Ndumberi Farmers Co Ltd (In Liquidation) v Shah & 2 others (Environment & Land Case 1213 of 2013) [2019] KEELC 2659 (KLR)
The bottom line
#What this practically means
#Executive summary
#Key legal issues
#Whether the preliminary objection raised matters of pure law
The objection failed because the issues raised required evidence and could not be resolved summarily as preliminary points of law.
The 1st defendant contended the 2nd set of liquidators were not lawfully appointed and that Ezekiel Kamau Kariuki was not a member of the company. The court held these are issues of both law and fact requiring evidence at trial, including whether notice of the liquidators' appointment was given and whether Kariuki had already proved shareholder status in his testimony. Such matters cannot be determined through a preliminary objection and must await final judgment.
Whether the amendment substituting the liquidators as plaintiffs should be allowed
The application succeeded; the suit was instituted in the company's name through bona fide mistake and no prejudice to the defendants was shown that could not be compensated in costs.
Applying settled principles from Bullen & Leake & Jacob's Precedents of Pleadings and Central Kenya Limited v Trust Bank, amendments should be freely allowed at any stage unless they cause prejudice or injustice not compensable in costs. The 1st defendant never contended the amendment would prejudice him, only raising technical objections. Under Order 1 rule 10(1), substitution of the right plaintiff for a wrong plaintiff named through bona fide mistake is permitted at any stage.
Whether the firm of J. M. Njenga & Company Advocates was validly appointed to act for the plaintiff
The objection failed; the 1st defendant produced no evidence to controvert the plaintiff's evidence of the firm's appointment by the liquidators.
Relying on Arthi Highway Developers Limited v West End Butchery Limited, which approved United Assurance Co. Ltd. v Attorney General, an authorized director has the powers of a board to instruct counsel and institute proceedings on behalf of a company. The plaintiff's advocate referred to correspondence in the supplementary bundle evidencing the appointment, and the 1st defendant placed no controverting evidence before the court.
Legal principles established
#- Whether persons were validly elected as liquidators, and whether the deponent is a shareholder, are issues of law and fact that cannot be determined via preliminary objection
- Section 298 of the repealed Companies Act (court appointment of a liquidator) applies only where there is no liquidator; where members have duly appointed liquidators, notice of the appointment is a matter of evidence for trial
- Any director authorized to act on behalf of a company has, unless the contrary is shown, the powers of a board to instruct counsel and file proceedings on behalf of the company
- Where a suit is instituted in the name of a wrong plaintiff through bona fide mistake, the court may at any stage order substitution of the right plaintiff
Court orders
#- 1.The plaintiff's application dated 9th November 2017 is allowed in terms of prayer 1 thereof
- 2.The plaintiff shall file the further amended plaint within 14 days from the date of the ruling
- 3.The defendants shall be at liberty to amend their statements of defence within 14 days from the date of service of the further amended plaint
- 4.The 1st defendant shall have the costs of the application
- Jurisdiction invoked
- Order 8 rules 3 and 5 and Order 1 rule 10(1) of the Civil Procedure Rules
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ndumberi Farmers Co Ltd (In Liquidation) v Shah & 2 others (Environment & Land Case 1213 of 2013) [2019] KEELC 2659 (KLR)", Case Analysis (2019). Not stated in judgment (formerly Ndumberi Farmers Co. Ltd. v 1st and 2nd Defendants). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/2659/eng@2019-07-04
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.