Nakachi v Centric Air Ambulance Limited (Cause E614 of 2021) [2023] KEELRC 3177 (KLR)
The bottom line
#A Kenyan court ordered a company director to explain why he should not be jailed after finding the firm was hiding assets to avoid paying a judgment debt.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether a Notice to show cause should issue against the Respondent's Director, Peter Kenneth Chege Nduati, why he should not be committed to civil jail for failure to settle the decree sum
Key legal issues
#Whether notice to show cause should issue against the Respondent's Director for committal to civil jail for non-satisfaction of the decree
The application was merited. The Director was to show cause why he should not be committed to civil jail, failing which he would be committed.
The court found the Respondent aware of the judgment and decree, which had not been challenged, varied or set aside. The Director claimed insolvency but produced no financial statements to substantiate it, merely asserting the accounts were dormant. The court found the Respondent had previously been found to have engaged in fraudulent activities to obstruct the Claimant from enjoying the fruits of judgment, and regarded the explanation for the transfer of the company's motor vehicles as unconvincing, evidencing trickery to avoid honouring the judgment.
Whether the Respondent's explanation that the motor vehicles were repossessed by Maisha Bora Sacco over a third party's loan discharged the allegation of dishonest transfer
The court rejected the explanation. The records did not show the relationship between the third party borrower and the Respondent, and the vehicles were registered solely in the Respondent's name.
The court noted the official search showed the vehicles were registered in the Respondent's name, not jointly with the Sacco as would be expected if bought on loan. There was no explanation of who John Aoka Gecheo was to the Respondent or why the Respondent's vehicles would be collateral for his loan. This led the court to conclude the Respondent was using tricks to avoid honouring the judgment, supporting the inference of dishonesty necessary for committal proceedings.
Whether the plea of insolvency and financial hardship caused by Covid-19 excused non-compliance with the decree
No. The Director ought to have produced financial statements to prove the alleged financial difficulties.
The court accepted Covid-19 was a global pandemic but held the Respondent should nonetheless have produced financial statements illustrating its difficulties. The plea of dormant accounts was not accepted as a reason for failing to produce audited accounts. The court further queried why the Director, aware of insolvency, had not initiated insolvency proceedings to liquidate the company, undermining the assertion that non-compliance was beyond his control.
Legal principles established
#- A person is not liable to be committed to civil jail for mere inability to pay a debt, but a dishonest and fraudulent debtor is liable to arrest and committal.
- Committal of a judgment debtor to civil jail under section 38 of the Civil Procedure Act requires proof of dishonesty.
Court orders
#- 1.The Respondent's Director, Peter Kenneth Chege Nduati, to show cause why he should not be committed to civil jail for failure to honour the decree of the court, and if he does not show cause, he be committed to civil jail
- 2.The Claimant's application dated 19th June 2023 is allowed with costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Section 38 of the Civil Procedure Act and Order 22 Rule 31 of the Civil Procedure Rules, 2010 (enforcement of decree in the court that issued it)
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In the upshot the Respondent's Director Peter Kenneth Chege Nduati should show cause why he should not be committed to civil jail for failure to honour the decree of this court and if he does not show cause he be committed to civil jail.
In conclusion the Claimant's application dated 19th June, 2023 is found merited and is hereby allowed with costs.
A person is not liable to be committed to civil jail for inability to pay a debt but a dishonest and fraudulent debtor is liable to be punished by way of arrest and committal.
The committal of judgment debtor to civil jail is provided for under section 38 of the Civil Procedure Act where dishonesty is proved.
This clearly shows that the Respondent is only using tricks to avoid honouring Judgment of this court.
Issues in the judgment
#The judgment contains a typographical error in the service date, omitting the month.
The judgment inconsistently describes the previous finding against the Respondent, referring to 'the Respondent' where the director is apparently meant, and the sentence is grammatically incomplete.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nakachi v Centric Air Ambulance Limited (Cause E614 of 2021) [2023] KEELRC 3177 (KLR)", Case Analysis (2023). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3177/eng@2023-12-05
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.