Imperial Bank Kenya Limited v Janco Investments Limited & 10 others [2018] eKLR

Key Facts

Deceased Name

Issues

• The defendants argued that the plaintiff filed overlapping suits (e.g., HCCC No. 522 of 2015 and HCCC No. 392 of 2016) against different parties for the same cause of action, potentially abusing the court's process. The court evaluated the validity of this claim.
• The court weighed the plaintiff's interest in preserving assets against the potential hardship to the defendants. This included considering the impact on the bank's depositors, creditors, and the broader Kenyan economy if assets were dissipated.
• The court considered the plaintiff's claims of imminent asset transfers or removals by the defendants, supported by anonymous notes and forensic audit findings. This included assessing the defendants' financial history and whether their actions indicated a likelihood of concealing or transferring assets.
• The court examined the plaintiff's allegations that the defendants, including the deceased's beneficiaries and associates, engaged in fraudulent activities causing over Kshs. 35 billion in losses. This involved reviewing evidence of fictitious accounts, unauthorized transactions, and the defendants' potential unjust enrichment.
• The court evaluated whether the plaintiff, Imperial Bank Kenya Limited, met the legal criteria to obtain a freezing injunction against the defendants to prevent dissipation of assets during the ongoing fraud investigation. This included assessing the existence of a prima facie case, risk of asset removal, and the balance of convenience.

Date of Death

Holdings

• The court confirmed the ex parte freezing orders issued on 27 October 2015 pending the hearing and determination of the suit. The freezing injunction was granted to restrain defendants from removing or disposing of assets, including those comprising the deceased's estate and trust, to prevent dissipation. The court found the plaintiff has a good arguable case based on prima facie evidence of fraudulent activities by the deceased and other defendants, and the balance of convenience favors maintaining the status quo to protect depositors and the public interest.
• The court ordered that the costs of the application be 'costs in the cause,' meaning the plaintiff bears the costs unless the court later determines otherwise. This decision aligns with the principle that costs follow the event, but the court left the matter open pending the final outcome of the suit.
• The court dismissed Prayer 4 for tracing and discovery as spent, noting the plaintiff reduced the sums in issue from Kshs. 35 Billion to Kshs. 3,757,162,208.10. The plaintiff was required to demonstrate that the assets listed in the freezing order are less valuable than the reduced sum to warrant further intervention, but no such evidence was presented.

Remedies

• The court ordered that the costs of the application be costs in the cause, meaning the plaintiff will bear the costs unless the court decides otherwise in the final determination of the case.
• The court confirmed the ex parte freezing injunction orders issued on 27 October 2015, restraining the defendants from removing, disposing of, or otherwise dealing with their assets, investments, and businesses (including specified properties and financial accounts) pending the hearing and determination of the suit. This includes assets comprising the deceased's estate and trust.

Will Type

Probate Status

Legal Principles

• The plaintiff contended that defendants, including the deceased's beneficiaries, held assets as constructive trustees due to their involvement in or knowledge of fraudulent activities. The court acknowledged this as a basis for the injunctive relief, referencing cases like Kuwait Oil Tanker Co. SAK v. Al Bader to support the equitable claim.
• The court confirmed an interim injunction (Mareva) to restrain defendants from dissipating assets while the case proceeds, based on the plaintiff's prima facie case of fraud and the risk of asset dissipation. The ruling emphasized the need to balance the interests of justice, including the bank's depositors and the broader economy.
• The court recognized the plaintiff's argument that defendants unjustly enriched themselves using funds obtained through fraudulent schemes. This principle of unconscionability underpinned the request for injunctive relief to prevent the retention of misappropriated assets, particularly those linked to the deceased's estate and trust.
• The court upheld a Mareva injunction under Order 40 Rules 1 and 2 of the Civil Procedure Rules, citing the plaintiff's need to trace and recover misappropriated funds. The order restrained defendants from transferring or disposing of assets, including those comprising the deceased's estate and trust, to safeguard the bank's interests and ensure fair adjudication.

Succession Regime

Precedent Name

• Motorola Credit Corp vs. Uzan & Others
• Kuwait Oil Tanker Co. SAK & Another vs. Al Bader & Others
• Arab Monetary Fund vs. Hasham & Others
• Lipkin Gorman vs. Karpnale Limited
• Dimskal Shipping Co. Ltd vs. International Transport Workers Federation
• Third Chandris Shipping Corporation vs. Unimarine SA
• Lennard's Carrying Co. Ltd vs. Asiatic Petroleum Co. Ltd
• Ngruruman Limited vs. Jan Bonde Nielsen & Others
• Ninemia Maritime Corp vs. Trave Schiffahrtsgesellschaft mbH & Another
• DCF Engineering Limited vs. Johari Limited & Another
• International Air Transport Association & Another vs. Akarim Agencies Co. Ltd & Others
• Giella vs. Cassman Brown
• The Niedersachsen

Executor Name

• Rehana Afschin Janmohamed (sued as a beneficiary and as a Legal Representative of the Estate of Abdulmalek Janmohamed)
• Gulshan Janmohamed (sued as a beneficiary and as a Legal Representative of the Estate of Abdulmalek Janmohamed)
• Mehdi Janmohamed (sued as a beneficiary and as a Legal Representative of the Estate of Abdulmalek Janmohamed)
• Aliya Jahan Ara Janmohamed (sued as a beneficiary and as a Legal Representative of the Estate of Abdulmalek Janmohamed)
• Salim Janmohamed (sued as a beneficiary and as a Legal Representative of the Estate of Abdulmalek Janmohamed)
• Shaista Amal Janmohamed (sued as a beneficiary and as a Legal Representative of the Estate of Abdulmalek Janmohamed)
• Tasneem Abida Janmohamed (sued as a beneficiary and as a Legal Representative of the Estate of Abdulmalek Janmohamed)

Cited Statute

• Kenya Deposit Insurance Act, No. 10 of 2012 (KDIA)
• Civil Procedure Rules, 2010
• Banking Act, Chapter 488 of the Laws of Kenya
• Civil Procedure Act, Chapter 21 of the Laws of Kenya
• Central Bank Act, Chapter 491 of the Laws of Kenya

Executor Appointment

Judge Name

Passage Text

• "...Where the dispute not only affects the protagonists in the legal arena, but may also affect third party bystanders or observers, the court cannot shut its eyes from such circumstances. The fact that the sources of livelihood of third parties and their families are likely to be adversely affected in the meantime unless the injunction sought is granted, is not totally far-fetched and, does tilt the balance of convenience in favour of the maintenance of the status quo..."
• "...the disclosure order, where there is a freezing order is intimately involved in the effectiveness of the freezing order. Normally, when making worldwide freezing orders it will be appropriate to make disclosure orders as well. The disclosure order gives the teeth which are critical to the freezing order."
• I am satisfied that an arguable case has been made out by the Plaintiff; and, given the foregoing scenario, I am satisfied that the balance of convenience, including the interests of all parties hereto, including the Bank's depositors and bondholders, would best be served by confirming the freezing order that was issued herein on 27 October 2017 pending the hearing and determination of this suit.

Beneficiary Classes