[2020] KEHC 10046 (KLR)

[2020] KEHC 10046 (KLR)

The court found that the plaintiffs, although they had not sought leave at the time of filing, have a statutory right under section 239(1) of the Companies Act, 2015 to apply for permission to proceed with a derivative suit during the course of proceedings. The issue of capacity to sue as a derivative action requires the exercise of judicial discretion and consideration of evidence, and therefore cannot be determined as a pure point of law through a preliminary objection. The preliminary objection did not meet the threshold established in Mukisa Biscuits Ltd v West End Distributors, as it required the court to ascertain facts and exercise discretion. Consequently, the preliminary...

Citation
[2020] KEHC 10046 (KLR)
Parties
Plaintiff: Samuel Mburu Gitere; Plaintiff: Anne Wanjiru Gitere; Defendant: Kenneth Kimari Gitere; Defendant: David Wakangu Gitere; Defendant: National Bank of Kenya; Defendant: Chabrin Agencies Limited; Defendant: Co-operative Bank of Kenya Limited; Defendant: Lucas Waithaka Gitere
Court
High Court
Court Station
High Court at Nairobi (Milimani Commercial Courts)
Jurisdiction
Kenya
Judgment Date
27 August 2020
Case Number
Civil Case 119 of 2016
Procedural Posture
Civil Case / Ruling on Preliminary Objection
Outcome
preliminary objection dismissed
Judges
DAS Majanja
Legal Topics
Derivative Actions, Company Membership, Capacity to Sue, Preliminary Objection, Leave of Court
Source Language
English
Commercial and Corporate Derivative Actions Company Membership Capacity to Sue Preliminary Objection Leave of Court

Case Brief

Summary, issues, holding and outcome

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Parties

Samuel Mburu Gitere

Plaintiff

Anne Wanjiru Gitere

Plaintiff

Kenneth Kimari Gitere

Defendant

David Wakangu Gitere

Defendant

National Bank of Kenya

Defendant

Chabrin Agencies Limited

Defendant

Co-operative Bank of Kenya Limited

Defendant

Lucas Waithaka Gitere

Defendant

Procedural Posture

Civil Case / Ruling on Preliminary Objection

Legal Issues

  1. 1 Whether the plaintiffs have capacity to institute a derivative suit on behalf of the company without court permission.
  2. 2 Whether the issue of capacity can be raised as a preliminary objection.
  3. 3 Whether the preliminary objection meets the threshold set in Mukisa Biscuits Ltd v West End Distributors.

Ratio Decidendi

The court found that the plaintiffs, although they had not sought leave at the time of filing, have a statutory right under section 239(1) of the Companies Act, 2015 to apply for permission to proceed with a derivative suit during the course of proceedings. The issue of capacity to sue as a derivative action requires the exercise of judicial discretion and consideration of evidence, and therefore cannot be determined as a pure point of law through a preliminary objection. The preliminary objection did not meet the threshold established in Mukisa Biscuits Ltd v West End Distributors, as it required the court to ascertain facts and exercise discretion. Consequently, the preliminary...

Court Disposition

preliminary objection dismissed

Orders

  • The Preliminary Objection dated 26th April 2016 is dismissed.
  • Costs in the cause.