Introduction and Background
1. The Court is called upon to determine the application dated 12th August 2024, brought under Sections 1A, 1B, 3A, and 63(c) and (e) of the Civil Procedure Act, Order 22 Rule 35 and Rule 51(1) of the Civil Procedure Rules, and Sections 148, 787, 996, and 1002 of the Companies Act.
2. The application seeks orders compelling the directors of the respondent company to attend court for examination regarding the business and affairs of the respondent and to produce, on oath, the respondent's books of account and other financial records. In default, the applicant prays that the corporate veil of the respondent be lifted and the directors held personally liable for the decretal sum.
3. The application arises from a decree issued in Milimani SCCCOMM Case No. E6020 of 2023. The applicant contends that all attempts to execute the decree have been futile and alleges that the respondent is deliberately frustrating the execution process.
4. Although directions had previously been issued by this Court, the respondent has not filed any response. I am satisfied that today’s hearing date was duly served upon the respondent, as evidenced by the Affidavit of Service sworn on 10th May 2025. Accordingly, the Court shall proceed to determine the application on its merits, the same being unopposed.
Analysis and Determination
5. The purpose of Order 22 Rule 35 of the Civil Procedure Rules is to facilitate post-judgment discovery to assist in the execution of decrees. This principle was aptly stated by Ringera J in Ultimate Laboratories v Tasha Bioservice Limited, HCCC No. 1287 of 2000:
“The objective of an examination of a company’s director or officer under Order XXI 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. He also 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.”
8. 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.”
9. In the present case, the applicant has produced a valid decree dated 26th September 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.
10. 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.
12. 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
13. In view of the foregoing, I make the following orders:
i. Prayers 2 and 3 of the application dated 12th August 2024 are allowed.
ii. The directors of the respondent company, namely JOSEPH O. AGOLA, MARTIN MUNENE NJENGA, and TERESIAH NYAMBURA GATHU, shall attend court for examination on oath regarding the business and financial affairs of the respondent; the respondent’s property and assets and the respondent’s ability to satisfy the decree issued in Milimani SCCCOMM No. E6020 of 2023.
iii. For purposes of the examination, the said directors shall produce before the Court the following documents for the last five (5) years: books of account; withholding tax certificates; audited financial statements; annual returns; VAT returns; bank statements and cheque books; title deeds, bank guarantees, and other documents relevant to the respondent’s operations, property ownership, and financial transactions.
iv. Prayer 4 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.
It is so ordered.
DATED, SIGNED AND DELIVERED IN NAIROBI
THIS 22nd DAY OF MAY 2025
F. MUGAMBI
JUDGE
1. The Court is called upon to determine the application dated 12th August 2024, brought under Sections 1A, 1B, 3A, and 63(c) and (e) of the Civil Procedure Act, Order 22 Rule 35 and Rule 51(1) of the Civil Procedure Rules, and Sections 148, 787, 996, and 1002 of the Companies Act.
2. The application seeks orders compelling the directors of the respondent company to attend court for examination regarding the business and affairs of the respondent and to produce, on oath, the respondent's books of account and other financial records. In default, the applicant prays that the corporate veil of the respondent be lifted and the directors held personally liable for the decretal sum.
3. The application arises from a decree issued in Milimani SCCCOMM Case No. E6020 of 2023. The applicant contends that all attempts to execute the decree have been futile and alleges that the respondent is deliberately frustrating the execution process.
4. Although directions had previously been issued by this Court, the respondent has not filed any response. I am satisfied that today’s hearing date was duly served upon the respondent, as evidenced by the Affidavit of Service sworn on 10th May 2025. Accordingly, the Court shall proceed to determine the application on its merits, the same being unopposed.
Analysis and Determination
5. The purpose of Order 22 Rule 35 of the Civil Procedure Rules is to facilitate post-judgment discovery to assist in the execution of decrees. This principle was aptly stated by Ringera J in Ultimate Laboratories v Tasha Bioservice Limited, HCCC No. 1287 of 2000:
“The objective of an examination of a company’s director or officer under Order XXI 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. He also 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.”
8. 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.”
9. In the present case, the applicant has produced a valid decree dated 26th September 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.
10. 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.
12. 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
13. In view of the foregoing, I make the following orders:
i. Prayers 2 and 3 of the application dated 12th August 2024 are allowed.
ii. The directors of the respondent company, namely JOSEPH O. AGOLA, MARTIN MUNENE NJENGA, and TERESIAH NYAMBURA GATHU, shall attend court for examination on oath regarding the business and financial affairs of the respondent; the respondent’s property and assets and the respondent’s ability to satisfy the decree issued in Milimani SCCCOMM No. E6020 of 2023.
iii. For purposes of the examination, the said directors shall produce before the Court the following documents for the last five (5) years: books of account; withholding tax certificates; audited financial statements; annual returns; VAT returns; bank statements and cheque books; title deeds, bank guarantees, and other documents relevant to the respondent’s operations, property ownership, and financial transactions.
iv. Prayer 4 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.
It is so ordered.
DATED, SIGNED AND DELIVERED IN NAIROBI
THIS 22nd DAY OF MAY 2025
F. MUGAMBI
JUDGE