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ELRCDismissedNotice of Motion dated 8th October, 2014 in the main suit (Objector's proceedings)· [2015] KEELRC 325 (KLR)

Peter Morwabe & 3 others v E-Smart College Limited & another [2015] KEELRC 325 (KLR)

Employment and Labour Relations Court
4 November 2015
MOMAUREEN ONYANGO
1,613 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 dismissed a director's attempt to shield company assets from debt collectors because he failed to prove the goods were his.

What this practically means

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Executive summary

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Following judgment delivered on 31st March, 2014 and a decree issued on 24th April, 2014 in favour of the Claimants against e-Smart College Limited, execution proceedings commenced. After a garnishee application was withdrawn, a Warrant of Sale of Property was issued to Pambo Auctioneers on 10th September, 2014, and goods were proclaimed on 6th October, 2014. Julius Mogaka Gekonde, trading as The Esmart Technical College, filed objection proceedings on 8th October, 2014 seeking a stay of attachment, a declaration that the proclaimed goods belonged to him, and discharge of the attachment. He argued that the decree was against a limited company of which he was merely a director, and that execution against him personally was unlawful absent proof of grounds for lifting the corporate veil. The Claimants opposed, contending the Objector ran the Kisii Centre, personally accepted service of summons, registered a confusingly similar business name after the suit was filed, and had not proved ownership of the attached goods. Justice Maureen Onyango framed the sole issue as whether the Objector proved the proclaimed goods were his. Applying Akiba Bank Ltd v Jetha & Sons Ltd and related authorities, she held the burden lay on the Objector, who failed to discharge it. The court found he was a director of the judgement debtor, registered the business name after the filing of the claim apparently to defeat execution, and produced no evidence of ownership. The application was dismissed with costs on 4th November, 2015.

Key legal issues

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01

Burden of proof in objection to attachment proceedings

Holding

The Objector must prove ownership of the attached goods; he failed to do so

Reasoning

The court applied the trite law that an objector must exhibit evidence of legal or equitable interest in the whole or part of the property attached in execution. Relying on Akiba Bank Ltd v Jetha & Sons Ltd and authorities cited by Mutava J and Odunga J, the court held the onus rests on the objector. The Objector annexed no receipts proving ownership of the proclaimed goods and did not deny facts in the Replying Affidavit.

p. 4
02

Whether execution against a director is permissible where the decree is against a limited company

Holding

Registration of a business name after filing of the claim, likely to defeat execution, was improper; the Objector's registration of Esmart Technical College appeared intended to defeat execution of the decree

Reasoning

The court found the Objector was a director of the Respondent company who took over running of the Kisii Centre, personally received summons, and registered the business name Esmart Technical College on 11th October, 2013 after the claim was filed, in a manner likely to confuse and to defeat execution against the Respondent.

p. 3

Legal principles established

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  • In objection proceedings, the objector bears the burden of proving ownership or legal/equitable interest in the property attached in execution

Court orders

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  1. 1.The Objector's Notice of Motion dated 8th October, 2014 is dismissed
  2. 2.Costs of the application awarded to the Claimants/decree-holders

Authorities

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Legislation

  • Business Names Act

Cases cited (4)

  • Akiba Bank Ltd v Jetha & Sons Ltd
    (2005) eKLR
  • Naran Hirani T/a Classico Builders vs Maina Mwangi and Wanjiku Karanja
  • Dubai Bank (K) Ltd v Come-cons Africa Ltd and Impak Holdings Co. Ltd.
  • CHATABHAI M. PATEL & ANOTHER
    HCCC NO. 544 OF 1957 (Lewis) on 8/12/58 HCU(1958) 743
Jurisdiction invoked
Original employment and labour relations jurisdiction; objection proceedings in execution of decree issued by the court

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Peter Morwabe & 3 others v E-Smart College Limited & another [2015] KEELRC 325 (KLR)", Case Analysis (2015). Notice of Motion dated 8th October, 2014 in the main suit (Objector's proceedings). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/325/eng@2015-11-04

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