise of the right of execution by interested parties since it is a serious contradiction to suggest that creditors who are enforcing their rights under the private law should be stopped from so doing because there are allegations of violations of the Constitution by the state or Government.”

80. The court appreciates the decree holders right to recover the debt but the process employed by the judgment creditor should meet the test of fairness.

81. The order by the Hon. Micheni C.M was for hearing of the Notice to show cause on 12th March 2024. It is the view of this court that since the date was never vacated that remained the date when the Notice to show cause should have come up for hearing.

83. It is the finding of this court that the learned Hon. Court erred by allowing the application on a date that was not scheduled for hearing. In Bhudev Mallick Alias Bhudeb Mallick & Anr. Vs Ranajit Ghoshal & ORS. Civil Appeal No.2248 OF 2025 the Indian Supreme Court had this to say about the role of the High court in reviewing orders in the nature of the one before this court;-“We are a bit disappointed with the manner in which the High Court dealt with the present litigation, more particularly while deciding the revision application filed by the appellants herein against the order passed by the executing court. All that the High Court has said in one line is that it did not find any jurisdictional error in the order passed by the executing court ordering arrest, detention in a civil prison and attachment of the property of the appellants. We fail to understand, why the High Court was not able to see the gross error in the order passed by the executing court, be it called an error of law or a jurisdictional error. Undoubtedly, the High Court in exercise of its supervisory jurisdiction under Article 227 of the Constitution must ascertain before interfering with any order passed by a subordinate court or tribunal whether the same suffers from any jurisdictional error. At times in litigation like the one on hand, the court should be guided by its conscience, more particularly keeping in mind the peculiar facts and circumstances of the case and not strictly go by the term “jurisdictional error”. It is very easy for the High Court to say that there is no jurisdictional error and, therefore, no interference is warranted but before saying so, the High Court should be mindful of the consequences that would follow like arrest, detention in civil prison and attachment of property.”(emphasis mine).

84. The High court cannot ignore an error that is apparent on the face of the record and uphold the learned honorable magistrates’ decision without being accused of abdicating its cardinal responsibility of supervising the courts below. The intervention of this court has been sought primarily on the ground that the order leading to the appellants being committed to civil jail was made through a procedural error thus this court must be clear that the judgment debtors have had a fair opportunity before the committing court to explain their failure to honor the decree and that the court having heard the was not persuaded by the explanation.

85. The error pointed out by the appellant indicated that the court proceeded to determine the matter on a mention is not only a procedural error but also a jurisdictional one which cannot be overlooked by this court. The string of authorities on what precisely is the jurisdiction of a court on a mention date leads this court to the finding that the order granted on 22nd December 2023 was issued in error and must be set aside.

86. Having arrived at that conclusion the rest of the issues identified at the start of the determination collapse. The matter in the lower court is live for the hearing of the notice to show cause thus the parties shall be at liberty to canvass those issues for a substantive order by the lower court.

87. Accordingly, this court allows the appeal and as a consequence the order granted on the 22nd December 2023 is hereby set aside.

88. The costs of the appeal shall abide the outcome of the proceedings in the lower court.

89. The lower court file shall be transmitted to the Chief Magistrates Court for hearing and determination by any other Magistrate of competent jurisdiction other than Hon. Lucy Ambasi C.MIt is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 17TH DAY OF FEBRUARY 2025. A. M. MUTETIJUDGEIn the presence of:Court Assistant: KiptooLuseno-Majanja Absent for the AppellantMs Muigai for the 1st RespondentMurithi for the 2nd Respondent