Petition Application No. E012 of 2023 Dari Limited
Petition Application No. E012 of 2023 Dari Limited
Petition Application No. E012 of 2023 Dari Limited
(Mwilu; DCJ & VP, Ibrahim, Wanjala, Njoki, & Ouko SCJJ)
AND
-BETWEEN-
Representation:
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 1 of 15
Prof Githu Muigai SC and Mr. Wakhisi for the Respondent
(Mohammed Muigai LLP)
[2] In a Motion by the applicants dated 25th April 2023, and filed on 26th
April 2023 pursuant to Sections 21 and 24 of the Supreme Court Act, 2011 and
Rules 31 and 32 of the Supreme Court Rules, 2020, the applicants seek amongst
other orders:
[4] The applicants contend that they were directed to pay USD 15,162,320.95
to the respondent for default in repayment of a loan arising from a facility
agreement dated 10th April 2015. This was through the orders issued by Daniel
Toledano QC sitting as a Deputy Judge of the High Court in Claim Number CL-
2018-000720 in High Court of Justice Business and Property Courts of England
and Wales, Queens Bench Division, Commercial Court. They further contend
that the High Court dismissed the applicants’ application to set aside its ruling
of 7th January 2020 that recognized and registered the English Court judgment
as a judgment of the High Court of Kenya despite it being issued by a judge who
shared the same chambers with the respondent’s counsel, Michael Sullivan, SC.
[5] The applicants fault the appellate court for failing to appreciate the
jurisdiction of the High Court as set out in section 10 of the Foreign Judgments
(Reciprocal Enforcement) Act, on account that the English Court judgment was
obtained in a manner that violates Article 50 as read with Article 25 of the
Constitution of Kenya. Consequently, they assert that the Court of Appeal failed
to appreciate and give effect to the supremacy of the Constitution and
sovereignty of the people as enshrined in Articles 2, 3, 4 and 159 of the
Constitution and disregarding the finding of this Court in Elly Okong’o
Ing’ang’a & 3 others v James Finlay Kenya (Limited) SC Petition No.
7 (E009) of 2021 thereby rendering Kenyan law subservient to English law.
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 3 of 15
[6] The applicants also contend that the appeal would be rendered nugatory
unless the orders sought are granted, since the respondent has instituted
various insolvency proceedings, issued statutory demand notices, and
appointed receiver managers to the charged properties; that, in any event, the
respondent will not suffer any prejudice since it holds securities being charges
over LR No. 1055/165 and LR No. 11320/3. Also, in compliance with stay orders
issued by the Court of Appeal on 19th June 2020, the applicants deposited Kshs.
50,000,000/- in a joint interest earning account in the names of both parties’
advocates which continues to be held by the advocates on record. In the
alternative, the applicants contend that in the event the appeal succeeds, they
will not be able to recover monies from the respondent as it is established by a
Treaty between East African States and enjoys immunity from legal
proceedings.
[7] The applicants urge that it would be in public interest that the prayers
sought be granted because there is need to set Precedent regarding the
application of Section 10 of the Foreign Judgments (Reciprocal Enforcement)
Act. Accordingly, the applicants affirm that they have met the threshold for
issuance of the conservatory orders sought as set out in Gatirau Peter
Munya v Dickson Mwenda Kithinji & 2 others [2014] eKLR.
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 4 of 15
this Court since it is not a constitutional issue under section 15A of the Supreme
Court Act No. 7 of 2011.
[9] It is the respondent’s further argument that the appeal would not be
rendered nugatory because no evidence has been tendered of any threat,
immediate or otherwise of execution of the impugned judgment since no final
decree has been issued. The respondent, however, points out that the
applicants’ continued defiance of court orders of 2nd and 23rd March 2020 in
HCCC No. E469 of 2019 denies access to the charged properties to the
respondents’ receivers and managers. Be that as it may, the respondent
contends that even if the matter proceeds to execution, the same can be reversed
and the applicants be adequately compensated by damages given that the
respondent is an international bank with financial capacity and resources. On
the other hand, the security deposited by the applicants is insufficient compared
to the outstanding debt which is now at USD 29,253,298.98; that it is only fair
that the applicants be directed to add further security in the circumstances.
Hence, a dispute having originated from an agreement between the parties,
there is no nexus whatsoever with the public. Accordingly, the respondent
affirms that the application fails to meet the prerequisite principles set out in
Haki Na Sheria Initiative v Inspector General of Police & 2 Others;
Kenya National Human Rights and Equality Commission
(Interested Party) (Petition 5 (E007) of 2021) [2021] KESC 22 (KLR).
[11] The 2nd applicant avers that the respondent’s perspective of the
contextual background leading to the signing of the facility agreement is
inaccurate, prejudiced and one-sided. He affirms that the applicants were lured
into the agreement by Ms. Vivienne Yeda and Mr. David Odongo using undue
influence. This is corroborated by Amos Oketch who was the senior investment
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 5 of 15
officer – portfolio management of the respondent when the parties entered into
the facility agreement. That despite the respondent having appointed Maxwell
Stamp Kenya to look for an alternative financier for the 1st applicant, the
respondent frustrated the negotiation process and then resorted to filing its
dispute at the English Court.
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 6 of 15
of this Court; and founded on averments that are unsupported by evidence,
scandalous, frivolous and vexatious.
[16] The applicants oppose the application through the replying affidavit
sworn on 12th July 2023 by Raphael Tuju and written submissions dated and
filed on 12th July 2023. They contend that the application has no foundation in
law and should be dismissed with costs; that jurisdiction which is derived from
the Constitution and the law is determined by reference to the cause of action
tabled in a petition of appeal and not by reference to individual documents; that
the respondent has not established that the evidence adduced by Amos Oketch
is illegally obtained and the documents were already in the possession of the
applicants who shared them to Amos. Consequently, that the respondent has
not established the prejudice likely to be suffered should the evidence remain
as tendered.
[17] Citing Board of Governors, Moi High School Kabarak &
another v Malcom Bell [2013] eKLR, the applicants assert that this Court
has power to make any ancillary orders so as to sustain its jurisdictional
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 7 of 15
mandate under the Constitution. Therefore, the test to be applied is not whether
or not the documents are in the record of appeal but the relevance of the said
documents to the application dated 25th April 2023 before the Court.
[19] This Motion by the respondent is dated 23rd June 2023 and filed on 27th
June 2023 seeking the same orders as the above, that is, striking out of the
applicant’s supplementary affidavits by Raphael Tuju, Amos Oketch and
Edward Kenneth Okundi sworn on 12th June 2023.
[20] As regards the proceedings before the Deputy Registrar on 21st July 2023,
Mr. Wakhisi, counsel for the respondent, stated that the two applications are
essentially one and the same. He added that they are not identical because the
justifications for striking out are to a small degree different.
[21] We have perused and compared the two applications. The distinguishable
difference between the two is that the additional ground that the respondent
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 8 of 15
has raised for striking out the supplementary affidavits is that the documents
did not form part of the record of the High Court and Court of Appeal and as
such ought not to be considered and or interrogated for purposes of
determination of the petition as they do not form part of the record before this
Court.
[23] In the above context, and noting the Court’s order issued on 28th April,
2023 granting the applicants conservatory orders staying execution and stay of
proceedings pending the inter partes hearing and determination, WE NOW
OPINE as follows:
[24] Having considered the foregoing, we hold the considered view that it is
apposite to deal with the striking out of the applicants’ supplementary affidavits
first, for their correlation to the application for conservatory orders. Thereafter,
we will deal with the applications filed by the respondent contemporaneously.
Cognizant that empowered by Rule 40(3) of the Supreme Court Rules on which
the respondent’s two applications are founded, the Court may, on application of
any party, direct certain documents to be excluded from the record, and an
application for such exclusion may be made orally.
[25] Turning to the matter at hand, it is not in contestation that the annexures
adduced by the applicants in the supplementary affidavit were not produced in
the superior courts below. It is a party’s duty to satisfy all the elements under
the provisions of Section 20 of the Supreme Court Act that guides the Court in
admitting additional evidence as established in Mohamed Abdi Mahamad
v. Ahmed Abdullahi Mohamed & 3 others [2018] eKLR.
[26] Under Rule 26 of the Supreme Court Rules, a party seeking to adduce
additional evidence should make a formal application to the Court. We
acknowledge that the supplementary affidavits seek to rebut averments made
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 9 of 15
by the respondent. However, this does not extend to allowing the applicants to
introduce additional evidence through the backdoor. Proper procedures as
prescribed by the law must be followed and this, the applicants failed to do. We
therefore find merit in the respondent’s applications to have the supplementary
affidavits struck out.
[27] With the above finding, we now proceed to consider the application for
conservatory orders. The Court has inherent power to make any ancillary or
interlocutory orders that it deems fit to make as it may be necessary for the ends
of justice or prevent abuse of the process of the Court. This power is derived
from section 21 (2) of the Supreme Court Act and rule 3 (5) of the Supreme
Court Rules; and the criterion we enunciated in Gatirau Peter Munya v
Dickson Mwenda Kithinji & 2 others [2014] eKLR. To consider whether
to entertain the interlocutory relief sought, an applicant must demonstrate that
the appeal is arguable and not frivolous; that if stay is not granted the appeal
will be rendered nugatory; and that it is in the public interest that the order of
stay is granted.
[28] The applicants’ prayers are two pronged. First, they seek conservatory
orders staying the execution of the judgment dated 20th April, 2023 in Civil
Appeal No.70 of 2020: Dari Limited and 5 Others -versus- East
African Development Bank pending the hearing and determination of this
Appeal. Secondly, they seek stay of proceedings before the High Court in
Milimani High Court Commercial Cause No. E469 of 2019 between
Dari Limited & 5 others vs. EADB & 2 others consolidated with
Insolvency Cause Nos. E001, E002, E003, E004 all of 2020;
Enforcement proceedings of the notice of appointment of receivers and
managers dated 23rd December 2019, appointing George Weru and Muniu
Thoithi as Receiver Managers of Dari Limited and any enforcement proceedings
emanating from the Facility Agreement of 10th April, 2015.
[29] In relation to the proceedings pending before the High Court, we note
that they do not directly arise in the appeal before us. The impugned judgment
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 10 of 15
by the Court of Appeal makes no reference to these proceedings. Having
interrogated the record, it is evident that the stay over these proceedings
emanated from the Court of Appeal ruling in Civil Appeal No. 202 of 2020
consolidated with Nos. 203, 204, 205 & 206 of 2020 that was
necessitated by the ruling of Kasango J in HCCC E469 of 2019 on 8th July
2020 that declined to extend that stay orders that had been issued by the Court
of Appeal in Civil Appeal No.49 of 2020. The applicants have not adduced
any evidence of the existence of any appeal on these issues before the Court of
Appeal. With the judgment having been made by the Court of Appeal on the
main issue on recognition and enforcement of the foreign judgment, these
pending proceedings before the High Court are beyond our remit.
“[23] That the Court has had the advantage of assessing the facts and
legal arguments placed and advanced before it by the parties since the
alleged causes are live before it. Accordingly, that court should ideally
be afforded the first opportunity to express an opinion as to whether
the causes filed and being filed before it raise similar questions as to
the ones being raised before the Supreme Court. Should the Applicants
be dissatisfied with the decision of that Court, they shall be free to
appeal that decision before the Court of Appeal and subsequently to this
Court through the normal appellate mechanism. To allow the applicant
disregard the courts below and come directly to this Court in search of
stay orders, would amount to an abuse of the process of Court. This
was the reasoning of this Court in the case of Sum Model Industries
Ltd v Industrial & Commercial Development Corporation, SC
Application No. 1 of 2011; [2011] eKLR.”
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 11 of 15
It is our finding that since, the proceedings the applicants seek to be stayed are
not in the purview of this Court, it would only be right to afford the trial court
the opportunity to render its decisions and if necessary, the dissatisfied party to
follow the appellate hierarchy. This leaves us with the sole prayer for
conservatory orders staying the judgment of the Court of Appeal.
[32] On the nugatory aspect, the concern is whether what ought to be stayed
is allowed to happen is reversible, or not. To establish this, a Court has to
balance the interest of the applicant vis a vis that of the respondent who is
seeking to enjoy the fruits of its judgment. (See Tanad Transporters
Limited Case (supra)). The applicants assert that there is imminent danger
of eviction from LR. No. 1055/165 and LR. No. 11320/3 which the respondent
currently holds as securities. That in the event their appeal succeeds, the
respondent’s immunity may prevent the applicants from recovering their
monies. Conversely, the respondent contends that the amount in question
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 12 of 15
which is owed to them is considerably substantial, and in any case, the
applicants can be compensated by way of damages.
[33] Matching the competing arguments under the circumstances, the balance
of probability favours the respondent. We say so because, though the
respondent currently holds securities being charges over LR. No. 1055/165 and
LR. No. 11320/3 which are located in a suburb area in Nairobi in their favour;
as well as the security of Kshs. 50,000,000/- deposited in the joint names of the
parties’ advocates in an interest earning account; the amount owed to the
respondent is colossal with a decretal sum of USD 15,162,320.95 that continues
accruing interest. The appeal before us is founded on the enforcement and
recognition of a foreign judgment as against our judgment in Elly Okong’o
Ing’ang’a case. The money decree issued is a result of the findings on the
primary dispute as already stated. The enforceability and validity of the Facility
Agreement dated 10th April 2015 as between the different parties is, in our view,
a distinct issue whose determination accrues from a different course of action.
The parties are, in any event, still engaged before the High Court including in
High Court Insolvency Cases E001, E002, E003, and E004 of 2020,
as consolidated with E469 of 2019.
[35] Lastly, on the public interest element, we note that although the intended
appeal is on the recognition of the foreign judgment, the arguments raised by
the applicant with respect to the present application revolve around their
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 13 of 15
grievances with the enforcement of the resultant money decree. Our perusal of
the record reveals that the dispute between the parties arose out of the Facility
Agreement entered into by the parties on 10th April 2015 and the terms
thereunder. These are at best private interests that are at stake that do not have
a bearing on public interest as the settings are specific to the parties in this
dispute. In our view, enforcement of a foreign judgment is not in and of itself an
affirmation of public interest until it is interrogated further as may be applicable
on a case to case basis. We think that, prima facie, the applicants’ dispute is a
matter of “private international law” or “conflict of laws” as known in other
jurisdictions.
[36] It is premature for the Court to wade into the merits of the international
law aspect of the dispute as to satisfy the public interest threshold to warrant
our intervention. This position extends to the applicability of Article 50 of the
Constitution on the right to fair hearing in view of the purely private and/or
commercial engagement between the parties. It is our inescapable conclusion
that the applicants have not demonstrated to our satisfaction that they can
surmount the public interest criteria for exercise of our discretion in their
favour.
[37] Consequently, and for the reasons aforesaid we make the following
orders:
(i) The Notice of Motion Application dated 25th April 2023 and filed
on 26th April 2023 be and is hereby dismissed.
(ii) The Notice of Motion Application (Petition (Application)
No. E012 of 2023) dated 23rd June 2023 and filed on 27th June
2023 be and is hereby allowed.
(iii) The Notice of Motion Application (Application No. E017 of
2023) dated 23rd June 2023 and filed on 27th June 2023 be and
is hereby allowed.
(iv) Costs of the application shall abide the outcome of the appeal.
It is so ordered.
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 14 of 15
DATED and DELIVERED at NAIROBI this 6th day of October, 2023.
…...………………………………………………………………..
P. M. MWILU
DEPUTY CHIEF JUSTICE & VICE
PRESIDENT OF THE SUPREME COURT
……………………..…………......................... …………………………………………………
M. K. IBRAHIM S. C. WANJALA
JUSTICE OF THE SUPREME COURT JUSTICE OF THE SUPREME COURT
…………………………………………….. ……………………………………………………
NJOKI NDUNGU W. OUKO
JUSTICE OF THE SUPREME COURT JUSTICE OF THE SUPREME COURT
REGISTRAR
SUPREME COURT OF KENYA
Petition (Application) No. E012 of 2023 & Application No. E017 of 2023 Page 15 of 15