[2022] KEHC 10858 (KLR)

Meridian Acceptances Limited v Muchungu & 4 others (Commercial Case E743 of 2021) [2022] KEHC 10858 (KLR) (Commercial and Tax) (13 June 2022) (Ruling)

Neutral citation: [2022] KEHC 10858 (KLR)

Republic of Kenya

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

Commercial and Tax

Commercial Case E743 of 2021

DAS Majanja, J

June 13, 2022

Between

Meridian Acceptances Limited

Plaintiff

and

James Ndwigah Muchungu

1st Defendant

Lisa Mumbi Ndwigah

2nd Defendant

Ian Nyaga Ndwigah

3rd Defendant

Judita Warue Ndwigah

4th Defendant

Trevor Sawaya Ndwigah

5th Defendant

Ruling

1. Following an application filed by the Plaintiff seeking an injunction, I delivered a ruling on November 3, 2021where I issued the following order:(a)That Pending hearing and determination of this suit an injunction be and is hereby issued restraining the defendant and any persons acting under his instructions from conducting any business on behalf of the plaintiff and accessing the company server online.(b)That pending hearing and determination of this suit a mandatory injunction be and is hereby issued compelling the defendant, agents and any persons acting under his instructions to surrender all passwords of computers, documents and company property in their possessions.(c)That therespondent bears the costs of this application.

2. The plaintiff has now filed a Notice of Motion dated March 29, 2022made,inter alia, under Order 41 Rule 3 of the Civil Procedure Rules and section 5 of the Judicature Act (chapter 8 of the Laws of Kenya) seeking the following orders:(1)Spent(2)That this honourable court be pleased to commit the 1st to 5th defendants to civil jail for a period of not less than six months until they comply with the court order.(3)The Commanding Officer Westlands Police Station to assist the plaintiff to compel Safaricom PLC to comply with the court order issued on December 14, 2021and freeze M-Pesa Dealerships operated on the plaintiff’s behalf by the 1st defendant and his agents.(4)That the properties of the 1st to 5th defendants be attached pending the hearing and determination of this suit or until the court orders issued on December 14, 2021 are complied with.(5)That costs of this application be borne by the defendants.

3. The application is supported by the affidavit of its Managing Director, Saurabh Mhala, sworn on March 31, 2022. It is opposed by the defendants through the 1st defendant’s replying affidavit sworn on May 19, 2021. The parties’ advocates made brief oral submissions in support of their respective positions.

4. The plaintiff’s case is that the 1st defendant continues to retain the plaintiff’s passwords for its computer system which supports the plaintiffs core business of advancing financial services despite being served with the order on March 21, 2022 to surrender the passwords or otherwise be cited for contempt of court. The plaintiff also states that it wrote the letter dated January 12, 2022 to Safaricom PLC demanding that it furnishes documents relating to M-pesa accounts registered in its names including statements of accounts, surrender monies held in those accounts and stop unauthorized persons from operating its accounts. That to date, Safaricom PLC has not responded to its demand despite several reminders. The Plaintiff urges the court to hold the Defendants in contempt for willfully and deliberately disobeying court orders.

5. The 1st defendant denies the allegations against the defendants. The 1st defendants states that he was unlawfully, forcefully and violently removed from office as the Managing Director hence there was no organized hand over. He depones that the plaintiff’s directors changed locks and hired security who had express instructions to prevent the defendants from accessing the plaintiff’s premises. He further states that all company documents and records remained in the plaintiff’s custody.

6. As regards the passwords, the 1st defendant denies that he holds any passwords as alleged. He states that to his knowledge, the plaintiff never operated a centralized computer system or ERP which would require his password. He states that passwords were restricted to individual computers operated by staff and that he was not privy to or custodian of those passwords.

7. The defendants deny that they operate M-pesa accounts as alleged or at all. They contend that nothing would have been easier than to confirm the status of those accounts from Safaricom PLC. They urge that the plaintiff has not proved that the defendants run the subject M-pesa accounts. In short, the defendants submit that the plaintiff has not proved its case.

8. There is no dispute that this court has jurisdiction to adjudicate on the issue of contempt. The parties also agree on the general principles to be applied in considering the plaintiff’s application. It is a settled principle that once a court issues an order, it creates an unconditional obligation upon whom it is directed to obey it.

9. In order to succeed in an application for contempt of court, the applicant must establish the following factors. First, that the person was aware of/had knowledge of the order. Second, the order must be clear and precise so as to leave no doubt on what a party was supposed to do/refrain from doing and third, the disobedience of then order must be proved (see Cecil Miller v Jackson Njeru and another [2017] eKLR). In Mutitika v Baharini Farm Limited[1985] KLR 229, 234, the court held that, “in our view the standard of proof in contempt proceedings must be higher than proof on the balance of probabilities, almost but not exactly, beyond reasonable doubt ... the standard of proof beyond reasonable doubt ought to be left where it belongs, to wit, in criminal cases. It is not safe to extend it to an offence which can be said to be quasi criminal in nature."

10. In this case, there is no dispute that the defendants had knowledge of the court order. The issue for consideration is whether the plaintiff has established or proved to the required standard that the defendants are guilty as alleged.

11. The plaintiff’s case rests on two grounds. The first concerns the allegation that thedefendants have failed to surrender all passwords of computers, documents and company property in their possessions despite the order of mandatory injunction. The defendants deny this allegation. This is a case where a general allegation yields a general denial. The allegations ought to be specific enough to enable the alleged contemnor respond to them. For example, what company documents is the 1st defendant holding or what passwords is he keeping. The defendants’ answers to these allegations are reasonable and have not been rebutted.

12. The plaintiff alleges that the defendants continue to carry on the plaintiff’s business through M-pesa accounts operated by them. The plaintiff bears the burden of proving this charge. Apart from showing a demand letter to Safaricom PLC, there is no evidence that the defendants are operating M-pesa accounts on the plaintiff’s behalf. If anything, the demand letter portends a cause of action against Safaricom PLC which can be pursued independently. Further, Safaricom PLC is not a party to these proceedings hence court cannot order it to freeze the M-pesa dealerships allegedly operated by the defendants particularly where there is no evidence to show that they are operating those accounts.

13. From the totality of the evidence, I find and hold that the plaintiff has failed to prove the charges of contempt of court against the defendants. The application dated March 29, 2022is dismissed with costs to the Defendants.

DATED AND DELIVERED AT NAIROBI THIS 13TH DAY OF JUNE 2022. ****D. S. MAJANJA****JUDGE****Court Assistant: Mr M. OnyangoMr Seko instructed by Seko and Company Advocates for the Plaintiff.Mr Njenga instructed by Muchoki Kangata Njenga and Company Advocates for the Defendant.