Okoiti & another v Afrison Export Import Limited & 5 others; Continental Credit Finance Limited (In Receivership) & 5 others (Interested Party) (Petition 1488 of 2016) [2022] KEELC 2211 (KLR)
The bottom line
#A Kenyan court refused to jail directors over a Kshs 1.5 billion land payment because court orders never directly bound them.
What this practically means
#Executive summary
#Key legal issues
#Jurisdiction of the Environment and Land Court over contempt proceedings
The court rejected the submission that contempt jurisdiction is confined to the High Court and Court of Appeal and held that the Environment and Land Court has jurisdiction to hear contempt applications
The 3rd, 5th and 6th Respondents argued that under Section 5(1) of the Judicature Act and Section 13 of the Environment and Land Court Act, contempt jurisdiction rests only with the High Court and Court of Appeal. The court disagreed, holding that it possesses the requisite jurisdiction to hear and determine the application, notwithstanding the earlier invalidation of the Contempt of Court Act.
Whether the orders of 13th December 2016 bound the 1st and 2nd Respondents
The orders prohibited only the 3rd, 4th, 5th and 6th Respondents from making further payments; no orders were issued against the 1st and 2nd Respondents, who could not therefore be cited for contempt
The court examined the wording of Okong'o J's order of 13th December 2016 and found it expressly directed at the 3rd, 4th, 5th and 6th Respondents, prohibiting them from making further payments to the 1st and 2nd Respondents. The order imposed no obligation on the recipients of the payments. Consequently, the 1st and 2nd Respondents were not in breach of any order made against them.
Whether the payment of Kshs.1.5 billion breached the orders
The impugned payment related to a distinct compulsory acquisition for schools at the behest of the Ministry of Education, not the Outer Ring Road compensation preserved by the order
The court noted that the notice of motion of 28th November 2016 concerned preservation of approximately Kshs.209 million being the balance for compensation for land acquired for the Outer Ring Road. The Kshs.1.5 billion payment arose from a separate acquisition of 13.7701 acres for Drive-Inn Primary School and Ruaraka High School commenced in March 2017 at the instance of the Ministry of Education. These unchallenged averments meant the payment fell outside the scope of the order.
Committal of directors without lifting the corporate veil
The application to commit directors was misdirected because the corporate veil had not first been lifted and personal service or personal knowledge of the orders was not proved
Applying Katsuri Limited v Kapurchand Depar Shah, the court held that a director is not a party in his personal capacity and is not personally liable for the company's actions; the proper procedure is to first apply to lift the corporate veil before proceeding against directors personally. The 1st and 2nd Respondents' submissions on this point were accepted, and the quasi-criminal standard of proof in contempt, per Gatharia K. Mutitika v Baharini Farm Ltd, was not met.
Legal principles established
#- Contempt proceedings are quasi-criminal; the standard of proof is higher than on a balance of probabilities, consistent with the gravity of the charge
- Directors of a company cannot be committed for contempt without first lifting the corporate veil
- An order directed at specified parties cannot found contempt proceedings against parties to whom it was not directed
- The Environment and Land Court has jurisdiction to hear and determine applications for contempt of court
Court orders
#- 1.The Notice of Motion dated 13th April 2018 is dismissed
- 2.No orders as to costs
- Jurisdiction invoked
- Articles 3(1), 22, 23, 50, 159(2)(d), 165 and 258 of the Constitution; Section 5 of the Judicature Act and Section 13 of the Environment and Land Court Act, 2012 (contempt jurisdiction affirmed by the court)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Okoiti & another v Afrison Export Import Limited & 5 others; Continental Credit Finance Limited (In Receivership) & 5 others (Interested Party) (Petition 1488 of 2016) [2022] KEELC 2211 (KLR)", Case Analysis (2022). Notice of Motion dated 13th April 2018 (within Petition dated 28th November 2016). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/2211/eng@2022-04-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.