https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/6975

Cytonn High Yield Solutions LLP & another v Dande & another (Insolvency Petition E063 of 2021) [2026] KEHC 6975 (KLR) (Commercial and Tax) (22 May 2026) (Ruling) Neutral citation: [2026] KEHC 6975 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Insolvency Petition E063 of 2021 FG Mugambi, J May 22, 2026 IN THE MATTER OF CYTTON HIGH YIELDS SOLUTIONS (IN LIQUIDATION Between Cytonn High Yield Solutions LLP Petitioner and The Official Receiver Applicant and Edwin Harold Dande 1st Respondent Cytonn Investment Management Plc 2nd Respondent (On the applications dated 5th June 2025 and 5th December 2025) Ruling 1.For determination are two applications dated 5th June 2025 (the first application) and 5th December 2025 (the second application) both filed by the Official Receiver, in his capacity as the Liquidator of Cytonn High Yields Solutions (CHYS) and Cytonn Real Estate Project Notes (CPN). 2.The first application seeks to have the 1st respondent and alleged contemnor show cause why he should not be committed to civil jail for disobeying the Court of Appeal’s orders of 3rd December 2024 by interfering with and disrupting the liquidator’s possession of the property known as ‘The Alma’ on L.R. No Kiambaa/Ruaka/6667 (hereinafter the suit property). the Official Receiver also seeks injunctive relief restraining the directors of the 2nd respondent, its Chief Executive Officer, their agents and any other Cytonn entity from entering the suit property and finally an order directing the County Commander to appear before this Court and appraise it on the prevailing situation at the property 3.The second application equally seeks to have the 1st respondent committed to prison for a period of six (6) months with a fine of Kshs.30,000,000/- or such an amount as the Court shall determine for being in contempt of the Orders of this Court given on 6th January 2023, 30th November 2023, and 22nd November 2024. 4.The applications are opposed through the Replying Affidavits sworn by the 1st respondent on 25th July 2025 and 28th January 2026 as well as that of Elizabeth Nailantei Nkukuu on behalf of the 2nd respondent. The parties filed their respective written submissions which I have duly considered alongside the application and responses filed. Analysis and Determination 5.Having regard to the nature of the prayers sought by the applicant, and mindful of the directions issued by this Court on 27th September 2024, intended to ensure that only matters incapable of resolution through the liquidator are placed before the Court, I consider it proper to grant leave for the applications to be prosecuted. 6.Additionally, I find it necessary to clarify the prioritization of the contempt applications, over a number of other pending applications, a matter which the respondents have vigorously challenged as prejudicial. I take this objection to be unmerited. It is neither unusual nor exceptional for a court to accord priority to contempt proceedings. Indeed, it is the norm. The rationale for this is that the authority of the court must be safeguarded before any other matter can be meaningfully adjudicated. 7.As was aptly explained by Ibrahim, J (as he then was), in Econet Wireless Kenya Ltd V Minister for Information & Communication of Kenya & Another, [2005] KEHC 1767 (KLR), with which I am in full agreement:“Where an application for committal for contempt of court orders are made the court will treat the same with a lot of seriousness and urgency and more often will suspend any other proceedings until the matter is dealt with and if the contempt is proven to punish the contemnor or demand that it is purged or both. For instance, an alleged contemnor will not be allowed to prosecute any application to set aside orders or take any other step until the application for contempt is heard. The reasons for this approach are obvious – a contemnor would have no right of audience in any court of law unless he is punished or he purges the contempt. So, the court is obliged to hear the application for committal first before any other matter. This is a general rule which must be applied strictly.” 8.Considering that the respondents are at the center of these proceedings, and mindful of the grave danger posed to the administration of justice by any continued contempt if proved, I am persuaded that no prejudice will be occasioned by prioritizing these applications. 9.That said, I am mindful that a court deprived of the power to punish for contempt ceases to function as a court in any meaningful sense. The authority to enforce compliance with its orders is not a discretionary attribute but an inherent aspect of jurisdiction, without which the very notion of a court becomes contradictory. This principle was affirmed in Samuel M. N. Mweru & Others V National Land Commission & 2 Others, [2020] KEHC 9233 (KLR), where the Court Mativo, J, (as he then was) underscored that the dignity and authority of the law must be preserved if courts are to discharge their constitutional mandate. It is for this reason that courts are vested with the extraordinary power to punish contempt, not for self-preservation, but to uphold the majesty of the law and safeguard the integrity of justice. 10.In the same decision, the learned Judge, drawing from the authoritative text Contempt in Modern New Zealand, articulated the elements that constitute civil contempt. To establish civil contempt, an applicant bears the burden of proving, to a standard higher than that applicable in ordinary civil claims but lower than the criminal threshold, the following essential elements:i.The existence of a clear and unambiguous court order;ii.Knowledge of the order by the alleged contemnor, whether actual or constructive;iii.Willful disobedience or breach of the order, demonstrated by deliberate or reckless conduct inconsistent with its terms; andiv.Resulting prejudice or interference with the due administration of justice or the rights of the parties entitled to the benefit of the order. 11.It is against this background that I now move to determine the substantive applications. The first application is premised on the alleged willful disobedience of the Orders of the Court of Appeal dated 3rd December 2024, issued in Civil Appeal (Application) No. E590 of 2023. According to the Official Receiver, the specific orders said to have been breached were set out as follows:“The status quo that shall be maintained until the next hearing date shall be that the Official Receiver (the 1st Respondent) shall collect, preserve and be in possession of the suit premises that are the subject of the consolidated applications, and shall not transfer, charge, dispose, waste or otherwise deal with the said properties in any way detrimental to the parties hereto.” 12.The Official Receiver averred that, notwithstanding the appointment of Ms. Muigai Commercial Agencies to manage the suit property on its behalf, the 1st respondent and his agents had continued to interfere with the Official Receiver’s exercise of powers over the suit property. The respondents vehemently questioned the competence of this Court to entertain the application. The central issue is therefore whether this Court has jurisdiction to adjudicate contempt proceedings founded upon orders issued by the Court of Appeal. 13.Article 165 of the Constitution confers upon the High Court unlimited original jurisdiction in criminal and civil matters. This jurisdiction does not extend to supervising or enforcing orders of the Court of Appeal. The supervisory jurisdiction of the High Court is expressly limited to subordinate courts and bodies exercising judicial or quasi-judicial functions. 14.Further, Section 5 of the Judicature Act provides the statutory foundation for contempt proceedings. It stipulates 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 such 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.” 15.It is evident from the above provisions that both the Court of Appeal and the High Court possess inherent jurisdiction to punish for contempt of their own orders. This jurisdiction, however, is confined to each court’s authority and does not extend to enforcing or punishing contempt of orders issued by another superior court, save for the appellate process where contempt before the High Court may be reviewed by the Court of Appeal. The rationale for this limitation lies in the constitutional design of judicial hierarchy. 16.Additionally, the power to punish for contempt is not a mere procedural tool but a substantive safeguard of judicial authority. To permit the High Court to enforce or punish disobedience of orders emanating from the Court of Appeal would blur the lines of accountability, undermine the institutional integrity of the appellate court, and create duplication of proceedings. Such an approach would be inconsistent with the principle of judicial orderliness and contrary to the constitutional framework that defines the hierarchy of courts. 17.This position has already been affirmed by this Court in its previous Order for Directions issued on 15th May 2025, in the following terms:“The matter appears to touch on the interpretation of the Appellate Court Orders, which lies outside the jurisdiction of this Court. It is trite law that this Court does not have jurisdiction to interpret, enforce or punish for contempt of Orders issued by the Court of Appeal, a superior Court of record under Article 164 of the Constitution. The Appropriate forum for such clarification or enforcement is the Court of Appeal itself.” 18.Accordingly, I am inclined to agree with the respondents that this Court lacks jurisdiction to punish for contempt of the Court of Appeal orders. The proper recourse for the Official Receiver, or any party aggrieved by disobedience of these orders, is to move the Court of Appeal itself for enforcement or contempt proceedings. In light of the foregoing, I decline to consider the merits of the first application. 19.The second application is founded upon the respondents’ disobedience of this Court’s Orders issued on 6th January 2023, 30th November 2023, and 22nd November 2024. By these orders, the Court preserved certain properties and subsequently vested them in the Official Receiver, including The Alma. Thereafter, enforcement orders were issued to secure compliance with the preservation orders in respect of The Alma and the other suit properties. The Official Receiver now contends that the respondents have willfully refused to surrender the title documents as directed, thereby undermining the vesting orders and frustrating the liquidation process. 20.The Official Receiver further confirms that the respondents’ appeals against these orders were dismissed. The effect of these dismissals was to unequivocally uphold the decisions of this Court and to affirm the Official Receiver’s mandate to proceed with the liquidation of CHYS for the benefit of its creditors. Despite the orders being in force, the Official Receiver complains that the respondents have continued to intermeddle with the suit properties and to collect rent at The Alma, to the detriment of CHYS creditors. In addition, the Official Receiver challenges the irregular appointment of an Administrator over the preserved properties, which had already been vested in the Official Receiver for the benefit of the creditors. 21.In their separate responses, the respondents deny any willful disobedience of this Court’s orders. They contend that the original title documents in question are not in their custody or control, noting that this Court had expressly anticipated such eventualities by granting the Official Receiver liberty to apply for provisional titles. They argue that it is therefore unreasonable and legally untenable to cite them for contempt in respect of documents that remain unaccounted for following an alleged raid on the 2nd respondent’s premises. 22.The respondents further deny any interference with The Alma. They maintain that neither has collected rent, managed, or otherwise dealt with the property contrary to the Court’s orders. They emphasize that Alma Management Company Ltd, duly constituted by the 306 homeowners pursuant to their sub-leases, remains the lawful management entity, and no order has displaced its role. They add that the 1st respondent is merely a homeowner with no involvement in management, and that the residents themselves have raised concerns about accountability following the appointment of Muigai Commercial Agencies Limited. 23.On the issue of administration of other suit properties, the respondents clarify that they did not appoint any Administrator over Taraji, Ridge, or Applewood. They explain that the appointments referred to by the Official Receiver were made by Goal Advisory Africa Limited, acting lawfully as Trustee of the Cytonn High Yield Fund and holder of a qualifying floating charge under the Insolvency Act. They stress that these appointments were statutory and not made at their instance, and that the matter remains live in HCCOMMIN/E192/2025, where the appointed Administrator has sought the Court’s guidance. 24.The respondents also argue that the Official Receiver has failed to place before the Court credible evidence linking them to the alleged acts of contempt, invasions, or violence. They insist that no willful disobedience has been demonstrated, and that they cannot be held liable for non-compliance arising from circumstances beyond their control. They further contend that the Official Receiver must first complete the verification process to determine which apartments properly belong to the liquidation estate before seeking to collect rent or service charges. To proceed otherwise, they argue, would risk unconstitutional deprivation of property and violate the guarantees of due process and fair administrative action. 25.I have carefully considered the evidence and submissions placed on record. Each party accuses the other of deploying “goons” to forcibly take over The Alma, and both have tendered photographic evidence purporting to depict hostile takeovers, vandalism, and disturbances of the peace. While the photographs indeed portray scenes of disorder and breaches of tranquility, they do not identify the perpetrators with any degree of certainty. In the face of such ambiguity, this Court cannot attribute responsibility for the violence to a specific party. 26.It is further noted that, arising from the said incidents of vandalism, the respondents claim that they are no longer in possession of the title documents relating to the suit properties. The applicants have not placed before the Court any credible evidence to disprove this assertion or to demonstrate that the respondents are willfully withholding the documents. Contempt jurisdiction requires proof of deliberate and willful disobedience of a court order. Mere suspicion, inference, or the existence of disorderly circumstances cannot suffice. 27.In the absence of clear and cogent evidence establishing that the respondents intentionally refused to surrender the title documents as directed, this Court cannot draw an inference of contempt. This conclusion is reinforced by the fact that both parties acknowledge the incidents of violence, thereby accentuating the difficulty of attributing culpability to the respondents in the manner alleged. 28.To further buttress the evidentiary gap in the claims and counterclaims advanced by the parties, it is significant that the Director of Public Prosecutions declined to institute criminal charges against any persons allegedly involved in the incidents at The Alma. In a letter dated 8th May 2025, Mr. Arnold Baraka, writing on behalf of the Director of Public Prosecutions, expressly noted as follows:“Given the conflicting accounts presented and the fact that each party may have had access to or custody of the alleged stolen items in the ordinary course of their dealings, it is not clear who if anyone bears criminal responsibility. The matter appears to arise from a deeper underlying civil disagreement over property rights and management roles. In view of the above, we decline to exercise our discretion to charge and direct that parties be advised to resolve their disputes through the appropriate civil channels.” 29.These circumstances highlight the difficulty of attributing responsibility for the alleged acts of contempt and further demonstrates that the threshold for establishing willful disobedience of court orders has not been met. The mere presence of the 1st respondent in one of the photographs, which has been explained away by his role as a promoter and homeowner of The Alma, is insufficient to meet this threshold. The Official Receiver, as applicant, bears the burden of proving willful disobedience of court orders. From the material before me, direct involvement of the respondents has not been demonstrated. 30.Even with respect to the appointment of an Administrator over certain suit properties that had already been vested in the Official Receiver, the evidence before me shows that any such appointments were undertaken by another entity that is neither of the respondents. The record shows that Goal Advisory Africa Limited, acting as Trustee of the Cytonn High Yield Fund was the party responsible for those appointments. In any event, I note that the validity and effect of those appointments remain the subject of a separate legal process currently pending before this Court. 31.The 2nd respondent, being a separate legal entity, cannot be conflated with its directors, shareholders, or agents absent any proof of a resolution or direct participation by the 1st respondent. That said, the only documentary evidence presented before me of such direct involvement at the Alma is a letter dated 4th June 2025 written by Mr. Peter Wachira, Chairman of the Homeowners Committee. I find it necessary to reproduce a portion of it here for the avoidance of doubt:“Dear Homeowners and Residents,Re: Management Operations By The Legitimate Management CompanyWe trust this notice finds you well. As you are all aware, on 4th February 2025, Muigai Commercial Agencies unlawfully and unprocedurally trespassed in the Alma thereby disrupting the operations of the Management Company duly appointed by the homeowners in accordance with the Sublease Agreements. We are pleased to inform you that, with the express support and blessings of the Homeowners' Committee, the legitimate Management Company has resumed its operations with immediate effect. We intend to continue managing the estate in accordance with the Sublease Agreements, the Sectional Properties Act, and other applicable legal instruments.Accordingly, all service charge payments and rent remittances should henceforth be made strictly in accordance with your Sublease Agreements. We have noted that Muigai Commercial Agencies failed to remit service charges to essential service providers, resulting in disruption of utilities and diminished estate standards. An audit of the estate's financial position during the takeover period is ongoing. Once concluded, we shall provide a comprehensive report and advise on the way forward. In the meantime, we have reinstated key service providers including security, cleaning, waste collection, and utility coordination teams to restore normalcy and uphold the integrity, safety, and livability of the estate. We urge all residents to cooperate with the service teams for the efficient delivery of services.” 32.I have neither been told nor shown that the letter in question was authored with the instructions of any of the respondents. What I am however, prepared to find, and do hereby find for the sake of finality and clarity on this issue, is that the communication issued by the homeowners committee was inconsistent with the preservation and vesting orders of this Court. It constituted a deliberate and calculated attempt to mislead the residents of The Alma into disregarding lawful authority and undermining this Court’s Orders. 33.I rely on the clear provisions of Section 444 of the Insolvency Act which provides that:“When—(a)a liquidation order has been made; or(b)a provisional liquidator has been appointed, in respect of a company, the liquidator or the provisional liquidator shall assume control of all the property to which the company is or appears to be entitled.” 34.Equally instructive is Section 445 which provides that:“1.When a company is being liquidated by the Court, the Court may, on the application of the liquidator, by order direct all or any part of the property belonging to the company or held by trustees on its behalf to vest in the liquidator in that capacity.2.On the making of such an order, the property to which the order relates vests in the liquidator.” 35.It therefore follows that once preservation and vesting orders had been issued, as in this case over The Alma, the Official Receiver as liquidator became the sole lawful custodian of the suit property. The statutory scheme under Sections 444 and 445 of the Act vested exclusive control in the liquidator, and extinguished any competing claims to management or possession of the Alma. This deliberate centralization of authority is designed to uphold the principle of pari passu distribution and maintain transparency in the liquidation process. 36.More specifically, it should be noted that a liquidator has the power to appoint an agent to do any business that the liquidator is unable to do personally, and this power is exercisable without approval under Section 13 of the Third Schedule to the Act. This means that the Official Receiver was under no obligation to seek concurrence from the homeowners committee. Be that as it may, the Insolvency Act also requires the liquidator to account for all monies received, as a means of safeguarding creditors’ rights. Accordingly, any directive purporting to reassign management powers to a homeowners’ committee or other entity is ultra vires, unlawful, and void ab initio. 37.Finally, I must remind parties that obedience to court orders is not optional. In Shimmers Plaza Limited v National Bank of Kenya Limited, [2015] eKLR, the Court of Appeal reaffirmed the principle in Hadkinson v Hadkinson, [1952] All ER 567 that no party may arrogate to themselves the discretion of whether or not to comply with an order. The uncompromising obligation to obey subsists even where a party believes the order to be irregular or void. The proper recourse is to seek variation or discharge from the court, not unilateral defiance. Disposition 38.Accordingly, while I find that the applicant has not discharged the burden of proof necessary to hold the respondents personally liable for contempt, I do find that the communication issued by the homeowners committee was plainly inconsistent with the preservation and vesting orders of this Court and in breach of the Insolvency Act. Final Orders 39.I therefore make the following final orders:i.That the letter dated 4th June 2025 written by Mr. Peter Wachira, purporting to reinstate the homeowners’ management company and directing residents to remit service charges contrary to subsisting court orders, is hereby declared null and void for being in violation of the Insolvency Act and inconsistent with the preservation and vesting orders issued by this Court and upheld by the Court of Appeal.ii.That all service charge payments at the Alma shall henceforth be made only to the Official Receiver’s appointed agent, or as otherwise directed by the Official Receiver.iii.That the Official Receiver shall forthwith, and not later than seven (7) days from the date hereof, take possession of The Alma. The Kiambu County Police Commander, shall provide security and maintain law and order during the takeover to forestall further acts of vandalism.iv.That the Official Receiver shall file an affidavit within fourteen (14) days of this orders, confirming the status of the takeover, including details of service charge collections and measures taken to restore order.v.That the personal presence of the Kiambu County Police Commander shall be required at the next mention of this matter to confirm the prevailing security situation at The Alma.vi.That these orders shall be personally served upon the homeowners committee and upon Mr. Peter Wachira, Chairman, to ensure they are fully apprised of the Court’s pronouncements.vii.That save for the prayers granted, all other prayers are dismissed.viii.There shall be no orders as to costs. DATED, SIGNED AND DELIVERED IN NAIROBI THIS 22ND DAY OF MAY 2026.F. MUGAMBIJUDGE