Zara Properties Limited (CPR/2010/24490) v Zara Properties Limited (C.106174) & another [2019] KECA 635 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that a company certificate means nothing if the registration paperwork behind it is missing or unexplained.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Who between Zara Properties Limited (C.106174) and Zara Properties Limited (CPR/2010/24490) is the properly and legally registered entity?
- 2.Whether the learned judge erred in failing to address evidence that the name was stolen in an attempt to grab land belonging to the appellant (L.R. No. 209/12261)
- 3.Whether the trial judge wrongly departed from the 2nd respondent's defence and wrongly accepted the 2nd respondent's change of position at trial
- 4.Whether a certificate of change of name is conclusive evidence of proper registration notwithstanding unexplained gaps in the registration record
- 5.Whether the trial judge answered extraneous matters for which no party had sought determination
Key legal issues
#Which of the two identically named entities was the properly and legally registered company
The appellant, Zara Properties Limited (CPR/2010/24490), was the properly and legally registered entity; the 1st respondent's certificate of change of name was issued without the requisite documentation.
The Court re-evaluated the evidence and found unexplained gaps in the 1st respondent's registration: the reservation request letter could not be traced, no receipts existed for payment, and the Registrar was unaware of any certificate of change of name. By contrast, the appellant's name was properly reserved by letter dated 19th May 2010, its memorandum and articles were lodged and paid for, and its certificate of incorporation issued on 5th June 2010.
Conclusiveness of certificates of incorporation/change of name under section 17(1) of the repealed Companies Act
The trial court erred in treating the certificates as conclusive; where the underlying registration process is undocumented and unexplained, a certificate does not shield the party relying on it.
The respondents relied on section 17(1) making a certificate of incorporation conclusive evidence of compliance. The Court found, however, that the Registrar's own evidence disclosed that the certificate of change of name was issued without the requisite documents, that the Registrar was unaware of its issuance, and that the 1st respondent was still complaining of non-issue as late as 23rd August 2010. Unexplained gaps in the record outweighed the purported conclusiveness of the certificate.
Departure from pleadings by the 2nd respondent
The 2nd respondent's defence had demanded strict proof of the certificate of change of name; his change of tune at trial, unsupported by crucial documents, could not establish the 1st respondent's case.
Applying the trite principle that parties are bound by their pleadings, the Court held the 2nd respondent could not depart from a defence demanding strict proof and then support the 1st respondent's case without documentation. No reservation letter or receipts existed for the 1st respondent; had a proper reservation occurred, a letter of the kind issued to the appellant on 19th May 2010 would have existed.
Evidence of the DCI investigation (PW2) and the alleged land-grabbing
The Court declined to make findings on the DCI letter or the ownership of L.R. No. 209/12261, as that dispute was pending before the Environment and Land Court.
Ground 1 of the appeal faulted the judge for ignoring evidence of a land-grabbing scheme. The Court held the trial judge acted wisely in restraining himself given the pending ELC Case No. 183 of 2011, and it too declined to pronounce on the merits so as not to prejudice the parties in the land dispute or embarrass the hearing court. Nothing therefore turned on the first ground of appeal.
Legal principles established
#- Parties are bound by their pleadings; evidence at variance with the pleadings goes to no issue and must be disregarded.
- On a first appeal, the appellate court must re-evaluate the evidence and draw its own conclusions, while making due allowance for the fact that it neither saw nor heard the witnesses.
- A first appellate court may refrain from pronouncing on evidence touching a matter pending before another court to avoid prejudicing those proceedings.
Court orders
#- 1.Appeal allowed
- 2.High Court judgment and decree dated 8th June 2017 set aside
- 3.Substituted finding that Zara Properties Limited (CPR/2010/24490) is the properly and legally registered entity as opposed to Zara Properties Limited (C.106174)
- 4.Respondents to bear the appellant's costs of the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 700 of 2010
- Jurisdiction invoked
- First appellate jurisdiction over the High Court (appeal as of right on the record of the trial court)
Relief refused
#Appellant's request for findings on the alleged land-grabbing scheme and the DCI investigation report (PW2's evidence)
The Court declined to make findings on ownership of L.R. No. 209/12261 as that is the subject of pending litigation before the Environment and Land Court
Costs
The respondent shall bear the appellant's costs of the 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.
In view of that finding, we hereby allow the appeal, set aside the High Court judgment and decree dated 8 th June, 2017; and substitute therefor a finding that Zara Properties Limited (CPR/2010/24490) is the properly and legally registered entity as opposed to Zara Properties Limited (C.106174)).
In our view, preponderance of evidence demonstrates that the appellant was the properly and legally registered entity.
it is now a very trite principle of law that parties are bound by their pleadings and that any evidence led by any of the parties which does not support the averments in the pleadings, or put in another way, which is at variance with the averments of the pleadings goes to no issue and must be disregarded
All the above issues raise serious concerns about the manner in which the 1 st respondent obtained the certificate of change of name, as compared to the well documented process through which the appellant was incorporated. The evidence tendered by the 1 st and 2nd respondents had many gaps that were not explained.
The respondent shall bear the appellant’s costs of the appeal.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Zara Properties Limited (CPR/2010/24490) v Zara Properties Limited (C.106174) & another [2019] KECA 635 (KLR)", Case Analysis (2019). Civil Appeal No. 216 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/635/eng@2019-04-05
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.