IN THE HIGH COURT OF KENYA

AT ELDORET

CIVIL SUIT NO. 206 OF 2011

VERSUS

          The 2^nd defendant, Jackson Adede Iravunah and the 3^rd defendant, Evelyn Iravunah, have applied, by Chamber Summons dated 16^th September, 2010 for one order namely that their names be struck out for being improperly enjoined in this suit. They contend that as directors of the 1^st defendant they cannot be sued in their own names for claims against the 1^st defendant.

          The plaintiff, in his plaint, describes the 1^st defendant as a private institute having a common seal with registered offices in Nairobi and Eldoret.  In paragraph 5 of the same plaint, he avers that he entered into a contract with the defendant to buy hostel business from the 1^st defendant. In the agreement exhibited by the plaintiff, the only parties thereto are the plaintiff and the 1^st defendant. The 2^nd and 3rd defendants are mentioned nowhere.

          It is plain that the plaintiff does not appreciate the separate corporate identity of the 1^st defendant hence his contention that he did not know that he was dealing with the 2^nd and 3^rd defendants as the directors of the 1^st defendant yet the agreement of sale which is the foundation of his claim is in the name of the 1^st defendant as the only seller of the hostel business. It is a basic principle of Company Law that a company has a distinction and separate personality from its shareholders and directors even where the directors are also the shareholders. (See the precedent setting case of Salomon -Vs- Salomon and Company Limited [1957] AC 22.)  As a separate legal entity, its property is distinct from that of its shareholders and directors. It follows therefore that if the company herein sold its property or business to the plaintiff, it is only proper that it bears the consequences. In the premises, I find and hold that the 2^nd and 3^rd defendants, as directors of the 1^st defendant have no capacity to be sued for wrongs committed by the 1^st defendant and have therefore improperly been joined in this suit.

          I accordingly allow the 2^nd and 3^rd defendants’ application dated 10^th September, 2010 and order that the two be and are hereby struck out of this suit.

          As the plaintiff appears to have dealt with the two, the proper order on costs is that each party bears its own costs.