Republic v National Land Commission, Registrar of Titles, Nairobi & Majestic Security Systems Limited Ex-Parte Magnate Ventures Limited [2017] KEHC 4296 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

JUDICIAL REVIEW NO.  424 OF 2016

IN THE MATTER OF AN APPLICATION BY MAGNATE VENTURES LIMITED OR THE ORDERS OF CERTIORARI AND MANDAMUS

AND

IN THE MATTER OF THE CONSTITUTION OF KENYA, 2010, THE CIVIL PROCEDURE ACT, CAP 21   OF THE LAWS OF KENYA, THE ENVIRONMENT AND LAND COURT ACT, NO.  19 OF 2011, THE LAND REGISTRATION ACT, NO.  3 OF 2012, THE NATIONAL LAND COMMISSION ACT, NO.  5   OF 2012, THE LAND ACT, NO.  6 OF 2012   AND THE FAIR ADMINISTRATIVE ACTION ACT NO.  4 OF 2015

AND

IN THE MATTER OF MAGNATE   VENTURES LIMITED

BETWEEN

REPUBLIC………………….....……...………………………….APPLICANT

VERSUS

NATIONAL LAND COMMISSION …………...……….....1ST RESPONDENT

REGISTRAR OF TITLES, NAIROBI……...……………..2ND RESPONDENT

AND

MAJESTIC SECURITY SYSTEMS LIMITED...…....…INTERESTED PARTY

MAGNATE VENTURES LIMITED……..….......…………………..EX-PARTE

RULING ON LEGAL REPRESENTATION

1. This ruling determines  a preliminary  issue on  who is the  legal counsel  for the interested  party – Majestic  Security  Systems  Ltd  as there are  two advocates  on record  each claiming  to be representing  the  interested party, Majestic Security Systems   Limited.

2. The advocates  concerned  are Mr  Kandie  and  Mr Njeru  and the issue for  determination  is who, legally speaking, is on   record as  representing  the interested party.

3. Mr  Kandie submitted, relying on the replying  affidavit  filed on  9th December  2016  and a further  supplementary  affidavit sworn on  16th January  2017 filed on the same date by Esther Jeanette Ngeny together with accompanying  annextures  and submissions  filed on  16th January  2017  dated  9th December  2016.

4. According to Mr Kandie, Form CR  12  from the Registrar of  Companies  confirmed that the  interested  party  had  only  3  directors   since its  inception and  that two  of its  directors  are  deceased.  Further, that the main issue emanates from the purported change of directors done outside the purview of the Law and Regulations.

5. That the purported change of directors by Rahab K. Mukiama and  Titus  Karauka Mukiama  was through a fake  Power of Attorney that was not registered.

6. That the fake Power of Attorney claims that one of the deceased   directors Mr Jack Kimkung signed the purported power of Attorney.

7. That in this case, Mr Njeru purports to represent Ms Rahab and Titus Kurauka Mukiama.

8. It was contended  by Mr Kandie that a limited liability  company  operates  through  a Board  of Directors   and for an advocate  to be given instructions  to represent  a  limited  liability  company, a resolution  must be passed by a  Board  of Directors  to appoint  such counsel and  an instructions  note given  to counsel  to act upon it to  represent  the company.

9. That in this case, there is clear documentation from the Registrar of Companies and instructions given to Mr Kandie’s firm of advocates by the Company.

10 Further, that Mr Kandie had instructions to represent the interested  party before  the National Land  Commission  while Mr  Njeru  did not  represent  the  interested  party but  appeared  for  Rahab  Mukiama  and  Titus  Mukiama.

11. Mr Kandie  urged the court  to unravel  the mystery  on the issue  of legal  representation  based on documents  filed on  record since the  subject  matter of the dispute  is very prime  land  and  since even  the  Registrar of Companies   highly suspected  fraud on the part of Rahab  who applied  for a  duplicate copy of the  Certificate  of Incorporation  as  a director.

12. It was submitted that Rahab and Titus Mukiama attempted to perpetuate fraud for   purposes of transferring the property subject of this case without following due process hence the court should establish who, properly speaking represents the interested party company in these proceedings.

13. Mr Njeru on his part submitted contending that Mr Kandie is addressing issues of fraud which have nothing to do with the issue of legal representation. Further, counsel  submitted  that he did not  see the need to  file any   affidavit   on legal representation  because  the record  is clear  that  Mr Kandie  appears for Ms Esther  Jeanet  Ngeny  as shown by  her document  from the Registrar  of Companies, which are returns for the year 2015.

14. It was submitted that Esther Ngeny is a non director shareholder with nil shareholding of the interested party company.  That since the directors/shareholders Mr Eric Naibei and Jack Kimkung died, Esther Ngeny is introduced in a scandalous fashion. That no director gave Mr Kandie  instructions  to represent  the company.

15. That although  Mr Naibei  complained  to the National Land  Commission  of fraud, he is the one  who handed  over the company to Mr  Njeru’s  client  interested  party as   represented  by Rahab and Titus  Mukiama who in turn transferred  the company to the  exparte  applicant, Magnet Ventures Limited, who are Mr Havi’s  client.

16. It  was  submitted that  Mr Njeru’s  client could not be registered  as a  tax payer  using  fake  documents. Further, that  Esther Ngeny  does not  appear as  director  on the Memorandum  and  Articles of  Association.

17. Further, that the issue  fraud was  investigated  by CID  and dismissed  and that  more so, the power  of Attorney  which  was  prepared by Mr Njeru’s  office  was never  used  anywhere.

18. That his client  took over  the  company  after compensating Mr Naibei  who was a director.  Mr Njeru  insisted  that he was  properly  on record for  interested party although  he has  no objection to Mr Kandie  representing  his client  Esther Ngenywho is not  a non  director  shareholder  with no shares.

19. On the part  of the  exparte  applicant, it  was  submitted by Mr Havi that  according  to his  clients, the person  from whom  his client   obtained  transfer  of the company  is the one  who has proper  legal  representation before  the court  and  that therefore  Mr Njeru  Nyaga  the appropriate  advocate  for the interested party.

20. Mr Havi  referred  the court  to the  agreement   for sale of the company  which  was signed by  Rahab  and  Titus  Mukiama  as  Directors  of the interested  party company.  It  was submitted that none of the advocates have proved that they  were appointed  by directors  of the interested party  since CR 12 dated  9th November 2016 does not disclose that Rahab and Titus  Mukiama are Directors. Further, that Sections 105 and 135 of the Companies Act is clear  that the register of members and directors is prima facie evidence of who directors and  shareholders are unless the contrary is  proven, and  that  the contrary is  found in Sections 128-135  of the Companies  Act.

21. That Esther Ngeny  is a non director and that there is no evidence of how Mr  Kandie was appointed in the  manner set out  in Articles 12  and  22 of  the Interested  Party’s  Articles  of Association  hence Mr Kandie could not have  been instructed by Ms Esther Ngeny who is a non director who cannot purport  to act as director to initiate  litigation.  As such, it was submitted that Form CR 12  is not  conclusive  evidence  that  Rahab and  Titus Mukiama are not directors of the interested party company.  Mr Havi relied on  the cares of  Re-chitembe  Estates  Ltd  [2008] e KLR  and  Kabundu  Holdings v Ali  Ahmed  T/A Sky Club  Restaurant  [2005]  e KLRwhere the court  held that  a  company cannot  have less  than 2  directors   or more than  7 directors.

22. That in this case, Rahab and  Titus Mukiama signed  and  executed  an agreement under seal transferring the disputed property in favour   of  Magnate  Ventures  in the manner set out  in Articles  12 and  22 of the Articles  of  Association  of the interested party  and that as the  Registrar’s letter  of  3rd  May 2012 shows  that as  at  8th January  2009  Rahab was on the  Register, after  being  given  original  documents  by the company  through  a sale.

23. According to Mr Havi, two forensic reports show that Naibei signed the agreement under the Power of Attorney.

24. According  to  Mr Havi, Rahab  and  Titus  Mukiama were on the Company’s register but it  is not  clear how they exited  the register  and that the fact that the Director of Public Prosecutions closed the fraud  investigations file  is a clear  indication that  fraud cannot  be relied  on  to raise  similar  issues  before the National Land  commission  by Mr Naibei  since there  was no  criminal culpability  on the  part of  Rahab  and  Titus Mukiama.

25. In Mr  Havi’s  view, Rahab  and Titus  Mukiama are properly   before the court   to demonstrate  their bona fides  and  that Naibei’s  Estate  too is free  to demonstrate  its interest   in the  matter since  he  died before   the  issue  he had  raised   before National Land  Commission   was resolved.

26. Miss Njuguna on behalf of the National Land Commission submitted that the  issue   was the manner in which the land  was transferred  and  that CR 12  and the  Power of Attorney are material to the Commission’s determination of the issues  of  whether the transferors  had capacity  to do so transfer the  property  or not to  the  exparte  applicant.

27. In a rejoinder, Mr  Kandie submitted that a limited  liability  company  has perpetual  succession  whether   the  directors  die or not.

28. Mr  Njeru  on the other  land maintained  that his client  was the  proper party to these proceedings.

DETERMINATION

29. I have considered the foregoing.  The only issue for determination is who between Mr Kandie and Mr Njeru  Nyaga  represents the interested party therein-Majestic security Systems Ltd.

30. From the  submissions  of all the  parties/advocates  on record, it is  clear  that each of  the natural persons Rahab; Titus  and  Esther  claim to have interests  in these   proceedings, with Esther being found to be a non-shareholder director of the Interested party as per CR12 and no evidence of Rahab and Titus being directors- shareholders  of the interested  party, as  correctly  submitted  by Mr Havi.

31. Nonetheless, CR 12 is only but prima facie evidence of directorship and the contrary could be proved by other evidence but which contrary  evidence is beyond the scope of this ruling on legal representation as it touches on the merits of the substantive application. That being  the case, albeit  issues of  fraud have  been raised  and  argued  extensively, to delve into the  merits  thereof  will be to determine the merits  of this case  by installments which will  prejudice  the ultimate  outcome   thereof.

32. As it is  clear that  Esther Ngeny has interests  in the company  by virtue  of  her being   found on CR 12  despite  being  a director  non-shareholder - with no shares; and  Ms  Rahab  and  Titus Mukiama  too  have  an interest in the company   though their  names do not  appear  CR 12, it  will  not be  appropriate  to exclude  any of the  persons named  from being represented by their respective advocates in these  proceedings, whether  they claim to be directors  or not, of  the interested  party.

33. Since it  is clear  that Mr Kandie  represents  the interests  of  Esther Ngeny who claims  that Rahab and Titus  Mukiama who are  alleged to  have fraudulently  acquired  the  property  from the late  Naibei and  transferred  to the  exparte applicant, which  allegations  are vehemently denied by Rahab and Titus as shown by the submissions  of Mr Havi  counsel  for  the exparte  applicant, it is only fair  and  just that  both Esther and  her adversaries, Rahab and  Titus  are legally represented  in these  proceedings  by their respective advocates, whether in their capacities as directors  of the interested  party  or as  persons who have  an interest in the interested party company and or property subject of these  proceedings.

34. Moreso, the record of proceedings before the National Land Commission show that Mr Kandie  represented  the interested  party Majestic  Security  Systems  Ltd.  The issue  of fraudulent  transfer  of  the company was not  considered but not fully canvassed by the National Land  Commission in the decision  of  4th August  2016  and parties were advised  to pursue  it through  relevant  jurisdictions.

35. This court is not that relevant jurisdiction to determine  on merits  the issue of  fraudulent  transfer  of the company  as it will  only be  concerned with the questions of  jurisdiction, propriety, legality or reasonableness of the decision  made  by National Land  Commission, especially the question  of cancellation of the transfer of the land made to Magnate  Ventures  Limited  and reversion  thereto to Majestic  Security Systems  Limited.

36. In this case, since  the issue of  fraudulent  transfer   of the company  and the  property  is at  play, and as it is  apparent  that Esther  Ngeny had adverse  interests  to those of  Rahab and  Titus  Mukiama, and as  it is clear that each of them lay claim to the interested party  company, the order  that commends  itself  at this moment is to  direct  that Mr Kandie continues  representing  the interested  party  through  Esther  Ngeny while Mr Njeru  Nyaga  continues  representing  the interested  party through Rahab  and  Titus Mukiama who also  claim  the  directorship of the interested  party.

37. In the end, I decline  to hold  that any  of the two advocates  have a better entitlement of legal representation of the  interested  party Majestic Security Systems Limited.  Each of the two advocates hereto, through their respective instructing clients are at liberty to advance  their respective   client’s  best  interests  and  arguments.

38 .I make  no orders  as to costs  and  direct  that the  main motion  be set  down for hearing  inter parties.

Dated, signed and delivered in open court at Nairobi this 22nd day of May, 2017.

R. E. ABURILI

JUDGE

In the presence of:

Mr Kandie for Interested Party through Esther Ngeny

Mr Miller h/b for Mr Njeru for Interested Party through Rahab and Titus Mukiama

And h/b for Mr Havi for the exparte applicant

Mr Wahome h/b for Mrs Njuguna for the 1st respondent

CA: George