Oduor & 2 others v Ogol & another [2024] KEHC 4513 (KLR)

Oduor & 2 others v Ogol & another (Commercial Cause E957 of 2021) [2024] KEHC 4513 (KLR) (Commercial and Tax) (18 March 2024) (Ruling)

Neutral citation: [2024] KEHC 4513 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Commercial Cause E957 of 2021

DO Chepkwony & A Mabeya, JJ

March 18, 2024

Between

William Evance Oduor

1st Applicant

George Otieno Radol

2nd Applicant

Tisa Suites & Lounge Limited

3rd Applicant

and

Stephen Odhiambo Ogol

1st Respondent

Kcb Bank Kenya Limited

2nd Respondent

Ruling

1. This ruling is in respect of the Applicant’s Notice of Motion application dated 16th December 2021 brought under Sections 1A, 3A of the Civil Procedure Act and Order 51 rule 1 of the Civil Procedure Rules. The application was couched in the following terms;a.Spent;b.Spent;c.Spent;d.Spent;e.Spent;f.That the 1st Respondent by himself, his servants, agents and or employees be compelled by an order of this court to disclose any other account, if any operated in the name of 3rd applicant/plaintiff or Tisa Suite & Lounge pending the hearing and determination of this suit.g.That the 1st Respondent be complelled by an order of this court to render true accounts and bank statements of any monies received and or paid in relation to 3rd applicant/plaintiff or TIsa Suite & Lounge, from 10th July 2018 to date, pending the hearing and determination of this suit.h.That the 2nd Respondent by an order of this court, be compelled to release to the applicants bank statements of all accounts operated by or associated with 3rd applicant/plaintiff or Tisa Suite & Lounge from 4th April 2018 to date, pending the hearing and determination of this suit.i.That the 1st Respondent be complelled not to undertake the running and operation of 3rd applicant/plaintiff or Tisa Suite & Lounge without the involvement and approval of the applicants herein, pending hearing and determination of this suit.j.That the cost of this application be provided for.

2. The application was premised on the grounds on the face of the application and the supported by the affidavit of William Evance Oduor and Geirge Otieno Radol Modi dated 16th December, 2021.

3. The deponents aver that the applicants and the 1st Respondent are directors of the 3rd Applicant and before the joint venture, the 1st Respondent operated a business in the name of Tisa Suites & Lounge. The business ran into financial turbulence and the 1st Respondent invited the 1st and 2nd Applicants to partnership which business latter transformed to a company by the name Tisa Suites & Lounge Limited incorporated on 10th July, 2018.

4. The 1st and 2nd applicants deposed that Tisa Suites & Lounge ceased operation on 4th April, 2018 to pave way for Tisa Suites & Lounge Limited and Account No. 1217186263 in the name of Tisa Suites & Lounge ceased to operate. That the 1st Respondent in collusion with the 2nd Respondent’s agents, servants or employees continued to operate Tisa Suites & Lounge interchangeable with Tisa Suites & Lounge Limited denying the applicants any income from the business.

5. They averred that the 3rd Applicant operated Account No. 1236299175 with the 2nd Respondent at Kisumu branch with the signatory of either two directors to opearate the account. That the 2nd Resondent had received authority from Tisa Suites & Lounge Limited that the applicants can communicate to the 2nd Respondent through email and facsimile. The 1st Respondent and agents, servants and employees of the 2nd Respondent colluded to open and operate the accounts belonging to Tisa Suites & Lounge and 3rd applicant in exlusion of the 1st and 2nd Applicants.

6. The 2nd Respondent wrote to the applicants and the 1st Respondent on 8th January, 2019 demonstrating that they had detected something fishy. The 1st Respondent fraudulently trasfferred monies belonging to Tisa Suites & Lounge and 3rd applicants to other bank accounts.

7. In response to the Appellants’ application dated 16th December, 2021, the 1st Respondent filed a Replyig Affidavit dated 2nd February, 2022 sworn by the 1st Respondent. In the said affidavit, he deposed that in April, 2018 he converted his business name to Private Limited Company to Tisa Suites And Lounge Limited and issued shares to the 1st and 2nd Applicants.

8. That the 1st and 2nd Applicants were not interested in the operation of the busness but wanted to take out money out of the business. The 1st and 2nd Applicants would seek exorbitant payments for attending meetings in Kisumu and would demand dividends even as the business was still struggling. They would take advantage of the mandate at the bank allowing two directors to sugn cheque to withdraw cash from the bank for their personal benefit without his knowledge.

9. The 1st Respondent deposed that he entered inot a mediated agreement with the 1st Applicant on refunding the sums he contributed into the business on 11th February, 2019. The agreement required him to pay a sum of Kshs. 931,000/= as a way of amicable settlement for him to relinguish shareholding and directorship in the company. On 24th October, 2019 he fulfilled his obligation as per the agreement and entered into a resignation and general release agreement with the 1st applicant. Pursuant to a meeting between him and the 1st and 2nd Applicants, on 22nd September, 2021 the 2nd Applicant also resigned as a director of Tisa Suites & Lounge Limited.

10. That he is aware of the sums owed by Tisa Suites & Lounge Limited to Kenya Revenue Authority and has reached a settlement with KRA on payment by instalments of the sums owed.

11. That in view of the Applicants refusal to effect changes in the directorship and shareholding of Tisa Suites & Lounge Limited, the applicants do not have a cause of action against him. The applicants only came to court to malign his name and continue holding him and the 3rd Applicant hostage by refusing to effect the changes at the companies registry.

12. On 21st March, 2022, this court issued directions that the application be canvassed by way of written submissions. Both parties complied and filed their respective submissions in support and in opposition to the application which this court shall proceed to consider in it analysis and determination.

Analysis and determination 13. I have considered both the Notice of Motion together with the written submissions by both parties alongside the cited authorities. The issues for determination are;a.Whether the applicants have established a prima facie case to warrant the grant of the orders sought; andb.Who bears the costs of this application.

14. On whether the Applicants have established a prima facie case, this court is guided by the principles and conditions to be considered in determining an application seeking interlocutory injuction as encuniated in the case of Giella –vs- Cassman Brown & Co Ltd (1973) 358 at Pg. 360 where the court stated that:-“First, an Applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the Court is in doubt, it will decide an application on the balance of convenience (E.A. Industries Vs. Trufoods [1972] E.A. 420. )”

15. Further, the Court of appeal in Mrao Ltd vs First American Bank of Kenya Limited & 2 Others [2003] eKLR, stated that a prima facie case is one which on the material presented in court, a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the Respondent.

16. In the present case, the 1st and 2nd Applicants have submitted that they alongside the 1st Respondent are the directors of the 3rd Applicant and the 1st Respondent has been running the 3rd to the exclusion of the 1st and 2nd Applicants. The 1st and 2nd Respondents are aware f the new account number operated in the name in the name of Tisa Suite & Lounge which business entity ceased its operations. It is on that basis that the applicants pray and submit that they have a prima facie case against the Respondents.

17. The Aplicants have urged that the Applicants will suffer prejudice for the reasons that; the interest of the 1st and 2nd Applicants as shareholders are at risk, the Respondents have been acting in exclusion of the 1st and 2nd Applicants and the 1st Respondents purports to disown the 1st and 2nd Applicants from directorship and finally the te 1st Respondentcontinues to operate Tisa Suite & Lounge which entity ceased opearations.

18. On the balance of convenience, the Applicants submitted that they stand to suffer great harm. Again, it was submitted that on 4th January, 2022, parties consented to allowing the directors work as a unit and so far the parties are doing fine with the iternal arrangements. It was their submission that the application is allowed and no party will be prejudiced.

19. On the part of the 1st Respondent, has submitted that the Applicants do not have a prima facie case as the 1st and 2nd applicants are not members of the 3rd Applicant Company for having relinguished their right to participate in the affairs of the company and resigning as directors and shareholders of the 3rd Applicant. The 1st Applicant has refused to facilitate the changes in his e-citizen account since October, 2019 despite acknowledgment of receiving compensation for his sareholding. In regards to the 2nd Applicant it was since September, 2021.

20. According to the 1st Respondent, no explanation has been given by the Applicants as to why they have not effected changes yet they are bound by their signatures and the documents they signed. In short the 1st and 2nd Applicants are no longer directors of the 3rd Applicant and consequently have no locus standi to file a suit on behalf ot the 3rd Applicant.

21. I have had the opportunity to read through the pleadings and peruse the annextures attached thereto and note that there are resignation agreements signed by the Applicants. This fact was never disclosed by the applicants in their own documents. It is clear that the the applicants had intended to resign from shareholding of the company and therefore can not turn around and claim that their right have been infringed.

22. The Applicants had a duty to establish a prima facie case before this court. In the case of Nguruman Limited –vs- Jan Bonde Nielsen & 2 Others [2014] eKLR, the Court of Appeal held thus:-“We reiterate that in considering whether or not a prima facie case has been established, the court does not hold a mini trial and must not examine the merits of the case closely. All that the court is to see is that on the face of it the person applying for an injunction has a right which has been or is threatened with violation.”

23. In the circumstances of this case, the applicants have not establisahed a prima facie case to warrant the grant of the prayers sought. I therefore find that the application dated 16th December, 2021 lacks merit and the same is hereby dismissed wth costs to the 1st Respondents.

It is so ordered.

RULING DATED AND SIGNED AT KIAMBU THIS 15 TH DAY OF MARCH , 2024. D. O. CHEPKWONYJUDGERULING DELIVERED VIRTUALLY, DATED AND SIGNED AT NAIROBI THIS 18 TH DAY OF MARCH , 2024. ALFRED MABEYAJUDGE