National Industrial Credit Bank Limited v S. K. Ndegwa Auctioneer [2005] KECA 22 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that proclaiming attachment of goods counts as attachment, but auctioneer fees must be based on the goods' value, not the decretal sum.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether an auctioneer who has proclaimed attachment of goods under Rule 12 of the Auctioneers Rules, without actual seizure of the goods as contemplated by Order 21 Rule 38 of the Civil Procedure Rules, is entitled to fees for attachment under paragraph 4 of Part II of the Fourth Schedule.
- 2.Whether the procedure for attachment prescribed in Rule 12 of the Auctioneers Rules is in conflict with Order 21 Rule 38 of the Civil Procedure Rules and, if so, which procedure governs.
- 3.On what value the percentage charges specified in paragraph 4 of Part II of the Fourth Schedule are to be computed - the decretal sum or the value of the goods attached.
- 4.What relief should follow where the Item 4 assessment is wrongly computed and there is no or insufficient evidence before the appellate court of the value of the attached goods.
Key legal issues
#Whether proclamation of attachment under the Auctioneers Rules constitutes attachment entitling the auctioneer to fees under paragraph 4 of Part II of the Fourth Schedule.
Yes. Proclamation of movable goods under Rule 12 read with Rule 14 and Sale Form 2 is legally and effectively an attachment; from the moment of proclamation the goods pass into the custody of the law and the auctioneer becomes entitled to attachment fees.
The Court compared Rule 12 of the Auctioneers Rules with Order 21 Rule 38 of the Civil Procedure Rules and held the actual words of the two provisions not decisive; what matters is the essence and purpose of attachment - removing goods from the judgment-debtor's possession into the custody of the law so they may be sold if the debt is unpaid. Rule 14 prohibits removal, interference or alienation of proclaimed goods; Sale Form 2 notifies the debtor that the goods are attached and left in his custody for seven days; and, per Mulla on the in pari materia Indian provision, affixing a warrant amounts to actual seizure.
Which procedure governs where Order 21 Rule 38 of the Civil Procedure Rules prescribes actual seizure and Rule 12 of the Auctioneers Rules prescribes proclamation.
The Auctioneers Rules procedure prevails as a deliberate reform; a proclamation places the goods in the custody of the law even though the goods are not physically carried away.
The Court acknowledged that the procedure in Order 21 Rule 38 (actual seizure and custody by the attaching officer) appears to conflict with Rule 12 (proclamation, seven-day redemption notice, storage, then sale). It resolved the conflict by treating the Auctioneers Act as a modern statute whose Rule 12 procedure is a reform of the old procedure, which 'clearly needs to be amended'. Physical removal is unnecessary; proclamation deprives the judgment-debtor of legal possession and places the goods in the custody of the law and the court through the auctioneer, redeemable only by payment of the debt.
On what value the percentage charges in paragraph 4 of Part II of the Fourth Schedule are to be computed.
On the value of the goods attached, not on the decretal sum; a decretal-sum basis is unjust because the attached goods may be worth far less than the decree.
Paragraph 4 specifies percentage bands but not the value to which they apply. The Court invoked the canon that a statute should, if possible, be construed so as to make it operative rather than rejected as a nullity (Halsbury's Laws of England, Vol. 36). The object of paragraph 4 is to provide the values on which charges are assessed; the auctioneer is remunerated for the actual work done, not for what he could have done had he attached goods equivalent in value to the decretal sum. The decretal-sum-based assessment was therefore wrong.
What relief follows where the Item 4 assessment is wrongly computed and there is no or insufficient evidence of the value of the attached goods before the appellate court.
The Shs.1,000,000/= assessment under Item 4 is set aside and the assessment remitted to the Deputy Registrar for reassessment on the basis of the total value of the properties described in the proclamation; the appeal on entitlement is otherwise dismissed.
The Court found itself unable to reassess the fees because there was no, or insufficient, evidence of the value of the goods attached. Rather than substitute its own figure, it set aside the Shs.1,000,000/= allowed under Item 4 and remitted the assessment to the Deputy Registrar, confining the reassessment to the total value of the properties described in the proclamation. The holding on entitlement - that proclamation is an attachment - was affirmed, so the appeal was otherwise dismissed. Both parties having partly succeeded, no order as to costs was made.
Legal principles established
#- Under the Auctioneers Rules 1997, proclamation of movable goods under Rule 12 read with Rule 14 and Sale Form 2 is legally and effectively an attachment, and an auctioneer who has proclaimed attachment is entitled to the fees prescribed in paragraph 4 of Part II of the Fourth Schedule even without actual seizure under Order 21 Rule 38 of the Civil Procedure Rules.
- From the moment goods are proclaimed, the judgment-debtor is deprived of legal possession and physical control and the goods stand in the custody of the law and the court through the auctioneer; the goods need not be carried away from the judgment-debtor's premises.
- Auctioneer's charges for attachment under paragraph 4 of Part II of the Fourth Schedule must be assessed on the value of the goods attached, not on the decretal sum.
- Where a statutory provision admits of several meanings, courts must adopt the meaning that makes the provision operative rather than reject it as a nullity.
- The literal wording of two apparently conflicting procedural provisions is not decisive; the court looks to the essence and purpose of the process.
Court orders
#- 1.Appeal partly allowed to the extent that the auctioneers fees assessed under Item 4 at Shs.1,000,000/= on the basis of the decretal sum is set aside.
- 2.The assessment of the auctioneers fees remitted to the Deputy Registrar for re-assessment on the basis of the total value assessed by him of the properties described in the proclamation by the respondent.
- 3.The appeal against the award of fees for attachment otherwise dismissed.
- 4.No orders as to the costs of the appeal, both parties having partly succeeded.
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 1818 of 2000
- Jurisdiction invoked
- Appeal to the Court of Appeal with leave granted by the High Court (Mohamed Ibrahim, J.) after the Bank's appeal to a Judge in chambers under Rule 55(4) of the Auctioneers Rules 1997 against the Deputy Registrar's assessment was dismissed.
Relief refused
#The Bank's contention that the auctioneer was not entitled to any attachment fees under paragraph 4 of Part II of the Fourth Schedule because there was no actual seizure, only a proclamation.
Proclamation under Rule 12 read with Rule 14 of the Auctioneers Rules and Sale Form 2 is legally and effectively an attachment; the High Court's construction to that effect was upheld.
The respondent auctioneer's claim to retain the Item 4 assessment of Shs.1,000,000/= computed on the decretal sum.
Attachment fees must be based on the value of the goods attached, not the decretal sum; the assessment was set aside and remitted for reassessment.
Costs of the appeal by either party.
Both parties partly succeeded in the appeal.
Costs
No orders as to the costs of the appeal - "As both parties have partly succeeded in this appeal, we make no orders as to the costs of this appeal."
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
For those reasons, we partly allow the appeal to the extent that the auctioneers fees assessed under item 4 at Shs.1,000,000/= on the basis of the decretal sum is set aside.The assessment of the auctioneers fees is remitted to the Deputy Registrar for re-assessment on the basis of the total value assessed by him of the properties described in the proclamation by the respondent.The appeal against the award of fees for attachment is otherwise dismissed.
It is clear from Rule 12 as read with Rule 14 of the Auctioneers Rules and the contents of the prescribed form, that is, Sale Form 2 that the proclamation of the movable goods is legally and effectively an attachment.
From the moment the goods are proclaimed, the judgment-debtor is deprived of the legal possession and physical control of the goods and instead the goods are placed in the custody of the law and the court through the auctioneer.
To place the goods in the custody of the law it is not necessary, as Mr. Gatonye correctly submitted, that the goods must be carried away from the premises of the judgment-debtor.
We think that it is reasonable that the auctioneer’s charges for attachment should be based on the value of the goods attached and not on the decretal sum.
Nevertheless, it is a canon of the construction of statutes, that, if possible a statute should be construed in a manner which makes it operative and that where a statutory provision has several meanings even though there is little to choose between them, the courts must decide what meaning the statute is to bear, rather than reject the provision as a nullity.
where a warrant of attachment is executed by affixing it to the out door of the warehouse in which goods belonging to the judgment debtor are stored, it amounts to “actual seizure” within the meaning of the present rule
As both parties have partly succeeded in this appeal, we make no orders as to the costs of this appeal.
Issues in the judgment
#The decretal sum is given as Kshs.75,772,501/20 in the narrative but as Kshs.75,772,501/50 in the description of Item 4 of the auctioneer's schedule of charges.
The chronology as narrated is internally inconsistent: the warrant of attachment and sale is said to be dated 18th October 2001, yet the respondent auctioneer is said to have issued the proclamation of attachment on 18th May 2001, i.e. before the warrant as narrated.
The appellant is named in the caption as National Industrial Credit Bank Limited but is described in the body of the judgment as 'National Industrial Bank Limited'.
The coram lists three Judges of Appeal (Omolo, Githinji and Deverell) but the signature block in this copy prints only two names, R. S. C. Omolo and W. S. Deverell, the second signature line being blank.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "National Industrial Credit Bank Limited v S. K. Ndegwa Auctioneer [2005] KECA 22 (KLR)", Case Analysis (2005). Civil Appeal No. 195 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2005/22/eng@2005-12-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.