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ELCDismissedappeal against judgment in Milimani Chief Magistrate's Court Civil Case No. 12815 of 2004· [2018] KEELC 968 (KLR)

Michael Njuguna Kimemia v Vitalis Kungu Ayieye & another [2018] KEELC 968 (KLR)

High Court of Kenya (not expressly named in the judgment; per coram 'S. OKONG'O JUDGE')
25 October 2018
SOS. Okong'o
2,926 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan company lawfully forfeited and resold a member's plot after he ignored payment notices, and the High Court refused to overturn that forfeiture.

What this practically means

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Executive summary

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The appellant appealed against the judgment of Hon. P. Gichohi (Mrs) S.P.M delivered on 13th April 2006 in Milimani CMCC No. 12815 of 2004, in which the respondents, who had bought Plot No. 507 Phase 13 on L.R No. 8469/4, Nairobi from Karura Farmers Company Ltd for Kshs.55,000/-, obtained a permanent injunction restraining the appellant from trespassing on or constructing on the suit property. The respondents' case was that the appellant's plot had been forfeited for non-payment of additional share capital of Kshs.2,454/- called for by the company to avert repossession by its vendor, Mulanye Enterprises, and re-sold to them. The appellant, a member since 1981, denied receiving the notices, maintained he remained a member, and relied on the decision in Nairobi HCCC No. 643 of 1990. On appeal, S. Okong'o J applied the settled duty of a first appellate court to re-evaluate the evidence, upheld the trial court's findings that the company's Articles 34–38 permitted forfeiture, that the modes of communication used (newspapers, radio and personal letters) amounted to proper service since the Memorandum prescribed no mode of service, and that the respondents proved ownership as purchasers of the lawfully forfeited plot, free of the appellant's extinguished interest. The court agreed the HCCC No. 643 of 1990 precedent was distinguishable since the appellant there had fully paid, held a share certificate, and there was collusion. All seven grounds of appeal failed and the appeal was dismissed wholly; because the respondents sold the suit property while the appeal was pending, they were denied costs and each party was ordered to bear its own costs of the appeal.

Key legal issues

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01

Validity of forfeiture for non-payment of additional share capital

Holding

The forfeiture was lawful; the articles allowed forfeiture on default and the appellant did not pay the additional share capital

Reasoning

Articles 34–38 of the third party's Memorandum of Association empowered the directors to forfeit shares of members who failed to pay after notice. The Memorandum did not prescribe any mode of serving the notice, and the appellant did not cite any provision requiring personal service. Notice communicated through newspaper advertisements, radio and personal letters sufficed; the appellant undisputedly never paid the additional share capital.

p. 3
02

Service of the forfeiture notice on the appellant

Holding

The appellant was properly served through the various modes of communication adopted by the third party

Reasoning

The notice calling for additional share capital was communicated through newspaper advertisements, radio and personal letters, the same modes used to notify members of available plots. DW2 confirmed receipt. As the Memorandum of Association prescribed no particular mode of service and no requirement of personal service was shown, the lower court's finding of proper service could not be faulted.

p. 3
03

Respondents' title as purchasers of the forfeited plot

Holding

The respondents lawfully acquired the suit property free of the appellant's extinguished interest

Reasoning

The suit property was lawfully forfeited and sold to the respondents, who were issued a share certificate after paying Kshs.55,000/-. The forfeiture extinguished the appellant's prior proprietary interest, so the respondents acquired the property free of that interest and proved ownership before the lower court.

p. 3
04

Distinguishability of HCCC No. 643 of 1990 (Catherine Wangui Mwangi v Karura Farmers Co. Ltd & Another)

Holding

The case was distinguishable and the lower court was entitled to disregard it

Reasoning

In HCCC No. 643 of 1990 the plaintiff had paid for her share in full, held a share certificate, and paid the additional share capital, and the court found collusion between the third party and the purchaser. Here the appellant did not prove full payment, did not pay the additional share capital, and established no collusion. The factual matrix therefore differed materially and the precedent did not bind the outcome.

p. 3

Legal principles established

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  • A first appellate court must re-evaluate the evidence on record and draw its own conclusions, while bearing in mind that it did not see or hear the witnesses
  • An appellate court will not ordinarily interfere with findings of fact by the trial court unless they were not based on evidence, or on a misapprehension of the evidence, or where the court acted on wrong principles
  • Where the company's articles do not prescribe a mode of serving forfeiture notices, service through newspaper advertisements, radio and personal letters is sufficient; a member in default forfeits his interest, which is extinguished on lawful resale

Court orders

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  1. 1.The appeal fails wholly and is dismissed
  2. 2.Each party shall bear its own costs of the appeal

Authorities

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Legislation

  • Memorandum of Association of Karura Farmers Company LtdArticles 34, 35, 36, 37 and 38

Cases cited (5)

  • Verani t/a Kisumu Beach Resort v Phoenix of East Africa Assurance Co. Ltd
    [2004] 2 KLR 269
  • Selle v Associated Motor Boat Co. Ltd.
    [1968] E.A 123
  • Peter v Sunday Post Ltd.
    [1958] E.A 424
  • Makube v Nyamuro
    [1983] KLR 403
  • Catherine Wangui Mwangi v Karura Farmers Company Ltd. & Another
    Nairobi HCCC No. 643 of 1990
On appeal from
Milimani Chief Magistrate's Court
Civil Case No. 12815 of 2004 - Vitalis Kungu Ayieye and Pamela Akinyi Kungu v Michael Njuguna Kimemia
Jurisdiction invoked
First appellate jurisdiction over a subordinate court civil appeal (the judgment does not cite a specific statutory provision)

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, "Michael Njuguna Kimemia v Vitalis Kungu Ayieye & another [2018] KEELC 968 (KLR)", Case Analysis (2018). appeal against judgment in Milimani Chief Magistrate's Court Civil Case No. 12815 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/968/eng@2018-10-25

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