Republic v Registrar of Companies & Atlantic Group Company Limited Ex-parte Atlantic Group (K) Limited [2017] KEHC 7776 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

JUDICIAL REVIEW

MISCELLANEOUS APPLICATION NO.  329 OF 2016

IN THE MATTER OF AN APPLICATION FOR LEAVE  BY ATLANTIC  GROUP(K)LIMITED TO COMMENCE PROCEEDINGS IN THE  NATURE OF JUDICIAL REVIEW FOR ORDERS OF CERTIORARI  AND  MANDAMUS

AND

IN THE MATTER OF REGISTRATION OF ATLANTIC GROUP COMPANY  LIMITED  REGISTERED UNDER CERTIFICATE  OF  INCORPORATION  NUMBER  17025  ON  23RD  FEBRUARY  2015

AND

IN THE MATTER OF ARTICLE  47 AND  165   THE CONSTITUTION OF KENYA

AND

IN THE MATTER OF   FAIR ADMINISTRATIVE   ACTION ACT ( ACT  NO. 4   OF 2015) AND CIVIL  PROCEDURE  ACT CHAPTER  21   OF THE LAWS OF KENYA, ORDER  53  OF THE CIVIL PROCEDURE  RULES, 2010.

AND

IN THE MATTER OF SECTIONS 57,58,59,60 AND 61 OF THE COMPANIES  ACT NO.  17 OF 2015

BETWEEN

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

VERSUS

THE REGISTRAR OF COMPANIES…………….………  ...RESPONDENT

ATLANTIC GROUP COMPANY LIMITED ……......INTERESTED PARTY

EX PARTE ……………………….…….ATLANTIC GROUP (K) LIMITED

JUDGMENT

1. On  28th July 2016  this court  granted the  exparte  applicant  Atlantic  Group (K) Limited leave to institute  Judicial Review  proceedings  seeking for  Judicial Review  orders of:

a. Certiorari to issue to   remove into the  High Court  and  quash  the  decision of the  Registrar of Companies  to register  the interested PARTY ATLANTIC GROUP COMPANY LIMITED as a  registered   company;

b. Mandamus  to compel  the respondent  to strike  out from  the Registrar of Companies the registration of the name ‘ATLANTIC  GROUP  COMPANY LIMITED’ from the list of  registered  companies.

2. The court  ordered that  the substantive   motion  be filed  and  served by way of substituted  service  upon the  respondent   and  interested party  within 21 days  from  date of order.

3. As  against  the interested  party, the court   also granted  leave for   service  upon the company  by  way  of substituted   service   in at least  two   daily newspapers  of Nationwide circulation  giving  it  14  days from the date of  service  to file  their response  to the substantive  motion.

4. The exparte  applicant  complied with  the orders  for leave and   filed the substantive  notice of  motion on  5th August  2016   and   effected service upon the interested party by way of  newspaper  advertisements in the Daily  Nation and the Standard  Newspapers  on  11th August  2016.  The Registrar  of Companies  who is  the respondent  in this matter  was also  served on  8th August  2016.

5. Neither the respondent nor interested party filed any appearance or response to the substantive motion  filed on 5th August  2016.

6. The matter  came  up for directions on  5th October  2016  and the court   fixed  the  hearing  for  16th November  2016 and  hearing  proceeded  as scheduled.

7. The notice  of motion  was  supported  by the statutory  statement  and  verifying   affidavit  sworn by  Alex  Trachtenberg  and annextures  thereto.  The  exparte applicant’s  case is that it is a limited  liability  company duly registered  on  16th March 2005  under the then  Companies Act  Cap  486  Laws  of  Kenya ( repealed) and   issued with a  Certificate of Incorporation  No.  C  115423.  That  it complied  with the law and from time to time filed its  annual returns.  That  when its  advocates Ms  Oraro  & Company Advocates   wrote a letter  to the  respondent  Registrar   of Companies  on  3rd June  2015   seeking for   a search certificate  as per  Form CR  12   to verify the  existing  shareholders  and directors, and  a further  letter of  27th July  2015   requesting   for copy of  the Memorandum and  Articles of Association  of the exparte  applicant, the exparte applicant  received a  letter from  the  respondent to the effect  that the  applicant’s  file at the Companies  Registry was missing.

8. In the ensuing, the applicant learnt  that one Mr Dominic  Otieno  had applied  to reserve  the name  “ATLANTIC GROUP COMPANY LIMITED’which  name  is confusingly  similar   to the applicant’s  name.

9. That subsequently, the said  Atlantic Group Company had its  Memorandum and Articles of Association presented for registration  allegedly  drawn  by an  advocate  under the name of Ms Sammy Nyaga of P.O. Box 4009-40103  Kisumu, together  with a statement  of  nominal  share capital  dated  11th February 2015; Form  201  and  208  both dated  13th February  2015  and  Form 203 dated   12th February  2015  were lodged and  registered  with the  respondent.

10. That on 17th February  2015  the reservation of  name  was registered  by the respondent   and followed by  the lodging  of the registration  document  for the interested party.  That  on  23rd  October  2015   the applicant  through  its advocates  wrote to the   respondent   demanding  that  a notice  be issued   to the interested party  requiring  it to  change  its  name  and  copies  of the said  letter send to the addresses  indicated  in the Memorandum  and Articles  of Association being : Dominic  Otieno  Ogallo P.O. BOx 1994-40100, Kisumu; Phoebe  Atieno Agik, P.O. BOX  5036 Kisumu and its advocates Sammy Nyaga  P.O. Box  4009-40103 Kisumu.

11. That the respondent never responded  to the said  letter   and that  despite  follow  up letter  of  20th November  2015  requesting for urgent confirmation of whether the directors and  shareholders  of the interested  party company were issued   with notice, there   was no  response.  That a further letter dated   14th December  2015  to the respondent  elicited  to response.

12. That  it   was   not until  4th January  2016  that the respondent   wrote a letter  to the interested party  asking the interested parties to  change their  name in default  of which  she  would   invoke  the provisions  of Sections  20(2)  of the Companies  Act,  which the interested party   has failed to change  and  neither  did the respondent  invoke  those provisions  of Section  20(2)  (b) of the Companies Act  to revoke   the registration  of the interested party company.

13. That despite  several  reminders  to the respondent  dated  19th January 2011, 14th March  2016 and  19th March 2016  the respondent  has not  struck out  of the register  the interested  party’s name.

14. That the missing  file has now  been  retrieved  and the file shows  the details of directors  and  shareholders of the applicant   which are different from the interested party’s.  That the confirmation from the Law Society of Kenya shows that  there  is no such  advocate   by the name  of Sammy Nyaga  practicing   law  in Kenya  or Kisumu.

15. That registration  of the interested  party breaches   Section  57,58, 59 and  60  of the Companies  Act No.  17/2015  and that  there is great  danger  that the  interested  party may  be used  either  to defraud  the applicant  or third  parties in the name  of the  applicant   since the  two names  are confusingly  similar.

16. The  exparte  applicant’s application  was argued   orally by its  counsel Mr Okoth  holding brief  for Mr SC Oraro   relying  on  the grounds  in the statutory  statement,  the verifying  affidavit  and the annextures  verifying  the  facts relied  on.

17. The  applicant’s  counsel  also filed   brief submission relying  on statutory  provisions with  no  case law  cited.  The submissions mirror the grounds and  verified   facts  while citing   the statutory   provisions  in support  thereof.

Determination

18. I have  carefully  considered  the  exparte   applicant’s  notice of motion, the statutory  statement   grounds, the verifying   affidavit   and  annextures  as well as the brief written  and oral  submissions  supported by  relevant   statutory  provisions of   the  law.

19. The issue for determination  is  whether the Judicial Review Order  of certiorari  and  mandamus  as sought  are available  to the exparte  applicant.

20. Section  20 of the Companies  Act (repealed)  provides that:

“change of name”

1. A company  may, by special  resolution and  with the approval of the  Registrar  signified   in writing  change its name.

a. If through inadvertence  or otherwise, a company  on its  first  registration  is registered  by a name   which, in  the opinion  of the Registrar, is registered  by a name  which, in the opinion of the Registrar, is   too like  the name  by which  a  company  in existence is previously registered, the first  mentioned  company  may change  its name with the  sanction of the Registrar  and, if he so  directs  within six  months  of  its being   registered   by that  name, shall change  it within  a period  of six weeks   from the date  of the direction  or such  longer period  as the Registrar may think  fit to allow.

b. If a company  makes default in  complying  with a discretion under this  subsection, the company  and every  officer  of the company  who is in default  shall be  liable to  a fine not  exceeding  one hundred  shillings   for  every day  during  which  the default  continues.

c. Where a  company  changes  its name  under this Section, it shall  within  fourteen  days give notice to the Registrar  thereof   and the Registrar shall enter  the new  name  on the  register in place  of the former  name, and shall  issue to the  company   a certificate  of change  of name, and shall notify  such change  of name in the Gazette.

d. ………”

21. From the above  provision, it is clear  that in  cases where the Registrar inadvertently or otherwise registers two companies  under the same name, the Registrar  is obliged  to call up  and inform  the latter  company, to change  its name, and if the  latter company defaults to comply with the Registrar’s  directions, such  company  and  every officer   thereof  shall be  liable  to a fine  not exceeding   one hundred  shillings  for every day  during  which  the  default continues.

22. The Registrar, regrettably, cannot enforce such default.  He/she can only  follow the  criminal process of complaining   to the Director  of Public Prosecutions for prosecution or to cause the  Inspector  General   of Police  to investigate the alleged  violation and  prosecute the   defaulting   company and its chief  officers  including directors  and  chairman( see Section  395  of the Act).

23. In the instant  case, the Registrar  of Companies  has not  followed up the enforcement    of Section 395  of the  Act to cause  the interested party   to be prosecuted  for  refusing to change   its name  which is in  material particulars, similar to the exparte  applicant’s  name.

24. There is   a overwhelming   evidence which is  uncontroverted by either the  respondent or the interested  party  that the  registration of the applicant  was done  in  2005   nearly  10 years  before the interested  party  was   registered hence the  applicant has  priority  of registration and  existence.

25.  Palmers  Company Precedents 17th Edition page 289  by K. W. Mackinnon & Buchanan  writes that:

“ The  principle on which the  courts  interfere  in such cases is that, one  person is not  to be  permitted  to represent the business  which is   carried  on by  another  as  carried on  by him, or to  represent  his goods  as being  the goods  of another man, or  to enable  his customers   to make a false  representation, to someone  who is  an ultimate purchaser.”

26. In Leny Vs Walker [1879] 10 ch  D.P  206the authors  refer  to an English Companies Acts 1948, similar  to Sections  15,16,19 and  20  of the Companies Act, Cap  486   Laws of Kenya a stating:

“ These provisions are designed principally to prevent   similar  names   getting to the register, but the  registration of a  company  by a name which is calculated  to  deceive  by reason  of its identity  with or  resemblance  to the name  used by some  other registered  company--- will not prevent   the  courts from  intervening  in a proper  case by  injunction, to protect  the rights of  such last   mentioned  company  for the court  has jurisdiction  to restrain  a defendant  from using  a  trade name  colourably  resembling  that of the plaintiff, if the defendant’s trade name though innocently adopted is calculated to deceive either:

By diverting customers from the plaintiff   to the defendants, or

By occasioning confusion between   the two businesses.”

27. In the present  case,  one does  not need  a scanner to see  and discern  that the name of the exparte applicant ATLANTIC  GROUP (K) LIMITED (C 115423)is quite similar  in resemblance  to the name  of the interested   party  ATLANTIC  GROUP  COMPANY  LIMITED  CR 2015/179025  which names are strikingly and confusingly  similar.

28. Section  20(2)  of the Companies Act is  clear   that a company  may change  the name  with the approval of the Registrar. And  once  the Registrar  discovers  that  another company  with a similar  name  has inadvertently  or otherwise  been registered  and  informs  the  affected  company in writing, that  notification  marks  the end of the  name of  the  latter company and the affected company  is bound  to change   its name  and in default, the latter  company  and its  directors   or officers commit  an offence triable  and  fined under Section  20(2) (b)  of the Act.

29. The exparte applicant herein seeks  for Judicial Review  Order of  Mandamus  to compel   the Registrar to do  that which   the law  requires her to do, where two  companies  have inadvertently or otherwise  been registered.

30. However, since  the law  only  requires the  respondent  to advise   the interested  party to change  its name, and the  Registrar  having   so advised   the interested  party vide  her letter  dated  4th January 2016   CR 18-C115423 &  CPR/2015/179025  using  the  last known registered  address of the interested party at P.O. Box  1994-40100 Kisumu, and  having notified  the latter company  that its  name   and  the  exparte  applicant’s  name  are deceptively  similar   and  cannot  exist   concurrently  in the register  as they are  likely  to cause  confusion to ordinary  members  of the public; and that the allocation of the name  “ATLANTIC  GROUP COMPANY  LIMITED” to  it  was  inadvertently  done  and the  same is  no longer  tenable within the meaning  of Section 20 0f the  Companies  Act Cap  486  Laws of Kenya; and calling upon  the interested  party  to change  its name   within 6  weeks  from  4th January  2016  failure  to which the  Registrar’s office would invoke the provisions of Section  20(2)  (b) of  the Companies Act; and the interested  party having  defaulted  to change   its  name; I find that  the respondent  has done  that which  the law requires her to  do and  therefore  the order of  mandamus   will not issue   against  the respondent  who has   already done what the statute commands  her to do- to advise  the interested  party  to change   its name within a certain stipulated period.

31. Similarly, the Judicial  Review Order of certiorari  cannot issue  to quash  the decision of the respondent   to register  the interested party for reasons  that   the provisions  of  Section 20  of the Companies  Act foresees  situations where the  Registrar  may inadvertently  or otherwise  register  the latter   company  bearing   the same or similar  name  as the already existing  company.

32. Furthermore, the said Section  20 provides  a remedy  where such  registration  by inadvertence  or otherwise  occurs  that of  directing  the latter   company to change  its   name  within the stipulated  period, and  which the  respondent  has done.

33. The same provisions also provide for penal consequences for failure to comply   with the Registrar’s directions by the interested   party.

34. Accordingly, I find that the order of certiorari   is not   an effective remedy in the circumstances of this case.  I decline to grant it.

35. Nonetheless, the exparte applicant has genuinely approached the seat and temple of justice.  It cannot go away remediless.  A  wrong  has  been committed  against  it and there  cannot be  no remedy  for  such a wrong  which is  likely to cause it  loses through fraudulent  transactions  by the interested  party  who has  defaulted to comply with  the Registrar’s  directives , with  impunity.

36. Article   159(2) of the Constitution  clothes this  court with inherent  jurisdiction  to administer  justice  to all irrespective  of status   and make such  orders   as may be  necessary  to meet  the  ends of justice  and to prevent  the  abuse of court process.

37. There is no abuse of court process in the instant    proceedings.  However, there  is a sufficient  cause to make  such  orders  as to meet  the ends  of justice.  It is  for the above reasons  that I make  the following orders:

1. That the Registrar  of Companies  shall pursuant  to Section  20 of  the Companies  Act report  the  interested  party’s  default  to the Director  of Public  Prosecutions for  the prosecution  of the interested   party and  all its   directors  for  flagrant  breach  of Section  20(1) (b)  of the Companies Act.

2. The interested party shall change  its name  within  14 days  from the date   of service  of this  order.

3. This order to be served  upon the Registrar of  Companies   personally  and  upon the interested  party  by way of  advertisement  in at least two daily newspapers of nationwide  circulation.

4. Upon  expiry of  14 days  from date of service of this order upon the interested  party  in the manner aforesaid  in Order  No. (3)  above; the respondent Registrar  shall, without further  application by the exparte applicant  forthwith  deregister   the interested party ATLANTIC GROUP COMPANY LIMITED, and publish   the fact  of such deregistration  or striking  it off the  register  of companies in the  Kenya Gazette  within  14 days   from the date of expiry of notice  stipulated   in Order  No. 3  above.

5. The interested  party ATLANTIC GROUP COMPANY LIMITED shall  pay costs of  these Judicial  Review  proceedings  and in default   thereof, the corporate  veil of the interested   party shall  be lifted   by this order and such costs  be borne  by Dominic  Otieno Ogallo of P.O. BOX 1994-40100 Kisumu  and  Phoebe  Atieno Agik   P.O. BOX  5036-40100 Kisumujointly and severally.

Dated, signed and delivered in open court at Nairobi this 18th day of January 2017.

R.E. ABURILI

JUDGE

In the presence of Mr Okoth for the exparte applicant

N/A for the Respondent

N/A for the interested party