[2022] KEHC 10569 (KLR)

Darrod Investment Limited v Ibrahim & 4 others (Civil Case E714 of 2021) [2022] KEHC 10569 (KLR) (Commercial and Tax) (10 June 2022) (Ruling)

Neutral citation: [2022] KEHC 10569 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Commercial and Tax

Civil Case E714 of 2021

A Mshila, J

June 10, 2022

Between

Darrod Investment Limited

Applicant

and

Ahmed Eddle Ibrahim

1st Respondent

Fresh Pro Farm Limited

2nd Respondent

Fresh Pro Dairy Limited

3rd Respondent

Mohamed Mohamud Farah

4th Respondent

Mkamba Musa Hamisi

5th Respondent

Ruling

Background 1. The notice of motiondated November 5, 2021was brought under article 50 (1) of the Constitution of Kenya (2010), sections IA 1B and 34 of the Civil Procedure Act (2010) and order 51 (1) the Civil Procedure Rules for orders that;a)The court to strike out the affidavit filed by Ali Mohamud Adon Omar dated November 4, 2021. b)The court to strike out the affidavit filed by Collins Kiprono Chemng'orem dated November 2, 2021c)The court to find and sanction Ali Mohamud Adon Omar for contempt of the orders in Civil Suit No. 2257 of 2020, at the Milimani Chief Magistrates Commercial Court.d)The court to find and sanction Collins Kiprono Chemng'orem for contempt of the orders in Civil Suit No. 2257 of 2020, at the Milimani Chief Magistrates Commercial Court.

2. The Application was supported by the sworn Affidavit of Mohamed Mohamud Farahwho stated that Ali Mohamud Adon Omar at paragraph 2 of his affidavit dated November 4, 2021admits to being a Director /Shareholder of the 2nd defendant and thus have no locus to swear an affidavit in support of the applicant's/ plaintiffs application.

3. Collins Kiprono Chemng'orem at paragraph 2 of his affidavit dated November 2, 2021admits to being a director /shareholder of the 2nd defendant and thus have no locus to swear an affidavit in support of the applicant's/ plaintiff's application.

4. The said affidavits are in contempt of orders in Civil Suit No. 2257 of 2020, at the Milimani Chief Magistrates Commercial Court and is intended to circumvent the orders in Civil Suit No. 2257 of 2020, at the Milimani Chief Magistrates Commercial Court.

5. The application and suit by the applicant are thus scandalous, frivolous and vexatious, and an abuse of the court process and should be dismissed with costs as unfounded and unmerited.

Applicant’s Case 6. It was the applicant’s submission that order 40 rule 8 of the Civil Procedure Rulesis explicit that an injunction directed to a corporation is binding on the corporation and all its members and officers whose personal action it seeks to restrain. The two directors acted in contempt of the orders of the court in feigning lack of restraint by the orders of the court in Civil Suit No. 2257 of 2020.

7. The pleadings of the two directors were drawn and filed by the Advocates of the respondents and the suit has been brought to circumvent the orders of the lower court which can be varied or set aside by the court on application by any party dissatisfied with such orders. The applicant submitted that the orders were alive.

8. It was theapplicant’s position that it is a well-established principle of law that a company is a separate juristic person capable of suing and being sued. (Salomon v Salomon & Company Ltd [1897] AC). The respondents cannot purport to lift or pierce the corporate veil by swearing the affidavits in their capacities as directors of the 2nd defendant.

9. The two affidavits on record will not only create further friction among the directors/shareholders of the 2nd defendant but will prejudice the 3rd, 4th and 5th defendants constitutional right to a fair and expeditious trial. The affidavits should be struck out.

Respondents’ Case 10. It was the respondents’ case that the orders sought to be relied on by the 3rd to 5th defendants were issued on June 12, 2020. It has now been more than twelve (12) months since the said orders were issued, and the 3rd to 5th defendants have not shown that the said orders were either extended or confirmed by the court. The said orders lapsed by virtue of the provisions of order 40, rule 6 of the Civil Procedure (Amendment) Rules, 2020.

11. A reading of the orders also shows that the 3rd defendant was required to serve it for inter partes hearing on June 29, 2020. Such service has not been demonstrated by the 3rd to 5th defendants. Equally, there is no indication by the 3rd to 5th defendants as to what transpired during the inter-partes hearing on June 29, 2020, and it is possible that the said orders may not have been extended to make them capable of being relied on by the 3rd to 5th defendant.

12. Further, the 3rd to 5th defendants failure to furnish the court with the said orders, or the pleadings which informed the said orders, is improper, since it causes the court to speculate about the issuance, extension, confirmation and compliance of those orders.

13. In addition, the way the 3rd to 5th defendants have chosen to approach the court with orders seeking to sanction Collins Kiprono Chemngórem and Mohamud Adon Omar for contempt is flawed. The procedure for instituting and sanctioning for contempt of court is settled. The applicable law was restated by the Court of Appeal in Christine Wangari Gachege vs. Elizabeth Wanjiru Evans & 11others, [2014] eKLR where the court found that the English law on committal for contempt of court under rule 81. 4 of the English Civil Procedure Rules, which deals with breach of judgment, order or undertakings, was applied by virtue of section 5(1) of the Judicature Act.

14. In so far as the 3rd to 5th defendants seek sanctions for contempt of court, their application as such is clearly incompetent and ought to be dismissed with costs.

15. It was the respondent’s position that the only time when a Director of a company requires the express authority of the company to swear affidavits is if the director is swearing an affidavit on behalf of the company. In this case, Collins Kiprono Chemngórem and Mohamud Adon Omar were not swearing affidavits on behalf of the 2nd defendant. They were swearing affidavits on their own behalf in their individual capacities to attest and support the plaintiff’s application dated July 24, 2021.

16. The Deponent of the supporting affidavitto the 3rd to 5th defendant’s application dated November 5, 2021, Mr. Mohamed Mohamud Farah, is himself neither a Shareholder nor a Director of the 2nd defendant, and has denied having any association with the 2nd defendant. The said deponent cannot therefore, in the absence of evidence, be heard to say that 2nd defendant’s directors do not have locus or authority of the 2nd defendant. The question would be, on what basis does the deponent make such an assertion? Especially considering the fact that the 2nd defendant has itself not questioned the locus or denied having granted its Directors authority to swear their said supporting affidavits.

17. The grounds upon which the 3rd to 5th Defendants seek to strike out the said Affidavits on the basis of locus and/or authority is patently speculative. It is therefore clear from the foregoing that there is no legal or other sound basis in which the 3rd to 5th defendants seek to impugn the Supporting Affidavits of Collins Kiprono Chemngórem and Mohamud Adon Omar.

Issues for Determination 18. The court has considered the application, response and the written submissions filed herein and the issues for determination are;a.Whether Ali Mohamud Adon Omar and Collins Kiprono Chemng'orem should be sanctioned for contempt?b.Whether the supporting affidavits made by Ali Mohamud Adon Omar and Collins Kiprono Chemng'orem should be struck out?

Analysis Whether Ali Mohamud Adon Omar and Collins Kiprono Chemng'orem should be sanctioned for contempt? 19. First, the court ought to satisfy itself of the elements of civil contempt as were laid out in Contempt in Modern New Zealand that was cited in North Tetu Farmers Co Ltd v Joseph Nderitu Wanjohi[2016] eKLR as follows: -“There are essentially four elements that must be proved to make the case for civil contempt. The applicant must prove to the required standard (in civil contempt cases which is higher than civil cases) that: -(a)the terms of the order (or injunction or undertaking) were clear and unambiguous and were binding on the defendant;(b)the defendant had knowledge of or proper notice of the terms of the order;(c)the defendant has acted in breach of the terms of the order; and(d)the defendant's conduct was deliberate.”

20. It is not in dispute that the above elements (a) and (b) have been satisfied. The respondent had knowledge of the order and its terms. the point of contention is whether the respondent acted in breach of the said order.

21. It was the respondent’s case that the order sought to be relied on by the 3rd to 5th defendants were issued on June 12, 2020. Further, that it has now been more than twelve (12) months since the said orders were issued, and the applicants have not shown that the said orders were either extended or confirmed by the court. The court is in agreement with the respondent that the applicants have not presented any evidence before the court indicating that the said orders were extended by the court at any point.

22. The present application is dated November 5, 2021 and this brings to question whether the orders issued on June 12, 2020in Civil Suit No 2257 of 2020, at the Milimani Chief Magistrates Commercial Court were still viable? order 40, rule 6 provides for the Lapse of injunction as follows;“Where a suit in respect of which an interlocutory injunction has been granted is not determined within a period of twelve months from the date of the grant, the injunction shall lapse unless for any sufficient reason the court orders otherwise.”

23. This court reiterates what the Court of appeal stated in Erick Kimingichi Wapang’ana &another v Equity Bank Limited &another [2015] eKLR that:“Rule 6 order 40 was made in clear cognizance of the preceding Rules in that order. It therefore follows that notwithstanding the wording of any order of interlocutory injunction, the same lapses if the suit in which it was made is not determined within twelve months “unless”, as the rule provides, “for any sufficient reason the court orders otherwise………In this case there was no subsequent order extending the injunction. Having been issued on 1October 1, 2011, the injunction lapsed on 1October 2, 2012”.

24. Also, the Court of Appeal in the case of Nguruman Limited –v- Jan Bonde Nielsen & 2others (2014) eKLR expressed itself as follows:“Without going into the details we, with respect, agree with the submissions of all learned counsel that the object of introducing rule 6 aforesaid in the 2010 Rules was to deal with the mischief where a party at whose instance a temporary injunction is granted employs various machinations to delay the disposal of the suit. Rule 6 of Order 40 was therefore a necessary and reasonable safeguard against such machinations. It is a condition that many jurisdictions have imposed in dealing with abuse of injunctive orders.”

25. In the case of Barclays Bank of Kenya Limited Vs Henry Ndungu Kinuthia &another (2018) eKLR, the Court of Appeal stated thus: -“A plain reading of order 40 rule 6 shows that the rule is couched in mandatory terms, and that the only situation in which an interlocutory injunction will not automatically lapse after 12 months by operation of the law is where the court has given a sufficient reason why the interlocutory injunction should not lapse.”

26. Order issued by the court had already lapsed by virtue of order 40 rule 6 and the Applicant availed no evidence to prove that the said order was extended by the court. The contemnors could not be said to have been in contempt of orders that had ceased to exist by operation of law.

27. For those reasons this court is satisfied that the application to sanction Ali Mohamud Adon Omar and Collins Kiprono Chemng'orem for contempt is clearly incompetent.

Whether the Supporting Affidavits made by Ali Mohamud Adon Omar and Collins Kiprono Chemng'orem should be struck out; 28. The application also sought the striking out of the supporting affidavitsof Collins Kiprono Chemngórem dated November 2, 2021and that of Mohamud Adon Omar dated November 4, 2021on the basis that both being directors/shareholders of the 2nd defendant, they have no locus, or authority of the 2nd defendant to competently swear affidavits in support of the plaintiff’s application dated July 24, 2021 as directors/shareholders of the 2nd defendant.

29. Based on the numerous documents before the court, the minutes for the various meetings and the CR12 of the 2nd defendant show that the Collins Kiprono Chemngórem and Mohamud Adon Omar are directors of the 2nd defendant.

30. This court is satisfied that the two directors of the 2nd defendant cannot now purport to swear affidavits in support of the plaintiff’s case.

FIndings and Determination 31. For the foregoing reasons this court makes the following findings and determinations;i.This court finds the application to be partially meritorious;ii.The application to sanction Ali Mohamud Adon Omar and Collins Kiprono Chemng'orem for contempt of the orders in Civil Suit No 2257 of 2020, at the Milimani Chief Magistrates Commercial Court is found to be incompetent; this portion of the application is hereby struck out;iii.The application to strike out the affidavit filed by Ali Mohamud Adon Omar dated November 4, 2021is found to have merit and it is hereby allowed. The affidavit is hereby struck out.iv.The application to strike out the affidavit filed by Collins Kiprono Chemng'orem dated November 2, 2021is hereby allowed;v.Ali Mohamud Adon Omar and Collins Kiprono Chemng'orem shall jointly bear the costs of this application.Orders Accordingly.

DATED, SIGNED AND DELIVERED ELECTRONICALLY AT NAIROBI THIS 10TH DAY OF JUNE, 2022. HON. A. MSHILAJUDGEIn the presence of;Gitau Paul for the 1st and 2nd Defendants/RespondentsGitau Paul holding brief for Kerongo for the 3rd, 4th and 5th RespondentsNo appearance by the ApplicantsLucy---------------------------------Court Assistant