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ELRCDismissedCause 677 “A” of 2014· [2024] KEELRC 332 (KLR)

Saenger v Afrikon Limited (Cause 677 “A” of 2014) [2024] KEELRC 332 (KLR)

Employment and Labour Relations Court
14 February 2024
MOMaureen Onyango
1,734 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~7 min to read original · ~4 min brief

The bottom line

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A Kenyan employment judgment creditor failed to make a company's directors personally pay, because one had resigned and the other never came to court.

What this practically means

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Executive summary

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Judgment was delivered on 27th September 2019 in favour of Frank Saenger against Africon Limited for 68,000 Euros plus costs and interest. Unable to execute, the Claimant filed a Notice of Motion dated 16th February 2021 seeking leave for substituted service, summons to compel director Mike Jung Woonsun to attend court for oral examination as to the judgment debtor's means and assets, deposit of the director's passport, production of the company's books, and in default, that the director be held personally liable for the decree. By a ruling delivered on 11th February 2022, the court ordered summons to issue to Mike Jung Woonsun and Sammy Maina Kamau to be orally examined. Sammy Maina Kamau was arrested on a warrant and examined on 4th July 2022; he denied being a current director, producing a CR12 of 1st July 2022 showing James Githinji Maina as director, and stated he had been a director for only two to three months in 2021. Mike Jung Woonsun never appeared. The Claimant urged the court to lift the corporate veil and hold the directors personally liable. The sole issue for determination was whether the corporate veil should be lifted. Applying Halsbury's Laws of England principles, the court held that Sammy Maina Kamau, no longer a director, was not liable for the company's debts; and since the orders sought were specific to Mike Jung Woonsun, who had not been produced in court, the prayers were unproved. The application was dismissed with no orders as to costs.

Key legal issues

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Whether the corporate veil should be lifted so as to hold the company's directors personally liable for the decretal sum

Holding

The corporate veil was not lifted. Sammy Maina Kamau was no longer a director per the CR12, and the application targeted Mike Jung Woonsun who never appeared; hence the application was dismissed.

Reasoning

The court adopted Halsbury's Laws of England on piercing the corporate veil, noting courts do so where the character of the company or its controllers is relevant, such as fraud or improper conduct. Here the CR12 extracted on 1st July 2022 showed Sammy Maina Kamau was no longer a director; James Githinji Maina was the current director. The orders sought were specific to Mike Jung Woonsun, who was represented until the examination orders but never appeared and is a foreign national outside the jurisdiction. Since the director was not produced in court, the prayers were unproved.

p. 4

Legal principles established

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  • A person who is no longer a director of a company is not liable to pay the company's debts including settling a decree against the company
  • A prayer for personal liability of a director who has not been produced in court and not examined cannot be granted

Court orders

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  1. 1.The application dated 21st February 2021 is dismissed with no orders as to costs
Jurisdiction invoked
Original civil jurisdiction over execution/decree-satisfaction proceedings following its judgment of 27th September 2019 (employment claim); Civil Procedure Act provisions on examination of judgment debtors invoked in practice

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, "Saenger v Afrikon Limited (Cause 677 “A” of 2014) [2024] KEELRC 332 (KLR)", Case Analysis (2024). Cause 677 “A” of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/332/eng@2024-02-14

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