Mwinzi & another v Kimanzi & 4 others [2022] KEHC 13406 (KLR)

Mwinzi & another v Kimanzi & 4 others (Civil Case E12 of 2021) [2022] KEHC 13406 (KLR) (6 October 2022) (Ruling)

Neutral citation: [2022] KEHC 13406 (KLR)

Republic of Kenya

In the High Court at Nakuru

Civil Case E12 of 2021

HK Chemitei, J

October 6, 2022

Between

Caroline Mutwa Mwende Mwinzi

1st Applicant

Kasyethau Noble Trading Limited

2nd Applicant

and

George Ngui Kimanzi

1st Respondent

Annah Mwale Kimanzi

2nd Respondent

Registrar of Companies

3rd Respondent

Attorney General

4th Respondent

Francis Gathenya Gathuku

5th Respondent

Ruling

Ruling on the Applications dated May 5, 2021 and August 24, 2021 1. The applicant herein has filed two sets of applications stated above. The two are more less the same and the court directed that the same be determined simultaneously.

2. The first application dates May 5, 2021 prays for the following orders;(a)that temporary orders of injunction do issue to restrain the 1st and 2nd respondents from claiming under them or in any way dealing with the shareholding of the 2nd plaintiff company or dealing adversely with properties known as Apartment No Nakuru Municipality Block 20/285/T6, Nakuru Municipality Block 20/285/U8 and Apartment No Nakuru Municipality Block 20/285/U2. (b)pending the hearing of the main suit the court be pleased to issue orders restraining the 3rd defendant from effecting changes in the register of members, shareholders and directors of Kasyethau Noble Trading Limited applied from December 1, 2020. (c)pending the determination of the suit the court does direct the rent in respect to apartments Nakuru Municipality Block20/285/T6 ,20/285/U8 be paid into the company’s account at NCBA Bank Nakuru Branch no xxxx.(d)the purported resolution of a general meeting held on December 30, 2020 adopting the forfeiture of the applicants 400 shares and allotting the same to Joseph Kamau Kimanzi (deceased), George Ngui Kimanzi and Anna Mwale Kimanzi and the appointment of George Ngui Kimanzi and Annah Mwale Kimanzi as directors of Kasyethau Noble Trading Limited be declared illegal since the purported resolutions and minutes were forgeries.(e)a permanent injunction do issue stopping George Ngui Kimanzi and Anna Mwale Kimanzi and their agents or servants from dealing and interfering with the affairs of Kasyethau Noble TradingLimited including collecting rents or in any other way dealing with the properties known as Apartments Numbers Nakuru Municipality Block20/285/U8, and20/285/U2.

3. The application is premised on the grounds on the face of the application as well as the applicant’s affidavit sworn on the even date.

4. The substance of the application is that the applicant was married to the late Joseph Kamau Kimanzi under the Kamba customary law. In the cause of time they had some matrimonial problems which led the deceased to move to Mwingi.

5. In the cause of their marriage they incorporated the 2nd plaintiff company where she held some 500 shares. They also purchased the residential properties enumerated in the application which formed part of their home as well as several motor vehicles.

6. She went on to state that as a result of the matrimonial issues she filed for children’s custody vide Nakuru Children’s Case NoE50 of 2020 where the said court issued some interim orders in her favour.

7. The above case sparked off series of events including the deceased forging her signature and making major changes in the company without her consent and or participation. These include changing the back accounts in terms of authorised signatories as well as allotting her shares to the 1st and 2nd respondents. The deceased went as far as disposing some of the motor vehicles without her consent and authority.

8. The applicant deponed that she learned of this events when she opened her e-citizen portal on April 26, 2021 and that she reported the matter to the police station. According to her therefore all that the respondents have done while the deceased was alive as well as after he had died has caused her interest in the company to be compromised since she did not consent to ceding out her shareholding and directorship to anybody.

9. That the businesses run by the company was her source of livelihood and the children and that she has been unable to meet her financial obligations as she has been unable to access the rent collections. Consequently, she has been unable as a result to pay her children’s fees and the related outgoings.

10. She therefore prayed that pending the outcome of this suit her interest in the company as well as the properties be secured and she be allowed to get access to the rent collected from the rentals among other benefits. Unless this is allowed the respondents shall obviously run the estate down to her detriment.

11. The 1st respondent has opposed the application vide the replying affidavit sworn on 28 May 2021 in which he has done so on his own behalf and on behalf of the 2nd respondent. He stated that the properties in question belonged to the 2nd plaintiff and not a specific person and that property number Nakuru Municipality Block 20/285/U8 belonged to the 5th respondent as per the title deed he attached to the affidavit.

12. The deponent when ahead to indicate the details of CR12 showing the directors of the 2nd plaintiff and that the interest of the parties in a company are only limited to their shares and nothing else.

13. He went on to state that the applicant who is a tenant at Nakuru Municipality Block20/285/U2 is a perennial defaulter and has subjected the company to a financial loss. The rent should not be deposited in anyone’s account but that of the company.

14. He stated that the applicants shareholding was only 100 shares and nobody was interested with her shares.

15. Regarding the shareholding of the company he said that the same was effected on the December 29, 2020 as per attached copy of CR6 and that she participated in the resolution as per the minutes attached.

16. As regards depositing of the rent from Nakuru Municipality Block20/285/T6 at NCBA bank he swore that all the directors must be made signatories to the said account or alternatively a new account can be opened.

17. In respect to the 5th respondent he stated that he was the owner of Nakuru Municipality Block 20/285/U8 which the 2nd plaintiff had nothing to do with and the same ought to be expunged from this matter.

18. Finally, on the issue of permanent injunction he submitted that the same can only be issued after a full trial and not at this level. He prayed that the application ought to be dismissed.

19. The application dated August 24, 2021 by the 1st applicant more less has the same prayers save that she wants the authority to lease out the properties namely Nakuru Municipality Block 20/285/T6 and 20/285/U8 and the rent be deposited in court. She is also asking the court to compel the 1st ,2nd and 5th respondents to hand over the keys of the said premises and further that they should account for the rent so far collected from April 2, 2021.

20. The said application has been supported by the applicants sworn affidavit dated the same date. The facts as earlier indicated are not different from those deponed in the application dated May 5, 2021 and it is instructive to note that the respondents have not file any response.

21. When the matter came up for trial the court directed the same to be determined by way of written submissions which the court has gladly perused.

22. It is generally submitted by the parties that the principles laid down inGiella v Cassman Brown company limiteddo apply herein. What is not in dispute is that the applications ought to be granted if merited, if failing to do so may cause irreparable harm and whether on a balance of convenience it is desirable to do so.

23. Having looked at the facts herein, it is evident that the applicant has been a shareholder of the 2nd plaintiff and still so to date. The only interference came when she had matrimonial issues with her late husband who was as well a shareholder and director. According to her and without her knowledge her 400 shares were transferred to the 1st and 2nd respondents who have since taken them up. According to her the transfer was fraudulently done and her signature forged as well as the minutes.

24. Clearly in my view this is a matter that cannot be dealt with at an interlocutory stage. It must be subjected to a full hearing so as to establish if indeed there was any fraud and if so who committed it.

25. Following the above observation, the 2nd plaintiff, its assets and shareholding must be protected pending the determination of the issues in controversy. The 3rd defendant will obviously play a big role in the determination.

26. As regards the 5th respondent, there is sufficient evidence that he is the registered owner of property number Nakuru Municipality Block 20/285/U8 as per the green card dated July 12, 2021. Again, how he came to possess the same will be a subject of a full trial noting for instance that he did not oppose the application and already there is a caution as per the court order in Nakuru Succession Cause No E46 of 2021.

27. So, what is the way forward.? The court finds that the applicant has established a prima facie case indicating that the transfer of her shares from the 2nd plaintiff needs to be interrogated. Secondly the 5th respondent is already the registered owner of block 20/285/U8. The safest way now is to protect the interest of the said assets awaiting the full trial of the suit.

28. The issue of the rent is as well a legitimate claim. In respect to the 5th respondent however, it is safer to have him manage and run whatever is in his name since prima facie he is the legitimate owner. Nevertheless, he should not part with the same but must keep and maintain it safely and not prejudice the same in any way. There is no evidence by the applicant indicating how the 5th respondent came into possession of the said property whether fraudulently or otherwise to warrant this court issue injunctive reliefs for now but most probably that should come out clearly at the substantive hearing.

29. The court agrees with the applicant’s prayer to grant the management of Nakuru Municipality Block20/285/T6 to a third party for the benefit of the parties and in particular the 2nd plaintiff. The said third party ought to manage the same under the watchful eye of the shareholders of the 2nd plaintiff and in case of any disagreement the parties may seek the assistance of this court through the deputy registrar.

30. With these arrangements which the court considers a win - win for the parties, the main suit could therefore be set down for determination so that the real issues in controversy can be ironed out. The balance of convenience tilts in favour of all the parties. The shares as they are of all the parties with the 2nd plaintiff are in any case known and ought to remain so without any of them parting with it in any way.

31. The court agrees with the respondents that some of the orders sought by the applicant which are permanent in nature ought to await the matter to go to full trial.

32. In the premises, the applications are allowed as follows;(a)pending the hearing and determination of this suit, there be temporary orders of injunction barring the 1st and 2nd respondents jointly and severally, their servants and or agents from interfering with the shareholding, directorship or at all of the 2nd plaintiff company or in any way parting with its properties namely apartments situate at Nakuru Municiplaity Block 20/285/T6, and 20/285/U2. (b)pending the hearing and determination of this suit, the 3rd defendant /respondent is hereby restrained from effecting any changes in the register of members, shareholding and directors of the Kasyethau Noble Trading Limited.(c)pending the hearing and determination of this suit the management of Apartment No. Nakuru Municipality Block20/285/T6 be agreed upon by the applicant, the 1st and 2nd respondents herein and the rent so collected be placed in the account at NCBA Bank Nakuru Branch No xxxx and all the three be signatories to the said account.(d)pursuant to (c) above, the parties be at liberty to engage a reputable estate agent to manage the said property who shall keep proper records, pay all out goings and liabilities if any and in the event of any disagreement the deputy registrar of this court be at liberty to choose the said agent and further the bank to open an account.(e)the 5th respondent pending the hearing and determination of this suit should not sale, transfer or in any way part with property number Nakuru Municipality Block 20/285/U8. (f)the costs shall await the outcome of the suit.

DATED SIGNED AND DELIVERED VIA VIDEO LINK THIS 6TH DAY OF OCTOBER 2022. H. K. CHEMITEI.JUDGE