Andrew Githinji Mwihuri v Silas Munuhe Mwaniki & 9 others [2014] KEELC 535 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NYERI

ENVIRONMENT AND LAND COURT

E.L.C. NO.224 OF 2013

ANDREW GITHINJI MWIHURI.................................................PLAINTIFF

VERSUS

SILAS MUNUHE MWANIKI & 9 OTHERS.....................................DEFENDANTS

R U L I N G

The plaintiff, Andrew Githinji Mwihuri is male adult working and residing in Nyeri whilst the 1st – 9th defendants are Directors of Muhotetu Farmers Company Limited. The plaintiff in this suit is seeking an injunctive order restraining the defendants from selling 4 prime developed plots advertised in the Daily Nation of 19th October 2013and an order restraining the Directors from accessing  the Muhotetu Farmers Company Limited accounts in all banks in the country  for having presented a dubious balance sheet audited accounts which was signed by the defendants on behalf of Registered auditors.

He claims that the defendants have paid themselves allowances,  certified by themselves and prays for an order restraining the defendants, their employees, servants, and or agents from selling out or parting with titles in the advertised sale of plots in the Daily Nation of 19/10/2013.

The suit was accompanied with a Notice of Motion and Certificate of Urgency dated 7th of November 2013 in which the applicant  precisely seeks this court to intervene by stopping the sale of 4 prime developed plots advertised for sale in the Daily Nation of 19/10/2013 namely L.R. 6585/2 and 4 in Nyahururu Municipality, Block 4/138 in Nyahururu Municipality, L.R.6585/585 in Nyahururu Municipality, Nyeri Municipality block 1/57.

He further seeks the court to determine whether the report of audited accounts presented before the shareholder by a dubious auditor was legal or illegal.  The application is based on grounds that that on the 14th September 2013 the 1st defendant and his board of directors presented  audited accounts to the shareholders certified by his own signature moreover that the 1st defendant with his board of directors has advertised the sale of 4 prime developed plots in the daily nation of 19/10/13 and that the shareholders have 40% of shares holdings in the Kindong Ranch Co. Ltd with a value of 3 to 4 Billions Kenya Shillings which the defendants want to dispose.

The application is supported by the affidavit of Andrew Githinji Mwihuri sworn on 7/11/2013 and filed on 8/11/2013 whose  gist  is that the 1st defendant and his board of directors presented a doctored audited accounts to the shareholders on the 14/9/2013 with a balance sheet that had been signed by 1st defendant and another director on behalf of an auditor and that the shareholders of Muhotetu Farmers Co. Ltd have share holdings of 3 to 4 billion Kenya Shillings which is 40% of Kindong Ranch Ltd and the defendants are looking for an interested buyer. He states that his late father in law was one  of the founders of Muhotetu Farmers Company Ltd whose shares are still held under the names of pioneers of Muhotetu although majority have died and that the  company has a total of 578 share holders and that the share is not transferable to the members of the deceased family. He deposes that every member of Muhotetu Farmers Co. Ltd has a company card with the number of the member even if the member is not alive. The families of the deceased members have agreed on a single representative person who will be attending AGM on behalf of the family and sometimes members are paid hefty dividends going to Kshs.300,000 which is shared amongst the family members. On the 14/9/2013 the plaintiff was given the membership card in the name of his late father in law by his mother-in-law to represent her in the meeting as she is growing old at an age of 90 years. Everybody who attended that extra share holders meeting on 14/9/2013 had to produce  the share holder's card to be allowed in the meeting and that  80% of those who attended in addition to 4 directors who are in office represented their families.

When the matter came up for hearing on the 12/11/2013 this court was not satisfied that the applicant had capacity hence asked the applicant to avail  the Grant of Letters of Administration and Power of Attorney.

On the 13th of November 2013, the applicant appeared before court exparte and with a grant of letters of administration granted by the High Court of Kenya at Nairobi to Hellen Wambugu Maranga of P.O. Box 247 Nyeri in Kenya on 16/4/1991 and therefore the court issued a temporary order stopping the sale of the 4 prime plots as prayed and set the matter for interparte hearing on 20/11/2013.

On the 18/11/2013, the defendants filed a memorandum of appearance  and the  resolution of the Board of Directors of Muhotetu Farmers Company Limited and a preliminary objection and a replying affidavit of William Gathecha Nguyo, the secretary to the 10th defendants Board of Directors.

The gist of the replying affidavit sworn by William Gathecha Nguyo on 18/11/2013 is that the  application is bad in law, fatally defective,incompetent, inept, devoid of merit  and it is an abuse of the court process, and that it should be dismissed with costs. It is the respondent's contention that the applicant has not demonstrated under which capacity he purports to seek for the prayers sought, and in addition he has not demonstrated any legally recognizable interest and/or right he is agitating by instituting the instant suit and believes that applicant does not have any recognizable cause of action against the defendants as he is not its member, and as such he lacks thelocus standi to interfere and interrogate any of the affairs of the 10th defendants . Though the defendants agree that  that the company had an extra ordinary general meeting on 14th September 2013,  to the best of their knowledge and the information gathered from the attendance register of the legally recognized members present on that date, the applicant herein did not attend the said meeting, as he was not a member or a legal representative of any member  and as such could not have been allowed to attend. It is contended in the affidavit that the auditor's reports that has been unfairly branded as dubious was presented on 14th September 2013, but the applicant   waited for over 2 months to challenge the same, which is a clear indication of bad faith as his real intent is to sabotage the 10th defendant's resolution to dispose off its properties.

On the 20/11/2013, the applicant filed a further affidavit whose import was that the Notice of preliminary objection raised by the 1st,  2nd, 3rd 5th, 7th and 8th defendants is immaterial incompetent and an abuse of court process because the six directors have no legal authority or backing to transact businesses on behalf of the 10th defendant, reasons being that they are not members of the 10th defendant and  that it is not in dispute that the names of the 1st, 2nd, 3rd, 5th 7th and 8th defendants who are the directors of the 10th defendant cannot be traced in the members register year 2012.

And in a further affidavit  Mr. William Gathecha Nguyo states that that to the best of his knowledge and belief, the current Board of Directors of the 10th defendant were validly, legally and lawfully elected, and there has never been any order setting aside their aforesaid election and to his best of knowledge and belief, the election of the 10th defendant's Board of Directors was done in accordance with its Articles of Association and the Companies Act and that it is not true that he is  not a member of the 10th defendant as his name appears in the register that he had marked as annexture WGN/”1” in his replying affidavit.

The 6th defendant, a director of the 10th defendant  supports the application by the plaintiff and has urged the court to protect shareholders. When this matter came up for hearing on 29/1/2013 both parties were ready to proceed with the preliminary objection dated 16/11/2013.

Mr. Nderitu for the defendants submitted that the plaintiff was not a member of the 10th defendant.  According to Nderitu, the applicant claimed that he had been given authority by one Hellen Wambugu Muranga to represent the estate of the deceased (Harrison Maranga Mutuaruhiu) who was member No.412.  Mr. Nderitu argued that in order to agitate the interest of the deceased, one had to obtain a grant of letters of administration.  It is only the administrator who can agitate a cause of action.

He referred to the case of Trouistik Union International and another -VS- Jane Mbeyu and another Nairobi C.AC.A NO 145 OF 1990 (unreported).

It is a common law rule that expressed in the latin maxim, “actio personalis moritor cum persona” that is to say a personal action dies with the person.  This rule has been supplemented by the Law Reform Act cap 26 laws of Kenya.  This Act keeps alive causes of action that vest in a person who has died such as the late Harrison Maranga Mutuaruhiu.  This Act has to be read with the Law of Succession Act Cap 160 Laws of Kenya.  Section 2 of Cap 160 provides that unless any other written law provides otherwise, the provision of the Act shall constitute the law in Kenya in respect of and shall have universal application to all cases of intestate or testate succession to the estates of deceased persons dying after the commencement of this Act.

The Act came into force in 1981, the deceased herein died in 1991 and to determine who may agitate by suit any cause of action vested in him at the time of his death one must turn to section 82(a) of the Law of Succession Act which confers that power to the personal representative alone.  Personal representative are the administrators, Administratrixes or executors of the estate of the deceased person.  The deceased died intestate and therefore the person who can commence such suit  is the administrator or administratrix of the estate of deceased.  An administrator or administratrix means a person to whom a grant of letters of administration has been made under the Law of Succession Act.  Unlike in the Trouistic's Case, (supra), the applicant herein, a son in law to the deceased is neither a Dependant , nor an administratrix of the estate, of the deceased.  The deceased is survived by a widow who is said to be ailing and who is the administratrix of the estate of the deceased having obtained a grant of letters of administration in respect of the estate.  The applicant claims to have been given authority by the administratrix to represent the family of the late Maranga Mutuaruhiu in all businesses where the family of the late Maranga has an interest.  This authority is of no consequence as it does not reverse the provision of Section 82(a) of Cap 160.  I agree with the submissions of Mr. Nderitu that the administratrix  does not have the power to delegate her duties in the  estate of the deceased.

Mr. Githinji on his part argues that he had a power of Attorney which was registered in the register of powers of Attorney as No.79 on the 27th day of November 2013.  This court finds that as at the time the Power of Attorney was registered the  plaintiff had already filed this suit and therefore placing the cart before the horse.  The defendants had already filed a replying affidavit, Notice of preliminary objection and defence raising the issue of capacity and therefore, the plaintiff appears to have obtained the power of Attorney to cure  the incompetent suit as he lacked capacity and therefore the suit was abinitio, a nullity having been commenced without capacity.

This court finds that the entire suit is a nullity, bad in law and incompetent having been commenced by the plaintiff on behalf of Hellen Wambugu Maranga who was the administratrix of the estate of the deceased without a valid power of Attorney.  The Preliminary Objection is upheld the suit is dismissed with no order as to costs.

Dated, signed and delivered at Nyeri this 21st day of February 2014.

A. OMBWAYO

JUDGE