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Court of AppealPartially AllowedCivil Application No. 137 of 2017 (UR 100/2017)

Kiru Tea Factory Company Ltd v Stephen Maina Githiga [2019] KECA 933 (KLR)

Court of Appeal of Kenya
22 February 2019
2,740 words in judgment
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·~11 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal ruled that company resolutions passed in breach of a court status quo order are void, and a law firm appointed at that meeting cannot act.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal (Ouko P, Sichale and Otieno-Odek JJ.A) on an application for review and rescission of the Court's own ruling of 11th May 2018, in which Makhandia, M'Inoti and Sichale JJ.A had dismissed an application by the firm of Njoroge Regeru & Co. Advocates to withdraw contempt proceedings brought against directors of Kiru Tea Factory Company Limited. The dispute arose from two feuding factions of the company's Board, each claiming to instruct different law firms. The review application contended that the earlier ruling was delivered without a hearing and left the question of the company's legal representation undetermined. The Court reiterated that its power to review its own decisions is very restricted, citing Nguruman Limited v Shompole Group Ranch. Examining the merits, it found that the status quo order issued on 6th December 2017 preserved the Board as it then existed and prohibited elections of directors; the AGM held on 14th December 2017 therefore contravened that order and was null and void, together with all resolutions passed at it, including the appointment of Njoroge Regeru & Co. Advocates. Consequently, all pleadings filed by that firm in the contempt proceedings were struck out as improperly on record, and the Court reviewed its 11th May 2018 ruling, substituting the dismissal of the withdrawal application with an order striking it out as incompetent. The Court declared the lawful Board as at 6th December 2017 under the chairmanship of Geoffrey Chege Kirundi and confirmed Kithinji Marete & Co. Advocates as the duly instructed firm. Each party was ordered to bear its own costs.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the Court should review or rescind its Ruling of 11th May 2018 dismissing the Notice of Motion dated 31st January 2018 seeking withdrawal of contempt proceedings
  2. 2.Which law firm was lawfully instructed to represent Kiru Tea Factory Company Limited in the contempt proceedings

Key legal issues

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01

Scope of the Court of Appeal's power to review its own decisions

Holding

The power is restricted and exists only to correct an error or mistake to give effect to the Court's original intention; it was exercised here because the review application had merit.

Reasoning

The Court cited its earlier decision in Nguruman Limited v Shompole Group Ranch as espousing the restricted nature of review jurisdiction. Having found that the AGM of 14th December 2017 contravened the status quo order, the Court held the underlying basis of the 11th May 2018 ruling was undermined and granted review. The doctrine binds lower courts as a statement of the restricted nature of appellate review.

p. 3
02

Effect of breach of a status quo order on resolutions passed at the AGM of 14th December 2017

Holding

The AGM held on 14th December 2017 contravened the status quo order issued on 6th December 2017 and was null and void; all resolutions passed thereat, including the appointment of Njoroge Regeru & Co. Advocates, were equally null and void.

Reasoning

The status quo to be maintained was the status of the Board of Directors and company secretary as of 6th December 2017, which was a question of fact requiring evidence. The Court found that under the Articles of Association a Director could only be elected at an AGM, and the Court order had prohibited such elections. Holding an AGM on 14th December 2017 therefore violated the injunctive order, rendering the meeting and its resolutions void ab initio.

p. 4
03

Consequences of filing pleadings without lawful authority

Holding

All pleadings, the notice of change of advocates and the withdrawal application filed by Njoroge Regeru & Co. Advocates were filed by a firm not authorized by a lawfully convened AGM and were struck out as not properly on record.

Reasoning

Because the resolution appointing the firm was null and void, the legal consequence followed that the firm had no authority to act. The Court used its review jurisdiction to cure the earlier irregular dismissal by substituting an order striking out the unauthorized withdrawal application as incompetent, thereby upholding the principle that an uninstructed advocate cannot prosecute or withdraw proceedings on behalf of a company.

p. 4

Legal principles established

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  • The Court of Appeal's power to review or rescind its own decisions is very restricted and exists only to correct an error or mistake so as to give effect to the Court's original intention

Court orders

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  1. 1.Declared that the AGM held on 14th December 2017 was an unlawful meeting held in violation of the status quo order of 6th December 2017 and that Njoroge Regeru & Co. Advocates was not appointed by resolution of a lawfully convened AGM
  2. 2.Struck out all pleadings filed by Njoroge Regeru & Co. Advocates in relation to the contempt proceedings as not properly on record
  3. 3.Reviewed the Ruling of 11th May 2018 and substituted the order dismissing the Notice of Motion dated 31st January 2018 with an order striking out that Notice of Motion as incompetent
  4. 4.Declared the lawful Board of Directors of KTFC as at 6th December 2017, with Mr. Geoffrey Chege Kirundi as Chairman
  5. 5.Declared that the law firm legally and duly instructed to represent KTFC in these proceedings is Kithinji Marete & Co. Advocates
  6. 6.Clarified that the ruling relates only to legal representation of KTFC by Kithinji Marete & Co. Advocates in the contempt proceedings arising from the status quo order of 6th December 2017
  7. 7.Ordered each party to bear its/her/his own costs in the application

The bench

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One judgment of the whole court — no separate or dissenting opinions.

William Ouko
W. OukoJA
Currently serving
majority

Wrote the judgment

majority

Wrote the judgment

majority

Wrote the judgment

On appeal from
Court of Appeal of Kenya (Nyeri)
Nyeri C. Appl. No. 132 of 2017 & Nyeri C. Appl. No. 133 of 2017
Jurisdiction invoked
Inherent review/rescission power of the Court of Appeal over its own rulings, invoked with reference to sections 3A and 3B of the Appellate Jurisdiction Act
Consolidated with
Nyeri C. Appl. No. 132 of 2017, Nyeri C. Appl. No. 133 of 2017

Relief refused

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Reinstatement or hearing afresh of the withdrawal application dated 31st January 2018

The Notice of Motion was struck out as incompetent because it was drawn and filed by an unauthorized firm of advocates

p. 4

Costs

Each party is to bear its/her/his own costs in this application.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

This Court has very restricted power to review or rescind its decisions. Where the power to review exists, it is to enable the Court correct an error or mistake so as to give effect to what was the intention of the Court at the time when the error or mistake was made.
p. 3Restricted scope of appellate review of own decisions
In our considered view, the AGM held on 14 th December 2017 contravened the status quo order of this Court issued on 6 th December 2017. The said AGM of 14th December 2017 was null and void and any resolution passed thereat is equally null and void.
p. 4Nullity of resolutions passed in breach of status quo orders
The upshot is that we find the Notice of Motion dated 29 th May 2018 has merit and accordingly review the Ruling and Orders of this Court made on 11th May 2018 and make the following declarations and orders:
p. 4Final disposition - review granted
(g) Each party is to bear its/her/his own costs in this application.
p. 5Costs order

Issues in the judgment

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minor

The coram on the review application (Ouko (P), Sichale, Otieno-Odek JJ.A) differs from the bench that delivered the ruling under review (Makhandia, M'Inoti and Sichale JJ.A); Sichale JA sat on both, so the review was determined partly by a judge who made the original order

minor

The application date is inconsistently referred to as a Notice of Motion dated 31st May 2018 in the relief sought while elsewhere it is dated 29th May 2018

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Kiru Tea Factory Company Ltd v Stephen Maina Githiga [2019] KECA 933 (KLR)", Case Analysis (2019). Civil Application No. 137 of 2017 (UR 100/2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/933/eng@2019-02-22

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.