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ELCAllowedApplication dated 31st July, 2015 (suit particulars not stated)· [2016] KEELC 569 (KLR)

Sharif Mohamed A. Omar & another v Bontempi Luigi [2016] KEELC 569 (KLR)

Environment and Land Court
22 September 2016
OAO. A. Angote
699 words in judgment
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The bottom line

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Kenya's Environment and Land Court froze four Malindi properties a director bought with company money until trial decides who owns them.

What this practically means

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Executive summary

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By an application dated 31st July 2015, the Plaintiffs sought an interlocutory injunction restraining the Defendant, his agents, servants, auctioneers or successors in title from transferring, charging, selling, leasing or dealing with four properties - LR 3044 (Orig. No. 26/ii) Malindi, LR 8980, LR 7861 and LR 7851 - pending the hearing and determination of the suit, together with costs. The 1st Plaintiff, a director and shareholder (150 shares, with his son holding 25) of the 2nd Plaintiff company, deponed that running of the company had been placed in the Defendant's hands; that the company was paid Kshs.17,000,000 for putting up temple cottages and a further Kshs.3,000,000, and that these funds were used to purchase the suit properties; and that the Defendant, an Italian national, was now disposing of the properties. The dispute followed prior litigation: in Mombasa HCCC No. 255 of 1995, Sergon J gave judgment for the Plaintiffs on 26th July 2007, and the Court of Appeal dismissed the Defendant's appeal on 19th June 2015, finding systematic misappropriation of company funds by the Defendant and a constructive trust over plot 3104. The Defendant opposed, asserting registered ownership and mere apprehension of sale. Angote J observed that the Defendant did not deny the shareholding, the running of the company, or the use of company money to buy the properties, and held it proper to preserve the properties pending trial. The application was allowed as prayed on 22nd September 2016.

Key legal issues

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01

Entitlement to interlocutory injunction over suit properties allegedly purchased with misappropriated company funds

Holding

Injunction granted pending hearing and determination of the suit to preserve the suit properties

Reasoning

The court noted this was not the first time the dispute was in court; in HCCC No. 255 of 1995 Sergon J entered judgment for the Plaintiffs, and the Court of Appeal found systematic misappropriation of company funds by the Defendant and a constructive trust. The Defendant did not deny the 1st Plaintiff's shareholding, that he ran the company, or that company money purchased the suit properties. Preservation pending final determination of whether the Defendant holds the properties for the 2nd Plaintiff was therefore proper.

p. 2

Legal principles established

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  • Where a defendant does not deny depositions that company funds under his control were used to purchase suit properties, it is proper to preserve the properties by injunction pending trial of whether they are held for the company

Court orders

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  1. 1.The Application dated 31st July, 2015 was allowed as prayed
  2. 2.The Defendant, his agents, servants, auctioneers or successors in title restrained from transferring, charging, selling, leasing or in any way dealing with LR 3044 (Orig. No. 26/ii) Malindi, LR 8980, LR 7861 and LR 7851 pending the hearing and determination of the suit
Jurisdiction invoked
not stated in the judgment

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Sharif Mohamed A. Omar & another v Bontempi Luigi [2016] KEELC 569 (KLR)", Case Analysis (2016). Application dated 31st July, 2015 (suit particulars not stated). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2016/569/eng@2016-09-22

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