BELGO HOLDINGS LIMITED v AKBER ABDULLAH KASSAM ESMAIL [2004] KEHC 61 (KLR)

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI (NAIROBI LAW COURTS)

Civil Case 244 of 2004

BELGO HOLDINGS LIMITED............................................... PLAINTIFF

VERSUS

AKBER ABDULLAH KASSAM ESMAIL........................ DEFENDANT

RULING

1.   The Application dated 24th March 2004 by Mr. Akber AbdullahKassam Esmail seeks that this court, invoking its inherentjurisdiction should dismiss the instant suit with costs to be paid byM/S K. Getanda & Co., Advocates for the Plaintiff.

2.   The sole ground on which the Application is brought is that"this suit is not the act or deed of Belgo Holdings Limited andneither the Directors nor the Shareholders of this companyhave authorized K. Getanda & Co. Advocates to file the same".

3.   I should, I think, give a brief background to the issues arisingfrom the Plaint because it would be a good starting point to the disposal of the matter before me. In a Plaint filed on 15th March,2004, M/S Belgo Holdings Ltd. as represented by M/S K. Getanda& Co. advocates seeks a number of prayers, chiefly those ofinjunctions to restrain Mr. Esmail from holding himself out as adirector or shareholder of the Plaintiff company and to compel himto release all documents in his custody that relate to the company.Of interest at this stage are two other prayers [(c) and (d) of thePlaint] namely: -.

"c) An order declaring as null and voidand of no effect any affidavits,pleadings, documents or howsoever,signed, executed, sworn, drawn or inother way done by the defendant andpurporting to be on behalf and underthe instructions of the Plaintiff, and afurther Order that the said Affidavits,pleadings, documents or howsoever,be expunged from any record wherethey have been used particularly in HCCC No. 507 of 2003 (OS).

d) An order that the Applications filed bythe Defendant in HCCC No. 507 of2003  (OS)  be  stayed pending the hearing and determination of thiscase."

4.  As regards HCCCNo.  507 of 2003  (O.S.)it is averred in paragraphs 6, 7,8, 9 and 11 of the Plaint that, that suit was filedby "some persons who had acquired ownership"of titles L.R. No.3859 and 3860 by adverse possession. The two titles wereregistered in the name of the Plaintiff Company and it is said thatMr. Esmail having received summons thereto "fraudulently andunlawfully received and retained"the same and did not defendthe suit. The High Court allowed the orders sought in that suit andBelgo Holdings filed an Application to set aside the final ordersmade but subsequently withdrew the same. Mr. Esmail has filedApplications in HCCC No. 507 of 2003challenging the compromisemade on the same grounds as in this Application; that M/S K.Getanda & Co. Advocates had no authority to act for the companyand all their actions in that suit should be set aside. ThoseApplications are to my knowledge undetermined.

5.  Counsel in submissions before me raised a number of issuesbut I shall restrict myself to a discussion of only these issues: -

i)  Are the acts in this suit those of Belgo Holdings Ltd. and is the firm of M/S  K.  Getanda & Co.  Advocates properly instructed?ii)  Whatever my finding on (i)  above,  should I  oblige the Defendant and strike out the suit?iii)  If I should strike out the suit, should I punish M/S K.? Getanda & Co. Advocates by condemning them to pay costs personally?

6. On the first point, it is submitted and deponed by Affidavitthat Belgo Holdings Limited has had a rather unfortunate history.Whereas it is not denied that the founding directors at itsincorporation were James Isabirye and Akber Abdullah KassamEsmail, subsequent changes are in contention. The morecontentious one however, is that of changes purportedly made on5th June 1995. Two documents (company forms 203 A) werepresented by parties: -

i)  By the  Defendant wherein it is  indicated  that  SamvirTrustees  Limited  were  appointed  sole  director of the company and Mr. Akber Abdullah Kassam Esmail andShirin Esmail resigned as directors,ii) By the Plaintiff as represented by M/S K. Getanda & Co.advocates wherein it is indicated as in (i) above but withadditional information to the effect that Robert Kotch Otachiand Wilson Birir were appointed directors of the company.

7.  The Defendant says that the last document is a forgery but a letter dated 19th February 2004 from the Registrar of Companies to M/S   K. Getanda & Co.  Advocates shows that the last Annual Return of the Company filed in 1995 bears out the position in (ii) above.  Conversely, the Affidavit of Diamond Jamal sworn on 24th March 2004 says otherwise.  At paragraph 6 of his Affidavit he depones as follows: -

"I do not know the deponent (RobertOtachi) or anyone called Wilson Birir;neither of them has ever been in touch withme or Samvir Registrars; neither I norSamvir Registrars nor Samvir TrusteesLimited are aware of any resolution ordecision by the Directors or Shareholdersof Belgo  to  appoint  either  of  them  as

Directors of Belgo we have not taken partin any such resolution or decision nor wereI or Samvir Registrars even instructed toprepare or file a company form No. 203 Aor an Annual Return of Belgo in which thedeponent or said Wilson Birir were to benamed as Director of Belgo."

8.   Similarly in the Affidavit of Azim Virjee sworn on 22nd March2004 it is deponed that "between 11th July 1995 and 4th August1999 my company (Samvir Registrars) was the sole Director ofBelgo"and "neither I nor my company have ever authorized K.Getanda & Co. Advocates to file this suit or act for Belgo inHCCC No.  507 of 1999".

9.   On this hotly contested issue, matters are not made better bythe fact that whereas K. Getanda & Co. Advocates were served withthe instant Application, they filed no substantive response to it.Mr. Getanda relied on Affidavits filed in support of his Applicationfor injunction. Had Mr. Ochieng Oduol for the Defendant pressedthe point, I would have invoked Order 50 Rule 16 (3) of the CivilProcedure Rules and asked that the Application be argued ex-parte.

He did not and I think wisely so and I allowed Mr. Getanda toaddress me on the evidence contained in his previously filedaffidavit and on the basis of any applicable law.

10. As things now stand, there are two very unclear issues andneither the Affidavits filed nor submissions have cleared them: -

a) Mr. Azim Virjee, and this is borne out by both form 203A's referred to earlier, depones that Mr. Esmail andShirin Esmail resigned as directors of Belgo sometimein June or July 1995 (Virjee says 11th July 1995, form203 A indicates 5th June 1995). It is not indicated whenhe was re-appointed although a resolution to that effectis attached but is not apparently filed with the Registrarof Companies and the same has been attacked as anafterthought by Mr. Getanda. To that extent therefore,and taking the records of the Registrar of Companies asauthoritative, Mr. Esmail may not be a director of thecompany. This is merely a finding based on what isbefore me and is not conclusive.

b) M/s K. Getanda & Co. Advocates have not shown theirletter of instructions to act for Belgo. When an advocateis being attacked as acting without authority, the firstthing to do is to file an Affidavit showing that suchauthority indeed exists. To the extent that this has notbeen done, M/s K. Getanda & Co. Advocates may notbe properly instructed. Again obviously and noting myearlier comment that no Affidavit was filed in responseto the instant Application, this is a non-conclusivefinding but is based on material before me at this point.

11. I am being asked to dismiss the suit herein. It has been saidtime and again that the power of court to dismiss or strike out asuit should be used very sparingly and in the most clear cut ofcases and after weighing the interests of parties and seeing quiteclearly that the suit is so hopeless and incapable of sustenance.This is not the case in this suit.

12.  Further, the issues being litigated upon here are also beinglitigated upon in HCCC No. 507 of 2003and it would be an abuse of court process for any party to use the findings of court in onesuit to press its advantage in another. I see that possibility arisingfrom any findings I shall make in this suit.

13.   I shall therefore, move onto my second point and state that thematters raised in the Application herein cannot be determined onthe basis of Affidavit evidence only. There are too many issues thatrequire proof and tested by cross-examination as I have pointedout. I note for example that in a report dated 25th March 2004 byHawkeye Technologies it is said that the form 203 A produced by Mr. Getanda is a forgery, yet the Registrar of Companies thinks thatit is the correct statement of the company's directors. Mr. Esmail'sreinstatement to the company, if at all, is also being questioned andevidence needs to be called to clear the matter.

14.   Mr. Getanda's appointment has been similarly attacked asunauthorized and I have misgivings about how he has handled it,yet he has filed suit on behalf of Belgo Holdings Ltd. which I haveshown is in an unclear position as to directorship.  He may have been instructed as he says, by Robert Kotch Otachi and/or WilsonBirir but not the Defendant or Samvir Registrars.

15.  Where  therefore,  an  advocate  may  have  acted  without authority as is claimed in this Application as I understand it, the correct way to handle the matter is not to strike out or even to dismiss, but to stay the proceedings.  In Bland, Corlett and Walsh vs. First National Commercial Bank PLC [19931 J LR 80it was held as follows: -

"where an advocate acted inproceedings without authority;... it wasthe practice in England to stay all orders

16.  Similarly, in 44 Halsbury's Laws of England 4th Edition paragraph 115 at 84-85,it is stated as follows: -

"115.  Effect  of  acting  without authority. The fact that a Solicitor wasnot authorized to institute proceedings isnot a defence to those proceedings, andalthough in special circumstances thecorrect course may be for the court tostrike out proceedings instituted without authority, the proper method of raising thequestions of want of authority is usuallyby an Application to stay the proceedings.Accordingly, if a Solicitor takes, defends,or continues proceedings without authorityof the litigant whom he purports torepresent, those proceedings will besummarily stayed if the proceedings areinstituted without authority."

17.  In a case very similar to this are, Buike Estate Coffee Ltd. and two others vs. S. Lutabi & Another [1962] E.A. 328Bennet, J. at page 329, had this to say,

"In the instant case the question as towhether the Plaintiffs advocate has beenduly authorized to sue will depend uponthe court's finding as to who are thelawful directors. That is a matter, whichcan only be determined after evidence hasbeen heard. In my judgment, want ofauthority to sue does not plainly appear at the present state of the suit, and the suitought not to be struck out at this juncture.If it should appear that the PlaintiffsAdvocate has not been duly authorized by the lawful directors (whoever they may be)to institute proceedings on behalf of thecompany, the advocate can be ordered topay the costs of the suit personally; seeJudgment of JENKINS L.J. in DanishMercantile Co. Ltd. vs. Beaument (2) [1951Jch-680 at page 682. "

18.   As I have shown above my mind is one with Bennet, J. for thereasons that the instant matter is even less clear at this stage and Idecline to strike out the suit.

19.   On my third point,  I  have  made  no  categorical  finding to warrant penalization of M/S  K.  Getanda & Co. Advocates.  The matter should be suitably handled in HCCC No. 507/2003where the same question is pending.  In my Ruling on a number of preliminary objections raised to Mr. Esmail's Applications in that suit, I noted as follows: -

"Mr. Esmail further argued that thepurported representation of Belgo HoldingsLtd. by M/S K. Getanda& Co. Advocateswas unprocedural, a nullity and the court has power to strike out the proceedings orin the alternative, stay the same."

I agree with Esmail in his alternative to proposition

20.  In the event then, I am of the view that I should not allow the

Application dated 24th March 2004 as worded and instead order that all proceedings in this suit be stayed pending resolution and determination of all outstanding Applications in HCCC No. 507 of

2004.

Orders accordingly.

Dated and delivered at Nairobi this 30th day of April 2004.

I. LENAOLA

Ag. JUDGE