National Industrial Credit Bank Limited v S. K. Ndegwa Auctioneer
The bottom line
#Kenya's Court of Appeal ruled that proclaiming goods attached is legally enough for an auctioneer to charge fees, but those fees must reflect the goods' value, not the debt owed.
What this practically means
#Executive summary
#Key legal issues
#Whether proclamation of attachment under the Auctioneers Rules constitutes attachment entitling the auctioneer to fees despite absence of actual physical seizure
Yes. Proclamation under Rule 12 read with Rule 14 and Sale Form 2 is legally and effectively an attachment; from proclamation the judgment-debtor loses possession and the goods are in the custody of the law through the auctioneer, who may charge attachment fees under paragraph 4 of Part II of the Fourth Schedule.
The Court accepted an apparent conflict between Order 21 Rule 38 of the Civil Procedure Rules (attachment by actual seizure and custody) and Rule 12 of the Auctioneers Rules (proclamation, seven-day redemption notice, no removal until the grace period expires). Holding that the actual words used are not decisive, it examined the essence and purpose of attachment - removing goods from the judgment-debtor's possession into the custody of the law for sale if the debt is unpaid - and found that proclamation under Rule 12, reinforced by Rule 14's prohibition of removal, interference or alienation and Sale Form 2's notification that goods are attached and left in the debtor's custody, achieves precisely that.
The conflict between Order 21 Rule 38 of the Civil Procedure Rules and Rule 12 of the Auctioneers Rules
The Auctioneers Rules embody a reform of the old attachment procedure and govern; the inconsistencies in Order 21 Rule 38 need legislative amendment, but the two are reconciled by focusing on the essence of attachment rather than the actual words used.
The Court acknowledged that the manner and procedure of attachment in Order 21 Rule 38 appear to conflict with Rule 12, but reasoned that the Auctioneers Act is a modern statute whose procedure gives the judgment-debtor time to pay, avoiding seizure and carting away of goods; Rule 12 was intended as a reform of the old procedure, which 'clearly needs to be amended to remove any inconsistencies'. Seizure does not necessarily mean carrying goods away - as Mulla's commentary on the Indian counterpart confirms, executing a warrant by affixing it can amount to actual seizure. The reforming statute therefore governs attachment under a court warrant.
The basis of valuation for attachment fees under paragraph 4 of Part II of the Fourth Schedule
The percentage charges must be computed on the value of the goods attached, not on the decretal sum.
Paragraph 4 specifies percentage bands but does not state the value on which they are to be based. The Court held it would be unjust to base the fee on the decretal amount, since the value of the attached goods may be many times less than the decretal sum shown in the warrant; the auctioneer is to be remunerated for the actual work done, not for what he could have done had he attached goods equivalent in value to the decree. Reading the provision purposively to make it operative, the Court fixed the basis as the value of the goods attached.
The proper construction of an obscure statutory fee provision
An obscure provision should not be rejected as a nullity; the court must adopt a meaning that makes it operative.
The values indicated in paragraph 4 of Part II of the Fourth Schedule were described as obscure. Drawing on Halsbury's Laws of England (Vol. 36, 3rd Edn, paragraph 582), the Court applied the canon that a statute should, if possible, be construed so as to be operative and that where a provision bears several meanings, even with little to choose between them, the courts must decide what meaning the statute bears rather than reject it as a nullity. It thereby declined to strike down paragraph 4 and gave it the construction that charges attach to the value of the goods attached.
Whether the Court of Appeal could itself reassess the fees
No. For want of sufficient evidence of the value of the goods attached, the Item 4 assessment was set aside and remitted to the Deputy Registrar.
Having determined the correct construction, the Court found itself unable to reassess the fees because there was no, or not sufficient, evidence of the value of the goods attached. It therefore set aside the Shs.1,000,000 assessed under Item 4 on the basis of the decretal sum and remitted the assessment to the Deputy Registrar, who had assessed the properties described in the proclamation, for re-assessment on the basis of the total value of those properties.
Legal principles established
#- Under the Auctioneers Rules, proclamation of movable goods under Rule 12 read with Rule 14 and Sale Form 2 is legally and effectively an attachment, entitling the auctioneer to attachment fees under paragraph 4 of Part II of the Fourth Schedule; actual physical seizure is not required.
- From the moment goods are proclaimed, the judgment-debtor is deprived of legal possession and physical control and the goods pass into the custody of the law and the court through the auctioneer; removal of the goods from the judgment-debtor's premises is not necessary for a valid attachment.
- Auctioneer's charges for attachment under paragraph 4 of Part II of the Fourth Schedule are to be assessed on the value of the goods attached, not on the decretal sum.
- Canon of construction: a statute should, if possible, be construed so as to be operative, and where a provision bears several meanings the courts must choose a meaning rather than reject the provision as a nullity.
Court orders
#- 1.Appeal partly allowed: the auctioneer's fees assessed under Item 4 at Shs.1,000,000/= on the basis of the decretal sum are set aside.
- 2.The assessment of the auctioneer's fees is remitted to the Deputy Registrar for re-assessment on the basis of the total value assessed by him of the properties described in the proclamation by the respondent.
- 3.The appeal against the award of fees for attachment is otherwise dismissed.
- 4.No orders as to the costs of the appeal, both parties having partly succeeded (each party to bear its own costs).
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 1818 of 2000
- Jurisdiction invoked
- Appeal to the Court of Appeal with leave granted by the High Court (Mohamed Ibrahim, J.) at the conclusion of an appeal to a Judge in chambers under Rule 55(4) of the Auctioneers Rules 1997 against the Deputy Registrar's assessment of auctioneer's fees; the judgment does not cite the specific constitutional or statutory provision conferring jurisdiction on the Court of Appeal.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "National Industrial Credit Bank Limited v S. K. Ndegwa Auctioneer", Case Analysis (2005). Civil Appeal No. 195 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2005/1/eng@2005-12-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.