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ELRCPartially AllowedNot stated on the face of the extract (Objection proceedings in an ELRC decree enforcement matter)· [2018] KEELRC 89 (KLR)

Kenya Chemical and Allied Workers Union (Claimant/Decreeholder) v East African Portland Cement Company Limited (Respondent/Judgment Debtor) & Kenya Commercial Bank Kenya Limited (Objector/Applicant) [2018] KEELRC 89 (KLR)

Employment and Labour Relations Court
3 December 2018
HWHellen Wasilwa
1,674 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~7 min to read original · ~4 min brief

The bottom line

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A Kenyan court stopped a union from auctioning a company's assets because the bank held registered security over them, but made the company pay all the costs.

What this practically means

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Executive summary

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This was an objection application filed on 31st August 2018 by a Bank (Objector/Applicant) under Rule 32(2) of the ELRC Rules 2016 and Order 22 of the Civil Procedure Rules, seeking to stay and lift the proclamation of attachment dated 6th August 2018 issued by Moran Auctioneers at the instance of the Claimant/Decree Holder, a union executing a decree arising from a 2016 judgment on a Collective Bargaining Agreement, which decree the Court of Appeal had affirmed on appeal. The Objector claimed a legal interest in the proclaimed assets by virtue of a Debenture dated 7th October 2014 registered under the Movable Property Security Rights Act 2017. The Claimant opposed, arguing collusion between the Objector and the Judgment Debtor, that the Debentures did not oust execution, and that some 500 union members beneficiaries of the decretal sum had been terminated and faced hardship. Examining Form 4 registrations over the motor vehicles and the Further Supplement Debenture covering all present and future fixed assets excluding stock in trade, the court found that the Judgment Debtor had charged all its present and future assets to the Objector, giving the Objector a privileged position over the properties. The court noted that in objection proceedings it determines interest, not ownership. The Objection succeeded; the proclamation and attachment were set aside as prayed, with the Judgment Debtor bearing the costs of the Auctioneer and the application.

Key legal issues

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01

Whether the Objector established a legal or equitable interest in the proclaimed property under Order 22 Rule 51(1)

Holding

Yes. The Debentures and Form 4 registration showed the Judgment Debtor charged all present and future assets to the Objector, giving it a privileged position.

Reasoning

The court examined Appendix P.O 5 Form 4 listing the motor vehicles as registered collateral and the Further Supplement Debenture dated 7.10.2014 covering all present and future fixed assets, plants, machinery, vehicles, computers and equipment excluding stock in trade. On that evidence the Objector discharged its burden on a balance of probability of showing a legal interest in the attached assets.

p. 3
02

Whether the proclamation and attachment should be set aside

Holding

Yes. The Objection succeeded and the proclamation and attachment were set aside as prayed.

Reasoning

Having found the Objector held a registered security interest over the proclaimed assets, the court concluded the attached property was not available for execution by the Decree Holder and granted the stay and lifting of the proclamation, with costs borne by the Judgment Debtor.

p. 3

Legal principles established

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  • In objection proceedings the court does not determine ownership but only whether the objector has a legal or equitable interest in the attached property
  • Where a judgment debtor has charged all its present and future assets to a secured objector, the objector has a privileged position over the attached properties

Court orders

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  1. 1.The Objection/Application succeeds and the proclamation and attachment issued on 6th August 2018 are set aside
  2. 2.The Judgment Debtor to pay the costs of the Auctioneer and of the application

Authorities

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Legislation

  • Employment and Labour Relations Court Rules 2016Rule 32(2)
  • Civil Procedure ActOrders 2 Rule 51(2), Order 52, Order 51(1)
  • Civil Procedure RulesOrder 22 Rule 15(1); Order 22 Rule 51(1)
  • Movable Properties Security Rights Act No. 13 of 2017Section 92

Cases cited (4)

  • Dubai Bank (K) Ltd v Come-Cons Africa Ltd and Impack Holdings Co. Ltd
    (2012) eKLR
  • Akiba Bank Ltd v Jetha & Sons Ltd
    (2005) eKLR
  • Diversey East African Limited v Mohandon Food Distributors Limited & Another
    1 E.A 43
  • Awo Sharriff t/a Mohammed Investment v Abdulkadir Shariff Mohammed & Another
    (2006) Eklr
Jurisdiction invoked
Rule 32(2) of the Employment and Labour Relations Court Rules 2016; Orders 2 Rule 51(2), Order 52 and Orders 51(1) of the Civil Procedure Act (objection proceedings under Order 22 Rule 51(1))

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, "Kenya Chemical and Allied Workers Union (Claimant/Decreeholder) v East African Portland Cement Company Limited (Respondent/Judgment Debtor) & Kenya Commercial Bank Kenya Limited (Objector/Applicant) [2018] KEELRC 89 (KLR)", Case Analysis (2018). Not stated on the face of the extract (Objection proceedings in an ELRC decree enforcement matter). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/89/eng@2018-12-03

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