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ELRCDismissedNot stated in judgment (Cause filed 25 August 2015)· [2016] KEELRC 641 (KLR)

Dickson Oduor Odhiambo & another v Peter Njenga Kibe Former Director Mukii Maize Millers & another [2016] KEELRC 641 (KLR)

Employment and Labour Relations Court

30 September 2016

RSRadido Stephen

667 words in judgment

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The bottom line

Suing company directors personally instead of the company itself got these employees' entire case dismissed with costs against them.

What this practically means

Executive summary

Two Claimants jointly sued the Respondents, former and current directors of Mukii Maize Millers, on 25 August 2015 alleging unfair termination and redundancy, and additionally claiming underpayment and outstanding leave. The Respondents filed a joint response contending the Cause was incompetent; the 1st Respondent stated he had ceased to be a director after transferring the business to the 2nd Respondent in December 2014. The Cause was heard on 8 March 2016 and 19 July 2016, with written submissions filed in August and September 2016. The Court framed five issues, including the legality of the joinder of the Respondents. On the joinder issue, the Court found that a limited liability company has a life separate from its directors and that, absent lifting of the corporate veil, employment liabilities lie with the company. The Claimants, though legally represented, had sued the directors in their personal capacities without pleading or proving any basis for personal or agency liability, and the Memorandum of Claim was poorly drafted and vague. The Court deprecated the poor drafting, observing that legal practitioners should not treat the art of pleading and background research as unimportant. It concluded the Cause was incompetent and unsupported by sufficient evidence against the named Respondents and declined to address the remaining issues, which would have been academic. The Memorandum of Claim was dismissed with costs to the Respondents on 30 September 2016 in Nakuru.

Key legal issues

Joinder of the Respondents in their personal capacities

Holding

The joinder was improper; the proper respondent should have been the legal entity, Mukii Maize Millers, and the Claimants failed to establish any basis for personal liability of the directors.

Reasoning

The Respondents testified, uncontroverted, that the 1st Respondent transferred the mill business to the 2nd Respondent in December 2014 and that Mukii Maize Millers Ltd was a limited liability company. The Court held that a company's liabilities lie with the company unless the veil is lifted, and that no evidential or legal foundation for personal or agency liability was pleaded or proved. The pleading also failed to distinguish which Respondent was 1st and which was 2nd.

p. 2

Whether the remaining issues (dates of employment, underpayment, leave, unfair termination) required determination

Holding

Having found the Cause incompetent against the named Respondents, the Court declined to determine the remaining issues as it would be academic.

Reasoning

Once the Court concluded that the Cause could not legally survive as pleaded and proved, examining the other identified issues (employment dates, underpayment, leave and unfair dismissal) would serve no practical purpose, so the claim was dismissed in its entirety with costs.

p. 2

Legal principles established

A limited liability company has a legal personality separate from its directors, and liabilities such as employment claims lie with the company unless the corporate veil is lifted
A court, particularly the Labour Court, should not hold an agent or manager of a known limited liability company liable for the company's employment acts without a firm evidential and legal foundation

Court orders

1.The Memorandum of Claim was dismissed with costs to the Respondents

Jurisdiction invoked: Employment and Labour Relations Court jurisdiction over unfair termination and redundancy disputes (Cause filed under the Court's employment law framework)

Key timeline

Practical implications

Frequently asked questions

Cite this brief

Caselaw, "Dickson Oduor Odhiambo & another v Peter Njenga Kibe Former Director Mukii Maize Millers & another [2016] KEELRC 641 (KLR)", Case Analysis (2016). Not stated in judgment (Cause filed 25 August 2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/641/eng@2016-09-30

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