Nanji & 2 others v Exobi (Finance House) Limited (Civil Appeal E434 of 2020) [2025] KECA 1119 (KLR)
The bottom line
#The Court of Appeal dismissed the appeal, upholding injunctions and asset-freezing orders protecting a majority shareholder excluded from a company's management.
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 trial court introduced a new issue for determination, namely, whether the respondent's claim was a derivative suit
- 2.whether the trial court properly exercised its discretion in granting an interim and a mareva injunction to the respondent
- 3.whether the trial court misconstrued or misinterpreted the conditions and circumstances for the appointment of a receiver at an interlocutory stage
- 4.whether the trial court unduly and prematurely interfered with the internal management of UHE
Key legal issues
#Whether the trial court erred in raising, unilaterally, the question whether the suit was a derivative action
The trial court did raise and deal with an unpleaded issue, but its observation was obiter dictum that had no bearing on the interlocutory orders, so it furnished no ground of appeal.
Neither party pleaded or addressed the derivative-suit question. The trial court analysed section 238 of the Companies Act and observed the respondent could regularise the suit, but the observation formed no part of the disposition. The Court of Appeal adopted Halsbury's definition of dicta and held that, since the observation did not impact the decision to grant the interim or mareva injunctions, the appellants' complaint failed.
Whether the trial court properly exercised its discretion in granting the interim and mareva injunctions
Yes. On largely uncontested facts - the allotment of shares to the directors without notice, the sale of ABC shares to themselves, denial of access to information and non-declaration of dividends - the discretion was properly exercised and the appellate court would not interfere.
Guided by Mbogo v Shah and United India Insurance, the Court found no misdirection, no misapprehension of facts, and no wrong decision. The admitted conduct of the 1st and 2nd appellants disclosed a prima facie case and irreparable harm in the form of diminution of the respondent's shareholding. The conditions for a mareva injunction - jurisdiction, good arguable case, assets within the jurisdiction, risk of dissipation and balance of convenience - were satisfied.
Whether the trial court erred in declining to appoint a receiver and instead ordering appointment of the respondent's representative
No. No receiver was appointed; and the alternative order made in the court's inherent jurisdiction was not premature or an undue interference with the company's affairs.
The trial court considered the parties' arguments and Order 41 rule 1, found the company a going concern and declined to appoint a receiver, leaving the issue open. Expressing an opinion on it now would prejudice its hearing before the trial court. The order for a shareholder representative, made under inherent jurisdiction, was justified by the admitted exclusion of the majority shareholder from the company's management pending trial.
Legal principles established
#- An appellate court will not interfere with a discretionary decision unless the judge misdirected himself in law, misapprehended the facts, took into account matters he should not have, failed to take into account matters he should have, or the decision is plainly wrong; the onus lies on the appellant.
- On an interlocutory appeal, the appellate court must refrain from making concluded views on the matters in contention to avoid prejudicing the pending suit.
- An appeal does not lie from obiter dictum observations of a judge that did not form part of the court's disposition or affect the ultimate decision.
- Conditions for a temporary injunction: prima facie case with probability of success; irreparable injury not compensable by damages; and, if in doubt, balance of convenience.
Court orders
#- 1.Appeal dismissed
- 2.Costs awarded to the respondent against the 1st and 2nd appellants
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court
- not stated in judgment
- Jurisdiction invoked
- First appellate jurisdiction over an interlocutory appeal from the High Court (statutory basis not expressly stated in the judgment)
Relief refused
#Setting aside the interim injunction, mareva injunction and related interlocutory orders of the trial court
The trial court properly exercised its discretion on the largely uncontested facts; the appellants failed to discharge the onus of showing misdirection or that the decision was plainly wrong
Interference with the trial court's order appointing a representative of the respondent to attend board meetings and be a signatory to company accounts
Exercise of inherent jurisdiction to include a central shareholder in the management pending hearing was neither premature nor undue interference
Costs
Appeal dismissed with costs to the respondent against the 1st and 2nd appellants
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.
The Court of Appeal is only entitled to interfere if one or more of the following matters are established: first, that the Judge misdirected himself in law; secondly, that he misapprehended the facts; thirdly, that he took account of considerations of which he should not have taken account; fourthly, that he failed to take account of considerations of which he should have taken account, or fifthly, that his decision, albeit a discretionary one, is plainly wrong.
The onus of satisfying the Court that it should interfere with the exercise of discretion, we should add, always lies with the appellant.
We should, accordingly, refrain from making any concluded views on the matters in contention, to avoid prejudicing the suit pending before the trial court
We take the view that the trial court's consideration of and conclusion that the respondent's suit was a derivative one did not have a bearing on the decision to grant the interim or mareva injunctions.
Accordingly, we find that this appeal is without merit. It is hereby dismissed with costs to the respondent against the 1st and 2nd appellants.
Issues in the judgment
#Trial court ruling quoted in the judgment describes the company as 'United Housing Limited' in one order while elsewhere the company is 'United Housing Estate Limited', an apparent internal inconsistency in the trial court's orders reproduced verbatim.
The judgment contains multiple typographical errors in quoted and original text (e.g. 'afiairs', 'efiect', 'Comgania Naviera'), likely OCR artefacts in the copy of the judgment provided.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nanji & 2 others v Exobi (Finance House) Limited (Civil Appeal E434 of 2020) [2025] KECA 1119 (KLR)", Case Analysis (2025). Civil Appeal (interlocutory appeal from High Court, memorandum of appeal dated 6th November 2020). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/1119/eng@2025-06-20
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.