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ELCPartially Allowed· [2022] KEELC 1069 (KLR)

Gerald Katana Mwamumba & 3 others v ARM Cement PLC (Under Receivership) [2022] KEELC 1069 (KLR)

Environment and Land Court
3 March 2022
2,108 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that you cannot even ask a court to interpret a judgment against a company under administration without leave or the administrator's consent.

What this practically means

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Executive summary

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This ruling by the Environment and Land Court at Malindi (M.A. Odeny, J) determines a preliminary objection dated 6th October 2021 raised by the Defendant, a company placed under administration with effect from 17th August 2018 pursuant to High Court Insolvency Cause No. 14 of 2018. The objection targeted the Plaintiffs' application dated 29th June 2021, which sought interpretation of the court's judgment of 19th July 2018 awarding Kshs 17 million. The Defendant argued that under Section 560(1)(d) of the Insolvency Act, no legal proceedings may be begun or continued against a company under administration without the administrator's consent or the court's leave, which the Plaintiffs neither sought nor obtained. The Plaintiffs countered that the date of administration required evidential proof, that a preliminary objection cannot be supported by evidence, and that seeking interpretation of a judgment is not 'continuing legal proceedings'. The court applied the Mukisa Biscuit and Aviation & Allied Workers Union tests and found that the fact of administration was undisputed, being admitted in the Plaintiffs' own certificate of urgency and a letter of 14th May 2019, making the objection a pure point of law. Rejecting the Plaintiffs' interpretation argument, the court held that the statutory words 'begin' and 'continue' capture proceedings of any nature, including an application for interpretation. Although acknowledging that interpretation would assist the administrator's objectives under Section 522, the court held the consent or leave requirement was mandatory. The preliminary objection was upheld, with each party bearing its own costs.

Key legal issues

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01

Whether the preliminary objection is a pure point of law

Holding

Yes - the objection rests on Section 560 of the Insolvency Act and the undisputed fact that the Defendant was placed under administration on 17th August 2018, facts admitted by the Applicants

Reasoning

The court applied the Mukisa Biscuit and Aviation & Allied Workers Union tests, noting that a preliminary objection may only be raised on a pure question of law where there is no contest as to facts. Here the Applicants themselves admitted, in their certificate of urgency and a letter dated 14th May 2019, that the Defendant was under administration from 17th August 2018, so no evidentiary inquiry was required.

p. 2
02

Whether an application seeking interpretation of a judgment amounts to 'beginning or continuing legal proceedings' under Section 560(1)(d)

Holding

Yes - the statutory language 'begin' and 'continue' covers proceedings of any nature, and leave of the Court or the administrator's consent is a mandatory precondition

Reasoning

The court rejected the Applicants' argument that interpretation of a judgment is not a legal proceeding, holding that the statutory wording is broad enough to capture any proceedings resolvable by a court. Although it accepted that interpretation would assist the administrator's objectives under Section 522, the court held it was still bound by the requirement for consent or leave, which the Applicants never sought.

p. 3

Legal principles established

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  • Once a company is placed under administration, no person may begin or continue legal proceedings against the company or its property without the consent of the administrator or the approval of the Court, and this extends to any proceedings including an application for interpretation of a judgment
  • The statutory words 'begin' and 'continue' in Section 560(1)(d) refer to legal proceedings of any nature that can be resolved by a court of law, including an application for interpretation of a judgment

Court orders

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  1. 1.The Preliminary Objection dated 6th October, 2021 is upheld
  2. 2.Each party to bear their own costs

Authorities

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Legislation

  • Insolvency ActSection 560, Section 560(1), Section 560(1)(d), Section 522
  • Civil Procedure RulesOrder 21 [1]
  • Insolvency Act 1986 (England)Section 11(3)(d)

Cases cited (10)

  • Mukisa Biscuit Manufacturing Co. Ltd vs West End Distributors Ltd
    (1969) EA 696
  • Bake N' Bite Mombasa Limited (Under Administration) vs Janendra Raichand Shah & 3 others
    (2018) eKLR
  • Midland Energy Limited vs George Muiruri t/a Leakeys Auctioneers & Another
    (2019) eKLR
  • Charity Wangui Ngumo vs Chase Bank Limited (In Receivership) & Antique Actions Agencies
    (2018) eKLR
  • George Mureithi and others v Kenatco Taxis Limited (In Receivership)
  • Aviation & Allied Workers Union Kenya vs Kenya Airways Ltd & 3 Others
    [2015] eKLR
  • Fredrick Okoth Owino v T. S. S Grain Millers
    (2017) eKLR
  • Nakumatt Holdings Limited and Another v Ideal Locations Limited
    (2019) eKLR
  • Hoggers Limited (In Administration) v John Lee Halamandres & 11 others
    [2021] eKLR
  • Bristol Airport PLC v Powdrill
    [1990] Ch. 744
Jurisdiction invoked
Section 560(1)(d) of the Insolvency Act, 2015 (moratorium over legal proceedings against a company under administration); application seeking interpretation of the court's judgment delivered 19th July 2018

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, "Gerald Katana Mwamumba & 3 others v ARM Cement PLC (Under Receivership) [2022] KEELC 1069 (KLR)", Case Analysis (2022). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/1069/eng@2022-03-03

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