China National Aero-technology International Engineering Corporation v Dazzler Properties Limited

Dazzler Properties Limited in full and in default, the Decree holder/Applicant be liberty to execute against them individually either jointly or severally. 2. The application is based on the grounds on the face of the application and is supported by the Affidavit dated 13th June 2024, sworn by WANG JIN, a Deputy Director with the Applicant/Decree Holder. 3. The Respondent opposed the application vide the affidavit of 4. It is undisputed that on 24th June, 2013, the parties entered into a Construction Contract for the Spring Valley Business Park. A dispute arose and was referred to arbitration before Ms. Sylvia Mueni Kasanga, MCIArb. A Final Award was delivered in favour of the Applicant for Kshs. 153,616,082.00, plus costs, which were subsequently taxed at Kshs. 4,266,573.00. 5. On 18th May, 2023, the High Court (Gichohi J) recognized and adopted both the Final Award and the Award on Costs as a Judgment of the Court, resulting in a Decree dated 30th May, 2023. 6. The Decree remains unsatisfied. The Applicant’s attempt at execution through an auctioneer failed since no moveable or immovable property of the Judgment Debtor was found, hence the instant application. 7. The Application was canvassed by way of written submissions. The Applicant, vide the law firm of Nyaanga & Mugisha Advocates, filed submissions dated 17th May 2025. Whilst the Respondent filed its submissions dated 3rd June 2025 through the law firm of Kilukumi & Co Advocates. Analysis & Determination 8. Having carefully considered the Application, the supporting affidavit, and the law, I find the following as requiring the Court’s determination: i. Whether the Court should issue summons compelling the Respondent's Directors to appear for oral examination regarding the Judgment Debtor's afiairs. ii. Whether the corporate veil of the Respondent should be lifted and its Directors be held jointly and personally liable to settle the Decree at this stage. Whether Summons for Examination of Directors should issue 9. The Applicant relies on Order 22 Rule 35 of the Civil Procedure Rules, which grants the Court discretion to order a Judgment Debtor, or in the case of a corporation, any officer thereof, to be orally examined as to their means of satisfying the decree, and for the production of relevant books or documents. The Applicant specifically seeks the examination of the Directors, particularly Mr. Peter Kiarie Muraya, who is stated to be the agent responsible for the day-to-day operations and financial transactions. 10. In support of its submissions, the Applicant relies on, among others, the case of Ganesh Engineering Works Limited & 3 Others v Yamini Builders Limited (2020) e KLR and urged this Court to allow the Application. 11. The Respondent, on the other hand, opposes this prayer on the grounds that it would serve no useful purpose. The Respondent asserts that in its Replying Affidavit, sworn by Mr. Peter Kiarie Muraya on 13th February, 2025, it has made a full and candid disclosure by providing complete financial statements, audited accounts, bank statements, a list of assets and liabilities, and business plans for settling the debt. They maintain the company is a going concern and not insolvent. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16509/eng@2025-10-23 2

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12. Citing, among others, the case of Ng’ang’a v Spero Africa Limited [2024] KEHC 12608 (KLR), the Respondent asserted that there will be no need for Directors' examination since I has “provided the relevant documents, including its books of accounts, bank statements and audited accounts acting transparently and in good faith.” 13. Order 22 Rule 35 of the Civil Procedure Rules Provides that: “ Where a decree is for the payment of money, the decree-holder may apply to the court for an order that— a. the judgment-debtor; b. in the case of a corporation, any officer thereof; or c. any other person, be orally examined as to whether any or what debts are owing to the judgment-debtor, and whether the judgment-debtor has any and what property or means of satisfying the decree, and the court may make an order for the attendance and examination of such judgment-debtor or officer, or other person, and for the production of any books or documents.” 14. From the above provision of the law, it is apparent that the power to summon any person specified therein is discretionary. The aim of the examination, when ordered, is for purposes of examination on the nature and extent of debts owing by a judgment debtor, as well as the ability by such judgment debtor to satisfy the decree in question. 15. In Masefield Trading (K) Ltd v Rushmore Company Limited & Another Civil Suit No. 1794 of 2000; [2008] eKLR, the Court stated as follows on the role of the provision:“ I think the above rule grants this court jurisdiction to summon any officer of a company to attend court so that he may be examined on the assets and means of the company to settle the sum decreed to be paid by the company. By examining such an officer, the court may or may not lift the veil of incorporation.” 16. In the present case, it is not in dispute that there is an Arbitral Award in the sum of Kshs. 153,616,082.00, plus costs, of Kshs. 4,266,573.00, in favour of the Applicant as against the Respondent. The award was recognized and adopted as judgment of this Court on 18th May 2023, and a Decree in respect thereof issued on 30th May 2023. The Decree remains unsatisfied. The Applicant averred that its attempt at execution through an auctioneer failed since they have been unable to trace any movable or immovable property of the Judgment Debtor. 17. The Respondent, on the other hand, contends that it is still a going concern and that with adequate time, it will be able to pay the money owed. The Respondent asserted that the law provides for sufficient accommodation in an instance where a party cannot fully pay back all of the decretal sum at once. 18. I have duly considered and carefully weighed the parties’ submissions in support of their respective positions. The Court notes that the right of a successful litigant to enjoy the fruits of their judgment is fundamental and must be jealously protected. While the Respondent has made a voluminous disclosure, the purpose of an oral examination under Order 22 Rule 35 is not merely documentary discovery; it is a critical process to scrutinize and test the disclosed information under oath, and to explore the viability of any proposed payment plan. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16509/eng@2025-10-23 3

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19. Consequently, I therefore find that the Applicant has satisfied the legal threshold for granting the order for examination, under Order 22 Rule 35 of the Civil Procedure Rules. 20. However, taking into account that the Respondent has named Mr. Peter Kiarie Muraya as the agent responsible for the company's financial afiairs, and is the one who has provided the relevant documents through his Affidavit. It would be excessive at this initial stage to summon all four named Directors as sought in the application. On Lifting the Corporate Veil 21. The Applicant prays for the corporate veil to be lifted on the basis of the Directors' alleged complete lack of compliance and the attempt to hide behind the veil of incorporation. The Applicant relies on established principles allowing the veil to be pierced where the company is used as a "device and a sham" or where there is "fraud or improper conduct." 22. The Respondent opposed the prayer and argues that this prayer is premature and preemptive, citing the principle in Ng'ang'a v Spero Africa Limited [2024] KEHC 12608 (KLR) where the Court held that the issue of lifting the corporate veil can only be adequately ventilated upon examination of the directors of the Respondent. 23. The doctrine of limited liability, stemming from Salomon v A Salomon & Co Ltd [1896] UKHL 1, [1897] AC 22, is a cornerstone of corporate law. The company is a separate legal person from its directors and shareholders. 24. The threshold for lifting the corporate veil is exceptionally high, requiring clear and cogent evidence of misuse, fraud, egregious misconduct, or that the company is a mere alter ego designed to perpetuate injustice or evade obligations. Mere insolvency is insufficient. 25. As held in Corporate Insurance Co Ltd v Savemax Insurance Brokers Ltd & another [2002] 1 EA 41, the veil is not lifted merely because a company has no assets or is unable to pay its debts. Ringera J (as he then was) stated that: “ The veil of incorporation is not to be lifted merely because the company has no assets or it is unable to pay its debts and is thus insolvent. In such a situation the law provides for remedies other than the director of the company being saddled with the debts of the company.” 26. In the present case, the Applicant has not yet led evidence of fraud, commingling of funds, or that the company is a mere sham, as the oral examination which could establish such facts has not yet taken place. To grant the prayer at this stage would be to pre-judge the matter before the Applicant has had the opportunity to establish the necessary factual basis to meet the high legal threshold required. Final Orders 27. For the reasons set out above, the Decree Holder/Applicant’s Chamber Summons Application dated 13th June, 2024, is partially allowed on the following terms: i. That Summons for Examination do issue against PETER KIARIE MURAYA, one of the Directors/Agent of Dazzler Properties Limited, to personally appear before this Honourable Court on a date to be immediately hereafter, for oral examination on oath regarding the Judgment Debtor’s assets, debts, and other means of satisfying the Decree dated 30th May, 2023. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16509/eng@2025-10-23 4

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ii. That the said PETER KIARIE MURAYA shall, during the examination, produce the original books of accounts, bank statements, audited financial statements, valuation reports, and any other documentary evidence relevant to the Judgment Debtor's ability to satisfy the Decree, as already referenced in the Replying Affidavit sworn on 13th February, 2025. iii. The prayer seeking to lift the corporate veil of Dazzler Properties Limited and hold its Directors jointly and personally liable is hereby declined at this stage, with liberty to the Applicant to renew the application upon conclusion of the examination, should the evidence gathered warrant such renewal. 28. On costs, Applicant having substantially succeeded in its prayer to compel the examination, which is an essential step in enforcing the Court’s Decree, I find that the costs of this application should be borne by the Respondent/Judgment debtor. 29. It is so ordered. SIGNED, DATED, AND DELIVERED IN VIRTUAL COURT THIS 23RD OCTOBER 2025 ADO MOSES JUDGE In the presence of: C/A – Moses Dachi…………..for the Applicant Murazia……..... for the Respondent https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16509/eng@2025-10-23 5

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