[2022] KEHC 17090 (KLR)

China Road and Bridge Corporation Kenya v Limited & 6 others; Gikera (Applicant) (Civil Case 117 of 2015) [2022] KEHC 17090 (KLR) (30 September 2022) (Ruling)

Neutral citation: [2022] KEHC 17090 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Case 117 of 2015

MN Mwangi, J

September 30, 2022

Between

China Road and Bridge Corporation Kenya

Plaintiff

and

Limited

1st Defendant

Mary Manyiwa Meri

2nd Defendant

Bernard Shume Chamutu

3rd Defendant

Meri Chigamba Meri

4th Defendant

Juma Mkala Mwabeja

5th Defendant

Manyiwa Shume Manyiwa

6th Defendant

Meri Chamutu Meri

7th Defendant

and

Stephen Njoroge Gikera

Applicant

Ruling

1. The application before this Court is a Notice of Motion dated 13th July, 2021 brought under the provisions of Sections 3A, 22 & 63(e) of the Civil Procedure Act, Order 51 Rule 1 of the Civil Procedure Rules, 2010, and Article 159(d) (sic) of the Constitution of Kenya, 2010. The applicant seeks the following orders-i.Spent;ii.That this Honourable Court be pleased to issue an order directing Kengo Menza Mwamenza and Shee Hamisi Mwamindi, the directors of the Judgment debtor to produce the original and/or certified copies of the following documents-a.books of accounts of the 1st defendant/judgment debtor for the period 20th June, 2012 to 29th September, 2016; andb.annual reports of the 1st defendant/judgment debtor for the period 20th June, 2012 to 29th September, 2016. iii.That the applicant be allowed to inspect and take copies of all the documents listed in prayer 2(a) and (b) above all inclusive and related to the matter in question which are in the 1st defendant/judgment debtor’s possession for purposes of preparing for the cross-examination;iv.That this Honourable Court be pleased to order that the said documents to be delivered within fourteen (14) days from the date of the order;v.That in default the applicant be excused from producing and/or being cross-examined on the said documents; andvi.That the applicant be awarded costs of this application.

2. The application is anchored on a supporting affidavit sworn by Lilian Atuo Opondo, the applicant’s Counsel, and a supplementary affidavit sworn by Stephen Njoroge Gikera a former director of the 1st defendant company and the applicant herein, on 13th July, 2021 and 14th February, 2022 respectively. In opposition to the application, the current director and the immediate former director of the 1st defendant/judgement debtor, Kengo Menza Mwamenza and Shee Hamisi Mwamindi, respectively, filed replying affidavits sworn on 4th February, 2020.

3. The application herein was canvassed by way of written submissions. The applicant’s submissions were filed on 5th May, 2022 by the law firm of Gikera & Vadgama Advocates, the 1st defendant/judgment debtor’s current and immediate former directors’ submissions were filed on 10th March, 2022 by the law firm of A.O Aminga & Company Advocates, whereas the plaintiff/decree holder’s submissions were filed by the law firm of Hamilton Harrison & Mathews Advocates on 9th May, 2022.

4. Ms. Opondo, learned Counsel for the applicant submitted that sometime on 5th June, 2012, the applicant was approached by Mr. Kengo Menza Mwamenza who requested him to be his proxy and incorporate a company since he could not do so due to his political ambitions at the time. That vide a letter of engagement dated 5th June, 2012, Mr. Kengo Menza Mwamenza appointed the applicant as a nominee director of Econite Mining Company Limited which was incorporated on 20th June, 2012. It was stated that the applicant was allocated 60% shares in the said company to hold on behalf of the said Kengo Menza Mwamenza while the remaining 40% shares were allocated to Shee Hamisi Mwamindi.

5. Ms Opondo stated that on 29th September, 2016, the applicant resigned as a nominee director and handed over all the documents pertaining the 1st director to Mr. Kengo Menza Mwamenza. She further submitted that on 22nd January, 2021, this Court ordered the applicant to produce the 1st defendant’s books of accounts and documentary evidence which came into his possession when he was a director of the 1st defendant. She contended that the applicant does not have the books of accounts and annual reports of the company as they were prepared and kept by Kengo Menza Mwamenza pursuant to Clause 2(iv) of the letter of engagement dated 5th June, 2012. She stated that the said information is in the hands of the 1st defendant’s current directors.

6. She also stated that pursuant to Clause 6 of the said letter of engagement, the applicant requested for financial documents, management accounts and updated list of directors and shareholders of the company through letters dated 26th January, 2021 and 26th February, 2021 but the said letters had elicited no response from the 1st defendant and the appointer. Ms Opondo relied on the provisions of Sections 628 and 478 of the Companies Act No. 17 of 2015 and submitted that inasmuch as the said Act does not confer a right of inspection of the books of accounts to a former director, the Court has the discretion to order for production and inspection of the 1st defendant’s records.

7. The applicant’s Counsel urged this Court to excuse the applicant from producing the books of accounts and annual reports which are in the possession of Kengo Menza Mwamenza and Shee Hamisi Mwamindi who are the 1st defendant/judgment debtor’s current directors.

8. Mr. Otieno, learned Counsel for the current and immediate former directors of the 1st defendant relied on the provisions of Order 22 Rule 35 of the Civil Procedure Rules and the case of Ultimate Laboratories v Tasha Bioservice Limited NBI HCCC No. 1287 of 2000 and submitted that owing to the judgment debtor’s indebtedness to the plaintiff/decree holder, the plaintiff was well within its rights to seek orders of this Court to summon the judgment debtor’s director(s) and/or former director(s) to be cross-examined on oath over the state of affairs of the company. In submitting that the purpose of Order 22 Rule 35 of the Civil Procedure Rulesis to enable the Court to establish the company’s true financial position and not to penalize any party. He relied on the case of Postbank Credit Limited (in Liquidation) v Nyamangu Holdings Limited [2015] eKLR and submitted that Mr. Stephen N. Gikera is the appropriate person to produce the documents sought herein and thereafter be cross-examined for the following reasons-i.He was a majority shareholder with 60% shareholding at the time the plaintiff’s cause of action arose;ii.He signed the lease agreement dated 24th August, 2014 between the plaintiff/decree holder and the judgment debtor;iii.The plaintiff/decree holder addressed all cheques for rent due to the judgment debtor through Gikera & Vadgama Advocates where Stephen Gikera is a partner;iv.The judgment debtor shared the same office postal address with that of Gikera Vadgama Advocate; andv.That throughout the proceedings and his engagements with the decree holder, he never asserted that he was a proxy director.

9. Mr. Otieno cited the English Court of Appeal decision in Société Généralé v J.M. Farin & Co. (1904) IKB 794, where the Court in interpreting the provisions of their Civil Procedure Rules at that time, which are in pari materia with Order 22 Rule 35 of the Kenyan Civil Procedure Rules, interpreted. “any other officer thereof” to include former directors. He submitted that as at 11th May, 2017, Stephen Njoroge Gikera was a shareholder of the 1st defendant and was the majority shareholder with 60% shareholding. Mr. Otieno stated that the applicant’s contention that he was a proxy for a shareholder by the name Kengo Menza Mwamenza is an issue that is subject to being proved through cross-examination.

10. In addition, Mr. Otieno stated that it is Mr. Kengo Menza’s position that he had no dealings whatsoever with the judgment debtor until 30th November, 2018 when he was appointed by the applicant as a director for the 1st defendant/judgment debtor. He submitted that this Court had already pronounced itself in its ruling dated 22nd January, 2021, by directing that the applicant herein be examined, which ruling had not been appealed from.

11. Mr. Mugambi, learned Counsel for the plaintiff/decree holder submitted that the orders sought are superfluous since on 22nd January, 2021 this Court ordered Mr. Mwamenza and Mr. Mwamindi to avail the judgment debtor’s books of accounts, notices, minutes and resolutions from the date of the lease agreement being 24th August, 2014 between the decree holder and the judgment debtor to the date of the Court’s ruling. He stated that in addition, this Court ordered Mr. Mwamenza, the judgment debtor’s current director to supply the aforementioned documents as per its ruling within fourteen days. Mr. Mugambi pointed out that there are two Court orders directing Messrs Mwamenza and Mwamindi to produce the documents sought herein, which orders have not been complied with.

12. He also submitted that the applicant’s contention that he was just a nominee director acting on the instructions of Mr. Mwamenza was made when the Court was considering the decree holder’s application for production of the judgment debtor’s books of accounts, documentary evidence and examination of its directors and the Court held that was an issue subject to being proved through cross-examination. Mr. Mugambi was of the view that the application herein is the applicant’s attempt to review and/or appeal against the Court’s ruling.

13. He referred to the case of Stephen N. Gikera & another v Econite Mining Company Limited & 7 others [2018] eKLR, where the applicant’s Counsel argued before the Court of Appeal that the applicant herein was the judgment debtor’s majority shareholder and director, and the said Court held that the applicant herein represented the directing mind, soul and hands of the 1st defendant/judgment debtor thus the Court upheld this Court’s decision to lift the judgment debtor’s corporate veil.

ANALYSIS AND DETERMINATION 14. This Court has considered the application filed herein, the grounds on the face of it and the affidavits filed in support thereof and the replying affidavit. It has also considered the written submissions filed by Counsel for the parties. The issue that arises for determination is whether the application herein is merited.

15. In the applicant’s supporting affidavit, he deposed that he urgently needs the documents sought herein so as to prepare for his cross-examination which is scheduled for 14th July, 2021.

16. In his replying affidavit, Mr. Kengo Menza Mwamenza, the current director of the 1st defendant/ judgment debtor deposed that he was appointed as the director of the 1st defendant/judgment debtor on 30th November, 2018 and was handed documents for safe keeping by one Stephen Njoroge Gikera who was the 1st defendant/judgment debtor’s former director. He averred that the documents now sought by the applicant herein were never submitted nor handed over to him during his appointment hence the application herein is the applicant’s attempt to deflect blame on him without any justiciable cause.

17. On the other hand, Mr. Shee Hamisi Mwamindi, the immediate former director of the 1st defendant/judgment debtor in his replying affidavit deposed that he resigned as the 1st defendant/judgment debtor’s director on 27th February, 2019 pursuant to the resolution of 15th February, 2019 and transferred his shares to the current director, Mr. Kengo Menza Mwamenza. He averred that the applicant herein was the sole custodian of the documents sought hence the proper person to produce the documents sought is the applicant. Mr. Shee Hamisi Mwamindi stated that upon appointment of one Kengo Menza Mwamenza, the company’s documents were handed over to him for safe keeping by the applicant herein, the 1st defendant/judgment debtor’s former director.

18. The applicant in his supplementary affidavit deposed that while acting as a nominee director, he received instructions from his appointee Kengo Menza Mwamenza with respect to the duties he would undertake on his behalf in the 1st defendant/judgment debtor. He averred that during the period he was a proxy director and upon his resignation on 29th September, 2016, he handed over all the documents pertaining the 1st defendant to Kengo Menza Mwamenza. The applicant stated that he received no further instructions from Mr. Kengo Menza Mwamenza after resigning from the directorship of the 1st defendant and handing over the documents.

19. It is noteworthy that the application herein is based on the allegation that the applicant was a nominee/proxy director of Mr. Kengo Menza Mwamenza in the 1st defendant/judgment debtor company and that he resigned as a director on 29th September, 2016. It is the applicant’s contention that during his time as a proxy director, the books of accounts and annual reports were prepared and kept by Kengo Menza Mwamenza. In addition, he stated that upon his resignation, he handed over all the documents pertaining to the 1st defendant/judgment debtor to the said Kengo Menza Mwamenza therefore, in the event Kengo Menza Mwamenza and Shee Hamisi Mwamindi fail to produce the 1st defendant’s/judgment debtor’s books of accounts and annual reports for the period 20th June, 2012 to 29th September, 2016, the applicant should be excused from producing and/or being cross-examined on the said documents.

20. This Court has gone through the proceedings in relation to the plaintiff/decree holder’s application dated 21st November, 2019 and found that the submissions made therein in opposition to the said application are similar to the ones made by the applicant herein. This Court thoroughly considered the decree holder’s application therein, the submissions by the Counsel for the parties and delivered a ruling on 22nd January, 2021. In the said ruling, the Court held that there was no doubt that the applicant herein was at one time a director of the judgment debtor and that he had a role to play in the operations of the judgment debtor thus his contention that he was a proxy for a shareholder by the name Kengo Menza Mwamenza is an issue that is subject to being proved through cross-examination.

21. In addition, this Court directed that by virtue of the applicant being a former director of the judgment debtor, he shall be examined on oath as to the judgment debtor’s means and assets and produce the judgment debtor’s books of accounts and other documentary evidence which came into his possession when he was a director of the judgment debtor, from the date of the lease agreement between it and the decree holder, up to the time when he resigned from the judgment debtor. This Court also made orders affecting the current and immediate former directors of the 1st defendant/judgment debtor to the effect that they avail all the books of accountss of the judgment debtor. It is also noteworthy that on 25th January, 2022, this Court directed the current director of the 1st defendant/judgment debtor to produce the books of accountss and comply with this Court’s ruling delivered on 22nd January, 2021 within fourteen days from 25th January, 2022 when the matter was listed for cross-examination of the current director(s) and former director(s).

22. In light of the above, it is evident that the orders sought by the applicant in prayers No. 2, 3 and 4 of the application herein have already been granted on two separate occasions by this Court. As such, all pertinent issues of fact and points of law having been fully canvassed and considered, it is my finding that this Court is functus officio and lacks jurisdiction to grant the orders sought. See Election Petitions Nos. 3, 4 & 5 Raila Odinga & others vs IEBC & others [2013] eKLR.

23. This Court notes with great concern that the application herein is an attempt by the applicant to review this Court’s ruling delivered on 22nd January, 2021 without filing a proper application for review. The applicant is in other words inviting this Court to sit as an appellate Court in its own decision. The applicant seems to be keen in taking this Court around in circles, a practice which he should stop, more so as he is an officer of the Court by virtue of being an Advocate.

24. This Court finds that the application herein is bereft of merit and is an abuse of the Court process. Consequently, the application dated 13th July, 2021 is dismissed with costs to Messrs Shee Hamisi Mwamindi, Kengo Menza Mwamenza and the decree holder, China Road and Bridge Corporation Kenya.It is so ordered.

DELIVERED, DATED AND SIGNED AT NAIROBI ON THIS 30TH DAY OF SEPTEMBER, 2022. RULING DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORMNJOKI MWANGIJUDGEIn the presence of:Ms Opondo for the 1st defendant and the applicantMr. D. Otieno Odundo for Messrs Shee Mwamindi, Kengo Menza MwamenzaMr. Mugambi for the decree holderMr. Oliver Musundi – Court Assistant.