[2020] KEHC 3426 (KLR)
The court found that since the default judgment, which formed the basis of the petitioners' claim, had been set aside, the debt was now disputed. Although liability for payment of fees under the retainer agreement was not denied, the existence and quantum of the debt were subject to ongoing litigation. In such...
Source-derived case information.
- Citation
- [2020] KEHC 3426 (KLR)
- Parties
- Applicant: John Mugambi T/A Mugambi & Company Advocates; Applicant: Beatrice Kariuki T/A Beatrice Kariuki & Associates; Respondent: Showcase Properties Limited
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Insolvency Cause E172 of 2019
- Procedural Posture
- Insolvency Petition / Ruling on Application for Stay of Petition
- Outcome
- petition stayed pending determination of the substantive suit
- Judges
- DAS Majanja
- Legal Topics
- Insolvency Proceedings, Company Debt Dispute, Retainer Agreement, Stay of Proceedings
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
John Mugambi T/A Mugambi & Company Advocates
Applicant
Beatrice Kariuki T/A Beatrice Kariuki & Associates
Applicant
Showcase Properties Limited
Respondent
Procedural Posture
Insolvency Petition / Ruling on Application for Stay of Petition
Legal Issues
- 1 Whether the insolvency petition should be stayed pending the determination of the dispute over the debt.
- 2 Whether the setting aside of the default judgment affects the maintainability of the insolvency petition.
Ratio Decidendi
The court found that since the default judgment, which formed the basis of the petitioners' claim, had been set aside, the debt was now disputed. Although liability for payment of fees under the retainer agreement was not denied, the existence and quantum of the debt were subject to ongoing litigation. In such circumstances, the court exercised its discretion to stay the insolvency petition pending the determination of the substantive suit, to avoid prejudicing the respondent and to ensure that insolvency proceedings are not used as a means of debt collection where the debt is genuinely contested.
Court Disposition
petition stayed pending determination of the substantive suit
Orders
- The Notice of Motion dated 28th May 2020 is allowed.
- The insolvency petition is stayed pending hearing and determination of HC COMM NO. 436 OF 2018 or further orders of the court.
Full Case Text
Judgment text and source record
26 paragraphs
THE HIGH COURT OF KENYA
AT NAIROBI
COMMERCIAL AND TAX DIVISION
CORAM: D. S. MAJANJA J.
INSOLVENCY PETITION NO. E172 OF 2019
IN THE MATTER OF THE INSOLVENCY ACT, 2015
AND IN THE MATTER OF
SHOWCASE PROPERTIES LIMITED
BETWEEN
JOHN MUGAMBI T/A
MUGAMBI & COMPANY ADVOCATES ..……...... 1ST PETITIONER
BEATRICE KARIUKI T/A
BEATRICE KARIUKI & ASSOCIATES ………….2ND PETITIONER
AND
SHOWCASE PROPERTIES LIMITED …………....... RESPONDENT
RULING
1. This petition has been brought by the petitioners on the ground they have a judgment and decree in their favour for Kshs. 28,063,325. 00 in MILIMANI HC COMM NO. 436 OF 2017; JOHN MUGAMBI T/A MUGAMBI & COMPANY ADVOCATES AND BEATRICE KARIUKI T/A BEATRICE KARIUKI & COMPANY ADVOCATES V SHOWCASE PROPERTIES LIMITED.
2. The Company now seeks stay of the petition or further proceedings on the ground that it has now applied to set aside the default judgment entered against it in HC COMM NO. 436 OF 2018. The judgment has now been set aside by a ruling dated 24th August 2020 hence the debt, which is based on a retainer agreement, is disputed.
3. This court has discretion to dismiss or stay the petition in such circumstances. Since liability for payment of fees under the retainer agreement is not disputed, I propose to stay the petition.
4. I allow the Notice of Motion dated 28th May 2020 and order that this petition be stayed pending hearing and determination of HC COMM NO. 436 OF 2018 or further orders of the court. The petitioners are at liberty to apply for further orders. Costs in the cause.
DATEDand DELIVERED at NAIROBI this24thday of AUGUST2020.
D. S. MAJANJA
JUDGE
Court Assistant: Mr. M. Onyango.
Ms Muthama instructed by Odhiambo, Talam and Company Advocates for the petitioners.
Mr Mungai instructed by Mungai Kalande and Company Advocates for the Company