[2022] KEHC 3316 (KLR)

SBM Bank Kenya Limited v Geoffrey Ndungu Joseph T/A Venture Auctioneers & 2 others (Civil Case E001 of 2022) [2022] KEHC 3316 (KLR) (7 July 2022) (Ruling)

Neutral citation: [2022] KEHC 3316 (KLR)

Republic of Kenya

In the High Court at Nakuru

Civil Case E001 of 2022

HK Chemitei, J

July 7, 2022

Between

SBM Bank Kenya Limited

Plaintiff

and

Geoffrey Ndungu Joseph T/A Venture Auctioneers

1st Defendant

Countryside Dairy Limited

2nd Defendant

Ol-Kalou Dairy Limited

3rd Defendant

Ruling

1. The applicant filed a Notice of Motion dated 7th March 2022 under Sections 1A, 1B, 3, 3A of the Civil Procedure Act and Order 51 Rule 1 of the Civil Procedure Rules, 2010 and Sections 3, 4(1) (a), (5), 27 (b), 28 of the Contempt of Court Act, 2016 they praying for the following orders; -a)That the 1st Respondent herein Geoffrey Ndungu Josephat t/a Venture Auctioneers be held in contempt of court orders.b)That the 3rd Respondent herein together with its general manager Mr. Kenneth Wachira and its officials be held in contempt of court orders.c)That the 1st Respondent herein be fined for the said contempt and be committed to civil jail for six (6) months and/or such fine or penalty that this Honorable Court may impose.d)That the 3rd Respondent herein together with its general manager Mr. Kenneth Wachira and its officials be fined for the said contempt and be committed to civil jail for six (6) months and/or such fine or penalty that this Honorable Court may impose.e)That this Honourable Court do grant an order cancelling the sale purported to emanate from the unlawful and or un procedural Auction conducted on the 21st January, 2022, payment of purchase price, transfer and / or any other dealings on UHT line, ESL filling line, 3/10. 000 liters chilling tank, the piping and accessories.f)That the 1st Respondent be compelled to produce the proceedings of the Auction conducted on the 21st January, 2022. g)The costs of this Application be provided for.

2. The application is supported by the grounds on the face thereof and the sworn affidavit by Samuel Kamau Margaret the regional business manager of the applicant dated 7th March 2021. He deposed that on the 17th January, 2022 this court granted an order staying execution of the ruling and consequential orders issued on 22nd December, 2021 and the scheduled auction and ordered return of UHT Line, UPS Unit, ESL filing Line, 3/10,000 Litters Chilling Tank, Piping & other Accessories that had been attached and were scheduled to be sold by the 1st Defendant.

3. He deposed further that the said orders were granted in light of the fact the said equipment were securities registered by the Applicant to secure payment of various financial facilities of up to the maximum principal amount of Kenya Shillings One Hundred and Forty-Seven Million (Kshs. 147,000,000/-) which were extended to the 2nd defendant vide various letters of offer. Additionally, that the said order which had a penal notice was served upon the 1st defendant on the 17th January, 2022 at around 4pm physically and the 1st defendant accepted service but refused to sign an acknowledgement. That notice was also served upon the 1st defendant on the 17th January, 2022 at around 4pm vide a mobile enabled messaging application (WhatsApp) to the 1st defendant’s last known and used telephone number 0721 849 506.

4. He went on to depose that the said order which had a penal notice was served upon the 3rd defendant on the 17th January, 2022 at around 4pm vide electronic mail service to the 3rd respondent’s last confirmed and used e-mail address kwachira@olkaloudairy.co.ke, isaacmuchiri04@gmail.com and kennethwachira46@gmail.com. That the same was also served upon the 3rd defendant physically on 21st January 2022 at 1am and service was acknowledged by stamping and dating on the principal copy.

5. While relying on the advice from his advocates on record, he believed that service via electronic mail and mobile enabled message “WhatsApp” was duly recognized as a mode of service by virtue of Order 5, Rule 22(b) and (c) of the Civil Procedure (Amendment) Rules 2020 respectively. That the 1st and 3rd defendants deliberately elected not to comply with the said order and on the 21st January, 2022, the 1st and 3rd Defendants purport to have sold via auction the said equipment in violation of the said court order. That further, the said auction sale was made in violation of Section 2 Auctioneers Act No.5 of 1996 and Rules 16, 17 and 18 of the Auctioneers Rules. 1997.

6. Mr. Kamau deposed that the said purported sale is illegal, null and void and the 3rd defendant cannot pass good title. That the applicant stood to lose more than Kshs. 50,000,000 as a result of the 1st and 3rd defendant’s disobedience of the court order as the purported sold equipments were used as security to advance 2nd defendant Kshs. 147,000,000/=. He deposed further that the conduct of the 1st and 3rd defendants was evidence of the fact that they had total disregard and disdain to this court on the administration of justice and were meant to defeat the end of justice.

7. The 2nd respondent in support of the applicant’s application dated 7th March 2022 filed a replying affidavit sworn on 17th September 2021 by its director one George Mwangi. He affirmed the contents of paragraphs 2, 11 and 18 of the applicant’s supporting affidavit sworn on 7th March 2022. He deposed that the order of 17th January, 2022 which had a penal notice was also served upon Mr. Muchiri the 3rd defendant’s chairman on the same day via mobile enabled message “WhatsApp” on phone number 0705350520. He urged the court to allow the applicant’s application.

8. The 1st respondent in response to the application filed a replying affidavit sworn on 24th March 2022. He deposed that the application was misconceived, inept, bad in law and an abuse of the court process. He denied the contents of paragraph 4, 5 and 13 of the applicant’s supporting affidavit. He went on to deny having been aware of an auction that was scheduled on Monday the 16th January 2022 as was alleged by the applicant’s Regional Business Manager. That the said allegation was misleading as the said date was not an official working day.

9. The applicant in response to the 3rd respondent’s replying affidavit sworn on 23rd March 2022 by its chairman one Kenneth Wachira, filed a further affidavit sworn on 30th March 2022 by Samuel Kamau Margaret, its Regional Business Manager.

10. He averred that the application herein was meritorious and that the applicant was a stranger to averments in paragraphs 6-11 of 3rd respondent’s affidavit. He averred further the security equipment pledged to the applicant for advancement of the loan was not part of the arrangements between the 2nd and 3rd Respondents.

11. In response to the contents of paragraph 12 and 13 of the said affidavit, he averred that the orders of 17th January 2022 was to the effect of staying execution of the order issued on 22nd December 2021 in Nakuru Misc. Civil Application Number 250 of 2021 Geoffrey Ndungu Josephat t/a Venture Auctioneer v Countryside Dairy Limited. He added that the said orders were not defective and this was in response to paragraph 15.

12. He averred further that the machines were still lying at the 3rd respondent’s yard and that the same had not been sold on public auction. He went ahead to challenge the 1st and 3rd respondents to table notification of sale and proof of service thereof, valuation reports, minutes/proceedings of the auction, list of bidders, memorandum of sale and evidence of payment of the purchase. He concluded by stating that he was a stranger to the averments made in paragraphs 18-23 and that the order referred to herein was not overtaken by events.

13. When the matter came up for hearing the court directed that the same be disposed by way of written submissions which the parties have complied.

Applicant’s Submissions 14. The applicant in its submission identified two issues for determination namely; whether the 1st and 3rd respondents are in contempt of court orders issued on 17th January 2022. The applicant placed reliance on Kristen Carla Burchell vs Barry Grant Burchell, Eastern Cape Division Case No. 364 of 2005 as cited with approval in the case of Samuel M.N Mweru & Others v National Land Commission & 2 Others [2020] eKLR, which laid down the principles for one to succeed in civil proceedings.

15. The applicant submitted further that the aforementioned orders issued were clear, unambiguous and binding to the 1st and 3rd respondent. That the said orders were not defective as alleged by the 3rd respondent and that they had knowledge of its terms but failed to comply with the same. That further, their conduct was deliberate and in bad faith thus they were guilty of contempt and liable to punishment.

16. Lastly, on the issue whether the purported public auction sale conducted on 21st January 2022 was illegal, null and void and should be cancelled the applicant submitted that said public auction was done against the spirit of a valid court order and no due procedure was followed as provided by the law.

17. In conclusion, the applicant submitted that it had satisfied the pre- conditions for grant of prayers sought and it urged the court to allow its application with cost.

2nd Respondent’s Submissions 18. The 2nd respondent in its submission identified three issues for determination which include whether the 1st and 3rd respondents are guilty of contempt of court. The 2nd respondent submitted that having been served the 1st and 3rd respondents had knowledge of the existence of the orders dated 17th January 2022. That they deliberately elected not to comply with the said orders while they purported to sell via auction the equipment indicated in the order. It placed reliance it the cases of Shimmers Plaza Limited v National Bank of Kenya and Sheila Cassatt Issenberg and another v Anthony Macharia Kinyanjui [2021] eKLR which cited the case of Mahinderjit Singh Bitta v Union of India & Others 1 A No. 10 of 2010.

19. On the second issue, whether this honourable court should cancel the purported auction sale that happened on the 21st January, 2022 the 2nd respondent submitted that the said auction was made in violation of section 21of the Auctioneers Act No. 5 of 1996 and Rules 16,17 and 18 of the Auctioneers Rules, 1977.

20. Lastly, on the issue whether the orders sought should be granted the 2nd respondent submitted that the application herein was merited and the same should be allowed as prayed with costs.

3rd Respondent’s Submissions 21. The 3rd respondent in its submission identified one main issue for determination namely; whether or not it was guilty of contempt of the court orders issued 17th January, 2022. It submitted that the application herein lacked merit and that the same was an abuse of the court process. That it was not served with the said orders until the 21st January, 2022 in the afternoon and that the aforementioned orders sought to stop auction taking place on 16th January, 2022 but no such orders were taking place. He draws the court’s attention to the cases of Stephen Onyambu v East African Building Society & 3 others [2005] eKLR and Trans Mara Sugar Company Limited v Hosea Muga & Another [2021] eKLR.

22. In conclusion, the 3rd respondent submitted that an order ought to be clear and unequivocal and should not miss important details. It urged the court to dismiss the present application with costs.

Analysis and Determination 23. I have has perused carefully the applicant’s application, the supporting affidavit, affidavit by the 2nd respondent and both parties’ submissions. In my view two issues stand out for determination namely; whether the 1st and 3rd respondents are guilty of contempt of court and whether the applicant has established any basis for the orders sought to be granted.

24. In addressing the first issue, contempt of court definition according to the Black’s Law Dictionary is as follows;“Contempt is a disregard of, disobedience to, the rules or orders of a legislative or judicial body, or an interruption of its proceedings by disorderly behavior or insolvent language, in its presence or so near thereto as to disturb the proceedings or to impair the respect due to such a body”

25. The statutory basis of contempt of court in so far as the High court is concerned is section 5 of the Judicature Act which provides as follows;1. “The High court and the Court of Appeal shall have the same power to punish for contempt of court as is for the time being possessed by the High Court of Justice in England, and that power shall extend to upholding the authority and dignity of subordinate courts.2. An order of the High court made by way of punishment for contempt of court shall be appealable as if it were a conviction and sentence made in the exercise of the ordinary original Criminal jurisdiction of the High court.”

26. The High Court in the case of Samuel M. N. Mweru & Others v National Land Commission & 2 others [2020] eKLR discussed the applicable law on contempt of court as follows: -“It is an established principle of law that in order to succeed in civil contempt proceedings, the applicant has to prove (i) The terms of the order, (ii) Knowledge of these terms by the Respondent, (iii) Failure by the Respondent to comply with the terms of the order.”

27. The court in the aforementioned case proceeded to quote with approval the learned authors of the book; Contempt in Modern New Zealand thus: -“There are essentially four elements that must be proved to make the case for civil contempt. The applicant must prove to the required standard (in civil contempt cases which is higher than civil cases) that: -a.The terms of the order (or injunction or undertaking) were clear and unambiguous and were binding on the defendant;b.The defendant had knowledge of or proper notice of the terms of the order;c.The defendant has acted in breach of the terms of the order;d.The defendant's conduct was deliberate.”

28. These four elements must be proved to make a case for civil Contempt. Although where the proceedings are civil in nature, it is well established that the degree of prove is almost that beyond reasonable doubt but definitely higher than on balance of probability. This was discussed in the locus classicus of Mutitika v Baharini Farm, Civil Application No. NAI 24 of 1985 (1985) eKLR.

29. In the instant suit, this court on 17th January 2022, on an application by the applicant issued among others, the following orders:a.Spent.b.That there be a stay of execution of the Ruling and consequential orders issued on 22nd December, 2021 regarding the breaking in and repossessing of UHT line, ESL filling Line, 3/10. 000 liters chilling tank, the piping and accessories at the 2nd Respondent’s plant pledged as security to the Applicant pending the hearing and determination of this application inter-parties.c.That this honorable Court hereby issues an order staying the scheduled auction on Monday 16* January, 2022 and for the return of all the machines the 1st Respondent collected pursuant to the Court order issued on 22nd December, 2021 and status quo be maintained until hearing and determination of this Application.d.That the application shall be heard inter-parties on the 31st January 2022.

30. Having looked at the court record, I note that the said orders were served on the 1st and 3rd respondent. The 1st respondent denied being served but I however note that there are several affidavits of service as proof that it was actually served and it has not adduced any evidence to the contrary. I further note that there are screenshots from “WhatsApp” messaging and emails sent to the 1st and 3rd respondent’s official last known email address and the 3rd respondent’s director also confirmed in his statement that he was served on 21st January 2022.

31. Although the order under paragraph 3 indicated the sale to take place on Monday 16th January 2022, the same should be a typing error as that day is a Sunday and not a Monday. More importantly the auction was to take place on the 21st January 2022 which meant that the respondents were already aware of the said order. The affidavit of Maureen Sibachi and Robert O. Ojou in my view are believable. The 1st defendant has for instance not denied that telephone number 0721849506 does not belong to him or at all.

32. At the same time the 1st respondent’s office is not just an ordinary one. In other words, considering the nature of the work he does and the interaction with the public and more specifically the court and other legal exercise, it is not possible for the process server not to miss the said office.

33. The upshot of this is that the 1st and 3rd respondents were duly served with the orders as well as the application but they choose to ignore. The WhatsApp messages have not been controverted by the respondents. Indeed, our civil procedure rules now envisages such kind of service and in this case they duly received the same but choose to ignore.

34. Further, save for the advertisement attached to the 1st respondents replying affidavit, there is no evidence that the sale took place. There is no notification of sale, no evidence of any bidders, no memorandum of sale and more significantly no evidence of payments by the final bidder. These are crucial evidence which the respondents ought to have exhibited in support of their claim. In the absence of these, this court takes it that there was no auction on the said date and if there was then the same was against the express orders of the court.

35. Considering the four elements set out hereinabove, it’s evident that the terms of the order were clear. The 1st and 3rd respondents had knowledge of the order, but instead went ahead to auction the properties on 21st January 2022 which were the subject of the orders issued by this court on 17th January 2021 but they acted in breach of the terms of the said order and their conduct was deliberate.

36. This court finds that the 1st and 3rd respondents are in contempt of the orders of this court dated 17th January 2022. What then is the recourse the court should take.? The court has wide range of options on the punishment it ought to meet against them. Court orders must be obeyed least of all by the 1st respondent. The value of the properties attached is colossal and the interest of all the parties herein is significant. All the parties in the mind of the court ought to be heard before any action or auction was undertaken and that was the reason for the court granting the temporary orders.

37. Consequently, and so as to purge their contempt, it is hereby ordered that;a.All the attached properties mentioned in the order dated 17 th January 2022 be returned to the 2nd defendant unconditionally by the 1st and 3 rd respondent within three (3) days from the ruling of this court and in the same conditions they were before attachment.b.The purported sale, if any, that may have taken place on 21 st January 2022 in respect to the said properties is hereby cancelled for all intend and purposes.c.The 1st and 3 rd respondents specifically Geofrey Ndungu Josphat and Kenneth Wachira are each fined Kshs. 250,000/= to be paid to this court within 7 days from the date herein and in default each shall serve 30 days’ imprisonment.d.The applicant shall have the costs of this application.

DATED SIGNED AND DELIVERED VIA VIDEO LINK AT NAKURU THIS 7TH DAY OF JULY 2022. H K CHEMITEI.JUDGE