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ELCPartially AllowedNot stated in the judgment as extracted (Mombasa suit transferred to Malindi)· [2018] KEELC 262 (KLR)

Suleiman Enterprises Limited v Kensalt Limited, Kemu Salt Packers Production Limited, Handsheswer Transporters Limited & Shreeji Express (Environment & Land Case 90 of 2018) [2018] KEELC 262 (KLR)

Environment and Land Court
14 December 2018
4,274 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~17 min to read original · ~4 min brief

The bottom line

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Kenya's Environment and Land Court blocked Kensalt from salt land it had no right to use, but refused to jail its directors for contempt.

What this practically means

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Executive summary

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Suleiman Enterprises Ltd, the registered owner of two salt-harvesting parcels in Tana River County (LR 21918 and LR 21983), sued Kensalt Ltd, Kemu Salt Packers and two transporters for trespass and sought a permanent injunction, general damages and mesne profits. It alleged that before receivership it had licensed Kemu Salt Packers to harvest salt and use its plant, but after Kemu was placed under receivership its Receiver Managers granted a lease and consent to Kensalt to harvest salt on the Plaintiff's properties without consent. Three interlocutory applications were heard together: the Plaintiff's injunction application of 4th April 2018, its contempt application of 10th April 2018 seeking six months' imprisonment of Kensalt's directors for disobeying interim orders of 4th April 2018 served on 6th April 2018, and Kensalt's application of 27th April 2018 to set aside the interim orders as obtained by concealment. The court framed two issues: contempt and entitlement to injunction. On contempt, applying Wildlife Lodges and Mutititka, it held that proof must be above balance of probabilities but below beyond reasonable doubt; service was on a secretary and operations ceased within about 24 hours, so there was no willful disobedience, and the contempt application failed. On the injunction, applying Giella and Nguruman, the court found a prima facie case: the Licence Agreement of 7th June 2017 granted by Kemu to Kensalt did not cover the Plaintiff's properties, Kemu's rights under the Plaintiff's licence were non-transferable without consent, and the companies were distinct legal entities notwithstanding alleged common directorship, for which no formal evidence was adduced. Damages were inadequate because salt is a depleting resource that cannot be quantified. The injunction application was allowed in terms of Prayers 5, 6 and 7, with costs; the other applications were dismissed. Judgment was delivered at Malindi on 14th December 2018.

Key legal issues

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01

Whether the 1st Defendant's directors were in contempt of the orders of 4th April 2018

Holding

No contempt found; service was on a secretary and operations ceased within about 24 hours

Reasoning

The process server served an office secretary rather than a director or principal officer, so the exact time knowledge of the order's terms reached the company was unclear. The defendant stopped operations by 7th April around mid-day. Applying the contempt standard of proof above balance of probabilities but below beyond reasonable doubt, the court was not satisfied there was willful disobedience.

p. 3
02

Whether the Plaintiff established entitlement to an injunction

Holding

Yes; the 1st Defendant had no legitimate basis to be on the Plaintiff's land and damages were inadequate

Reasoning

The Plaintiff granted a licence over the suit properties to the 2nd Defendant only. The Licence Agreement of 7th June 2017 between the 2nd and 1st Defendants did not cover the suit properties and did not assign any rights over them. The companies were distinct legal entities; even a common directorship would not allow the 2nd Defendant to grant rights over the Plaintiff's land without concurrence. Salt is a depleting resource whose loss cannot be quantified.

p. 5

Legal principles established

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  • Court orders must be obeyed until discharged; a party cannot choose to disregard them
  • Standard of proof in contempt proceedings is above balance of probabilities but below beyond reasonable doubt
  • A company is a separate legal entity distinct from its shareholders and directors
  • A licence granted to one party is personal and cannot be transferred without the grantor's consent

Court orders

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  1. 1.The Plaintiff's Application dated 10th April 2018 is dismissed with no order as to costs
  2. 2.The 1st Defendant's Application dated 27th April 2018 is dismissed
  3. 3.The Plaintiff's Application dated 4th April 2018 is allowed in terms of Prayers 5, 6 and 7 thereof
  4. 4.The Plaintiff shall have the costs of both the application dated 27th April 2018 and the one dated 4th April 2018

Authorities

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Cases cited (8)

  • Wildlife Lodges Ltd –vs- County Council of Narok & Another
    (2005) 2 EA 244
  • Re Bramblevale Ltd
    (1969) 3 All ER 1062
  • Mutititka –vs- Baharini Farm Ltd
    (1985) eKLR
  • Giella –vs- Cassman Brown Company Ltd
    (1973) EA 358
  • Nguruman Limited –vs- Jan Bonde Nielsen & 2 Others
    (2014) eKLR
  • Kenya Commercial Finance Company Ltd –vs- Afraha Education Society
    (2001) Vol 1 EA 86
  • Mrao Ltd –vs- First American Bank of Kenya Ltd & 2 Others
    (2003) KLR 125
  • Riccattii Business College of East Africa Ltd –vs- Kyanzavi Farmers Company Ltd
    (2016) eKLR
Jurisdiction invoked
Not expressly stated; suit filed in the High Court/Environment and Land Court at Mombasa, later directed to be tried in Malindi

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Suleiman Enterprises Limited v Kensalt Limited, Kemu Salt Packers Production Limited, Handsheswer Transporters Limited & Shreeji Express (Environment & Land Case 90 of 2018) [2018] KEELC 262 (KLR)", Case Analysis (2018). Not stated in the judgment as extracted (Mombasa suit transferred to Malindi). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/262/eng@2018-12-14

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.