[2019] KECA 530 (KLR)

IN THE COURT OF APPEAL

AT MOMBASA

(CORAM: VISRAM, KOOME & MURGOR, JJ.A.)

CIVIL APPEAL NO. 52 OF 2018

BETWEEN

SPIRE BANK LIMITED...................................................APPELLANT

AND

LAND REGISTRAR................................................1STRESPONDENT

ABDULGADER SHARIF SALEH.........................2NDRESPONDENT

NUR SHARIFF OMAR...........................................3RDRESPONDENT

(Appeal from the ruling and order of the of the Environment and Land Court

at Mombasa (Yano, J.)delivered on 30thJanuary 2018

in ELC Judicial Review Case No. 7 of 2017)

JUDGEMENT OF THE COURT

This appeal arises from the ruling of the Environment and Land Court (Yano, J.)which struck out the appellant’s Notice of Motion dated 11th May 2017 that sought Judicial Review orders where it had been alleged that the appellant had not complied with the provisions of order 4 rule 1 (4) of the Civil Procedure rulesby failing to file a resolution and or authority allowing Josephine Musembi to swear the verifying affidavit in support of the Judicial Review Petition filed in terms of order 53 rule 1 (2) of the Civil Procedure rules.

As a brief background, sometime in 2003, the appellant then operating under the name of Southern Credit Corporation Limited, advanced certain loan facilities to the 2nd respondent, his partners trading as Jingo Tours and Safaris. The 2nd respondent’s property namely Mombasa/Block XVII/797 (the charged property)was provided as security for the loan. Jingo Tours and Safaries defaulted in the loan repayments, and the appellant exercised its power of sale of the charged property. The 2nd respondent challenged the sale, in HCCC No. 245 of 2010, Abdulgader Shariff Selah & Jamal Shariff Swaleh T/A Jingo Tours & Safaries Limited vs Southern Credit Banking Corporation Limited & Anotherand sought an injunction to restrain the appellant from disposing of the property. The court declined to grant the injunction paving way for the sale by public auction.

The charged property was sold on 25th November 2016. On 9th December 2016, the 2nd and 3rd respondents registered restriction against the title stopping the transfer of the charged property to the purchaser. This prompted the appellant to file Judicial review proceedings against the Registrar of Lands to quash the decision to register the restriction and caution against the title.

In a ruling delivered on 30th January 2018, the Judicial review proceedings were struck out for reasons that there was no board resolution authorizing the Corporation Secretary, Josephine Musembi to bring the proceedings, as a consequence of which the suit was rendered incompetent.

The appellant, Spire Bank Limited the Ex-Parte applicant, had sought for and was granted leave to commence judicial review proceedings subsequent to which it filed a Notice of Motion dated 17th May, 2017 seeking that;

i) An order of certiorari do issue to bring into this court for purposes of quashing and to quash the restriction and or decision of the Respondent purporting to restrict any dealing over Title No. MOMBASA/BLOCK XVII/797.

ii) An order of mandamus do issue compelling the Respondent herein, to remove and or cause to be removed the Restriction entered on Title No. Mombasa/Block XVII/797 on 9thDecember 2016 as entry No. B9 and on 14thDecember 2016 as entry No. B10 and any other subsequent Restrictions and or caveat cautions however put on the suit property.

iii) An order of prohibition do issue prohibiting the Respondent and the 1stand 2ndinterested parties from making or causing to be made any Restriction, caution, caveat, encumbrance and or any impediment whatsoever on the sale, Transfer, alienation, leasing, charging and or disposing of the suit property being title No. MOMBASA/BLOCK XVII/797.

iv) Costs of the proceedings. The application is founded upon the grounds set out in the statutory statement and the verifying Affidavit of Josephine Musembi annexed thereto.

The appellant’s judicial review application was supported by the statutory statement and verifying affidavit of Josephine Musembi, the appellant’s corporation secretary who deponed that she was competent and authorized to make and swear the affidavit on behalf of the appellant.

Opposing the application, the respondent filed grounds of opposition dated 8th July 2017 and in support of the grounds the 2nd respondent, who was the 1st Interested Party in the lower court, Abdulgader Shariff Swaleh, also swore a replying affidavit on 24th August 2017. Simultaneously with the grounds of opposition and the replying affidavit filed, the interested parties also filed a notice of preliminary objection raising the following grounds;

i) That the Ex-parte applicant does not have the locus to institute the proceedings herein.

ii) That the application is fatally defective for the reason that there is not any or any valid resolution authorizing Josephine Musembi to plead or to sign court documents on behalf of the Ex-parte applicant. Accordingly, the application is not supported by an affidavit as required under order 53 rule 1 (2) of the Civil Procedure Rules 2010.

iii) The entire suit is void because there is not any or any valid resolution by the Ex-parte applicant to sue.

In the submissions challenging the preliminary objection the 1st interested party argued that the appellant did not have the locus standii to institute the proceedings; that the application was fatally defective for the reason that no valid resolution authorizing Josephine Musembi to plead or to sign court documents on behalf of the appellant had been presented, and therefore, the application was not supported by an affidavit as required under order 53 rule 1(2)of theCivil Procedure ruleswhich thereby render it to be incompetent.

On its part, the appellant submitted that order 4 rule 1(4) of the Civil Procedure ruleswere not cited in the preliminary objection, and that in any case they were only applicable to suits commenced by way of a plaint and not judicial review proceedings as was the case before the court. It was further argued that the preliminary objection did not meet the threshold requirements since it was not concerned with a pure point of law, as to whether or not the deponent was entitled to swear the affidavit in support of the judicial review application was a matter that required the production of evidence.

The learned judge found that the preliminary objection was merited, and struck out the motion dated 11th May 2017 for reasons that there was no board resolution sanctioning the commencement of the action by the company, and therefore the appellant was not properly before the court.

The appellant was aggrieved by the court’s decision and has brought this appeal on grounds that, the learned judge failed to appreciate that order 4 rule 1(4)does not ordinarily apply to Judicial Review proceedings as they are neither civil nor criminal in nature and that in holding that there was no board resolution sanctioning the commencement of the judicial review proceedings; in holding that there was no board resolution sanctioning the commencement of judicial review proceedings when there was no requirement that the resolution be filed together with the judicial review proceedings.

In the submissions, learned counsel Mr. Wafula for the appellant submitted that there was no rule or established practice specifying that an affidavit filed under order 53 rule 1 (2) of the Civil Procedure rules must be filed together with the authority authorizing the deponent; or that such authority required to be filed in court. Counsel argued that Josephine Musembi pleaded that she was authorized and competent as the Corporation Secretary to swear the verifying affidavit on behalf of the appellant, and that none of the parties had disputed the averment that she was the corporation secretary; that furthermore, none of the parties had tendered any evidence to show that she was not the corporation secretary and did not have the requisite authority to swear the affidavit on behalf of the company.

Learned counsel for the respondent Mr. Omondi opposed the appeal and informed us that he would be relying on the respondent’s submissions in the lower court.

We have considered the pleadings, the parties’ submissions and the law, and are of the view that the issue for our consideration is whether the learned judge rightly struck out the appellants judicial review proceedings on the basis that it was incompetent as it was not supported by a properly authenticated affidavit.

In this regard the learned judge found that there was no board resolution sanctioning the commencement of this action by the company, and therefore it was not properly before the court because “…The Ex-parte Applicant has not exhibited in the verifying affidavit a copy of the resolution of the company authorizing the institution of these proceedings. There is also no evidence before this court that the said Josephine Musembi has been authorized by a resolution under seal.”

Order 4 rule 1(4) provides as follows:

“1 (4) Where the plaintiff is a corporation, the verifying affidavit shall be sworn by an officer of the company duly authorized under the seal of the company to do so.”

It is clear from the provision, which is stated in mandatory terms, that for a company to file suit, there must be a verifying affidavit sworn by an officer of the company stipulating that he or she is duly authorized under the company’s seal to verify the affidavit in respect of the suit. Such person would of necessity require to be authorized by a resolution of the Board of Directors or the members under seal of the company, in order for the suit to be instituted.

Clarifying the position on the question of authorization in the case ofMakupa Transit Shade Limited & Another vs Kenya Ports Authority & Another [2015] eKLRthis Court stated thus;

“In our view, the Authority, as with other corporate bodies, has its affidavits deponed on its behalf by persons with knowledge of the issues at hand who have been so authorized by it. It was therefore sufficient for the deponents to state that“they were duly authorized.” It was then up to the appellants to demonstrate by evidence that they were not so authorized.”

So that it was sufficient for the authorized person to depone that he or she was duly authorized, but in the event of a complaint that such person was unauthorized, it was up to the disputing party to demonstrate with evidence that the deponent did not have the requisite authority, the onus being on the party making the allegation to prove it. A bare statement that the plaintiff or applicant was not authorized would not be sufficient.

It is essential to appreciate that the intention behind order 4 rule 1 (4) was to safeguard the corporate entity by ensuring that only an authorized officer could institute proceedings on its behalf. This was to address the mischief of unauthorized persons instituting proceedings on behalf of corporations, and obtaining fraudulent or unwarranted orders from the court. The company’s seal that is affixed under the hand of the directors ensured that they were aware of, and had authorized such proceedings together with the persons enlisted to conduct them. And where evidence was produced to demonstrate that a person was unauthorized, the burden shifted to such officer to demonstrate that they were authorized under the company seal. With this in mind, we dare say that the provision was not intended to be utilized as a procedural technicality to strike out suits, particularly where no evidence was produced to demonstrate that the officer was unauthorized.

Which brings us to the next issue concerning the preliminary objection itself. In this case, the application questioning the Corporation Secretary’s authority was brought by way of a preliminary objection. In the celebrated case of Mukisa Biscuit Manufacturers Ltd vs Westend Distributors Limited [1969] E.A 696Law, JA stated that;

"...so far as I am aware, a preliminary objection consists of a pure point of law which has been pleaded, or which arises by clear implication out of pleadings, and which if argued as a preliminary objection may dispose of the suit. Examples are an objection to the jurisdiction of the court, or a plea of limitation, or a submission that the parties are bound by the contract giving rise to the suit, to refer the dispute to arbitration."

In the same case, Newbold, JA set out the remit upon which preliminary objections would be founded;

“A preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion”. (Emphasis ours)

The Supreme Court also had occasion to pronounce itself on the remit of a preliminary objection when it stated;

“A preliminary objection may only be raised on a ‘pure point of law.’ To discern such a question of law, the court has to be satisfied that there is no proper contest as to the facts. The facts are deemed as agreed as they are prima facie presented in the pleadings on record”.

As such for a preliminary objection to be successful it must be based on a pure point of law, and further, it cannot be a requirement of its foundation that evidence be produced in its support. In other words the objection does not lie if the objector requires to demonstrate that a party is unauthorized or if in response a resolution or other document under seal requires to be produced as proof of its existence. This effectively defeats the principles behind a preliminary objection, in which case, it ought not to succeed.

Returning to the instant case, in her Verifying Affidavit of 5th March 2017, Josephine Musembi deponed that;

“I am an adult of sound mind and the Applicant’s Corporation Secretary and therefore I am competent and authorized to make and swear this Affidavit on behalf of the Exparte Applicant”.

But despite this, the learned judge found that there was no evidence that demonstrated that Josephine Musembi, the Corporation Secretary had been authorized by a resolution under the seal of the appellant to institute the judicial review proceedings. The judge took the view that it was not sufficient to state that, because she was the Corporation Secretary, she was authorized and competent to swear it; that the seal of the company required to be produced to show that she was appropriately authorized. Yet, no evidence was produced by the respondent to show that she was not.

Given the circumstances, we would adopt the position taken by Odunga, J, in the case of The Presbyterian Foundation & Another vs East Africa Partnership Limited & Another [2012] eKLRthus;

"The Civil Procedure Rules do not define what an authorized officer of a company is. If the Rules Committee had intended that in cases involving corporations, affidavits be sworn by either the directors or company secretaries nothing would have been easier than for it to have expressly stated so. Accordingly, we must apply the ordinary grammatical meaning of the word "authorize" which is defined by Oxford Dictionary as "sanction"; "give authority"; "commission". That being the position, whether or not the 2ndPlaintiff was given authority to swear the verifying affidavit is a matter of evidence and cannot certainly be the subject of a preliminary objection unless the said fact is admitted."

Indeed, the pleadings do not show that the respondent was concerned with whether or not the Corporation Secretary had the necessary authority to institute the suit, and the court was not told that she was an imposter who brought the proceedings on behalf of the appellant. And no evidence was produced before the court in support of this contestation. It is evident that the preliminary objection was not for the purposes of genuinely ascertaining whether the suit was brought with the appellant’s authority; its intent and purpose was to bring the appellant’s suit to a screeching halt on a mere procedural technicality which is contrary to the tenor behind Article 159 of the Constitution.

Whether or not an officer is authorized to institute the proceedings is a matter of evidence, which requires to be canvassed before the court. In concluding that Ms. Musembi was unauthorized to bring the proceedings on behalf of the appellant because there was no document produced under seal showing that she was authorized, we find that the learned judge misdirected himself. The learned judge ought to have ordered that such authorization be produced before the commencement of the trial.

As such, we are satisfied that the appeal is merited, and is allowed with costs to the appellant. The ruling and order of the Environment and Land Court of 30th January 2018 is set aside and the Notice of Motion dated 17th May 2017 hereby reinstated. We order that the appellant do file and serve an authorization of such duly authorized officer under the seal of the company within 15 days from the date hereof.

It is so ordered.

Dated and delivered at Malindi this 11thday of July, 2019.

ALNASHIR VISRAM

JUDGE OF APPEAL

M. K. KOOME

JUDGE OF APPEAL

A. K. MURGOR

JUDGE OF APPEAL

I certify that this is atrue copy of the original

DEPUTY REGISTRA