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ELRCDismissedNot stated in the judgment as provided· [2024] KEELRC 25 (KLR)

Crispus v RT (East Africa) Limited (Cause E1071 of 2021) [2024] KEELRC 25 (KLR)

Employment and Labour Relations Court
25 January 2024
JGJACOB GAKERI
1,514 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court refused to strike out a lawsuit filed without consent against a company in administration, ruling that striking out would unfairly end the case before a proper hearing.

What this practically means

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Executive summary

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The Respondent, a company in administration since 11th June 2021, moved the court by Notice of Motion dated 20th April 2023 seeking dismissal of the Claimant's suit for want of the Administrator's consent or the court's leave, relying on sections 560, 560A and 561 of the Insolvency Act, 2015. The Respondent's Administrator deponed that the administration, published in the Kenya Gazette on 18th June 2021, had been extended by the High Court effective 9th June 2022 in Petition No. E046 of 2021, yet the Claimant neither obtained the Administrator's consent nor sought leave before filing suit on 8th January 2022. The Claimant opposed, arguing the application was incompetent, that no evidence showed the administration was still continuing, and that the relief sought was premature as the suit had not been heard. The court framed a single issue: whether the Notice of Motion was merited. It accepted the legal position that proceedings against a company in administration require the Administrator's consent or the court's approval, and that the suit was indeed commenced during the moratorium without either. Citing Tuiyott J. in Midland Energy Ltd, Onguto J. in In re Nakumatt Holdings Ltd, and Cook v Mortgage Debenture Ltd, the court endorsed the purpose of the administration moratorium. However, it noted that the Respondent had earlier filed a preliminary objection which failed for want of supportive evidence, and had withheld the documentation now produced - effectively a second bite at the cherry. Dismissing the suit before a hearing would drive the Claimant from the seat of judgement. The Notice of Motion was disallowed with no orders as to costs.

Key legal issues

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Whether a suit commenced without the Administrator's consent or the court's leave against a company in administration should be struck out under Section 560 of the Insolvency Act

Holding

Although the requirement of consent or leave exists and the Claimant admittedly had neither, the application was disallowed because it would drive the Claimant from the seat of judgement before the suit is heard on merit, and the Respondent had withheld the same evidence in an earlier failed preliminary objection

Reasoning

The court accepted that the suit, filed on 8th January 2022, was commenced while the Respondent was already in administration (effective 11th June 2021), so consent or leave was a prerequisite. However, the Respondent had earlier filed a preliminary objection which failed for want of supportive evidence; it now produced the withheld documentation, effectively seeking a second bite at the cherry. Striking out would oust the Claimant before a hearing on the merits, so the motion failed and each side was left to bear its own costs.

p. 3

Legal principles established

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  • During administration, legal proceedings may only be begun or continued against the company with the consent of the administrator or the approval of the court, by virtue of the statutory moratorium

Court orders

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  1. 1.The Respondent's Notice of Motion dated 20th April, 2023 is disallowed
  2. 2.There shall be no orders as to costs

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 159; Article 159(2)(d); Article 48
  • Insolvency Act, 2015Sections 560(d), 560A, 561(3), (4) and (6); Part VIII
  • Evidence ActSection 107
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B

Cases cited (5)

  • Nakumatt Holdings Ltd & another v Ideal Locations Ltd
    (2019) eKLR
  • George Mureithi & 5 others v Kenatco Taxis Ltd (in Receivership)
    (2016) eKLR
  • Midland Energy Ltd v George Muiruri t/a Leakeys Auctioneers & another
    (2019) eKLR
  • In re Nakumatt Holdings Ltd
    (2017) eKLR
  • Cook v Mortgage Debenture Ltd
    (2016) EWCA Civ. 103
Jurisdiction invoked
Article 159 of the Constitution of Kenya, 2010; sections 560(d), 560A and 561(3), (4) and (6) of the Insolvency Act, 2015

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, "Crispus v RT (East Africa) Limited (Cause E1071 of 2021) [2024] KEELRC 25 (KLR)", Case Analysis (2024). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/25/eng@2024-01-25

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