Eunice Wambui Kamotho & Another v Peter Kimani Wainaina & 2 Others
The bottom line
#A Kenyan court refused to fully lift directors' personal liability, but allowed it only after judgment creditors properly examine the directors' assets first.
What this practically means
#Executive summary
#Key legal issues
#Whether the Applicants were properly served with the application to lift the corporate veil
Substituted service by newspaper publication, made with the Court's leave, was proper service; the prayer to set aside the orders for non-service fails
The Applicants claimed they were never served with the application of 12/1/2023. The Plaintiffs produced an Affidavit of Service sworn on 13/3/2023 showing service through the Star newspaper on 8/3/2023, pursuant to leave granted on 2/3/2023. The Court held substituted service, being invoked with leave, was valid and the non-service ground failed.
Whether the ex parte orders lifting the corporate veil should be set aside or varied
The Court varied the orders, conditioning any execution against the Applicants on the Plaintiffs first examining them under Order 22 Rule 35 to discover their property and means of satisfying the decree
The Court invoked Order 12 rule 7 and its inherent jurisdiction under Article 159 of the Constitution to balance the Plaintiffs' right to enjoy the fruits of judgment against the Applicants' right to a fair hearing, directing that the Applicants be orally examined as to property before execution issues against them.
Legal principles established
#- A company is a juristic person with separate legal entity from its directors and shareholders, and the corporate veil may be lifted only in special circumstances involving fraud, improper conduct or where the company is a mere facade
- A judgment entered against a party who was not served and not heard will be set aside ex debito justitiae as a matter of judicial duty
Court orders
#- 1.The Court varied the orders of 26/9/2023 lifting the corporate veil, subject to the Plaintiffs complying with Order 22 Rule 35 of the Civil Procedure Rules by first examining the Applicants as judgment-debtors as to their property
- 2.Each party to meet the costs of the application
- Jurisdiction invoked
- Inherent powers under the Civil Procedure Act and Article 159 of the Constitution of Kenya; Order 12 rule 7 and Order 51 rule 15 of the Civil Procedure Rules, 2010
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Eunice Wambui Kamotho & Another v Peter Kimani Wainaina & 2 Others", Case Analysis (2024). ELC 455 of 2017 (Thika). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/6410/eng@2024-09-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.