Thome Farmers Company No. 4 Ltd v Farm of Faith Investors Ltd [2019] KEELC 2704 (KLR)
The bottom line
#A Kenyan court struck out a company's land suit because no board resolution authorized it, and made the company's lawyer pay the costs personally.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the proceedings herein were authorized through a resolution of the company.
- 2.Whether Counsel on record representing the Plaintiff had the authority to represent it.
- 3.Whether the Preliminary Objection raised is sustainable.
Key legal issues
#Whether the suit was authorized by a resolution of the company
No resolution authorizing the institution of the suit was lodged or exhibited; the proceedings were a nullity.
The court applied Bugerere Coffee Growers, Omondi v National Bank of Kenya, Philomena Ndanga Karanja and Affordable Homes Africa: a company, being an artificial person with separate personality, can sue only through a board or company resolution sanctioning the action. The plaintiff filed none, and no letter of authority supported the supporting affidavit sworn by John Kang'ethe Ngugi.
Whether the advocates on record had authority to act for the plaintiff
No authority or instructions were demonstrated; the firm and the deponent of the supporting affidavit acted without authority and are personally liable for costs.
Relying on Kyanzavi Farmers and Bugerere Coffee Growers, the court held that an advocate instituting proceedings for a company must demonstrate authority, ideally by resolution or affidavit; absent such proof, the advocate becomes personally liable for costs. Article 159(2)(d) does not excuse non-compliance with procedural imperatives.
Whether the preliminary objection is sustainable
Yes - it raises a pure point of law under the Mukisa Biscuits definition and succeeds, resulting in the suit being struck out.
The objection rested on the pleaded legal point that no resolution authorized the suit, requiring no ascertainment of disputed facts or exercise of discretion, satisfying the Mukisa Biscuits test. Since the company was not properly before the court and no valid suit existed, the objection succeeded with costs.
Legal principles established
#- A limited liability company can only institute suit if authorized by a valid company or board resolution, failing which the proceedings are a nullity and the company is not before the court.
- An advocate who brings proceedings without authority of the purported plaintiff is personally liable for the costs of the action.
Court orders
#- 1.The suit commenced by Thome Farmers Company No. 4 against the Defendant vide the Plaint dated 7th November 2017 is struck out with costs to the Defendant/Applicants.
- 2.Costs to be met by the firm of Lawrence Mwangi & Mwangi Advocates and John Kangethe Ngugi jointly and severally for acting without authority.
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Original civil jurisdiction of the Environment and Land Court over a dispute concerning the plaintiff company's suit; no specific constitutional or statutory provision invoked
Relief refused
#Plaintiff's suit (and the application dated 7th November 2017)
No board resolution authorizing institution of the suit was lodged; the proceedings were a nullity and the company was not properly before the court.
Costs
Costs to the Defendant/Applicants, to be met by the firm of Lawrence Mwangi & Mwangi Advocates and John Kangethe Ngugi jointly and severally for acting without authority.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
For reasons set out herein above, the Preliminary Objection raised on the 12 th February 2019 is sustainable, the suit commenced by Thome Farmers Company No. 4 (the Plaintiff), against the Defendant, vide the Plaint dated the 7 th November 2017 is hereby struck out with costs to the Defendant/Applicants.
Costs to be met by the firm of Lawrence Mwangi & Mwangi Advocates and John Kangethe Ngugi jointly and severally for acting without authority.
I therefore find that the proceedings, as they relate to the affairs of a limited liability company, were a nullity, having had not been sanctioned by a valid resolution of the company.
In the absence of a Board of directors' resolution to commence a suit, then a company, which is an artificial person, cannot be capable of instituting a suit in court.
Issues in the judgment
#The judgment refers to both an application dated 7th November 2017 and one dated 21st November 2017, creating ambiguity as to the pleading dates.
The Defendant is referred to only as 'Defendant/Applicants' throughout; its actual name is never stated.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Thome Farmers Company No. 4 Ltd v Farm of Faith Investors Ltd [2019] KEELC 2704 (KLR)", Case Analysis (2019). ELC Suit, Nyahururu (Plaint dated 7th November 2017; Preliminary Objection dated 12th February 2019). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/2704/eng@2019-07-02
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.