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ELCPartially AllowedNot stated in the judgment (application dated 5th October 2023)· [2024] KEELC 3715 (KLR)

Mwalimu & 2 others (On their own behalf and on behalf of all members of Centi Kumi Residents Society) v Blueshield Insurance Company Ltd (Under Statutory Management) & 2 others (Enviromental and Land Originating Summons 136 of 2022) [2024] KEELC 3715 (KLR)

Environment and Land Court
25 April 2024
NMN.A. MATHEKA
890 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Mombasa court allowed land claimants to add the statutory manager of an insolvent company as a party so their adverse possession case could move forward.

What this practically means

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Executive summary

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The applicants moved the court by a notice of motion dated 5th October 2023 under Section 560(1)(d) of the Insolvency Act and Regulation 10 of the Insolvency Regulations, 2010, seeking leave to continue a suit filed on 17th November 2022 against the 1st Respondent, in which they claim the remainder of the lease of land known as Mombasa/MS/Block 1/274 by adverse possession. The suit stalled when the applicants learned that the 1st Respondent had been placed under statutory management pending the determination of Winding Up Milimani High Court Miscellaneous Cause Number 238 of 2017, with the Policyholders Compensation Fund appointed as statutory manager, its term extended by the High Court on 3rd November 2017. The applicants sought leave to continue the suit and to enjoin the Managing Trustee of the Policyholders Compensation Fund as statutory manager. The application was unopposed. Relying on Order 1 Rule 10(2) and (4) of the Civil Procedure Rules and the Court of Appeal authorities in Civicon Limited v Kivuwatt Limited, Central Kenya Limited v West Bank Limited and Meme v Republic, the court applied the test of whether the proposed party is necessary for the effectual and complete adjudication of all questions in the suit. It found the Policyholders Compensation Fund to be a necessary party and granted leave to enjoin it. The court did not expressly restate the prayer to continue the suit in its final orders. It made no order as to costs, delivering its ruling at Mombasa on 25th April 2024.

Key legal issues

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01

Whether the statutory manager of a company under statutory management is a necessary party to pending litigation against the company

Holding

Yes - the Policyholders Compensation Fund, being the Statutory Managers of the 1st Respondent, is necessary for effectual and complete adjudication of the suit

Reasoning

The applicants' suit seeking a declaration of adverse possession over the 1st Respondent's land could not proceed because the 1st Respondent had been placed under statutory management. Applying the joinder tests from Civicon, Central Kenya Ltd and Meme, the court found the presence of the Statutory Manager necessary to effectually and completely adjudicate the dispute and prevent proliferated litigation. The application was unopposed.

p. 3

Legal principles established

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  • The paramount consideration in joinder of a party is whether that party is necessary for the effectual and complete adjudication of all the questions involved in the suit

Court orders

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  1. 1.Leave granted to the Applicants to enjoin The Managing Trustee, Policyholders Compensation Fund, Statutory Managers of the 1st Respondent
  2. 2.No orders as to costs

Authorities

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Legislation

  • Insolvency Act No. 18 of 2015Section 560(1)(d)
  • Insolvency Regulations, 2010Regulation 10
  • Civil Procedure RulesOrder 1 Rule 10(2) and (4)

Cases cited (4)

  • Civicon Limited vs Kivuwatt Limited & 2 Others
    (2015) eKLR
  • Central Kenya Limited vs West Bank Ltd & Others
    CA No. 222 of 1998
  • Meme vs Republic
    (2004) KLR 637
  • Central Kenya Ltd vs Trust Bank Ltd & Others
    CA No. 222 of 1998
Jurisdiction invoked
Section 560(1)(d) of the Insolvency Act No. 18 of 2015 and Regulation 10 of the Insolvency Regulations, 2010; Order 1 Rule 10(2) and (4) of the Civil Procedure Rules

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, "Mwalimu & 2 others (On their own behalf and on behalf of all members of Centi Kumi Residents Society) v Blueshield Insurance Company Ltd (Under Statutory Management) & 2 others (Enviromental and Land Originating Summons 136 of 2022) [2024] KEELC 3715 (KLR)", Case Analysis (2024). Not stated in the judgment (application dated 5th October 2023). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/3715/eng@2024-04-25

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