[2009] KEHC 3812 (KLR)
The court found that the plaintiff, as a shareholder, was entitled to receive dividends from the defendant company. The defendant's failure to pay the correct amount, as established by the auditor's report, constituted unjust retention of the plaintiff's funds. The court held that the company, being a commercial...
Source-derived case information.
- Citation
- [2009] KEHC 3812 (KLR)
- Parties
- Plaintiff: David Chege Mwangi; Defendant: Mugambo wa Gachocho
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Civil Case 260 of 2008
- Procedural Posture
- Civil Case / Ruling After Plaintiff Closed Evidence; Application for Audited Account and Payment of Dividends
- Outcome
- judgment for the plaintiff
- Legal Topics
- Dividend Entitlement, Shareholder Rights, Company Liability, Interest on Unpaid Dividends
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
David Chege Mwangi
Plaintiff
Mugambo wa Gachocho
Defendant
Procedural Posture
Civil Case / Ruling After Plaintiff Closed Evidence; Application for Audited Account and Payment of Dividends
Legal Issues
- 1 Whether the plaintiff is entitled to payment of accrued and outstanding dividends as a shareholder.
- 2 Whether the defendant company is liable to pay interest on the unpaid dividends at commercial rates.
- 3 Whether the amount calculated by the defendant is correct or the auditor's report should be adopted.
Ratio Decidendi
The court found that the plaintiff, as a shareholder, was entitled to receive dividends from the defendant company. The defendant's failure to pay the correct amount, as established by the auditor's report, constituted unjust retention of the plaintiff's funds. The court held that the company, being a commercial institution, was not justified in withholding the dividends and must pay interest at the prevailing commercial rate. The court accepted the auditor's calculation of Kshs.247,703, inclusive of principal and interest, and ordered payment of this sum to the plaintiff, including any amount already paid into court.
Court Disposition
judgment for the plaintiff
Orders
- The defendant shall pay the plaintiff Kshs.247,703 forthwith, inclusive of principal and interest as per the auditor's report.
- Any money already paid into court shall be released to the plaintiff forthwith.
Full Case Text
Judgment text and source record
18 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
AT NAIROBI (MILIMANI COMMERCIAL COURTS)
Civil Case 260 of 2008
DAVID CHEGE MWANGI ……………………………....…. PLAINTIFF
VERSUS
MUGAMBO WA GACHOCHO …………………………. DEFENDANT
R U L I N G
This suit has been proceeding for sometime now. The plaintiff has closed the taking of his evidence.
In the middle of proceedings the defendants admitted not having paid the plaintiff his dividends for some time whereby the court ordered defendant to pay dividends. The plaintiff is not satisfied with amount paid. He then filed notice of motion on 31/12/08 seeking order that the plaintiff be allowed to submit an audited account of his accrued and outstanding dividends in the defendant company. The defendant calculated an amount of Kshs.59,830/= instead of Kshs.247,703/= as per auditors report. This issue arose during the proceedings.
The plaintiff is asking his dividends paid since he was removed and denied directorship. The defendant has admitted that the plaintiff has at all times been entitled to dividends as a shareholder just like other shareholders.
The auditors report shows that principal amounts to Kshs.120,280/= and interest amounting to Kshs.127,423/=. The schedule of calculations is exhibited and the total amounts to Kshs.247,703/=. The company states that the uncollected dividends do not attract interest. In this respect, the company refused to pay the plaintiff dividends. They should have forwarded the payment by cheque or postal orders or by hand delivery or by calling the shareholder to collect. Any person who would retain money belonging to another must pay interest. The company is a commercial institution and is not justified to retain funds which does not belong to it.
In this case the interest ought to be paid at commercial rates. During the period the money was retained the court rate was 14% which I find to be reasonable to be paid to the principal.
I therefore find that the plaintiff’s claim is Kshs.247,703/= which I order to be paid to him forthwith. This is inclusive of the money already paid to court, which shall be released forthwith to applicant.
Order accordingly.
DATED and DELIVERED at Nairobi this 6th day of May 2009.
JOYCE N. KHAMINWA
JUDGE