High Court 3450 of 2020

show cause was required to be issued if the application for execution was made within one year from the date of the order – Civil Procedure Rules, order 22, rule 18. Evidence Law – execution – execution of decrees - burden of proof – who bore the burden of proving that the judgment creditor had sufficient means to reimburse the decretal sum? Brief facts The court on March 22, 2018 awarded the respondent, among others, a sum of Kshs. 8,498,746.03 plus interest. Consequent upon the judgment, a decree was extracted on May 17, 2018. In execution of the decree, the respondent moved to proclaim the applicant’s goods on November 15, 2019. The applicant then moved to court seeking orders for the setting aside of warrants of attachment and notice of proclamation dated November 14, 2019 and November 15, 2019 respectively. The applicant also sought to stay execution of the decree. The applicant’s position was that the proclamation was based on an unlawful warrant as no notice to show cause was ever extracted and served yet the decree was over one year old. The applicant argued that it had an arguable appeal which would be rendered nugatory if execution was not stayed and that it stood to suffer substantial loss if the stay orders sought were not granted as the respondent was not be in a position to refund the decretal sum. Issues i. Who bore the burden of proving that the judgment creditor had sufficient means to reimburse the decretal sum? ii. Whether it was mandatory for a notice to show cause to be issued to a person against whom execution was applied. iii. Whether a notice to show cause was required to be issued where proclamation was done eighteen (18) months after issuance of the decree. iv. Which property was liable to attachment and sale in execution of a decree? v. What amounted to tools of trade which could not be attached in the banking industry? vi. Whether photocopying machines, printers, money counting machines, among others, amounted to tools of trade in the banking industry. Relevant provisions of the Law Civil Procedure Act; Section 44(1); “All property belonging to a judgment debtor including property over which or over the profits of which he has a disposing power which he may exercise for his own benefit, whether that property is held in his name or in the name of another but on his behalf, shall be liable to attachment and sale in execution of a decree provided that the following shall not be liable to attachment or sale(i)………………………. (i) The tools and implements of a person necessary for the performance by him or his trade or profession" Civil Procedure Rules; Order 22, rule 18; (1) Where an application for execution is made: (a) More than one year after the date of the decree; (b) Against the legal representative of a party to the decree; or (c) For attachment of salary or allowance of any person under rule 43; The Court excluding the decree shall issue a notice to the person against whom execution is applied for requiring him to show cause, on a date to be fixed, why the decree should not be executed against him ......". "... provided that no such notice shall be necessary in consequence of more than one year having elapsed between the date of the Decree and the application for execution if the Application is made within one https://new.kenyalaw.org/akn/ke/judgment/kehc/2020/3450/eng@2020-07-30 2

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year from the date of the court order against the party against whom the execution is applied for, made on any previous application for execution or in consequence of the application being made against the legal representative of the judgment debtor, if upon a previous application for execution for execution against the same person, the court has ordered execution to issue against him, provided further that no such notice shall be necessary on any application for the attachment of salary or allowance which is caused solely by reason of the judgment debtor having changed his employment since a previous order for attachment". Held 1. The respondent was a registered company, but it had not annexed any evidence to show what resources were available to the company to enable it refund the decretal amount if and when called upon to do so. While the legal duty was on an applicant to prove the allegation that an appeal would be rendered nugatory because a respondent would be unable to pay back the decretal sum, it was unreasonable to expect such an applicant to know in detail the resources owned by a respondent or lack of them. Once an applicant expressed that a respondent would be unable to pay back the decretal sum, the evidential burden then shifted to the respondent to show what resources it had since that was a matter which was peculiarly, within its knowledge. 2. Where there was an allegation that the respondent was not possessed of means, the burden of proof shifted to the respondent to demonstrate, by way of affidavit of means evidence, that it was possessed of such sufficient means that if the decretal sum was paid to it and the appeal was successful, it was in a position to reimburse/refund the decretal sum. 3. The respondent had not annexed an affidavit of means to confirm the resources available to it. Further, the applicant being a commercial bank in business, was possessed of sufficient means to satisfy any award that could be made against it by the Court of Appeal. In the circumstances, it was prudent to grant a stay sought as that would enable both parties to ventilate their respective arguments before the Court of Appeal. 4. Proclamation was done eighteen (18) months after issuance of the decree. Therefore, in terms of order 22, rule 18 of the Civil Procedure Rules (Rules), a notice to show cause ought to have been issued by the respondents. However, in terms of the proviso to order 22, rule 18 of the Rules, no notice to show cause was required to be issued if the application for execution was made within one year from the date of the last order against the party whom the execution was applied for. 5. Order 22, rule 18 of the Rules was couched in mandatory terms. The proviso to the order was not applicable in the instant circumstances. Accordingly, the respondents erred by failing to issue the applicants with a notice to show cause in compliance with order 22, rule 18 of the Rules. 6. The proclaimed items, according to the proclamation notice, included, photocopying machines, printers, money counting machines, projector machine and vault safe. Those were tools of trade in the banking industry and without them, the applicant would be greatly hampered in carrying out its core mandate on behalf of its customers. Amongst the items which were proclaimed, were necessary tools of trade which under section 44 (1) (ii) of the Civil Procedure Act, were not attachable. 7. The applicant had demonstrated that it stood to suffer substantial harm if the stay of execution was not granted. Application allowed, with costs awarded to the applicant. Orders i. Stay of execution of the decree dated March 22, 2018 was granted. ii. The applicant ordered to deposit as security, within 30 days of the date of the ruling, the sum of Kshs. 4 Million (Four Million only) in a joint interest earning account opened in the name of both counsels. iii. Failure to deposit the security as ordered would lead to lapse of the stay of execution granted with no further reference to the applicant. https://new.kenyalaw.org/akn/ke/judgment/kehc/2020/3450/eng@2020-07-30 3

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Citations Statutes 1. Civil Procedure Act Advocates None mentioned RULING 1. Before this court is the Notice of Motion dated 19th November 2019 by which Stanbic Bank Kenya Ltd. (the Defendant/Applicant) seeks the following orders:“ 1. Spent 2. Spent 3. This Honourable Court be pleased to set aside the Warrants of attachment dated 14th November 2019 and the Proclamation by Tigwoods Auctioneers dated 15th November 2019. 4. Pending the hearing and determination of the Plaintiffs Appeal and the Defendant's cross appeal in Nairobi Civil Appeal No. 160 of 2018 Santowels Ltd. - vs - Stanbic Bank Kenya Ltd. there be a stay of execution of the decree dated 22nd March 2018. 5. The costs of this application awarded to the Applicant in any event". 2. The application was premised upon Article 40,50 and159 Constitution of Kenya 2010, Sections lA,lB and 3A,44 and 46 of the Civil Procedure Act and Order 22 rule 18; Order 42, Rule 6, Order 51 Rule 1 of the Civil Procedure Rules, Rules 6 and 11 of the Auctioneers Rules 1997 and all other enabling provisions of law and was supported by the affidavit of even date sworn by Elisha Nyikuli Senior legal counsel with the Defendant Bank. 3. Stanbic Limited the Plaintiff/Applicant filed Grounds of Opposition dated 25th November 2019. The Respondent also filed a Replying Affidavit dated 28th November 2019, sworn by Kelvin Mogeni an Advocate of the High Court of Kenya. 4. The application was canvassed by way of written submissions. The Defendant/Applicant filed its written submissions on 6th December 2019, whilst the Plaintiff/Respondent filed its submissions on 16th December 2019. Background: 5. The present application arises from the Judgment of this court delivered on 22nd March 2018 in which the court awarded to the Plaintiff a sum of Kshs. 8,498,746.03 plus interest thereon at court rates from the date of filing of the suit until payment in full. The costs of the suit were also awarded to the Plaintiff. 6. The Plaintiff being aggrieved with the entire judgment of 22nd March 2018 filed an appeal against the same being Civil Appeal No. 160 of 2018. The Defendant also filed a Cross Appeal against the whole judgment on 12th March 2019. 7. Consequent upon said judgment a decree was issued on 17th May 2018 was extracted. https://new.kenyalaw.org/akn/ke/judgment/kehc/2020/3450/eng@2020-07-30 4

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8. In execution of that decree, the Plaintiff on 15th November 2019 moved to proclaim the Defendant Banks goods. The Applicants position is that the proclamation was based on an unlawful warrant as no notice to show cause was ever extracted and served yet the decree was over one year old. Analysis And Determination: 9. I have carefully considered the submissions filed by both parties as well as the relevant law. 10. The Defendant/Applicant submits that it has an arguable appeal which will be rendered nugatory if execution is not stayed. Similarly, the Plaintiff/Respondent also submits that it has an arguable Crossappeal. It is not for this court to determine the merits or otherwise of the appeal or the cross - appeal. 11. The Applicant has submitted that it stands to suffer substantial loss if the stay orders sought are not granted as the Plaintiff may not be in a position to refund the decretal sum. The Plaintiff also argues that the items listed in the proclamation have been grossly undervalued, exposing the Plaintiff to prejudice should its appeal eventually succeed. 12. The Plaintiff is a registered company, but they have not annexed any evidence to show what resources are available to the company to enable them refund the decretal amount if and when called upon to do so. 13. In the case of National Industrial Credit Bank Ltd. v Aquinas Francis Wasike & Another [2006] eKLR the Court of Appeal held as follows: “ This court has said before and it would bear repeating that while the legal duty is on an applicant to prove the allegation that an appeal would be rendered nugatory because a respondent would be unable to pay back the decretal sum, it is unreasonable to expect such an applicant to know in detail the resources owned by a respondent or lack of them. Once an applicant expresses a respondent would be unable to pay back the decretal sum, the evidential burden must then shift to the respondent to show what resources he has since that is a matter which is peculiarly, within his knowledge. In my view, the respondent was unable to discharge his burden". [own emphasis]. 14. Likewise, in the case of Lawrence Musyoka Ndambuki &Another v Daniel Kato Ndambuki [2018] eKLR the court held: “ 47. The decretal amount is substantial and the Respondent has no known source of income. Further, the Respondent has not demonstrated that he would be able to refund the said amount in the event the Applicants appeal is allowed. 48. There is no sworn affidavit of means that has been served upon and or on record. 49. The law as it is requires that where there is an allegation that the Respondent is not possessed of means, the burden of proof shifts to the Respondent to demonstrate,by way of affidavit of means evidence that they are possessed of such sufficient means that should the decretal sum be paid to them and the appeal is successful they shall be in a position to reimburse/refund the decretal sum". [own emphasis]. https://new.kenyalaw.org/akn/ke/judgment/kehc/2020/3450/eng@2020-07-30 5

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15. The Plaintiff has not in this matter annexed an Affidavit of means to confirm the resources available to it. Further,I find that the Applicant being a Commercial Bank in business is possessed of sufficient means to satisfy any award that may be made against by the Court of Appeal. 16. Ido agree with counsel for the Applicant that in the circumstances it would be prudent to grant a stay sought as this will enable both parties to ventilate their respective arguments before the Court of Appeal. 17. The Applicant submits that the Plaintiff/Respondents failed to comply with Order 22 Rule 18 of the Civil Procedure Rules which provides: “ 18. (1) Where an application for execution is made: (a) More than one year after the date of the decree; (b) Against the legal representative of a party to the decree; or (c) For attachment of salary or allowance of any person under rule 43; The Court excluding the decree shall issue a notice to the person against whom execution is applied for requiring him to show cause,on a date to be fixed,why the decree should not be executed against him ......". 18. The Defendant/Applicant submits that the Respondent failed to take out a Notice to show cause as per the mandatory requirements of Order 22 rule 18. 19. The Respondent counters that Order 22 Rule 18 contains a proviso as follows:“ ... provided that no such notice shall be necessary in consequence of more than one year having elapsed between the date of the Decree and the application for execution if the Application is made within one year from the date of the court order against the party against whom the execution is applied for,made on any previous application for execution or in consequence of the application being made against the legal representative of the judgment debtor,if upon a previous application for execution for execution against the same person, the court has ordered execution to issue against him, provided further that no such notice shall be necessary on any application for the attachment of salary or allowance which is caused solely by reason of the judgment debtor having changed his employment since a previous order for attachment". 20. It is not in dispute that the decree herein was issued on 17th May 2018. Proclamation was done on 15th November 2019, eighteen (18) months or 11/2 years after issuance of the decree. Therefore, on terms of Order 22 rule 18 it would appear that a Notice to Show Cause ought to have been issued by the Respondents. https://new.kenyalaw.org/akn/ke/judgment/kehc/2020/3450/eng@2020-07-30 6

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21. The Applicants have cited in support of their submissions the case of Metro Petroleum Ltd V Turbo Highway Eldoret Ltd [2006] eKLR where Hon. Justice Azangalala held that: “ It is clear that between 24.11.2004 and 22.2.2006 a period in excess of one year had elapsed. Accordingly, the court should have issued a notice to the defendant to show cause why the decree should not be executed against it. I have not traced a copy of such NTSC in this record. I take it therefore that no such notice was issued. have not also seen reasons recorded dispensing with the requirement of the NTSC. In the premises, the execution in question having occurredwithout compliance with the rules regarding NTSC is irregular". [own emphasis]. 22. However, in terms the proviso to said Order 22 Rule 18 no Notice to show cause will be required to be issued if the application for execution is made “ within one year from the date of the last order against the party against whom the execution is applied for". 23. Order 22 rule 18 is couched in mandatory terms. I have looked at the proviso to said order and in my view it is not applicable in the present circumstances. Accordingly,I find that the Respondents erred by failing to issue the Applicants with a Notice to Show Cause in compliance with Order 22 Rule 18. 24. Finally, the Applicants place reliance upon Section 44 (i) (ii) of the Civil Procedure Act which provides that:“ All property belonging to a judgment debtor including property over which or over the profits of which he has a disposing power which he may exercise for his own benefit, whether that property is held in his name or in the name of another but on his behalf,shall be liable to attachment and sale in execution of a decree provided that the following shall not be liable to attachment or sale(i) ………………………. (i) The tools and implements of a person necessary for the performance by him or his trade or profession". [own emphasis]. 25. A copy of the Proclamation Notice is annexed at pages 19- 21 of the supporting Affidavit dated 19th November 2019. The proclaimed items include, inter alia;- Photocopying machines;- Printers,- Money counting machines,- Projector machine,- Vault safe.The above are in my view tools of trade in the Banking Industry and without them the Defendant Bank would be greatly hampered in carrying out its core mandate on behalf of its customers. I am satisfied that, amongst the items which were proclaimed were necessary tools of trade which under Section 44 (1) (ii) are not attachable. 26. The remaining submissions made by the Applicant relate to matters which in my view, properly reside within the domain of the Appeal and or such, I will not comment on the same. 27. Order 42 Rule 6 (2) of the Civil Procedure Rules provides:“ (2) No order for stay of execution shall be made under subrule (1) unless; a) The court is satisfied that substantial loss may result to the Applicant unless the order is made and that the Application has been made without unreasonable delay: and https://new.kenyalaw.org/akn/ke/judgment/kehc/2020/3450/eng@2020-07-30 7

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b) Such security as the court order for the due performance of such decree or order as may ultimately be binding on him has been given by the Applicant." 28. From the foregoing discussion, I am satisfied that the Applicants have demonstrated that they stand to suffer substantial harm if the stay of execution is not granted. I am therefore inclined to grant the stay applied for which I hereby do. With respect to security, I direct that the Applicant do deposit as security within 30 days of the date of this Ruling the sum of Kshs. 4.0 Million (Four Million only) in a joint interest earning account opened in the name of both counsel. 29. Failure to comply with the above means that the stay granted will automatically lapse with no further reference to the Applicant. Costs of this application are awarded to the Applicant. It is so ordered. DATED, DELIVERED AND SIGNED IN NAIROBI THIS 30TH DAY OF JULY 2020 M.A ODERO JUDGE https://new.kenyalaw.org/akn/ke/judgment/kehc/2020/3450/eng@2020-07-30 8

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