[2017] KEHC 10008 (KLR)
The court determined that, to enforce its previous orders for an audit and to ensure impartiality and international standards, the Chairperson of the Institute of Chartered Public Accountants of Kenya (ICPAK) should appoint an audit firm of international reputation and global reach, excluding PWC, Ernst & Young,...
Source-derived case information.
- Citation
- [2017] KEHC 10008 (KLR)
- Parties
- Plaintiff: Tatu City Limited; Plaintiff: Kofinaf Company Limited; Plaintiff: Nahashon Ngige Nyagah; Plaintiff: Vimalkumar Bhimji Depar Shah; Defendant: Stephen Jennings; Defendant: Frances Holliday; Defendant: Hans Jochum Horn; Defendant: Pius Mbugua Ngugi; Defendant: Frank Mosier; Defendant: Anthony Njoroge; Defendant: Christopher Baron
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Civil Case 46 of 2015
- Procedural Posture
- Civil Case / Ruling on Appointment of Audit Firm Following Contempt Finding
- Outcome
- Orders granted as prayed regarding appointment of audit firm; costs in the cause.
- Judges
- F Tuiyott
- Legal Topics
- Contempt of Court, Court Orders Enforcement, Appointment of Auditors, Corporate Governance
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Tatu City Limited
Plaintiff
Kofinaf Company Limited
Plaintiff
Nahashon Ngige Nyagah
Plaintiff
Vimalkumar Bhimji Depar Shah
Plaintiff
Stephen Jennings
Defendant
Frances Holliday
Defendant
Hans Jochum Horn
Defendant
Pius Mbugua Ngugi
Defendant
Frank Mosier
Defendant
Anthony Njoroge
Defendant
Christopher Baron
Defendant
Procedural Posture
Civil Case / Ruling on Appointment of Audit Firm Following Contempt Finding
Legal Issues
- 1 Who should appoint the audit firm to comply with the court's previous orders for audit.
- 2 Which audit firms are eligible or ineligible for appointment given conflicts and prior exclusions.
- 3 Whether the prior audit by Cedarsoc Limited precludes further audit as ordered by the court.
Ratio Decidendi
The court determined that, to enforce its previous orders for an audit and to ensure impartiality and international standards, the Chairperson of the Institute of Chartered Public Accountants of Kenya (ICPAK) should appoint an audit firm of international reputation and global reach, excluding PWC, Ernst & Young, KPMG, and PKF due to conflicts of interest or prior exclusion. The court rejected the argument that a prior audit by Cedarsoc Limited rendered a further audit unnecessary, noting that any application to vary the substantive audit order must be made formally. The court thus issued operative orders to facilitate compliance with its earlier rulings and to maintain the integrity of...
Court Disposition
Orders granted as prayed regarding appointment of audit firm; costs in the cause.
Orders
- The Chairperson of ICPAK shall within 21 days of service of this order appoint an audit firm of international reputation and global reach to undertake the audit ordered by the court on 6th March 2015 and 28th April 2015.
- The firm to be appointed shall not be PWC, Ernst & Young, KPMG, or PKF.
Full Case Text
Judgment text and source record
44 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERICIAL AND ADMIRALTY DIVISION
MILIMANI HIGH COURT
CIVIL CASE NO 46 OF 2015
TATU CITY LIMITED……………………………………………………1ST PLAINTIFF
KOFINAF COMPANY LIMITED………….……………………………...2ND PLAINTIFF
NAHASHON NGIGE NYAGAH………………………………………….3RD PLAINTIFF
VIMALKUMAR BHIMJI DEPAR SHAH…………………………………...4TH PLAINTIFF
VERSUS
STEPHEN JENNINGS……………………..………………………………1ST DEFENDANT
FRANCES HOLLIDAY……………………………………………………2ND DEFENDANT
HANS JOCHUM HORN………………………………………….……….3RD DEFENDANT
PIUS MBUGUA NGUGI………………………………………..………….4TH DEFENDANT
FRANK MOSIER…………………………………………………………..5TH DEFENDANT
ANTHONY NJOROGE……………………………………………………6TH DEFENDANT
CHRISTOPHER BARON……………………………………………….....7TH DEFENDANT
RULING
1. In a Ruling dated 4th May, 2017 I observed as follows:-
“Whilst I find that the 1st, 2nd, 3rd, 5th and 7th Defendants are guilty of Disobeying and being in contempt of the orders made in respect to the order for Audit, I direct Counsel for the parties herein to address me on which Firm should be appointed in place of PWC. This will enable Court make further Orders in regard to the order. In the meantime the Plaintiffs will have costs of the Notice of Motion of 21st September 2015”.
2. Counsel have addressed me on the question and there is consensus that a firm of Audit firm of International repute should be appointed. It is also agreed that the Chairperson of The Institute of Chartered Public Accountants Kenya Chapter (ICPAK) should appoint the Audit firm. In addition Mr. Issa for the 1st, 2nd, 4th, 5th and 7th Defendants further proposed that the Audit firm should have a global reach.
3. The Plaintiffs have, however, submitted that the firms of KPMG, PWC, PKF and Ernst & Young cannot be so appointed. These are the reasons given:-
(a) PriceWaterCoopers have themselves asked to be excluded.
(b) Ernst and Young are the current auditors of the 1st and 2nd Plaintiffs.
(c) KPMG were excluded by Court on 12th June, 2015.
(d) PKF have done a lot of consultancy work for the 1st and 2nd Plaintiff.
The 1st, 2nd, 4th, 5th and 7th Defendants were silent on the proposed exlusions. Given the foregoing, who should be the appointing authority and which firms are not eligible for appointment need not be controversial.
4. However the Court needs to observe that while addressing Court on this matter, Counsel for 1st, 2nd, 4th, 5th and 7th Defendants told Court that an audit had already been undertaken by Cedarsoc Limited. In essence, that another Audit is unnecessary. It was nevertheless conceded by Counsel that it was a matter that can be properly raised by a party to seek variation of this Courts order of 25th April 2015 which made the substantive orders for the Audit. This Court notes the issues raised but will not say more on it as the issues raised cannot preclude it from making orders on the singular question before it.
5. These are the orders of the Court:-
(i) The Chairperson of ICPAK shall within 21 days of service of this Order appoint an Audit firm of International Reputation and with a Global reach to undertake the Audit ordered by Court on 6th March 2015 and 28th April 2015.
(ii) The firm to be appointed shall not be any of the following:-
a. PWC
b. Ernst and Young
c. KPMG
d. PKF
6. Any party is at liberty to serve this order upon the Chairperson of ICPAK. Costs in the cause.
Dated, Signed and Delivered in Court at Nairobi this 22nd day of September,2017.
F. TUIYOTT
JUDGE
PRESENT;
Havi for Plaintiffs
Busaidy h/b Issa for 1st, 2nd , 4th , 5th & 8th Defendants
N/a 3rd & 7th Defendants
Alex - Court Clerk