[2013] KEHC 1188 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

SUCCESSION CAUSE NO. 488 OF 2007

IN THE ESTATE OF BURTON KAMAU THURI – (DECEASED)

RULING

The application dated 18th October 2012 seeks discharge of the injunctive orders granted on 9th August 2012 exparte by Muchemi J.

The applicant complains that the orders are directed at him and they restrain him from intermeddling with the assets and property of Thuri Transporters Ltd. His other grouse is that the orders are final in nature, yet they were made exparte without the benefit of his side being heard. He further states that Thuri Transporters Ltd is a limited liability company with a separate existence from that of the deceased; and that its assets and profits except the 807 shares of the deceased should not be subject to succession.

The application was served. There is a reply by Naomi Wairimu Kamau, one of the administrators, videher affidavit sworn on 30th October 2012. She avers that the two sons of the deceased, who are the remaining directions of Thuri Transporters Ltd, did not contribute any funds to the incorporation of the family company in 1979 as all the capital and assets were contributed by the deceased through his company known as Wasafiri Bus Company. The two sons were brought into the company as shareholders and directors to hold the shares in the company in trust for and on behalf of their siblings most of whom were in school or minors at the time of the incorporation of the company. She argues that the bulk of the estate of the deceased was bought out of property acquired from proceeds from Thuri Transporters Ltd.

The orders complained of were made in an application dated 6th August 2012. The application sought restraining orders against Thuri Burton Kamau, Yuster Wanjiru Karanja and Joseph Kihiu Kamau with relation to their handling of various assets making up the estate of the deceased including capital assets and profits of Thuri Transporters Ltd. It was brought by the administrators of the estate. The application was granted exparte in terms of the prayers sought in the application.

The only issue for determination in this matter is whether the orders in question should be discharged. The courts have power to discharge injunctive or restraining orders where it is demonstrated that the same were wrongly granted or based on wrong principle. For injunctions granted under order 40 of the Civil Procedure Rules, rule 7 provides express power for discharge of injunctive orders. Restraining orders granted under inherent powers are dischargeable under the same inherent powers.

There is dearth of case law on discharge of exparte injunctions. In one of the few reported cases, Uunet Kenya Ltd -vs- Telkom Kenya Ltd and another (2004) 1 EA 348, Njagi J. discharged exparteorders on the basis that they were granted wrongly. It was the opinion of the court that under Order XXXIX rule 3(1) (now Order 40 rule -) 4(1) of the Civil Procedure Rules, before a court can proceed exparte to hear an application for an injunction, it is a condition precedent that it should be satisfied that any delay would defeat the object of granting the injunction. He further stated that the court should record the reasons for being so satisfied. Failure to comply with these conditions vitiates any orders so obtained and renders them non-effective. The High Court in that matter was guided by the decision of the Court of Appeal in Omega Enterprises (Kenya) Ltd -vs- Kenya Tourist Development Corporation and Others(1993) LLR 2525.

I have perused the record of proceedings of 9th August 2012 before Muchemi J. After counsel of the applicant urge for grant of the interim orders, the court recorded the following order:-

“Prayer 2 is hereby granted as prayed. Prayer 4 is granted on interim basis pending hearing of the application on 20th September 2012. ”

The court did not record that it was satisfied that any delay would defeat the object of granting the injunction, nor did it record the reasons that satisfied of the need to grant the orders. Going by the principles stated in Uunet Kenya Ltd -vs- Telkom Kenya Ltd and another and the Omega Enterprises (Kenya) Ltd -vs- Kenya Tourist Development Corporation and Others the exparte injunction orders are of no effect.

I am mindful of the fact that the decision in Uunet Kenya Ltd -vs- Telkom Kenya Ltd and Another was by a competent court of jurisdiction, but I note that Njagi J. applied a decision of the Court of Appeal in Omega Enterprises (Kenya) Ltd -vs- Kenya Tourist Development Corporation and Others. I am also aware that the two decisions were founded on the provisions of the Civil Procedure Rules on injunctions. The application where the impugned orders were made was founded not on the Civil Procedure Act and Rules, but on Sections 45and47 of the Law of Succession Act. Those provisions do not provide for grant of injunctions in probate cases. Indeed, they are general provisions. It is moot whether a probate court can issue orders of an injunctive nature. Although rule 63 of the Probate and Administration Rules did import certain provisions of the Civil Procedure Rules, it is noteworthy that it did not adopt the provisions governing grant of injunctive orders. That however is not to say that the probate court cannot grant preservatory orders in appropriate cases under inherent powers. The principles governing grant of preservatory or restraining orders under the inherent powers of the courts would be the same as those that govern injunctions made under the Civil Procedure Act and Rules.

It was argued by Mr. Kinuthia that some of the orders affected parties that are not party to the cause. He was referring specifically to the aspects of the order touching on Thuri Transporters Ltd. The orders restrain the respondents from dealing with “the capital assets and profits of Thuri Transporters Ltd of the deceased Burton Kamau Thuri”.He complains that the company is not subject to the succession process save for the 807 shares held by the deceased.

The material before me shows that the first respondent is a shareholder and director of Thuri Transporters Ltd. The orders granted effectively restrains him from dealing with the capital assets and profits of Thuri Transporters Ltd in his capacity as shareholder and director of the company.

It is classic company law that a limited liability company is a separate legal entity from its shareholders. It has perpetual succession, and th death of its shareholders should not in any way spell death to the company. In short it outlives its shareholders. Thuri Transporters Ltd was a separate legal entity from the deceased, and its capital and profits should not be affected of the succession process.

Limited liability companies are governed by the Companies Act and not the Law of Succession Act. If the administrators have issues regarding the affairs of Thuri Transporters Ltd, in terms of its overall management and the handling of its capital assets and profits they ought to proceed against the company and its directors in separate legal proceedings properly convened in line with the provisions of the Companies Act. The probate court is not the place for resolving disputes as between the company, its shareholders, directors and third parties. The orders relating to Thuri Transporters Ltd ought not to have been made. In any event the said Thuri Transporters Ltd, which was no doubt going to be effected by the orders, was not party to the proceedings.

For the reasons that I have given above, I am inclined to order the discharge of the interim exparte orders granted herein on 9th August 2012. The application dated 18th October 2012 in therefore allowed in the terms proposed in prayer (a). Costs shall be in the cause.

DATED, SIGNED and DELIVERED at NAIROBI this 8th DAY OF November, 2013.

W. M. MUSYOKA

JUDGE