Case Citation: DAVID NGUGI MBUTHIA v CHARLES NDERITU MUKORA [2004] eKLR The parties to this suit were business associates. In 1977, they incorporated Computer Stationery & Supplies Ltd., a limited liability company (hereinafter referred to as the “company”) in which they were the sole shareholders and directors. The plaintiff’s case against the defendant as outlined in the plaint is that the plaintiff was the majority shareholder in the company, holding 5000 out of the 8000 issued shares of the company while the defendant held 361 shares. By an oral agreement made between the parties sometime in 1987, it was agreed that the defendant would sell his shares in the company to the plaintiff for the sum of Ksh.40,000/=. It was further agreed that the said sum of Ksh.40,000/= would be paid by the plaintiff to the company, which would in turn pay it out to the defendant. It is the plaintiff’s case that he duly paid the said sum to the company, and the company in turn paid it out to the defendant. Thereafter, the defendant refused and continues to refuse and neglect to take any steps towards the completion of the said agreement for sale by transferring the shares in question to the plaintiff. The plaintiff therefore claims from the defendant- (a) Specific performance of the said agreement by the defendant. (b) Alternatively the Registrar of the High Court do execute the transfer. (c) Damages for breach of contract (d) Costs of the suit. In his defence, the defendant specifically denies that the plaintiff is the holder of 5,000 shares in the company and that he is himself the holder of 361 shares. If the plaintiff is the holder of 5000 shares, which the defendant denies, then such shares were allocated in contravention of the company’s articles of association. The defendant further denies that by an oral agreement in 1987 or at all, he agreed to sell his shares in the company to the plaintiff for Ksh.40,000/= or at all. He therefore states that he is a stranger to any arrangements for the payment of that money by the plaintiff to the company and the subsequent payment to him of the same by the company. In the alternative and without prejudice to the foregoing, the defendant contends, without admitting, that if the plaintiff paid any moneys to him, either by himself or through the company, such sums were paid as a gift to assist him in his election campaign and not for the alleged purported sale of shares. For these reasons, the defendant prays that the plaintiff’s suit be dismissed with costs. Arising out of these pleadings, the parties advocates have filed two statements of agreed issues. The first statement is dated 24th August, 1994, signed by M/s Hamilton Harrison & Mathews Advocates for the plaintiff, and Rustam Hira, Advocate for the defendant, and the same was filed in court on 27th September, 1994. According to this statement, the issues between the parties are- 1. Does the plaintiff hold 5,000 shares in the company known as Computer Stationery & Supplies Limited? 2. If so, have the plaintiff’s shares been allotted to him in contravention of the articles of association? 3. Does the defendant hold 361 shares in the company? 4. Was there an oral agreement between the plaintiff and the defendant for the sale of the defendant’s shares in the company for Sh.40,000/=? 5. Was there an agreement that the plaintiff would pay Sh.40,000/= to the company which would in turn pay the said sum to the defendant? 6. Did the plaintiff pay the said sum to the company? 7. Did the company pay the said sum to the defendant? 8. Was the sum paid to the defendant in consideration for the sale of the shares or as a gift? 9. Is the plaintiff entitled to an order for specific performance? 1. What is the number of shares held by the plaintiff and the defendant respectively in the company known as Computer Stationery & Supplies Limited? 2. Has there been any share certificates issued? If yes, at what price and what was the mode of payment? 3. Have any shares been allocated to the plaintiff in contravention of the articles of association of the company? 4. Did the defendant vide an oral agreement or otherwise agree to sell his shares to the plaintiff? 5. If any agreement existed in 3 (sic) hereinabove, have both parties performed their obligations? 6. Did the plaintiff pay any money to the defendant either directly or through the company? If yes, what was the purpose of the payment? 7. Is the plaintiff entitled to his claim in the plaint? 8. Who is liable to pay costs? by an agreement between the parties, the defendant agreed to sell his shares to the plaintiff. The plaintiff performed his part of the bargain by paying the defendant the agreed sum through the company. It may not be practicable for him to identify the Ksh.40,000/= which he deposited into the company’s bank account as his exhibit No.2 shows that he kept on depositing money into the company’s account almost at will. In contrast, the defendant did not honour his side of the bargain. He acknowledges receipt of the money but then says it was a gift. I do not think so. This case has a few loose ends. If it were a criminal matter, the plaintiff would probably have an uphill task proving his case beyond reasonable doubt. But on a balance of probability, I am satisfied that he has proved his case against the defendant, and that he is entitled to specific performance, and to the transfer to his name of all the defendant’s shares in the company. The Deputy Registrar of the High Court is hereby authorised to execute on behalf of the defendant all such instruments and documents as may require execution by the defendant in order to give effect to the order for specific performance. The plaintiff will also get costs of this suit. It is so ordered.
Posted on: Tue, 15 Oct 2013 00:47:57 +0000
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