Background and Introduction
1. On 10th November 2020, Judgment was delivered in favor of the plaintiff (the decree holder) for the amount of Kshs. 93,000,000/= with interest from 1st January 2015. The decree holder contends that by 7th August 2022, when the defendants (the applicants herein) filed an application for a stay of execution in the Court of Appeal under Rule 5(2)(b), the decretal sum had risen to Kshs. 180,555,401.77. In May 2021, the Court granted a conditional stay requiring payment of Kshs 10,000,000/= and provision of a Kshs 20,000,000/= bank guarantee within 30 days, failing which the stay would lapse.
2. The decree holder contends that despite informal requests for extensions, the applicants failed to comply with the stay conditions. The decree holder’s advocates extracted a decree on 3rd August 2021. A Bill of Costs was filed in September 2021 and on 29th June 2022, costs were taxed at Kshs 2,478,918/= and later revised to Kshs 2,400,073/= on 5th August 2022. These facts are not contested.
3. With no stay in place, the decree holders contend that they initiated the execution process to realize the fruits of their judgment. Execution proceeded, and warrants of attachment were issued in August 2022 targeting a stock of petroleum products belonging to the 3rd applicant in Kenya Pipeline Company's custody. Prohibition orders were issued on 16th September 2022, but following an unsuccessful application by the respondents, on 6th October 2022, the court ordered the sale of these assets, which the decree holder asserts lead to the realization of Kshs 68,000,000/=.
4. The proceeds from the petroleum sale did not fully satisfy the judgment debt. According to the decree holders, these proceeds reduced the outstanding balance to Kshs. 112,555,401/=. They therefore took further execution steps and on 28th July 2023, they sought and were granted an order for attachment of the applicants’ shares in Metro Petroleum Limited (the 3rd applicant) and Sombha (Africa) Limited. The decree holders contend that the prohibitory and seizure orders for the shares were issued after the applicants failed to object.
5. The decree holders contend that this measure was necessary to prevent the applicants from dissipating assets and to secure the balance of the judgment sum. The decree holders assert that as of now, the applicants remain indebted to the tune of Kshs 61,680,401/= plus interest.
6. Aggrieved by these turns of events, the applicants moved this court by a Notice of Motion application dated 2nd August 2024 (the application herein). They seek to review and set aside the court’s orders that sanctioned the above execution steps. Specifically, they urge the court to set aside the orders that allowed the auction sale of the petroleum assets and the subsequent attachment of shares. In essence, they are seeking to have the court to reverse or nullify those execution outcomes and to restore the status quo ante.
7. The applicants’ grounds in support of the application are in summary, as follows: First, they allege that the execution was conducted irregularly and unlawfully. They contend that they were not properly served with the proclamation notice in respect of the shares and that notice of the intended attachment and sale of the petroleum products was ever served upon them. As such, they say, they were denied an opportunity to settle the debt or object before their property was auctioned, resulting in them being condemned unheard. They argue this amounted to a violation of their right to a fair hearing and the rules of natural justice.
8. Secondly, the applicants assert that the auction of the petroleum assets was carried out in a manner that breached the Auctioneers Rules. They allege that the sale was premature as it was conducted before the lapse of the statutory 7-day notice period and without proper advertisement and that it fetched a grossly inadequate price due to the decree holder’s rush to sell. They suggest the process was tainted and did not maximize value, thereby causing undue loss to them as judgment debtors.
9. Thirdly, regarding the share attachment, the applicants contend that this order was obtained ex parte and without any notice to them. They maintain that the decree holders ambushed them by securing an attachment of their shares behind their backs, on the basis of an application in which the court only heard the decree holders. The applicants insist they were not given a chance to be heard before such a drastic order, essentially freezing their company shares, was made. This, in their view, was a further breach of their constitutional right to be heard.
10. They accuse the decree holders of material nondisclosure in obtaining the ex parte order, arguing that had the court been apprised of all facts, for example, the fact that the applicants were willing to settle the balance or had other assets, the order might not have issued in the same terms. They invoke the principle in Bahadurali Ebrahim Shamji Vs Al Noor Jamal & 2 Others [1998] KECA 255 (KLR) that a party who obtains orders ex parte must make full and frank disclosure of all material facts, failing which the orders should be discharged
11. On these premises, the applicants submit that they have sufficient reason to warrant a review of the court’s orders under Order 45. They argue that the combination of being denied a hearing, the procedural irregularities, and the resultant injustice rises to the level of sufficient cause to justify the court in setting aside the execution orders.
12. Finally, the applicants emphasize that they brought this application without inordinate delay, within weeks of the impugned actions, indicating their diligence once they became aware of the situation. They urge the court to prevent what they term as a grave miscarriage of justice by granting their application.
13. The decree holders have opposed the application. They characterize the applicants’ move as an abuse of the court’s process aimed at forestalling a lawful judgment. In their replying affidavit and submissions, the decree holders maintain that the applicants have failed to meet the strict threshold for review as set out in law. They submit that the application discloses no new evidence, no obvious error on the record, and that the reasons advanced are neither convincing nor analogous to the established grounds for review. In particular, the decree holders argue that all requisite procedures were followed during execution, and the applicants were accorded the opportunities required by law.
14. The decree holders aver that a proper Proclamation Notice of attachment of the petroleum products was served on the applicants by the auctioneer, in compliance with the 7-day notice rule. The decree holders therefore contend that any claim by the applicants that they were unaware of the attachment is therefore false or self-serving. In fact, the applicants were sufficiently aware of the risk of execution, as evidenced by their attempt to seek a stay, and are said to have even engaged the auctioneer initially. The decree holders point out that the applicants had even negotiated on the choice of what stock to attach or indicated an intention to settle, but did not follow through within the allowed time.
15. The decree holders insist that the auction sale of the petroleum assets was done lawfully. They assert that once the 7-day proclamation period lapsed without payment from the applicants, the auctioneer proceeded to sell the goods. An advertisement was placed in a local daily newspaper beforehand, and the sale was conducted publicly. The decree holders deny that the goods were sold at an undervalue, and take issue with the applicants for not having produced a valuation report indicating the market value of the petroleum products. They accuse the applicants of crying foul about the price only after losing the assets, noting that no formal objection to the sale was raised within the timelines provided by the Civil Procedure Rules.
16. On the share attachment order, the decree holders concede that they moved the court ex parte due to urgency. They feared the applicants might dispose of the shares to avoid execution. They argue that proceeding ex parte was legally permissible and even necessary in the circumstances. The decree holders aver that there was no material nondisclosure on their part and that all relevant facts including the unsatisfied portion of the decree and the prior auction were disclosed to the court. They assert that they acted above board.
17. According to them, the principle in the Bahadurali case (supra), relied on by the applicants, which would penalize a party for concealing facts in an ex parte application, does not impugn them here, since they hid nothing and only took legitimate steps to secure their debt.
18. The decree holders further submit that the applicants have not been denied a hearing unjustly. Any ex parte order, they note, was interim and subject to challenge. Indeed, the applicants were able to come to court (via this application) and have their say before any shares were actually sold.
19. Thus, any initial one-sided proceeding has now become an inter partes one. The decree holders argue that the applicants’ right to be heard has been effectively realized through the present proceedings, and no enduring prejudice befell them in the interim. It is their proposition that even where a matter begins ex parte, what matters is that ultimately the affected party gets an opportunity to present their case before a final decision is made, which they have, in this review application.
20. In sum, the decree holders contend that the application is baseless and is a thinly veiled attempt to delay or avoid compliance with a lawful judgment. They argue that if the applicants were aggrieved by the judgment or the court’s subsequent orders, the proper avenue was to file an appeal not to file what is essentially a second bite at the cherry in the guise of a review.
21. They urge the court to dismiss the application with costs, so that they may proceed unhindered to recover the remaining decretal sum.
Analysis and Determination
22. I have carefully considered the application, response and the submissions on record. The following issues arise for determination.
23. The first and principal issue is whether the applicants have demonstrated grounds for review of the court’s orders as required by Order 45 Rule 1. Order 45 Rule 1 of the Civil Procedure Rules and Section 80 of the Civil Procedure Act provide require that a court may review and/or vary a judgment or order if an applicant establishes one of the following grounds:
i. Discovery of new and important matter or evidence,
ii. Mistake or error apparent on the face of the record,
iii. Any other sufficient reason.
24. It is not in dispute that the applicants did not file an appeal against the judgment or the subsequent rulings of the court. Therefore, this court retains jurisdiction to hear the review application by dint of Section 80 of the Civil Procedure Act, and the absence of an appeal is a prerequisite met. The present application was filed on 2nd August 2024, roughly two to three weeks after the execution events complained of. The court is satisfied that the application was brought without undue delay. The focus then shifts to the substantive grounds.
25. The crux of the applicants’ case is that there exists ‘any other sufficient reason’ to warrant a review of this court’s orders. They essentially urge the court to find sufficient reason in the alleged denial of their right to be heard and the purported procedural irregularities in the execution. In my view, the ground ‘sufficient reason’ confers a broad discretion but it must be exercised cautiously. The court is required to enquire whether the circumstances reveal a significant injustice or miscarriage that cannot be corrected by other means and that calls for the court to re-examine its prior orders.
26. The applicants argue that because they were not heard and because the execution was done improperly, the resulting orders should be revisited to prevent an injustice. They allege that the auctioneer did not serve them with a proclamation of attachment or any notice prior to carting away and selling their petroleum stock. I have reviewed the evidence on record. It confirms that a prohibitory order was issued on 16th September 2022 against Kenya Pipeline Company in respect of the petroleum products belonging to the 3rd applicant.
27. An application dated 23rd September 2022 brought by the applicants seeking to stay the proclamation strongly suggests that they were aware of the attachment and the impending sale. It is otherwise not clear how else the applicants would have learnt of the intended auction. In light of this, the court is persuaded, on a balance of probabilities, that the requisite 7-day proclamation notice was served or at least brought to the attention of the applicants. The applicants had an opportunity to avert the sale for instance, by paying the decretal amount or engaging the decree-holder meaningfully. Thus, the claim that the auction was done surreptitiously “behind their backs” is not borne out by the evidence.
28. Regarding the conduct of the auction, the applicants complain the sale was at an undervalue and not advertised. The decree holders’ bundle of documents confirms that an advertisement was ran. A copy of the advertisement is annexed at page 73 of the documents. The advertisement listed the items to be sold on 11th November 2022. The applicants did not dispute the authenticity of this advertisement. Thus, there was publicity as required.
29. The price fetched at the auction of Kshs.68,000,000/= is documented in the auctioneer’s report at page 71 of the decree holder’s documents. The applicants did not provide an alternative valuation to demonstrate these were far below market price. The decree holder has provided a copy of the bidding register which confirms that M/S Texas Energy Ltd was the highest bidder at the auction. In absence of contrary evidence, the court has no basis to conclude that the petroleum products were sold at a gross undervalue.
30. More so, the applicants did not utilize the legal avenue of objecting to the sale immediately thereafter under Order 22 Rule 75. They waited until filing this review. By that time, the purchasers of the goods (who are not before this court) have presumably taken possession and perhaps used or disposed of the fuel. Setting aside the sale now would be practically problematic and prejudicial to innocent third parties. However, since my finding is that the sale was properly notified and fairly conducted, there isn’t a compelling reason to invalidate it anyway.
31. The other issue for determination is the attachment of the 1st applicants’ shares in the 3rd applicant and in Sombha (Africa) Limited via an ex parte court order. It is clear from the record that a prohibitory order was issued on 28th July 2023 by the Hon. Deputy Registrar. The said order (at page 57) reads that it was issued ‘against 25,000 shares held by Bill Kipsang Rotich in Metro Petroleum Limited in Sombha Africa Limited’. At page 58 is another prohibitory order issued ‘against 1 share held by Bill Kipsang Rotich and 998 shares held by Metro Petroleum Limited’.
32. There is clearly an error apparent on the proclamation orders issued by the Hon. Deputy Registar, as picked up by the applicants. The question is whether the error is so substantial as to occasion an injustice on the applicants, that they would not be aware of which specific shares were being attached. I do not think so. From the letter dated 13th July 2023 written by the decree holder’s counsels to the Deputy Registrar, there is reference to the court order of 6th and 13th July 2023. The decree holders sought to be issued with prohibitory orders in respect of
i. Nine Hundred and Ninety-Eight 998 shares held by Metro Petroleum Limited and one (1) share held by Bill Kipsang Rotich in Sombha (Africa) Ltd.
ii. Twenty-Five Thousand (25,000) shares held by Bill Kipsang Rotich in Metro Petroleum Limited.
33. In my respectful view, the error in question is best characterized as a clerical mistake. Accordingly, the seizure order dated 21st August 2023—containing the accurate and updated information—ought to guide the court's determination. The discrepancy does not materially affect the substance or validity of the order.
34. From the decree holder’s bundle of documents, an affidavit of service sworn on 28th July 2023 shows that the prohibitory orders were served on the applicants on 28th July 2024. The email forwarding the proclamation notices is attached to the supporting affidavit. While ideally service should have been effected on the applicants’ advocates, courts have held that irregular service does not nullify proceedings where the party has actual knowledge and suffers no prejudice. See for instance Ooshin Engineering Corporation v Aia Architects Limited (Civil Appeal E074 of 2022) [2023] KECA 872 (KLR) (7 July 2023) (Judgment). The applicants have not denied the email addresses to which the proclamation notices were sent yet there was no objection to the proclamation.
35. Ultimately, on the strength of the letter dated 14th December 2023 this Court directed the Deputy Registrar to execute the relevant transfer documents for purposes of effecting the seizure and transfer of shares to the decree holders. The issue for determination is whether the ex parte issuance of that directive, in and of itself, constitutes sufficient cause to warrant its setting aside.
36. In my view, it does not. The record demonstrates that the applicants were aware of the prohibitory orders, notwithstanding the fact that service was effected directly on them rather than through their advocates as ideally required. Crucially, they have since been afforded a full opportunity to be heard on the matter through the current application. It has not been established that the shares in question have already been disposed of, and thus no irreparable prejudice has occurred. In these circumstances, the applicants have been heard at an appropriate juncture, and the inter partes hearing requirement has effectively been satisfied. Consequently, the Court finds no continuing breach of the rules of natural justice that would justify setting aside the order.
37. Taking stock of the foregoing analysis, it is my view that there is no proved irregularity or unjust conduct by the decree holders or the court that would amount to a miscarriage of justice. On the contrary, it appears that the applicants’ predicament is largely self-induced. They did not pay their debt, were aware of execution, and even after losing some assets, they have not moved to settle the balance. The right to be heard does not equate to a right to interminably delay lawful enforcement of a judgment.
38. The upshot is that the applicants have not demonstrated any compelling “other sufficient reason” to justify reviewing or setting aside the orders. The threshold under Order 45 Rule 1 is not met.
Disposition
39. Accordingly, the application dated 2nd August 2024 is dismissed with costs.
DATED, SIGNED AND DELIVERED IN MOMBASA
THIS 16TH DAY OF APRIL 2025
F. MUGAMBI
JUDGE