G.K Martin Transporters Limited v Philip Kimwele; Gideon Githuka Martin & another (Interested Parties) [2019] KEELC 716 (KLR)
The bottom line
#A Kenyan court upheld a company property transfer, dismissed a director's counterclaim for lack of court leave, but denied rent claims not specifically pleaded.
What this practically means
#Executive summary
#Key legal issues
#Whether the Defendant had locus standi to bring the counter claim on behalf of Nuvaland Transport Company Limited
The Defendant lacked locus standi; the counterclaim was derivative in nature and no leave of the court was sought. The counterclaim was dismissed
The court held that a company sues through its organs, and a director suing on its behalf must seek leave to bring a derivative claim under Section 238(1) of the repealed Companies Act. The company was under liquidation, so the liquidator was best suited to sue. Section 228 of the repealed Act and Section 432(1) of the Insolvency Act require leave for proceedings. Without leave, the court had no jurisdiction and had to down its tools.
Whether the Affidavit sworn by the parties was fraudulent
The alleged fraud was not proved; fraud must be strictly proven and the Defendant called no document examiner or reported the matter to the authorities
The Defendant pleaded forgery of his signature but adduced no expert or documentary evidence. Both interested parties testified that the Defendant signed the Affidavit in their presence. Fraud being a serious allegation, sections 107 and 109 of the Evidence Act placed the burden of proof on the Defendant, who failed to discharge it or even report the alleged forgery to the police.
Whether the undated Affidavit without a proper jurat or court stamp was valid
The Affidavit was valid; defects of form cannot vitiate it and it was not prepared for court use
The court held the court stamp was unnecessary since the Affidavit was not made for court purposes. Relying on Saggu v Roadmaster Cycles (U) Ltd, defects in the jurat or irregularities of form do not vitiate an affidavit. The overriding objective requires substance over technicalities. An Affidavit is not among documents reserved to qualified advocates under Section 34 of the Advocates Act.
Whether the Affidavit constituted a proper company resolution
Yes; a resolution may take any form, including an Affidavit, provided the members' agreement is formally expressed
Applying Black's Law Dictionary's definition of a resolution and the decision in Monecor (London) Ltd v Euro Brokers Holdings Ltd, what matters is that the members reached agreement, not the formal procedure followed. The Affidavit evidenced a formal agreement between the shareholders to distribute the company's assets, including transfer of the suit property to the Plaintiff.
Whether the Plaintiff is entitled to the reliefs sought
The Plaintiff proved its case on a balance of probabilities and was entitled to eviction, costs and nominal general damages of Kshs. 300,000/-, but not mesne profits
Under Section 26(1) of the Land Registration Act the Plaintiff's title is prima facie absolute and indefeasible, and no fraud or misrepresentation by the Plaintiff or interested parties was proved. The Defendant remained in occupation through belongings locked in stores, so eviction was sustained. Mesne profits failed for want of specific pleading and proof, but nominal damages of Kshs. 300,000/- were awarded.
Legal principles established
#- A director or shareholder who seeks to sue on behalf of a company must first obtain leave of the court to bring a derivative claim; without such leave he lacks locus standi and the court has no jurisdiction
- Fraud is a serious allegation that must be strictly proven; it is not enough to merely allege that a signature was forged
- A company resolution may take any form, including an Affidavit, so long as the company's opinion or will has been formally expressed
- A defect in the jurat or any irregularity in the form of an affidavit cannot vitiate the affidavit; substance prevails over form
- Mesne profits are special damages which must be specifically pleaded and proved with evidence showing how the amount claimed was arrived at
Court orders
#- 1.Judgment entered for the Plaintiff against the Defendant in terms of prayer No. 1 (eviction of the Defendant, his servants and/or agents from L.R No. 209/7367)
- 2.Nominal general damages of Kshs. 300,000/- plus interest from the date of filing the suit in terms of prayer No. 4
- 3.Costs of the suit to the Plaintiff (prayer No. 3)
- 4.The Defendant's Counter claim against the interested parties dismissed with costs to the Plaintiff and the interested parties
- 5.Prayer for mesne profits refused
- Jurisdiction invoked
- Original civil jurisdiction over a claim relating to land, exercising jurisdiction under the Land Registration Act and the Evidence Act; the court also considered Section 432(1) of the Insolvency Act and Sections 228 and 238(1) of the repealed Companies Act (Cap 486)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "G.K Martin Transporters Limited v Philip Kimwele; Gideon Githuka Martin & another (Interested Parties) [2019] KEELC 716 (KLR)", Case Analysis (2019). Not stated in the judgment (Plaint dated 23rd July 2003). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/716/eng@2019-11-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.