1. This is a ruling on the 1st Respondent’s Notice of Motion dated 5th June 2024 which seeks an order to restrain the ARA/Applicant from evicting him from the preserved property and to allow him to continue renting the preserved property and to keep a portion of the rental income, pending the determination of the forfeiture application. In other words, the application seeks the variation of the preservation order granted to the ARA/Applicant in regard to the property described as LR NO. 13741 MEASURING 0.0593 IN SIZE AND 22.91M BY 26.3 IN DIMENSIONS AND THE DEVELOPMENTS THEREON KNOWN AS CASAURINA PLAZA.
2. The preservation order was issued on 13th February 2024 in HC ACEC No. E004 OF 2024, the ARA/Applicant having satisfied this court that there are reasonable grounds to believe that the property constitutes proceeds of crime.
3. The Application which is vehemently opposed was canvassed by way of affidavits and written submissions. The Respondent/Applicant was represented by Mr. J.O Magolo Advocate while the ARA/Respondent was represented by Principal State Counsel Mohamed Adow.
The applicant’s case
4. The application is expressed to be brought under Order Section 89 of the Proceeds of Crime and Anti-Money Laundering Act. Article 159 of the Constitution, Sections 3 & 3A of the Civil Procedure Act (the POCAMLA), and all other enabling provisions of the law and is premised on grounds that:-
“a) The Agency obtained preservation orders over the suit property.
b) The orders have denied the Applicant his only means of survival.
c) The Agency has used the orders to close shops and seeking that the Applicant vacate.
d) The Agency stands to suffer irreparably.”
5. The application is supported by the affidavit of ANWAR ALI OMAR, the Applicant, sworn on 5th June 2024 where he deposes that by an order dated 13th February 2024, the Agency/Respondent obtained a preservation order over the property wherein he and his family reside and which is the only home he owns; that on 3rd June 2024, the Agency’s officers raided the premises and locked all the shops he has rented out to tenants and ordered the Applicant to vacate within 5 days; that he has nowhere to move to; that his only source of income is the rent from the rental units and that is what his family depends on. Further that in his reply to the Originating Motion he explained his source of income as being just what he had recorded in the statement he made with the Agency.
6. In a Supplementary Affidavit sworn on 24th July 2024 he further deposes that he does not have any other income aside from the rent as his business collapsed forcing him to even sell his furniture and personal effects to survive. He explained that he needs money to pay for electricity, water and security; that his wife, children and sick mother depend solely on him and that the Agency has threatened to evict him and attempted to lock out his tenants from the premises after collecting rent from them. He pleads to be allowed to access half of the rental income, to wit, Kshs. 135,000/= per month.
The Respondent’s case
7. The Agency opposed the application through a replying affidavit, sworn by ISAAC NAKITARE on 10th July 2024, where he deposes that the Applicant has not adduced any reasonable evidence to warrant the setting aside or varying of the preservation order; that the application does not meet the threshold set out in Section 89 of the POCAMLA. He contended that the Applicant has not demonstrated that he will suffer hardship, which would outweigh the risk that the preserved property will be destroyed, lost damaged, concealed or transferred, should the preservation order remain.
8. He further deposed that the Agency had already filed a forfeiture application and therefore the preservation order should remain and that the Applicant has blocked the tenants from complying with the preservation order. He however, disputed that the Agency is intent on evicting or demanding rent from the Applicant for the house which he and his family occupy and has contended that the Applicant has not proved that he solely relies on the rental income from the property which is preservation.
9. He further deposed that the property and rental income are presumed to be proceeds of crime and the Applicant is not entitled to utilize them pending the hearing and determination of the forfeiture application. He contended that setting aside, discharging, or varying the preservation order shall not only render the forfeiture application nugatory but that the application is not merited and the orders sought should not be granted.
Submissions
10. Learned Counsel for the Respondent submitted that the Preservation Orders have affected the Applicant’s residence, the rental units and the rental income; that the Respondent/Applicant seeks that he be allowed to continue living in his house and to receive part of the rent as he needs money for subsistence and payment of essential services such as utilities. Counsel submitted that Section 89 of the POCAMLA envisages a situation like the Applicant’s. Counsel argued that at this stage of the proceedings, the Applicant is not required to demonstrate that the property is legally his but, that he is only required to demonstrate his situation/predicament. He therefore urged this court to rescind the preservation order so as to ensure that the property does not go to waste.
11.Counsel placed reliance on the following cases:-
• Albulrahman Mahmoud Sheikh & 6 Others v Republic & Others [2006]eKLR
• Ethics & Anti-Corruption Commission v Moses Kasaine Lenokula & Another [2019]eKLR
• Assets Recovery Agency V Lilian Wanja Muthoni t/a Sahata Consultants & 5 Others [2019]eKLR
• Assets Recovery Agency v Joyce Teresia Akinyi Ochieng [2021]eKLR
12.On his part, Learned Counsel for the ARA/Applicant submitted that the Respondent /Applicant does not meet the threshold for variation of the variation order. Counsel relied on the following cases:-
“Assets Recovery Agency v Pamela Aboo; Ethics & Anti-Corruption Commission (Interested Party) [2018] eKLR, Gulamhusein Mulla Jivanji & Another v Ebrahim Mulla Jevanji & Another (1929-30) [2018] eKLR and National Bank of Kenya Ltd v Ndungu Njau NAIROBI CA Civil Appeal No. 211 of 1996.”
Analysis and Determination:
13. I have carefully considered the application, the grounds, the affidavits, the submissions, the cases cited and the law.
14. Section 89 (1) of the POCAMLA prescribes the conditions that an application for variation of a preservation order must meet. It states: -
“(1) A court which makes a preservation order -
(a) may, on application by a person affected by that order, vary or rescind the preservation order or an order authorizing the seizure of the property concerned or other ancillary order if it is satisfied -
(i) that the operation of the order concerned will deprive the applicant of the means to provide for his reasonable living expenses and cause undue hardship for the applicant; and
(ii) that the hardship that the applicant will suffer as a result of the order outweighs the risk that the property concerned may be destroyed, lost, damaged, concealed or transferred; and
(b) shall rescind the preservation order when the proceedings against the defendant concerned are concluded....”
15.In the case of Assets Recovery Agency v Rose Monyani Musanda; Sidian Bank Limited (Interested Party) (supra), the court interpreted the provision as follows:
“It is therefore incumbent upon the respondent/applicant to prove that the applicant/respondent does not deserve the orders sought on the account that the orders will deprive him the means to provide for his reasonable living expenses and cause him unnecessary hardship and, that his suffering outweighs the risk that the property will be destroyed, lost, damaged concealed or transferred.”
16.In the case of Asset Recovery Agency v Samuel Wachenje alias Sam Mwadime & 7 others [2016] eKLR the court stated:-
“The foregoing section therefore gives the court power to vary a preservation order, where it can be sufficiently proven that the operation of the order will deprive the applicant of the means to provide for his reasonable living expenses, causing him undue hardship. Further the said undue hardship should be such as outweighs the risk that the property concerned may be destroyed, lost or transferred.”
17.The issue for determination therefore is whether the Respondent/Applicant has fulfilled the following conditions:
a. That the order has deprived him of his and his family’s reasonable living expenses and caused him undue hardship; and
b. That the hardship that he will suffer outweighs the risk that the property concerned may be destroyed, lost, damaged, concealed or transferred.
18.The preservation orders issued on 7th February 2024 prohibited the Applicant herein whether by himself, his agents and/or representatives from dealing with the property in any manner. The order further directed that pending hearing and determination of the forfeiture application the rental income and profits from the property would be deposited into the Agency’s account and also ordered the Respondent/Applicant to surrender the title deed for the property to the ARA/Respondent and directed the Chief Land Registrar to register a caveat over the property.
19.The Respondent/Applicant has attached photographs showing the padlocks on the premises as well as copies of his response to the main motion and the statement he recorded with the agency.
20.The Agency on the other hand denies ordering the Applicant to vacate the portion of the property which he uses as a residence and accuses the Applicant of dissuading his tenants not to remit rent to the Agency as directed in the preservation order.
21.In the United Kingdom Case of TDK Tape Distributor (UK) Ltd v Video choice Ltd [1986] 1 WLR 141, 146 Skinner J defined living expenses as follows:-
“..ordinary recurrent expenses involved in maintaining the subject of the injunction in the style to which he is reasonably accustomed. It does not include exceptional expenses.”
22.In in the Matter of Cantor Index Ltd v Lister [2002] CP Rep 25, Neuberger J, as he then was, in considering whether on the proper construction of the freezing order in that case permitted a living expenses provision to be rolled over, observed that:
“The purpose of this part…is to enable the defendant to live his private and social life in a reasonable way, no doubt taking into account his previous lifestyle, despite the making of the Freezing Order.”
23.I find that the Applicant has not met the threshold set out in Section 89 of the POCAMLA as to warrant this court to vary the preservation order. This is given that in a statement recorded with ARA the Applicant himself contends that he was, before the preservation order was issued, engaged in a taxi business through which he acquired the subject property and that he has a joint bank account with his wife which is separate from the Equity Bank account to which the rent is paid and that is wife is working. If this were to be believed, then he has not adduced any evidence as would convince this court on a balance of probabilities, that his businesses collapsed or that other than the rental income he has no other source of income to provide for his reasonable living expenses. It is not sufficient for him to merely assert; he must also prove.
24.The Agency has disputed that it intends to evict the Applicant from his residence and albeit that it is within the preserved property, recognizing that shelter is a basic need and right for the Applicant and his family, I shall allow his prayer to restrain the Agency from evicting him from that portion of the property which he uses as a residence for himself and his family.
25.However, as for the rental income, the Applicant cannot be allowed to collect the same as that might result in allowing him to continue deriving a benefit from proceeds of crime hence perpetuate illicit enrichment, should it turn out that the property constitutes proceeds of crime. Allowing this prayer would also have the effect of rendering the application for forfeiture nurgatory. On the other hand should the Originating Motion be dismissed all the rental income derived from the property shall be refunded to him and so he shall not suffer any prejudice.
26.The application therefore succeeds only to the extent that the Applicant/Respondent be and is hereby restrained from evicting the Respondent/Applicant from that portion of the preserved property which he occupies as a residence. The other prayers are declined. The costs of the application shall be borne by the Respondent/Applicant.
Orders accordingly.
Dated, signed and delivered virtually on this 30th day of July, 2024.