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ELRCPartially AllowedELRCC Cause No. 1710 of 2013· [2024] KEELRC 1082 (KLR)

Maingi v Sen-Tech Limited; KHS East Africa Limited (Objector) (Cause 1710 of 2013) [2024] KEELRC 1082 (KLR)

Employment and Labour Relations Court
13 May 2024
JGJACOB GAKERI
1,870 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 allowed an auctioneer to get police help to seize a company's assets, rejecting a related company's claim that the property belonged to it.

What this practically means

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Executive summary

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This ruling of the Employment and Labour Relations Court at Nairobi, delivered virtually on 13th May 2024 by Dr. Jacob Gakeri, J, determines a Notice of Motion dated 23rd January 2024 by licensed auctioneer Charles Mutinda Mutua T/A Charlton Auctioneers seeking police assistance to execute warrants of sale against Sen-Tech Ltd, the judgment-debtor in ELRC Cause No. 1710 of 2013 in which the Claimant was awarded Kshs.1,200,000 plus taxed costs, totalling about Kshs.1.35 million. The auctioneer deponed that after the warrants were re-issued on 24th November 2023, security guards at the Karen premises denied him access on multiple occasions. KHS East Africa Ltd, which had filed objection proceedings, swore through director Denise Schneider Walimohamed that it was a separate legal entity which acquired Sen-Tech's assets in 2013, and that its property would be prejudiced. The court framed a single issue: whether the application was merited. It traced the chequered history, noting the trial court had already dismissed the 2019 objection and the 2022 stay/review application on the same separate-entity grounds, applying the Rule in Turquand's Case, and finding the alleged asset acquisition was 'more than it was willing to admit' on uncontroverted documentary evidence. Holding that a CR12 alone does not establish lack of relationship, and that a licensed auctioneer's unlimited liability and police supervision obviate fears of vandalism, the court granted the order with costs but modified it: directed solely to the OCS Karen Police Station, conditional on executable warrants, with breaking of doors or gates only where otherwise practically impossible and under supervision of the OCS Karen.

Key legal issues

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01

Whether the auctioneer is entitled to a police escort to gain access to execute warrants of sale

Holding

Yes, with modification: the order is confined to the OCS Karen Police Station, conditional on executable warrants and supervised breaking only where access is otherwise impossible

Reasoning

The court found the Objector had persistently denied the auctioneer access without stay orders, and that the objections raised (separate legal personality of KHS East Africa Ltd) had already been determined by the trial court which dismissed the objection and review applications. The auctioneer is licensed under the Auctioneers Act and police escort guarantees order and observance of the rule of law, obviating the Objector's fears of vandalism.

p. 4
02

Whether the Objector (KHS East Africa Ltd) is a separate entity from the Judgment-Debtor (Sen-Tech Ltd) such that its property cannot be attached

Holding

The evidence, including an uncontroverted 2013 letter, supported the trial court's finding that the alleged acquisition of assets by the Objector was more than it was willing to admit; the CR12 alone did not prove absence of relationship

Reasoning

The trial court had already found, on documentary evidence the Objector did not controvert, that the transfer of staff and business from Sen-Tech to KHS East Africa Ltd in 2013 indicated the assets continued to be effectively connected. The Objector adduced no evidence to the contrary then or now, and its averment that KHS acquired the assets in 2013 had no supporting documentation despite the suit being filed in October 2013.

p. 4

Legal principles established

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  • The Rule in Turquand's Case (Indoor Management Rule) entitles third parties dealing with a company in good faith to assume internal company rules have been complied with even if they are not
  • A Form CR12 does not of itself demonstrate that two companies have no relationship
  • A licensed auctioneer's liability in the conduct of auctioneering business is unlimited and he can be sued in his personal capacity

Court orders

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  1. 1.The Officer Commanding the Karen Police Station is directed to accompany the Auctioneer Charles Mutinda Mutua T/A Charlton Auctioneers to witness the attachment of proclaimed movable assets, provided the Auctioneer has executable warrants
  2. 2.No breaking of door and/or gate shall take place unless it is practically impossible to access the premises otherwise, and any such breaking shall be supervised by the OCS Karen Police Station
  3. 3.Costs of the application granted to the applicant

Authorities

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Legislation

  • Auctioneers Act and Rules1997 and 2010
  • Auctioneers Act No. 5 of 1996generally (Auctioneers Licensing Board)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48

Cases cited (1)

  • Tarquands Case (Royal British Bank v Turquand)
    6 E&B 327
Jurisdiction invoked
Auctioneers Act and Rules 1997 and 2010 (execution proceedings in ELRC Cause No. 1710 of 2013)

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, "Maingi v Sen-Tech Limited; KHS East Africa Limited (Objector) (Cause 1710 of 2013) [2024] KEELRC 1082 (KLR)", Case Analysis (2024). ELRCC Cause No. 1710 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1082/eng@2024-05-13

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