Embakasi Ranching Company Ltd v Registrar of Companies & 14 others [2022] KEHC 15003 (KLR)

Embakasi Ranching Company Ltd v Registrar of Companies & 14 others (Commercial Case E096 of 2019) [2022] KEHC 15003 (KLR) (Commercial and Tax) (18 October 2022) (Ruling)

Neutral citation: [2022] KEHC 15003 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Commercial Case E096 of 2019

DO Chepkwony, J

October 18, 2022

Between

Embakasi Ranching Company Ltd

Plaintiff

and

Registrar of Companies

1st Defendant

Wanjiru Richu

2nd Defendant

Andrew Okumu

3rd Defendant

Gabriel Gotinga

4th Defendant

James Mingi Njoroge

5th Defendant

Sisto Tuta Mwambia

6th Defendant

Peninah Nyairegi Mwangi

7th Defendant

James Njehu Mbochi Njeru

8th Defendant

David Mwangi Wanderi

9th Defendant

Phideli Wangari

10th Defendant

Jane Njeri Muregi

11th Defendant

Christopher Eliud Kakuru Ngige

12th Defendant

Joeph Kinyanjui Njenga

13th Defendant

Chalres Kihagi Thuah

14th Defendant

Joseph Juan Kanani

15th Defendant

Ruling

1. On July 25, 2022 counsel for the parties herein appeared before this court for directions on an application dated January 22, 2022 which seeks to withdraw the plaintiff’s suit. That application is filed by Mr Gachichio, allegedly acting for the plaintiff. He intimated that the application cannot be objected to by the defendants since in any event a party cannot oppose or deny the other the right to withdraw a suit save for claiming for costs.

2. Mr Muruiki, the lead counsel for the plaintiff’s set of lawyers expessed a different view. He told the court that the present case had substantially proceeded before the Honourable Justice Nzioka, where the plaintiffs were heard and they closed their case. Thus, the case is pending the defendants case hearing. In addition Mr Muruiki informed court that the Honourable Justice Nzioka had issued orders of status quo on July 31, 2019 in that the Directors in office before the election purported to have happened, continue holding office and the ones in the CR12 to remain as such pending the hearing and determination of the suit.

3. It is the Directors then in office who filed this suit and testified on behalf of the plaintiff and they have not filed any application to withdraw the suit as it is intimated. It was his submission that there is no valid application by the plaintiff by virtue of the status quo orders to withdraw the suit. He asks the court to answer the question, whether it is right for Mr Gachichio to withdraw a suit he has not instituted without instructions and whether, by virtue of thestatus quo orders, Mr Gachichio can legally represent the plaintiff company.

4. Mr Odhiambo, appearing for the 1st defendant confirmed that indeed the matter proceeded before the Hon Nzioka but supported the invite to have the suit withdrawn, claiming that a party should not be precluded from withdrawing their case if they wish to do so.

5. Mr Macharia Gakuo appearing for the 3rd defendant reiterated the sentiments by Mr Muruiki with an addition that, besides the orders of July 31, 2019 in which the 2nd to 15th defendants who appear in CR12 were directed to remain as such, the court further issued orders against 4th – 15th defendants to stop transacting on behalf of the plaintiff company at a moment as they had opened a parallel office from where they were transacting in the plaintiff’s name. That it is during this time when the 5th defendant changed advocates and instructed Mr Gachichio, who upon being appointed, filed a notice of change of advocates for 5th defendant. He urged the court to confirm from the record that when Mr Gachichio first appeared in this matter to act for the plaintiff it was on the ground that the 4th to 15th defendants appear on the plaintiff’s company CR12. He urged the court to abandon the application seeking to withdraw the case and allow the matter to proceed for hearing.

6. Mr BA Musyoki, counsel for the 6th, 9th – 15th defendants clarified that as counsel for these parties, he was never directed to do anything with regard to opening of offices parallel to the plaintiff’s. In regard to the application he stated that the same is a dispute between Mr Gachichio and Mr Muruiki on representation of the plaintiff company and they had no representation or objection on the same.

7. In rejoinder, Mr Gachichio acknowledged that there are two sets of Directors claiming to assert their right of leadership of the plaintiff company. That one set of Directors have been referred to as those who were in office before election of the new set of Directors, now appearing on the plaintiff’s company the CR12. According to Mr Gachiochio, whereas the old set of Directors seek to assert control on the plaintiff company, he avers that he has been instructed by the new set of Directors appearing in CR12 who are the legitimate and legally recognised Directors as per a resolution before court. Consequently, he filed the notice of appointment of advocates for plaintiff on January 22, 2022 which he served upon all parties. He stated that he was the only counsel who is lawfully seized of the matter of the plaintiff who is a limited liability company and one who has filed any resolution to act for the company. His argument is that the old set of Directors are becoming a stumbling block in the way of the new Directors and frustrating any possible way for smooth management of the plaintiff.

8. Having listened to all counsel for the parties, from the onset it is important to note that the issue of party representation by counsel has a constitutional underpinning and cuts through various provisions of the Constitution including the right to fair administrative action, under article 47;, the right to access to justice under article 48 and right to fair hearing under article 50.

9. Such an issue cannot be wished away as a mere technicality. It is a substantive issue which may result into striking out all the pleadings and or documents filed by an advocate who is found to irregularly on record.

10. I have perused the court record and established the following:-a)That the suit was instituted videa plaint amended on May 2, 2017 and filed on May 8, 2017 by the firm of AI Onyango & Company Advocates.b)Later, on July 22, 2022 the firm of Ngata Kamau & Co Advocates came on record and replaced the plaintiff’s elstwhile advocates. He appeared alongside Mr Mwaniki.c)On November 11, 2021 Mr Gachichio appeared in the matter for the first time and purported to have been instructed by the 5th defendant.d)On March 2, 2022, when parties appeared before the Deputy Registrar, Mr Gachichuo changed stands and made representation that he was appearing for the plaintiff and on March 8, 2022 he informed the court that he had instructions from the correct Directors to withdraw the suit.e)On July 31, 2019 the court issued among other orders. Orders for status quo for the Directors in the office to remain in the office and the ones indicated on the CR12 form to remain as such.

11. In the case of service in the case of Serve in Love Africa(SILA) Trust v David Kipsang Kipyego & 7others[2017] eKLR, this court observed that an advocate would be deemed to be acting in conflict of interest when serving or attempting to serve two or more interests which are not compatible or serves or attempts to serve two or more interests which are not able to be served consistently or honours or attempts to honour two or more duties which cannot be honoured or are compatible and thereby fails to observe the fiduciary duty to clients or even the court. Thus, conflict of interest can arise broadly like where an advocate purports to act for both the plaintiff and the defendant in the same matter. Such conflict of interest may be also be described as conflict of duties.

12. While I agree that the choice of an advocate is a prerogative of a party to a suit, it must be borne in mind that in the discharge of his office, an advocate has a duty to his client, a duty to his client’s opponent, a duty to the court, a duty to himself and duty to the state. Therefore, as an officer of the court, an advocate owes allegiance to a cause that is higher than serving the interests of his client and that is, simply put, to foster the cause of justice and truth.

13. In the present case, Mr Gachichio does not deny that on November 11, 2021 he made representations on behalf of the 5th defendant and in my respectful view, it would be in conflict of duties to change his stand along the way and now purport to act for the plaintiff. In addition to that, the notice of appointment filed and dated November 22, 2022 does not fit under the confines of order 9 rule (5) and (6) of the Civil Procedure Rules, 2010 so as to qualify as a notice of change of advocates. The said rules prescribe that unless and until a notice of change of advocate is filed in court and served in accordance with order 9 rule (6), the former advocate shall be considered the advocate of the party until the final conclusion of the cause or matter. What was filed by Mr Gachichio cannot be described as a notice of change of advocates.

14. Lastly, Mr Gachichio, in purporting to enter appearance for the plaintiff company under the instructions of the Directors whose names are in the plaintiff’s company CR12, has acted in ignorance of the status quo orders issued by the Hon Justice Grace Nzioka on July 31, 2019 wherein the learned judge directed that the former Directors who were still in office, continue holding office while the newly elected Directors who were in the company’s CR12, to remain as such pending the determination of the dispute. It then follows that the newly elected Directors whose names are in the company’s CR12, by virtue of the court orders, are precluded from assuming any office duties including appointment of advocates on behalf of the plaintiff company until the pending dispute herein is heard and determined. For that reason, Mr Gachichio was acting on improper instructions when filing the application dated January 22, 2022. Consequently, the said application is hereby expunged from the record.

15. In the resultant, the plaintiff having closed its case, the parties were directed to proceed for defence hearing with directions that:-a.A hearing date to be fixed at the court registry within the next fourteen (14) days from the date hereof.It is hereby so ordered.

RULING DELIVERED VIRTUALLY, DATED AND SIGNED IN NAIROBI THIS 18TH DAY OF OCTOBER 2022. D. O. CHEPKWONYJUDGEIn the presence of:Mr. Gachiochio counsel for PlaintiffMrs. Maoki appearing alongside Mr. Danstan Omari counsel for PlaintiffMr. Odhiambo counsel for 1st Defendant, Registrar of CompaniesMr. Musyoki B. N. for 6th, 9th – 15th DefendantsMr. Maina holding brief for Mr. Ngata Kamau counsel for PlaintiffCourt Assistant - Sakina