[2023] KEHC 25875 (KLR)

Gessner (Suing as Executor of the Estate of the Late Wilfred Gunther Herbert Osser) & another v Osser & 5 others (Civil Suit 9 of 2019) [2023] KEHC 25875 (KLR) (21 November 2023) (Judgment)

Neutral citation: [2023] KEHC 25875 (KLR)

Republic of Kenya

In the High Court at Mombasa

Civil Suit 9 of 2019

DKN Magare, J

November 21, 2023

Between

Uwe Heinrich Gessner (Suing as Executor of the Estate of the Late Wilfred Gunther Herbert Osser)

1st Plaintiff

Wilfred Gunther Herbert Osser

2nd Plaintiff

and

Ronny Patric Herbert Osser

1st Defendant

Ronny Patric Herbert Osser

2nd Defendant

Jeanine Notalie Boelig

3rd Defendant

Jeanine Notalie Boelig

4th Defendant

Hanos (K) Limited

5th Defendant

Hanos (K) Limited

6th Defendant

Judgment

1. In the Plaint dated 2nd November 2018 and amended on 16th November 2022, the Plaintiff pleaded among others that:i.The Deceased was a shareholder in the 3rd Defendant Company owning 78% of the shares of the 3rd Defendant.ii.The original shareholding was such that the Deceased, Festus Ogada and Hans Bruno Huse owned share in the ratio of 150:1:149. iii.After the Hans Bruno Huse died, the Deceased gave 75 shares to his divorced wife now deceased.iv.That probably in 2005, the 1st and 2nd Defendants, being son and daughter of the Deceased purported to unlawfully transfer shares in the 3rd Defendant Company without consent of the deceased, or resolution of the company and so the company never authorized such transfer of the shares.v.The Plaintiff also averred that his purported signature in the documents submitted to the Registrar of Companies for the change of Directors was forged and not appended by himself.vi.The Plaintiff further pleaded that it was not possible for the deceased to have signed the purported documents because at the time, in around 2005, the deceased had left Kenya since March 1998 and only came back to Kenya in December 2009. vii.The Deceased never at any time resigned as Director of the Company.viii.The Plaintiff averred that the Deceased too di not receive any consideration for his shares in the company.ix.Therefore, the process of changing directors as purported by the 1st and 2nd Defendants was ultravires to the 3rd Defendant’s Memorandum of and Articles of Association and the Companies Act and was actuated by falsehood and forgery.

2. The Plaintiffs thus prayed for the following reliefsa.A declaration that the process of changing the Directorship and the shareholding structure is ultravires to the Memorandum and Articles of Association of the 3rd Defendant, the Companies Act, Cap (repealed) or was through falsehoods, forgery and misrepresentation.b.A declaration that no valid interest was passed by the disputed documents.c.An Order compelling the Registrar of Companies to rectify the Register and to revert or reflect the shareholding and directorship as it was before 2005 when the Register was unlawfully altered.d.In the alternative, Order the Defendants to compensate the Plaintiff for the current market value of his shares.e.Cost of the suit.

3. The Defendants filed their Defence dated 20th May 2019 on 21st May 2019 in which it was inter alia pleaded as follows:i.Prior to 7th June 1998, the Plaintiff only held 100 shares being 33% of the shares in the 3rd Defendant Company and later sold 99 shares to his former wife, Gunhild Gerlind Osser in consideration of Kshs. 99,000. ii.On 2nd September 2002, Gunhild Gerlind Osser and the Plaintiff resigned as Directors and the 2nd and 3rd Defendants were appointed as Directors of the 3rd Defendant and subsequently Gunhild Gerlind Osser resigned as Director on 3rd September 2002. iii.Later on 22nd April 2004, the Plaintiff transferred his remaining 1 share to the 1st Defendant at a consideration of Kshs. 1,000 and on the same date Gunhild Gerlind Osser transferred her 49 shares in the company to the 1st Defendant in consideration of Kshs. 49,000/= and 50 shares to the 2nd Defendant in consideration of Kshs. 50,000/=.iv.The above stated share transfers were ratified by a resolution of the members on 22nd April 2004 in Germany after which the 1st and 2nd Defendants could hold 50 shares each and Gunhild Gerlind Osser could hold the remainder 200 shares.v.That on 20th January 2013, Gunhild Gerlind Osser ceased to be director by virtue of her demise.vi.That the Plaintiff left Kenya in 1998 having divorced in 1997 on a permanent basis and was convicted and sentenced to serve a jail term of 10 years in Germany and only returned to Kenya after his wife died in 2013 and remained in Mombasa on a special pass.

4. However, it is not disputed that the Deceased was of ill health prior to his death and had to be placed on oxygen for a considerable number of days. Vide this Court’s Ruling dated 12th March 2021, the Court allowed, on Application by counsel for the Plaintiff, that the witness statements and documents filed in Court by both parties be relied upon without the need for witnesses’ testimonies. The witnesses who were able to attend Court were however allowed to do so and testify.

5. At the hearing, the Plaintiff called one witness, PW2, John Muinde who testified and produced evidence in Court.

6. The witness relied on his witness statement filed on 16th September 2019 and a further witness statement filed on 9th February 2021 both of which he relied on in evidence.

7. The witness introduced himself as Forensic Document Examiner based at the Directorate of Criminal Investigations.

8. He also relied on the Forensic Report dated 9th December 2019 and filed in Court on 25th February 2022 as his evidence.

9. It was his case that he conducted a forensic audit of the signatures authorizing the transfer of shares on the document dated 22nd April 2004 as well as the Company’s Resolution document and in comparing the signatures there on with the specimen signature of the Deceased, he formed the opinion that the signatures were extremely dissimilar and not made by the same person.

10. On cross examination, it was his case that age and illness would not change the way one writes and that the pressure of the pen remained the same.

11. The Defendants called 3 witnesses.

12. DW1, Ronny Patrick Herbert Osser introduced himself as son of the Deceased and Director of the 3rd Defendant.

13. He relied on his witness statement dated 5th July 2019 and the Bundle of Documents dated on 20th May 2002 to support the Defendants’ case.

14. In cross examination, it was his case that the shares were transferred when his father was in prison and that he was present at the transfer but did not sign.

15. He further stated that it was the Deceased who was operating Babylon Restaurant as he opened with other Partners in 1992 but had been paid before relocating to Germany and that he died within the apartment on the Hotel.

16. The witness also stated that he was a resident of Mombasa since 1999 but the 2nd Defendant was not a resident and that he has 50 shares, the 2nd Defendant who is also his sister has 50 shares and their late mother 200 shares and the Deceased was no longer a shareholder.

17. Further, it was his case that their mother died after transferring her shares to him and the 2nd Defendant.

18. The witness also testified that he was born in 1980 and was 42 years and the 2nd Defendant was born in 1982 and was 41 years.

19. DW2, one Abdul Wahil Mohamed relied on his statement and testified in cross-examination that the Deceased was his client and the Defendants were his clients.

20. He introduced himself as a certified Public Accountant.

21. It was his case that he was familiar with the signatures of the Deceased and the Defendants and had signed and presented the documents as company secretary of the 3rd Defendant.

22. It was his case that the husband and wife brought the documents in 1998 and they were working on divorce with the deceased.

23. Finally, DW3 one Ushwin Khanna testified that he had acted for the Deceased as advocate until the Divorce.

24. It was his case that he advised the deceased and his divorced wife to finalize the transfer of shares and the 1st and Defendants were not party.

25. He further stated that the deceased agreed to transfer the shares. However, he did not have evidence for this suggestion.

26. It was his further case that the 1st and 2nd Defendants were his clients in ELC Suit No. 52 of 2016 and ELC No. 18 of 2021 both in Mombasa which did not involve shareholding.

Analysis 27. The Court has reviewed and considered the pleadings, testimonies and evidence produced by parties as well as submissions filed by counsel in support and opposition to their respective cases. The submissions are commendable and this court would have replicated them but for the limited space.

28. The issue for determination in this case is whether the process of transfer of the shares in the 3rd Defendant company was through fraudulent misrepresentation on the part of the 1st and 2nd Defendants as to be rendered a nullity.

29. Whereas the Plaintiff’s claim is that the process of transfer was instigated by falsehoods and forgery in the signatures purported by the 1st and 2nd Defendant and that his signature was in fact forged and so cannot be held to have given his consent and authority to the transfer, the 1st and 2nd Defendants content that the deceased by himself signed the share transfer and Resolution documents and voluntarily transferred the shares in the manner depicted by the filed documentary evidence.

30. I have had the opportunity to peruse the documents and averments rendered by the parties and I must confirm the relationship between the Deceased and his divorced wife was not a friendly one and since the 1st and 2nd Defendants deemed themselves amiable to their mother, the Deceased could have died with a lasting loathe towards them. Even in the will referred to partly in this case, the Deceased expressly left out his divorced wife and the 1st and 2nd Defendants herein as beneficiaries in his estate and dispassionately did so, so to speak.

31. This Court also noted that the quick succession through which some activities happened are worthy concern to justice.

32. For instance, on 2nd September 2002, the deceased’s wife is said to have resigned as director of the 3rd Defendant and on 3rd September 2002, one day later, reappointed as Director.

33. Similarly, on 22nd April 2004, the deceased is said to have transferred his 1 share to the 1st Defendant and his late divorced wife also transferred her 49 shares to the 1st Defendant and 50 shares to the 2nd Defendant and these changes are occasioned by a resolution signed including by the deceased, in Germany on that same date and it is further stated that the deceased signed the resolution while in prison.

34. All these averments are anchored by the Defendants. There is however nothing to speak of the relationship of the deceased with the divorced wife after the Divorce. Whereas the Defendants’ case depicts a scenario of cooperation, the Plaintiff’s case depicts a scenario of detachment and suspicion.

35. In his testimony, DW1 testified that according to him, his late mother was still a shareholder in the 3rd Defendant Company. Further it was his testimony on cross examination that his mother died after transferring her shares to him and the 2nd Defendant. The number of shares held by their deceased mother is said to be 200 shares.

36. In my view, the testimony of the 1st Defendant was marred with inconsistences and he largely depicted a striking lack of specific particulars pertaining to the issues in dispute, or at least he made attempts to hide the truth of the matter.

37. Whereas the 1st Defendant testified that he was not sure that the Deceased was in prison at the time of signing the transfer of shares, he also asserted that the Deceased signed the transfer while in prison. It was his further testimony that the Deceased transferred one share to him but that even though he was present at the time of the transfer, he did not sign the transfer document.

38. Witnesses should know that the Court is a formal and public arbiter to which they have a duty to say nothing but the truth, whether on oath, affirmation or otherwise. A deliberate misrepresentation of fact during testimony is inimical to the squander of judicial time, mocks the administration of justice and amounts to a lie that will not change the truth of the matters as presented from the pleadings and evidence as viewed from the all-round angle of the case scenario.

39. It is such conduct on the part of a witness that Odunga J (as he then was), alluded to in the case of Kioko Peter v Kisakwa Ndolo Kingóku [2019] eKLR while referring to the reasoning of Madan J, (as he then was) in the case of N vs. N [1991] KLR 685. The Learned Judge lamented as follows:Parties and Counsel ought to give the courts some credit that the courts are not manned by morons who can be easily duped into believing all manner of incredible stories with little or no iota of truth. It is these kinds of allegations that Madan, J (as he then was) had in mind when in N vs. N [1991] KLR 685 when he expressed himself in the following terms:“I wish people would not tell me absurd and unbelievable lies. I feel disappointed if a lie told in court is not reasonable imitation of the truth and is not reasonably intelligently contrived. I wish people who tell lies before me would respect my grey hair even if they consider that my intelligence is not of high order. I wish the witness had not told me the most stupid of his lies, which both disappointed and made me feel intellectually insulted.”

40. Now, the testimony of PW1, the Forensic Document Examiner who testified for the Plaintiff concurred with the Plaintiff’s case that the signatures on the share transfer and resolution documents purporting to be endorsed by the deceased were extremely dissimilar and not of the same person. There is no contrary report to this expert opinion.

41. This Court appreciates that Courts have impressively expressed the extend of application of an expert opinion in judicial proceedings and the general trend is that such evidence is not necessarily conclusive and binding.

42. As was held in Shah and Another vs. Shah and Others [2003] 1 EA 290:“The opinion of the expert witness is not binding on the court, but is considered together with other relevant facts in reaching a final decision in the case and the court is not bound to accept the evidence of an expert if it finds good reasons for not doing so.”

43. Further, the Court of Appeal, on its part in Kimatu Mbuvi T/A Kimatu Mbuvi & Bros vs. Augustine Munyao Kioko Civil Appeal No. 203 of 2001 [2007] 1 EA 139 held that:“… such opinions are not binding on the Court although they will be given proper respect, particularly where there is no contrary opinion and the expert is properly qualified although a Court is perfectly entitled to reject the opinion if upon consideration alongside all other available evidence there is proper and cogent basis for doing so.”

44. Furthermore, in Parvin Singh Dhalay vs. Republic [1997] eKLR; [1995-1998] 1 EA 29, it was held that:“It is now trite law that while the courts must give proper respect to the opinions of experts, such opinions are not, as it were, binding on the courts and the courts must accept them. Such evidence must be considered along with all other available evidence and if there is proper and cogent basis for rejecting the expert opinion, a court would be perfectly entitled to do so. We will repeat what this Court said in the case of Elizabeth Kamene Ndolo vs. George Matata Ndolo, Civil Appeal No. 128 of 1995. There the Court said with regard to the evidence of experts:-"The evidence of PW1 and the report of Munga were, we agree, entitled to proper and careful consideration, the evidence being that of experts but as has been repeatedly held the evidence of experts must be considered along with all other available evidence and it is still the duty of the trial court to decide whether or not it believes the expert and give reasons for its decision. A court cannot simply say:- "Because this is the evidence of an expert, I believe it."..."

45. The case by the Plaintiff is that the signatures on the share transfer and resolution to transfer the shares are forgeries and the purported transfer should be declared null and void.

46. Section 109 of the Evidence Act, Cap 80, Laws of Kenya, places the burden of proof on the Plaintiff herein. The Section provides that: -“The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie in a particular person.’

47. The need to prove and the burden of proof of such allegations of forgery, fraud, falsehood or dishonesty was elaborated by the court in Christopher Ndaru Kagina vs. Esther Mbandi Kagina & Another [2016] eKLR where the court stated that –‘It is trite law that he who alleges fraud must prove fraud. Allegations of fraud must strictly be proved. Great care needs to be taken in pleading allegations of fraud or dishonesty. In particular, the pleader needs to be sure that there is sufficient evidence to justify the allegations. In the Case Central Bank of Kenya Ltd -Vs- Trust Bank Ltd & 4 Others [26] the Court of Appeal in considering the standard of proof required where fraud is alleged stated that fraud and conspiracy to defraud are very serious allegations. The onus of prima facie proof is much heavier on the person alleging than in an ordinary Civil Case. The burden of proof lies on the applicant in establishing the fraud that he alleges. In Belmont Finance Corporation Ltd. v. Williams Furniture Ltd [27] Buckley L.J. said:““An allegation of dishonesty must be pleaded clearly and with particularity. That is laid down by the rules and it is a well-recognized rule of practice. This does not import that the word ‘fraud’ or the word ‘dishonesty’ must be necessarily used. The facts alleged may sufficiently demonstrate that dishonesty is allegedly involved, but where the facts are complicated this may not be so clear, and in such a case it is incumbent upon the pleader to make it clear when dishonesty is alleged. If he uses language which is equivocal, rendering it doubtful whether he is in fact relying on the alleged dishonesty of the transaction, this will be fatal; the allegation of its dishonest nature will not have been pleaded with sufficient clarity.”In Armitage v Nurse [28] Millett L.J. having cited this passage continued:““In order to allege fraud it is not sufficient to sprinkle a pleading with words like “willfully” and “recklessly” (but not “fraudulently” or “dishonestly”). This may still leave it in doubt whether the words are being used in a technical sense or merely to give colour by way of pejorative emphasis to the complaint.”In Paragon Finance plc v D B Thakerar & Co the court stated that it is well established that fraud must be distinctly alleged and also distinctly proved, and that if the facts pleaded are consistent with innocence it is not open to the court to find fraud. The burden is always on the claimant to prove fraud on the part of the Respondent. The standard of proof where fraud is alleged is high. Though it is the same civil standard of proof on a balance of probabilities, it is certainly higher than the ordinary proof on a balance of probabilities but lower than proof beyond reasonable doubt. It all depends on the nature of the issue and its gravity. Evidence of especially high strength and quality is required to meet the civil standard of proof in fraud cases. It is more burdensome: (see also the cases of Mpungu & Sons Transporters Ltd –v- Attorney General & another. In Jennifer Nyambura Kamau v Humphrey Nandi, the Court of Appeal, Nyeri, emphasized that fraud must be proved as a fact by evidence; and, more importantly, that the standard of proof is beyond a balance of probabilities.’

48. Therefore, it is obvious that the burden of proof was on the Plaintiff to prove the allegations of forgery.

49. The Plaintiff herein relied on the evidence of a document examiner to prove his allegations. It was the evidence of the document examiner that the signatures on the impugned documents were extremely dissimilar and not made by the same person.

50. Courts are guided by several principles when relying on evidence of handwriting experts. In Christopher Ndaru Kagina (supra) the court stated that -‘The fundamental characteristic of expert evidence is that it is opinion evidence. To be practically of assistance to a court, however, expert evidence must also provide as much detail as is necessary to allow the court to determine whether the expert’s opinions are well founded.While the test for admissibility of expert evidence differs from jurisdiction to jurisdiction, judges in all jurisdictions face the common responsibility of weighing expert evidence and determining its probative value. This is no easy task. Expert opinions are admissible to furnish courts with information which is likely to be outside their experience and knowledge. The evidence of experts has proliferated in modern litigation and is often determinative of one or more central issues in a case. Expert testimony, like all other evidence, must be given only appropriate weight. It must be as influential in the overall decision-making process as it deserves; no more, no less. To my mind, the weight to be given to expert evidence will derive from how that evidence is assessed in the context of all other evidence and the circumstances of the case including the real likelihood of the expert witness having been compromised or the real possibility of such witnesses using their expertise to mislead the court by placing undue advantage to the party in whose favour they offer the evidence. The court must be alert to such realities and act with caution while analyzing such evidence. It is important to bear in mind the criteria a court should use to weigh the probative value of expert evidence. This is because, while expert evidence is important evidence, it is nevertheless merely part of the evidence which a court has to take into account. Four consequences flow from this as reiterated by this court in the case of Stephen Wang'ondu Vs The Ark Limited.Firstly, expert evidence does not “trump all other evidence.” It is axiomatic that judges are entitled to disagree with an expert witness. Expert evidence should be tested against known facts, as it is the primary factual evidence which is of the greatest importance. It is therefore necessary to ensure that expert evidence is not elevated into a fixed framework or formula, against which actions are then to be rigidly judged with a mathematical precision. Secondly, a judge must not consider expert evidence in a vacuum. It should not therefore be “artificially separated” from the rest of the evidence. To do so is a structural failing. A court’s findings will often derive from an interaction of its views on the factual and the expert evidence taken together. The more persuasive elements of the factual evidence will assist the court in forming its views on the expert testimony and vice versa. For example, expert evidence can provide a framework for the consideration of other evidence. Thirdly, where there is conflicting expert opinion, a judge should test it against the background of all the other evidence in the case which they accept in order to decide which expert evidence is to be preferred. Fourthly, a judge should consider all the evidence in the case, including that of the experts, before making any findings of fact, even provisional one.’

51. In this case, the Plaintiff’s case that the 1st and 2nd Defendants forged his signatures and deceptively used it to sign the transfer of shares and the company resolution purporting to be the deceased was corroborated by the evidence of the document examiner who testified on behalf of the Plaintiff. There is no second expert opinion filed by the Defendants or which conflicts the Plaintiff’s expert opinion.

52. As observed elsewhere in this judgement, the circumstances of this case also impute doubt as to the honesty of the Defendants in favour of the Plaintiff’s case. Whereas the Plaintiff maintains that the Deceased never signed the documents, the Defendants’ case is that the Deceased signed the documents while in prison. There is no mention of the involvement of the Prison authorities who could have permitted the Defendants to access the incarcerated Plaintiff, now Deceased. Similarly, the 1st Defendant’s testimony did not assure certainty that the Deceased was in prison as the witness stated that he was not sure about this fact. Furthermore, the quick succession through which the resignation and reappointment of the Defendants’ late mother as director was done as well as how the documents were executed and shared transferred from the Deceased to the 1st Defendant and from the 1st and 2nd Defendants’ late mother to the 1st and 2nd Defendants leaves doubt as to whether there was good faith and honesty on the part of the Defendants and their deceased mother towards the Deceased Plaintiff.

53. The shares were transferred to the 1st and 2nd Defendants’ deceased mother. The evidence produced in Court confirmed that the Deceased Plaintiff did not authorize the transfers or at all. The transfer was thus a nullity. It was void in law and would not take effect. As stated in Macfoy vs United Africa Company [1961] 3 All ER 1169:“If an act is void, then it is in law a nullity. It is not only bad but incurably bad. There is no need for an order of the court to setting aside. It is automatically null and void without more ado, though it is sometimes convenient to have the court declare it to be so.

54. In the circumstances, I have said enough to show that the Plaintiff proved his case on a balance of probabilities.

Determination 55. In the upshot, the Plaintiffs’ suit is allowed as follows:-i.A Declaration be and is hereby issued that the process of changing the Directorship and the Shareholding structure herein is ultravires to the Memorandum and Articles of Association of the 3rd Defendant.ii.A Declaration be and is hereby issued that no valid interest was passed to the 1st and 2nd Defendants.iii.An Order be and is hereby issued directing the Registrar of Companies to rectify the Register of the 3rd Defendant and to revert or reflect the Shareholding and Directorship as it was before 2005 when the Register was unlawfully altered.iv.The Costs of the suit are awarded to Plaintiff to be paid by the 1st and 2nd Defendant.

DELIVERED, DATED AND SIGNED AT MOMBASA ON THIS 21ST DAY OF NOVEMBER, 2023. KIZITO MAGAREJUDGEJudgment delivered through Microsoft Teams Online Platform.In the presence of:-Miss Egesa for the PlaintiffMr. Munyoki for the Defendant