https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11970

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI COMMERCIAL AND TAX DIVISION CORAM: F. MUGAMBI, J CIVIL SUIT NO. E216 OF 2019 COMM BETWEEN SIFATRONIX LIMITED .......................................... PLAINTIFF AND TUMAZ AND TUMAZ LIMITED ………………..... 1ST DEFENDANT JULIUS MWALE ………………………..……………. 2ND DEFENDANT AND EVANSON MWALE ………………………...………….. 1ST OBJECTOR MWAL-MART HOLDINGS LTD ………………….…. 2ND OBJECTOR RULING Introduction and Background 1. In a Judgment delivered on 17th February 2025, this Court entered judgment for the Plaintiff against the Defendants for the sum of Kshs. 17,128,300/= together with interest and costs. It is that Judgment that spurred a number of applications. Application dated 26th November 2025: HCCOMM No E216 OF 2019 RULING Page 1 2. The application was filed by the 2nd Defendant, seeking a stay of execution of the Judgment and resultant Decree therein, pending an intended appeal. That application was supported by the affidavit of JULIUS MWALE sworn on 26th November 2025. 3. It was opposed by way of Grounds of Opposition dated 15th December 2025 and 10th February 2026. The Plaintiff impugned the application and the purported appeal for failure to seek and obtain leave of the Court prior to lodging the Notice of Appeal as required under Order 42 Rule 1 of the Civil Procedure Rules and Section 79G of the Civil Procedure Act, filing the Notice of Appeal out of time without extension of time or leave of the Court, inordinate and unreasonable delay of over nine (9) months between entry of judgment and the application and lack of this Court’s jurisdiction. Application dated 18th December 2025: 4. Then came the second application filed again by the 2nd Defendant, seeking interim stay of execution pending the hearing of the application dated 26th November 2025. The application was allowed and HCCOMM No E216 OF 2019 RULING Page 2 interim stay orders were granted on 19th December 2025, on condition that the Applicant deposits the amount of Kshs. 17,128,300/= in Court within 30 days. 5. The application was opposed by way of a Replying Affidavit sworn by ELIAKIM OWALA on 12th May 2026. By the said affidavit the Plaintiff brought to the attention of the Court the Ruling of the Court of Appeal of 26th February 2026, dismissing the 1st Defendant’s application for leave to file an appeal out of time and extension of time. Application dated 21st December 2025: 6. The application was filed by the Plaintiff, seeking to vacate or vary the orders of 19th December 2025. The Plaintiff sought to alternatively have the 2nd Defendant ordered to deposit his passport in court to ensure he would be within the jurisdiction of the court until the orders of 19th December 2025 were complied with or to provide a guarantee and security for the due performance of the same orders. 7. The application was premised on the fact that the 2nd Defendant is a resident of the United States, a HCCOMM No E216 OF 2019 RULING Page 3 jurisdiction that falls outside the reach of this Court and does not reciprocally enforce orders of civil arrest. It was further stated that the 2nd Defendant has no known property registered in his name within the jurisdiction of this Honourable Court. Similarly, that the 1st Defendant also has no known property registered in its name within the jurisdiction of this Court. Consequently, the Plaintiff contended that the only viable means of enforcing the Court's order was through an open warrant, capable of being executed at any time the 2nd Defendant was found within this Court's jurisdiction. Application dated 26th June 2026: 8. The final application was filed by the Objectors, seeking to lift the proclamation and attachment in execution of the Decree dated 27th February,2025 vide a Proclamation Notice dated 24th June, 2026. The application was supported by the affidavit of EVANSON MWALE, described as the sole proprietor in the 1st Objector’s business and a Director in the 2nd Objector’s Company, sworn on 26th June 2026. 9. The Objectors contend that they are strangers to the instant suit, not having been made parties thereto, HCCOMM No E216 OF 2019 RULING Page 4 and that the attachment of their tools of trade was therefore illegal and unlawful. They further contend that the assorted items proclaimed are indeed tools of trade belonging to them, and that both the Decree and the proclamation notice were served on the wrong parties, none of whom are parties to this suit. The Objectors maintain that unless the auction is stopped, they will suffer irreparable loss, and that the proclamation itself is defective and unlawful, being contrary to Rules 6(f) and 12(b) of the Auctioneer's Rules, 1997. 10. The application was opposed through a Replying Affidavit sworn by AMON ROBERT OKUMU on 6th July 2026. The main grounds of opposition are that the 1st Objector was actively involved in the original suit as a witness for the 2nd Defendant and held himself out as a Director of the 1st Defendant, duly authorized by the 2nd Defendant. It was further averred that the 2nd Defendant had executed an authority to plead authorizing the said 1st Objector, as a fellow Director of the 1st Defendant, to appear, plead, sign documents, testify, and act on his behalf in this very suit. HCCOMM No E216 OF 2019 RULING Page 5 11. It was further averred that the Objectors and the Judgment Debtors share the same premises on land owned by the 1st Defendant, and that their businesses are essentially alter egos of the same individuals. That the 2nd Defendant is a key director and shareholder in the 2nd Objector Company, while the is the proprietor of the 1st Objector Company and is closely intertwined with the 1st Defendant. 12. It was contended that this is a classic case warranting the lifting of the corporate veil, to reveal that the Objectors are not independent entities but devices to shield the Judgment Debtors' assets. It was further averred that the attached items are not genuine tools of trade exempt from attachment, as the Objectors operate a supermarket-like business dealing in general merchandise, electronics, construction materials, and household goods. The proclaimed items, consisting of televisions, music systems, construction helmets, vests, gumboots, and the like, were stock-in-trade held for sale, not specialized tools essential to the running of a specific trade. HCCOMM No E216 OF 2019 RULING Page 6 13. It was further deposed that the purchase receipts and invoices annexed by the Objectors as "EM-3" raise serious questions of authenticity and appear to have been tailored for purposes of this application. The deponent stated that the said receipts had been forwarded to the Kenya Revenue Authority (KRA) for verification, and that KRA had confirmed the receipts to be invalid in the absence of accompanying ETR receipts, rendering them inadmissible. It was contended that the timing and pattern of the purported purchases strongly suggested that they were manufactured to obstruct justice. 14. It was averred, in conclusion, that the 2nd Defendant is central to both the 1st Defendant and the Objector companies, creating a clear conflict of interest and piercing any claim to separate legal personality. Analysis and Determination 15. I have considered the applications, responses and written submissions on record. Only two issues fall for determination, considering that the first 3 applications are, in substance, related to the question of stay of execution, and the fourth relates to the objection proceedings. HCCOMM No E216 OF 2019 RULING Page 7 On the Question of Stay of Execution: 16. I have not been provided with any evidence indicating whether there was compliance on the part of the Defendants with the orders of this Court granting interim stay of execution on 19th December 2025. In the absence of such evidence, I can only presume that execution proceeded by reason of non- compliance with those orders. It bears noting that, save for the objection application, no written submissions were filed by the parties in respect of this limb. 17. Be that as it may, the record is unambiguous that the purpose for which the stay of execution was sought by the Defendants was to enable them to lodge an appeal against the Judgment of this Court. In this regard, the Plaintiffs have drawn the attention of this Court to the Ruling of the Court of Appeal, dated 26th February 2026 (Sila Munyao, JA), dismissing the Defendants' application dated 24th November 2025. The learned Judge of Appeal expressed himself thus: “The applicant's counsel having failed to appear, and having failed HCCOMM No E216 OF 2019 RULING Page 8 to abide by the directions of Court to file written submissions in respect to the application, I hereby proceed to dismiss the application pursuant to Rule 58 (1) of the Court of Appeal Rules, 2022, with costs to the 1st respondent.” 18. In light of the foregoing, and given that the very appellate process for which stay was sought has now been dismissed for want of prosecution, I agree with the Plaintiffs that the applications and any concomitant prayer for stay, must be found to have been overtaken by events and is accordingly spent. The objection application: 19. The principal question for determination under this head is whether the Objectors have provided sufficient evidence to warrant the lifting of the proclamation dated 24th June 2026. The threshold governing applications of this nature is provided for under Order 22 Rule 51(1) of the Civil Procedure Rules, which provides as follows: “Any person claiming to be entitled to or to have legal or HCCOMM No E216 OF 2019 RULING Page 9 equitable interest in the whole or part of any property attached in execution of a decree may at any time prior to payment out of the proceeds of the sale of such property give notice in writing to the Court and to all the parties and to the decree-holder of his objection to the attachment of such property.’’ 20. It is now well settled that the success of an application brought under this provision turns entirely upon whether the objecting party has sufficiently demonstrated the existence of a legal or equitable interest in the goods attached. This principle finds firm support in the decision of this Court in Arun V Sharma Astana Raikundaha T/A Raikundaha & Co Advocates & 4 Others, (2014) KEHC 1412 (KLR). It was further reiterated in Stephen Kiprotich Koech V Edwin K. Barchilei; Joel Sitienei (Objector), [2019] eKLR, where the court held: “The core of objection proceedings, the objector must HCCOMM No E216 OF 2019 RULING Page 10 adduce evidence to show that at the date of the attachment there was a legal or equitable interest in the property(s) attached. For this purpose, he may raise an objection on the ground, inter alia, that he has some beneficial interest in the property. A beneficial interest is as much an interest within the meaning of the Rules as a legal interest in the property attached.” 21. To these authorities must be added a further and important distinction, namely, that which obtains where execution is levied against a company. It is trite law, and has been since the landmark , pronouncement in Salomon V Salomon & Co Ltd [1897] AC 22 (HL) that a company is a separate and distinct legal entity from its directors and shareholders. This principle finds statutory reinforcement in the Companies Act, by virtue of which a company, upon incorporation, acquires the capacity to sue and be sued, and to hold property, in its own name and right. HCCOMM No E216 OF 2019 RULING Page 11 22. Turning to the facts of the present case, the proclamation upon its face was expressly directed at the Defendants. The CR12 filed in Court shows that the only director and shareholder of the 1st Defendant is the 2nd Defendant. Technically therefore, execution can only issue against property belonging to either of the Defendants and not any other party. It is the Plaintiffs' contention that the Objectors are not, in truth, bona fide third parties, but are instead intricately bound up with the Defendants. No evidence has been produced to counter the information on the CR12 and particularly to link the Objectors to the 1st Defendant Company. 23. Additionally, the fact that the entities may share directorships is not in itself sufficient reason to attach goods belonging to a separate entity, absent of any fraud being proven. I have not been provided with any reason beyond speculation to show that the Objectors are conduits through which the Defendants are using to evade execution. 24. Additionally, the fact that the 2nd Objector, was actively involved in this suit as a witness for the Defendants or that the companies in question share HCCOMM No E216 OF 2019 RULING Page 12 common business premises is not enough to establish such fraud. These are, at their highest, circumstances giving rise to suspicion, and fall well short of the cogent evidentiary threshold the law demands. 25. In a bid to prove their ownership of the attached items the Objectors filed customer invoices and receipts spanning the period between 2021 and 2024, in the name of the 1st Objector. The said documents have been impugned by the Plaintiff. By didn’t of section 108 of the Evidence Act, the burden rested upon the Plaintiff to disprove the veracity of the documents. The Plaintiff only stated that the impugned documents had been forwarded to the Kenya Revenue Authority (KRA) for verification. However, in the absence of any confirmatory response from KRA, this Court is not at liberty to presume the outcome of such verification one way or the other. 26. The Defendants urge that the corporate veil ought to be lifted. That course, however, is not one to be embarked upon lightly, nor merely on account of shared directorships between the companies HCCOMM No E216 OF 2019 RULING Page 13 concerned, more so where, as here, no formal prayer for the lifting of the veil has in fact been made. It is trite that an applicant seeking to pierce the corporate veil must establish fraud, as affirmed in Jiang Nan Xiang V Cok Fas-St Company Limited, [2018] eKLR , Protus Opwora Wabwoto V Ken Manda & 2 Others, [2020] eKLR , and Charles Ray Makuto V Almakony Limited and Another, [2016] eKLR . No such case has been made out on the material before me. Disposition 27. For these reasons the Objectors’ application dated 26th June 2026 is successful as against the Plaintiffs who shall bear the costs of the application. 28. The applications dated 26th November 2025 and 18th December 2025 filed by the Defendants are dismissed and that dated 21st December 2025 filed by the Plaintiff is allowed. The Plaintiff shall have the costs of the applications. DATED, SIGNED AND DELIVERED AT NAIROBI THIS 31 ST DAY OF JULY 2026. F. MUGAMBI HCCOMM No E216 OF 2019 RULING Page 14 JUDGE Delivered in presence of: Mbaabu for Owala for respondents Agwata for the objector/applicants Court Assistant: Lillian HCCOMM No E216 OF 2019 RULING Page 15