Ethics and Anti-Corruption Commission v Saleh Chepkole & 4 others [2021] KEELC 2042 (KLR)
The bottom line
#A Kenyan court struck out a law firm's filings for a company in liquidation because only the Official Receiver, not a director, could instruct lawyers.
What this practically means
#Executive summary
#Key legal issues
#Authority of advocates to act for a company in liquidation
A law firm instructed by a director, rather than by the Official Receiver as provisional liquidator, comes on record without valid instructions and all its filings and actions are null and void
The winding-up order of 21st January 2005 appointed the Official Receiver as provisional liquidator and remains in force. Under section 239 of the repealed Companies Act, the liquidator takes into custody all the company's property. Sang & Lang'at admitted being instructed by a director, not the Official Receiver. Since the company and its claim to the suit property are in the Official Receiver's custody, the firm's appearance and pleadings were unauthorised and a nullity, justifying the otherwise draconian remedy of striking out.
Whether discharge of a receiving order in a director's personal bankruptcy affects pending liquidation of the company
The discharge of the receiving order made against the estate of Jim Choge (the director) does not affect the separate liquidation proceedings against the company
The court accepted the Official Receiver's further affidavit distinguishing two separate insolvency matters: Bankruptcy Cause No. 6 of 2000 (Jim Choge, discharged) and Winding Up Cause No. 29 of 2004 (Liberty Assurance Company Limited, still pending). The estate of the late Jim Choge and the 4th defendant are separate entities, so the letter of 12th February 2015 was issued erroneously and could not vest control of the company's property in the director's estate or confer authority to instruct advocates.
Whether striking out a firm from the record was a proportionate remedy
Although striking out is draconian and should be used sparingly, it was necessary where the firm acted without authority from the liquidator
The court acknowledged the orthodox position that striking out is a draconian remedy to be resorted to sparingly. However, given that every action taken by Sang & Lang'at was a nullity for want of instructions from the Official Receiver, and that the firm purported to prosecute a counterclaim over property vested in the liquidator, the court was satisfied this was one of the exceptional situations in which striking out was in fact necessary.
Legal principles established
#- Where a winding-up order has been made, the company and its property (including its causes of action) are in the custody or control of the liquidator, and no advocate may act for the company without the liquidator's instructions
- A company remains under winding-up provisions from the date of presentment of the petition until it is actually wound up, and the winding-up order places the company in the custody of the provisional liquidator
Court orders
#- 1.The Memorandum of Appearance and all other pleadings/documents filed in this matter by the firm of Messrs Sang & Lang'at Advocates on behalf of the 4th defendant are struck out and expunged from the record
- 2.The firm of Messrs Sang & Lang'at Advocates are not on record for the 4th defendant in this matter
- 3.Costs shall be in the cause
- Jurisdiction invoked
- Inherent power of the court to control its own record and proceedings; Insolvency Act, 2015 (s. 444) and Companies Act Cap 486 (repealed), s. 239, in relation to Winding Up Cause No. 29 of 2004
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ethics and Anti-Corruption Commission v Saleh Chepkole & 4 others [2021] KEELC 2042 (KLR)", Case Analysis (2021). Case No 242 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/2042/eng@2021-09-16
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.