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ELRCDismissedNakuru ELRC Cause No. 127 of 2016· [2024] KEELRC 1897 (KLR)

Kenya Chemical Workers Union v Kenya Flexgrovure Limited (Cause 127 of 2016) [2024] KEELRC 1897 (KLR)

Employment and Labour Relations Court
18 July 2024
3,655 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 dismissed a union's contempt case against company directors because no formal court order was extracted or served on them.

What this practically means

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Executive summary

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The claimant union moved the ELRC at Nakuru by notice of motion dated 3rd July 2023 under Order 40 Rule 4 of the Civil Procedure Rules, Section 5 of the Judicature Act and Section 29 of the Contempt of Court Act, seeking summons against three directors of the respondent company, committal to civil jail for six months, and an order that they purge contempt by implementing a consent order of 21st February 2017, alleged to have been disobeyed despite the court's ruling of 18th May 2023 directing the parties to engage the County Labour Office, Nakuru, to settle the matter in terms of the consent order. The respondent denied contempt: it said economic downturn and Covid-19 forced it to declare the grievants redundant and pay their terminal dues, that the employees had withdrawn union membership so the claimant acted without instructions, that it was not invited to the conciliation meeting, and that neither it nor its directors were served with or aware of the orders of 18th May 2023, no formal order having been extracted. It also argued the corporate veil had not been lifted to reach the directors. The court framed two issues: whether the respondent was in contempt of the orders of 18th May 2023, and whether the directors should be summoned. Applying the ingredients of contempt (valid clear order; knowledge or proper service; breach; willfulness), the court found no formal order was extracted or served and no proof the directors personally knew of the ruling, and that the corporate veil was intact. The application was dismissed with no order as to costs, and the main cause was directed to be set down for priority hearing.

Key legal issues

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01

Whether the respondent and its named directors were in contempt of the orders of 18th May 2023

Holding

No contempt established; the essential elements of contempt, including a valid formal order served or known to the alleged contemnors, were not proved

Reasoning

The court confirmed the ruling of 18th May 2023 was delivered in the presence of the respondent's counsel, but found no formal order was ever extracted or exhibited, and no service of the ruling upon the directors personally. Knowledge of counsel does not substitute for a formal order in quasi-criminal contempt proceedings, and it would be unfair to assume the directors knew of the ruling. The conciliation invitation was also not proved to have been served.

p. 6
02

Whether the named directors could be held liable for the company's alleged contempt without lifting the corporate veil

Holding

They could not; the application was directed at the directors while the corporate veil remained intact

Reasoning

The company is a separate juridical person (Salomon v Salomon) and acts through human agents, but liability of directors requires lifting the veil, which was not sought or achieved. A company can itself be found in contempt, but since it cannot be jailed, sanctions would be fines, denial or suspension of licences and similar regulatory measures.

p. 7
03

Whether the claimant acts with instructions of the grievant employees

Holding

The court noted there was no evidence from the claimant that any grievant remained a union member or wished to pursue the claim; those weighty issues needed ventilation at the hearing of the main cause

Reasoning

The respondent deposed that the grievants were declared redundant, paid terminal dues, and withdrew union membership. The claimant offered no contrary evidence such as affidavits from the grievants, leaving a question mark over its mandate, which the court flagged for the hearing of the main cause.

p. 7

Legal principles established

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  • A formal order extracted from a ruling is the correct expression of the ruling and must be served on a party before contempt can be founded on its breach
  • All court orders, whether issued suo motto, ex-parte or inter-partes, carry equal force and must be obeyed
  • Directors of a limited liability company cannot be pursued for contempt of the company's obligations unless the corporate veil is lifted; a company, being juridical, may itself be found in contempt and sanctioned by fines or regulatory measures

Court orders

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  1. 1.The claimant's notice of motion dated 3rd July 2023 is denied and dismissed
  2. 2.No order as to costs of the application
  3. 3.The parties shall be allocated a hearing date of the main cause on priority basis

Authorities

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Legislation

  • Civil Procedure RulesOrder 40 Rule 4
  • Judicature ActSection 5
  • Contempt of Court Act 2016Section 29
  • Constitution of Kenya, 2010Articles 159 & 162(2)(a)
  • Employment & Labour Relations Court ActSection 12
  • Labour Relations ActSection 4(1)

Cases cited (6)

  • Samuel M. N. Mweru & Others v National Land Commission & 2 Others
    [2020] eKLR
  • Shimmers Plaza Ltd v NBK
    [2015] eKLR
  • Africa Management Communication International Limited v Joseph Mathenge Mugo & Another
    [2013] eKLR
  • Geoffrey Kathuri Kison & 10 Others v East African Portland Cement Co. Ltd & 5 Others
    [2021] eKLR
  • Katsuri Limited v Kapurchand Depar Shah
    [2016] eKLR
  • Salmon v Salmon
Jurisdiction invoked
Articles 159 & 162(2)(a) of the Constitution; Section 5 of the Judicature Act; Section 12 of the Employment and Labour Relations Court 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, "Kenya Chemical Workers Union v Kenya Flexgrovure Limited (Cause 127 of 2016) [2024] KEELRC 1897 (KLR)", Case Analysis (2024). Nakuru ELRC Cause No. 127 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1897/eng@2024-07-18

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