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ELCDismissedELC Case (Nakuru), Notice of Motion dated 13th June 2023· [2024] KEELC 484 (KLR)

Solai Ruiyobei Farm Ltd v Cherutich & another (Environment and Land Case E052 of 2022) [2024] KEELC 484 (KLR)

Environment and Land Court
7 February 2024
1,802 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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A Kenyan court ruled that a company's right to sue is judged at filing date, so later cancellation of its directors' registration cannot kill an already-filed case.

What this practically means

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Executive summary

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This Environment and Land Court ruling at Nakuru by M. A. Odeny J, delivered on 7th February 2024, determines a Notice of Motion dated 13th June 2023 by the Defendants seeking striking out of the suit on the ground that the directors listed in a CR 12 dated 7th August 2020 annexed to the plaint lacked locus standi, with costs sought personally against Richardson Kipkoech Bundotich. The applicants relied on a ruling of 16th March 2023 in Nakuru HCC No. E026 of 2022 (Cheruiyot Arap Changwony v Registrar of Companies) cancelling the CR 12 and ordering fresh elections of directors. Bundotich replied that the suit, filed in September 2022, predates the cancellation, that the company has perpetual succession and cannot act in a vacuum, and that the earlier ruling of 22nd March 2023 had directed compliance by filing requisite minutes. The court framed the issue as whether the plaintiff had locus standi to institute the suit and, if not, whether it should be struck out. Applying Law Society of Kenya v Commissioner of Lands on the meaning of locus standi, retrospectivity principles from Samuel Kamau Macharia and Sree Sankaracharya University, and the D.T. Dobie and Co-operative Merchant Bank line of authority that striking out is draconian and reserved for plain cases, the court held that the right to sue vested at filing and could not be divested retrospectively. Noting this was a second attempt to dismiss the suit after a dismissed preliminary objection, the court dismissed the application with costs to the Respondent, directed compliance with the order on election of new directors, and ordered the matter to proceed to hearing on merit.

Key legal issues

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01

Whether the plaintiff had locus standi at institution of the suit given the later cancellation of the CR 12

Holding

The plaintiff had locus standi when the suit was filed on 29th September 2022; the later setting aside of the CR 12 on 16th March 2023 cannot act retrospectively to divest that right

Reasoning

The court found it undisputed that at the date of filing the directors had authority per the CR 12. Relying on retrospectivity principles from S K Macharia and the Indian Supreme Court decision, it held that permitting retrospective application would withdraw vested rights. The company, having perpetual succession, could not operate in a vacuum, and the incoming directors may elect to continue the suit.

p. 3
02

Whether the suit should be struck out as an abuse of process

Holding

No; the application lacked merit and was dismissed, the suit to proceed to hearing on merit

Reasoning

Striking out is draconian and should be done only in plain cases; a suit showing a semblance of a cause of action should go to trial. The court noted this was a second attempt to dismiss the suit after a preliminary objection had been dismissed, and courts should be slow to lock litigants out of the seat of justice.

p. 4

Legal principles established

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  • Locus standi is the right of a party to appear and be heard; a person must have sufficiency of interest to sue
  • An order setting aside a CR 12 does not operate retrospectively to divest a right of suit already vested at the time of filing
  • Courts should be slow to strike out pleadings; striking out is draconian and reserved for plain cases
  • Retrospectivity should not be imported where it would divest rights legitimately acquired

Court orders

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  1. 1.The Notice of Motion dated 13th June 2023 is dismissed with costs to the Respondent
  2. 2.The Respondent to ensure compliance with the court order on the election of new directors if not already done
  3. 3.The matter to be heard and determined on merit

Authorities

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Legislation

  • Civil Procedure RulesOrder 21 [1]
  • Constitution of IndiaARD 226

Cases cited (11)

  • Law Society of Kenya v Commissioner of Lands & 2 others
    [2001] eKLR
  • Christopher Mutiembu Machimbo & 3 Others v County Surveyor, Transnzoia & 4 others
    [2022]
  • Leo Investment Ltd v Trident Insurance Company Ltd
    [2014] eKLR
  • Eye Company (K) Limited v Erastus Rotich t/a Vision Express
    [2021] eKLR
  • Cheruiyot Arap Changwony & another v Registrar of Companies & 10 others
    Nakuru HCC No. E026 of 2022
  • Sree Sankaracharya University v Dr. Manu and Another
  • Samuel Kamau Macharia & another v Kenya Commercial Bank Limited & 2 others
    [2012] eKLR
  • Simon Kirima Muraguri & another v Equity Bank (Kenya) Limited & another
    [2021] eKLR
  • The Co-Operative Merchant Bank Ltd. v George Fredrick Wekesa
    Civil Appeal No. 54 of 1999
  • D.T. Dobie & Company (Kenya) Limited v Joseph Mbaria Muchina & another
    [1980] eKLR
  • BV Narayana Reddy v State of Kamataka
    (1985) Kan 99, 106
Jurisdiction invoked
Original jurisdiction of the Environment and Land Court over the suit; application under civil procedure (Order 21 [1] of the Civil Procedure Rules referenced in delivery note)

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, "Solai Ruiyobei Farm Ltd v Cherutich & another (Environment and Land Case E052 of 2022) [2024] KEELC 484 (KLR)", Case Analysis (2024). ELC Case (Nakuru), Notice of Motion dated 13th June 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/484/eng@2024-02-07

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