'1. The parties herein were engaged in arbitration proceedings. The sole arbitrator issued a Final Arbitral Award dated 22nd October, 2019 and the Final Award on Costs is dated 5th October 2020. Express Connections Limited, the applicant herein, filed HCC ARB/E003/2020 dated 4th November 2020 seeking an order that the said awards be recognized, adopted and enforced as a judgment of this court. Easy Properties Limited, the respondent herein on its part filed HCC ARB/E007/2020, application dated 28th December 2020 seeking various orders among them, an order that the said awards be set aside in their entirety. On 9th February 2020, this court differently constituted directed that the two applications be consolidated and that the lead file be E007 of 2020.
2. The two applications were heard and determined concurrently and the court rendered its decision dated 7th September 2025 wherein the application dated 4th November 2020 by Express Connections Ltd seeking recognition of the arbitral awards was allowed and the awards by the Honourable Sole arbitrator were recognized and adopted as a judgment of the court with leave to enforce the same as a decree of the court while the application dated 28th December 2020 by Easy Properties Ltd seeking the setting aside of the arbitral awards was dismissed. Costs for the consolidated applications were directed to be paid by Easy Properties Limited.
3. Express Connections Ltd has now filed the present application by way of Notice of Motion dated 8th November 2023. The application is brought under sections 3A and 63E of the Civil Procedure Act (Cap. 21) Laws of Kenya, Order 51 Rule 1 of the Civil Procedure Rules and all other enabling provisions of the law.
4. The first prayer is for the firm of T. M. Kuria & Co. Advocates to be granted leave to act for the applicant Express Connections Ltd. The substantive prayer is that the court grants leave to pierce the corporate veil of the Respondent, Easy Properties Ltd with a view to executing the decree herein and that costs be provided for.
5. The grounds upon which the application is laid are set out on the face thereof and are expounded in the supporting affidavit of Mary Wangari Mwangi, one of the applicant’s directors, sworn on 8th November 2023. They are that the respondent has not made any effort to satisfy the decree of the court issued herein since the year 2021 and applicant has made several attempts to trace attachable property belonging to the respondent in vain. Further that the applicant has been exposed to the brink of poverty and so prays for an order of lifting the corporate veil of the respondent company so that it can enforce the decree against the directors.
6. A copy of the decree sought to be enforced and a copy of the respondent’s registration particulars with the Business Registration Service are annexed to the supporting affidavit.
7. The application is opposed by the respondent by way of a replying affidavit sworn on 9th April 2025 by Stephen Onyambu, a director of the respondent and notice of preliminary objection.
8. After narrating the background to the matter, the respondent deposes that the sole arbitrator awarded KShs 168,000,000/= to the applicant but also ordered the applicant to hand over the title to the property back to the respondent company. However, the applicant had already obtained a loan using the property as security from Kenya Commercial Bank (KCB) and the title deed is now with the bank as the applicant has not discharged the same. In the circumstances, it is not feasible for the respondent company to refund the monies paid by the applicant as awarded by the arbitrator as it will mean it loses the money and also the title deed of the property. The respondent therefore requires the title of the property to be free from encumbrances in order for it to pay the applicant.
9. Otherwise, the respondent deposes that the application fails to meet the legal requirements for lifting the corporate veil both in substance and procedure. That the ground advanced by the applicant, of the respondent’s inability to satisfy the decretal sum is not sufficient to meet the threshold for lifting the corporate veil which require that fraud, misrepresentation or other exceptional circumstances have to be demonstrated.
10. The respondent also filed a preliminary objection dated 11th November 2025 to the application on grounds that the application does not meet the legal threshold for piercing and/or lifting the corporate veil of a company as established by various authorities on grounds of fraud, improper conduct, injustice, or the company being an instrumentality or alter ego of the directors such that there is unity of interest and one is inseparable from the other.
11. I have considered the preliminary objection and I find that the issue raised therein calls for arguments by parties on whether or not the threshold for grant of the orders sought in the application has been met. It means that the applicant has to establish certain facts which obviously the respondent disputes. I find therefore that the preliminary objection fails to meet the threshold of being a pure point of law as enunciated in the case of Mukisa Biscuit Manufacturing Co. Ltd vs West End Distributors Ltd [1969) EA 696 at page 700 paragraphs D-F where Law JA (as he then was) said that:
“...A Preliminary Objection consists of a point of law which has been pleaded, or which arises by clear implication out of pleadings and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the Jurisdiction of the court or a plea of limitation, or a submission that the parties are bound by the contract giving rise to the suit to refer the dispute to arbitration.”
12. At page 701 paragraph B-C Sir Charles Newbold, P. added the following:
“A Preliminary Objection is in the nature of what used to be a demurrer. It raises a pure point of law which is usually on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion...”
13. I will consider the preliminary objection to be part of the response to the application because the grounds in support of the same are the ones advanced in the supporting affidavit and in arguing the preliminary objection the respondent has used the same submissions as for the application.
14. The applicant filed its submissions dated 4th November 2025 on 28th November 2025. The respondent filed its submissions dated 9th April 2025 way earlier.
15. The applicant submits only one issue for determination, that is, whether the applicant is entitled to pierce the corporate veil of the respondent company.
16. Referring to the celebrated authority of Salmon –vs- Salmon & Co. Ltd (1897) AC 22, the applicant appreciates the principle of corporate personality that a company is a separate legal entity from its shareholders meaning that the company can have its own rights and liabilities, and its shareholders have limited liability, meaning they are not personally responsible for the company''s debts beyond the value of their investment and a company''s separate legal existence remains valid even if it is a one-person company, and courts will not disregard this separate existence unless the company is used for a fraudulent or exceptional purpose.
17. The applicant submits that however that principle is not absolute and Kenyan courts have affirmed that the veil may be lifted where the company’s controllers have used it to evade existing obligations or perpetrate an injustice. For instance in the case of Lucy Mukembura Kimani v Nzuri Feeds Suppliers Ltd [2021] KEHC 6552 (KLR) the court stated that the corporate veil will be lifted/pierced where:
a. Where the Company is a mere instrumentality or alter ego for the shareholders or directors in question, such that there is such unity of interest and ownership that one is inseparable from the other, and,
b. the facts must be such that adherence to the fiction of separate entity would, under the circumstances, sanction a fraud or promote an injustice.
18. The applicant has also cited the case of Kibatia & Company Advocates v Kings Group of Schools Limited & another [2024] KEHC 5464 (KLR) to underscore the circumstances under which the corporate veil will be pierced.
19. The applicant further submits that piercing the veil is justified where the company structure is being used to evade legal obligation and cited the United Kingdom Supreme Court case of Prest (Appellant) v Petrodel Resources Limited & Others (Respondents) [2013] UKSC 34 [2013] 4 All ER 673 as the basis for that submission which he states has been followed persuasively in Kenya.
20. It is the applicant’s position that in the present matter it has demonstrated that:
a) The applicant has not uncertified (I believe ascertained) independent assets or operations of the respondent company capable of satisfying the decree herein.
b) Execution against the company has returned null bona (Nulla bona) showing deliberate avoidance of satisfaction of the decree.
21. The applicant submits that the unity of interest between the respondent’s directors is total and the company is nothing more than their alter ego and to allow them to hide behind the corporate veil would sanction fraud and render the arbitral award and this court’s decree a dead letter. Further that where adherence to the separate legal personality would result in an injustice, the veil should be lifted and the respondents be compelled to settle the decretal amount as ordered by the court.
22. The applicant submits that the respondent’s contention that the applicant (not the respondent as stated in the submissions) has encumbered the title, hence they are unable to settle the decretal amount is self-defeating as this was not a point of argument during trial or arbitration proceedings for consideration, hence is an afterthought calculated at diverting the court’s attention to the real issues.
23. The applicant submits that considering that this matter arises from a breach of the terms of an agreement for sale of 10th October 2012, the amount awarded in the arbitration proceedings is long overdue and so the respondent’s corporate veil should be lifted and its directors declared personally liable to settle the decretal amount herein together with accrued interests and costs.
24. The applicant further prays for such ancillary orders under Order 22 Rule 35 of the Civil Procedure Rules for the examination of the directors of the respondent and tracing of its assets. However, this prayer is not made in the application and cannot be granted as made through submissions.
25. On its part, the respondent submits that the applicant obtained a loan using the title of the property as security and deposited the same with KCB and failed to annex it in the arbitration proceedings. That the same has not been discharged and remains encumbered and for that reason the respondent has been unable to satisfy the decree due to inability to obtain a clean title to the property. The respondent submits that the action of recovery without the bank’s involvement will be null and void and against the statutory right of the bank. That the respondent therefore requires the title to be free from encumbrances to enable it to pay the applicant.
26. Otherwise, according to the respondent, the applicant is engaging in an abuse of the court process as explained in the case of Uhuru Highway Development Ltd v Central Bank of Kenya & 2 others [2002]2 EA 624 because it is using the encumbered title as a shield to frustrate the respondent’s compliance with the arbitral award while at the same time wielding the award as a sword for execution since the arbitral award envisaged a simultaneous exchange which was payment by the respondent and transfer of a clean title by the applicant. However, the applicant’s actions have undermined the process and the applicant should not be allowed to undermine the process as such.
27. The respondent submits that equity would not allow the applicant to profit from its own inequitable conduct in the sense that it has created the impediment to enable the respondent to comply with the court’s order on the arbitral award.
28. The respondent submits further that the application does not meet the legal threshold for piercing or lifting the corporate veil. The respondent relies on the principle of corporate legal entity as set out in section 19(3) of the Companies Act (Cap. 486) Laws of Kenya and as enunciated in the case of Salomon v Salomon (supra).
29. The case of Ukwala Supermarket v Jaideep Shah & another [2022] KEHC 2207 (KLR) is cited among several others in support of the submission that the applicant has failed to demonstrate that circumstances exist where the corporate veil of the respondent should be lifted by demonstrating fraud, improper conduct or that the company is being used as a façade to evade legal obligations. In that case, the court stated that:
“In Kenya, courts have a strong presumption against piercing the corporate veil, and will only do so if there has been serious misconduct or if the Company, shareholders or directors who are asserted to be the Company’s alter egos have acted in fairly egregious manner. This is because Courts understand the benefits of limited liability as expressed in the statute.
In general, therefore, Courts in Kenya will only allow for the piercing of the corporate veil when two requirements are met:
a) First, the company is a mere instrumentality or alter ego of the shareholder or director in question such that there is such unity of interest and ownership that one is inseparable from the other; and
b) Second, the facts must be such that adherence to the fiction of separate entity would, under the circumstances, sanction a fraud or promote injustice.
Some of the factors the Court would likely look at to determine if the two requirements have been met include the following:
i. Whether the company is adequately capitalized;
ii. Whether there is a failure to maintain adequate corporate records or to comply with corporate formalities;
iii. Whether there has been demonstrated commingling of funds or assets between the company and the asserted alter ego;
iv. Whether the alter ego has treated the assets or finances of the corporation as his own.
Piercing the corporate veil is an equitable remedy. The burden rests on the party asserting such a claim to demonstrate, using the factors outlined above, that the two conditions have been met. Each case is determined on its own merits under a totality of circumstances test.”
30. I have considered the application, the grounds in support and the response thereto through the preliminary objection and the replying affidavit as well as the submissions by the parties. I will not consider the preliminary objection separately for reasons stated above and also because I find it unnecessary as it is clearly argumentative and not on a pure point of law. In any case it is clearly subsumed in the replying affidavit.
31. The applicant’s prayer is for this court to order the lifting or piercing of the corporal veil from the respondent in order to expose the directors to execution proceedings in their respective personal capacities. The applicant annexed to the supporting affidavit the record relating to the registration of Easy Properties Ltd, the respondent herein from the Business Registration Bureau showing that as at 31st October 2023 the directors and who are also the shareholders of the company are Stephen Onyambu and Pamela Bwari Buruchara each holding 10 ordinary shares making a total of 20 ordinary shares issued by the company.
32. I have seen in the court record an application for execution of a decree dated 25th October 2021 by the applicant Express Connection Ltd against the respondent Easy Properties Ltd, by way of issue of warrants of attachment and sale of the judgment debtor’s moveable property to be sold to satisfy the decretal amount. The warrants were to be executed by Kindest Auctioneers. The said warrants were issued on 23rd November 2021 for execution of the sum of KShs 409,895,088.51. It is not clear how that process of execution proceeded and its end result as I have not seen a return of service filed by Kindest Auctioneers. All the same, it is apparent that the execution by that process was not fruitful because the applicant now deposes that efforts made to execute the decree have been fruitless due to inability to trace the respondent’s assets.
33. In its response to the application, Stephen Onyambu, one of the respondent’s directors deposes that, “in the unlikely event that the company is able to raise he monies demanded by the applicant …”. This is an indication by the director that the respondent is unable to pay the decretal sum and all other monies accruing therefrom.
34. At the same time, the respondent goes ahead to depose that, “since the title is already charged by the applicant to KCB bank, the respondent company is highly likely to lose both the money and the title to the property.” The respondent does not however advance any reasons why t holds such a view against the applicant.
35. But most importantly, I have read the Final Award dated 22nd October 2019 and I am satisfied that the same completely addressed the issue raised by the respondent herein about the title being encumbered by way of charge by the applicant to KCB. This court is precluded by law, the Arbitration Act, from adding or subtracting anything thereto. Clause C of the Final Award is clear that first the respondent has to make full payment of the sums awarded followed by payment of the debt due to Kenya Commercial Bank by the applicant to obtain a full discharge of charge followed by transfer of the title back to the respondent. It was not as contended by the respondent in its replying affidavit that the title has to be free from encumbrances to enable it to pay to pay the applicant. Whereas that would be the desirable position, it is not the manner in which the Final Award was made. The Final Award was clear that the respondent has to refund the money first followed by the applicant processing the discharge of the title to the property. That is the position as it stands to-date.
36. There is no doubt that under appropriate circumstances, the onus which is on the applicant to satisfy, the corporate veil of a company may be lifted or pierced in order to reach the directors and execute against them personally for orders issued against the company by the court.
37. As was held in the cases of Lucy Mukembura Kimani v Nzuri Feeds Suppliers Ltd [2021] KEHC 6552 (KLR) and Ukwala Supermarket v Jaideep Shah & another [2022] KEHC 2207 (KLR) a party who intends to benefit from the extraordinary relief of piercing the corporate veil must tender concrete evidence to satisfy the two requirements set out above.
38. The applicant alleges that it has been met with frustration from the respondent in its bid to execute the Final Award. However, it has not tendered any evidence of the effort made so far.
39. Unfortunately for the applicant it has not made any effort to establish the grounds upon which the corporate veil of the respondent should be lifted.
40. There is one thing that I fail to understand on the part of the applicant though, its failure to respond to the contention by the respondent that it not only holds the title of the property but that the same is charged to KCB. Indeed, that is what the arbitral tribunal found. This application is in furtherance of the applicant’s quest to execute the arbitral award. Assuming, and I am not saying that this should be the case, seeing the sole arbitrator’s decision that the property was not fit for human habitation, can’t the applicant make any effort to dispose of that property (say even the land alone) at a price that it will fetch then seek the balance, if at all, from the respondent? How can it allege that it cannot trace any of the respondent’s property and yet it holds title to the respondent’s property?
41. All the same, I find that the present application is pre-mature. The issues which the applicant wanted addressed, that is, for the respondent to point out its properties would be best addressed through order 22 Rule 35, an application for examination of the judgment debtor as to its property. It would appear that the applicant came to the realization that this ought to have been the proper way to go late in the day during the filing of the submissions and that is why it makes such a prayer therein. However, as stated above, that is not a prayer in the application and so cannot be considered herein. The prayer herein was for lifting/piercing the respondent’s corporate veil.
42. Ringera, J (as he then was) in Corporate Insurance Company Limited v Savemax Insurance Brokers Limited [2002] EA 41 considering the subject of lifting/piercing the corporate veil of a company held that:
“The veil of incorporation is not to be lifted merely because the company has no assets or it is unable to pay its debts and is thus insolvent. In such a situation, the law provides for remedies other than the director of the company being saddled with the debts of the company.”
43. The Court of Appeal approved the above decision in the case of Riccatti Business College of East Africa Limited v Kyanzavi Farmers Company Limited [2016] KECA 763 (KLR) when it held that:
“The Court may lift the corporate veil in exercising its inherent jurisdiction to do justice and fairness for the ends of justice. This jurisdiction may be exercised only in special circumstances where the Court finds improper conduct, fraud or when a company is a sham, acting as an agent of the shareholders or evading tax revenues….
“It is obvious, then, from all the issues we have considered that a court can lift the corporate veil subject to strict conditions being satisfied for such action to be taken.”
44. I note that the respondent appears to be simply grandstanding against the applicant’s quest to recover its money as ordered by the sole arbitrator and as per the judgment of this court adopting the same. However, given the strict requirements to be satisfied for the equitable remedy of lifting the corporate veil to issue, I find that the same cannot issue on the facts relied upon by the applicant herein.
45. Consequently, I find that the notice of motion application by the applicant herein dated 8th November 2023 lacks merit and the same are dismissed.
46. Seeing that the respondent’s grandstanding is the cause of this application being filed by the applicant it is ordered that each party to bear its own costs.
47. Orders accordingly.
Written, dated, signed and delivered this 1st day of December 2025.
ANDAYI W. F.
JUDGE
In the presence of:
N/A for the applicant.
N/A for the Respondent.
Carlos: Court assistant.
'
2. The two applications were heard and determined concurrently and the court rendered its decision dated 7th September 2025 wherein the application dated 4th November 2020 by Express Connections Ltd seeking recognition of the arbitral awards was allowed and the awards by the Honourable Sole arbitrator were recognized and adopted as a judgment of the court with leave to enforce the same as a decree of the court while the application dated 28th December 2020 by Easy Properties Ltd seeking the setting aside of the arbitral awards was dismissed. Costs for the consolidated applications were directed to be paid by Easy Properties Limited.
3. Express Connections Ltd has now filed the present application by way of Notice of Motion dated 8th November 2023. The application is brought under sections 3A and 63E of the Civil Procedure Act (Cap. 21) Laws of Kenya, Order 51 Rule 1 of the Civil Procedure Rules and all other enabling provisions of the law.
4. The first prayer is for the firm of T. M. Kuria & Co. Advocates to be granted leave to act for the applicant Express Connections Ltd. The substantive prayer is that the court grants leave to pierce the corporate veil of the Respondent, Easy Properties Ltd with a view to executing the decree herein and that costs be provided for.
5. The grounds upon which the application is laid are set out on the face thereof and are expounded in the supporting affidavit of Mary Wangari Mwangi, one of the applicant’s directors, sworn on 8th November 2023. They are that the respondent has not made any effort to satisfy the decree of the court issued herein since the year 2021 and applicant has made several attempts to trace attachable property belonging to the respondent in vain. Further that the applicant has been exposed to the brink of poverty and so prays for an order of lifting the corporate veil of the respondent company so that it can enforce the decree against the directors.
6. A copy of the decree sought to be enforced and a copy of the respondent’s registration particulars with the Business Registration Service are annexed to the supporting affidavit.
7. The application is opposed by the respondent by way of a replying affidavit sworn on 9th April 2025 by Stephen Onyambu, a director of the respondent and notice of preliminary objection.
8. After narrating the background to the matter, the respondent deposes that the sole arbitrator awarded KShs 168,000,000/= to the applicant but also ordered the applicant to hand over the title to the property back to the respondent company. However, the applicant had already obtained a loan using the property as security from Kenya Commercial Bank (KCB) and the title deed is now with the bank as the applicant has not discharged the same. In the circumstances, it is not feasible for the respondent company to refund the monies paid by the applicant as awarded by the arbitrator as it will mean it loses the money and also the title deed of the property. The respondent therefore requires the title of the property to be free from encumbrances in order for it to pay the applicant.
9. Otherwise, the respondent deposes that the application fails to meet the legal requirements for lifting the corporate veil both in substance and procedure. That the ground advanced by the applicant, of the respondent’s inability to satisfy the decretal sum is not sufficient to meet the threshold for lifting the corporate veil which require that fraud, misrepresentation or other exceptional circumstances have to be demonstrated.
10. The respondent also filed a preliminary objection dated 11th November 2025 to the application on grounds that the application does not meet the legal threshold for piercing and/or lifting the corporate veil of a company as established by various authorities on grounds of fraud, improper conduct, injustice, or the company being an instrumentality or alter ego of the directors such that there is unity of interest and one is inseparable from the other.
11. I have considered the preliminary objection and I find that the issue raised therein calls for arguments by parties on whether or not the threshold for grant of the orders sought in the application has been met. It means that the applicant has to establish certain facts which obviously the respondent disputes. I find therefore that the preliminary objection fails to meet the threshold of being a pure point of law as enunciated in the case of Mukisa Biscuit Manufacturing Co. Ltd vs West End Distributors Ltd [1969) EA 696 at page 700 paragraphs D-F where Law JA (as he then was) said that:
“...A Preliminary Objection consists of a point of law which has been pleaded, or which arises by clear implication out of pleadings and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the Jurisdiction of the court or a plea of limitation, or a submission that the parties are bound by the contract giving rise to the suit to refer the dispute to arbitration.”
12. At page 701 paragraph B-C Sir Charles Newbold, P. added the following:
“A Preliminary Objection is in the nature of what used to be a demurrer. It raises a pure point of law which is usually on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion...”
13. I will consider the preliminary objection to be part of the response to the application because the grounds in support of the same are the ones advanced in the supporting affidavit and in arguing the preliminary objection the respondent has used the same submissions as for the application.
14. The applicant filed its submissions dated 4th November 2025 on 28th November 2025. The respondent filed its submissions dated 9th April 2025 way earlier.
15. The applicant submits only one issue for determination, that is, whether the applicant is entitled to pierce the corporate veil of the respondent company.
16. Referring to the celebrated authority of Salmon –vs- Salmon & Co. Ltd (1897) AC 22, the applicant appreciates the principle of corporate personality that a company is a separate legal entity from its shareholders meaning that the company can have its own rights and liabilities, and its shareholders have limited liability, meaning they are not personally responsible for the company''s debts beyond the value of their investment and a company''s separate legal existence remains valid even if it is a one-person company, and courts will not disregard this separate existence unless the company is used for a fraudulent or exceptional purpose.
17. The applicant submits that however that principle is not absolute and Kenyan courts have affirmed that the veil may be lifted where the company’s controllers have used it to evade existing obligations or perpetrate an injustice. For instance in the case of Lucy Mukembura Kimani v Nzuri Feeds Suppliers Ltd [2021] KEHC 6552 (KLR) the court stated that the corporate veil will be lifted/pierced where:
a. Where the Company is a mere instrumentality or alter ego for the shareholders or directors in question, such that there is such unity of interest and ownership that one is inseparable from the other, and,
b. the facts must be such that adherence to the fiction of separate entity would, under the circumstances, sanction a fraud or promote an injustice.
18. The applicant has also cited the case of Kibatia & Company Advocates v Kings Group of Schools Limited & another [2024] KEHC 5464 (KLR) to underscore the circumstances under which the corporate veil will be pierced.
19. The applicant further submits that piercing the veil is justified where the company structure is being used to evade legal obligation and cited the United Kingdom Supreme Court case of Prest (Appellant) v Petrodel Resources Limited & Others (Respondents) [2013] UKSC 34 [2013] 4 All ER 673 as the basis for that submission which he states has been followed persuasively in Kenya.
20. It is the applicant’s position that in the present matter it has demonstrated that:
a) The applicant has not uncertified (I believe ascertained) independent assets or operations of the respondent company capable of satisfying the decree herein.
b) Execution against the company has returned null bona (Nulla bona) showing deliberate avoidance of satisfaction of the decree.
21. The applicant submits that the unity of interest between the respondent’s directors is total and the company is nothing more than their alter ego and to allow them to hide behind the corporate veil would sanction fraud and render the arbitral award and this court’s decree a dead letter. Further that where adherence to the separate legal personality would result in an injustice, the veil should be lifted and the respondents be compelled to settle the decretal amount as ordered by the court.
22. The applicant submits that the respondent’s contention that the applicant (not the respondent as stated in the submissions) has encumbered the title, hence they are unable to settle the decretal amount is self-defeating as this was not a point of argument during trial or arbitration proceedings for consideration, hence is an afterthought calculated at diverting the court’s attention to the real issues.
23. The applicant submits that considering that this matter arises from a breach of the terms of an agreement for sale of 10th October 2012, the amount awarded in the arbitration proceedings is long overdue and so the respondent’s corporate veil should be lifted and its directors declared personally liable to settle the decretal amount herein together with accrued interests and costs.
24. The applicant further prays for such ancillary orders under Order 22 Rule 35 of the Civil Procedure Rules for the examination of the directors of the respondent and tracing of its assets. However, this prayer is not made in the application and cannot be granted as made through submissions.
25. On its part, the respondent submits that the applicant obtained a loan using the title of the property as security and deposited the same with KCB and failed to annex it in the arbitration proceedings. That the same has not been discharged and remains encumbered and for that reason the respondent has been unable to satisfy the decree due to inability to obtain a clean title to the property. The respondent submits that the action of recovery without the bank’s involvement will be null and void and against the statutory right of the bank. That the respondent therefore requires the title to be free from encumbrances to enable it to pay the applicant.
26. Otherwise, according to the respondent, the applicant is engaging in an abuse of the court process as explained in the case of Uhuru Highway Development Ltd v Central Bank of Kenya & 2 others [2002]2 EA 624 because it is using the encumbered title as a shield to frustrate the respondent’s compliance with the arbitral award while at the same time wielding the award as a sword for execution since the arbitral award envisaged a simultaneous exchange which was payment by the respondent and transfer of a clean title by the applicant. However, the applicant’s actions have undermined the process and the applicant should not be allowed to undermine the process as such.
27. The respondent submits that equity would not allow the applicant to profit from its own inequitable conduct in the sense that it has created the impediment to enable the respondent to comply with the court’s order on the arbitral award.
28. The respondent submits further that the application does not meet the legal threshold for piercing or lifting the corporate veil. The respondent relies on the principle of corporate legal entity as set out in section 19(3) of the Companies Act (Cap. 486) Laws of Kenya and as enunciated in the case of Salomon v Salomon (supra).
29. The case of Ukwala Supermarket v Jaideep Shah & another [2022] KEHC 2207 (KLR) is cited among several others in support of the submission that the applicant has failed to demonstrate that circumstances exist where the corporate veil of the respondent should be lifted by demonstrating fraud, improper conduct or that the company is being used as a façade to evade legal obligations. In that case, the court stated that:
“In Kenya, courts have a strong presumption against piercing the corporate veil, and will only do so if there has been serious misconduct or if the Company, shareholders or directors who are asserted to be the Company’s alter egos have acted in fairly egregious manner. This is because Courts understand the benefits of limited liability as expressed in the statute.
In general, therefore, Courts in Kenya will only allow for the piercing of the corporate veil when two requirements are met:
a) First, the company is a mere instrumentality or alter ego of the shareholder or director in question such that there is such unity of interest and ownership that one is inseparable from the other; and
b) Second, the facts must be such that adherence to the fiction of separate entity would, under the circumstances, sanction a fraud or promote injustice.
Some of the factors the Court would likely look at to determine if the two requirements have been met include the following:
i. Whether the company is adequately capitalized;
ii. Whether there is a failure to maintain adequate corporate records or to comply with corporate formalities;
iii. Whether there has been demonstrated commingling of funds or assets between the company and the asserted alter ego;
iv. Whether the alter ego has treated the assets or finances of the corporation as his own.
Piercing the corporate veil is an equitable remedy. The burden rests on the party asserting such a claim to demonstrate, using the factors outlined above, that the two conditions have been met. Each case is determined on its own merits under a totality of circumstances test.”
30. I have considered the application, the grounds in support and the response thereto through the preliminary objection and the replying affidavit as well as the submissions by the parties. I will not consider the preliminary objection separately for reasons stated above and also because I find it unnecessary as it is clearly argumentative and not on a pure point of law. In any case it is clearly subsumed in the replying affidavit.
31. The applicant’s prayer is for this court to order the lifting or piercing of the corporal veil from the respondent in order to expose the directors to execution proceedings in their respective personal capacities. The applicant annexed to the supporting affidavit the record relating to the registration of Easy Properties Ltd, the respondent herein from the Business Registration Bureau showing that as at 31st October 2023 the directors and who are also the shareholders of the company are Stephen Onyambu and Pamela Bwari Buruchara each holding 10 ordinary shares making a total of 20 ordinary shares issued by the company.
32. I have seen in the court record an application for execution of a decree dated 25th October 2021 by the applicant Express Connection Ltd against the respondent Easy Properties Ltd, by way of issue of warrants of attachment and sale of the judgment debtor’s moveable property to be sold to satisfy the decretal amount. The warrants were to be executed by Kindest Auctioneers. The said warrants were issued on 23rd November 2021 for execution of the sum of KShs 409,895,088.51. It is not clear how that process of execution proceeded and its end result as I have not seen a return of service filed by Kindest Auctioneers. All the same, it is apparent that the execution by that process was not fruitful because the applicant now deposes that efforts made to execute the decree have been fruitless due to inability to trace the respondent’s assets.
33. In its response to the application, Stephen Onyambu, one of the respondent’s directors deposes that, “in the unlikely event that the company is able to raise he monies demanded by the applicant …”. This is an indication by the director that the respondent is unable to pay the decretal sum and all other monies accruing therefrom.
34. At the same time, the respondent goes ahead to depose that, “since the title is already charged by the applicant to KCB bank, the respondent company is highly likely to lose both the money and the title to the property.” The respondent does not however advance any reasons why t holds such a view against the applicant.
35. But most importantly, I have read the Final Award dated 22nd October 2019 and I am satisfied that the same completely addressed the issue raised by the respondent herein about the title being encumbered by way of charge by the applicant to KCB. This court is precluded by law, the Arbitration Act, from adding or subtracting anything thereto. Clause C of the Final Award is clear that first the respondent has to make full payment of the sums awarded followed by payment of the debt due to Kenya Commercial Bank by the applicant to obtain a full discharge of charge followed by transfer of the title back to the respondent. It was not as contended by the respondent in its replying affidavit that the title has to be free from encumbrances to enable it to pay to pay the applicant. Whereas that would be the desirable position, it is not the manner in which the Final Award was made. The Final Award was clear that the respondent has to refund the money first followed by the applicant processing the discharge of the title to the property. That is the position as it stands to-date.
36. There is no doubt that under appropriate circumstances, the onus which is on the applicant to satisfy, the corporate veil of a company may be lifted or pierced in order to reach the directors and execute against them personally for orders issued against the company by the court.
37. As was held in the cases of Lucy Mukembura Kimani v Nzuri Feeds Suppliers Ltd [2021] KEHC 6552 (KLR) and Ukwala Supermarket v Jaideep Shah & another [2022] KEHC 2207 (KLR) a party who intends to benefit from the extraordinary relief of piercing the corporate veil must tender concrete evidence to satisfy the two requirements set out above.
38. The applicant alleges that it has been met with frustration from the respondent in its bid to execute the Final Award. However, it has not tendered any evidence of the effort made so far.
39. Unfortunately for the applicant it has not made any effort to establish the grounds upon which the corporate veil of the respondent should be lifted.
40. There is one thing that I fail to understand on the part of the applicant though, its failure to respond to the contention by the respondent that it not only holds the title of the property but that the same is charged to KCB. Indeed, that is what the arbitral tribunal found. This application is in furtherance of the applicant’s quest to execute the arbitral award. Assuming, and I am not saying that this should be the case, seeing the sole arbitrator’s decision that the property was not fit for human habitation, can’t the applicant make any effort to dispose of that property (say even the land alone) at a price that it will fetch then seek the balance, if at all, from the respondent? How can it allege that it cannot trace any of the respondent’s property and yet it holds title to the respondent’s property?
41. All the same, I find that the present application is pre-mature. The issues which the applicant wanted addressed, that is, for the respondent to point out its properties would be best addressed through order 22 Rule 35, an application for examination of the judgment debtor as to its property. It would appear that the applicant came to the realization that this ought to have been the proper way to go late in the day during the filing of the submissions and that is why it makes such a prayer therein. However, as stated above, that is not a prayer in the application and so cannot be considered herein. The prayer herein was for lifting/piercing the respondent’s corporate veil.
42. Ringera, J (as he then was) in Corporate Insurance Company Limited v Savemax Insurance Brokers Limited [2002] EA 41 considering the subject of lifting/piercing the corporate veil of a company held that:
“The veil of incorporation is not to be lifted merely because the company has no assets or it is unable to pay its debts and is thus insolvent. In such a situation, the law provides for remedies other than the director of the company being saddled with the debts of the company.”
43. The Court of Appeal approved the above decision in the case of Riccatti Business College of East Africa Limited v Kyanzavi Farmers Company Limited [2016] KECA 763 (KLR) when it held that:
“The Court may lift the corporate veil in exercising its inherent jurisdiction to do justice and fairness for the ends of justice. This jurisdiction may be exercised only in special circumstances where the Court finds improper conduct, fraud or when a company is a sham, acting as an agent of the shareholders or evading tax revenues….
“It is obvious, then, from all the issues we have considered that a court can lift the corporate veil subject to strict conditions being satisfied for such action to be taken.”
44. I note that the respondent appears to be simply grandstanding against the applicant’s quest to recover its money as ordered by the sole arbitrator and as per the judgment of this court adopting the same. However, given the strict requirements to be satisfied for the equitable remedy of lifting the corporate veil to issue, I find that the same cannot issue on the facts relied upon by the applicant herein.
45. Consequently, I find that the notice of motion application by the applicant herein dated 8th November 2023 lacks merit and the same are dismissed.
46. Seeing that the respondent’s grandstanding is the cause of this application being filed by the applicant it is ordered that each party to bear its own costs.
47. Orders accordingly.
Written, dated, signed and delivered this 1st day of December 2025.
ANDAYI W. F.
JUDGE
In the presence of:
N/A for the applicant.
N/A for the Respondent.
Carlos: Court assistant.
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