[2022] KEHC 1643 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAKURU

MISCELLANEOUS CIVIL APPLICATION NO. E128 OF 2021

PATRICK W MAKOKHA & 9 OTHERS.................................................APPLICANTS

VERSUS

EZEKIEL ANDATI & 3 OTHERS.........................................................RESPONDENTS

RULING.

1. The applicants and the respondents are members and shareholders of the 9th applicant, Tsimbavasi investment co. ltd. This company was registered for purposes of investments and in particular dealing with real estate.

2. The said company from the records seemed to have two properties one of them being land parcel number SHAWA/GICHEHA BLOCK 11/17(KAHUNGU) measuring three acres.

3. The members decided to subdivide the above parcel of land and in the process the applicants were aggrieved that there have been some underhand dealings especially on the financial part which they have been left in the dark. They blame the respondents for the mess including the way the above land was being subdivide and allotted.

4. Consequently, they filed the application herein dated 15th July 2021 seeking inter alia temporary orders of injunction to restrain the respondents from subdividing the aforementioned parcel of land and demanding that they call a general meeting within 30 days. They also prayed that they be granted leave to commence a derivative action against the respondents.

5. The application is supported by the affidavit of Evans Jumba, the 2nd applicant sworn on the same date and attached to it are payslips for the rest of the applicants indicating their membership.

6. When the matter came before this court the applicants were granted temporary orders pending the determination of the application inter partes.

7. The respondents have since filed a preliminary objection on a point of law as well as a lengthy replying affidavit by one Ezekiel Andati, the first respondent on his behalf and that of the co respondents.

8. In the said affidavit, he has enumerated the history of the company and how they purchased the land, subdivided, balloted and the difficulty they have had holding an AGM because of the Covid pandemic. He went on to state that some of the applicants are non-compliant for they have not paid up fully.

9. The court having looked at the application and the preliminary objection wishes to deal with the objection first.

10. The respondent’s objection is to the effect that the applicants ought to have complied with the provisions of Section 35 of the Articles of Association of the company which required that any dispute between the members should be resolved by way of arbitration and not filing a claim in the court directly.

11. For the above reason the respondents opined that the application is premature and the same ought to be disallowed at this stage.

12. The court has perused the said section of the articles attached to the supplementary affidavit of the 1st respondent. It states as hereunder;

“whenever any differences arise between the company on the one hand any of the members ,their executors ,administrators and or assignees on the other hand ,touching on the true intent or construction ,or the incidents or construction ,or constructions or the incidents or consequences of these articles ,or of the statutes ,or touching anything then or thereafter done ,executed ,omitted ,or suffered in pursuance of these articles ,or otherwise relating to the premises ,or to these articles ,or to any statute affecting the company or any of the affairs of the company ,every such differences shall be referred to the decision of any arbitration ,to be appointed by the parties in the difference ,or if they cannot agree upon a single arbitrator ,to the decision of two arbitrators ,of whom one shall be appointed by each of the parties in difference.”( underlining mine).

13. Clearly the intention of the subscribers was to have the matter as of first instance be resolved by way of arbitration. The issues laid before this court in my view are clear and very basic. If the applicants have any issues regarding the accounts, AGM, or subdivision of the parcel and balloting, then they should have referred the same to the team and in the event of any disagreement sought an arbiter as spelt out by Article 35 above.

14. This provision is for a good measure, namely, to hasten any litigation and avoid the long period taken in the corridors of justice.

15. In the premises, I find merit in the preliminary objection and allow the same. The application is premature and it is hereby dismissed with costs.The said costs shall not be borne by the company.

Dated signed and delivered via video link at Nakuru this 10th day of March 2022.

H K CHEMITEI.

JUDGE.