https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12822

Equator Two Thousand Limited & another v Eco Bank Kenya Limited & another (Civil Case E683 of 2025) [2026] KEHC 12822 (KLR) (Commercial and Tax) (6 August 2026) (Ruling) Neutral citation: [2026] KEHC 12822 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Civil Case E683 of 2025 RC Rutto, J August 6, 2026 Between Equator Two Thousand Limited 1st Plaintiff Mwanya Migadde 2nd Plaintiff and Eco Bank Kenya Limited Defendant and Warsame Energy Ltd Intended Interested Party Ruling 1.Before the Court is the Notice of Motion dated 21st November, 2025 by the Intended Interested Party seeking; leave to be enjoined in these proceedings as an Interested Party; stay of execution of the orders issued on 14th November, 2025; and, pending the hearing and determination of the suit, an order maintaining the status quo in respect of L.R. No. 209/12369 and restraining the Plaintiff, the Defendant, their agents or servants from interfering with its occupation and business activities on the suit property. The application is supported by the affidavit of Mohamud Farah Mohamud one of the managers of the Intended Interested Party. 2.The Intended Interested Party contends that it is the lawful tenant and occupier of L.R. No. 209/12369 by virtue of a lease allegedly registered on 22nd February, 2024. It avers that the orders issued by this Court on 14th November, 2025, directly affect its proprietary and commercial interests notwithstanding that it was not a party to the proceedings. 3.According to the deponent, the Plaintiff had moved the Court through a Notice of Motion dated 16th October, 2025, seeking, among other reliefs, an interlocutory injunction restraining the Defendant from occupying or interfering with the Plaintiff's use and enjoyment of the suit property. The Court subsequently granted injunctive orders on 14th November, 2025. The Intended Interested Party contends that, at all material times, it had been in possession and occupation of the entire property pursuant to the aforesaid lease. 4.The deponent states that the lease arose after the Plaintiff and the registered proprietor of the property had charged the suit property to the Defendant as security for a loan facility. Following default in repayment, the Defendant allegedly exercised its statutory powers under Section 90(3) of the Land Act and leased the property to the Intended Interested Party in order to recover the outstanding debt. It is further deposed that upon taking possession, the Intended Interested Party complied with the terms of the lease, undertook substantial renovations and development works on the property for purposes of its business operations. 5.The Intended Interested Party further states that it was served with the Court's orders on or about 20th November, 2025, whereupon its operations on the suit property were adversely affected. It contends that the orders were obtained through misrepresentation of material facts, since they were issued without disclosure of its existing leasehold interest and occupation of the property. It therefore argues that unless the impugned orders are stayed and it is allowed to participate in the proceedings, it stands to suffer prejudice and substantial financial loss, having already paid the requisite lease deposit and invested significant resources in the premises. 6.The application is opposed. The Plaintiff filed Grounds of Opposition dated 28th January, 2026, and a Replying Affidavit sworn on the same date by its Director, Mwanya Migadde. 7.The Plaintiff contends that the Intended Interested Party has failed to demonstrate any legal or proprietary interest in the suit property capable of justifying its joinder. It is argued that the lease relied upon was not executed by the Intended Interested Party, Warsame Energy Limited, but by one Farah Hassan Mohamud Warsame in his personal capacity. Consequently, the Plaintiff maintains that the company cannot claim rights arising from a contract to which it is not a party. 8.The Plaintiff further relies on the principle of corporate personality under the Companies Act, 2015, arguing that a company is distinct from its directors and shareholders and can only enforce rights accruing to it in its own name. It is therefore contended that no landlord-tenant relationship exists between the Defendant and the Intended Interested Party. 9.The Plaintiff also submits that the Intended Interested Party breached the terms of the lease by undertaking alterations and developments on the suit property without first obtaining the lessor's written consent as required under clause 1(h) of the lease agreement. On that basis, the Plaintiff contends that the Intended Interested Party is undeserving of the equitable reliefs sought. 10.Additionally, the Plaintiff disputes the validity of the lease, contending that it was not duly registered and therefore did not confer any enforceable legal interest in the property. The Court was consequently urged to dismiss the application. 11.The application was canvassed by way of written submissions. Intended Interested Party’s Submissions 12.The Intended Interested Party seeks joinder as an Interested Party, the setting aside of the ex parte orders issued on 14th Novemberc, 2025, preservation of the status quo in respect of L.R. No. 209/12369, and injunctive orders restraining the Plaintiff and the Defendant from interfering with its occupation and business operations on the suit property pending the determination of the application and the suit. 13.It identified three issues for determination, that is whether it ought to be enjoined in the proceedings; whether the ex parte orders issued on 14th November, 2025, should be stayed or set aside and who should bear the costs of the application. 14.On joinder, it relies on JMK v MWM & Another [2015] eKLR, Order 1, rule 10(2) of the Civil Procedure Rules and Joseph Njau v Robert Maina & 3 Others, HCCC No. 136 of 2000. It submits that it has been in uninterrupted occupation of the suit property pursuant to a lease dated 1st November, 2017, and that its occupation came under threat following the issuance of the ex parte orders. It contends that, as the party currently occupying and operating a business on the property, any orders made in the suit will directly affect its rights and interests, thereby rendering its participation necessary for the effectual and complete determination of the dispute. It further invokes Article 47(1) of the Constitution, arguing that it ought to have been accorded an opportunity to be heard before orders prejudicial to its occupation and business operations could be enforced. 15.On the prayer for setting aside the ex parte orders of 14th November, 2025, the Intended Interested Party relies on Richard Nchapai Leiyangu v IEBC & 2 Others. It submits that the Plaintiff obtained the orders without disclosing that the Intended Interested Party was already in possession of and operating a business on the suit property. According to the Applicant, this amounted to material non-disclosure and deprived the court of critical information necessary for a fair determination. It therefore argues that the Plaintiff failed in its duty of full disclosure and that the ex parte orders ought to be vacated. It further contends that the Plaintiff is not the legal owner of the suit property and acted in bad faith by concealing material facts relating to ownership and occupation. 16.In its supplementary submissions, the Intended Interested Party acknowledges that the lease was executed by Farah Hassan Mohamud Warsame rather than Warsame Energy Ltd. It explains, however, that Farah Hassan Mohamud Warsame is the sole director of the company and leased the premises for purposes of conducting business through the company. It submits that the Plaintiff has not disputed that Warsame Energy Ltd is in actual possession of the property and conducting business thereon. It further contends that the Plaintiff has adopted inconsistent positions by denying that it has a personal stake in the proceedings while at the same time acknowledging that it has undertaken developments on the property. Relying on Njogu & 2 Others v Githinji & 2 Others; Ngiriciha & 4 Others, it argues that its undisputed occupation of the suit property and the absence of any challenge by the Defendant as to how it came into possession justify its joinder. It accordingly urges the court to allow its application, set aside the ex parte orders and award it costs. 17.On costs, the Intended Interested Party relies on Jasbir Singh Rai & 3 Others v Tarlochan Singh Rai & 4 Others [2014] eKLR and submits that although costs ordinarily follow the event, the court retains discretion to award costs in the interests of justice. It contends that the application was necessitated by the Plaintiff’s failure to disclose material facts and therefore seeks costs against the Plaintiff. Plaintiff’s Submissions 18.The Plaintiffs set out the background and identify two issues for determination, namely, whether the application by the Intended Interested Party dated 21st November, 2025, is merited and whether the Defendant's application of the same date is merited. 19.The Plaintiff submits that the proceedings were commenced through a Notice of Motion dated 16th October, 2025, seeking conservatory orders restraining the Defendant from interfering with the Plaintiffs’ occupation and enjoyment of L.R. No. 209/12369, a mandatory injunction compelling the Defendant to vacate the property, and costs. It states that the application was served upon the Defendant on 21st October, 2025, but that the Defendant neither entered appearance nor filed a response. Consequently, the court granted conservatory orders on 3rd November, 2025, restraining the Defendant, its agents or any other persons from interfering with the Plaintiffs’ use and enjoyment of the suit property. The Plaintiff contends that it was only after those orders had been issued that the Defendant filed its application dated 21st November, 2025, seeking to strike out both the application and the suit. 20.The Plaintiff further submits that the 2nd Plaintiff is the registered proprietor of the suit property, while the 1st Plaintiff stood as guarantor for Mary Migadde under a charge dated 7th August, 2022, securing an overdraft facility advanced by the Defendant. It contends that the Defendant unlawfully exercised its statutory power by leasing the suit property to a third party. It further argues that the Intended Interested Party is a stranger to the proceedings because the lease relied upon was executed between the Defendant and Farah Hassan Mohamud Warsame and not Warsame Energy Ltd. 21.On joinder, the Plaintiff relies on Francis Karioki Muruatetu & Another v Republic & 5 Others [2016] eKLR, as cited in Njogu & 2 Others v Githinji & 2 Others; Ngiricha & 4 Others (Interested Party) [2025] KEELC 936 (KLR). It submits that an interested party must demonstrate a clearly identifiable stake in the proceedings, prejudice likely to be suffered if not joined, and that its intended submissions are distinct from those of the existing parties. The Plaintiff argues that the Intended Interested Party has failed to satisfy those requirements as it has not demonstrated any legal or beneficial interest in the suit property. 22.The Plaintiff further invokes the doctrine of privity of contract and relies on Aineah Liluyani Njirah v Aga Khan Health Services [2013] KECA 481 (KLR). It submits that because the lease was executed by Farah Hassan Mohamud Warsame and not Warsame Energy Ltd, the Intended Interested Party has no enforceable rights under the lease and lacks the requisite personal stake necessary for joinder. 23.The Plaintiff also contends that the Intended Interested Party has not demonstrated that it intends to advance any distinct or novel submissions. It argues that any renovations allegedly undertaken on the property were unauthorized, as the lease prohibited alterations without the Defendant’s prior written consent. Consequently, the Plaintiff submits that no legal rights can arise from such developments and that equity cannot be invoked to sanitize an illegality. 24.Regarding the injunctive orders sought, the Plaintiff relies on Nguruman Limited v Jan Bonde Nielsen & Others [2014] eKLR and submits that the Intended Interested Party has not established a prima facie case, irreparable harm or that the balance of convenience favours the grant of the orders sought. It therefore urges the court to dismiss the application with costs. 25.In conclusion, the Plaintiff submits that the Intended Interested Party is a stranger to the lease and to the proceedings, while the Defendant seeks to benefit from its own failure to comply with court timelines. The Plaintiff accordingly urges the court to dismiss the application with costs while preserving the Plaintiffs' proprietary rights over L.R. No. 209/12369. 26.The Defendant did not oppose the orders sought in the Intended Interested Party’s application. Analysis and Determination 27.Before delving into the merits of the application, I consider it necessary to clarify the scope of the present ruling. The record reveals that there are two applications dated 21st November, 2025, before the court, namely, the Defendant's application and the Intended Interested Party's application. However, on 17th February, 2026, this court directed that the Intended Interested Party's application for joinder be heard and determined first. Although the Plaintiff, in its written submissions, addressed both applications, the court is presently concerned only with the Intended Interested Party's Notice of Motion dated 21st November, 2025. Consequently, this ruling is confined to the issues arising from that application and does not extend to the merits of the Defendant's application. 28.Having carefully considered the Intended Interested Party Notice of Motion dated 21st November, 2025, the supporting affidavit together with the annexures thereto, the Replying Affidavit sworn by Mwanya Migadde on 28th January, 2026, the grounds of opposition, the rival submissions filed by the parties, and the authorities cited, I am of the considered view that the following issues arise for determination:i.Whether the Intended Interested Party has established sufficient grounds to warrant its joinder in these proceedings as an Interested Party.ii.Whether the Intended Interested Party has established a basis for the stay, and/or setting aside of the ex parte orders issued on 14th November 2025 and for the grant of the conservatory orders sought.iii.Who should bear the costs of this application. Whether the Intended Interested Party has established sufficient grounds to warrant its joinder in these proceedings as an Interested Party 29.The law governing joinder of parties is now well settled. Under Order 1, rule 10(2) of the Civil Procedure Rules, the court may, at any stage of proceedings, add a party whose presence before the court is necessary to enable it effectually and completely adjudicate upon and settle all questions involved in the suit. Equally, in Francis Karioki Muruatetu & Another v Republic & 5 Others [2016] eKLR, the Supreme Court set out the principles governing admission of an interested party. The Supreme Court held that an intended interested party must demonstrate a clearly identifiable stake or legal interest in the proceedings, the prejudice likely to be suffered if excluded from the proceedings, and the relevance of the submissions it intends to place before the court. 30.The Plaintiff opposes the application principally on the ground that the Intended Interested Party lacks any recognizable legal interest in the suit property because the lease agreement relied upon was executed by one Farah Hassan Mohamud Warsame in his personal capacity and not by Warsame Energy Ltd. The Plaintiff consequently invokes the doctrine of separate corporate personality and contends that a company cannot enforce rights arising from a contract to which it was not a party. 31.There is no dispute that the lease agreement exhibited before the court identifies Farah Hassan Mohamud Warsame as the lessee. Equally, the Plaintiff's argument concerning the separate legal personality of a company is legally sound. A company is distinct from its directors and shareholders and, ordinarily, can only enforce rights arising from contracts executed in its own name. However, the issue presently before the court is not whether Warsame Energy Ltd has conclusively established contractual rights under the lease. Neither is the court required at this stage to determine the validity, enforceability or legal effect of the lease agreement. Those are substantive questions that may ultimately arise for determination at the hearing of the suit. The issue presently before the court is a narrower one, namely, whether the Intended Interested Party has demonstrated a sufficient interest in the subject matter of the litigation to justify its participation in these proceedings. 32.In that regard, I note that the Intended Interested Party has exhibited documents indicating that a lease over L.R. No. 209/12369 was granted by the Defendant. The lease identifies the suit property as the premises that are the subject of these proceedings. The lease further indicates that it was registered on 22nd February 2024 for a term of seven (7) years commencing on 1st February 2023. The Intended Interested Party has also exhibited documents evidencing its incorporation and has consistently maintained that it is the entity presently occupying and conducting business on the suit property. 33.Significantly, the Plaintiff does not dispute that a business associated with the Intended Interested Party is in occupation of the property. Indeed, in its Replying Affidavit, the Plaintiff alleges that the Intended Interested Party has undertaken developments and renovations on the property in breach of the lease terms. While that assertion is intended to challenge the conduct of the Intended Interested Party, it nonetheless acknowledges its physical presence and activities on the suit property. Further, the Defendant, being the party that granted the lease and in whose favour the charge subsists, informed the court on 20th May 2026 that it did not oppose the orders sought by the Intended Interested Party. Although such lack of opposition does not, in itself, entitle the Intended Interested Party to joinder, it remains a relevant consideration when viewed alongside the factual matrix presented before the court. 34.This Court cannot overlook the nature of the reliefs sought in the main suit. Among other prayers, the Plaintiff seeks orders restraining occupation and use of L.R. No. 209/12369 and challenges the Defendant's decision to lease the property. Any determination regarding the validity of the lease, the propriety of the Defendant's actions, or the right to possession and occupation of the property will inevitably affect the person or entity currently occupying and operating from the premises. 35.In the Court's view, it would be inconsistent with the principles of natural justice and the right to a fair hearing to determine questions that directly affect the occupation, possession and use of the suit property without affording the current occupant an opportunity to participate in the proceedings and present its case. Whether the Intended Interested Party will ultimately succeed in establishing rights under the lease is a matter for determination upon a full hearing. At this stage, what is material is that it has demonstrated a direct, proximate and identifiable interest in the subject matter of the dispute, and that its occupation and business operations may be affected by the outcome of the suit. 36.The Intended Interested Party has demonstrated a discernible and proximate interest in the subject matter of the suit. Further, the outcome of these proceedings is likely to have a direct bearing on its alleged occupation and business operations on the suit property. I am therefore satisfied that its participation is necessary for the effectual and complete adjudication of all the questions arising for determination in this suit. 37.Accordingly, and guided by the principles set out in Francis Karioki Muruatetu & Another v Republic & 5 Others [2016] eKLR, I am satisfied that the Intended Interested Party has demonstrated a sufficient stake in the proceedings, the prejudice it stands to suffer if excluded, and the relevance of its participation in the determination of the issues before the Court. The prayer for joinder is therefore merited. Whether the Intended Interested Party has established a basis for the stay, variation and/or setting aside of the ex parte orders issued on 14th November, 2025, and for the grant of the preservatory orders sought 38.Having found that the Intended Interested Party ought to be joined in these proceedings, the next issue is whether the orders issued on 14th November, 2025, ought to be stayed, varied or set aside. 39.The Intended Interested Party contends that the orders were obtained without disclosure of its occupation and leasehold interest in the suit property. It argues that had the court been informed that the property was already leased and occupied, those facts would have been considered before the issuance of the impugned orders. The Plaintiff, on the other hand, maintains that the Intended Interested Party has no recognizable legal interest and therefore cannot challenge orders issued in proceedings to which it was not a party. 40.The Court has carefully considered the circumstances under which the impugned orders were issued. At the time those orders were granted, the Intended Interested Party had not been joined to the proceedings and had consequently not been afforded an opportunity to place before the court the nature of its claimed interest in the suit property. The material presently before the Court discloses the existence of a registered lease and evidence of occupation predating the issuance of the impugned orders. While this Court makes no definitive pronouncement at this stage on the validity, enforceability or legal effect of the said lease, those matters cannot be dismissed as frivolous and call for full interrogation at the substantive hearing. 41.It is well established that the court's discretionary power to set aside or vary ex parte orders is exercised to prevent injustice and to ensure that disputes are determined on their merits after all affected parties have been accorded an opportunity to be heard. The guiding consideration is whether the continued subsistence of such orders would occasion prejudice or result in an unjust outcome. 42.In the present case, I am persuaded that the continued operation of orders affecting the occupation and use of the suit property, without hearing the party presently asserting possession and occupation thereof, would occasion prejudice and risk rendering its participation in these proceedings illusory. At the same time, I remain cognisant of the Plaintiff's allegations regarding the legality of the lease, the Defendant's exercise of its statutory power and the lawfulness of the Intended Interested Party's activities on the property. Those are contested matters which can only be conclusively determined upon a full hearing and evaluation of the evidence. 43.In the circumstances, the interests of justice favour the preservation of the suit property pending the hearing and determination of the suit. Maintaining the prevailing state of affairs will ensure that the competing claims regarding ownership, possession, occupation and the validity of the lease arrangement are determined without any party obtaining an undue advantage before trial. I am therefore satisfied that sufficient grounds have been established to warrant the court's intervention in respect of the orders issued on 14th November 2025. The appropriate remedy, however, is not the determination of proprietary rights at this interlocutory stage, but the preservation of the subject matter pending the final adjudication of the dispute. Who should bear the costs of this application 44.Costs are in the discretion of the court pursuant to Section 27 of the Civil Procedure Act. Although the general rule is that costs follow the event, the court retains discretion to depart from that principle where the circumstances of the case so warrant. Given that the issues concerning the legality of the lease and the parties' respective rights in the suit property remain unresolved and await determination at the trial, I consider it just and appropriate that the costs of the present application abide the outcome of the suit. 45.Consequently, the Intended Interested Party's Notice of Motion dated 21st November, 2025, succeeds, in the following terms:i.Warsame Energy Ltd is hereby enjoined in these proceedings as an Interested Party.ii.Pending the hearing and determination of the suit, the status quo obtaining on L.R. No. 209/12369 as at the date of this ruling shall be maintained. For the avoidance of doubt, the occupation, possession and use of the property as presently existing shall remain unchanged, and none of the parties, their servants, agents or any person acting under their authority shall interfere therewith except with leave of the court.iii.The costs of the Intended Interested Party Notice of Motion dated 21st November, 2025, shall abide the outcome of the suit. 46.It is so ordered. DELIVERED, DATED AND SIGNED VIRTUALLY THIS 6TH DAY OF AUGUST, 2026RHODA RUTTOJUDGECourt Assistant: Wabwire