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Background
1. This judgment addresses the dispute between the Plaintiff, Geoffrey Ngari Kuira, and the Defendants, Martha Wangui Karanja and others, concerning the ownership, management, and financial affairs of Busara Forest View Academy Limited (BFVAL).
2. By way of a plaint dated 25th March 2013, the Plaintiff, Geoffrey Ngari Kuira, instituted the present suit against Martha Wangui Karanja, as the 1st Defendant, and the Administrators of the Estate of Johannes Karanja, as the 2nd Defendant. The Plaintiff also joined Dr. Joseph Karanja and Busara Computer Point Limited as the 1st and 2nd Interested Parties, respectively. In the suit, the Plaintiff sought the following fifteen (15) orders against the Defendants and interested parties jointly and severally: -
(i) A declaration be made that the Shareholding and directorship of BFVAL remains as initially approved and allotted within the provisions of the initial Memorandum and Articles of Association of the Company to date as follows:
a) Mrs. Martha W. Karanja 1 share (25%)
b) The Plaintiff Geoffrey Ngari Kuira 2 shares (50%)
c) The late Johannes Karanja 1 share (25%)
(ii) A declaration be made that there have never been any valid and lawful changes in the share portfolio and Directorship of BFVAL from the time of incorporation to date.
(iii) An Order do issue declaring that any alleged changes in the share portfolio and Company Share status and Directorships of BFVAL are illegal, null and void and all returns making changes to the Company Directorship, share portfolio and allotments be ordered cancelled and expunged from the Company records and file No. 34428 of BFVAL at the Companies Registry and the Registrar of Companies be directed to immediately effect such cancellation and to expunge such returns and changes from the Company file and to return the Company status and shareholding as it was at incorporation.
(iv) A declaration be made that the Plaintiff is entitled to earn 50% of the Company profits after tax from the year 1998 to the date of Judgement and full payment in the sum of Kshs. 1,886.480/= per year, which is half of the net profits of Kshs 3,772,960/=borne out of the Plaintiff’s accounts for the year 1998, which is equally a close estimate comparable to the net profits of Kshs. 2,500,000/= declared by the 1st Defendant’s appointed Auditors in 1996.
(v) That the total sum of profits found due as above be increased by a general factor of 30% to cover the continuous increment in profits over the years to the date of Judgement and full payment.
(vi) That the sums misappropriated and/or siphoned out of the school and school accounts between 1987 and 1997 by the Defendants and the 1st Interested Party totaling to Kshs. 49,418,728/= be presumed to have been profits earned by the Company/School, and it be found that the Plaintiff was therefore entitled to 50%thereof, which sum totaling to Kshs. 24,709,364/= be ordered payable to the Plaintiff with interest from 1st January, 1998 to the date of full payment at Court rates.
(vii) It be ordered that the Plaintiff is entitled to payment of his salary for the time illegally kept out of School at Kshs.27,000/= per month, from January 1999 to the date of full payment, or that the said total sum be paid to the Plaintiff as aggravated damages in compensation for an illegal and inhuman loss of employment.
(viii) It be found that the transfer of LR. No. Nyandarua/Oljoro Orok Salient 1343 from BFVAL to Busara Computer Point Limited (“BCPL”), the 2nd Interested party, was illegal and fraudulent as against BFVAL and the Plaintiff, and was without any or any valid and lawful resolution of the Company, and that the Registrar of Lands Nyandarua, be ordered to cancel the Title and ownership of Busara Computer Point Limited in respect of the stated Parcel and re-register the Parcel of land in the name of BFVAL, it being the main and most important Company asset.
(ix) That the Plaintiff be by Order of this Court reinstated back into the Company Management as a 50% Shareholder of the Company and Director and be ordered to be a signatory to all and any of the Company accounts to be opened for the operations of the Company and to be paid all back salaries and any future dividends.
(x) An order do issue for Nakuru Kenya Commercial Bank, Kenyatta Avenue Secret Account Number 200524138 in the name of Busara Forest View Academy to be audited to establish the total amounts of monies siphoned from the Company/School through the stated Account from the time of its opening to-date and that all monies deposited and paid out through the said account be declared to be further profits of the Company and half the total thereof be ordered payable to the Plaintiff with interest as extra profit by the 1st Defendant and 1st Interested Party in person.
(xi) That it be ordered that all and any of the Bank Accounts currently opened and operated by the 1st Defendant and the 1st Interested Party or their nominees and agents for and in the name of the Company/School, Busara Forest View Academy Limited or as Busara Forest View Academy be ordered closed and only two new Bank Accounts being a Savings and Current Account be opened by the Busara Forest View Academy Limited at Cooperative Bank of Kenya Limited, Nyahururu Branch or any other Bank approved by the Court (not having handled company accounts before) with the Plaintiff and 1st Defendant as the only mandatory signatories and that all School/Company incomes and earnings be banked into the said accounts exclusively and all payments and expenditures on behalf of the Company/Schools, Busara Forest View Academy, or Busara Forest View Academy Limited and Busara Secondary School be made out of the stated Bank Accounts only and all monies hitherto in any previous and other accounts disclosed and/or not disclosed (and ordered closed by the Court as here-above) be transferred to the new Bank Accounts.
(xii) That the 1st Defendant and 1st Interested Party be personally ordered to meet and ensure that all payments to be ordered satisfied by the said 1st Defendant and 1st Interested Party are pursuant to any and all the prayers in this Case individually and/or throw the Company and also to personally and/or through the Company ensure compliance with all the other orders of the Court in this Case.
(xiii) That if the Defendants and the Interested Parties fail to abide any of the orders to be granted herein within 30 days of the Court''s Orders, the Plaintiff be allowed on the authority of this Courts Order to be at liberty to appoint a Receiver Manager to take over fully and exclusively and to manage the entire and all operations of the Company Busara Forest View Academy Limited and its Businesses, Busara Forest View Academy or Busara Forest View Academy Limited and Busara Secondary School with a view to enforcing the Courts Orders to be issued herein and/or to liquidate the Company and ensure the implementation of the payments and other orders issu1ed herein.
(xiv) The Court do equally authorize the Deputy Registrar of this Court to execute all such necessary documents and orders as shall be necessary to ensure full compliance and fulfillment of the Court''s Orders herein.
(xv) The Defendants and Interested parties do pay the Plaintiffs'' costs of this case, plus interest on all ordered sums of money.
3. The Plaintiff’s primary contention is that he is the majority shareholder and a co-director of BFVAL, but that the 1st Defendant and the 1st Interested Party have engaged in a series of fraudulent and illegal acts to dispossess him of his shareholding and misappropriate company assets and profits.
4. The Plaintiff''s case, as presented in the pleadings, is that between in 1987, together the 1st Defendant, Martha Wangui Karanja, and the 2nd Defendant, Johannes Karanja (now deceased), they established a company, BFVAL, which took over the running of Busara Forest View Academy School, an enterprise they had started in 1984, but under a business name.
5. The Plaintiff contended that at the incorporation of the company, he made substantial contributions to the incorporation of the company, which included a parcel of land measuring 13.34 acres in which the school was built, his expertise and professional connection in the education sector, as well as his ability to plan and source construction materials. That in recognition of this contribution, he was allotted two shares, being 50% of the shareholding; the other 50% shareholding of the company was shared equally (one share each) between the 1st and 2nd Defendants.
6. The Plaintiff further contended that he was the academic and administrative head of the school, overseeing planning, development, and mobilization of resources for construction. However, matters took a turn in 1994 when an audit revealed that the 1st Defendant, together with her husband, the 1st Interested Party, had become a signatory to the company accounts without authority, and had withdrawn Kshs. 14,022,199 from the company’s accounts without any board resolution. The Plaintiff stated that although the 1st Interested Party was not a director, fraudulent returns filed in 1994 purported to transfer to him a share from one Johannes Karanja, a shareholder who had died in 1988, six years earlier.
7. According to the Plaintiff, the said withdrawal of monies from the company’s account, as well as fraudulent transfer of shares, led him to file the HCC No. 3373 of 1995, which was later settled by a consent order, by which he was reinstated as a mandatory co-signatory to the company accounts together with the 1st Defendant.
8. It was the Plaintiff’s case that in November 1998, notwithstanding her minority shareholding of 25%, the 1st Defendant purported to sack him and thereafter physically locked him out of the school on 31st January 1999. Furthermore, the Defendants and the 1st Interested Party clandestinely and unprocedurally opened other company bank accounts for the company, some in the names of other entities, and operated the school’s business therefrom. Thereby locking out the Plaintiff.
9. It was further the Plaintiff’s case that the Defendants and the 1st Interested Party unlawfully transferred the company’s critical asset, the land on which the school stands (LR Nyandarua/Oljaro Orok Salient 1343), from the company to their family company, Busara Computer Point Limited (the 2nd Interested Party). The Plaintiff contends that this was done fraudulently, without any board resolution authorizing the same.
10. The Plaintiff maintains that these acts, undertaken without his authority as a 50% shareholder and co-director, were illegal and therefore a nullity, which ought to be quashed and a declaration be made by this Court that the company’s shareholding remains as originally incorporated, with the Plaintiff holding two out of four shares, being 50% shareholding. The Plaintiff also seeks that all his entitlements as the majority shareholder in the company be reinstated.
The Defence
11. The 1st Defendant and 1st & 2nd Interested Parties (herein jointly referred to as “Defendants”), in their joint Statement of Defense dated 13th June 2013, denied the allegations. According to them, the Plaintiff has no valid claim to the shareholding he purports to hold, having transferred his interests to the 1st Interested Party. They assert that the suit is a personal vendetta lacking merit and ought to be dismissed.
12. The Defendants dispute the Plaintiff’s capacity to institute the present suit on behalf of the company, asserting that he neither has majority control nor authority from the company to litigate in its name. The Defendants asserted that the Plaintiff, having transferred his Shareholding to the 1st Interested Party, cannot again turn around and deny that fact.
13. The Defendants deny the allegations of mismanagement, diversion of funds, or breach of fiduciary duty. They maintain that the 1st Defendant and the 1st Interested Party have managed the company prudently, transparently, and in accordance with the law and the Articles of Association.
14. According to the Defendants, the company was their brainchild and investment, and that they have at all times acted in its best interest. They contend that the Plaintiff has contributed little, if anything, to the company’s operations or success. The Defendants accused the Plaintiff of being disruptive, engaging in hostile acts against the company and its directors, and attempting to frustrate its operations.
15. The Defendants, therefore, urged this Court to dismiss the Plaintiff’s suit and the prayers sought therein with costs for being misconceived, legally untenable, and incapable of being granted.
Hearing and Evidence
16. The matter proceeded for hearing on various dates between 28th June 2016 and 11th December 2024, when the hearing was concluded.
Plaintiff’s Evidence
17. The Plaintiff called four witnesses in support of his case. Jeffrey Kiruki Mureithi (PW1), Grace Gathii Kuira (PW2), Geoffrey Ngari Kuira (PW3), and David Njoroge Muiru (PW4)
18. The first to testify was Jeffrey Kiruki Mureithi (PW1), an accountant by profession and a director of Nyahururu Registrars Limited, who informed Court that he was instrumental in the formation of BFVL. He stated that the company was initially registered as a partnership in 1985 before its conversion into a limited liability company in 1987, with three shareholders and two directors at inception.
19. PW1 testified that the original shareholders of the company were Martha Wangui Karanja, Geoffrey Ngari Kuira, Johannes Karanja, and Jason Wang’ombe as reflected in the Memorandum and Articles of Association. He stated that the 1st Interested Party herein (Dr. Joseph Karanja) was neither an original shareholder nor director. PW1 emphasized that he had never seen any resolution authorizing Dr. Joseph Karanja’s appointment as a director and that he personally did not initiate any such changes.
20. On cross-examination and upon being referred to various documents in the Defendant’s bundle, PW1 acknowledged that some bore his signature in his capacity as a director of Nyahururu Registrars Limited, though he could not recall preparing them. He confirmed that annual returns for 1989, which had Dr. Joseph Karanja as a director of the company, had not been prepared by his firm. He, however, stated that his firm simply forwarded the forms to the directors for completion and filing. He explained that in the instant case, the forms were not returned to Nyahururu Registrars for filing but appear to have been filed directly by the directors themselves.
21. The second witness for the Plaintiff, Grace Gathii Kuira (PW2), told Court that she is the wife of the Plaintiff, Geoffrey Kuira Ngari, and that she has known Dr. and Mrs. Karanja since 1974. She adopted her written statement dated 30th December 2014 as part of her evidence.
22. PW2 stated that the idea of establishing Busara Forest View Academy was conceived around 1983–1984 when Dr. and Mrs. Karanja approached her and her husband with a proposal to start a school. She was supportive of the venture and, together with her husband, donated land measuring approximately 13.4 acres for the project. The land was registered in her husband’s name, but the donation was made with her knowledge and blessing.
23. PW2 further testified that financial contributions towards the project were agreed upon among the founders. She recalled personally contributing Kshs. 10,000/= to Mrs. Karanja in addition to the land and other ideas. She stated that since there were four founders, she considered her entitlement to be 25% of the company’s equity. She added that whatever her husband contributed ought also to be treated as her contribution. She told the court that the operation of the company was being run entirely by her husband and Mrs. Karaja, who were both teachers.
24. The Plaintiff, Geoffrey Ngari Kuira (PW3), testified and adopted his witness statement dated 15th January 2015 as part of his evidence. He stated that he was both a shareholder and director of the company from inception. He told Court that the company had evolved from a partnership in 1983–1985 into a limited liability company in 1987. Its core business was education, operating both a primary and secondary school.
25. PW3 testified that at the time of registration of the partnership, his name and that of his wife did not appear on the certificate of partnership because they were “silent partners,” owing to their employment with the Teachers Service Commission, and thus Mrs. Karanja was registered as the active partner. He further stated that Dr. Joseph Karanja withdrew from the partnership in 1985 and, in his place, introduced his father, Johannes Karanja.
26. PW3 testified that at the time of registering the partnership, neither his name nor that of his wife appeared on the certificate of partnership as they were “silent partners” owing to their employment with the Teachers Service Commission. Consequently, it was agreed that Mrs. Karanja would be registered as the active partner. He further stated that in 1985, Dr. Joseph Karanja withdrew from the partnership and introduced his father, Johannes Karanja, in his place.
27. According to PW3, Dr. Joseph Karanja was never a shareholder or director of the company, and any subsequent appearance of his name in the company records was irregular. He referred to documents showing that shares were allegedly transferred to Dr. Karanja in 1994, notwithstanding that Johannes Karanja, to whom the shares were originally allocated, had passed away in 1988. PW3 maintained that he neither sold nor transferred any shares to Dr. Karanja and that no consideration was ever paid for such transfer. He contended that the alleged transfer, together with the subsequent returns filed at the Companies Registry, was irregular, a fact underscored by the Registrar of Companies’ rejection of those returns.
28. PW3 further testified that his contribution to the company was substantial, being the donation of family land measuring 13.4 acres on which the school was built, valued at approximately Kshs. 190,000 in 1984. His wife, Grace Kuira, also contributed Kshs. 10,000. He maintained that aside from this land, no meaningful financial contributions were made by Dr. or Mrs. Karanja, save for an initial Kshs. 50,000 said to have been contributed.
29. The witness recounted that the company later experienced disputes regarding shareholding, including attempts at arbitration which awarded Dr. Karanja 12 shares, Mrs. Karanja 3 shares, and himself 2 shares, but that award was set aside by the High Court. He also stated that in 2001, Dr. and Mrs. Karanja unlawfully transferred the land belonging to Busara Forest View Academy Limited to Busara Computer Point Limited, a company under their control, and subsequently charged the same land to Equity Bank to secure a loan of Kshs. 60 million.
30. Under cross-examination, PW3 confirmed that Dr. and Mrs. Karanja contributed Kshs. 50,000 each at the start, while he and his wife contributed the land and Kshs. 10,000 in cash. He acknowledged that Dr. Karanja was reflected in minutes as chairman of the board of directors, though in practice, he stood in for his father, Johannes Karanja, who rarely attended the meetings.
31. PW3 further stated that the company never paid dividends despite making profits, as the directors resolved to plough back the income into development.
32. He stated that in 1998, he was dismissed as headmaster by Mrs. Karanja, which marked the deterioration of relations. He maintained, however, that he remained a director of the company and that the dispute over shareholding persisted due to irregular filings and manipulations by the Defendants.
33. The Plaintiff’s final witness, David Njoroge Muiru (PW4), a registered property valuer with GIMCO Limited, adopted his witness statement dated 15th January 2015 as his evidence and produced two valuation reports he had prepared at the request of the Plaintiff.
34. PW4 testified that his first valuation, dated 6th May 1996 and found at pages 78–82 of the Plaintiff’s bundle of documents, related to land on which Busara Forest View Academy stood. He assessed the land at a value of Kshs. 2 million per acre. He observed that the transfer documents reflected a consideration of Kshs. 65,000, whereas his assessment as at 1994 indicated a value of approximately Kshs. 400,000, which in his view amounted to an undervaluation.
35. He told Court that his second valuation on the same parcel of land, conducted on 18th March 2014 and contained at pages 27–58 of the Plaintiff’s supplementary bundle of documents, placed the aggregate value of the 13 acres together with developments thereon at Kshs. 134,318,880. He confirmed that his team visited the property and annexed photographs of the premises to the report to demonstrate this.
36. On cross-examination, PW4 confirmed that his instructions came directly from the Plaintiff and that he did not engage with the company itself in either valuation. He explained that the 1996 valuation included retrospective assessments to arrive at values as at 1994. He reiterated that the figure of Kshs. 65,000 in the transfer documents was an undervalue compared to his professional assessment.
37. Upon re-examination, PW4 stated that his firm’s work was independent, and the mere fact that his instructions came from the Plaintiff did not affect the objectivity of the valuation. He added that the photographs annexed to the 2014 report confirmed their inspection of the property.
Defendants’ Evidence
38. The Defense, on their part, called two witnesses. DW1, Martha Wangui Karanja, the 1st Defendant, testified and adopted her written statement dated 28th April 2015 as her evidence in chief. She confirmed that Busara Forest View Academy was conceived in 1984 through a joint initiative between herself, her husband Dr. Joseph Karanja, and Mr. Geoffrey Kuira, with Mrs. Grace Kuira initially involved but later withdrawing from active participation. According to the witness, the founding members agreed that each would contribute Kshs. 50,000, but in practice Mr. Kuira’s contribution was the land on which the school was built, while she and Dr. Karanja contributed the monetary capital.
39. DW1 stated that upon incorporation in 1987, BFVAL shareholding was as stated by PW3 and as reflected in the records at page 25 of the Defendant’s bundle, but this position was subsequently adjusted following meetings of 11th July 1989 and 15th September 1992, as captured in the minutes at page 91 of the Defendant’s bundle, as follows: -
i. Dr. J. W. Karanja (The 1st Interested Party)– 12 Shares
ii. Mrs. M.W. Karanja (the 1st Defendant) – 3 Shares
iii. Ms. G. Kuira (the Plaintiff) – 1 Share
40. DW1 told Court that a valuation of the school property was undertaken to guide the allocation of shares and that the Registrar of Companies was engaged to correct initial discrepancies that still reflected the entity as a partnership. She pointed to documents at pages 60–70 of the Defendant’s bundle, which bore the signatures of both herself and Mr. Kuira in support of the changes.
41. The witness further testified that disputes later arose when Mr. Kuira accused her and Dr. Karanja of fraud at the Registrar’s office. Subsequent visits revealed irregularities in the company’s records, including entries showing that Mr. and Mrs. Kuira held 75% of the shares. The matter was referred to arbitration, which was determined in her favour, but the award was later set aside by the Court. she asserted that despite the disputes, the school continued to operate, though Mr. Kuira ceased attending company meetings from 1999 and was formally removed as a director by resolution at the AGM of 2nd July 1999. She maintained that profits were never distributed as dividends but were reinvested in the school in line with their agreement.
42. DW1 acknowledged that the Plaintiff had contributed land, which was transferred into the company’s name, but stated that the property was later transferred to Busara Computer Point Limited in 2001, an entity, she said, was formed by herself and Dr. Karanja to enable smooth management of the school, and all its assets, including those acquired from ploughed-back profits, were vested in it. She conceded that no cash consideration changed hands between the two companies for the transfer, but explained that Busara Computer Point Limited obtained a Kshs. 60 million loan from Equity Bank, which was used for the benefit of the business.
43. In cross-examination, DW1 maintained that the directors of Busara Forest View Academy from inception were herself, Dr. Karanja, and the Plaintiff. She, however, acknowledged that there were inconsistencies in the company’s filings, including documents suggesting transfers signed after the death of Johannes Karanja, Dr. Karanja’s father. She admitted that she did not have documentary evidence of proper allotment or transfer of shares but attributed the confusion to missing records both at the company registry and in the company’s offices.
44. She reiterated that the Plaintiff ceased to participate in the management of the company after 1999, and thereafter she and Dr. Karanja ran the school with the assistance of their company secretary, Mr. Sichangi.
45. DW1 denied the Plaintiff’s allegations of fraud and insisted that all decisions, including the creation of Busara Computer Point Limited, were taken in the best interests of sustaining the school. She contended that the Plaintiff benefited from allowances, a motor vehicle, and share transactions prior to his exit and that he could not now claim to have been unfairly excluded.
46. The last witness for the defence was Dr. Joseph W. Karanja (DW2), the 1st Interested Party herein, who is also the husband of DW1. He adopted his written witness statement dated 28th April 2015 as his evidence-in-chief and relied on the documents already produced by DW1. His account was that in 1983, the Karanja and Kuira families agreed to establish Busara Forest View Academy, each family contributing the sum of Kshs. 50,000/-. According to him, the school commenced operations in 1984 under the management of DW1, whilst he provided the financial input. He further stated that the Plaintiff resigned from his teaching job in 1988 to join the school, and that his contribution was the provision of 13.4 acres of land upon which the school was constructed.
47. DW2 testified that he was a director, shareholder, and chairman of the company, and regularly attended meetings in those capacities. He maintained that his shareholding stood at twelve (12) shares, DW1 held two shares, while the Plaintiff held one share. He added that one of his shares had been acquired from the Plaintiff in exchange for his motor vehicle registration No. KXU 075.
48. The witness acknowledged that the dispute over the company’s shareholding had previously been the subject of arbitration. Although the Arbitral Tribunal initially ruled in favour of the defendants, the award was subsequently set aside by the High Court. It was, however, his position that the setting aside was on technical rather than substantive grounds. He also stated that the Plaintiff had accused him of fraudulently acquiring the subject land, but that he had been acquitted of such allegations in ensuing criminal proceedings.
49. DW2 further disclosed that there was a matter pending before the Employment and Labour Relations Court in Nakuru between the parties regarding the Plaintiff’s termination of employment at the school by the 1st Defendant.
50. Upon cross-examination, the witness confirmed that the initial directors of the Academy were Mrs. Martha Wangui Karanja with one share, the Plaintiff, Geoffrey Kuira, with two shares, and his late father, Johannes Karanja, with one share. He admitted that it was the Plaintiff who had provided the land on which the school was established. He also restated that he became a director after a transfer of shares from his father and the Plaintiff. He referred the Court to the defendants’ trial bundle at pages 45–46.
51. On the issue of the alleged signing of the share transfer form after his father’s death, he admitted that his father, Mr. Johannes Karanja, died on 31st August 1988, yet the share transfer form bore the date of 21st October 1994. He explained that the form was prepared and signed for the purpose of reconstructing the company’s file at the Registrar’s office after the earlier, duly signed form had been misplaced. He claimed to have acted upon the advice of the Registrar.
52. The witness also admitted that they had opened a bank account at Kenya Commercial Bank, Nakuru branch, using the certificate of the name of the partnership under which the school initially operated before incorporation, since they still had in their custody the Certificate of registration of the Partnership. This, he explained, was necessitated by the Plaintiff’s conduct, which made it difficult to operate the company’s official accounts.
53. DW2 denied that the transfer of the school land to Busara Computer Point Limited was fraudulent. He also denied that the allocation of twelve shares to himself was fraudulent, maintaining that the changes were supported by board minutes and duly lodged with the Registrar. In his view, it was the Plaintiff who had attempted to mislead the Registrar by presenting documents purporting to allocate seventy-five percent of the company’s shares to his wife, which he insisted were not supported by any minutes of the company.
Written Submissions
54. On 26th February 2025, directions were given by this Court for the filing of written submissions. The Plaintiff’s Counsel, Namada & Co. Advocates, filed submissions dated 7th March 2025, whilst the Defendants’ submissions dated 29th May 2025 was filed
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Background
1. This judgment addresses the dispute between the Plaintiff, Geoffrey Ngari Kuira, and the Defendants, Martha Wangui Karanja and others, concerning the ownership, management, and financial affairs of Busara Forest View Academy Limited (BFVAL).
2. By way of a plaint dated 25th March 2013, the Plaintiff, Geoffrey Ngari Kuira, instituted the present suit against Martha Wangui Karanja, as the 1st Defendant, and the Administrators of the Estate of Johannes Karanja, as the 2nd Defendant. The Plaintiff also joined Dr. Joseph Karanja and Busara Computer Point Limited as the 1st and 2nd Interested Parties, respectively. In the suit, the Plaintiff sought the following fifteen (15) orders against the Defendants and interested parties jointly and severally: -
(i) A declaration be made that the Shareholding and directorship of BFVAL remains as initially approved and allotted within the provisions of the initial Memorandum and Articles of Association of the Company to date as follows:
a) Mrs. Martha W. Karanja 1 share (25%)
b) The Plaintiff Geoffrey Ngari Kuira 2 shares (50%)
c) The late Johannes Karanja 1 share (25%)
(ii) A declaration be made that there have never been any valid and lawful changes in the share portfolio and Directorship of BFVAL from the time of incorporation to date.
(iii) An Order do issue declaring that any alleged changes in the share portfolio and Company Share status and Directorships of BFVAL are illegal, null and void and all returns making changes to the Company Directorship, share portfolio and allotments be ordered cancelled and expunged from the Company records and file No. 34428 of BFVAL at the Companies Registry and the Registrar of Companies be directed to immediately effect such cancellation and to expunge such returns and changes from the Company file and to return the Company status and shareholding as it was at incorporation.
(iv) A declaration be made that the Plaintiff is entitled to earn 50% of the Company profits after tax from the year 1998 to the date of Judgement and full payment in the sum of Kshs. 1,886.480/= per year, which is half of the net profits of Kshs 3,772,960/=borne out of the Plaintiff’s accounts for the year 1998, which is equally a close estimate comparable to the net profits of Kshs. 2,500,000/= declared by the 1st Defendant’s appointed Auditors in 1996.
(v) That the total sum of profits found due as above be increased by a general factor of 30% to cover the continuous increment in profits over the years to the date of Judgement and full payment.
(vi) That the sums misappropriated and/or siphoned out of the school and school accounts between 1987 and 1997 by the Defendants and the 1st Interested Party totaling to Kshs. 49,418,728/= be presumed to have been profits earned by the Company/School, and it be found that the Plaintiff was therefore entitled to 50%thereof, which sum totaling to Kshs. 24,709,364/= be ordered payable to the Plaintiff with interest from 1st January, 1998 to the date of full payment at Court rates.
(vii) It be ordered that the Plaintiff is entitled to payment of his salary for the time illegally kept out of School at Kshs.27,000/= per month, from January 1999 to the date of full payment, or that the said total sum be paid to the Plaintiff as aggravated damages in compensation for an illegal and inhuman loss of employment.
(viii) It be found that the transfer of LR. No. Nyandarua/Oljoro Orok Salient 1343 from BFVAL to Busara Computer Point Limited (“BCPL”), the 2nd Interested party, was illegal and fraudulent as against BFVAL and the Plaintiff, and was without any or any valid and lawful resolution of the Company, and that the Registrar of Lands Nyandarua, be ordered to cancel the Title and ownership of Busara Computer Point Limited in respect of the stated Parcel and re-register the Parcel of land in the name of BFVAL, it being the main and most important Company asset.
(ix) That the Plaintiff be by Order of this Court reinstated back into the Company Management as a 50% Shareholder of the Company and Director and be ordered to be a signatory to all and any of the Company accounts to be opened for the operations of the Company and to be paid all back salaries and any future dividends.
(x) An order do issue for Nakuru Kenya Commercial Bank, Kenyatta Avenue Secret Account Number 200524138 in the name of Busara Forest View Academy to be audited to establish the total amounts of monies siphoned from the Company/School through the stated Account from the time of its opening to-date and that all monies deposited and paid out through the said account be declared to be further profits of the Company and half the total thereof be ordered payable to the Plaintiff with interest as extra profit by the 1st Defendant and 1st Interested Party in person.
(xi) That it be ordered that all and any of the Bank Accounts currently opened and operated by the 1st Defendant and the 1st Interested Party or their nominees and agents for and in the name of the Company/School, Busara Forest View Academy Limited or as Busara Forest View Academy be ordered closed and only two new Bank Accounts being a Savings and Current Account be opened by the Busara Forest View Academy Limited at Cooperative Bank of Kenya Limited, Nyahururu Branch or any other Bank approved by the Court (not having handled company accounts before) with the Plaintiff and 1st Defendant as the only mandatory signatories and that all School/Company incomes and earnings be banked into the said accounts exclusively and all payments and expenditures on behalf of the Company/Schools, Busara Forest View Academy, or Busara Forest View Academy Limited and Busara Secondary School be made out of the stated Bank Accounts only and all monies hitherto in any previous and other accounts disclosed and/or not disclosed (and ordered closed by the Court as here-above) be transferred to the new Bank Accounts.
(xii) That the 1st Defendant and 1st Interested Party be personally ordered to meet and ensure that all payments to be ordered satisfied by the said 1st Defendant and 1st Interested Party are pursuant to any and all the prayers in this Case individually and/or throw the Company and also to personally and/or through the Company ensure compliance with all the other orders of the Court in this Case.
(xiii) That if the Defendants and the Interested Parties fail to abide any of the orders to be granted herein within 30 days of the Court''s Orders, the Plaintiff be allowed on the authority of this Courts Order to be at liberty to appoint a Receiver Manager to take over fully and exclusively and to manage the entire and all operations of the Company Busara Forest View Academy Limited and its Businesses, Busara Forest View Academy or Busara Forest View Academy Limited and Busara Secondary School with a view to enforcing the Courts Orders to be issued herein and/or to liquidate the Company and ensure the implementation of the payments and other orders issu1ed herein.
(xiv) The Court do equally authorize the Deputy Registrar of this Court to execute all such necessary documents and orders as shall be necessary to ensure full compliance and fulfillment of the Court''s Orders herein.
(xv) The Defendants and Interested parties do pay the Plaintiffs'' costs of this case, plus interest on all ordered sums of money.
3. The Plaintiff’s primary contention is that he is the majority shareholder and a co-director of BFVAL, but that the 1st Defendant and the 1st Interested Party have engaged in a series of fraudulent and illegal acts to dispossess him of his shareholding and misappropriate company assets and profits.
4. The Plaintiff''s case, as presented in the pleadings, is that between in 1987, together the 1st Defendant, Martha Wangui Karanja, and the 2nd Defendant, Johannes Karanja (now deceased), they established a company, BFVAL, which took over the running of Busara Forest View Academy School, an enterprise they had started in 1984, but under a business name.
5. The Plaintiff contended that at the incorporation of the company, he made substantial contributions to the incorporation of the company, which included a parcel of land measuring 13.34 acres in which the school was built, his expertise and professional connection in the education sector, as well as his ability to plan and source construction materials. That in recognition of this contribution, he was allotted two shares, being 50% of the shareholding; the other 50% shareholding of the company was shared equally (one share each) between the 1st and 2nd Defendants.
6. The Plaintiff further contended that he was the academic and administrative head of the school, overseeing planning, development, and mobilization of resources for construction. However, matters took a turn in 1994 when an audit revealed that the 1st Defendant, together with her husband, the 1st Interested Party, had become a signatory to the company accounts without authority, and had withdrawn Kshs. 14,022,199 from the company’s accounts without any board resolution. The Plaintiff stated that although the 1st Interested Party was not a director, fraudulent returns filed in 1994 purported to transfer to him a share from one Johannes Karanja, a shareholder who had died in 1988, six years earlier.
7. According to the Plaintiff, the said withdrawal of monies from the company’s account, as well as fraudulent transfer of shares, led him to file the HCC No. 3373 of 1995, which was later settled by a consent order, by which he was reinstated as a mandatory co-signatory to the company accounts together with the 1st Defendant.
8. It was the Plaintiff’s case that in November 1998, notwithstanding her minority shareholding of 25%, the 1st Defendant purported to sack him and thereafter physically locked him out of the school on 31st January 1999. Furthermore, the Defendants and the 1st Interested Party clandestinely and unprocedurally opened other company bank accounts for the company, some in the names of other entities, and operated the school’s business therefrom. Thereby locking out the Plaintiff.
9. It was further the Plaintiff’s case that the Defendants and the 1st Interested Party unlawfully transferred the company’s critical asset, the land on which the school stands (LR Nyandarua/Oljaro Orok Salient 1343), from the company to their family company, Busara Computer Point Limited (the 2nd Interested Party). The Plaintiff contends that this was done fraudulently, without any board resolution authorizing the same.
10. The Plaintiff maintains that these acts, undertaken without his authority as a 50% shareholder and co-director, were illegal and therefore a nullity, which ought to be quashed and a declaration be made by this Court that the company’s shareholding remains as originally incorporated, with the Plaintiff holding two out of four shares, being 50% shareholding. The Plaintiff also seeks that all his entitlements as the majority shareholder in the company be reinstated.
The Defence
11. The 1st Defendant and 1st & 2nd Interested Parties (herein jointly referred to as “Defendants”), in their joint Statement of Defense dated 13th June 2013, denied the allegations. According to them, the Plaintiff has no valid claim to the shareholding he purports to hold, having transferred his interests to the 1st Interested Party. They assert that the suit is a personal vendetta lacking merit and ought to be dismissed.
12. The Defendants dispute the Plaintiff’s capacity to institute the present suit on behalf of the company, asserting that he neither has majority control nor authority from the company to litigate in its name. The Defendants asserted that the Plaintiff, having transferred his Shareholding to the 1st Interested Party, cannot again turn around and deny that fact.
13. The Defendants deny the allegations of mismanagement, diversion of funds, or breach of fiduciary duty. They maintain that the 1st Defendant and the 1st Interested Party have managed the company prudently, transparently, and in accordance with the law and the Articles of Association.
14. According to the Defendants, the company was their brainchild and investment, and that they have at all times acted in its best interest. They contend that the Plaintiff has contributed little, if anything, to the company’s operations or success. The Defendants accused the Plaintiff of being disruptive, engaging in hostile acts against the company and its directors, and attempting to frustrate its operations.
15. The Defendants, therefore, urged this Court to dismiss the Plaintiff’s suit and the prayers sought therein with costs for being misconceived, legally untenable, and incapable of being granted.
Hearing and Evidence
16. The matter proceeded for hearing on various dates between 28th June 2016 and 11th December 2024, when the hearing was concluded.
Plaintiff’s Evidence
17. The Plaintiff called four witnesses in support of his case. Jeffrey Kiruki Mureithi (PW1), Grace Gathii Kuira (PW2), Geoffrey Ngari Kuira (PW3), and David Njoroge Muiru (PW4)
18. The first to testify was Jeffrey Kiruki Mureithi (PW1), an accountant by profession and a director of Nyahururu Registrars Limited, who informed Court that he was instrumental in the formation of BFVL. He stated that the company was initially registered as a partnership in 1985 before its conversion into a limited liability company in 1987, with three shareholders and two directors at inception.
19. PW1 testified that the original shareholders of the company were Martha Wangui Karanja, Geoffrey Ngari Kuira, Johannes Karanja, and Jason Wang’ombe as reflected in the Memorandum and Articles of Association. He stated that the 1st Interested Party herein (Dr. Joseph Karanja) was neither an original shareholder nor director. PW1 emphasized that he had never seen any resolution authorizing Dr. Joseph Karanja’s appointment as a director and that he personally did not initiate any such changes.
20. On cross-examination and upon being referred to various documents in the Defendant’s bundle, PW1 acknowledged that some bore his signature in his capacity as a director of Nyahururu Registrars Limited, though he could not recall preparing them. He confirmed that annual returns for 1989, which had Dr. Joseph Karanja as a director of the company, had not been prepared by his firm. He, however, stated that his firm simply forwarded the forms to the directors for completion and filing. He explained that in the instant case, the forms were not returned to Nyahururu Registrars for filing but appear to have been filed directly by the directors themselves.
21. The second witness for the Plaintiff, Grace Gathii Kuira (PW2), told Court that she is the wife of the Plaintiff, Geoffrey Kuira Ngari, and that she has known Dr. and Mrs. Karanja since 1974. She adopted her written statement dated 30th December 2014 as part of her evidence.
22. PW2 stated that the idea of establishing Busara Forest View Academy was conceived around 1983–1984 when Dr. and Mrs. Karanja approached her and her husband with a proposal to start a school. She was supportive of the venture and, together with her husband, donated land measuring approximately 13.4 acres for the project. The land was registered in her husband’s name, but the donation was made with her knowledge and blessing.
23. PW2 further testified that financial contributions towards the project were agreed upon among the founders. She recalled personally contributing Kshs. 10,000/= to Mrs. Karanja in addition to the land and other ideas. She stated that since there were four founders, she considered her entitlement to be 25% of the company’s equity. She added that whatever her husband contributed ought also to be treated as her contribution. She told the court that the operation of the company was being run entirely by her husband and Mrs. Karaja, who were both teachers.
24. The Plaintiff, Geoffrey Ngari Kuira (PW3), testified and adopted his witness statement dated 15th January 2015 as part of his evidence. He stated that he was both a shareholder and director of the company from inception. He told Court that the company had evolved from a partnership in 1983–1985 into a limited liability company in 1987. Its core business was education, operating both a primary and secondary school.
25. PW3 testified that at the time of registration of the partnership, his name and that of his wife did not appear on the certificate of partnership because they were “silent partners,” owing to their employment with the Teachers Service Commission, and thus Mrs. Karanja was registered as the active partner. He further stated that Dr. Joseph Karanja withdrew from the partnership in 1985 and, in his place, introduced his father, Johannes Karanja.
26. PW3 testified that at the time of registering the partnership, neither his name nor that of his wife appeared on the certificate of partnership as they were “silent partners” owing to their employment with the Teachers Service Commission. Consequently, it was agreed that Mrs. Karanja would be registered as the active partner. He further stated that in 1985, Dr. Joseph Karanja withdrew from the partnership and introduced his father, Johannes Karanja, in his place.
27. According to PW3, Dr. Joseph Karanja was never a shareholder or director of the company, and any subsequent appearance of his name in the company records was irregular. He referred to documents showing that shares were allegedly transferred to Dr. Karanja in 1994, notwithstanding that Johannes Karanja, to whom the shares were originally allocated, had passed away in 1988. PW3 maintained that he neither sold nor transferred any shares to Dr. Karanja and that no consideration was ever paid for such transfer. He contended that the alleged transfer, together with the subsequent returns filed at the Companies Registry, was irregular, a fact underscored by the Registrar of Companies’ rejection of those returns.
28. PW3 further testified that his contribution to the company was substantial, being the donation of family land measuring 13.4 acres on which the school was built, valued at approximately Kshs. 190,000 in 1984. His wife, Grace Kuira, also contributed Kshs. 10,000. He maintained that aside from this land, no meaningful financial contributions were made by Dr. or Mrs. Karanja, save for an initial Kshs. 50,000 said to have been contributed.
29. The witness recounted that the company later experienced disputes regarding shareholding, including attempts at arbitration which awarded Dr. Karanja 12 shares, Mrs. Karanja 3 shares, and himself 2 shares, but that award was set aside by the High Court. He also stated that in 2001, Dr. and Mrs. Karanja unlawfully transferred the land belonging to Busara Forest View Academy Limited to Busara Computer Point Limited, a company under their control, and subsequently charged the same land to Equity Bank to secure a loan of Kshs. 60 million.
30. Under cross-examination, PW3 confirmed that Dr. and Mrs. Karanja contributed Kshs. 50,000 each at the start, while he and his wife contributed the land and Kshs. 10,000 in cash. He acknowledged that Dr. Karanja was reflected in minutes as chairman of the board of directors, though in practice, he stood in for his father, Johannes Karanja, who rarely attended the meetings.
31. PW3 further stated that the company never paid dividends despite making profits, as the directors resolved to plough back the income into development.
32. He stated that in 1998, he was dismissed as headmaster by Mrs. Karanja, which marked the deterioration of relations. He maintained, however, that he remained a director of the company and that the dispute over shareholding persisted due to irregular filings and manipulations by the Defendants.
33. The Plaintiff’s final witness, David Njoroge Muiru (PW4), a registered property valuer with GIMCO Limited, adopted his witness statement dated 15th January 2015 as his evidence and produced two valuation reports he had prepared at the request of the Plaintiff.
34. PW4 testified that his first valuation, dated 6th May 1996 and found at pages 78–82 of the Plaintiff’s bundle of documents, related to land on which Busara Forest View Academy stood. He assessed the land at a value of Kshs. 2 million per acre. He observed that the transfer documents reflected a consideration of Kshs. 65,000, whereas his assessment as at 1994 indicated a value of approximately Kshs. 400,000, which in his view amounted to an undervaluation.
35. He told Court that his second valuation on the same parcel of land, conducted on 18th March 2014 and contained at pages 27–58 of the Plaintiff’s supplementary bundle of documents, placed the aggregate value of the 13 acres together with developments thereon at Kshs. 134,318,880. He confirmed that his team visited the property and annexed photographs of the premises to the report to demonstrate this.
36. On cross-examination, PW4 confirmed that his instructions came directly from the Plaintiff and that he did not engage with the company itself in either valuation. He explained that the 1996 valuation included retrospective assessments to arrive at values as at 1994. He reiterated that the figure of Kshs. 65,000 in the transfer documents was an undervalue compared to his professional assessment.
37. Upon re-examination, PW4 stated that his firm’s work was independent, and the mere fact that his instructions came from the Plaintiff did not affect the objectivity of the valuation. He added that the photographs annexed to the 2014 report confirmed their inspection of the property.
Defendants’ Evidence
38. The Defense, on their part, called two witnesses. DW1, Martha Wangui Karanja, the 1st Defendant, testified and adopted her written statement dated 28th April 2015 as her evidence in chief. She confirmed that Busara Forest View Academy was conceived in 1984 through a joint initiative between herself, her husband Dr. Joseph Karanja, and Mr. Geoffrey Kuira, with Mrs. Grace Kuira initially involved but later withdrawing from active participation. According to the witness, the founding members agreed that each would contribute Kshs. 50,000, but in practice Mr. Kuira’s contribution was the land on which the school was built, while she and Dr. Karanja contributed the monetary capital.
39. DW1 stated that upon incorporation in 1987, BFVAL shareholding was as stated by PW3 and as reflected in the records at page 25 of the Defendant’s bundle, but this position was subsequently adjusted following meetings of 11th July 1989 and 15th September 1992, as captured in the minutes at page 91 of the Defendant’s bundle, as follows: -
i. Dr. J. W. Karanja (The 1st Interested Party)– 12 Shares
ii. Mrs. M.W. Karanja (the 1st Defendant) – 3 Shares
iii. Ms. G. Kuira (the Plaintiff) – 1 Share
40. DW1 told Court that a valuation of the school property was undertaken to guide the allocation of shares and that the Registrar of Companies was engaged to correct initial discrepancies that still reflected the entity as a partnership. She pointed to documents at pages 60–70 of the Defendant’s bundle, which bore the signatures of both herself and Mr. Kuira in support of the changes.
41. The witness further testified that disputes later arose when Mr. Kuira accused her and Dr. Karanja of fraud at the Registrar’s office. Subsequent visits revealed irregularities in the company’s records, including entries showing that Mr. and Mrs. Kuira held 75% of the shares. The matter was referred to arbitration, which was determined in her favour, but the award was later set aside by the Court. she asserted that despite the disputes, the school continued to operate, though Mr. Kuira ceased attending company meetings from 1999 and was formally removed as a director by resolution at the AGM of 2nd July 1999. She maintained that profits were never distributed as dividends but were reinvested in the school in line with their agreement.
42. DW1 acknowledged that the Plaintiff had contributed land, which was transferred into the company’s name, but stated that the property was later transferred to Busara Computer Point Limited in 2001, an entity, she said, was formed by herself and Dr. Karanja to enable smooth management of the school, and all its assets, including those acquired from ploughed-back profits, were vested in it. She conceded that no cash consideration changed hands between the two companies for the transfer, but explained that Busara Computer Point Limited obtained a Kshs. 60 million loan from Equity Bank, which was used for the benefit of the business.
43. In cross-examination, DW1 maintained that the directors of Busara Forest View Academy from inception were herself, Dr. Karanja, and the Plaintiff. She, however, acknowledged that there were inconsistencies in the company’s filings, including documents suggesting transfers signed after the death of Johannes Karanja, Dr. Karanja’s father. She admitted that she did not have documentary evidence of proper allotment or transfer of shares but attributed the confusion to missing records both at the company registry and in the company’s offices.
44. She reiterated that the Plaintiff ceased to participate in the management of the company after 1999, and thereafter she and Dr. Karanja ran the school with the assistance of their company secretary, Mr. Sichangi.
45. DW1 denied the Plaintiff’s allegations of fraud and insisted that all decisions, including the creation of Busara Computer Point Limited, were taken in the best interests of sustaining the school. She contended that the Plaintiff benefited from allowances, a motor vehicle, and share transactions prior to his exit and that he could not now claim to have been unfairly excluded.
46. The last witness for the defence was Dr. Joseph W. Karanja (DW2), the 1st Interested Party herein, who is also the husband of DW1. He adopted his written witness statement dated 28th April 2015 as his evidence-in-chief and relied on the documents already produced by DW1. His account was that in 1983, the Karanja and Kuira families agreed to establish Busara Forest View Academy, each family contributing the sum of Kshs. 50,000/-. According to him, the school commenced operations in 1984 under the management of DW1, whilst he provided the financial input. He further stated that the Plaintiff resigned from his teaching job in 1988 to join the school, and that his contribution was the provision of 13.4 acres of land upon which the school was constructed.
47. DW2 testified that he was a director, shareholder, and chairman of the company, and regularly attended meetings in those capacities. He maintained that his shareholding stood at twelve (12) shares, DW1 held two shares, while the Plaintiff held one share. He added that one of his shares had been acquired from the Plaintiff in exchange for his motor vehicle registration No. KXU 075.
48. The witness acknowledged that the dispute over the company’s shareholding had previously been the subject of arbitration. Although the Arbitral Tribunal initially ruled in favour of the defendants, the award was subsequently set aside by the High Court. It was, however, his position that the setting aside was on technical rather than substantive grounds. He also stated that the Plaintiff had accused him of fraudulently acquiring the subject land, but that he had been acquitted of such allegations in ensuing criminal proceedings.
49. DW2 further disclosed that there was a matter pending before the Employment and Labour Relations Court in Nakuru between the parties regarding the Plaintiff’s termination of employment at the school by the 1st Defendant.
50. Upon cross-examination, the witness confirmed that the initial directors of the Academy were Mrs. Martha Wangui Karanja with one share, the Plaintiff, Geoffrey Kuira, with two shares, and his late father, Johannes Karanja, with one share. He admitted that it was the Plaintiff who had provided the land on which the school was established. He also restated that he became a director after a transfer of shares from his father and the Plaintiff. He referred the Court to the defendants’ trial bundle at pages 45–46.
51. On the issue of the alleged signing of the share transfer form after his father’s death, he admitted that his father, Mr. Johannes Karanja, died on 31st August 1988, yet the share transfer form bore the date of 21st October 1994. He explained that the form was prepared and signed for the purpose of reconstructing the company’s file at the Registrar’s office after the earlier, duly signed form had been misplaced. He claimed to have acted upon the advice of the Registrar.
52. The witness also admitted that they had opened a bank account at Kenya Commercial Bank, Nakuru branch, using the certificate of the name of the partnership under which the school initially operated before incorporation, since they still had in their custody the Certificate of registration of the Partnership. This, he explained, was necessitated by the Plaintiff’s conduct, which made it difficult to operate the company’s official accounts.
53. DW2 denied that the transfer of the school land to Busara Computer Point Limited was fraudulent. He also denied that the allocation of twelve shares to himself was fraudulent, maintaining that the changes were supported by board minutes and duly lodged with the Registrar. In his view, it was the Plaintiff who had attempted to mislead the Registrar by presenting documents purporting to allocate seventy-five percent of the company’s shares to his wife, which he insisted were not supported by any minutes of the company.
Written Submissions
54. On 26th February 2025, directions were given by this Court for the filing of written submissions. The Plaintiff’s Counsel, Namada & Co. Advocates, filed submissions dated 7th March 2025, whilst the Defendants’ submissions dated 29th May 2025 was filed
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