[2017] KEHC 10092 (KLR)
The court found that since the ex parte judgment and decree in HCCC No. 228 of 2014, which formed the basis of the Bankruptcy Order, had already been set aside to allow the applicant an opportunity to defend the claim, it would be premature and unnecessary to consider the merits of the present application in detail....
Source-derived case information.
- Citation
- [2017] KEHC 10092 (KLR)
- Parties
- Applicant: Shakhalaga Khwa Jirongo; Respondent: Sammy Boit arap Kogo
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Insolvency Cause 3 of 2017
- Procedural Posture
- Insolvency Petition / Ruling on Application to Stay and Set Aside Bankruptcy Order
- Outcome
- Application allowed; Bankruptcy Order stayed pending determination of HCCC No. 228 of 2014.
- Judges
- OA Sewe
- Legal Topics
- Insolvency Proceedings, Bankruptcy Orders, Setting Aside Judgments
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Shakhalaga Khwa Jirongo
Applicant
Sammy Boit arap Kogo
Respondent
Procedural Posture
Insolvency Petition / Ruling on Application to Stay and Set Aside Bankruptcy Order
Legal Issues
- 1 Whether the Bankruptcy Order issued on 29 September 2017 should be stayed or set aside pending the hearing and determination of HCCC No. 228 of 2014.
- 2 Whether the applicant was properly served with the Statutory Notice and hearing notice as required under the Insolvency Act.
- 3 Whether the involvement of Rachier & Amollo Advocates for both parties in the underlying agreement constituted a conflict of interest.
Ratio Decidendi
The court found that since the ex parte judgment and decree in HCCC No. 228 of 2014, which formed the basis of the Bankruptcy Order, had already been set aside to allow the applicant an opportunity to defend the claim, it would be premature and unnecessary to consider the merits of the present application in detail. The court held that the proper course was to stay the Bankruptcy Order pending the outcome of HCCC No. 228 of 2014. This approach ensures that the applicant is not prejudiced by a bankruptcy order based on a decree that is now subject to challenge and possible reversal. The court also directed that a copy of the ruling in HCCC No. 228 of 2014 be filed in the insolvency...
Court Disposition
Application allowed; Bankruptcy Order stayed pending determination of HCCC No. 228 of 2014.
Orders
- Stay of the Bankruptcy Order made on 29 September 2017 pending the hearing and determination of HCCC No. 228 of 2014.
- A copy of the Court's Ruling in HCCC No. 228 of 2014 to be filed in these proceedings.
Full Case Text
Judgment text and source record
23 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
MILIMANI LAW COURTS
COMMERCIAL AND TAX DIVISION
INSOLVENCY PETITION NO.3 OF 2017
IN THE MATTER OF THE INSOLVENCY ACT, 2015
RE: SHAKHALAGA KHWA JIRONGO - DEBTOR
RULING
[1]The Notice of Motion dated 16 October 2016 was filed herein by Shakhalaga Khwa Jirongo, the Debtor herein pursuant to Article 159 of the Constitution, Sections 3, 16(2) and (3), 30(1) and (2)(c), 272(2), 696 and 698of theInsolvency Act, No. 18 of 2015 as well as the inherent powers and jurisdiction of the Court. He thereby sought for the following orders:
[a]That this application be certified urgent and be heard ex-parte in the first instance. (spent)
[b]That pending the hearing and determination of this application, an Order be issued, ex-parte at the first instance, staying the execution and/or implementation of the Bankruptcy Order issued on 29 September 2017;
[c]That the Bankruptcy Order issued on 29 September 2017 that arose from the Decree in HCCC No. 228 of 2014: Masole Limited & 7 others vs. Shakhalaga Khwa Jirongo, be set aside and/or vacated.
[d]That all the Orders and/or proceedings issued by this Court in relation to this Insolvency Petition be set aside ex debito justitiae;
[e]That the Petitioner be ordered to serve the Statutory Demand upon the Debtor for a regular hearing to take place.
[f]That the costs of the application be provided for.
[2]The application was premised on the grounds that this Insolvency Petition is based solely on the Decree dated 28 July 2014 obtained in HCCC No. 228 of 2014: Masole Limited & 7 others vs. Shakhalaga Khwa Jirongo, in which he challenged the Judgment and Decree as having been obtained on the basis of fraudulent Agreement and false declaration by Court Process Servers. The grounds were deposed to in the Applicant's affidavit sworn on 16 October 2017, and in support thereof, Counsel for the Applicant, Mr. Kiplagat, adopted the submissions he made in respect of HCCC No. 228 of 2014.
[3] According to Mr. Kiplagat, the firm of Rachier & Amollo Advocates, having acted for both parties in respect of the Agreement that resulted in the Judgment and Decree of HCCC No. 228 of 2014, could not purport to act in this matter for one of the parties. Counsel relied on the case of King Woollen Mills Ltd vs. Kaplan & Stratton Advocates [1993] eKLR. Counsel further argued that the Applicant was afforded an opportunity to resist the Petition by reason of the fact that he was neither served with the Statutory Notice nor hearing notice. He accordingly urged for the stay or setting aside of the Bankruptcy Order.
[4]The application was opposed by the Creditor/Respondent, Mr. Sammy Boit arap Kogo. He relied on his Replying Affidavit sworn and filed on 18 October 2017. He was represented herein by the firm of Rachier & Amollo Advocates, and his Counsel, Mr. Ligunya, urged his case on his behalf in opposition to the application. His argument was that the Bankruptcy Order issued herein was founded on a clear proof of debt. Mr. Ligunya also invited both Mr. Ambrose Rachier and Francis Olalo, who are partners in the law firm of Rachier & Amollo Advocates, to the witness stand for cross-examination on the contents of their affidavits filed herein as annexures to the Replying Affidavit.
[5]It is manifest from the Statutory Notice and the Petition that the Bankruptcy application was hinged on the Decree issued in HCCC No. 228 of 2014,which was otherwise issued on the basis of a regular judgment of the Court. Having made a Ruling in HCCC No. 228 of 2014 setting aside the ex parte judgment and decree in HCCC No. 228 of 2014 to give the Applicant a chance to defend the claim therein, it would be superfluous to get into a consideration of the merits of the application herein. Accordingly, the orders that commend themselves to me are orders allowing the application dated 16 October 2017for stay of the Bankruptcy Order made herein on 29 September 2017, pursuant to Section 26 of the Insolvency Act, No. 18 of 2015, pending the hearing and determination of HCCC No. 228 of 2014. It is further ordered that a copy of the Court's Ruling in HCCC No. 228 of 2014 be filed herein for completeness of the record.
It is so ordered.
DATED, SIGNED AND DELIVERED AT NAIROBI THIS 23RD DAY OF OCTOBER, 2017
OLGA SEWE
JUDGE