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ELCDismissedCivil Case No. 169 of 2014· [2020] KEELC 2112 (KLR)

Najmuddin Hassanali Noorbhai (Suing as Personal Representative of the estates of Gulamhussein Mohamedali Noorbhai, Hassanali Mohamedali Noorbhai, Yusufali Mohamedali Noorbhai, Alibhai Mohamedali Noorbhai & Abdulhussein Mohamedali Noorbhai) & 4 others v Mobil Oil Kenya Limited & another [2020] KEELC 2112 (KLR)

Environment and Land Court
9 June 2020
5,332 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~21 min to read original · ~4 min brief

The bottom line

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What this practically means

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Executive summary

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Five plaintiffs, as personal representatives of the deceased lessors of three Mombasa properties, sued Mobil Oil Kenya Limited and Libya Oil Kenya Limited claiming that successive changes of name of the 1961 lessee, Standard-Vacuum Oil Company (East Africa) Limited, breached Clause 2(8) of the lease, which forbade assignment without the lessor's written consent. They sought a declaration entitling them to terminate the lease, vacant possession, mesne profits of Kshs.100,000 per annum from 1 June 2008 and damages. The defendants maintained they were the same entity as the original lessee, merely renamed over time, that no consent or notification was required for a name change, and that the plaintiffs were estopped, having executed a 2002 variation of lease reciting the name changes and having continued to receive rent. The defendants' company secretary testified the changes were registered and no assignment or transfer of possession occurred. The court framed two questions: entitlement to vacant possession for breach of Clause 2(8), and estoppel. It declined to lift the corporate veil for want of jurisdiction under the Companies Act and because no fraud was pleaded or proved, finding the registration number C.2318 unchanged throughout. It held the plaintiffs failed to prove assignment and were estopped by acquiescence through the 2002 variation, with delay of twelve years before suit. The suit was dismissed with costs to the defendants.

Key legal issues

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01

Whether the name changes constituted an assignment breaching Clause 2(8) of the lease

Holding

No; the evidence showed a continuous succession of name changes of the same entity (company number C.2318), not assignments

Reasoning

The Court found the company registration number remained C.2318 throughout all name changes, corroborating the defence witness's evidence that Standard-Vacuum and Libya Oil were the same entity save for name changes. The plaintiffs' claim that Tamoil Africa Holdings Limited acquired Mobil Oil Kenya was unsupported by Registrar of Companies documents, and the burden could not be shifted to the defendants.

p. 6
02

Whether the corporate veil should be lifted

Holding

No; lifting was refused for want of jurisdiction and want of pleaded/proved fraud

Reasoning

The claim was not pleaded as one for lifting the corporate veil, which would oust the ELC's jurisdiction under the Companies Act. Further, no particulars of fraud were pleaded or proved; rent was always paid. New issues introduced at submissions would open a Pandora's Box touching on non-joined parties.

p. 6
03

Whether the plaintiffs were estopped from claiming breach based on the name changes

Holding

Yes; by executing the 2002 variation of lease acknowledging the name changes, the plaintiffs acquiesced

Reasoning

The 2002 variation recited that Standard-Vacuum had changed its name to Esso Kenya Limited and finally to Mobil Oil Kenya Limited, and the plaintiffs signed it. Having acquiesced to the first three changes, they led the lessee to believe there was no objection, and nothing showed subsequent changes were different. They also delayed twelve years before suing.

p. 6

Legal principles established

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  • A company's change of name does not affect its rights or obligations or constitute an assignment where the company's registration number remains the same
  • A company is a legal entity distinct from its shareholders; the corporate veil may be lifted only on pleaded and proved fraud or improper conduct
  • A lessor who acquiesces to changes by executing a variation of lease acknowledging the lessee's changed name is estopped from later claiming those changes constituted breach
  • Equity does not assist indolent litigants who delay taking action

Court orders

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  1. 1.The plaintiffs' suit is dismissed with costs to the defendants

Authorities

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Legislation

  • Registered Land Actforfeiture notice provisions (now repealed)
  • Companies Actjurisdiction over lifting of corporate veil

Cases cited (8)

  • VTB Capital Plc Vs Nutritek International Corp
    (2013) 1 All ER 1296
  • Jones Vs Lipman
    (1962) I.W.L.R
  • Ben Hasham Vs Al Shayif
    (2008) EWHC 23 80 (Fam)
  • Salomon Vs Salomon & Co. Limited
    (1895-9) All ER 33
  • Charles Ray Makuto Vs Almakony Limited and Another
    (2016) eKLR
  • Victor Mabachi & Ano Vs Nurturn Bates Limited
    (2013) eKLR
  • Odd Jobs Vs Mobia
    (1970) E.A 476
  • Githunguri Dairy Farmers Co-operative Society Vs Errie Campbell & Company Limited & Ano
    (2018) eKLR
Jurisdiction invoked
Environment and Land Court jurisdiction under Article 162(2)(b) of the Constitution (not expressly cited; the Court noted that a claim for lifting the corporate veil would fall outside its jurisdiction under the Companies Act)

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, "Najmuddin Hassanali Noorbhai (Suing as Personal Representative of the estates of Gulamhussein Mohamedali Noorbhai, Hassanali Mohamedali Noorbhai, Yusufali Mohamedali Noorbhai, Alibhai Mohamedali Noorbhai & Abdulhussein Mohamedali Noorbhai) & 4 others v Mobil Oil Kenya Limited & another [2020] KEELC 2112 (KLR)", Case Analysis (2020). Civil Case No. 169 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/2112/eng@2020-06-09

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