Elvicx Bernard Okumu Sibi & 101 others v Birking Industries Services (BIS) Ltd [2015] KEELRC 237 (KLR)
The bottom line
#Kenya's Employment Court ruled that creditors chasing a company's judgment debt can directly summon its director for examination without first applying to lift the corporate veil.
What this practically means
#Executive summary
#Key legal issues
#Whether the decree-holders had to lift the corporate veil before examination orders could issue against the Respondent's managing director
No. The application was brought under Order 22 Rule 35 (formerly Order XXI Rule 36), which permits examination of an officer of a corporation; requiring a prior veil-lifting application was a misapplication of the law, and in any event the director had already appeared and been examined.
The court held the application was specific to examination of the judgment-debtor's officer as to property or means of satisfying the decree. The Corporate Insurance v Savemax principles confirm that examination of a corporation itself is misconceived, but the named director had already appeared on the stand under oath, so the veil-lifting requirement was overtaken by events and served no useful purpose known in law.
Whether the Deputy Registrar erred in granting no relief on the application dated 6th February 2009
Yes. There was a valid judgment, decree and certificate of taxed costs; the Respondent had made no effort to satisfy them since 29th July 2004. The court ought to have considered the alternative prayer that the director show cause why he should not be committed to civil jail for delaying execution.
A lawful judgment and decree were in existence and sanctioned by the court, making the Respondent a judgment-debtor. The director appeared but remained vague and evasive, offering no explanation of how the debt would be satisfied. In the absence of such satisfaction, the decree-holder's alternative prayer for committal proceedings had to be considered; entertaining matters outside the application was a misapplication of the law.
The scope of the first appellate court's powers in employment and labour disputes
As a first appellate court, the ELRC must reconsider the evidence on record and reach its own conclusions, per Selle v Associated Boat Company Ltd.
The court invoked its standing as a Superior Court of Record and first appellate court in employment and labour disputes, adopting the Selle principle that it is required to re-reconsider the evidence and come to its own conclusions, which justified re-evaluating the Deputy Registrar's treatment of the director's examination.
Legal principles established
#- A decree-holder seeking examination of a corporation's officer under Order 22 Rule 35 of the Civil Procedure Rules is not required to first apply to lift the corporate veil; requiring such a prior application is a misapplication of the law.
- Where the director of a judgment-debtor corporation has already presented himself for examination, a requirement to lift the corporate veil is overtaken by events and serves no useful purpose.
- An application under Order 22 Rule 35 is specific: judgment and decree having been entered, the process is for examination of the judgment-debtor as to property or means of satisfying the decree, not to reopen the defence.
- A first appellate court in employment and labour disputes must reconsider the evidence and reach its own conclusions.
Court orders
#- 1.The appeal is allowed
- 2.The ruling of the Deputy Registrar delivered on 3rd November 2010 is set aside
- 3.The Claimants shall cause the recall of the Respondent director George Muthama Gitia to appear before Court to show cause why he should not be arrested and committed to civil jail for delaying the execution of the decree and the taxed costs
- 4.Costs of the appeal awarded to the Claimants/Appellants
- On appeal from
- High Court Civil Division (Ruling of the Senior Deputy Registrar)
- Case No. 942 of 2006
- Jurisdiction invoked
- Article 162(2) of the Constitution, under which the appeal was transferred from the High Court to the Employment and Labour Relations Court
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Elvicx Bernard Okumu Sibi & 101 others v Birking Industries Services (BIS) Ltd [2015] KEELRC 237 (KLR)", Case Analysis (2015). Cause No. 2014 of 2014 (Formerly High Court Appeal No. 481 of 2010). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/237/eng@2015-10-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.