Dr Victor Kipkemei Bargoria VS Daniel Kiptoo Bargoria AND Siokwei Tarita Limited AND 6 Others

1. There are two applications for determination. The first application is the Notice of Motion dated 4^th October 2023 by the 1^st, 5^th, 6^th and 7^th Defendants seeking the following orders:
2. This Honourable Court be pleased to strike out the Plaint dated 28^th November 2022.
3. The entire suit be dismissed.
4. The costs of this application and the dismissed suit be borne by the Plaintiff.
5. The application is supported by the grounds on its face, the supporting affidavit sworn by David Kiptoo Bargoria on 4^th October 2023 and written submissions dated 1^st March 2024.
6. The application is opposed by the Plaintiff/Respondent through a replying affidavit sworn on 24^th October 2023.
7. The second application is the Notice of Motion dated 21^st May 2024, by the 2^nd and 3^rd Defendants seeking the following orders:-
8. Spent
9. Pending hearing and determination of this application, this Honourable Court be pleased to set aside and discharge the ex parte interim order issued on 12^th May 2024.
10. Pending hearing and determination of this application, this Honourable Court be pleased to issue directions on the application for review dated 9^th May 2024, and the application dated 15^th April 2024, by the Plaintiff/Respondent.
11. Costs of the application be provided for.
12. This application is premised on the grounds on its face, the supporting affidavit sworn by the 1^st Defendant, Daniel Kiptoo Bargoria on 21^st May 2024 and written submissions dated 18^th June 2024.
13. The application is opposed by the Plaintiff/Respondent who filed a replying affidavit sworn on 31^st May 2024 and written submissions dated 29^th June 2024.

Background

1. In brief, the background to the applications is that through a Plaint dated 28^th November 2022, the Plaintiff instituted this suit seeking judgment against the Defendants jointly and severally for a declaration that changes in shareholding and directorship in the 2^nd Defendant company after March 2016 ought to be set aside, rectification of the register by the Registrar of Companies, injunctions restraining them from making further changes in the company and operating the company’s bank accounts.
2. The gist of the Plaintiff’s case is that 2^nd Defendant Company was incorporated in March 2004 by his late father Barnabas Tuitoek Bargoria to manage his affairs. At incorporation, the late Barnabas held 900 shares while his second wife, the 5^th Defendant held 100 shares. Subsequently, he and his brother, the 6^th Defendant were incorporated as directors.
3. The Plaintiff alleges that the 1^st Defendant also a son of the deceased, started filing the company’s returns through the 7^th Defendant and purported to change the company’s structure to include him through fraudulent minutes of a meeting held on 2^nd February 2011 approving allotment of 800 shares. He also alleges that after the demise of the deceased on 14^th November 2020, the 1^st and 5^th Defendants purported to sign a resolution to be the sole signatories of the company’s accounts at the 4^th Defendant bank at a meeting purportedly held on 30^th November 2020 during the mourning period.

Analysis and determination

1. I have considered the applications, the grounds, the affidavits, evidence and submissions. At the outset, I note that the second application seeks orders pending the determination of the application. However, to do substantive justice, the Court will invoke its inherent power under section 3A of the Civil Procedure Act and deem the same as a drafting mistake.
2. Therefore, the issues for determination are whether the Applicants have met the threshold for striking out the suit and the setting aside of the ex parte orders and what directions the Court ought to give regarding the application for review dated 9^th May 2024, and the application dated 15^th April 2024, by the Plaintiff/Respondent.
3. The first issue is whether the Applicants have met the threshold for striking out the suit. They sought that the suit be struck out because the Plaint dated 28^th November 2022 is unreasonable, scandalous, frivolous, vexatious and an abuse of the process of the court; does not disclose any reasonable cause of action against them, does not show a triable issue and the Plaintiff has not served the 1^st, 5^th, 6^th and 7^th Defendants with the summons to enter appearance. They argued that the Plaintiff’s case based on allegations of fraud is not supported by any evidence. They also highlighted that they have adduced evidence in rebuttal of the Plaintiff’s allegations of fraud.
4. The Applicants also asserted that the Registrar of Companies after conducting investigations confirmed through a letter dated 23^rd November 2021 that the decision to appoint the three directors and allot shares to the 1^st defendant was regular. They relied on the case of China Young Engineering Company v L.G. Mwacharo T/A Mwacharo Associates & Another [2012] eKLR, that when there is a dispute as to directorship and shareholding of a company, the best evidence to be relied on is the updated records from the Registrar of Companies.
5. Order 2 Rule 15 of the Civil Procedure Code provides as follows:

“(1) At any stage of the proceedings the court may order to be struck out or amended any pleading on the ground that-

(a) It discloses no reasonable cause of action or defence in law; or

(b) It is scandalous, frivolous or vexatious; or

(c) It may prejudice, embarrass or delay the fair trial of the action; or

(d) It is otherwise an abuse of the process of the court, and may order the suit to be stayed or dismissed or judgment to be entered accordingly, as the case may be.”

1. The Court’s power to strike out pleadings is discretionary. The Court’s discretion must be exercised judiciously, with reason and not capriciously or on a whim. Regard must be had to the circumstances of the case. The guiding principles for determining whether to strike out pleadings are well settled.
2. In Yaya Towers Limited v Trade Bank Limited (In Liquidation) (Civil Appeal No. 35 of 2000) [2000] eKLR, the Court of Appeal observed that:

“A plaintiff is entitled to pursue a claim in our Courts however implausible and however improbable his chances of success. Unless the defendant can demonstrate shortly and conclusively that the plaintiff’s claim is bound to fail or is otherwise objectionable as an abuse of the process of the court, it must be allowed to proceed to trial.”

1. Indeed, looking at the plaint, it is clear that the plaintiff's claim against the defendants is for fraudulent allotment of shares and appointment of directors, among others. The defendants have sought to controvert the claim through affidavit evidence. In the Yaya case (supra], the Court of Appeal also stated that:-

“If the defendant assumes the heavy burden of demonstrating the claim is bound to fail, he will not be allowed to conduct a mini-trial upon the affidavits.”

1. The rationale for the foregoing was captured in the same case in the following statement by Danckwerts, LJ, said in Wenlock v Moloney [1965] 1 WLR 1238 at 1244 thus:

“...this summary jurisdiction of the court was never intended to be exercised by a minute and protracted examination of the documents and facts of the case, in order to see whether the plaintiff really has a cause of action. To do that, is to usurp the position of the trial judge, and to produce the trial of the case in chambers, on affidavits only, without discovery and without oral evidence tested by cross-examination in the ordinary way. This seems to me to be an abuse of the inherent powers of the court and not a proper exercise of that power.”

1. The Applicants further relied on Foss v Harbottle (1843), 2 Hare 261 to argue that any irregularity in the acts of directors should be regularized or nullified by the company at a general meeting. However, in Re K Boat Service (Winding Up Cause 35 of 1997) [1998] eKLR, the Court held that courts can interfere only where the act complained of is ultra vires or is of fraudulent character or not rectifiable by ordinary resolution. 
2. From the foregoing, I am not persuaded that this is a suitable case for striking out.
3. The next issue is whether the Applicants have met the threshold for the setting aside of the ex parte interim orders issued on 12^th May 2024.
4. The Plaintiff filed an application dated 15^th April 2024 seeking orders restraining the 2^nd, 5^th and 6^th Defendants from removing him as a director of the 2^nd Defendant company. On 16^th April 2024, the Court granted interim orders that pending further directions on 8^th May 2024, prayer (b) is allowed. On 8^th May 2024 the application came up for hearing and the Court discharged the interim orders granted on 16^th April 2024. The Plaintiff filed an application dated 9^th May 2024 seeking review of the orders of 8^th May 2024. On 12^th May 2024, the Court issued interim orders allowing prayer (b) of the Plaintiff’s application dated 9^th May 2024.
5. The Applicants have sought the setting aside of the ex parte interim orders issued on 12^th May 2024. The grounds are that the impugned orders were issued on a Sunday at 8.20 PM; that according to the High Court Practice Directions, applications filed under urgency shall be considered on a working day and where the attendance of parties is necessary, as in this case, the Judge shall notify the parties/advocates to appear before him; that the Plaintiff did not serve the 4^th and 8^th defendants and that the Plaintiff is trying to cripple the operations of the 2^nd Defendant company.
6. The Applicants asserted that they are entitled to the right to fair hearing; that they have demonstrated their willingness to participate through filing response in the matter; that the Respondent has not satisfied the threshold for the grant of interlocutory injunction; that the Respondent has not demonstrated that he will suffer prejudice that cannot be compensated by costs if the application for setting aside interim orders is granted and that courts cannot interfere with the internal affairs of a company.
7. Order 51, Rule 15 of the Civil Procedure Rules provides that the court may set aside an order made ex parte. The Court’s power to set aside an ex parte order is discretionary and must be exercised judiciously, not capriciously. (See Shah v Mbogo & Another [1967] EA 116).
8. The principles for consideration in determining whether to set aside an ex parte order were laid out in Alterfin CVBA v Timo & another (Civil Suit 447 of 2015) [2022] KEHC 11961 (KLR) (Commercial and Tax) (19 August 2022) (Ruling), as follows:

“The principles applicable in such an application are; the reason for non-attendance and the prejudice, if any, to be suffered by the opposite party. In addition, the application should be made expeditiously.”

1. It is not contested that the ex parte interim orders were given following an application that was made by the Respondent under Certificate of Urgency. The Practice Directions to Standardize Practice and Procedures in the High Court provide that:

“19. Application under Certificate of Urgency

1. Applications filed under Certificate of urgency shall be considered by the Judge at the earliest opportunity. However, matters filed after 12.00pm may be considered by the Judge on the next working day.
2. The Court may in its discretion, issue orders/directions without the attendance of the advocates or parties.
3. Where the attendance of parties/advocates is necessary, the court shall notify the parties/ advocates to appear.
4. Hearing dates for applications certified urgent by a Judge, shall be fixed by the Judge.”
5. Article 159(2) (d) of the Constitution provides that justice shall be administered without undue regard to procedural technicalities. In determining whether to set aside ex parte orders, the paramount factor is whether there was prejudice. The applicants have not demonstrated what prejudice was suffered by the Court issuing the impugned orders on a Sunday. This is because the ex parte orders are issued in the interim pending hearing and determination of the application of 8^th May 2024 and the Defendants shall get an opportunity to be heard during the inter parties hearing.
6. On the other hand, if the ex parte orders are set aside the Respondent stands to suffer prejudice due to the impending changes in the 2^nd defendant company’s structure. As such, I am not convinced that the Applicants have met the threshold for setting aside the ex parte orders.
7. In Mureithi Charles & another v Jacob Atina Nyagesuka [2022] eKLR, the Court underscored that:

“20. That the decision whether or not to set aside ex parte judgement is discretionary is not in doubt and that the discretion is intended so to be exercised to avoid injustice and hardship resulting from accident, inadvertence or excusable mistake or error, but is not designed to assist a person who has deliberately sought whether by evasion or otherwise to obstruct or delay the course of justice.”

Final disposition

1. In conclusion, I make the following orders:
2. The application dated 4^th October 2023 by the 1^st, 5^th, 6^th and 7^th Defendants is dismissed for want of merit.
3. The application dated 21^st May 2024 by the 2^nd and 3^rd Defendants is dismissed for want of merit.
4. Costs in the cause.
5. Parties shall take directions on the hearing of application for review dated 9^th May 2024, and the application dated 15^th April 2024, by the Plaintiff/Respondent.

Orders accordingly.

RULING delivered virtually, dated and signed at NAIROBI

This 7^th day of November 2024.

P. MULWA

JUDGE

In the presence of:

Mr. Kipkemboi for plaintiff/respondent

Mr. Mwangi h/b for Mr. Omondi for 1^st, 5^th, 6^th & 7^th defendants

Mr. Gatheru for 2^nd & 3^rd defendants/applicants

Mr. Chepngeno for 4^th defendant

Court Assistant: Carlos