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ELRCDismissedNot stated in judgment (Notice of Motion dated 10th June 2024 in a suit arising from Memorandum of Claim dated 7th June 2024)· [2024] KEELRC 2557 (KLR)

Njuguna v Utumoja Technologies Limited (Cause E443 of 2024) [2024] KEELRC 2557 (KLR)

Employment and Labour Relations Court
18 October 2024
SRStella Rutto
2,422 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 freeze a company's assets before judgment because the claimant proved suspicion, not evidence, that the employer was hiding or moving assets.

What this practically means

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Executive summary

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The Claimant, Leah Njuguna, moved the Employment and Labour Relations Court by Notice of Motion dated 10th June 2024 seeking, in substance, pre-judgment security arising from an employment dispute in which she claims her salary was unilaterally cut from Kshs 520,000 to Kshs 208,000 for eight months (a claimed total of Kshs 2,704,000 in unpaid salary) followed by termination without notice. She sought an order that the Respondent's director, Jason Robert Eisen, deposit his passport with the court, and that the Respondent deposit an amount equal to the sum claimed, or place it in a joint interest-earning account, pending hearing and determination of the suit. She premised the application on fears that the Respondent, allegedly owned by foreign entities with no known assets, would render any judgment infructuous. The Respondent opposed through a Replying Affidavit of Jason Robert Eisen, asserting it has two Kenyan citizen directors per its CR12, a registered office at Diamond Plaza, Parklands, operated for over five years, and remains a going concern with ongoing projects; it also denied dismissing the Claimant, contending she deserted duty. The court framed the application as one for attachment before judgment under Order 39 Rule 5(1) of the Civil Procedure Rules and applied Kuria Kanyoko, Saving and Loan Kenya Limited and Afrofreight Forwarders, holding that the applicant must show intent to obstruct or delay execution by disposing of or removing property. Finding only apprehension and no proof of such intent, and noting two directors are Kenyan nationals, the court declined the orders, directed the parties to fast-track the main suit, and ordered costs in the cause.

Key legal issues

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01

Whether the conditions for attachment before judgment under Order 39 Rule 5(1) of the Civil Procedure Rules were met

Holding

Not met; the Applicant failed to demonstrate the requisite intent by the Respondent to obstruct or delay execution of a decree by disposing of or removing property from the jurisdiction.

Reasoning

Order 39 Rule 5(1)(a) and (b) requires the applicant to show the respondent is about to dispose of property or remove it from the jurisdiction with intent to obstruct or delay execution of any decree. The Court of Appeal in Kuria Kanyoko requires clear proof of this mischief. The only evidence was an apprehension based on foreign shareholding, alleged lack of assets and WhatsApp remarks about finances. Two directors being Kenyan nationals means legal mechanisms exist to hold directors liable if judgment is passed.

p. 5

Legal principles established

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  • Attachment before judgment under Order 39 Rule 5 requires clear proof that the defendant, with intent to obstruct or delay execution of a decree, is about to dispose of or remove property from the jurisdiction; mere apprehension or failure to disclose assets does not suffice.
  • An order for attachment before judgment or security is a draconian remedy to be granted only with utmost circumspection.

Court orders

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  1. 1.Declined to grant the orders sought in the Application (orders for deposit of passport, deposit of the sum claimed, or placement of the sum in a joint interest-earning account)
  2. 2.Directed that parties fast-track the hearing of the main suit
  3. 3.Costs in the cause

Authorities

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Legislation

  • Civil Procedure RulesOrder 39 Rule 5(1)-(3)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48

Cases cited (3)

  • Kuria Kanyoko t/a Amigos Bar and Restaurant v Francis Kinuthia Nderu & others
    (1988) 2KAR 126
  • Saving and Loan Kenya Limited v Erustus Mwangi Mungai
    Nairobi High Court Civil Case No 775 of 2000
  • Afrofreight Forwarders (K) Ltd v Kenya Railways Corporation and another
    Mombasa High Court Civil Case No 229 of 2005
Jurisdiction invoked
Original employment and labour relations jurisdiction; application brought under Order 39 Rule 5(1) of the Civil Procedure Rules

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, "Njuguna v Utumoja Technologies Limited (Cause E443 of 2024) [2024] KEELRC 2557 (KLR)", Case Analysis (2024). Not stated in judgment (Notice of Motion dated 10th June 2024 in a suit arising from Memorandum of Claim dated 7th June 2024). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2557/eng@2024-10-18

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