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Kabogo, three others to pay Sh100M damages to firm.

The Lands Court has held former Kiambu Governor William Kabogo and others personally liable for Sh100 million damages to Aster Holdings Limited.

Kabogo, Esther Njeri, Patrick Gichure and Kamau Kabogo lost their cover after the court lifted the corporate veil of Caroget Investments Limited, in which they are directors.

Environment and Land judge Elijah Obaga said there is a need to pierce the corporate veil of the respondent and deal with the directors behind it.

'There is no doubt a company is at law a separate legal entity, which is different from its shareholders and subscribers. However, in some instances, the corporate veil of a company can be pierced,' Obaga said.

On October 31, 2017, the court ruled that Aster Holdings Limited was the lawful owner of 3.06 hectares valued at Sh3.5 billion. They were also awarded Sh100 million in damages.

Caroget Investments, the City Council of Nairobi, National Land Commission, Register of Titles and the Attorney General were ordered to pay Aster Holdings the Sh100 million damage fee.

Aster Holdings tried to locate the assets with the view to executing the order but has been unable, as neither the registered office of the respondents nor its assets could be traced.

In their investigations, Aster found that the directors of Caroget had two directors: Esther Njeri Gitau and another company, Acres and Homes Limited.

In the case where they were awarded the cash, the court heard that Kabogo falsely testified that he was a director of Caroget deliberately to mask the true identity of the company.

'By claiming that he was a director of the company, Kabogo was being dishonest and was out to cover the respondent (Caroget) from the eyes of equity,' the judge said.

It turned out that Kabogo is a director in Acres and Homes Limited.

Caroget contended that Aster's application is premature in that costs have not been taxed.

'There are circumstances under which the corporate veil of a company may be pierced by court to enable it to do justice by treating it as identical with the person or persons who control that company,' he said.

The judge noted that the company had not argued against the piercing of their corporate veil but only raised issues of taxation.

He also found that the Caroget had illegally obtained title to part of Aster Holdings' property.

'The respondent was found to have engaged in fraudulent activities in as far as registration of the suit property in its name was concerned,' Obaga ruled.

'It is therefore clear that when issues of fraud and dishonesty are raised, the court can pierce the corporate veil so as to see who the directors are'.

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Publication:The Star (Nairobi, Kenya)
Date:Apr 10, 2019
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