Githunguri Dairy Farmers Co-operative Society v Ernie Campbell & Co. Ltd & another [2018] KECA 721 (KLR)

Facts

The 1st respondent sued the 2nd respondent for outstanding sums of money arising from a construction contract for a milk processing plant. The 1st respondent obtained an arbitral award and subsequently sought to enforce it. The 2nd respondent had no attachable assets, and the milk processing plant was registered in the name of the appellant. The 1st respondent then sought to lift the corporate veil and declare the appellant liable.

Issues

1. Lifting of the corporate veil of the 2nd respondent
2. Declaration of the appellant's liability for the decree

Reasoning

The court found that the appellant, as the majority shareholder, had incorporated the 2nd respondent to avoid paying the decree. The court held that the device of incorporation was used for an improper purpose, and thus the veil was pierced.

Outcome

Appeal dismissed with costs

Authorities cited