Jaji & another v Habo Group of Companies Limited (Cause 487 of 2017) [2025] KEELRC 1242 (KLR)
The bottom line
#A Kenyan court ruled that company directors cannot dissolve their company to escape paying a valid judgment debt owed to former employees.
What this practically means
#Executive summary
#Key legal issues
#Whether the claimants' advocates are properly on record
The firm is properly on record; the objection fails because a Notice of Change of Advocates dated 5 October 2018 was served and acknowledged
The court found that the firm came on record through a Notice of Change of Advocates that was served upon the respondent and acknowledged. Consequently, the application to expunge the pleadings and vacate orders lacked justification, and the right-of-audience objection was rejected.
Whether the dissolution of the respondent company under Gazette Notice No. 666 of 29 January 2021 ousts the court's jurisdiction over execution
No. The dissolution post-dated the judgment and the cause of action, and section 897(6) of the Companies Act permits directors to be pursued notwithstanding dissolution; the objection is without basis
The court noted the cause of action arose in 2016 and judgment was delivered on 29 May 2020, before the Gazette Notice of dissolution. Reliance was placed on prior decisions in the same litigation against the same company. The court held a self-initiated dissolution cannot be used to abuse process and defeat judgment creditors, including former employees.
Whether the warrants of arrest should be set aside and the application dated 13 November 2024 allowed
The application and preliminary objections are dismissed with costs; the application dated 20 May 2024 will proceed to be heard on merit
Having found the advocates properly on record and jurisdiction intact, the court found no basis for the application and objections. It directed that the pending application dated 20 May 2024 (lifting the corporate veil and holding directors personally liable) be heard on its merit.
Legal principles established
#- Under Section 897(6) of the Companies Act, directors of a dissolved company may be pursued to settle the company's liabilities as if the company had not been dissolved, and a self-initiated dissolution cannot defeat execution on a valid judgment
- A notice of change of advocates, once served and acknowledged, cures any claim that the firm is improperly on record
Court orders
#- 1.The application and Notice of Preliminary Objections dated 13 November 2024 are dismissed with costs to the claimants
- 2.The court will hear the application dated 20 May 2024 on merit
- Jurisdiction invoked
- Article 162(2) of the Constitution (Employment and Labour Relations Court), though not expressly quoted in the judgment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Jaji & another v Habo Group of Companies Limited (Cause 487 of 2017) [2025] KEELRC 1242 (KLR)", Case Analysis (2025). Not stated on the face of the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1242/eng@2025-04-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.