https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8651

Muri Mwaniki & Wamiti Advocates v Draft and Develop Engineers Ltd (Miscellaneous Cause E270 of 2019) [2026] KEHC 8651 (KLR) (Commercial and Tax) (19 June 2026) (Ruling) Neutral citation: [2026] KEHC 8651 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Miscellaneous Cause E270 of 2019 JWW Mong'are, J June 19, 2026 Between Muri Mwaniki & Wamiti Advocates Applicant and Draft and Develop Engineers Limited Respondent Ruling Introduction and Background 1.Before the court for determination is the Applicants’ Notice of Motion dated 31st July 2025 made under section 1A,1B, 3 & 3A of the Civil Procedure Act (Chapter 21 of the Laws of Kenya), and Order 22 Rule 35 and Order 51 Rules 1 & 10 of the Civil Procedure Rules seeking orders inter alia that Peter Kibe Mwangi and Mary W. Mungai being the current and former directors/shareholders do appear in court to be orally examined about the Respondent’s property or means to satisfy the decree of Kshs. 38,431,324.00 issued by the court on 1st August 2023. Further, that they must produce all relevant documents regarding the Respondent’s assets and books of account, including annual financial statements, title documents, and records of operations and if they fail to comply or after examination, the court should lift/pierce the corporate veil and hold them personally, jointly, and severally liable to pay the decretal sum plus costs and interest. 2.The application is supported by the grounds on its face and the affidavits of Martin G. Mwaniki, an advocate in the Applicants’ firm, sworn on 31st July 2025 and 19th December 2025. It is opposed by the Respondent through the replying affidavit of its director, Peter Kibe Mwangi, sworn on 24th October 2025. The parties supplemented their arguments by filing written submissions that I have considered and I will be making relevant references to the same in my analysis and determination below. Analysis and determination 3.From the Applicants’ submissions, the issues for the court’s determination are whether the current and former directors of the Respondent should be summoned and orally examined in court and whether its corporate veil should be pierced/lifted and that the directors be jointly and severally held personally liable to satisfy the decretal sum. As stated in the introductory part, the Applicants’ application is grounded under inter alia Order 22 Rule 35 of the Rules which provides as follows:“Where a decree is for the payment of money, the decree- holder may apply to the court for an order that-(a)the judgment-debtor;(b)in the case of a corporation, any officer thereof; or(c)any other person,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. 4.The parties agree that a company is a separate legal entity from its members and shareholders as espoused by the Court in the English case of Salmon vs Salmon [1987] AC 78, but that this position is not cast in stone as there are instances where the corporate veil of a company may be pierced and/or lifted. The Court of Appeal, in Riccatti Business College of East Africa Limited v Kyanzavi Farmers Company Limited [2016] KECA 763 (KLR) 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.” 5.The Applicants posit that in 2011, the Respondent instructed the Applicants to represent it in arbitration proceedings against the National Water Conservation & Pipeline Corporation regarding the Umaa Dam construction contract. The Applicants successfully represented the Respondent, leading to a consent agreement in January 2017 where the employer paid the Respondent Kshs.536,464,310.56/=. The Respondent did not pay the Applicants’ legal fees and an Advocate/Client Bill of Costs was taxed on 28th April 2021 at Kshs.38,431,324.00/= against the Respondent and a decree was issued on 1st August 2023 for that amount plus interest. A further Party & Party Bill of Costs Kshs.34,890.00/= was certified on 28th February 2024. 6.The Applicants claim they demanded payment multiple times, but no response was received and they obtained warrants of attachment and sale in July 2024, but the auctioneer reported no assets could be traced, the Respondent closed its physical offices at View Park Towers, Utalii Lane, and its whereabouts are unknown. That a company search shows Peter Kibe Mwangi as director/shareholder, that both he and Mary W. Mungai were directors during the arbitration and personally undertook to pay the legal fees after receiving the settlement. That after receiving the settlement, they cut off communication and closed offices, leaving the fees unpaid. The Applicants state that the directors should not be allowed to use the corporate structure to evade execution of the court’s decree and it is just and fair to pierce the corporate veil and hold them personally liable. 7.In response, Mr. Mwangi depones that the Respondent stopped operating in 2015, and all records have since been misplaced or cannot be retrieved. He claims he was never served with any application seeking judgment on taxed costs and that Ms. Mungai who was the Finance Director had since removed herself from the company and he does not know how she did this. He avers that all efforts to contact her have failed as she ignores calls and messages and that as Finance Director, she was responsible for all financial matters, records, audits, salaries, rent, and bank account records. 8.Mr. Mwangi further stated that although Kshs.536,464,310.56/= was awarded, only Kshs.168,000,000.00/= was deposited into the Respondent’s account because a substantial portion was deducted for tax and related expenses. He claims that upon receipt of the Kshs.168,000,000.00/=, she illegally withdrew the full amount from the company’s bank account and disappeared. He avers that the Applicants received Kshs.5,000,000.00/=as a deposit before arbitration commenced and the Respondent later proposed a fee of Kshs.15,800,000.00/=, but the Applicants refused to negotiate and said they would wait for the arbitration outcome. He claims that some documents were destroyed or misplaced by auctioneers sent by creditors who repeatedly raided the View Park Towers offices, leading to permanent closure. Mr. Mwangi describes himself as the Technical Director, responsible for soliciting work, organizing technical aspects of contracts, site visits, and worker inspection and he claims he was not in charge of financial affairs and would be out of place to answer financial questions. 9.He depones that that if anyone should be cross-examined about the Respondent’s financial affairs, it is Ms. Mungai, not him and he urges the court to strike out the application with costs to the Respondent. 10.It is clear that the decree against the Respondent is uncontested and that Warrants of Attachment were issued, but the auctioneer confirmed the company closed its known offices and has no traceable assets. Both Mr. Mwangi and Ms. Mungai were directors during the arbitration, signed the board resolution instructing the Applicants, the Respondent was awarded the Kshs. 536,464,310.56 settlement and Mr. Mwangi personally undertook that the Respondent would pay the legal fees. 11.I am in agreement with the Applicants’ submission that once the decree-holder shows the judgment debtor has means or the officer is in a position to provide relevant information, the court should summon the person for examination and that the rule does not require a high threshold (see Margaret Soares v Jane Otieno [2014] KEHC 6225 (KLR)]. Mr. Mwangi’s argument that he was "only a technical director" and not responsible for finances is not a valid defence to an Order 22 Rule 35 examination. The rule applies to any officer of a corporation, regardless of their specific role. His contradictory statements that the Respondent ceased in 2015 yet he signed a settlement in 2017 and his claims of having no knowledge yet he made email commitments, only strengthen the need for oral examination and disclosure. 12.If the oral examination is not satisfactory then the court will proceed to pierce the corporate veil because it is clear that after receiving Kshs. 536,464,310.56 award, they cut communication and closed offices and Mr. Mwangi’s allegations of theft by Ms. Mungai, if true, shows serious misconduct and leads the court to conclude that the company appears to have been used to defeat execution of a lawful decree. Conclusion and Disposition 13.In the foregoing, I allow the Applicants’ application dated 31st July 2025 as follows:1.Peter Kibe Mwangi and Mary W. Mungai are hereby ordered do attend Court on a date to be fixed, to be orally examined as to the Respondent’s affairs on whether it has any property or means of satisfying the decree issued on 1st August 20232.Peter Kibe Mwangi and Mary W. Mungai are hereby ordered to produce the Respondent’s documents including financial statements, bank records, title documents, and books of account within 30 days of this ruling3.In default prayers 1) and 2) above or upon the personal attendance and examination of the said directors, should their explanation be unsatisfactory, then based on the evidence presented in the Applicants’ affidavits showing a prima facie case of corporate veil manipulation, this court will order the piercing of the corporate veil of the Respondent4.Peter Kibe Mwangi and Mary W. Mungai will then be personally, jointly and severally liable to satisfy the decree issued on 1st August 20235.The costs of this application are awarded to the Applicants to be borne by the Respondent and the same is assessed at Kshs.20,000.00/=. DATED SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 19TH DAY OF JUNE 2026............................................................................J.W.W. MONGAREJUDGEIn The Presence OfMr. Lundi for Advocate/ApplicantMr. Mwangi holding brief Mr. Mburu for the RespondentAmos- Court Assistant