Tatu City Limited, Kofinaf Company Limited, Nahashon Ngige Nyagah & Vimalkumar Bhimji Depar Shah v Stephen Jennings, Frances Holliday, Hans Jochum Horn, Pius Mbugua Ngugi, Frank Mosier, Anthony Njoroge & Christopher Barron [2015] KECA 140 (KLR)

IN THE COURT OF APPEAL

AT NAIROBI

(CORAM: GITHINJI, KOOME & G.B.M. KARIUKI, JJ.A)

CIVIL APPLICATION NO. NAI 244 OF 2015 (UR 203/2015)

BETWEEN

TATU CITY LIMITED......................................................1ST APPLICANT

KOFINAF COMPANY LIMITED……………………...…...2ND APPLICANT

NAHASHON NGIGE NYAGAH……………….……3RD APPLICANT

VIMALKUMAR BHIMJI DEPAR SHAH………………4TH APPLICANT

VERSUS

STEPHEN JENNINGS............................................1ST RESPONDENT

FRANCES HOLLIDAY…………………...…2ND RESPONDENT

HANS JOCHUM HORN………………………………..…3RD RESPONDENT

PIUS MBUGUA NGUGI……………………………...4TH RESPONDENT

FRANK MOSIER………………………………...…5TH RESPONDENT

ANTHONY NJOROGE…………………………..…..6TH RESPONDENT

CHRISTOPHER BARRON………………………...…..7TH RESPONDENT

(Application for injunction pending the determination of an intended appeal from the Ruling and Order of the High Court of Kenya at Nairobi (E.K.O. Ogola, J.) dated the 28thApril, 2015

in

H. C. C. C. No. 46 of 2015)

**************

RULING OF THE COURT

This is an informal application by the first and second applicants under Rule 52, Court of Appeal Rules 2010 for leave to withdraw the notice of motion dated 24th September 2015.

The notice of motion was filed by the firm of Havi & Company Advocates on behalf of the four applicants. On 1st October 2010 the firm of Ahmednasir Abdikadir & Company Advocatesfiled a notice of change of advocates indicating that the firm of advocates has been instructed by the 1st and 2nd applicants to act for them in place of M/s Havi & Company Advocates.

On 5th February 2015, the four applicants filed Nairobi High Court Case No. 46 of 2015 at the Commercial and Admiralty Division, through the firm of Havi & Company Advocates. The basis of the suit, are resolutions of the Board of Directors of the 1st applicant at a meeting held on 5th February 2015. It is averred in the plaint that those resolutions purported, amongst other things, to revoke the appointment of the 3rd applicant as Chairman of the Board of Directors of 1st applicant and appoint the 4th respondent as the Chairman; appoint 4th and 5th respondents as directors of 1st applicant; revoke the employment of certain employees of 1st applicant and remove the 3rd applicant and two others as signatories to 1st applicant’s bank accounts and replace them with 6th and 7th respondents.

It is further averred in the plaint that the resolutions in respect of the 2nd applicant purported to appoint the 4th and 5th respondents as directors of 2nd applicant, revoke the appointment of the 3rd applicant as Chairman of Board of Directors of the 2nd applicant and appoint 4th respondent as Chairman of the Board of Directors of the 2nd applicant.

It was alleged in the plaint that the two resolutions had not been the subject matter of any meetings of shareholders or of the Board of Directors of the 1st and 2nd applicants, and were thus unlawful and ultra vires the memorandum and articles of Association of the 1st and 2nd applicants. It is further averred in the plaint that the actions of 1st, 2nd and 3rd respondents were intended to give them exclusive control over the affairs of the 1st and 2nd applicants in order that they may continue pilfering the capital and income of 1st and 2nd applicants and stripping of the assets of the 1st and 2nd applicants.

The reliefs sought in the plaint were for judgment that the resolutions made in respect of the 1st applicant and 2nd applicant be declared null and void and various permanent injunctions, all intended to restore the status quo. The plaint was accompanied by an application for interlocutory injunction to restrain various actions arising from the resolutions.

On 28th April 2015 the High Court (Ogola, J.) made various interlocutory orders including an order that the unilateral resolutions made on 5th February, 2015 were prima facieunlawful, that the 3rd and 4th applicants should resume their positions in the 1st and 2nd applicants companies except that the 3rd applicant should not execute his bank accounts signatory powers, and that 4th to 7th respondents should remain in their current positions except that the 4th respondent should not chair the Boards of the 1st and 2nd applicants.

The applicants being dissatisfied with the decision of the High Court filed a notice of appeal and the present notice of motion in which the applicants seek various injunctions pending the determination of the intended appeal to restore the status quo before the impugned resolutions of 5th February 2015.

The application is supported by the affidavit of Nahashon Ngige Nyagah (4th applicant) a chairman of the Board of Directors of 1st and 2nd applicants. There is a replying affidavit sworn by Stephen Armstrong Jennings – a director of the 1st and 2nd applicants who claims to have been authorized by the majority of Board of Directors of the 1st and 2nd applicants to swear the affidavit. In short, Armstrong Jennings claims that the 3rd applicant had no authority of the Board of Directors to file the application; that Board of Directors of the 1st and 2nd applicants have resolved that the firm of Havi & Co. Advocates had no authority to represent the 1st and 2nd applicants in any matter relating to their affairs; that the two companies have no reason to sue their directors who are the respondents; that the Board of Directors of the two companies have authorised their current lawyers to withdraw the application and that the two companies have lodged complaints of fraud against Mr. Havi and Mr. Nyaga.

The oral application for leave to withdraw the application is opposed by the 3rd and 4th applicants but is supported by the respondents. Mr. Havi contended, inter alia, that the application to withdraw the notice of motion is an abuse of the process of the court and the Court should not exercise its discretion in favour of the applicants; that the suit in the High Court was filed with instructions from the two companies; that this is a case of a contest between two groups of directors where the majority are using their might to undermine the minority. Rule 52 of the Court of Appeal Rules authorizes an applicant to apply to the Court for leave to withdraw the application and stipulates that such an application may be made informally.

The extracts of the resolutions of the Board of Directors of the 1st and 2nd applicants passed at a meeting of 16th September 2015 are annexed. The extracts show that seven directors were privy to the resolutions namely Nahashon Ngige Nyaga as Chairman, Vimalkumar Shah (4th applicant), Pius Mbogua Ngugi (4th respondent), Stephen Jennings (1st respondent) Hans Jochum Horn (3rd respondent), Frances Holliday (2nd respondent) and Frank Mosier (5th respondent).

The Board of Directors of the 1st and 2nd applicants confirmed that Havi & Co. Advocates had not been instructed by the Board or shareholders of the two companies to file HCCC No. 46 of 2015 on behalf of the companies and that the firm had no authority to act on behalf of the companies. The extracts also show that the Board of Directors of the two companies appointed Mr. Ahmednasir Abdullahi of M/s Abdikadir & Co. Advocatesto act on behalf of the two companies and also authorised him to manage the law suits on behalf of the companies and take any appropriate legal action under the direction and supervision of Stephen Jennings.

The notice of motion sought to be withdrawn was dated 24th September, 2015 and was filed on 25th September, 2015. On 22nd October, 2015 the advocates now on record for the 1st and 2nd applicants, filed a notice in the High Court, Civil Case No. 46 of 2015 withdrawing all claims against the defendants. The notice of withdrawal was acted upon by the Deputy Registrar of the High Court on the same day and an order was made accordingly. However, at the time of hearing of the oral application we were informed that the 3rd and 4th defendants (3rd and 4th respondents herein) have instituted proceedings for restoration of the entire suit to hearing.

In this oral application, the Court is not concerned with whether or not the firm of Havi & Co. Advocates had instructions of the companies to file the suit in the High Court. That issue is being litigated in the High Court and it would embarrass the High Court if we were to express a view on it. Furthermore, the disputes amongst the directors of the two companies are not directly relevant. Those disputes would have been relevant if the Court was determining the pending notice of motion.

The notice of motion is filed by Havi & Co. Advocates, who the 1st and 2nd applicants had resolved had no instructions to institute the suit in the High Court. The notice of motion was filed about a week after the Board of Directors of the 1st and 2nd applicants had appointed Ahmednasir M. Abdullahi, SC to manage the suits and take an appropriate legal action.

At the hearing of the oral application no question was raised by Mr. Havi about the resolutions of 16th September, 2015 of the Board of Directors of the two companies. The 3rd and 4th applicants participated in the Board meetings and the extracts of the solution show that the resolutions were passed by all the seven directors.

Mr. Havi has not also raised any issue about the appointment of the current advocates. In the premises, M/s Havi & Co. advocates had no instructions from the 1st and 2nd applicants to file the notice of motion dated 24th September, 2015.

Furthermore, the notice of motion is a joint application by the four applicants. Nahashon Ngige Nyaga depones in the supporting affidavit that he was duly authorised to swear the affidavit on behalf of the 1st, 2nd, 3rd applicants and on his own behalf. It is apparent that the suit in the High Court and the present notice of motion are brought for the benefit of the two companies – to address a wrong done to the two companies.

The suit in the High Court, the application determined by the High Court and the pending notice of motion, principally relate to the affairs of the two companies - that is the appointment of additional directors, the removal and replacement of the chairman of the Board of Directors of the two companies and the change of signatories of the bank accounts of the two companies. Apparently, the suit and the applications do not concern any personal claim by the 3rd and 4th applicants for any wrongs personally done to them by the two companies. So although the 3rd and 4th applicants are named as parties to the notice of motion, they are in reality litigating on behalf of the two companies. They have no separate applications apart from that of the two companies and the application is not therefore severable.

In conclusion, the notice of motion was brought on behalf of the two companies by the firm of advocates which had no instructions as from 16th September, 2015 to represent the  two  companies.   The  notice  of  motion  is  in  reality  brought  by the  3rd applicants on behalf of the two companies who are among the directors, who appointed the 1st and 2nd applicants’ current advocates by a resolution of the Board of Directors passed on 16th September, 2015. Thus the notice of motion is brought in contravention of the resolution of the Boards of the two companies.

In the premises, leave should be given for the withdrawal of the entire application. For the foregoing reasons, the oral application is allowed. The notice of motion dated 24th September, 2015 and filed on 25th September, 2015 is withdrawn under rule 52 with no orders as to costs.

Dated and delivered at Nairobi this 11thday of December, 2015.

E. M. GITHINJI

……………..……….……

JUDGE OF APPEAL

M. K. KOOME

……………..……….……

JUDGE OF APPEAL

G.B.M. KARIUKI

……………..……….……

JUDGE OF APPEAL

I certify that this is a true copy of the original

DEPUTY REGISTRAR