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ELRCOtherNot stated in the excerpt· [2020] KEELRC 315 (KLR)

Clement Nderitu v ARM Cement Limited [2020] KEELRC 315 (KLR)

Employment and Labour Relations Court
2 October 2020
RSRadido Stephen
306 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~1 min to read original · ~4 min brief

The bottom line

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If a Kenyan company is under administration, you must get the administrator's consent or court approval before continuing any lawsuit against it.

What this practically means

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Executive summary

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The Claimant, Clement Nderitu, instituted proceedings against ARM Cement Ltd on 21 September 2015, raising a dispute over the unfair and unlawful termination of his employment. On 17 August 2018, the Respondent was placed under administration pursuant to section 560 of the Insolvency Act. The Respondent subsequently filed a Notice of Preliminary Objection dated 29 June 2020, seeking that the Cause be stood over until the requirements of section 560 were complied with. Submissions were exchanged, though belatedly on both sides. The Court considered section 560(1)(d) of the Insolvency Act, which provides that a person may begin or continue legal proceedings against a company under administration, or its property, only with the consent of the administrator or the approval of the court. The Court found that the Claimant had not denied being alerted to the administration, and had not demonstrated that he had sought, or attempted to seek, the administrator's consent or the court's approval. Holding that the statutory restriction applied, the Court upheld the preliminary objection and stayed the Cause until further directions were given, with parties at liberty to apply. Costs were awarded in the cause. The judgment did not finally determine the merits of the unfair termination claim; it merely suspended proceedings pending compliance with the insolvency regime. The judgment was delivered virtually through Microsoft Teams on 2 October 2020.

Key legal issues

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01

Whether the employment cause could proceed against a company under administration without compliance with section 560 of the Insolvency Act

Holding

The preliminary objection was upheld and the Cause stayed until further directions.

Reasoning

The Respondent was placed under administration on 17 August 2018 under section 560 of the Insolvency Act. Section 560(1)(d) restricts the commencement or continuation of legal proceedings against a company under administration without the administrator's consent or the court's approval. The Claimant was aware of the administration and had neither obtained consent nor attempted to utilise the provision, so proceedings could not continue.

p. 1

Legal principles established

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  • Legal proceedings (including execution and distress) against a company under administration may only be commenced or continued with the consent of the administrator or with the approval of the court.

Court orders

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  1. 1.The Cause be stayed until further directions are given
  2. 2.Parties at liberty to apply
  3. 3.Costs in the cause

Authorities

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Legislation

  • Insolvency Actsection 560 (specifically section 560(1)(d))
Jurisdiction invoked
Jurisdiction over the employment cause; the objection proceeded under section 560 of the Insolvency Act

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, "Clement Nderitu v ARM Cement Limited [2020] KEELRC 315 (KLR)", Case Analysis (2020). Not stated in the excerpt. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/315/eng@2020-10-02

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