Ali & another v Apa Homes Limited (Environment and Land Case 111 of 2018) [2026] KEELC 870 (KLR)
The bottom line
#A Kenyan court ordered a company's directors to explain its finances in court before deciding whether they should personally pay the company's debt.
What this practically means
#Executive summary
#Key legal issues
#Whether the plaintiffs made out a case for the oral examination of the defendant's directors under Order 22 Rule 35
Yes. The three named persons are custodians of the company's records and possess knowledge of its financial dealings, including the alleged sale and charging of apartments on the suit property; the court has power under Rule 35 to summon them.
Judgment had been entered against the defendant on 27.02.2024 for Kshs 16,000,000 plus costs and interest. The plaintiffs showed the defendant had leased out apartments (E5, D2, A2, A1, C4) and charged others (B6, D5, D6, A3, E2, B4) to Equity Bank, raising questions whether attachable assets were being dissipated. Rule 35 permits examination of corporate officers; the search dated 14.10.2024 established the roles of the three persons named. The examination will assist the court to determine whether the defendant has assets to satisfy the decree and whether the impugned transactions were fraudulent and intended to defeat the course of justice.
Whether the corporate veil should be lifted and the directors held personally liable at this stage
Not at this stage. Personal liability under lifting of the veil can only be decided after the examination and evaluation of the evidence.
The court acknowledged it has jurisdiction to lift the corporate veil, but held that the decision can only be made after the directors have been summoned and examined, and the evidence adduced evaluated to determine whether sufficient circumstances warrant lifting the veil. The court relied on Masefield Trading (K) Ltd v Rushmore Company Limited, where premature conclusion on lifting the veil before oral examination was disapproved. Prayer No. 2 was accordingly deferred, and the show-cause/committal prayer not granted.
Costs of the application
Costs to the defendant in the final order, though the body of the ruling reasoned the costs should be in the cause given that examination and further proceedings were pending.
The court noted costs are discretionary but that costs follow the event under the proviso to Section 27 of the Civil Procedure Act. In the analysis it reasoned that since examination of the directors was yet to be undertaken and further proceedings may become necessary, costs should be in the cause; yet the concluding disposal order directed that the defendant shall bear the costs of the application.
Legal principles established
#- Order 22 Rule 35 of the Civil Procedure Rules is a discovery avenue allowing a decree-holder to apply for the oral examination of a judgment-debtor, or in the case of a corporation any officer thereof, as to the debtor's debts, property and means of satisfying the decree.
- The corporate veil may only be lifted after the directors are summoned and orally examined and the court evaluates the evidence adduced.
- Costs follow the event under the proviso to Section 27 of the Civil Procedure Act unless the court, for good reason, directs otherwise.
Court orders
#- 1.Alina Waseem, Nicholas Kimeu Nzioka, and the legal representative of the Estate of Mohamed Rafique (the defendant's director, secretary and shareholder respectively) to appear before court on 06.05.2026 for oral examination on oath.
- 2.On 06.05.2026 the said persons to produce the books of account, audited financial statements, annual tax returns, bank statements, licenses, audited reports and other statutory documents of the defendant from January 2018 till January 2025 within their possession, custody and control, for examination on oath in relation to the sale of and charge of apartments E5, D2, A2, A1, C4 and B6, D5, D6, A3, E2, B4 all situated on Plot No. 2911/I/MN.
- 3.The defendant shall bear the costs of the application.
- Jurisdiction invoked
- Article 50 of the Constitution; Section 323 of the Companies Act; Sections 1A, 1B, 3A, 29, 34(1) and 92 of the Civil Procedure Act; Order 51 Rule 1 and Order 22 Rule 35(b) & (c) of the Civil Procedure Rules
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ali & another v Apa Homes Limited (Environment and Land Case 111 of 2018) [2026] KEELC 870 (KLR)", Case Analysis (2026). Mombasa Civil Suit (judgment delivered 27.02.2024; decree-holder's notice of motion dated 30.01.2025). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/870/eng@2026-02-19
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.