Background
1. This ruling determines the Motion application dated 1st July 2025, brought under Order 22 Rule 35, Order 41 Rule 1 of the Civil Procedure Rules as well as Section 3A and 63(e) of the Civil Procedure Act. The application seeks summons for the directors of the judgment debtor’s company to appear in court for oral examination regarding the company's assets and its ability to satisfy a decree issued by this Court in favour of the applicant. Additionally, it seeks an order for lifting the respondents corporate veil and holding the said directors personally liable for the outstanding decretal sum, in the event of non-compliance.
2. The application is opposed by way of grounds of opposition dated 10th December 2024.
Analysis and determination
3. I have carefully considered the application, response, submissions, authorities and evidence presented by the parties herein. The issue that this Court must determine is whether a case has been made by the applicants for granting of the prayers sought.
4. The respondents raise the concern that the application before Court offends the established laws and principles which define companies as corporate and separate legal entities, different from its directors. The respondent further alleges that the application is unsubstantiated.
5. I am, however, mindful that the primary purpose of an order under Order 22 Rule 35 of the Civil Procedure Rules is to aid in discovery. This position was aptly stated by Ringera J, in HCCC No. 1287 of 2000 Ultimate Laboratories v Tasha Bioservice Limited where the Learned Judge emphasized thus:-
“The objective of an examination of a company’s director or officer under Order XX1 Rule 36 is to obtain discovery, for the purpose of execution of a decree against the company, as to whether any or what debts are owing to the judgment debtor and whether the judgment-debtor has any and what property or means of satisfying the decree”.
6. The Learned Judge further explained that:
“The court’s duty under the Order and Rule in question is limited to ensuring that the person being examined answers all the questions which are fairly, pertinent and properly asked; it is thereafter up to the decree holder to use the said information to proceed with execution.”
7. For the avoidance of doubt, it is only after the conduct of such examination that consequential orders may be made, including the lifting of the corporate veil, where sufficient cause is established. As articulated in Halsbury’s Laws of England, 4th Edition, paragraph 90, the general principle is that the court may pierce the corporate veil to achieve justice by treating the company as indistinguishable from the individuals who control it. This may be warranted not only in instances of fraud or misconduct but also where the nature of the company or its controllers is material to the issues before the court.
8. The Court in the Ultimate Laboratories case (supra) emphasized that the threshold for summoning directors for examination is not unduly onerous:
“...as long as the applicant has shown that the respondent is in a position to provide information in the nature of discovery, the Court should summon the person to attend and be examined... If the decree holder already has such definite information, there would be no need for examination.”
9. This position was reaffirmed by the Court in Postbank Credit Limited (in Liquidation) v Nyamangu Holdings Limited [2015] eKLR:
“A person to be summoned under Order 22 Rule 35(c) of the Civil Procedure Rules... will also be required to produce any relevant documents or copies thereof... including but not limited to the judgment-debtor’s annual financial statements, documents of title, and other records.”
10. In the present case, the applicant has produced a valid decree issued on 16th February 2023. There is no evidence of satisfaction of the decree, and the applicant’s affidavit evidence remains uncontroverted. A copy of the CR12 annexed to the application confirms the directorship of the respondent company. The directors are agents of the company and as such are expected to have the information required for purposes of this application. I therefore find that the applicant has made a proper case for the examination of the directors of the respondent.
11. As to the prayer seeking to lift the corporate veil, I am of the view that this is a determination that must follow the examination of the respondent’s directors and a full assessment of their testimony and the documentary evidence regarding the affairs of the company. This approach aligns with the reasoning in Masefield Trading (K) Ltd v Rushmore Company Limited [2008] eKLR, where Kimaru J held:
“By examining such an officer, the court may or may not lift the veil of incorporation.”
Final Orders
12. In view of the foregoing, I make the following orders:
i. Prayer 1 of the application dated 1st July 2025 is allowed. The directors of the respondent company, namely VICTOR SWANYA OGETO and JANET NYADUKO OGETO, shall attend court for examination on oath regarding the respondent’s ability to satisfy the decree issued in MISC APPL. NO. E082 OF 2021.
ii. The said directors shall produce before the Court the books of account and other documentary evidence of the means, property and assets of the respondent company.
iii. Prayer 2 of the application, which seeks to lift the corporate veil and hold the directors personally liable, shall be deferred for consideration after the examination of the directors and assessment of the documentary evidence.
iv. The applicants shall have the costs of the application.
It is so ordered.
1. This ruling determines the Motion application dated 1st July 2025, brought under Order 22 Rule 35, Order 41 Rule 1 of the Civil Procedure Rules as well as Section 3A and 63(e) of the Civil Procedure Act. The application seeks summons for the directors of the judgment debtor’s company to appear in court for oral examination regarding the company's assets and its ability to satisfy a decree issued by this Court in favour of the applicant. Additionally, it seeks an order for lifting the respondents corporate veil and holding the said directors personally liable for the outstanding decretal sum, in the event of non-compliance.
2. The application is opposed by way of grounds of opposition dated 10th December 2024.
Analysis and determination
3. I have carefully considered the application, response, submissions, authorities and evidence presented by the parties herein. The issue that this Court must determine is whether a case has been made by the applicants for granting of the prayers sought.
4. The respondents raise the concern that the application before Court offends the established laws and principles which define companies as corporate and separate legal entities, different from its directors. The respondent further alleges that the application is unsubstantiated.
5. I am, however, mindful that the primary purpose of an order under Order 22 Rule 35 of the Civil Procedure Rules is to aid in discovery. This position was aptly stated by Ringera J, in HCCC No. 1287 of 2000 Ultimate Laboratories v Tasha Bioservice Limited where the Learned Judge emphasized thus:-
“The objective of an examination of a company’s director or officer under Order XX1 Rule 36 is to obtain discovery, for the purpose of execution of a decree against the company, as to whether any or what debts are owing to the judgment debtor and whether the judgment-debtor has any and what property or means of satisfying the decree”.
6. The Learned Judge further explained that:
“The court’s duty under the Order and Rule in question is limited to ensuring that the person being examined answers all the questions which are fairly, pertinent and properly asked; it is thereafter up to the decree holder to use the said information to proceed with execution.”
7. For the avoidance of doubt, it is only after the conduct of such examination that consequential orders may be made, including the lifting of the corporate veil, where sufficient cause is established. As articulated in Halsbury’s Laws of England, 4th Edition, paragraph 90, the general principle is that the court may pierce the corporate veil to achieve justice by treating the company as indistinguishable from the individuals who control it. This may be warranted not only in instances of fraud or misconduct but also where the nature of the company or its controllers is material to the issues before the court.
8. The Court in the Ultimate Laboratories case (supra) emphasized that the threshold for summoning directors for examination is not unduly onerous:
“...as long as the applicant has shown that the respondent is in a position to provide information in the nature of discovery, the Court should summon the person to attend and be examined... If the decree holder already has such definite information, there would be no need for examination.”
9. This position was reaffirmed by the Court in Postbank Credit Limited (in Liquidation) v Nyamangu Holdings Limited [2015] eKLR:
“A person to be summoned under Order 22 Rule 35(c) of the Civil Procedure Rules... will also be required to produce any relevant documents or copies thereof... including but not limited to the judgment-debtor’s annual financial statements, documents of title, and other records.”
10. In the present case, the applicant has produced a valid decree issued on 16th February 2023. There is no evidence of satisfaction of the decree, and the applicant’s affidavit evidence remains uncontroverted. A copy of the CR12 annexed to the application confirms the directorship of the respondent company. The directors are agents of the company and as such are expected to have the information required for purposes of this application. I therefore find that the applicant has made a proper case for the examination of the directors of the respondent.
11. As to the prayer seeking to lift the corporate veil, I am of the view that this is a determination that must follow the examination of the respondent’s directors and a full assessment of their testimony and the documentary evidence regarding the affairs of the company. This approach aligns with the reasoning in Masefield Trading (K) Ltd v Rushmore Company Limited [2008] eKLR, where Kimaru J held:
“By examining such an officer, the court may or may not lift the veil of incorporation.”
Final Orders
12. In view of the foregoing, I make the following orders:
i. Prayer 1 of the application dated 1st July 2025 is allowed. The directors of the respondent company, namely VICTOR SWANYA OGETO and JANET NYADUKO OGETO, shall attend court for examination on oath regarding the respondent’s ability to satisfy the decree issued in MISC APPL. NO. E082 OF 2021.
ii. The said directors shall produce before the Court the books of account and other documentary evidence of the means, property and assets of the respondent company.
iii. Prayer 2 of the application, which seeks to lift the corporate veil and hold the directors personally liable, shall be deferred for consideration after the examination of the directors and assessment of the documentary evidence.
iv. The applicants shall have the costs of the application.
It is so ordered.