George Kihara Mbiyu v Sifa International Ltd & 5 others [2002] KECA 119 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that a company's property does not form part of a shareholder's estate, even when the shareholder owned most of the shares.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the applicant had an arguable appeal against the ruling and order of Rimita J dated 26th February, 2002 in H.C.C.C. No. 215 of 2002.
- 2.Whether the appeal, if successful, would be rendered nugatory unless a stay of the ruling and an injunction restraining the respondents were granted.
- 3.Whether the Car Park on Plot L.R. No. 209/9099 City Hall Way, owned by Koinange Investment and Development Company Limited, forms part of the estate of the late Mbiyu Koinange so as to sustain the applicant's court-appointed management of it.
Key legal issues
#What an applicant must demonstrate to obtain a stay or injunction pending appeal under rule 5(2)(b) of the Court of Appeal Rules.
The applicant must first show an arguable appeal and, secondly, that the appeal, if successful, would be rendered nugatory unless a stay is granted; where there is no arguable appeal the second limb does not arise.
The court restated the twin criteria governing relief under rule 5(2)(b): arguability of the intended appeal and the nugatoriness of its success absent interim relief. The limbs are considered sequentially: once the court concludes there is no arguable appeal, the nugatory question does not fall for consideration. Here the court found the intended appeal unarguable and expressly declined to address the second limb, dismissing the application on the first limb alone.
Whether the intended appeal — that a court-appointed agent of a deceased's estate may keep the registered owner out of company-owned property — was arguable.
There was no arguable appeal; the applicant's appointment as agent of the estate did not entitle him to occupy and run the Car Park and keep the true owner out of it.
The applicant did not dispute that the Car Park is owned by the second respondent, a limited liability company. He argued that his appointment by the superior court as agent of the executors of the estate of the late Mbiyu Koinange entitled him to occupy and run the Car Park and keep the true owner out. Counsel submitted this was a substantial point for the intended appeal. The court disagreed, holding there was no arguable appeal and dismissing the application on that basis.
Whether property owned by a company in which the deceased was the majority shareholder forms part of his estate.
It does not; the Car Park belonged to Koinange Investment and Development Company Limited and not to the estate of the late Mbiyu Koinange, notwithstanding his 75% shareholding.
The High Court had rejected the applicant's claim that the Car Park formed part of the assets of the estate of Mbiyu Koinange, holding that since the car park belongs to the company it is not part of the estate. The Court of Appeal found incontrovertible evidence of the company's ownership. The distinction between a company's property and a shareholder's estate underpinned the conclusion that the intended appeal was unarguable.
Legal principles established
#- An applicant for a stay or injunction pending appeal under rule 5(2)(b) of the Court of Appeal Rules must first show an arguable appeal and, secondly, that the appeal, if successful, would be rendered nugatory unless a stay is granted.
- Where an intended appeal is found to be unarguable, the court need not consider whether its success would be rendered nugatory; the limbs of the rule 5(2)(b) test are addressed sequentially.
- Property owned by a limited liability company is not part of the estate of its shareholder, even a majority shareholder; it belongs to the company.
- An agent appointed by the court to manage a deceased person's estate cannot rely on that appointment to occupy and run property belonging to another and to keep the true owner out of it.
Court orders
#- 1.The application for a stay of the ruling and orders of Rimita J and for an injunction in respect of the Car Park fails and is dismissed.
- 2.Costs of the application are awarded to the respondents.
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 215 of 2002
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules
Relief refused
#Stay of the ruling and orders of Rimita J given on 26th February, 2002 in H.C.C.C. No. 215 of 2002
The court found the intended appeal was not arguable and therefore did not reach the nugatory limb of the rule 5(2)(b) test.
Injunction restraining the respondents, their servants and agents, from entering the Car Park on Plot L.R. No. 209/9099 City Hall Way, Nairobi or interfering with the applicant's management of the facility
The application failed in its entirety, the court having concluded there was no arguable appeal.
Costs
In the result this application fails and is dismissed with costs to the respondents.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In the result this application fails and is dismissed with costs to the respondents.
For the applicant to obtain the orders he seeks in this application, he must, first, show that he has an arguable appeal and, secondly, that his appeal, if successful, would be rendered nugatory, unless he is granted a stay.
Our considered opinion is that there is no arguable appeal and having arrived at that conclusion we do not have to consider the second limb of the application.
There is incontrovertible evidence that the Car Park is owned by the second respondent which, as we have already pointed out, is a limited liability company.
However, it is enough to state at this stage that since the car park belongs to the company it is not part of the estate of the late Mbiyu Koinange.
Issues in the judgment
#The judgment describes the applicant's court appointment inconsistently, first as agent of 'the administrators' of the estate (per the affidavit) and later as agent of 'the executors' of the estate.
The order of the Civil Procedure Rules under which the chamber summons was taken out is printed 'Order XXX1X' (numeral 1 in place of the Roman I), apparently for Order XXXIX.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "George Kihara Mbiyu v Sifa International Ltd & 5 others [2002] KECA 119 (KLR)", Case Analysis (2002). Civil Application No. Nai. 41 of 2002. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2002/119/eng@2002-07-19
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.