[2023] KEHC 25364 (KLR)

Paleah Stores Limited & 3 others v Mwaura & 22 others; Invesco Assurance Ltd Under Receivership) (Interested Party) (Insolvency Petition 1 of 2019) [2023] KEHC 25364 (KLR) (14 November 2023) (Ruling)

Neutral citation: [2023] KEHC 25364 (KLR)

Republic of Kenya

In the High Court at Kerugoya

Insolvency Petition 1 of 2019

RM Mwongo, J

November 14, 2023

Between

Paleah Stores Limited

1st Petitioner

Patrick Njiru

2nd Petitioner

Kenya Mpya Limited

3rd Petitioner

Neo Kenya Commuters Limited

4th Petitioner

and

Dedan Kangethe Mwaura & 22 others

Respondent

and

Invesco Assurance Ltd Under Receivership)

Interested Party

Ruling

1. By an order issued on 16th December 2019, this Court (Gitari, J.) granted conservatory orders restraining the enforcement or execution of any judgments made in favour of the respondents or other claimants by any court against the petitioners in respect of any motor vehicles insured by the Interested Party. Further, the orders restrained respondents and other parties from attaching detaining any vehicles or assets of the petitioner in enforcement or execution of such judgments.

2. The 8th and 9th Respondents, being judgment creditors in respect of a judgment issued in CMCC No 74 of 2018, in the Kiambu subordinate court against a party insured by the petitioners, on 22nd March, 2023, filed this motion dated 20th March, 2023, seeking that:a.The court review its orders of 16th December, 2019;b.The 8th and 9th respondents be allowed to execute in respect of the sum of Kshs 1,874,799/= which amount is over and above the statutory cap of Kshs 3,000,000/=payable by the Interested party on behalf of the 4th petitioner;c.Alternatively, that the court do order the 4th petitioner to pay the amount of Kshs 1,874,799 which amount is over and above the statutory cap of Kshs 3,000,000/=payable by the Interested party on behalf of the 4th petitioner;d.That this petition be transferred to Kiambu High Courte.That the 4th Petitioner furnishes the 8th and 9th respondents with security for costs

3. The application is based on, inter alia, the grounds that:i.The said conservatory orders dated 16th December 2019 are applicable only to the extent of the obligations of the Interested Party as the Insurer to the Petitioners.ii.The applicability of the said conservatory orders does not extend to the Petitioner’s obligation to satisfy the decretal sum over and above the statutory cap payable by the Interested Party.iii.Consequently, execution for the decretal sum over and above the statutory cap payable by the Interested Party as against the 4th Petitioner is merited and should be granted.iv.Judgment in CMCC 784 of 2019 entered in favour of the 8th & 9th respondents by a judgment dated 5th December, 2018 and subsequent decree issued on 31st May 2019 as against the 4th Petitioner is neither being impeached by the 4th Petitioner nor the Interested Party herein in the instant proceedings.v.The 4th petitioner has neither had the judgement entered in favour of the 8th & 9th respondents set aside nor reviewed nor appealed to warrant stay of execution.vi.At the time of filing this application, the total decretal sum plus interest thereon as well as costs plus interest thereon stands at kshs 5, 635,515. 60/=vii.Payment of the outstanding amount by the 4th Petitioner in satisfaction of the decretal sum over and above the statutory amount payable by the interested party is legal, and a review to the said effect is proper in law.viii.The transfer of this suit to Kiambu High Court will be cost efficient to the parties to this suit for reason that 8th & 9th Respondents/Applicants and most of the Respondents herein had their judgments obtained in courts across Thika, Ruiru and Gatundu; all within Kiambu County.

4. The 8th & 9th Respondents/applicants deposed a supporting affidavit and reiterated the above grounds upon which the notice of motion is based.

5. The substantive aspects of the Order of 16th December 2019, sought to be reviewed, granted conservatory orders in terms of prayers 4,5, and 6 of the application which are as follows:“…4)Pending the hearing and determination of this application an interim conservatory order be granted restraining the enforcement and /or execution of any judgments made in favour of the Respondents or any other Claimant by any court against the Petitioners in respect of any one or more of the Petitioners’ motor vehicles insured by the Interested Party;5)Pending the hearing and determination of this application an interim conservatory order be granted restraining the Respondents and any other Claimant acting either acting by themselves or through their representatives from attaching, detaining or retaining any motor vehicles or any assets of the Petitioners in enforcement and /or execution of any judgments made by any court against the Petitioners in respect of any one or more of the Petitioners’ motor vehicles insured by the Interested Party;6)Pending the hearing and determination of this application an interim conservatory order be granted staying all road traffic accident third party law suits and legal proceedings against the Petitioners’ in respect of any one or more of the Petitioners’ motor vehicles insured by the Interested Party;”

6. The court directed that the application be disposed off by written submissions.

8th& 9thRespondents/ Applicants submissions 7. Their submissions relate to an Application dated 20. 3.2023 and filed on 22. 3.2023 by the 8th and 9th Respondents, and the amended application dated 13th March, 2023 and filed on 17th May, 2023. Whether the applicants are entitled to the decretal sum

8. The 8th and 9th Respondents/ Applicants herein be at liberty to execute the judgement in CMCC 74 of 2018; Hellen Wambui Kariuki & Agnes Njeri Kimani v Neo Kenya Commuters Limited for the sum of Kshs. 1,874,799/= being the decretal sum over and above the statutory cap of Kenya Shillings Three Millions payable by the Interested Party on behalf of the 4th Petitioner.

9. Judgment was entered on 5. 12. 2018 in favour of the 8th and 9th Respondents as against the 4th Petitioner for the sum of Kenya Shillings Three Million Six Hundred and Twelve Thousand Five Hundred and Ten (Kshs. 3,612,510/=) plus costs and interest thereon.

10. Consequently, a Decree was issued on 31st May 2019. The 8th & 9th Respondents seek to execute the decree granted in their favour as against the 4th Petitioner.

11. It is clear to the 8th & 9th Respondents that the decretal amount awarded by the trial court at Thika is above the statutory limit payable by the 4th Petitioner’s insurer, who is the Interested Party herein as provided for under Section 5(b) (iv) of the Insurance (Motor Vehicle Third Party Risks) Act Cap 405 which provides as follows:“Provided that a policy in terms of this section shall not be required to cover –iv)liability of any sum in excess of three million shillings arising out of a claim by one person”

12. It is submitted that in the case of Law Society of Kenya v Attorney General & 3 others [2106] eKLR it was held that:“What the principal Act has done is to cap the amount of money that the insurer pays to the injured person. Nothing in the Principal Act stops a litigant or the injured person from pursuing a claim against the insured individual where an award in excess of the amount recoverable from the insurer is made.”

13. The applicants submit that preventing the 8th & 9th Respondents from executing the decretal amount over and above the statutory cap of Kshs. 3,000,000/= will lead to a miscarriage of justice. We make reference to the aforementioned case of Law Society of Kenya v Attorney General & 3 others [2016] eKLR where it was inter alia held at Paragraph 85 that:“85. In the end, I hold the view that the Principal Act does not exclude compensation to affect proprietary rights. It only limits who pays how much by apportioning a maximum of Kshs. 3,000,000/= to be paid by the insurer and the additional if any by the insured.”Whether the review sought is merited

14. It was submitted that in the case of Kenya orient Insurance Co. limited v Kennedy Kagai Kiruku [2022] the grounds for review were:“……a.The discovery of new and important matter of evidenceb.Some mistake or error apparent on the face of the recordc.Any other sufficient reason.”

15. In the present case, satisfaction of the decretal amount of Kshs. 1,847,799/= ought to be paid by the 4th Petitioner herein, notwithstanding the insolvency or lack thereof by the Interested Party. Therefore, the Orders ought to be reviewed in order to clarify this position; and in order to prevent the 4th Petitioner from failing to satisfy the decretal amount as per law in the guise of the proceedings in this matter. We submit that this lack of clarity as to the extent of the applicability of the said orders is sufficient reason to warrant for a review.Whether Transfer of the matter to the High Court at Kiambu is merited

16. Section 18 of the Civil Procedure Act gives power to the High Court to transfer cases on its own motion or on application by a party to a suit.

17. In the case of GKK v ANK & Another [2021] eKLR , the High Court sitting at Nyeri held inter alia the grounds to be considered for an application for transfer are as follows:-“In the case of Hangzhou Agrochemicals Industries Ltd. v Panda flowers Ltd [2012] eKLR the court held:-“ "In my view, which view I gather from authorities and from the law, the court should consider such factors as the motive and the character of the proceedings, the nature of the relief or remedy sought, the interests of the litigants and the more convenient administration of justice, the expense which the parties in the case are likely to incur transporting and marinating witnesses, balance of convenience, questions of expense, interest of justice and possibilities of undue hardship.

18. The applicants submit that in order to cut down on expenses of the litigants and in the interest of justice, transfer of this matter should be allowed as prayed.

Issues for Determination 19. The issues for determination in this application are as follows:1. Whether the orders dated 16th December, 2019 should be reviewed.2. Whether this Petition should be transferred from this Honourable Court to Kiambu High Court.Analysis and DeterminationWhether the orders dated 16th December, 2019 should be reviewed

20. The 8th and 9th Respondents/ Applicants seek for the orders dated 16th December, 2019 to be reviewed.

21. Further, they be at liberty to execute the judgement in CMCC 74 of 2018; Hellen Wambui Kariuki & Agnes Njeri Kimani v Neo Kenya Commuters Limited for the sum of Kshs. 1,874,799/= being the decretal sum over and above the statutory cap of Kenya Shillings Three Millions payable by the Interested Party on behalf of the 4th Petitioner.

22. Order 45 Rule 1 of the CPR encapsulates the grounds upon which this court may endeavor to review its own previous order or decision. It states as follows:“1. Any person considering himself aggrieved—

a.by a decree or order from which an appeal is allowed, but from which no appeal has been preferred; orb.by a decree or order from which no appeal is hereby allowed, and who from the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or the order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree or order, may apply for a review of judgment to the court which passed the decree or made the order without unreasonable delay.

23. In the case of Kenya Orient Insurance Co. limited v Kennedy Kagai Kiruku [2022] it was pointed out that a court will readily review its previous orders if the following threshold is met; that:“The grounds for review are:a.The discovery of new and important matter of evidenceb.Some mistake or error apparent on the face of the recordc.Any other sufficient reason.”

24. The applicants claim that satisfaction of the decretal amount of Kshs. 1,847,799/= ought to be paid by the 4th Petitioner herein, notwithstanding the insolvency or lack thereof by the Interested Party. Therefore, the orders ought to be reviewed in order to clarify this position. Further, they submit that preventing the 8th & 9th Respondents from executing the decretal amount over and above the statutory cap of Kshs. 3,000,000/= will lead to a miscarriage of justice.

25. In essence the applicants argue that the that this lack of clarity as to the extent of the applicability of the said orders is sufficient reason to warrant for a review.

26. The orders dated 16th December, 2019 are clear that they are conservatory orders restraining the enforcement or execution of any judgement against the petitioners. Thus, the 8th and 9th Respondents/ Applicants are restrained by the above orders from executing any judgement against the 4th Petitioner.

27. The applicant’s argument is not without merit. The critical point is that the applicants and others like it have obtained a judgment in their favour in the lower court. Since the judgment is for a sum over and above the statutory threshold of Kshs 3,000,000/- payable to the applicant under Section 5(b) (iv) of the Insurance (Motor Vehicle Third Party Risks) Act Cap 405 that excess amount not payable by the insurance company (Interested Party) should be free from the conservatory order, and be capable of execution.

28. This would be plausible if, for example, the Interested Party had been shown to have been collecting insurance premiums, during the period they knew it was unsustainable to grant cover, and notwithstanding their financial weakness or being aware of the imminent danger of insolvency; or if they had unsuccessfully defended the cases in the lower court where they were sued as insurers by the plaintiffs there.

29. I have carefully perused the petition. In paragraph 10 the Petitioners assert that the Interested Party was the third-party insurer for the vehicles in their transportation businesses. At paragraph 13 they assert that the judgment debts arising from the law-suits were at all material times the debts of the Interested Party; at paragraph 14, the petitioners assert that:“14. 14. The Interested Party due to financial distress and eventual insolvency, was unable to defend the suits or to make good the decrees arising from the judgments in the lawsuits”

30. Amongst the prayers sought in the petition, is:“d)d) An order terminating all road traffic accident third oparty law suits and legal proceedings against the petitioners in respect of any one or more of the Petitioner’ motor vehicles insured by the Interested Party

31. In Gatirau Peter Munya v Dickson Mwenda Kithinji & 2 others [2014] eKLR the Supreme Court emphasized the public law nature of conservatory orders as follows:“Conservatory orders” bear a more decided public-law connotation: for these are orders to facilitate ordered functioning within public agencies, as well as to uphold the adjudicatory authority of the Court, in the public interest. Conservatory orders, therefore, are not, unlike interlocutory injunctions, linked to such private-party issues as “the prospects of irreparable harm” occurring during the pendency of a case; or “high probability of success” in the supplicant’s case for orders of stay. Conservatory orders, consequently, should be granted on the inherent merit of a case, bearing in mind the public interest, the constitutional values, and the proportionate magnitudes, and priority levels attributable to the relevant causes.”

32. Clearly therefore, conservatory orders are issued not to aid a party but to preserve the status quo that is being challenged by the petition. Consequently, reviewing the conservatory orders dated 16th December, 2019 would not be in the best interest of the administration of justice and would render the Petitioners’ case nugatory.Whether this Petition be transferred from this Honourable Court to Kiambu High Court

33. The applicants claim that the transfer of this suit to Kiambu High Court will be cost efficient to the parties to this suit for reason that 8th & 9th Respondents/Applicants and most of the Respondents herein had their judgments obtained in courts across Thika, Ruiru and Gatundu; all within Kiambu County.

34. Section 18 of the Civil Procedure Act bestows upon the High Court the powers to transfer suits of a civil nature. It provides as follows:“(1)On the application of any of the parties and after notice to the parties and after hearing such of them as desire to be heard, or of its own motion without such notice, the High Court may at any stage—(a)transfer any suit, appeal or other proceeding pending before it for trial or disposal to any court subordinate to it and competent to try or dispose of the same; or(b)withdraw any suit or other proceeding pending in any court subordinate to it, and thereafter—(i)try or dispose of the same; or(ii)transfer the same for trial or disposal to any court subordinate to it and competent to try or dispose of the same; or(iii)retransfer the same for trial or disposal to the court from which it was withdrawn.(2)Where any suit or proceeding has been transferred or withdrawn as aforesaid, the court which thereafter tries such suit may, subject to any special directions in the case of an order of transfer, either retry it or proceed from the point at which it was transferred or withdrawn”.

35. In the case of GKK v ANK & Another [2021] eKLR , the High Court sitting at Nyeri held inter alia the grounds to be considered for an application for transfer as follows:-“In the case of Hangzhou Agrochemicals Industries Ltd. vs Panda Flowers Ltd [2012] eKLR the court held:"In my view, which view I gather from authorities and from the law, the court should consider such factors as the motive and the character of the proceedings, the nature of the relief or remedy sought, the interests of the litigants and the more convenient administration of justice, the expense which the parties in the case are likely to incur transporting and marinating witnesses, balance of convenience, questions of expense, interest of justice and possibilities of undue hardship. (Emphasis added)

36. The application herein of 20th March 2023, was filed on 22nd March 2023, the same day that the petition was coming up for mention. The counsel for the applicants argued that the Petition having been filed in Kerugoya affected many other suits that had been filed in Kiambu County, and that it was more apt that the petition be transferred to Kiambu, where most of the other suits were filed.

37. The court ordered that the said application be heard first and that written submissions be filed. Present at that mention were representatives for: petitioners, Interested Party; 19th, 20th and 21st Respondents. I have not seen any- evidence that this application was served on all the other parties to the petition. If the petition is to be transferred to Kiambu High Court, I think all other parties should have been served and given an opportunity to make their representations thereon.

38. Ultimately, I think that the prayer for the transfer of the petition to Kiambu High Court should involve all the petitioners and respondents and not be limited to the convenience of 8th and 9th Respondents. They need to satisfy the court that transferring the suit will be cost effective, more convenient, and in the interests of justice to so transfer the case.

Disposition 39. The upshot is that this court finds that on the issue whether the orders dated 16th December, 2019 should be reviewed, the answer is no; and on the issue whether this Petition should be transferred from this Honourable Court to Kiambu High Court, the answer is also no.

40. Accordingly, the application fails and is dismissed with costs.

41. Orders accordingly

DATED AT KERUGOYA THIS 14TH DAY OF NOVEMBER, 2023_______________________________R. MWONGOJUDGEDelivered in the presence of:SUBPARA 1. Nakitare holding brief for Atake for PetitionerSUBPARA 2. Munene holding brief for Gacheru for 8th & 9th RespondentsSUBPARA 3. Wanyama for 20th RespondentHC Constitutional Pet No 1/2019 Paleah Stores & Others v Dedan Mwaura & Ors Ruling Page 10 of 10