Nyando Farmers Company Limited v Lichet Farmers Co-operative Limited & 4 others [2016] KEELC 154 (KLR)
The bottom line
#A company cannot sue in Kenya without board or shareholder authorization, a valid verifying affidavit, and summons issued on time.
What this practically means
#Executive summary
#Key legal issues
#Whether the plaintiff company acted through recognized agents in filing suit and instructing counsel
No - the persons listed as directors in the minutes of 26th March 2016 were not registered as directors with the Registrar of Companies, and no proper authorization by bona fide directors or shareholders to commence the suit or appoint counsel was exhibited.
The court compared the minutes annexed to the plaintiff's supporting affidavit with the CR 12 and Form 203A from the Registrar of Companies showing seven different directors appointed from 31st March 2011. The plaintiff did not rebut the CR 12 contents, whose genuineness the court did not doubt. The unregistered persons therefore had no capacity to act for the plaintiff, and no resolution from registered organs authorized the counsel or the verifying affidavit.
Whether the verifying affidavit complied with Order 4 Rule 1(4)
It did not; the deponent, Benson Yugi Konyango, was not a registered director and had no authority to swear the verifying affidavit, which was struck out.
Order 4 Rule 1(4) requires the verifying affidavit to be sworn by an authorized person. Since the CR 12 and Form 203A showed Konyango was not among the registered directors, and nothing showed he was authorized, the affidavit was defective and under subrule (6) the plaint had to be struck out.
Whether summons to enter appearance were issued and served
No - the record showed no summons issued or served; only the certificate of urgency, notice of motion, supporting affidavit and annexures were served, so the suit abated.
Order 5 rule 1(5) requires summons to be prepared and filed with the plaint for signing, and subrule (6) requires collection for service within thirty days failing which the suit abates. Since no summons accompanied the plaint or was later issued, the suit abated even though some defendants had filed defences.
Whether the court had jurisdiction over the dispute
The court found it would have jurisdiction over the prayers sought in a properly constituted suit, but the defects in commencement meant the suit was a non-starter; disputes over the bona fide directors belong in another forum.
The court held that it could determine the questions leading to prayers (b) and (c) in a properly filed suit, but since the verifying affidavit was struck out and counsel was instructed by unrecognized organs, the suit could not proceed. Questions of who the bona fide directors and shareholders are, and the legality of the meetings, were for another forum.
Legal principles established
#- A private company may only institute suit and instruct counsel through resolutions of its board of directors and/or shareholders.
- A verifying affidavit sworn by a person not authorized under Order 4 Rule 1(4) of the Civil Procedure Rules offends the rule and the plaint should be struck out under subrule (6).
- Where summons are not collected for service within thirty days of issue, the suit abates notwithstanding that some defendants have filed defences.
- A preliminary objection on unauthorized commencement of suit, want of service and want of locus raises pure points of law within the Mukhisa Biscuit definition.
Court orders
#- 1.The preliminary objection raised by counsel for the 2nd to 4th Defendants is upheld.
- 2.The suit commenced through the plaint dated 6th April 2016 is struck out with costs.
- 3.The notice of motion under certificate of urgency dated 6th April 2016 is struck out with costs.
- Jurisdiction invoked
- Environment and Land Court jurisdiction (no specific provision cited in the ruling)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nyando Farmers Company Limited v Lichet Farmers Co-operative Limited & 4 others [2016] KEELC 154 (KLR)", Case Analysis (). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2016/154/eng@2016-11-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.