Scandviken Consultants & Trade (K) Ltd v Daniel Onyango Nyagwara & another [2020] KEELC 1004 (KLR)
The bottom line
#What this practically means
#Executive summary
#Key legal issues
#Whether the 1st and 2nd defendants colluded to fraudulently sell the go-down at undervalue
No collusion or fraud proved; but the 1st defendant breached his fiduciary duty by unilaterally selling and concealing the sale
The tenancy agreement made no provision for the go-down, and the alleged option-to-purchase agreement was not produced in evidence. Without any obligation on the 2nd defendant or Gurcharan Singh to buy at market value, there was no motive for collusion. The 2nd defendant paid the agreed price in full and took possession. The 1st defendant, however, concealed the sale from co-directors, breaching fiduciary duty and failing to account for the Kshs. 4,000,000/= received.
Whether the plaintiff is entitled to the reliefs sought
Only the claim of Kshs. 3,000,000/= against the 1st defendant succeeds; the remaining claims fail
The plaintiff did not prove entitlement to market value from the 2nd defendant, and its market valuation of Kshs. 25,000,000/= was unsigned and of no evidential value. The 1st defendant, having a fiduciary duty to account, admitted receiving Kshs. 4,000,000/= but failed to account for it; judgment was limited to the Kshs. 3,000,000/= claimed. The loan interest claim was wholly unproved.
Whether the suit was incompetent for want of a company resolution authorising it
Objection rejected; any authorised director may instruct advocates to file suit for the company
Relying on Arthi Highway Developers Ltd v West End Butchery Ltd, which traced the rejection of the Bugerere Coffee Growers rule in Uganda and its adoption in Kenya, the court held that a board resolution is not a precondition to filing suit in the company's name. The 1st defendant, being the person to be sued, could not have been party to any such resolution anyway.
Legal principles established
#- Allegations of fraud must be strictly proved on a standard higher than a mere balance of probabilities, though not beyond reasonable doubt
- The legal burden of proof lies on the party who desires the court to give judgment, and it remains constant throughout the trial
- An unsigned valuation report has no evidential value
- It is not necessary for a company's board to pass a resolution before instituting proceedings in the company's name; any director authorised to act for the company may instruct counsel
- A director's failure to consult co-directors is an internal management affair that does not affect the legality of a transaction with third parties
Court orders
#- 1.Judgment entered for the plaintiff against the 1st defendant for Kshs. 3,000,000/= together with interest at court rates from the date of judgment until payment in full
- 2.The 1st defendant to pay the plaintiff the costs of the suit as against the 1st defendant
- 3.The suit against the 2nd defendant dismissed with each party bearing its own costs
- Jurisdiction invoked
- Original civil jurisdiction of the Environment and Land Court over a dispute concerning land parcel L.R No. 12715/611 (statutory basis not expressly cited in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Scandviken Consultants & Trade (K) Ltd v Daniel Onyango Nyagwara & another [2020] KEELC 1004 (KLR)", Case Analysis (2020). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/1004/eng@2020-10-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.