Unda v Pentagon Security Services Limited (Cause E102 of 2018) [2025] KEELRC 2365 (KLR) (31 July 2025) (Ruling)
Neutral citation:
[2025] KEELRC 2365 (KLR)
Republic of Kenya
Cause E102 of 2018
K Ocharo, J
July 31, 2025
Between
Kahindi Karisa Unda
Claimant
and
Pentagon Security Services Limited
Respondent
Ruling
1.By a Notice of Motion Application dated 26th September 2024, the Claimant/Applicant sought the following orders:a.That summons to issue compelling Nazir Hussein Ahmed and Azmna Farid Ahmed, being Directors and shareholders of the Respondent / Judgment Debtor, to attend court and be examined under oath as to the Respondent/Judgment Debtor’s books of accounts and other documentary evidence showing the same before the Court;b.That upon examination of Nazir Hussein Ahmed and Azmna Farid Ahmed, being the Directors and shareholders of the Respondent/Judgment Debtor, this Hounourable Court be pleased to lift the veil of incorporation and hold the said Directors and shareholders personally liable to pay the decretal sum of Kshs. 185, 551.92 being the decretal sum, taxed costs and interest at 12% from the date of judgment or to be imprisoned and committed to civil jail for a period not less than six months; and
2.By its ruling dated 16th January 2025, this Court allowed the first limb of the application but deferred ruling on the second and third, pending examination of the Directors of the Respondent Company regarding its books of account. On 20th May 2025, noting that the Directors, despite being served with court process, were not present in court, this Court directed the Claimant/Applicant to file written submissions on the outstanding limbs of the application mentioned above.
3.Pursuant to the Court’s directions, Counsel for the Claimant/ Applicant filed her submissions dated 29th May 2025. Counsel identified two issues for determination on the application, thus;a.Whether the Claimant/Decree-holder has satisfied the legal requirements for lifting the corporate veil?b.Who should bear the costs of the Application?
4.She submitted that, while the corporate nature of a company as a legal personality and a separate entity from its shareholders and directors was established in the case of Salomon & Co. Ltd v Salomon [1897] A.C. 22 H.L., there exists an exception to the rule to prevent abuse of the protection accorded to companies. The circumstances under which the veil can be lifted are where the veil is used to perpetrate fraud, defeat justice, or evade legal obligations.
5.It was further submitted that the provisions of Order 22 Rule 35 of the Civil Procedure Rules allow for the filing of an application like the present one, and for the grant of the orders sought herein. The Rule provides as follows:
6.The Claimant/Applicant holds a money decree 4 years post judgment, but is unable to execute the same, despite frantic efforts. The Respondent have deliberately frustrated his efforts to realise the fruits of the judgment.
7.This Honourable Court is seized with the jurisdiction to determine all questions arising from or incidental to the satisfaction or enforcement of a decree emanating from its judgment, as is provided for under Section 34(1) of the Civil Procedure Act.
8.The matters raised in this application are within this Court's jurisdiction as outlined in Order 22 Rule 35, including a consequential order for lifting the corporate veil to facilitate execution.
9.The Respondent’s Directors' non-responsiveness in settling the decretal sum that the Respondent genuinely owes, and their deliberate failure to attend court, are actions intended to defeat the cause of justice. This Court should, in the circumstances, direct that they shoulder the liabilities of the Respondent, personally.
10.To support the submissions, Counsel placed reliance in the case of Kenagen Contractors Kenya Ltd v Abong’o, Church of Christ in Africa & 4 others [2024] KEELC 5111 (KLR) where the Court in granting orders to lift the Plaintiff’s corporate veil stated as follows:
11.Further reliance was placed on the case of Kepkemoi V Zaburi Enterprises Company Ltd & 2 Others (miscellaneous Civil Application 43 Of 2023) [2024] Kehc 2343 (klr) (8 March 2024) (ruling), the Court in its analysis stated as follows:
12.To further buttress her submissions, Counsel cited the holding in Petrol Oil (K) Ltd v Hosborne Arunga & 2 Others [2013] eKLR, thus:
13.Submitting on costs, Counsel stated that costs follow the event. The Claimant was compelled to file the present application owing to the Respondent’s failure to satisfy a valid court decree. The application has necessitated additional legal expenses and delayed the realisation of the fruits of his judgment. The Respondent’s directors should bear the costs of this application.
Analysis and Determination.
14.Undeniably, as the Court that issued the decree is seized of matters related to the controversy that may arise from it, under the provisions of section 34 of the Civil Procedure Act, such issues may include whether the realisation of the fruits of the decree has been or is being obstructed by the Judgment Debtor’s Directors [if it is a legal person], whether the Directors should be summoned to produce books of account and explain the assets and means of the entity, and whether, in the circumstances of the case, the Directors should be held personally liable for the liabilities of the entity arising from the decree.
15.It is trite law that a registered company is a legal persona distinct from the members who compose it. Equally trite is the fact that a court would be justified in certain circumstances in disregarding a company’s separate personality to fix liability elsewhere for what are ostensibly acts of the company.
16.The circumstances under which the corporate veil can be lifted are countless. The law has not established a comprehensive list of them, nor is it close to doing so. Each case must be examined based on its facts, which, once determined, can be of crucial significance.
17.I have carefully considered the Claimants’ application, which the Respondent and or the Directors have not opposed, the assertion that the execution of the decree and the realisation of the fruits thereof, which remain undiscounted following the Director’s failure to present themselves for examination regarding the Respondent’s means and assets, and production of the Respondent’s documents, and see that making an adverse inference against them would the most appropriate thing to do in the circumstances. Thus, had they appeared before this Court as directed in the earlier ruling, their examination could have revealed the Claimant’s assertion as accurate.
18.In the upshot, I find the Claimants’ application meritorious. Consequently;a.The corporate veil of the Judgment Debtor Company is hereby lifted. The Directors of the Company named in the notice of motion application shall be liable jointly and severally to settle the decretal sum of Kshs 185,551.92 and the costs of this application.
19.Orders accordingly.
READ, SIGNED AND DELIVERED VIRTUALLY IN MOMBASA THIS 31ST JULY 2025.OCHARO KEBIRAJUDGE