[2015] KEHC 2989 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL & ADMIRALTY DIVISION

MISCELLAENOUS CIVIL APPLICATION NO 288 OF 2014

Y.A. SHRETTA ………............................................................................APPLICANT

VERSUS

LEISURE LODGES LIMITED..........................................................RESPONDENT

RULING

INTRODUCTION

1. The Respondent’s Notice of Motion application dated 25th February 2015 and filed on 26th February 2015 was brought pursuant to the provisions of Order 21 Rule 12(1) and Order 51 (1) of the Civil Procedure Rules, 2010. It sought the following orders:-

1. THAT leave be granted to the Respondent to pay the amount of the decretal sum herein in equal monthly instalments of Kshs 1,500,000/=.

2. THAT costs of the Application be provided for.

THE RESPONDENT’S CASE

2. The said application was supported by the Affidavit of Rasik Kantaria, the Respondent’s Chairman that was sworn on 24th February 2015. The Respondent’s Written Submissions were dated and filed on 10th March 2015. Its Supplementary Written Submissions were dated and filed on 20th March 2015.

3. The Respondent stated that the Applicant’s advocates wrote to it on 13th February 2015 demanding payment of the decretal sum of Kshs 43,772,599/= within seven (7) days. However, it was unable to pay the said decretal sum of at once due to a slump in the tourist industry caused by the spate of terrorist attacks in the country by the Al Shabaab group.

4. It averred that it was able to pay equal monthly instalments in the sum of Kshs 1,500,000/= until payment in full and this urged the court to allow its application as prayed.

THE APPLICANT’S CASE

5. In opposition to the said application, on 2nd March 2015, the Applicant swore a Replying Affidavit. The said Affidavit and Grounds of Opposition dated 2nd March 2015 were filed on even date. The grounds could be summarised as follows:-

a. THAT the said application was an abuse of court process and was an attempt by the Respondent to litigate in instalments thus delaying the satisfaction of the judgment that had been entered in favour of the Applicant.

b. THAT the Respondent had over the years remitted money abroad and ought to have made reservations for the decretal amount as it had known of this debt since 1996 and that four (4) years had passed since the Arbitral Award was entered as a judgment of this court on 29th April 2011.

c. THAT the Respondent was attempting to take away the Applicant’s statutory right under the Companies Act to petition for the winding up of the Respondent for inability to pay its debts.

6. His List of Authorities were dated and filed on 3rd March 2015 while his Written Submissions dated 16th March 2015 were filed on 17th March 2015.

7. He re-stated the Grounds of Opposition in his Replying Affidavit and averred that the Respondent was not deserving of the discretion of the court to pay the decretal amount in instalments and his costs in the sum of Kshs 14,108,158/= as the Respondent was doing all it could to delay him from enjoying the fruits of his judgment. He therefore urged the court to dismiss the present application with costs to it.

LEGAL ANALYSIS

8. Order 21 Rule 12 (2) of the Civil Procedure Rules that the Respondent relied upon gives the court discretion to allow payment of decretal sum by way of instalments. The same provides as follows:-

“After passing of any such decree, the court may on the application of the application of the judgment-Debtor and with the consent of the decree holder or without the consent of the decree holder for sufficient cause shown, order that the payment of the amount decreed be postponed or be made by installments on such terms. ”

9. The Respondent referred the court to the several cases where the common thread was that the court had discretion to allow the payment of a decretal sum in instalments- See J.M. Mathenge t/a Builecon Associates vs Kenya Tea Development Agency Limited (unreported) and Aldina vs Aldina [1961] EA 565. In the case of Keshavji Jethbhai & Bros Limited vs Saleh Abdulla [1959] EA 260 that the Applicant also relied upon, Crawshaw J stated as follows:-

“… it is laid down that the mere fact that the debtor is hard pressed or unable to pay in full at once is not sufficient reason for granting instalments and that ordinarily should be required to show his bona fides by arguing prompt payments of a fair proportion of the debt. We are in respectful agreement with this interpretation of the law but find great difficulty in construing the last observations in the ruling in the way desired by the counsel for the plaintiff i.e. prompt payment of a fair proportion of the debt is a condition precedent for the granting of the discretion of granting instalments. Each case has to be decided on its own merits, the predominant fact being of course the bona fides of a debtor.

10. The Respondent was emphatic that it was not refusing to pay the decretal sum but that the current slump in the tourist industry had made it difficult to pay the said decretal sum all at once, which was a good reason why it should be allowed to pay in instalments. It denied that the period spanning nineteen (19) years for the determination of the reference by the Arbitral Tribunal was a scheme for it not to pay the said amount.

11. It was also its contention that it did not make reference to the costs as they were to be agreed within thirty (30) days of the making of the Arbitral Award failing which the costs were to be taxed by the Arbitral Tribunal.

12. On his part, the Applicant contended that this court had no jurisdiction to entertain the present application. It placed reliance on the case of Anne Mumbi Hinga vs Victoria Njoki Gathara [2009] eKLR where the Court of Appeal stated that:-

“…We therefore reiterate that there is no right for any court to intervene in the arbitral process or in the award except in situations specifically set out in the Arbitration Act or as has previously been agreed upon by the parties.”

13. He also referred the court to the case of Nyutu Agrovet Limited vs Airtel Networks Limited [2015] eKLRin which a five (5) judge bench of the Court of Appeal emphasised the finality of Arbitral Awards and held that there could be no appeal from the decision of a High Court relating to an application brought under the provisions of Section 35 of the Arbitration Act Cap 49 (Laws of Kenya).

14. As was rightly pointed out by the Respondent, the said cases of Anne Mumbi Hinga vs Victoria Njoki Gathara (Supra) and Nyutu Agrovet Limited vs Airtel Networks Limited(Supra) were distinguishable from the facts of this case. This court had, in its Ruling delivered on 30th May 2014, in which it dismissed all applications for setting aside the Arbitral Award for the reason that none of the respective applicants had demonstrated sufficient grounds for it to interfere with the findings in the said Final Award, determined that the applicable law in the arbitral proceedings herein was Order 46 of the Civil Procedure Rules and not the Arbitration Act Cap 49 (Laws of Kenya). The court had explained that this was because the arbitration proceedings had commenced pursuant to a court order.

15. It is for that reason that the Applicant, in whose benefit the said Ruling was made, could not approbate and reprobate by arguing that the court could not entertain the application herein when it had actually sought to have judgment entered against the Respondent in accordance with the provisions of Order 46 Rule 13 of the Civil Procedure Rules.

16. The fact that the parties had sought to have their dispute resolved by way of arbitral proceedings and that the decision of the Arbitral Tribunal was final and binding did not negate the fact that the Arbitral Award herein was recognised under the provisions of the Civil Procedure Rules and that the Respondent could therefore seek leave of this court to pay the decretal sum by way of instalments.

17. There is indeed no provision in the Civil Procedure Rules or any law that this court is aware of that would prohibit it from exercising its discretion to allow the Respondent to effect payment of the decretal sum by way of instalments where judgment has been entered pursuant to an Arbitral Award being entered as a judgment of the court.

18. The court thus found itself in agreement with the Respondent’s submissions that the moment an arbitral award was recognised by the court, the provisions relating to execution of the judgment or seeking any relief thereafter were, for all purposes and intent, those provided in the Civil Procedure Rules. In this regard, the court was not persuaded by the Applicant’s submissions that it did not have jurisdiction to consider the reliefs that had been sought by the Respondent herein. The case of Owners of Motor Vessel“Lillian SS”vs Caltex Limited (1989) KLR 1 that the Applicant relied upon was therefore not relevant in the circumstances of the case herein.

19. Having determined that this court has jurisdiction to entertain the Respondent’s application, the next question for determination was whether or not the same had been brought in good faith. The Applicant was emphatic that the present application was brought in bad faith. He referred the court to the case of Lavington Security Limited vs Nairobi City Water & Sewerage Company Limited [2014] eKLRwhere Gikonyo J stated thus:-

“…of great significance in application(sic)of this nature are; the circumstances of the case; the conduct of the parties; the willingness and bona fides of the applicant to pay a fair proportion of the debt; and of course, that the application is made without undue delay…”

20. As can be seen hereinabove, the Respondent blamed its inability to pay the decretal sum of Kshs 43,772,559/= to a slump in tourism industry due to Al Shabaab terrorist attacks. It exhibited newspaper cuttings from the Business Daily of 31st December 2014, The Standard of 15th October 2014 and 27th November 2014, Statements of Accounts titled “Comparative Profit or Loss for the month ended 31st January 2015” and Business Daily of 27th November 2014 marked as Exhibits “B”, “C”, “D”, “E” and “F”respectively.

21. Undoubtedly, the Respondent filed its application for leave to pay the decretal sum by instalments timeously. However, its proposal to pay the decretal sum in monthly instalments of Kshs 1,500,000/= was inequitable or unconscionable bearing in mind that the dispute between the parties had been pending for over nineteen (19) years and the decretal sum was in the sum of Kshs 43,772,559/=. Indeed, interest continues to accrue on the said decretal sum at court rates from date of entry of judgment until payment in full as was determined in the court’s Ruling of 12th February 2015.

22. If the court were to accept the Respondent’s prayers and allow it to pay the decretal sum in monthly instalments of Kshs 1,500,000/=, it would mean that it would take over twenty nine (29) months, essentially over two (2) years, for the Applicant to fully enjoy the fruits of his judgment. This does not show the willingness and bona fides of the Respondent to pay a fair proportion of the debt.

23. Additionally, the court was not satisfied that the “Comparative Profit or Loss for the month ended 31st January 2015” presented by the Respondent had any probative or evidentiary value to persuade it to find that it was fair and equitable for the Respondent to pay the proposed aforesaid monthly instalments. While the court did not wish to re-analyse the evidence that was placed before the Arbitral Tribunal as had been raised by the Applicant in his submissions herein, it relied more on the fact that Respondent failed to present credible, filed audited accounts and Income Tax Returns that would have laid a legal basis and assisted it to ascertain what would have been a more realistic figure of the instalments to be paid by the Respondent.

24. As was held in the case of Keshavji Jethbhai & Bros Limited vs Saleh Abdulla (Supra), the court was of the view that the sum of Kshs 43,772,559/= was a colossal amount and that if execution was enforced, there was a possibility of causing some amount of hardship to the Respondent herein.

25. If indeed the court were to accept the Applicant’s contention that the Respondent held monies abroad, there would be need to allow the Respondent to repatriate the same in the country. However, it was the view of the court that the Respondent ought not to be allowed to use the court process to defeat the Applicant’s remedies that are open to him under any provisions of the law that he would want to pursue to recover the decretal sum herein. In the absence of any cogent evidence by the Respondent of its inability to pay the decretal sum at once, the court was dissuaded from allowing long periods of payment in instalments.

26. The court therefore accepted the Applicant’s arguments that if the court had jurisdiction to allow payment of the decretal sum by way of instalments, which this court found it had, then the Respondent ought to be ordered to pay the said decretal sum in three (3) monthly instalments. This appeared to be fair, reasonable and struck a good balance between the Applicant enjoying the fruits of his judgment and the Respondent being given a soft landing to pay the said decretal sum in instalments and thus avoid it suffering any untold hardship.

27. In this respect, the court had due regard to the holdings in the cases of Freight Forwarders Limited vs Elsek & Elsek (K) Limited (2012) eKLRand Singh Gitau Advocates vs City Finance Bank Limited (2013) eKLRwhere the common thread was that the court could allow settlement of decretal sum by way of instalments if a debtor was unable to pay in lump sum, if the application was made in good faith and the monthly repayments were reasonable.

28. Accordingly, having considered the pleadings, affidavit evidence, the written submissions and case law in support of the parties’ cases, the court found that this was a suitable case for it to exercise its wide and unfettered discretion in favour of the Respondent to allow it to pay the colossal decretal amount together with interest thereon in three (3) equal monthly instalments. The court did not address its mind to the costs that would be payable to the Applicant by the Respondent as the said costs are yet to be taxed and in any event, the question of payment of the said costs was not an issue that was before this court for determination.

DISPOSITION

29. For the foregoing reasons, the Respondent’s Notice of Motion dated 25th February 2015 and filed on 26th February 2015 was hereby allowed in the followed terms:-

a. THAT the Respondent shall liquidate the decretal sum of 43,772,559/= together with interest thereon at court rates as had been stated in the court’s Ruling of 12th February 2015 in three (3) equal monthly instalments within thirty (30) days of its notification of the drawn Decree herein and thereafter after every thirty (30) days until payment in full.

b. Costs shall be in the cause.

30. It is so ordered.

DATED and DELIVERED at NAIROBI this 21st day of July 2015

J. KAMAU

JUDGE