Ndatani Enterprises Company Ltd & another v Railway Housing Co-operative Society Ltd (Environment & Land Case 224 of 2009) [2024] KEELC 3387 (KLR)
The bottom line
#What this practically means
#Executive summary
#Key legal issues
#Whether a non-party director may be cited for contempt of a consent judgment binding his company
Yes - where the director admits to being the director and is the one speaking for the company, the corporate veil is pierced so he cannot hide behind it to avoid legal obligations.
Relying on Stephen Njoroge Gikera v Econite Mining and Zingo Investment v Miema Enterprises, the court held the veil may be pierced where a company is used as a device or sham, or where a director feigns lack of instructions when ordered to comply. Since the contemnor admitted directing the company's response, he could be cited personally.
Whether the plaintiff breached the consent judgment of 31.10.2017
Yes - the plaintiff purported to process titles itself, dislodging the role assigned to the defendants and their advocates under Clause D, contrary to the consent.
Clause D required the plaintiff to sign completion documents and transmit them through its advocates to the defendants' advocates who would execute transfers to rightful owners. The consent did not require payment of the Kshs.120,000 before effecting transfers; the plaintiff's demand for that sum and its processing of titles amounted to a unilateral variation of the consent and was willful disobedience.
Legal principles established
#- A director who speaks for a company cannot hide behind the corporate veil to avoid legal obligations; the veil may be pierced to enable the court to do justice.
- The test for when disobedience of a civil order constitutes contempt is whether the breach was committed deliberately and mala fide.
- A consent order is binding upon the parties more or less like a contract and the court cannot step in to rewrite it.
- A party cannot unilaterally vary a consent judgment by dislodging the role assigned to the other party under it.
Court orders
#- 1.The corporate veil of the plaintiff company is pierced so that its director can be cited for contempt
- 2.The plaintiff and its director (the contemnor) are found to be in contempt of the court orders of 31.10.2017
- 3.The Notice of Motion dated 17.4.2023 is allowed in terms of the prayers set out therein save for prayer No. 3 (which sought a claim relating to mother titles, held not tenable)
- 4.The Respondent is condemned to bear the costs of the application
- Jurisdiction invoked
- Inherent contempt jurisdiction under Section 5(1) of the Judicature Act and enforcement of a consent judgment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ndatani Enterprises Company Ltd & another v Railway Housing Co-operative Society Ltd (Environment & Land Case 224 of 2009) [2024] KEELC 3387 (KLR)", Case Analysis (2024). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/3387/eng@2024-04-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.