Valerina Jiwa & 289 Others v The Official Receiver & 2 others
The bottom line
#Kenya's Court of Appeal dismissed Cytonn's appeals, upholding liquidation preservation and vesting orders because the companies produced no evidence that the disputed properties were bought with their own money.
What this practically means
#Executive summary
#Key legal issues
#Separate legal personality of the SPVs and alleged lifting of the corporate veil
The preservation order was not the same thing as lifting the corporate veil; the SPVs remained free to prove in the liquidation proceedings or another forum that their assets were not connected to the Companies' funds, but they produced no such evidence.
The Court accepted that the SPVs benefited from funds collected from the investing public and were the brainchild of CIMP and Dande. Section 444 empowers the liquidator to assume control of property to which the company appears to be entitled, and section 445 permits vesting orders. Claims by third parties claiming the properties must be supported by evidence, not bare assertions. The judge's findings could not be faulted.
Vesting orders in the course of liquidation under sections 444 and 445 of the Insolvency Act
A vesting order may properly be made in liquidation proceedings in respect of property that appears to belong to the company being liquidated; claimants must prove otherwise with evidence.
Section 444 obliges the liquidator to assume control of all property to which the company is or appears to be entitled; once such a determination is made, section 445 permits the court on the liquidator's application to vest the property in the liquidator. The 1st appellant's contention that a vesting order cannot issue in a liquidation process misconstrued the statute. No evidence established the source of the funds used to acquire the properties.
Consent orders and the bar on direct appeals under section 67(2) of the Civil Procedure Act
The direct appeal against the consent adopting the SBM Bank agreement was barred; the proper course was an application to set aside the consent, which was never made.
The Court read section 67(2) as not a bar to any challenge to a consent order, but as expressly barring a direct appeal therefrom. The remedy is an application seeking to set aside the consent, from which an appeal may then be preferred. There was no evidence that procedure was followed, so the ground failed. The consent settled a liability the 1st appellant admittedly owed to SBM Bank as a secured creditor.
Standard of proof for the finding of a scheme 'akin to fraud'
Because the judge found only a scheme 'akin to' fraud, not fraud itself, the stringent standard of proof required for findings of fraud did not apply.
The Court agreed with the Official Receiver that the judge chose his words carefully. Looked at holistically, given the undisclosed prior retention of the Administrator, the 'loans' to SPVs without the promised legal charges, and the guarantee issued by an entity without assets, the judge could not be faulted for concluding the conduct was akin to fraud. That is not the same as a finding of fraud.
Application of the doctrine of tracing
Tracing was properly invoked for preservation purposes; funds advanced to the SPVs could be traced from the affidavits supporting the administration application, and mixing with property enhancements does not break tracing.
Relying on McTaggart v Bofio and Tracy v Instaloans, the Court held tracing is possible so long as the funds can be located and identified, whether mixed or unmixed, and a pre-existing fiduciary relationship need not be shown. Whether funds were mixed with enhancements was a matter for the liquidation proceedings. The tracing was for preservation, not confiscation and disposal.
Enforceability of the deed of guarantee and consistency of the two rulings
The guarantee became enforceable upon default and was unaffected by the preservation orders; there was no contradiction between the rulings of 6th January 2023 and 30th November 2023.
A guarantee is distinct from the agreement giving rise to the guaranteed obligation (Moschi v Lep Air Services). The preservation orders applied to the SPVs, not to CIMP which was not in liquidation or administration, so the earlier arrest of proceedings did not apply to it. The guarantee liability must be delinked from the SPVs' liabilities, and enforcement should be canvassed in separate proceedings.
Joinder of the 3rd appellant and interference with judicial discretion
The refusal to join the 3rd appellant was a proper exercise of discretion; the Court had no justification to interfere since the guarantee-based joinder was misconceived.
Citing Apungu Arthur Kibira and Kacem v Bashir, an appellate court interferes with a discretionary decision only on error of law or principle, irrelevant considerations, failure to consider relevant considerations, or where the decision is plainly wrong. The 3rd appellant was already a party to the proceedings throughout, and its guarantor interests could not be ventilated in the liquidation proceedings.
Legal principles established
#- A first appeal from the High Court is by way of retrial; the appellate court must re-evaluate the evidence and draw its own conclusions while making allowance for not having seen or heard the witnesses
- An appeal lies from a discretionary decision only on established grounds such as error of law or principle, irrelevant or ignored considerations, or that the decision is plainly wrong
- A direct appeal does not lie from a consent decree under section 67(2) of the Civil Procedure Act; the remedy is to apply to set aside the consent first
- A finding that conduct was 'akin to fraud' is not a finding of fraud, so the stringent standard of proof for fraud is not engaged
- Tracing remains available so long as the property can be located and identified, whether mixed or unmixed, and does not require proof of a pre-existing fiduciary relationship
- A guarantee is distinct from the principal obligation; upon default by the principal debtor the guarantee becomes enforceable immediately and is not affected by preservation orders over the principal's assets
Court orders
#- 1.The consolidated appeals are dismissed
- 2.Costs of the appeals awarded to the 1st respondent and the Creditor's Committee
- On appeal from
- High Court of Kenya at Nairobi
- Petition No. E063 of 2021
- Jurisdiction invoked
- First appellate jurisdiction under the Court of Appeal Rules (Rule 31(1)(a)), appeals against the ruling of the High Court
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Namisi v Ndubi & another (Environment and Land Appeal Miscellaneous 22 of 2022) [2026] KEELC 4987 (KLR)[2026] KEELC 4987 (KLR)31 Jul 2026
Cite this brief
#Cite this brief
Caselaw, "Valerina Jiwa & 289 Others v The Official Receiver & 2 others", Case Analysis (2025). Consolidated appeals from Nairobi High Court Petition No. E063 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/1953/eng@2025-11-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.