Gladys Ngina Gideon v Elsabi Share Company Limited

iii. THAT this Honourable court do issue an order allowing attachment of the personal assets of the directors and/or shareholders of the Defendant Company to satisfy the judgment debt. iv. THAT costs of this application be provided for. 2. The application is premised on the grounds appearing on its face and supported by the affidavit of Gladys Ngina Gideon sworn on 24th April 2025. 3. The Applicant depones that following the judgment delivered by this Court on 28th March 2024, she was awarded a sum of Kshs. 5,600,000, together with costs, arising from the Court's finding that her termination from employment was unlawful and unfair. She avers that despite the existence of a valid decree, the Respondent has failed, refused and/or neglected to satisfy the judgment. 4. She further contends that investigations have revealed that the Respondent company has ceased operations, has no visible attachable assets, and that its directors continue conducting business through other entities while deliberately frustrating execution of the Court's decree. She therefore urges the Court to disregard the Respondent's separate corporate personality so as to prevent injustice and enable her to realize the fruits of her judgment. 5. Although served with the present application, the Respondent did not file a replying affidavit, grounds of opposition or written submissions on the same. The Court 2 |RULING CAUSE NO. E920 OF 2021

page 2 of 11

record contains several affidavits of service evidencing service of the application together with subsequent mention notices and notices for delivery of this ruling. Despite such service, the Respondent elected not to participate in these proceedings. 6. The Applicant consequently filed written submissions dated 15th April 2026, urging the Court to allow the application on the basis that the Respondent's directors had abused the doctrine of corporate personality to evade satisfaction of a lawful decree. The Applicant relied on Sections 19, 323 and 1002 of the Companies Act, Section 386 of the Insolvency Act, Order 22 Rule 35 of the Civil Procedure Rules, and various judicial authorities on lifting the corporate veil. 7. The Applicant states that despite the judgment and decree remaining valid and enforceable, the Respondent has failed, refused and/or neglected to satisfy the decretal sum. She avers that investigations undertaken after the delivery of the judgment established that the Respondent company is no longer operational, has no known attachable assets, and that its directors continue to operate other businesses through different entities using the same premises and infrastructure. 8. According to the Applicant, the Respondent's corporate personality has been employed as a façade to evade satisfaction of the decree and deny her the fruits of a lawful judgment. 3 |RULING CAUSE NO. E920 OF 2021

page 3 of 11

9. It is the Applicant's case that the doctrine of separate legal personality, though recognized under Section 19 of the Companies Act, 2015, is not absolute. She submits that where a company is used as an instrument of fraud, improper conduct, or to evade existing legal obligations, the Court is empowered to pierce the corporate veil in order to prevent injustice. In support of this proposition, reliance is placed on the decisions in Salomon v Salomon & Co. Ltd [1897] AC 22, Ukwala Supermarket v Jaideep Shah & another [2022] KEHC 2207 (KLR), Lucy Mukembura Kimani v Nzuri Feeds Suppliers Ltd [2021] eKLR, Mugenyi & Company Advocates v Attorney General [1999] 2 EA 199 and Petrol Oil (K) Ltd v Hosborne Arunga & 2 Others [2013] eKLR. 10. The Applicant further submits that this Court possesses jurisdiction to grant the reliefs sought. Counsel argues that where a judgment debtor is a corporation, the Court may examine its officers regarding the company's assets and affairs and, where appropriate circumstances exist, lift the corporate veil to hold directors personally liable for the company's obligations. 11. The Applicant therefore contends that the Respondent's directors have deliberately stripped the company of its assets and continued conducting business through other entities with the intention of frustrating execution of the decree issued by this Court. 4 |RULING CAUSE NO. E920 OF 2021

page 4 of 11

12. It is submitted that unless the orders sought are granted, the Applicant will continue to be denied the fruits of her judgment and the Respondent will unjustly benefit from the misuse of the corporate form. 13. The Applicant accordingly urges the Court to lift the Respondent's corporate veil, order disclosure of its financial records and assets, permit execution against the personal assets of its directors and/or shareholders and award costs of the application. Analysis and Determination 14. The issues for determination are: i. Whether the Claimant/Applicant has established a basis for examination of the Respondent's officers and disclosure of the company's books, assets and financial affairs. ii. Whether she has justified lifting or piercing the corporate veil and rendering the Respondent's directors and/or shareholders personally liable for the decretal sum. 15. There is no dispute that judgment was entered in favour of the Claimant/Applicant on 28th March 2024 for Kshs. 5,600,000. It is also not disputed that the decree remains unsatisfied to date. 16. The court is, however, alive to the fact that incorporation creates a legal personality distinguishing a company and its 5 |RULING CAUSE NO. E920 OF 2021

page 5 of 11

directors. Section 19 of the Companies Act, 2015 embodies this principle, which is equally firmly rooted in Salomon v Salomon & Co. Ltd [1897] AC 22. 17. The consequence is that the debts and obligations of a company are ordinarily its own debts and obligations and not those of its directors or shareholders merely by reason of their office or shareholding. 18. The corporate veil is therefore not lifted merely because a company has failed to satisfy a judgment debt, ceased operations or become unable to pay its debts. In Lucy Mukembura Kimani v Nzuri Feeds Suppliers Ltd [2021] KEHC 6552 (KLR), the Court held that there is a strong presumption against lifting the corporate veil and that the party seeking that remedy must establish, among other things, that the company is a mere instrumentality or alter ego of the shareholder or director and that adherence to the separate personality of the company would sanction fraud or promote injustice. 19. The same position was also reiterated in Jocelan Consultants Ltd v County Developers Ltd [2019] KEHC 1250 (KLR), where it was held that the Court is not precluded from considering the question of piercing the corporate veil in execution proceedings where circumstances warrant such intervention. 20.The Applicant herein relies substantially on the fact that the Respondent has 6 |RULING CAUSE NO. E920 OF 2021 ceased operations, has no visible

page 6 of 11

attachable assets and that its directors continue to conduct business through other entities using the same premises and infrastructure. 21.These circumstances, in my view, do not, by themselves, establish that the directors have fraudulently stripped the Respondent of its assets or that the other entities are merely alter egos of the Respondent. 22. The mere existence of other businesses operated by the same persons, or the use of similar premises or infrastructure, is not necessarily sufficient to establish fraud, commingling of assets or abuse of the corporate form. The Applicant still bears the evidential burden of establishing the facts upon which the exceptional remedy is sought. In the Lucy Mukembura Kiman case (supra), the mere closure of the company and absence of known assets were demonstrating held insufficient, fraudulent intent without or evidence commingling of corporate and personal assets. 23. Further, the fact that the Respondent has not opposed the application does not, in my view, relieve the Applicant of that burden. The Court must still be satisfied that the statutory and jurisprudential threshold for the orders sought has been met. 24. This court is, however, alive to the material distinction between lifting the corporate veil and examining an officer of a judgment debtor company regarding the company's 7 |RULING CAUSE NO. E920 OF 2021

page 7 of 11

assets and means of satisfying a decree. Order 22 Rule 35 of the Civil Procedure Rules expressly provides that where a decree is for payment of money, the decree holder may apply for the judgment debtor, an officer of a corporation or any other person to be orally examined as to whether any debts are owing to the judgment debtor and whether the judgment debtor has any property or means of satisfying the decree. 25. The Claimant/Applicant has demonstrated the existence of a valid decree and its continued non-satisfaction. She has further shown that attempts to realize the decree have not yielded any known attachable assets. These circumstances, in my considered opinion, provide a proper basis for invoking Order 22 Rule 35. 26. In Robert Khamala Situma v Afrikon Limited [2022] KEELRC 812 (KLR), this Court directed the company's director to attend court for oral examination concerning the company's means and assets and to produce its books and documents. Importantly, the Court held that the question of whether the corporate veil should ultimately be lifted should be determined after examining and considering the documentary evidence concerning the company's affairs. 27. Similarly, in KMK Law LLP v Kanuri Limited & 2 others [2024] KEHC 3552 (KLR), the Court affirmed that Order 22 Rule 35 empowers the Court to summon an officer of a company for examination as to the company's assets and 8 |RULING CAUSE NO. E920 OF 2021

page 8 of 11

means of satisfying the decree and that such examination may or may not ultimately result in lifting the corporate veil. 28. The Applicant has sought, in one motion, both an investigative order for disclosure and examination and the ultimate substantive remedy of imposing personal liability upon the directors/shareholders of the Respondent company. The former is justified by the unsatisfied decree and the Applicant's assertion that the company's assets cannot be traced. The latter, in my view, requires a higher evidential threshold. 29. In the end, I am persuaded that the appropriate course is to grant the Applicant an opportunity to interrogate the affairs of the judgment debtor company before determining whether the evidence warrants the exceptional remedy of piercing the corporate veil. 30. It is consequently premature to order attachment of the personal assets of persons who are not presently judgmentdebtors under the decree. Such an order would effectively impose personal liability without first establishing the legal and evidential basis for disregarding I find the company's separate personality. 31. In the circumstances, that the Claimant has established sufficient grounds for the invocation of Order 22 Rule 35 of the Civil Procedure Rules, but has not, on the evidence presently before the Court, established sufficient 9 |RULING CAUSE NO. E920 OF 2021

page 9 of 11

grounds for the immediate lifting of the corporate veil and imposition of personal liability upon the Respondent's directors and/or shareholders. 32. Accordingly, the Notice of Motion dated 24th April 2025 partly succeeds in the following terms:a) That the directors and/or shareholders of the Respondent, as disclosed in the current CR12, shall attend Court on a date to be fixed for oral examination on oath concerning the business, affairs, assets, liabilities and means of the Respondent/Judgment Debtor to satisfy the decree herein. b) That the said directors/share holders shall produce for examination all relevant books of account, bank statements, financial records, asset registers, statutory records and other documents relating to the Respondent's assets, liabilities and transactions that are within their possession, custody or control. c) That the prayer seeking, at this stage, to lift or pierce the corporate veil and hold the directors and/or shareholders personally liable for the decretal sum is declined. d) The prayer for attachment of the personal assets of the directors and/or shareholders is consequently declined at this stage. e) I make no orders on costs given that the application was unopposed. 10 |RULING CAUSE NO. E920 OF 2021

page 10 of 11

42.It is so ordered. SIGNED, DATED, AND DELIVERED BY VIDEO-LINK AND IN COURT AT NAIROBI THIS 24TH DAY OF SEPTEMBER, 2026. C. N. BAARI JUDGE Appearance: Ms. Salim present for the Claimant/Applicant N/A for the Respondent/Judgment Debtor Ms. Esther S -C/A 11 |RULING CAUSE NO. E920 OF 2021

page 11 of 11