High Court Refused to Freeze Contractor Accounts Over Unproven Asset Dissipation Risks

The High Court has formally dismissed an urgent application by Mombasa Cement Limited seeking to freeze bank accounts and attach receivables belonging to its customer, Broad Contractors, over a disputed KSh73.7 million debt for supplied clinker and raw construction materials.

Justice Letizia Wachira declined to grant the temporary preservation orders, ruling that the cement manufacturer failed to demonstrate that the contractor had an active intention to dissipate its assets or flee the court’s jurisdiction to frustrate execution of a potential decree.

The legal dispute centers on allegations by Mombasa Cement that Broad Contractors—a primary contractor involved in national Affordable Housing projects—accumulated unpaid invoices totaling KSh73.76 million for clinker deliveries, alongside contested interest accruals.

Mombasa Cement had petitioned the court under Order 39 Rule 5 of the Civil Procedure Rules, seeking an immediate freeze on the contractor’s bank accounts and the attachment of its incoming project receivables to secure the outstanding debt prior to the full trial.

In her determination, Justice Wachira emphasized established legal precedents establishing that the existence of an unpaid commercial debt, by itself, does not automatically justify the drastic step of attaching a firm’s working capital before judgment.

The court noted that Broad Contractors’ ongoing operational receivables from housing developments do not prove an intent to evade financial obligations.

Consequently, while the ruling allows Broad Contractors to continue its business operations unimpeded, it leaves Mombasa Cement’s primary suit to recover the principal debt open for full hearing and determination.

This high-voltage commercial litigation audit highlights how legal standards for interim preservation orders, corporate supply chain debts, and judicial protection of ongoing enterprise operations directly intersect.

As the substantive suit progresses, the High Court ruling sets a defining benchmark for commercial asset preservation thresholds under Kenyan civil procedure.

https://x.com/StandardKenya/status/2115429535793471963?a=MYeqXE14nf85TaIN-sw&s=20

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