REPUBLIC OF KENYA
IN THE EMPLOYMENT AND LABOUR RELATIONS COURT
AT KISUMU
CAUSE NO. 129 OF 2013
(Before Hon. Justice Dr. Jacob Gakeri)
KENYA HOTELS AND
ALLIED WORKERS UNION………………………….…...CLAIMANT
VERSUS
PRAYING MANTIS LIMITED
(OCTOPUS CLUB)……………………………............RESPONDENT
RULING
Before the Court for determination is the Applicant’s Notice of Motion dated 20th January 2026 filed under Certificate of Urgency seeking Orders that:
1. Spent.
2. Spent.
3. The Honourable Court be pleased to grant leave to the applicant/Judgement Creditor to attach ad sell the respondents surety or security for the decretal amount being the immovable property known as Kisumu/Kogony/193 Kisumu registered in the name of William McTough, Passport NO. A103031 in execution of decree issued by the court.
4. The Honourable Court be pleased to issue warrants of attachment and sale of the said property.
5. Costs of this application and auctioneers cost be borne by the respondent.
The Notice of Motion was expressed under Sections 1A, 3A and Section 63(b) and (e) of the Civil Procedure Act and Order 22 Rule 9 and 48 of the Civil Procedure Rules and was based on the grounds enumerated on its face and the Supporting Affidavit of Mr. Erick Ngame, the Branch Secretary of the Judgment Creditor who deponed that the court issued a decree against the respondent/judgment debtor on 28th January 2021 and it was served upon the judgment debtor.
The affiant deponed that the respondent/judgment debtor issued Kisumu/Kogony/193 Kisumu as Security for the decretal sum and was granted stay execution by the Court of Appeal but the application and appeal were subsequently dismissed and the sum of Kshs.1,700,790.00 remained unsettled with interest accruing, and the total amount outstanding was Kshs.2,911,185.55
That the Judgment Debtor rode on the stay of execution by the Court of Appeal to wind up the company’s operations to evade execution and it was in the circumstances fair to allow the decree holder to sell the property in question in satisfaction of the decretal sum.
Respondent’s case
In a Replying Affidavit sworn on 11th February 2026, Mr. William McTough deponed that he was the former director of Praying Mantis Ltd, the Judgment Debtor, now defunct.
That the respondent company ceased operations by virtue of Kenya Gazette Notice No.13377 of 11th October 2024 and the company was incapable of being sued since it had no legal existence and the affiant was not privy to the suit herein in any capacity and never issued a personal guarantee to settle the debts of the Judgment Debtor as he was not.
That the defunct company was a separate entity from its directors and their personal property could not be sold to satisfy the liabilities of the company and the application was fatally defective and could only be pursued by way of a substantive suit or Petition as opposed to post-judgment applications.
That the affiant’s proposal to provide his land as security for the stay of execution was not accepted by the court and if it had been accepted a prohibition ought to have been registered against the land.
Applicant’s submissions
Mr Ngame for the applicant submitted that the principal director of the Respondent, Mr. William McTough offered Kisumu/Kogony/193 vide his affidavit dated 29th March, 2021 while aware that in the event of default by the Respondent, the property could be attached.
According to Mr. Ngame, based on the director’s averment, the Court of Appeal granted unconditional stay of execution in Civil Application No. 38 of 2021.
Mr. Ngame, further submitted that on account of having offered to provide security, and stay of execution was granted, Mr. McTough admitted and guaranteed the Respondent’s debt before the Court of Appeal.
Reliance was placed on Law of Guarantees, Geraldine Andrews & Richard Millet 2nd Edition, at page 156 on the nature of a contract of guarantee, to urge that the security offered by Mr. William McTough could be attached for recovery of the decretal sum.
Reliance was further placed on the sentiments of the Court in Arun C. Sharma V. Raikundalla t/a Raikundalia & Co Advocates & 2 others (2014) eKLR, on the purpose of security in an application for stay of execution pending appeal, to submit that Kisumu/Kogony/193 could be attached and sold by the court to satisfy the decretal sum.
Finally, Mr. Ngame submitted that the instant application met the requirements of Order 22 Rule 9 of the Civil Procedure Rules.
Reliance was also placed on the provisions of Order 22 Rule 68 of the Civil Procedure Rules on the powers of the court in relation to immovable property as was the decision in Eco Bank Kenya Ltd V. Harvey Engineering Ltd & others (2018) eKLR.
Analysis
The applicant seeks Orders of attachment and sale of Mr. William McTough’s property Kisumu/Kogony/193, warrants of attachment and sale of the property in satisfaction of the decretal sum in KISUMU ELRC No. 129 of 2013 Kenya Hotels and Allied Workers Union V Praying Mantis Limited (Octopus Club), the sum of Kshs.2,917,185.55 inclusive of interest from the date of judgment.
The Orders sought relate to execution.
However, and as discernible from the suit, the respondent was a body corporate, which according to Mr. William McTough, a former director of the company was dissolved pursuant to Kenya Gazette Notice No.13377 dated 11th October 2024 and as such it did not exist.
The Gazette Notice in question was based on the provisions of Section 897 of the Companies Act which provides:
(1) On application by a company, the Registrar may strike the name of the company off the Register.
(2) Such an application is effective only if it—
(a) is made on behalf of the company by its directors or by a majority of them; and
(b) contains such information (if any) as is prescribed by the regulations.
(3) The Registrar may not strike the name of a company off the register under this section until after three months from the date of the publication by the Registrar in the Gazette of a notice—
(a)stating that the Registrar may exercise the power under this section in relation to the company; and
(b)inviting any person to show cause why the name of the company should not be struck off.
(4) As soon as practicable after striking the name of the company off the Register, the Registrar shall publish in the Gazette a notice that the company's name has been struck off the Register and the date of the striking off.
(5) On publication of the notice, the company is dissolved.
(6) Despite subsection (5)—
(a) the liability (if any) of each director, managing officer and member of the company continues and may be enforced as if the company had not been dissolved; and
(b) nothing in this section affects the power of the Court to liquidate a company the name of which has been struck off the Register.
A cursory reading of Section 897 of the Companies Act leaves no doubt that Mr. William McTough applied to the Registrar to dissolve the company.
However, the Gazette Notice on record related to the provisions of Section 897(3) of the Companies Act as it was an invitation to all and sundry to show cause why the company’s name should not be struck off the Register of Companies.
The respondent did not avail evidence of the fact of dissolution, which is a Gazette Notice indicating that the company’s name been struck off the Register of Companies under Section 897(4) of the Act.
The Gazette Notice signifies the dissolution of the company
Whereas the respondent company may have been dissolved, the respondent tendered no evidence of that fact and for purposes of these proceedings and ruling, the respondent company was privy to this suit.
The foregoing is fortified by the fact that under Section 900(1) of the Companies Act, copies of the application made under the provisions of Section 897 of the Companies Act must be given to members, employee(s), creditor(s) director(s) of the company, manager or trustee of any pension fund established for the benefit of employees of the company, or as provided by the Regulations, within 7 days of its lodgement with the Registrar of Companies.
Mr. William Mc Tough led no evidence to show that the notice was shared with the claimant/Applicant.
Even in circumstances in which dissolution of the company is not a consequence of an application by a director or majority of them, the dissolution is evidenced by a Gazette notice to the effect that the name of the company had been struck off the register and the company ceases to exist in law.
The Companies Act also provides for applications to the Registrar of Companies to restore to the Register a company that has been struck off the Register of Companies.
Needless to belabour, the claimant union instituted proceedings against the respondent company in 2013 and obtained judgment against the company on 13th November 2020 and a decree was extracted but realization of the fruits of the judgment by the grievants has been an arduous task.
A Garnishment yielded no significant results owing to the nominal amount in the director’s account and an application to have Mr. William Mc Tough arrested and detained till payment of the decretal sum was unsuccessful on account that the decree was made against the respondent company as opposed to its director, Mr. William Mc tough and the fraud alleged by the applicant and which would have facilitated the lifting of the veil or piercing of the corporate shell was neither specifically pleaded nor proved as by law required.
Thus far, the company remains the judgment debtor in accord with the suit and decree.
Be that as it may, the applicant’s case is grounded on the premises that Mr. Mc Tough offered his property as security to enable the respondent prosecute its appeal against the judgment against it and unconditional stay of execution was granted by the Court of Appeal vide its ruling dated 18th June 2021.
Thus, no security was provided by the appellant company and the parties recorded a consent under which the respondent would liquidate the decretal sum in monthly instalments but paid only one instalment.
Subsequently, at the applicant’s instigation the Court of Appeal struck out the Respondent’s Record of Appeal.
The court found that the appeal was an abuse of the court process vide its ruling delivered on 5th July 2024.
In a nutshell, Mr. William Mc Tough did not provide any security for the Order of stay of execution pending appeal, otherwise the court would have so directed and the necessary steps taken to effectuate the security, which both parties would have confirmed before the court for the stay of execution to issue.
The court is in agreement with the averments by Mr. William Mc Tough that the Court of Appeal neither made the provision of security a condition precedent to the grant of the order of stay of execution nor accepted any security and no processes attendant to effectuation of the alleged security were undertaken, which would have facilitated the sale of the security by the claimant in execution of the decree.
The foregoing is fortified by the sentiments of the Court of Appeal by its Ruling delivered on 18th June 2021 and by which it granted a stay of execution pending the hearing and determination of the respondent’s appeal.
The court stated:
“The applicant further deposes that it is willing to deposit as security the Title Deed for its property located along Lake Victoria whose value at Kshs.3,100,000 which is far much more than the amount claimed by the respondents. The Title Deed and valuation report for the said property are annexed to the said affidavit…
In sum, we are satisfied that both limbs of arguability and the nugatory aspect have been demonstrated. The application succeeds. We allow the same and Order execution of the impugned judgment stayed pending the hearing and determination of the intended appeal.
We order that the costs of this application be in the substantive appeal.”
Clearly, no security was required and none was provided.
In its subsequent ruling delivered on 5th July 2024, the court stated inter alia
“On 18th June 2021, the court in Civil Application No. 38 of 2021, delivered a Ruling which it granted the respondent an unconditional order of stay of execution pending the hearing of its appeal…”
The foregoing establishes beyond peradventure that the Respondent obtained a stay of execution pending appeal at no cost and the security alleged by the applicant herein does not exist for purposes of attachment or sale by the Judgment Creditor/Decree holder.
It is trite law that a registered company is a body corporate by the name stated in the certificate of incorporation, and by dint of its name, Praying Mantis Limited was a limited liability company and its members were only liable to contribute to the assets of the company, the amount, if any, outstanding on the shares held beyond which no liability arises.
As a body corporate, a registered company is liable for its debts and other liabilities incurred out of its dealings with third parties and as a general rule, neither a member of a company nor its directors are liable for the debts and liabilities of the company save by exception.
In Salomon V Salomon & Co. Ltd [1897] A.C 22, Lord McNaghten held inter alia;
“… The company is at law a different person altogether from the subscribers to the memorandum… nor are there subscribers as members liable in any shape or form except to the extent and in the manner provided by the Act”.
This is the concept or principle of limited liability.
In the instant case, the applicant has did placed any material before the court for a finding and holding that Mr. William McTough, a director of the respondent company, who was not a party to this suit was personally liable for the liabilities of the respondent, which would implicate his personal property and as adverted to elsewhere in this ruling, the alleged security was neither required nor provided for purposes of the stay of execution by the Court of Appeal.
The applicant failed to demonstrate that Mr. William McTough was personally liable for the debts and other liabilities of the respondent company, either as director or member of the company or both under any of the legislative or common law modifications to the rule in Salomon V Salomon & Co. Ltd (supra).
In the court’s view, the orders prayed for in the instant suit are unavailable against Mr. William Mc Tough’s property, Kisumu/Kogony 193.
This is reinforced by the finding that although Mr. William McTough offered to provide his property as security pending the hearing and determination of the appeal, the offer was not accepted and no security was provided.
The upshot of the foregoing is that the applicant’s Notice of Motion dated 20th January 2026 is unmerited and it is accordingly dismissed with no Orders as to costs.
DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI ON
THIS 24TH DAY OF MARCH 2026.
DR. JACOB GAKERI
JUDGE
ORDER
In view of the declaration of measures restricting court operations due to the COVID-19 pandemic and in light of the directions issued by His Lordship, the Chief Justice on 15th March 2020 and subsequent directions of 21st April 2020 that judgments and rulings shall be delivered through video conferencing or via email. They have waived compliance with Order 21 Rule 1 of the Civil Procedure Rules, which requires that all judgments and rulings be pronounced in open court. In permitting this course, this court has been guided by Article 159(2)(d) of the Constitution which requires the court to eschew undue technicalities in delivering justice, the right of access to justice guaranteed to every person under Article 48 of the Constitution and the provisions of Section 1B of the Civil Procedure Act (Chapter 21 of the Laws of Kenya) which impose on this court the duty of the court, inter alia, to use suitable technology to enhance the overriding objective which is to facilitate just, expeditious, proportionate and affordable resolution of civil disputes.
DR. JACOB GAKERI
JUDGE
FOOTNOTES
ENDNOTES
| DRAFTDRAFTRULING Kisumu ELRC Cause No. E129 of 2013 | Page 13 of 14 |