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ELRCAllowedNot stated in the extract· [2023] KEELRC 2000 (KLR)
Akello v Rural Development Solutions Ltd (Employment and Labour Relations Cause 554 of 2015) [2023] KEELRC 2000 (KLR)
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·~5 min to read original · ~4 min briefThe bottom line
#Kenya's Employment Court in Eldoret made five former directors personally pay a judgment debt after they dissolved their company while the case was still in court.
What this practically means
#Executive summary
#This is a ruling of the Employment and Labour Relations Court at Eldoret (M. Onyango, J) on a notice of application dated May 24, 2021 by the claimant, who had obtained judgment against the respondent, Rural Development Solutions, for Kshs 6,304,110 plus interest arising from an unfulfilled mutual separation agreement. By an earlier ruling delivered on August 13, 2021 the court granted prayers barring disposal of a motor vehicle, directing the directors to table a list of the judgment debtor's assets, and directing their attendance for examination. Svein Rene was cross-examined on September 26, 2022 and admitted that the claimant worked for the respondent for almost four years and was entitled to Kshs 4,000,000 under the mutual separation agreement. He maintained that the company had been dissolved in 2019, before judgment, and had no assets to satisfy the decree, one vehicle having been sold to a third party and another charged to Sidian Bank. The court held that a successful litigant is entitled to the fruits of his judgment and that equity will not suffer a wrong to be without a remedy, applying LTI Kisii Safari Inns Ltd v DEG. Noting that the company was dissolved voluntarily during the pendency of the suit and its assets shared among the directors without regard to the pending liability, the court found the directors personally liable and ordered them, jointly and severally, to pay the decretal sum, together with the costs of the application and accrued interests.
Key legal issues
#01
Personal liability of directors of a dissolved judgment debtor
Holding
The directors are jointly and severally personally liable to satisfy the decree
Reasoning
The applicant held a judgment against the respondent but could not execute because the company was voluntarily dissolved during the suit and its assets shared among the directors without regard to the pending liability. The court, as a court of law and equity, refused to leave the successful litigant without a remedy, applying the maxim that equity will not suffer a wrong to be without a remedy.
p. 3
Legal principles established
#- Directors who voluntarily dissolve a company during the pendency of a suit and share its assets without regard to pending liability are personally liable to satisfy the decree
- A wrong should not go without a remedy; a successful litigant is entitled to enjoy the fruits of judgment
Court orders
#- 1.Svein Rene, Max Joachim Seifert, Eunice Adhiambo, Danson Ligare Lung'atso and Sissel Austara Rene, being former directors of the respondent and having voluntarily dissolved the company during the pendency of the suit, are jointly and severally personally liable to pay the applicant as per the decree of the court
- 2.The costs of the application shall be borne by the said directors together with accrued interests
- Jurisdiction invoked
- Enforcement of a decree of the court in an employment claim (post-judgment application against directors of a dissolved judgment debtor)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Akello v Rural Development Solutions Ltd (Employment and Labour Relations Cause 554 of 2015) [2023] KEELRC 2000 (KLR)", Case Analysis (2023). Not stated in the extract. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2000/eng@2023-07-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.