Miseda v Todays Online Limited & 2 others; Standard Chartered Bank (Garnishee) (Cause 704 of 2010) (Employment and Labour) [2022] KEIC 2 (KLR)
The bottom line
#Kenya's Employment Court held company directors personally liable for an 11-year-old unpaid award after they sold the business and left the country.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether garnishee proceedings could validly be taken against the directors as opposed to their company
- 2.Whether the corporate veil of the 1st respondent should be lifted to hold the 2nd and 3rd respondents personally liable to satisfy the award
- 3.Whether the 2nd and 3rd respondents can be deemed employers of the claimant under Section 2 of the Employment Act
- 4.Whether an order nisi should issue against the bank account held by the 2nd and 3rd respondents
Key legal issues
#Lifting of the corporate veil to enforce an unsatisfied award against directors
The court lifted the corporate veil, holding the 2nd and 3rd respondents personally liable for the decretal amount
The directors sold the company's assets, relocated outside the jurisdiction, and failed to honour the award for 11 years despite awareness of it. The court characterised these as deliberate and fraudulent acts designed to dispossess the claimant of the benefit of the award, constituting circumstances that justify lifting the corporate veil.
Directors as 'employers' under Section 2 of the Employment Act
The directors were deemed employers of the claimant in the absence of the sold company
Section 2 of the Employment Act defines an employer to include agents, foremen, managers or factors of companies that have contracted to employ an individual. The respondents held decisional control of the company and the power to dispose of the business, so they could conveniently be deemed employers in the company's absence.
Legal principles established
#- Directors who dispose of company assets, leave the jurisdiction and fail to honour an award may have the corporate veil lifted and be held personally liable as employers under Section 2 of the Employment Act
- Deliberate acts to forestall satisfaction of a court award constitute fraudulent conduct justifying lifting of the corporate veil
Court orders
#- 1.The 2nd and 3rd respondents shall personally pay the decretal amount due to the claimant, as computed by the claimant
- 2.Order nisi granted directing the garnishee to attach all monies/debts in current account number 0150xxxxxxxx in the names of the 2nd and 3rd respondents and utilize such monies in satisfaction of Kshs 2,085,000
- 3.The garnishee to file its replying affidavit within 7 days of the ruling, with a suitable date for inter partes hearing to be obtained at the registry
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Original and supervisory jurisdiction over enforcement of its own award under the Employment and Labour Relations Court Act and the Employment Act
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.
Order nisi is granted, directing the garnishee to attach all monies/ debts in current account number 0150xxxxxxxx in the names of the 2nd and 3rd respondent, and to utilize such monies in satisfaction of the sum of Kshs 2,085,000.
The 2nd and 3rd respondents shall personally pay the decretal amount due to the claimant, as computed by the claimant.
These are deliberate acts meant to forestall satisfaction of an award of the court. They are fraudulent acts, meant to dispossess the claimant the benefit of an award, which he was granted by the court more than a decade ago.
Issues in the judgment
#The judgment does not state the case number, the names of the parties, or the identity of the garnishee bank, referring to them only by role
The judgment refers to both 'Communications Solutions Limited' and 'Communications Limited' as the entity that lodged successful objection proceedings, an internal inconsistency
The relief sought in paragraph 8 refers to order nisi 'with regard to the above account' numbered 0150xxxxxxxxx, while the order granted references account 0150xxxxxxxx, with inconsistent digit counts
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Miseda v Todays Online Limited & 2 others; Standard Chartered Bank (Garnishee) (Cause 704 of 2010) (Employment and Labour) [2022] KEIC 2 (KLR)", Case Analysis (2022). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keic/2022/2/eng@2022-09-29
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.