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ELRCDismissednot stated in the judgment provided· [2016] KEELRC 328 (KLR)

Josphat Macharia Gathii v Kundan Singh Internaional Ltd & Geoffrey Kariuki [2016] KEELRC 328 (KLR)

Employment and Labour Relations Court
2 November 2016
585 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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The ELRC dismissed a company's attempt to block attachment of its assets because it hid key facts from the court.

What this practically means

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Executive summary

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This was a first-instance ruling of the Employment and Labour Relations Court at Nakuru on a motion dated 6 May 2016 by the Respondent. The Respondent, against whom the Court had on 13 March 2015 awarded the Claimant Kshs 1,447,384/- for unfair termination, sought a stay restraining attachment of its assets under a Proclamation Notice dated 18 April 2016, and the lifting of a warrant of attachment dated 15 April 2016. The Respondent contended it had been placed under receivership by Bank of Africa Kenya Ltd, Kenya Commercial Bank Ltd and I & M Bank, that all charges had crystallised in favour of secured creditors, and that the Claimant's debt had become unsecured, rendering post-receivership execution void. From the bar, the Claimant produced a High Court order of 4 May 2016 in KSC International Ltd (under Receivership) & Ors v Bank of Africa (Kenya) Ltd & Ors barring the Receivers from interfering with the Respondent's affairs and assets until 19 May 2016. The Respondent failed to disclose what transpired at the inter partes hearing on 19 May 2016. The Court held that on the material before it the Receivers were stopped from interfering with the Respondent, so the anchor ground of the application collapsed. The Court dismissed the motion with costs to the Claimant. The Court also observed that the parties did not give the application the seriousness it deserved.

Key legal issues

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01

Effect of receivership on execution against the Respondent's assets

Holding

The Court declined to find that execution was void because the material before it showed the Receivers themselves had been restrained from interfering with the Respondent, undermining the basis of the application

Reasoning

The Respondent argued that crystallisation of charges in favour of secured creditors made the Claimant's debt unsecured and post-receivership execution void. However, the Claimant produced a court order of 4 May 2016 barring the Receivers from interfering with the Respondent's affairs and assets until 19 May 2016. The Respondent failed to disclose what transpired at the inter partes hearing, so on the material before the Court the Receivers remained stopped, collapsing the application's anchor ground.

p. 2
02

Duty of disclosure of material facts to the Court

Holding

The Respondent failed in its duty by not disclosing the outcome or status of the receivership proceedings before the High Court

Reasoning

The Court noted it was never told, before delivery of judgment, that the Respondent was under receivership - a material fact. Similarly, the Respondent did not disclose the outcome of the 19 May 2016 inter partes hearing in the receivership case. This non-disclosure weighed against granting the discretionary relief sought.

p. 2

Legal principles established

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  • A party seeking relief must make full and candid disclosure of material facts, including the current status of related litigation, failing which the application may fail notwithstanding unchallenged facts

Court orders

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  1. 1.The motion dated 6 May 2016 was dismissed with costs to the Claimant

Authorities

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Cases cited (1)

  • KSC International Ltd (under Receivership) & Ors v Bank of Africa (Kenya) Ltd & Ors
    Nairobi Commercial & Admiralty Division Civil Case No. 446 of 2015
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over execution/ancillary matters arising from its decree (not expressly cited in the judgment)

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, "Josphat Macharia Gathii v Kundan Singh Internaional Ltd & Geoffrey Kariuki [2016] KEELRC 328 (KLR)", Case Analysis (2016). not stated in the judgment provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/328/eng@2016-11-02

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