[2017] KEHC 3849 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT ELDORET

P&A 181 OF 2012

IN THE MATTER OF THE ESTATE OF ELIUD KIPCHIRCHIR YEGO ALSO KNOWN AS ELIUD K. YEGO (DECEASED)

BETWEEN

ROMANA CHEPKEMBOI YEGO...................1ST PETITIONER

DEBORA CHEPCHUMBA YEGO..................2ND PETITIONER

AND

JANE WANJIRU NJUGUNA............................1ST OBJECTOR

FRIDAH S. CHEPCHIRCHIR...........................2ND OBJECTOR

RULING

1. The petitioners in the summons dated 29th July 2013 moved this court seeking to have the properties known as Eldoret Municipality Block 13/490, Eldoret Municipality 13/492 and Eldoret Municipality 13/493 removed from the schedule of assets owned by the deceased the late Eliud K. Yego listed in the petition for grant of letters of representation to his Estate. The petitioners (applicants) also pray that costs of the application be in the cause.

2. The application is premised on grounds stated on its face. It is supported by an affidavit sworn on 29th July 2013 by the 1st petitioner Romana Chepkemboi Yego.

3. The applicants contend that the deceased died intestate on 31st March 2012; that at the time of his death, he was one of the major shareholders and directors of a duly incorporated limited liability company known as Roschild Properties Ltd; that when filing a petition for grant of letters of administration to his Estate, the petitioners erroneously included properties owned by the company in the list of properties owned by the deceased; that the court should grant the orders sought since the company is a separate and distinct legal entity different from its shareholders.

4. The application is opposed by the objectors. The 1st objector swore and filed a replying affidavit on 13th May 2015 while the 2nd objector filed grounds of objection dated 23rd October 2013. They both advanced the view that both the company’s shares and properties form part of the deceased’s Estate and are subject to distribution to his beneficiaries through administrators of the Estate.

5. By consent of the parties, the application was prosecuted by way of written submissions. The petitioners filed three sets of submissions namely, the submissions filed on 2nd November 2013; 9th December 2015 and supplementary submissions filed of 5th April, 2017. Upon application by the petitioners’ counsel, the submissions filed on 2nd November 2015 were expunged from the court record. On their part, the 1st and 2nd objectors filed their written submissions on 8th October 2015 and 24th November 2015 respectively.

6. In support of their written submissions, the parties relied on the following persuasive authorities;

Patrick Kibathi Kigure and 2 others V Charles Kigure GATHOKA (2015) eKLR; Re Estate of Burtin Kemed Thuri (2013)eKLR;Jane Gathoni Muraya Kanyutu v Mary Wanjiku Kanyoru & 9 others (2013)eKLR; In the matter of the Estate of Yakub Umardin Karimbux (deceased) 2015 eKLR.

7. After considering the application, the affidavits filed by the parties, the grounds of opposition filed by the 2nd objector, the written submissions filed on behalf of all the parties and the authorities cited, I find that it is not disputed that at the time of his death, the deceased and the 1st petitioner had one share each in Roschilds Properties Ltd, a limited liability company incorporated on 6th September 1991. It is also not disputed that this company was the registered owner of the following properties.

Eldoret Municipality Block 13/491

Eldoret Municipality Block 13/492

Eldoret Municipality Block 13/493

As stated earlier, in the petition for grant of letters of administration of the deceased’s Estate, the above properties (hereinafter the suit properties) were included in the inventory of assets comprising the Estate.

8. Having considered the pleadings and the rival submissions by the parties, I find that the only issue for my determination in this application is whether the aforesaid properties were wrongly or properly included in the inventory of assets belonging to the deceased and whether the applicants are entitled to the orders sought.

9. The starting point in my view should be a determination of what constitutes the Estate of a deceased person. Section 3 of the Law of Succession Act Chapter 160 of the Laws of Kenya defines an Estate to mean the free property of a deceased person. And free property is defined as the property which a deceased person was legally competent to dispose freely during his lifetime and in which his interest had not been terminated by his death.

10. As correctly submitted by the parties, it is now settled law that a duly incorporated company is a separate and distinct legal entity different from is shareholders and directors. This is why it has perpetual succession and has the power to acquire property in its own name.

See: Salomon vs Salomon (1897) AC 22 and Section 16(2) of the Companies Act (Now repealed) which was the law in force at the time the instant succession cause was instituted.

11. In this case, the certificates of lease annexed to the 1st petitioner’s supporting affidavit conclusively proves that the suit properties were at the time of the deceased’s death registered in the name of Roschilds Properties Ltd. They were therefore owned by the company and not the deceased. The deceased was only a shareholder in the company and he was only entitled to the share or shares he held and not the assets of the company. The shares of a company are different or are not synonymous with the assets owned by the company as insinuated by the objectors in their submissions.

12. Section 75 of the Companies Act (repealed) provides that the shares or other interest of any member in a company shall be movable property transferable in a manner provided by the articles of the company. Under Article 9 (VIII) of Roschild Properties Ltd articles of association annexed to the supporting affidavit, the shares of a deceased member could be transferred to his rightful heirs by the Executor or Administrator of his Estate.

13. Given the foregoing, there cannot be any doubt that what ought to have been included in the inventory of assets belonging to the deceased in the petition should have been properties which the deceased owned prior to his death which included his share in the company. This is the property that constituted his estate which was subject to administration and distribution by a probate court. The suit properties belonged to the company and not the deceased. They did not therefore form part of his estate and were consequently not liable to distribution to his beneficiaries.

14. Having reached the above finding, it necessary follows that the inclusion of the suit properties in the petition herein was erroneous as the same were not owned by the deceased at the time of his death.

15. For the foregoing reasons, I am satisfied that the applicants are entitled to the orders sought. I thus find merit in the summons dated 29th July 2013 and it is hereby allowed. Under Section 47 of the Law of Succession Act and Rule 73 of the Probate and Administration Rules, I order that the suit properties be removed from the list of assets owned by the deceased’s as indicated in the petition filed herein. I also order that the petitioners do file and serve an amended copy of Form P&A 5 listing only the assets legally owned by the deceased prior to his demise excluding the suit properties. This should be done within the next 30 days.

16. On costs, the order that best commends itself to me given the nature of the orders sought is that costs of the application shall be costs in the cause.

It is so ordered.

C. W. GITHUA

JUDGE

DATED, SIGNEDandDELIVERED atELDORETthis 20th day of July 2017.

In the presence of:-

Mr. Miyienda Holding brief for Gicheru & Company for the Petitioners

Mr. Lobolia Court Assistant

No appearance for the 1st and 2nd Objector.