R. Billing & Co. Advocates v Kundan Singh Construction Limited [2019] KECA 677 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed you can sue a company in receivership, but only if you first get the court's permission and show good reason.
What this practically means
#Executive summary
#Key legal issues
#Leave to commence proceedings against a company in receivership
Leave was granted because the intended litigation was not likely to adversely affect the receivership and the issues raised were contentious and required judicial resolution, involving taxation of a bill of costs of Kshs 1,734,581,100.00.
The court held that the grant of leave to sue a company under receivership is necessary but discretionary, exercised on a case-to-case basis upon sufficient cause being shown. Here the applicant's case raised contentious issues resolvable only through judicial intervention; the litigation would not adversely affect the receivership; and the matters concerned a colossal sum. The interests of justice therefore favoured allowing the pursuit of the applicant's rights.
Extension of time to file submissions out of time
Extension granted despite inordinate delay because no prejudice would be occasioned to the respondent, who had been given sufficient time to respond, and the appeal had already been set down for disposal by written submissions.
Applying the settled principles in Leo Sila Mutiso v Rose Hellen Wangari Mwangi - length of delay, reasons for delay, chances of the appeal succeeding and prejudice to the respondent - the court exercised its unfettered discretion judiciously. Although the delay in filing submissions was inordinate, no prejudice would result to the respondent and the appeal was already scheduled for disposal by written submissions.
Substitution of the respondent's name to reflect a change of name
Leave granted to substitute Kundan Singh Construction Limited with KSC International Limited, the court finding no prejudice or injustice to the respondent.
The applicant learned from the registrar of companies that the respondent had changed its name and been placed under receivership. Guided by the principle in Central Kenya Ltd v Trust Bank Ltd that amendments should be freely allowed at any stage unless they cause prejudice or injustice not compensable in costs, and this being an ex-parte unopposed application, the court found no reason to refuse the substitution.
Legal principles established
#- No claim can be brought against a company under statutory management or receivership without leave of the court, and the court must be satisfied that sufficient cause has been shown before granting leave
- Amendments to pleadings should be freely allowed at any stage of the proceedings provided they do not prejudice or cause injustice to the other party
Court orders
#- 1.Leave granted to the applicant to commence proceedings against the respondent under receivership
- 2.Extension of time granted and the appellant's submissions deemed duly filed and served out of time
- 3.Leave granted to substitute the name of the respondent with KSC International Limited
- 4.Costs of the application to be in the appeal
- On appeal from
- High Court of Kenya at Nairobi
- Misc. Cause No. 291 of 2010
- Jurisdiction invoked
- Inherent/appellate jurisdiction of the Court of Appeal, with reliance on Section 66(1), (2) and (3) of the Companies Act 2015, Sections 1A and 1B of the Civil Procedure Act and Article 159(1)(d) of the Constitution
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "R. Billing & Co. Advocates v Kundan Singh Construction Limited [2019] KECA 677 (KLR)", Case Analysis (2019). Civil Appeal No. 254 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/677/eng@2019-04-05
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.