[2022] KEHC 15437 (KLR)

Republic v Maliti (As the then County Executive Committee Member, Finance & Economic Planning Machakos County Government) & another; Lirona Construction Limited (Exparte) (Miscellaneous Application 16 of 2020) [2022] KEHC 15437 (KLR) (18 October 2022) (Ruling)

Neutral citation: [2022] KEHC 15437 (KLR)

Republic of Kenya

In the High Court at Machakos

Miscellaneous Application 16 of 2020

GV Odunga, J

October 18, 2022

Between

Republic

Applicant

and

Francis Maliti (As the then County Executive Committee Member, Finance & Economic Planning Machakos County Government)

1st Respondent

Grace Munguti (As the County Secretary of Machakos County Government)

2nd Respondent

and

Lirona Construction Limited

Exparte

Ruling

1. Vide a notice of motion application brought under section 1A, 1B and 3A of the Civil Procedure Act and order 50 rule 5 and 6, order 51 of the Civil Procedure Rules, 2010 dated April 20, 2022 seeking the following orders;a.Spentb.Spentc.That this honourable court do order accounts be taken as regards the paid/ settled amounts of the decretal sum so fard.That this honourable court do grant the applicants more time to settle the balance of the decretal sum as once accounts are taken.

2. The application is supported by the affidavit of Justus Kasivu, the chief officer department of transport, roads and public works as well as the accounting officer deposed on April 20, 2022 in which he contends that it has come to his knowledge that an order of mandamus was issued against the former county executive member, finance & economic planning, Francis Maiti and the county secretary of Machakos, Grace Munguti on September 24, 2020.

3. According to him, the Ministry of Transport, Roads and Public Works’ joint reconciliation and preliminary finding established that Kshs 1,493,379. 44 is unpaid which was retention for the final certificate and withholding taxes which amounted to Kshs 3,058,108 and that during the joint reconciliation, it was established that the contractor had calculated interest based on delayed payment certificates which had already been paid.

4. It was his contention that on January 12, 2022 as they continued with reconciliation, the ex parte applicant finally quantified the amount due to Kshs 4,950,570. 11 which they are keen on settling as follows;a.Retention Kshs 1,892,461. 37b.Withholding tax@ 3% Kshs 1,911,928. 08c.Withholding VAT @ 6% Kshs 1,146,180. 66Total Kshs 4,950,570. 11

5. He presented the payment status as follows;Road furniture and associated works Makutano- Kithimani roada.Retention Kshs 1,499,379. 44b.Withholding tax@ 3% cert 1 Kshs 477,941. 80c.Withholding VAT @ 6% cert 1 Kshs 772,313. 50Total Kshs 2,713,394. 75 (paid)Upgrading of Makutano- Kithimani roadd.Retention Kshs 399,321. 90e.Withholding tax@ 3% Kshs 1,463,986. 25f.Withholding VAT @ 6% Kshs 373,867. 15Grand total Kshs 4,950,570. 10

6. It was pointed out that the initial withholding tax was paid directly to Kenya Revenue Authority and the monies due for the upgrading was pending. He averred that despite the milestones, the ex parte applicant’s counsel is, without basis, asking for Kshs 7,331,551 and has been threatening to have the respondents arrested and jailed precipitating this application. He stated that unless the orders sought are granted, the cited officials are at risk of being arrested in execution of incorrect decretal amounts despite making tremendous efforts to clear the balance.

Replying affidavit 7. Erick Oyoto Akut, the director of the respondent in response filed a replying affidavit dated May 20, 2022 in which he deposed that contrary to what was alleged, the applicants were served with a notice to show cause and on December 6, 2021 when the warrants were issued, the 1st applicant had sent a representative and the court was satisfied that the 2nd respondent had been served. He admitted to writing the letter dated January 8, 2022 in the spirit of expeditious disposal of the matter but the applicants failed to remit the sums leaving him no choice but to proceed with execution of the warrants of arrest. He expressed his willingness to withdraw court proceedings on the mediation settlement of Kshs 3,874,120 upon expeditious receipt of the above payment of Kshs 4,950,570. 11 but five months later, the sums remain unpaid.

8. While asking the court to dismiss the application, he contended that the terms of the consent entered on October 18, 2019 have not been complied with and out of Kshs 8,824,690 only Kshs 1,493,139,45 has been paid leaving an outstanding sum of Kshs 7,331,550,55. He was apprehensive that in case a new governor and officers were elected, it would be difficult for him and his company to recover the outstanding sum. According to him, there was no proof of payment to his company or withholding VAT certificates and the application was an abuse of the court process.

Further affidavit 9. The applicant, in a further affidavit deposed that as per the letter dated January 8, 2022, the outstanding amount was Kshs 4,950,570. 11 after taking accounts out of which Kshs 1,499,379 had been paid and 3% of withholding tax on certificate 1 of Kshs 447,941. 80 and 6% VAT on certificate 1 amounting to and Kshs 772,313. 50 were both paid directly to KRA on June 29, 2022. He deposed that the ex parte applicant wrote back raising the issue of costs which came as a surprise to him. He further contended that the same should not be a basis for objecting to the settled amounts since it was not part of the agreed sum as per the letter dated January 8, 2022.

10. The Application was canvassed by way of written submissions.

Applicant’s submissions 11. The applicant filed submissions on July 12, 2022 in which he contended that the sum of Kshs 1,499,379. 44 was paid to the ex-parte applicants directly on February 3, 2022 which he has admitted to and the withholding tax and VAT on certificate 1 amounting to Kshs 447,941. 80 and Kshs 772,313. 50 respectively paid directly to KRA as per the remittances on June 29, 2022. He submitted that the balance of Kshs 399,321 was in the process of being paid and since the issue of costs was not mentioned in the letter dated January 8, 2022, then the same does not arise.

Respondent submissions 12. The respondents were filed on July 25, 2022 in which he relied on the case of Kenya Commercial Bank Limited v Specialized Engineering Company Limited [1982] KLR 485 and submitted that the consent judgement was entered in 2019 and to date the ex-parte applicant still seeks justice. It was submitted that the consent judgement has a contractual effect and the parties that entered into a mediation settlement agreement are bound by those terms.

13. The respondent made reference to section 107 and 108 of the Evidence Act and submitted that the remittances to KRA had not been done since proof had been provided and the law provides that a payee is required to generate a withholding tax certificate which is automatically sent to the payee once the payer remits the withholding tax to KRA.

14. It was submitted that the further affidavit was filed without leave of the court contrary to provisions of order 51 rule 14 (4) of the Civil Procedure Rules and ought to be struck out. Further, the annexed documents appear to be internally generated and there is no certificate of electronic evidence contrary to section 106 B of the Evidence Act. It was also submitted that the exhibits are not withholding tax certificates either. The court was urged to expunge the letter marked 'without prejudice' as the same was intended to keep alive the negotiations and could only be admissible if it culminated in a settlement agreement.

Determination 15. I have perused the application, the affidavit and the submissions of parties on record.

16. The first issue is whether the court ought to expunge the applicants’ further affidavit. It is true that the applicant did not seek and obtain the court’s leave before filing the said affidavit. While the courts frown upon the practice of filing documents without leave where such leave is required, the decision whether or not to ignore, as opposed to expunging, such a documents depends largely on whether or not to the other side was thereby prejudiced. Where no serious prejudice is caused such misdemeanor may be excused, of course subject to the culprit bearing the costs. As was held the Court of Appeal in Trust Bank Limited v Amalo Company Limited Civil Appeal No 215 of 2000 [2002] 2 KLR 627 [2003] 1 EA 350, in which the Court cited its decision in Central Bank of Kenya v Uhuru Highway Development Ltd & Others Civil Appeal No 75 of 1998:'The principle which guides the court in the administration of justice when adjudicating on any dispute is that where possible disputes should be heard on their own merit and errors should not necessarily deter a litigant from the pursuits of his right. The court is obliged to look at the documents on record even though filed out of time unless for a reason other than mere lateness, it considers it undesirable to do so.'

17. The law is therefore clear that the court ought not to ignore documents on record even if irregularly filed unless the filing thereof has prejudiced the other party in material respect. Prejudice if any occasioned to the respondents can, no doubt be compensated in costs. It has been said there is one panacea which heals every sore in litigation and that is costs. Seldom, if ever, do you come across an instance where a party has made a mistake which has put the other side to such disadvantage or that it cannot be cured by the application of that healing medicine. See Waljee’s (Uganda) Ltd v Ramji Punjabhai Bugerere Tea Estates Ltd [1971] EA 188.

18. Since the nature of prejudice if any that the respondent has been put to by the irregular filing of the said affidavit, was not disclosed, nothing turns on that issue.

19. In this matter, it is clear that the issue in contention is how much is due on the decree. Order 21 rule 17 of the Civil Procedure Rules, 2010 provides:The court may, either by the decree directing an account to be taken or by any subsequent order, give special directions with regard to the mode in which the account is to be taken or vouched, and in particular may direct that in taking the account the books of account in which the accounts in question have been kept shall be taken as prima facie evidence of the truth of the matter therein contained with liberty to the parties interested to take such objection thereto as they may be advised.

20. Accordingly, the order which commends itself to me and which I hereby issue is that the parties herein do, within 10 days of this decision, agree on and appoint an independent accountant to take accounts between them and file his/her report within 45 days from the date of his appointment. In default of such agreement each party to appoint an accountant and the two appointed accountants to appoint an umpire and the three to go through the documents in possession of the parties and prepare a report for filing in this matter within 45 days of the appointment of the umpire. Where the parties agree on one accountant his/her costs will be shared equally by the parties. Where one party does not co-operate in the process of appointment of the accountant, the report of the accountant appointed by the other party shall be filed for consideration by the court.

21. However, where three accountants are appointed each party will bear the costs of his accountant while the costs of the umpire will be shared equally by the parties.

22. Further orders of the court to await the filing of the said report.

23. Liberty to apply granted.

24. Orders accordingly.

G V ODUNGAJUDGERULING READ, SIGNED AND DELIVERED IN OPEN COURT AT MACHAKOS THIS 18TH DAY OF OCTOBER, 2022M W MUIGAIJUDGEDelivered the presence of: