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ELRCDismissedCause (undisclosed in judgment; Notice of Motion dated 23rd September 2014)· [2015] KEELRC 1211 (KLR)

Njoroge Njihia v K-Rep Bank Limited [2015] KEELRC 1211 (KLR)

Industrial Court (Employment and Labour Relations Court)
12 February 2015
NMNzioki wa Makau
1,305 words in judgment
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The bottom line

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A Kenyan employment claimant failed to force K-Rep Bank to provide security, because fear of a shareholder change alone doesn't prove a company will dodge a court judgment.

What this practically means

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Executive summary

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The Claimant, Njoroge Njihia, moved the Industrial Court by Notice of Motion dated 23rd September 2014 seeking an order that K-Rep Bank provide security pending hearing of his claim (concerning alleged unlawful redundancy and a staff mortgage rate of 6%), or in the alternative that maximum compensation, general damages and a declaration on the mortgage interest rate be awarded. He deponed that on 31st July 2014 the Managing Director announced a takeover of the Respondent by Centum Investment Company Limited, and that a transfer of shareholding would render his claim nugatory. The Respondent, through its Company Secretary Daisy Ajima, opposed the application, noting the Claimant ceased employment on 28th April 2011, that Centum was already a shareholder holding 37,801 shares as at 31st December 2013, and that there was no impending sale, winding up or liquidation. The Claimant relied on Raini v CMC Holdings; the Respondent relied on Henry Kakai, Ombworo v Kisii Bottlers and Meru Farmers Co-operative Union, distinguishing Raini. Nzioki wa Makau J. held that applications of this nature are akin to attachment before judgment; the burden lies on the applicant to show disposal of assets, removal from jurisdiction or impending absconscion to defeat a decree. Distinguishing Raini (where 100% of the holding was disposed of), the court held that corporations are distinct legal personalities, that the Respondent would be bound to satisfy any decree regardless of changes in shareholders or directors, and that only part ownership would change here. The application was dismissed with costs to the Respondent.

Key legal issues

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01

Whether apprehension over a change in the Respondent's shareholding justifies an order for security

Holding

It does not; only a change in part ownership was shown, and the company remains bound by its contracts and any decree

Reasoning

The court distinguished Raini v CMC Holdings where 100% of the company's holding was disposed of, whereas here Centum Investments was already an existing shareholder and only part ownership would change. A company bound by its employment contracts would still satisfy any decree. Security orders require proof of disposal of assets or alteration of corporate personality to defeat a claim; fluctuating shareholdings of listed companies cannot found such orders.

p. 3
02

Nature and governing principles of applications for security pending judgment

Holding

Such applications are analogous to attachment before judgment and the applicant bears the burden of demonstrating risk of defeat of a decree

Reasoning

The court adopted Mbaru J.'s statement of principle: the party seeking security must show the other party is disposing of business or property, moving property out of jurisdiction, or about to abscond, in each case with the object of defeating a decree. Mere apprehension or speculation about a takeover does not meet that threshold.

p. 2

Legal principles established

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  • The burden is on the party seeking security to show that the other party is disposing of its business/property, moving it from the jurisdiction, or about to abscond with the object of defeating a decree
  • Corporations are distinct legal personalities; a company remains bound to honour decrees regardless of changes in its shareholders or directors

Court orders

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  1. 1.The Claimant's Notice of Motion dated 23rd September 2014 is dismissed
  2. 2.Costs of the application to the Respondent

Authorities

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Legislation

  • Civil Procedure ActOrder 39
  • Companies Actnot specified

Cases cited (4)

  • Catherine M. Raini v CMC Holdings Limited
    Cause No. 1411 of 2011
  • Henry Kakai & 10 others v Debendra Kamat t/a Swadish Foods
    [2012] eKLR
  • Elijah Mugika Ombworo v Kisii Bottlers Limited
    [2013] eKLR
  • Meru Farmers Co-operative Union Limited v Abdul Aziz Suleiman (2)
    [1966] EA 422
Jurisdiction invoked
Employment and labour relations jurisdiction of the Industrial Court (application for security pending determination of a claim)

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, "Njoroge Njihia v K-Rep Bank Limited [2015] KEELRC 1211 (KLR)", Case Analysis (2015). Cause (undisclosed in judgment; Notice of Motion dated 23rd September 2014). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/1211/eng@2015-02-12

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