[2000] KEHC 50 (KLR)
The court held that the appropriate time to consider the merits of the objections raised by the respondents—namely, illegality and limitation—is not at the leave stage, but after the suit has been filed and the pleadings are before the court. The court found that, prima facie, the intended plaintiff (the liquidator)...
Source-derived case information.
- Citation
- [2000] KEHC 50 (KLR)
- Parties
- Applicant: Pan African Credit and Finance Limited (by Liquidator); Respondent: Kawahanja Limited; Respondent: James Kanyotu
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Law Courts)
- Jurisdiction
- Kenya
- Case Number
- Winding Up Cause 15 of 1995
- Procedural Posture
- Winding Up Cause / Ruling on Application for Leave to Institute Suit
- Outcome
- application allowed
- Legal Topics
- Company Liquidation, Leave to Sue, Creditor Rights
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Pan African Credit and Finance Limited (by Liquidator)
Applicant
Kawahanja Limited
Respondent
James Kanyotu
Respondent
Procedural Posture
Winding Up Cause / Ruling on Application for Leave to Institute Suit
Legal Issues
- 1 Whether the liquidator requires leave of court to institute proceedings against the respondents on behalf of the company.
- 2 Whether the objections raised by the respondents (illegality and limitation) should be determined at the leave stage.
Ratio Decidendi
The court held that the appropriate time to consider the merits of the objections raised by the respondents—namely, illegality and limitation—is not at the leave stage, but after the suit has been filed and the pleadings are before the court. The court found that, prima facie, the intended plaintiff (the liquidator) appears to have a cause of action against the proposed defendants. Therefore, the application for leave to institute proceedings was allowed, with costs in the cause.
Court Disposition
application allowed
Orders
- Leave is granted to the liquidator to institute suit against Kawahanja Limited and James Kanyotu.
- Costs in the cause.
Full Case Text
Judgment text and source record
19 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
AT NAIROBI (NAIROBI LAW COURTS)
Winding Up Cause 15 of 1995
In the Matter of Pan African Credit & Finance Ltd & In the Matter of Companies Act
Ruling.
This is an application under Section 228 and 241 (a) of the Companies Act by the Liquidator of Pan African Credit and Finance Limited for leave to institute a suit against Kawahanja Limited and James Kanyotu. Section 228 deals with proceedings against the company while Section 241 (a) deals with actions to be brought in the name of the company is the appropriate section.
The application was served on these last two persons and they filed Grounds of Objection to the orders sought for on the grounds that
1. The claim is tainted by illegality and
2. The claim is time barred.
The objectors further denied owing any money and claim the Applicant does not come to court with clean hands for the reasons alleged.
The objection are serious matters which will have to be addressed by the Court. The question arises when.
The power of the court to allow actions to be brought is in the court’s discretion. Clearly if assets are to be collected in by the Receive for the benefit of the creditors then the court should readily allow actions to be filed to do so.
Is this the appropriate time for the court to go into the merits of the case to see if it is likely to succeed or fail.
In my view it is not, as the suit has not as yet been filed and the court has not seen the averments to be made in the plaint. If after filing it can be struck out for any reason then the court should go into that aspect of the matter or an application made for the purpose.
I do not feel able at this point in time to say that the claim is illegal or that it is time barred as prima facie the intended Plaintiff appears to have a cause of action against the proposed Defendants.
In the result, I allow the application with costs in the cause.
November 16, 2000
Ransley, Commissioner of Assize