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ELCStruck OutNot stated in judgment (ELC suit, Machakos)· [2025] KEELC 6018 (KLR)

Ojiambo & another v Embakasi Ranching Company Limited & 3 others; Mutuku (Intended Interested Party) (Environment and Land Case Civil Suit 7 of 2022) [2025] KEELC 6018 (KLR)

Environment and Land Court
16 September 2025
2,380 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~10 min to read original · ~4 min brief

The bottom line

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Kenya's Environment and Land Court struck out a shareholder suit because the plaintiffs never got court leave to sue on the company's behalf.

What this practically means

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Executive summary

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This ruling by the Environment and Land Court at Machakos (A. Y. Koross, J) determined two notices of motion in a land dispute over parcel L.R no. 12715/627. The 2nd defendant's motion dated 10/11/2024 sought striking out of the plaintiffs' plaint dated 28/01/2022 on grounds that the plaintiffs, suing as apparent representatives of the 1st defendant company, had bypassed the indoor management rule and derivative action procedures. The intended interested party's motion dated 21/11/2024 sought joinder, leave to file a defence and counterclaim, vacation of orders of 8/08/2023 and interim protection from eviction; she claimed ownership as a gift from her late father. Both the 1st and 2nd defendants opposed joinder, each asserting their own title. Applying Salomon v Salomon and the derivative-suit factors in Isaiah Waweru Ngumi and Ghelani Metals, and Sections 238, 239, 241 and 243 of the Companies Act, the court held the plaintiffs never sought leave to bring a derivative suit, made no demand on the board, did not adequately represent other shareholders, and pursued their own interests as occupants. The suit was therefore incompetent. The striking-out motion was allowed, rendering the joinder motion unnecessary. The entire suit was struck out, each party ordered to bear their own respective costs of the suit and motions, liberty granted to the defendants and the intended interested party to file fresh suits, and the file marked closed.

Key legal issues

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01

Whether the plaintiffs' suit, framed as a derivative claim, could stand without leave

Holding

The suit was incompetent; the plaintiffs did not seek leave, did not plead particularised facts meeting the s.241(2) factors, made no demand on the board, and did not adequately represent the shareholders' interests

Reasoning

The court applied Salomon v Salomon and the derivative-suit principles in Ghelani Metals and Isaiah Waweru Ngumi. Although the plaintiffs appeared to act in good faith, they pursued their own interests as occupants rather than the company's interests, and the reliefs sought did not flow from the relevant Companies Act provisions. The threshold for derivative actions was therefore not met and the suit could not proceed.

p. 5
02

Whether the intended interested party should be joined

Holding

Determination became unnecessary once the suit was struck out

Reasoning

The court allowed the striking-out motion first; with the suit at an end, there was no proceeding into which the intended interested party could be joined. Liberty was nonetheless given to her, and to the defendants, to institute fresh suits over the suit property, the ownership of which remained unascertained.

p. 5
03

Ownership of the suit property with three competing title documents

Holding

The legitimate owner was not ascertained; parties were at liberty to file fresh suits

Reasoning

The court observed that the 1st defendant, 2nd defendant and the intended interested party each allegedly held title documents to the suit property, so it ostensibly has three title documents held by three different persons. Since the legitimate owner had not been judicially ascertained and the suit was struck out, all parties were granted liberty to file suits over the property.

p. 5

Legal principles established

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  • A company acquires its own property, rights and liabilities separate from its members upon incorporation; the proper plaintiff in respect of a wrong done to a company is the company itself
  • A shareholder suit brought in respect of a wrong done to a company must satisfy the statutory requirements for derivative actions, including leave and demand/futility requirements

Court orders

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  1. 1.The motion dated 10/11/2024 is allowed
  2. 2.The plaintiffs' plaint dated 28/01/2022, together with its accompanying documents, is struck out in its entirety
  3. 3.The determination of the motion dated 21/11/2024 (joinder of the intended interested party) is rendered unnecessary
  4. 4.Liberty is granted to the 1st and 2nd defendants and the intended interested party to file suits over the suit property
  5. 5.Each party to bear their respective costs of the suit and motions
  6. 6.The file is effectively marked as closed

Authorities

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Legislation

  • Companies ActSections 238, 239, 241, 243 (also referenced: 241(2), 241(3), 239(4) & (5), 143 & 144)

Cases cited (5)

  • Salomon vs. Salomon Company Limited
    [1895-99] All ER 33
  • Ghelani Metals Limited & 3 others v Elesh Ghelani Natwarlal & another
    [2017] KEHC 4629 (KLR)
  • Wallersteiner v Moir (No.2)
    [1975] 1 All ER 849
  • Isaiah Waweru Ngumi & 2 others v Muturi Ndung'u
    [2016] KEHC 3032 (KLR)
  • Recchion v Kirby
    637 F. Supp. 1309 (W.D. Pa. 1986)
Jurisdiction invoked
Not expressly invoked; the court exercises discretion under Sections 238, 239, 241 and 243 of the Companies Act on derivative suits, in an ELC land dispute over L.R no. 12715/627

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, "Ojiambo & another v Embakasi Ranching Company Limited & 3 others; Mutuku (Intended Interested Party) (Environment and Land Case Civil Suit 7 of 2022) [2025] KEELC 6018 (KLR)", Case Analysis (2025). Not stated in judgment (ELC suit, Machakos). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2025/6018/eng@2025-09-16

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