Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
ELCAllowedMiscellaneous Application dated 20th May 2020 arising from suit over LR. Nos 1160/654, 655 and 656-Nairobi· [2024] KEELC 579 (KLR)

Oni Properties Limited v Sigal Investments Limited (Environment & Land Case 1554 of 2014) [2024] KEELC 579 (KLR)

Environment and Land Court
8 February 2024
OAO. A. Angote
4,198 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~17 min to read original · ~4 min brief

The bottom line

#

A Kenyan court ordered two company directors to personally pay a company debt because they kept no accounts or bank records.

What this practically means

#

Executive summary

#
This was an enforcement application by a decree holder seeking payment of the unpaid Kshs 10,000,000 balance of a decretal sum of Kshs 48,000,000 arising from a consent judgment adopted by the Court, and seeking to lift the corporate veil so that the Respondent company's Directors, Mr. Samson Kiprugut Bundotich and Mr. Wilson Kipkemboi Kipkoti, would be personally liable. An earlier ruling of 28th June 2021 had directed the Directors to be examined and to produce books of accounts under Order 22 Rule 35 of the Civil Procedure Rules. Mr. Kipkoti was cross-examined on 17th January 2023; he admitted receiving sale proceeds in his personal account, claimed the company was dormant and asset-less since 2014, yet produced no bank accounts or books of account. The Applicant submitted the Directors were shielding behind the corporate veil, relying on authorities including Kaydee Quarry and Jetlink Express; the Respondent relied on China Wu Yi, arguing insolvency alone does not warrant piercing. The Court framed a sole issue: whether the veil should be pierced. It reaffirmed Salomon and its exceptions, found the company's claimed inability to satisfy the decree unsubstantiated in the absence of books and bank statements, and held the lack of proper accounts pointed to wrongful and/or reckless management. The Court allowed the application dated 20th May 2020, lifted the corporate veil, held both Directors personally liable for the decree, allowed execution against them, and awarded the costs of the application to be borne by the Judgment Debtor's Directors.

Key legal issues

#
01

Whether the corporate veil of the Judgment Debtor should be pierced and the Directors held personally liable

Holding

The veil was lifted and the Directors held personally liable because the company's claimed inability to pay was unsubstantiated - no books of account or bank statements were produced despite a court order directing their production

Reasoning

The court traced the Salomon principle and its exceptions, noting the veil may be lifted where there is fraud, improper conduct or the company is a sham. The Director admitted receiving sale proceeds in his personal account, produced no bank accounts or books despite the company handling millions of shillings, and failed to prove dormancy or insufficiency of assets. Absence of books and bank statements left the claimed inability to satisfy the decree unsubstantiated, amounting to wrongful and/or reckless management warranting piercing.

p. 8

Legal principles established

#
  • The veil of incorporation may be lifted where improper conduct, fraud or wrongful/reckless management of the company's affairs is established; inability to pay alone is not sufficient

Court orders

#
  1. 1.The corporate veil shielding the Directors of the Judgement Debtor Company from personal liability be and is hereby lifted
  2. 2.The said Directors, Mr. Samson Kiprugut Bundotich and Mr. Wilson Kipkemboi Kipkoti be held personally liable for the decree herein
  3. 3.Execution of the decretal amount to proceed as against Mr. Samson Kiprugut Bundotich and Mr. Wilson Kipkemboi Kipkoti
  4. 4.The Judgement Debtor's Directors shall bear the costs of the Application

Authorities

#

Legislation

  • Civil Procedure RulesOrder 22 Rule 35

Cases cited (13)

  • Kaydee Quarry Limited vs Baileys Rocktech Limited
    [2021] eKLR
  • Jiang Nan Xiang vs Cok Fas-St Company Limited
    [2018] eKLR
  • Mea Ltd vs C.S.B Cheputuk & J. J. Cheruiyot / A Rift Valley Feeds & General Supplies Ltd
    [2005] eKLR
  • Euphrasia Wariara Mukui vs Naken Motors Ltd
    [2008] eKLR
  • Jetlink Express Limited vs East African Safari Air Express Limited
    [2012] eKLR
  • Hansson vs Jetha & Sons Limited
    [2004] eKLR
  • China Wu Yi Company Ltd vs Edermann Property Ltd & 2 Others
    [2013] eKLR
  • Salomon Co. Ltd vs Salomon
    [1897] AC 78
  • Victor Mabachi & Another vs Nurturn Bates Ltd
    Civil Appeal No. 247 of 2005 [2013] eKLR
  • Riccatti Business College of East Africa Limited vs Kyanzavi Farmers Company Limited
    [2016] eKLR
  • Mugenyi & Company Advocates vs The Attorney General
    [1999] 2 EA 199
  • Ngini vs Dennis O. Ogolla & Another
    (2010) eKLR
  • Corporate Insurance Company Limited vs Savemax Insurance Brokers Limited and Another
    [2002] 1 EA 41
Jurisdiction invoked
Enforcement of decree; inherent powers under the Civil Procedure Act and Civil Procedure Rules (Order 22 Rule 35)

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Oni Properties Limited v Sigal Investments Limited (Environment & Land Case 1554 of 2014) [2024] KEELC 579 (KLR)", Case Analysis (2024). Miscellaneous Application dated 20th May 2020 arising from suit over LR. Nos 1160/654, 655 and 656-Nairobi. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/579/eng@2024-02-08

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