Kenya Union of Commercial Food and Allied Workers v Premier Flour Mills Limited (Cause 271 of 2019) [2025] KEELRC 568 (KLR)
The bottom line
#A Kenyan court refused to make company directors personally pay a judgment debt, ruling that a company's inability to pay alone is not enough to lift the corporate veil.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the Judgment Debtor and its Directors should be examined on other property or means to satisfy the decree
- 2.Whether the Directors should avail the title deed for Land Ref. No. 209/8377 and declare its present value
- 3.Whether the corporate veil should be lifted to hold the Directors personally liable for the judgment debt
Key legal issues
#Whether the corporate veil should be lifted to make Directors personally liable for the judgment debt
The application to lift the veil failed; the company remains a separate legal entity liable for the decree, and the Directors were not held personally liable
The court found that the conditions for lifting the corporate veil, such as fraud or improper conduct on the part of the Directors, were not established. Inability of the company to pay its debts or insolvency does not qualify as a ground for piercing the veil. The respondent was however directed to settle the decree from the surplus of the charged properties when sold and to render an account to the applicant.
Whether the respondent could satisfy the decree from the charged land and other properties
The court found the respondent should be able to settle the decretal sum once the charged properties are sold, and ordered an account of the proceeds
The land (Land Ref. No. 209/8377) is charged in favour of Eco Bank, but the loan amounts were not disclosed. The court therefore directed the respondent to settle the decretal sum from any surplus realized upon sale and to render an account, leaving the applicant at liberty to pursue any other lawful means of execution.
Legal principles established
#- The corporate veil may be lifted only where the relevant conditions, such as fraud or improper conduct by the Directors, are established; inability to pay debts or insolvency is not such a condition
Court orders
#- 1.The respondent to settle the decretal sum once the properties subject of the charges are sold and a surplus realized
- 2.The respondent to render an account to the applicant in view of order (a) and as may become necessary or appropriate in the circumstances
- 3.The applicant at liberty to pursue any other lawful means towards satisfaction of the decree
- 4.Each party to bear own costs of the application
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Section 20(8) of the Employment and Labour Relations Act, 2011; section 38 of the Civil Procedure Act; Order 22 rules 31 and 35 of the Civil Procedure Rules; rule 32(2) of the Employment and Labour Relations Court (Procedure) Rules, 2016
Relief refused
#Order lifting the corporate veil to hold the Directors personally liable to satisfy the judgment and decree
Conditions for lifting the corporate veil, such as fraud or improper conduct, were not established; mere inability to pay does not justify piercing the veil
Costs
Each party to bear own costs of the application.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The respondent to settle the decretal sum once the properties subject of the charges are sold and a surplus realized.
The respondent to render an account to the applicant in view of order (a) above and as may become necessary or appropriate in the circumstances.
The applicant at liberty to pursue any other lawful means towards satisfaction of the decree.
The corporate veil can be lifted only if the relevant conditions are met and do not include inability of the company to pay its debts with the applicant or insolvency of the Company and, the remedies in law have not been exhausted.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Union of Commercial Food and Allied Workers v Premier Flour Mills Limited (Cause 271 of 2019) [2025] KEELRC 568 (KLR)", Case Analysis (2025). Notice of Motion dated 22.02.2024 (in a cause with a judgment of 18.02.2022). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/568/eng@2025-02-27
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.