https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8429

Lubulellah & Associates v Zadok Furniture Systems Limited (Commercial Miscellaneous Application E068 of 2021) [2026] KEHC 8429 (KLR) (Commercial and Tax) (12 June 2026) (Ruling) Neutral citation: [2026] KEHC 8429 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Commercial Miscellaneous Application E068 of 2021 MN Mwangi, J June 12, 2026 Between Lubulellah & Associates Decree holder and Zadok Furniture Systems Limited Judgment debtor Ruling 1.The applicant filed a Notice of Motion application dated 23rd September 2024 pursuant to the provisions of Sections 3A & 63(e) of the Civil Procedure Act, Order 22 Rule 35 & Order 41 Rule 1 of the Civil Procedure Rules, 2010. The applicant prays for orders that the Court issues summons to the judgment-debtor’s Directors, Victor Swanya Ogeto & Janet Nyanduko Ogeto, requiring them to personally attend Court and produce the company’s books of account, with all relevant documentary evidence relating to the judgment-debtor’s means, property, and assets, for purposes of examination on the company’s ability to satisfy the decree issued in favour of the decree holder/applicant. The applicant further prays that in the event of non-compliance with the said order, the Court be pleased to lift the corporate veil of the judgment-debtor and hold the said Directors personally liable for the decretal sum. 2.The application is premised on the grounds on the face of the Motion, and it is supported by an affidavit sworn on the same day by Mr. Eugene Lubale Lubulellah, an Advocate of the High Court of Kenya and the Managing Partner of the applicant law firm. Mr. Lubulellah averred that a decree dated 14th December 2022 was issued in favour of the applicant against the respondent for Kshs.14,706,112.35. He averred that pursuant to the said decree, the applicant instructed Messrs. Moran Auctioneers to execute, but upon visiting the respondent’s registered office at Panari House, Off Mombasa Road, Embakasi East, the Auctioneers established that the company neither trades nor operates from that address. He deposed that instead, a different entity known as UR Homes Limited was found operating there, whose Manager indicated that it had occupied the premises for over 14 years and was unaware of the respondent. 3.Mr. Lubulellah stated that save for two motor vehicles, Registration Numbers KCQ 786L Land Cruiser and KCZ 306F Land Cruiser, which were proclaimed at the Directors’ premises, the applicant has no other known assets capable of satisfying the decree. He further stated that the aforesaid motor vehicles have since been concealed and unlawfully transferred into the joint names of microfinance credit providers to frustrate execution. Mr. Lubulellah averred that the respondent received Kshs.90,000,000/= from Victoria Furnitures Limited pursuant to a Deed of Settlement dated 27th February 2020 and also received substantial sums following an arbitration with Kenya Pipeline Company Limited, yet it has refused to satisfy the decree. He contended that the respondent company is being used as a cloak or sham to shield its Directors from liability, that the said Directors have concealed assets to evade execution, and that the proceeds from the proclaimed assets are unlikely to satisfy the decretal sum. 4.In opposition to the application herein, the respondent filed Grounds of Opposition dated 10th December 2024, raising the following issues: –i.That the application dated 23rd September 2024 offends the established laws and principles which define companies as corporate and separate legal entities, different from its Directors, as spelt out in the case of Salomon v Salomon & Co. Ltd. [1897] AC 22 and reiterated by the Kenyan Court of Appeal in Victor Mabachi & Another v Nurturn Bates Ltd, Civil Appeal No. 247 of 2005 [2013] eKLR, as follows:“[A company] as a body corporate, is a persona jurisdica, with separate independent identity in law, distinct from its shareholders, Directors and agents unless there are factors warranting a lifting of the veil.”ii.That the application fails to adhere to the established principle that it is only in exceptional circumstances that a veil of incorporation can be lifted, that is, in cases where the corporate veil is used either by the Shareholders and/or Directors to perpetrate fraud or improper conduct.iii.That the application should be dismissed in limine, because it does not take into account the principles established by the Court in Corporate Insurance Brokers Limited [2002] EA 41 [cited in Ganesh Engineering Works Limited & 3 others v Yamini Builders Limited [2021] eKLR] where Ringera J., (as he then was), found that:-“The veil of incorporation is not to be lifted merely because the company has no assets or it is unable to pay its debts and is thus insolvent. In such a situation, the law provides for remedies other than the director of the company being saddled with the debts of the company”iv.That the application does not meet the required threshold on the circumstances under which a veil of incorporation can be lifted, as explained by the Court of Appeal in the case of Riccatti Business College of East Africa Limited v Kyanzavi Farmers Company Limited [2016] eKLR, where it held that:-“The Court may lift the corporate veil in exercising its inherent jurisdiction to do justice and fairness for the ends of justice. This jurisdiction may be exercised only in special circumstances where the Court finds improper conduct, fraud or when a company is a sham, acting as an agent of the shareholders or evading tax revenues.”v.That the application is not supported by any credible evidence that can proof (sic) that there was either improper conduct, fraud or that the company is a sham, is acting as an agent of the Shareholders or that it is evading tax revenues.vi.That the grounds in support of the application are mere speculation and unfounded claims against the Judgment Debtor and its Directors.vii.That for the above reasons, the Judgment Debtor prays that the application dated 23rd September, 2024 be dismissed with costs. 5.The instant application was canvassed by way of written submissions. The applicant’s submissions were filed by the law firm of Lubulellah & Associates Advocates on 11th April 2025, whereas the respondent’s submissions were filed by the law firm of Swanya Law Advocates on 25th July 2025. 6.Mr. Wendoh, learned Counsel for the applicant submitted that the facts deposed to in the applicant’s supporting affidavit remain uncontroverted, as the respondent filed only grounds of opposition and no replying affidavit. He referred to the cases of Nyakundi & 68 others v Principal Secretary, State Department of Planning, Ministry of Devolution and Planning & another [2016] KEHC 467 (KLR) and Kennedy Otieno Odiyo & 12 Others v Kenya Electricity Generating Company Limited [2010] KEHC 282 (KLR), to support his assertion. He further submitted that it is trite law that grounds of opposition constitute mere general averments and do not amount to a proper rebuttal of factual depositions. He stated that the material facts set out by the applicant in its supporting affidavit stand unchallenged. 7.Mr. Wendoh submitted that the decree herein arose from a taxed Advocate -Client Bill of Costs and remains unsatisfied despite diligent but fruitless execution efforts. He relied on the provisions of Order 22 Rule 35 of the Civil Procedure Rules, 2010, and the case of Masefield Trading (K) Ltd v Rushmore Company Ltd & another [2008] KEHC 798 (KLR), and submitted that the applicant has made out a case for cross-examination of the respondent’s Directors and lifting of its corporate veil. He cited the case of Jiang Nan Xiang v Cok Fas-St Company Limited [2018] KEHC 10230 (KLR), and submitted that the veil of incorporation may be lifted not only in cases of fraud but wherever the company is a sham, or where Directors act recklessly, wrongfully, or in a manner that leaves creditors with unpaid judgments. 8.Ms Wangare, learned Counsel for the respondent acknowledged that Order 22 Rule 35 of the Civil Procedure Rules, empowers the Court to summon a judgment-debtor or in the case of a corporation, its officers for oral examination regarding debts owed to the company and its means or property available to satisfy a decree. She contended that the grounds and evidence presented by the applicant are insufficient to warrant the summoning and cross-examination of the respondent’s Directors. Counsel argued that there is no credible evidence demonstrating meaningful attempts at execution, beyond allegations that Auctioneers failed to trace its offices or assets. She disputed claims that two motor vehicles, Reg. Nos. KCQ 786L & KCZ 306F were unlawfully transferred to defeat execution and asserted that no documentary proof of such transfer has been produced. Further, she contended that no proof of actual payment arising from the alleged Deed of Settlement has been tendered and in any event, the alleged payment pre-dates the instant application by several years. 9.Ms Wangare submitted that the application herein is premised on the erroneous assumption that the corporate veil has already been pierced, yet no proper grounds have been advanced to justify such relief. She cited the Supreme Court case of Communications Commission of Kenya & 5 others v Royal Media Services Ltd & 5 others [2014] KESC 53 (KLR) and the Court of Appeal case of Riccatti Business College of East Africa Limited v Kyanzavi Farmers Company Limited [2016] KECA 763 (KLR), and stated that on the issue of whether the respondent’s corporate veil should be lifted in the event of non-compliance with Summons, the respondent was invoking the doctrine of ripeness and argued that such a determination would be premature and speculative. Counsel underscored the foundational principle of separate corporate personality established in Salomon v Salomon & Co. Ltd [1897] AC 22. She contended that the instant application is founded on speculation, lacks credible evidence of fraud or improper conduct, fails to meet the established legal threshold for piercing the corporate veil, and ought to be dismissed with costs. ANALYSIS AND DETERMINATION. 10.I have considered the instant application, the grounds on the face of it, and the affidavit filed in support thereof. I have also considered the grounds of opposition filed by the respondent and the written submissions by Counsel for the parties. The issues that arise for determination are -i.Whether the respondent’s Directors should be summoned to attend Court for examination on oath and production of the respondent company’s books of account, with all relevant documentary evidence relating to the respondent’s means, property, and assets; andii.Whether the respondent’s corporate veil should be lifted and its Directors held personally liable for the respondent company’s debt to the applicant.Whether the respondent’s Directors should be summoned to attend Court for examination on oath and production of the respondent company’s books of account, with all relevant documentary evidence relating to the respondent’s means, property, and assets. 11.It is not in contest that a decree was issued by the Court on 14th December 2022 in favour of the applicant against the respondent for Kshs.14,706,112.35. It is also not disputed that to date, the respondent has failed to satisfy the said decree. The applicant contended that efforts to execute the decree have been unsuccessful, as the respondent does not operate from its purported registered office, as the premises are being occupied by a different entity that has allegedly been in occupation for over 14 years, and professes no knowledge of the respondent. 12.The applicant further contended that apart from two proclaimed motor vehicles, Registration Numbers KCQ 786L and KCZ 306F, it is unaware of any other assets capable of satisfying the decree. It contended that the said vehicles have since been concealed and irregularly transferred into the joint names of microfinance credit providers to defeat execution. The applicant went further to state that despite the respondent having received Kshs.90,000,000/= from Victoria Furnitures Limited under a Deed of Settlement dated 27th February 2020, as well as additional substantial sums following an arbitration with Kenya Pipeline Company Limited, it has refused to settle the decretal sum, thereby using the company as a sham to shield its Directors from liability and to frustrate execution. 13.Examination of Judgment debtors, officers or any other persons as to property is provided for under Order 22 Rule 35(b) of the Civil Procedure Rules, 2010, which states that: –Where a decree is for the payment of money, the decree-holder may apply to the court for an order that in the case of a corporation, any officer thereof be orally examined as to whether any or what debts are owing to the judgment-debtor, and whether the judgment-debtor has any and what property or means of satisfying the decree, and the court may make an order for the attendance and examination of such judgment-debtor or officer, or other person, and for the production of any books or documents. 14.The purpose of the aforesaid provisions is to facilitate discovery in aid of execution and to enable a decree-holder obtain information necessary to realize the fruits of its judgment. The above provisions were considered in the case of Ultimate Laboratories v Tasha Bio service Limited NBI HCCC No. 1287 of 2000 (unreported) cited in Tropical Wood Limited v Samilisinternatinal Investments [2017] KEHC 579 (KLR), wherein the Court observed that-Two things emerge from the above proposition. One, the power of the Court to summon a person to attend and be examined under Order 22 Rule 35 is circumscribed within the purpose set out in the Rule. That is;…as to whether any or what debts are owing to the judgment debtor, and whether the judgment debtor has any and what property or means of satisfying the decree.I therefore, take the view that, as long as the Applicant has shown that the Respondent is in a position to provide information in the nature of discovery… as to whether any or what debts are owing to the judgment debtor, and whether the judgment debtor has any and what property or means of satisfying the decree, the Court should summon the person to attend and be examined in relation to the purpose stated in the Rule. 15.This Court has the powers to summon any officer of a judgment debtor company to be examined on oath about the debts owed by the company and to determine whether the company has property or means to satisfy a decree. It is not disputed that a decree was issued in favour of the applicant for Kshs.14,706,112.35 arising from a taxed Advocate - Client Bill of Costs, and that the same remains unsatisfied. As correctly submitted by Counsel for the applicant, the respondent did not file a replying affidavit to controvert the factual depositions in the applicant’s supporting affidavit, but filed only grounds of opposition. 16.Grounds of opposition, being general points of law, do not amount to evidence and cannot rebut factual matters deponed to, on oath. In the case of Nyakundi & 68 others v Principal Secretary, State Department of Planning, Ministry of Devolution and Planning & another (supra), the Court in addressing a claim where the respondent had failed to file a replying affidavit held as hereunder –As stated earlier the respondents did not file any replying affidavit to challenge and/or controvert the sworn averment by the petitioners that they were victims of the post-election violence. Ground of Opposition which were filed are only deemed to address issues of law. They are general averments and cannot amount to a proper or valid denial of allegations made on oath. (See Mereka & Co Advocates v Unesco Co Ltd 2015 eKLR, Prof Olaka Onyango & 10 others v Hon Attorney General Constitution Petition No 8 OF 2014 and Eliud Nyauma Omwoyo & 2 others v Kenyatta University). The respondents have failed to refute specifically the allegations in the petitioner’s sworn affidavit in support. Failure to file a replying affidavit can only mean that those facts are admitted. Therefore, in the absence of any evidence to the contrary I find that the petitioners are indeed victims of the 2007/2008 post-election violence.” 17.From the above decision, it is clear that in the absence of a replying affidavit, the factual depositions contained in the applicant’s supporting affidavit are deemed uncontroverted. In this case, the respondent merely filed grounds of opposition without responding to the affidavit evidence. Consequently, this Court finds that the averments set out in the applicant’s supporting affidavit remain unrebutted, and the application is therefore effectively unopposed. 18.The above notwithstanding, this Court still has a duty to consider the application herein on its merits. 19.On perusal of the annexures attached to the applicant’s supporting affidavit, I am satisfied that the applicant has demonstrated that attempts at execution were made, but it was established that the respondent was not operating from its registered office. Further, although two motor vehicles were proclaimed, the said vehicles have since been concealed and transferred to third parties. The respondent has not placed before this Court any material to show whether it received the sum of Kshs.90,000,000/= from Victoria Furnitures Limited pursuant to the Deed of Settlement dated 27th February 2020 annexed to the applicant’s supporting affidavit, and if so received, how the said funds were applied. This Court however notes that the said Deed of Settlement was executed prior to the issuance of the decree herein. 20.At this stage, this Court is not called upon to determine whether the alleged conduct amounts to fraud. The threshold under Order 22 Rule 35 of the Civil Procedure Rules, 2010, is not proof of fraud or improper conduct, but whether the intended examinees are in a position to provide information relating to the judgment-debtor’s assets and means. 21.Victor Swanya Ogeto & Janet Nyanduko Ogeto are the current Directors of the respondent company as per the respondent’s CR-12 dated 6th September 2021, annexed to the applicant’s affidavit in support of the application herein. I am therefore satisfied that the respondent’s Directors, being the controlling minds of the respondent company, are best placed to provide information regarding the company’s assets, financial dealings, and ability to satisfy the decree herein. 22.This Court therefore finds that the applicant has demonstrated sufficient basis to warrant the summoning of the respondent’s Directors for examination on oath and for production of the company’s books of account and relevant documents concerning its assets and means.Whether the said Directors should be held personally liable for the respondent company’s debt to the applicants. 23.A determination as to whether the respondent's Directors should be held personally liable for the respondent company’s debt, should be preceded by determining if there are sufficient reasons to pierce or lift the respondent’s corporate veil. This determination can only properly be made after examination of the respondent company’s Directors on oath, and on production of the company’s financial records and means of satisfying the decretal sum owing to the applicant, and for the said Directors to produce relevant financial documents for the period in dispute. 24.In the circumstances, I conclude that this issue shall be addressed after the cross-examination of the respondent company’s Directors. 25.In the end, this Court finds that the instant application is merited. It is allowed in the following terms: -i.I hereby issue Summons to the respondent company’s Directors, namely, Victor Swanya Ogeto & Janet Nyanduko Ogeto, to attend Court for oral examination under oath as to the respondent’s assets, liabilities and/or means of satisfying the decretal sum herein;ii.An order is hereby issued directing the respondent company’s Directors, namely, Victor Swanya Ogeto & Janet Nyanduko Ogeto, to produce the respondent company’s books of account, with all relevant documentary evidence relating to the respondent’s means, property, and assets;iii.The aforesaid Directors shall be examined on the contents of the said documents/records at a date to be set by the Court;iv.Prayer (2) of the instant application is hereby held in abeyance and shall be determined after examination on oath of the respondent’s Directors and production of the respondent’s financial records; andv.Costs shall be in the causeIt is so ordered. DATED, SIGNED AND DELIVERED AT KIAMBU ON THIS 12TH DAY OF JUNE 2026. RULING DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORM.NJOKI MWANGIJUDGEIn the presence of:-Mr. Lubullelah Eugene for the decree holder/applicantMr. Kilonzo h/b for Ms Wangare for the judgment debtor/respondentMs Julia – Court Assistant.