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ELCOtherELC 45B of 2020· [2021] KEELC 2585 (KLR)

Henry Chemormor Omari & 30 others v Musa Cherutich & 33 others; Ukingoni Farm Co. Limited (Interested Party) [2021] KEELC 2585 (KLR)

Environment and Land Court
15 July 2021
JMJ M Mutungi
1,157 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Environment and Land Court cannot decide which lawyers represent a company when rival directors disagree — that fight belongs to the High Court.

What this practically means

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Executive summary

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This ruling of the Environment and Land Court at Nakuru (J M Mutungi, J) dealt with a dispute over who may represent the interested party, Ukingoni Farm Co. Ltd, in ELC 45B of 2020, a suit filed by 31 plaintiffs against 34 defendants. Following a change of advocates, two rival firms - Githongori & Harrison Associates and Mirugi Kariuki & Co. Advocates - each claimed to act for the company. Githongori & Harrison filed a Notice of Motion seeking striking out of the notice of change of advocates, a stay of proceedings pending Nakuru ELC No. 72 of 2018, or in the alternative consolidation of the two suits. Ben Munyasia, purporting to act as company secretary, deposed that the plaintiffs were not directors, while Harun Chepkeitany Chemjor, claiming to be a director and board chairperson, asserted that Munyasia lacked board authority and that rival CR12 documents from the Registrar of Companies were in conflict. The court held that a company acts only through its board of directors and that deciding which firm was validly instructed would require deciding who the bona fide directors and shareholders are - a dispute outside the ELC's jurisdiction, vested in the High Court by the Companies Act 2015. The court stayed both suits, directed the parties to move the High Court within six months, preserved interlocutory orders for twelve months, and made no order for costs. Prayers 2 and 3 of the motion were left for later determination.

Key legal issues

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01

Whether the ELC could resolve which advocates were validly instructed for the interested party

Holding

It could not, because that determination depends on who the bona fide directors and shareholders are, a dispute within the exclusive jurisdiction of the High Court under the Companies Act 2015.

Reasoning

Two rival sets of directors each claim to control Ukingoni Farm Co. Ltd and each instructed different firms of advocates. Since a company acts only through its board, the court cannot decide which firm was appointed without first deciding who the genuine directors are. Company ownership and directorship disputes are not within the ELC's mandate; they belong to the High Court under the Companies Act 2015. Rather than determine the issue, the court stayed both related suits and directed the parties to move the High Court.

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02

How the competing suits should proceed pending resolution of the company dispute

Holding

Both suits were stayed; parties to move the High Court within six months; existing interlocutory orders survive for 12 months.

Reasoning

Because the ownership and directorship dispute is core to the progression of both ELC 45B of 2020 and Nakuru ELC No. 72 of 2018, the court held it would be problematic to proceed until the High Court resolves who the genuine directors and shareholders are. It therefore stayed both matters, set a six-month window for the parties to move the High Court, and preserved interlocutory orders for twelve months to prevent prejudice.

p. 2

Legal principles established

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  • A company can only act through its agents, the board of directors, and the board may by resolution appoint advocates to represent it in legal proceedings.
  • Disputes relating to ownership, directors, or appointment of a director or company secretary of a company fall outside the jurisdiction of the Environment and Land Court and rest with the High Court under the Companies Act 2015.

Court orders

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  1. 1.Both ELC 45B of 2020 and Nakuru ELC No. 72 of 2018 stayed pending determination by the High Court of who are the genuine directors and shareholders of Ukingoni Farm Limited
  2. 2.Parties to move the High Court appropriately within six months from the date of the ruling
  3. 3.Interlocutory orders in both suits to remain in force for 12 months, thereafter to lapse unless extended
  4. 4.No order for costs on the application

Authorities

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Legislation

  • Companies Act2015 (jurisdiction over company ownership/directorship disputes)
Jurisdiction invoked
Jurisdiction under the Companies Act 2015 (company ownership/directorship disputes vested in the High Court); Environment and Land Court Act jurisdiction over the suit

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, "Henry Chemormor Omari & 30 others v Musa Cherutich & 33 others; Ukingoni Farm Co. Limited (Interested Party) [2021] KEELC 2585 (KLR)", Case Analysis (2021). ELC 45B of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/2585/eng@2021-07-15

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