Manuel Anidos v Kinangop Windpark Limited (In Receivership) & 2 others [2019] KEELRC 1914 (KLR)
The bottom line
#Kenya's Employment Court confirmed that receivers of a company cannot be personally sued by employees unless they personally committed fraud, negligence, or contracted personally.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the applicants (2nd and 3rd Respondents) are wrongfully enjoined as respondents to the suit and should therefore be removed from the proceedings
Key legal issues
#Whether receivers of a company under receivership can be joined as respondents in an employment claim against the company
They cannot, absent allegations of personal contracts, negligence or fraud; they are agents of a disclosed principal and were wrongfully enjoined
The court defined a receiver as a disinterested person appointed for the protection or collection of property, acting as agent of the company. The applicants were appointed by Deloitte Limited as Security Trustee under a debenture, after the employment contract was concluded, and were never party to it. Under principal–agent principles an agent of a disclosed principal is not personally liable except where he enters personal contracts or commits negligence or fraud. The claimant alleged no such acts, so no cause of action lay against them and their joinder was wrongful.
Whether section 68 of the Employment Act obliges receivers to pay awards for unfair dismissal
The provision was irrelevant to the joinder question; receivers' primary responsibility is to secured creditors, whose claims take priority over employees' claims
Section 68(d) treats a basic award of compensation for unfair dismissal as a debt in the employer's insolvency, but this does not create personal liability on receivers. Relying on Oyugi, the court held that once appointed, receivers' primary responsibility is to secured creditors and employees' rights take a secondary level of priority, satisfied only after secured claims are met, so receivers ought not to be enjoined in the suit.
Effect of the applicants' failure to respond to the earlier joinder application
The joinder application was served only on the 1st Respondent and not on the applicants, so they could not respond and were not properly before the court at that stage
The affidavit of service sworn by the process server Samuel Kinyua Ndege showed service on the 1st Respondent only. The applicants therefore could not respond to the joinder application as they were not yet parties, weakening the claimant's argument that their joinder had gone unopposed and uncontested for over a year.
Legal principles established
#- Receivers and managers appointed over a company are agents of that company and cannot be sued where the principal is disclosed, save where they personally entered into contracts or were negligent or fraudulent
Court orders
#- 1.The Notice of Motion dated 4th March 2019 is allowed
- 2.The 2nd and 3rd Respondents (applicants) are struck out from the suit
- 3.Each party shall bear his or her own costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Sections 1A, 1B and 3A of the Civil Procedure Act; Order 1 Rule 10(2) and Order 2 Rule 15(1)(a)(b) and (d) of the Civil Procedure Rules 2010 (Employment and Labour Relations Court original jurisdiction)
Relief refused
#Claimant's plea that receivers be retained in the suit to settle any decretal award based on section 68 of the Employment Act
The court found the provision irrelevant as the claim disclosed no cause of action against the agents of a disclosed principal
Costs
Each party shall bear his or her own cost.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
I am convinced beyond peradventure that the applicants here are agents of the 1st respondent and they are wrongfully sued because their principal is known and the claim herein does fall within the general principal that an agent of a disclosed principal cannot be sued.
A receiver is deemed to be the agent of the company in relation to the property attached by the floating charge
I have found that the applicants are wrongfully enjoined as respondents with their principle for no good cause and I therefore allow the Notice of Motion dated 4.3.2019 by striking them from the suit.
Each party shall bear his or her own cost.
Personal liability can only be ordered if the receivers are found culpable of fraud or negligence in the discharge of their duties or for particular contracts that they entered into.
Issues in the judgment
#Judgment refers to 'the provisions of the Company's Act' within a quotation but no statute list is given, and the statutesCited entry for the Constitution is an artefact of the quoted passage rather than an express citation
Typographical errors in the judgment ('wrongfully dismissal', 'with their principle for no good cause')
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Manuel Anidos v Kinangop Windpark Limited (In Receivership) & 2 others [2019] KEELRC 1914 (KLR)", Case Analysis (2019). Notice of Motion dated 4th March 2019 in Employment and Labour Relations Court suit (Statement of Claim filed 3rd March 2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/1914/eng@2019-03-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.