Fort Properties Limited v Kenya National Highways Authority & another; Co-operative Bank of Kenya Limited & another (Garnishee) (Constitutional Petition 29 of 2020) [2024] KEELC 3594 (KLR)
The bottom line
#Kenya's Environment and Land Court let Fort Properties seize Kshs 738 million from KeNHA's bank account, confirming state corporations are not shielded from debt enforcement.
What this practically means
#Executive summary
#Key legal issues
#Whether the 1st Respondent demonstrated grounds to review the ruling of 15th May 2023 and secure unfreezing of its account
The application dated 14th June 2023 was dismissed. The court found nothing contradictory in the orders of 23rd May and 5th June 2023, no discovery of new matter, no error apparent on the face of the record, and no sufficient reason for review; the unfreezing order was unnecessary.
The court held the extracted orders mirrored the ruling of 15th May 2023 and the prayers of the application dated 11th August 2022, which was allowed. The 1st Respondent filed documents affirming money existed in its account, and the garnishee did not dispute liability. Review under Section 80 CPA and Order 45 Rule 1 requires new and important matter, error apparent or sufficient reason, none of which was shown, though the application was filed timeously.
Whether Kenya National Highways Authority is shielded from garnishee execution by Section 68 of the Kenya Roads Act, Section 21 of the Government Proceedings Act and Order 29 of the Civil Procedure Rules
No. KeNHA is a state corporation capable of suing and being sued in its own name and is not 'the Government' for purposes of the Government Proceedings Act; Section 68 restricts but does not make attachment illegal, and the Director-General was duty-bound to pay without delay.
Following Ikon Prints and the Kisya Investments dicta, the court reasoned that a body corporate with perpetual succession dependent on government funding is nonetheless an independent juridical body. Since the Authority admitted partial indebtedness and had not paid the balance despite command to pay without delay, garnishee proceedings against its funds were a permissible execution route and not a nullity.
Whether the garnishee order nisi issued on 5th June 2023 should be made absolute
Yes. The application dated 15th June 2023 was allowed in its entirety; the order nisi was made absolute for payment within 30 days.
The court found there was no dispute about the debt and no contest that the 1st Garnishee held funds in the 1st Respondent's account. The order nisi had been served on the garnishee, who neither attended to show cause nor disputed liability; under Order 23 Rule 4 the court could make the order absolute where the debt is undisputed.
Whether leave should be granted to deem the Notice of Appeal properly filed or extend time to file notice of appeal
No. The application dated 15th September 2023 was dismissed with costs.
The judgment was delivered on 28th October 2021 and the application filed 15th September 2023, a delay of about one year and eleven months. New advocates came on record in June 2023 but filed the application in September without explaining that delay. Applying Leo Sila Mutiso, the inordinate unexplained delay and the partial satisfaction of the decree weighed against extension.
Costs of the three applications
Costs awarded to the Petitioner and the 1st Garnishee, payable by the 1st Respondent, applying the principle that costs follow the event under Section 27(1) of the Civil Procedure Act.
The court invoked its discretion under Section 27(1) of the Civil Procedure Act, noting the 1st Respondent's failure to satisfy the decree dragged the Petitioner back to court. All three applications were determined in the Petitioner's favour (two dismissals of KeNHA's applications and one allowance of the Petitioner's application).
Legal principles established
#- A litigant is entitled to enforce a judgment by garnishee proceedings where the judgment debtor fails to comply, and where the garnishee admits or does not dispute the debt the court may make the order absolute.
- Kenya National Highways Authority, being a state corporation with capacity to sue and be sued in its own name, is not 'the Government' for purposes of the Government Proceedings Act, Cap. 40, and its judgments are not judgments against the government.
- Section 68 of the Kenya Roads Act restricts but does not prohibit execution against the Authority; where the Director-General fails to pay without delay, attachment is permissible.
- A garnishee order nisi may be made absolute where the garnishee does not appear or does not dispute the debt due from him to the judgment debtor.
- An erroneous view of evidence or law is a ground of appeal, not a ground for review; review requires discovery of new matter, error apparent on the face of the record, or other sufficient reason, without unreasonable delay.
- Extension of time to appeal is discretionary and depends on length of delay, reason for delay, chances of appeal succeeding and prejudice to the respondent.
Court orders
#- 1.That the Notice of Motion application dated 14th June, 2023 be and is hereby found to lack merit hence is dismissed in its entirety with costs to the Petitioner/Respondent.
- 2.That the Notice of Motion application dated 15th June, 2023 be and is found to have merit hence allowed in its entirety with costs to the Petitioner/Applicant.
- 3.That the Notice of Motion application dated 15th September, 2023 be and is hereby found to lack merit hence dismissed in its entirety with costs to the Petitioner/Respondent.
- 4.That the garnishee order nisi issued on 5th June 2023 be and is hereby made absolute and the funds be paid out to the Decree Holder's account (Fort Properties Limited, NCBA, Account No. 670365XXXX, Moi Avenue Mombasa Branch) within the next thirty (30) days from the date of the Ruling.
- 5.That costs of the Notices of Motion application dated 14th June, 2023; 15th June, 2023 and 15th September, 2023 be awarded to the Petitioner and 1st Garnishee to be paid by the 1st Respondent.
- Jurisdiction invoked
- Original jurisdiction of the Environment and Land Court under Article 162(2)(b) of the Constitution (implied); applications brought under Sections 1A, 1B, 3A and 80 of the Civil Procedure Act, Order 45 Rule 1 and Order 23 of the Civil Procedure Rules, 2010, and Section 7 of the Appellate Jurisdiction Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Fort Properties Limited v Kenya National Highways Authority & another; Co-operative Bank of Kenya Limited & another (Garnishee) (Constitutional Petition 29 of 2020) [2024] KEELC 3594 (KLR)", Case Analysis (2024). not stated in the judgment text. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/3594/eng@2024-04-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.