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ELRCOtherCause of 2019 (commenced 1 November 2019; motion filed 10 December 2019)· [2020] KEELRC 978 (KLR)

Geoffrey Nganga Tambara v Radio Frequency Systems Ltd & 2 others [2020] KEELRC 978 (KLR)

Employment and Labour Relations Court
5 June 2020
RSRadido Stephen
1,054 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~4 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that a company's majority shareholder, not a disputed director, decides which law firm represents the company in litigation.

What this practically means

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Executive summary

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The Claimant sued the Respondents on 1 November 2019 for breach of contract and unfair termination of employment, and filed a motion on 10 December 2019 seeking interim reliefs and substituted service. When the application came up for hearing, a dispute arose between two advocate firms, each claiming to be properly on record for the 1st Respondent: Midenga & Co. Advocates, instructed by the 2nd Respondent, and Cheloti Karanja Advocates, instructed by the 3rd Respondent. The Court noted an ongoing battle for control of the 1st Respondent between the 2nd and 3rd Respondents, both directors, which had produced conflicting decisions - the High Court in Simon Horner v Michael Njuguna Mwaura & Ors found the 3rd Respondent had fraudulently altered the shareholding and ordered rectification of the records (with no appeal lodged), while this Court, differently constituted, had in two separate Causes endorsed each side's authority to instruct advocates. Examining the Articles of Association, the Court found no provision for the office of Executive Director on which the 3rd Respondent relied, and that under Clause 13 the 2nd Respondent, holding the majority shares, would prevail in any vote on instructing advocates. The Court held that Midenga & Co. Advocates is properly on record for the 1st and 2nd Respondents, while Cheloti Karanja Advocates continues to act for the 3rd Respondent. The Court cautioned the warring directors on the risks of conflicting legal conclusions and their potential personal exposure under the definition of employer in section 2 of the Employment Act, 2007, and directed that the pending application and the Cause proceed to hearing. No costs order was made.

Key legal issues

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01

Authority to instruct advocates on behalf of a company in a directorship dispute

Holding

Midenga & Co. Advocates, instructed by the 2nd Respondent (majority shareholder and Chief Executive Officer per the High Court finding), is properly on record for the 1st and 2nd Respondents; Cheloti Karanja Advocates continues to act for the 3rd Respondent only.

Reasoning

The Court noted the conflicting prior decisions of this Court and the High Court finding that the 3rd Respondent fraudulently caused a change in shareholding, with no appeal lodged. Examining the Articles of Association, it found no provision for an 'Executive Director' position occupied by the 3rd Respondent, and under Clause 13 voting, the 2nd Respondent's majority shareholding would prevail on any vote regarding instructing advocates.

p. 2

Legal principles established

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  • The advocate instructed by the majority shareholder of a company, in accordance with its Articles of Association, is properly on record for the company where rival directors dispute authority to instruct counsel
  • A person cannot rely on a non-existent office under a company's Articles of Association to claim authority to instruct advocates

Court orders

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  1. 1.Midenga & Co. Advocates is properly on record for both the 1st and 2nd Respondents, having been instructed by the 2nd Respondent as majority shareholder
  2. 2.The firm of Cheloti Karanja Advocates continues acting for the 3rd Respondent
  3. 3.The pending application on record and the Cause should now be processed for hearing

Authorities

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Legislation

  • Employment Act, 2007section 2 (definition of employer)

Cases cited (3)

  • Simon Horner v Michael Njuguna Mwaura & Ors
    (2018) eKLR, High Court Misc Civil Application No. 393 of 2017
  • Jackson Mutiso Mwalali & Ors v Radio Frequency Systems Ltd
    Cause No. 305 of 2019, judgment of 19 July 2019
  • Nehemiah Kiprop Kiplagat & Ors v Radio Frequency Systems Ltd
    Cause No. 567 of 2019, decision of 14 October 2019
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Cause filed alleging breach of contract and unfair termination of employment); Employment Act, 2007 referenced

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, "Geoffrey Nganga Tambara v Radio Frequency Systems Ltd & 2 others [2020] KEELRC 978 (KLR)", Case Analysis (2020). Cause of 2019 (commenced 1 November 2019; motion filed 10 December 2019). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/978/eng@2020-06-05

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