Patrick Mutua Mwanzia & 19 others v Habo Group of Companies Limited; HGC Habo Group Limited (Objector) [2021] KEELRC 1685 (KLR)

REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR RELATIONS COURT

AT MOMBASA

CAUSE NO 724 OF 2016

PATRICK MUTUA MWANZIA & 19 OTHERS.............................................CLAIMANTS

VS

HABO GROUP OF COMPANIES LIMITED.............................................RESPONDENT

HGC HABO GROUP LIMITED........................................................................OBJECTOR

RULING

1. On 4th February 2021, I delivered a ruling dismissing the Objector’s application for stay of execution towards satisfaction of the decretal sum herein.

2. Immediately after reading of the aforesaid ruling, Mr Wameyo appearing for the Objector, made an oral application for stay of execution, which the Court granted, subject to the Objector depositing not less than 50% of the decretal sum in court, within three days from the date of the ruling.

3. The Objector did not comply with the orders issued by the Court on 4th February 2021 and instead filed the present application dated 9th February 2021, seeking review and setting aside of the orders of 4th February 2021.

4. The application is supported by an affidavit sworn by Anderson Mugambi, who describes himself as the Claims Manager of the Objector, and is based on the following grounds:

a)  That there is discovery of new and important matter or evidence, which after the exercise of due diligence, was not and could not have been within the knowledge of and could not have been produced by the Objector at the time the order was made;

b) That the discovery by the Objector is that by a Gazette Notice dated 29th February 2021, the Respondent was dissolved and the public thus notified pursuant to Section 897(4) of the Companies Act.

5. In response to the Objector’s present application, the Claimants filed a replying affidavit sworn by the 10th Claimant, Gertrude Ndiku on 25th February 2021.

6. Ndiku states that the deponent of the supporting affidavit to the Objector’s application has not exhibited any authorisation from the Objector.

7. Ndiku further states that the Objector, being closely affiliated to the Respondent, was aware of the Gazette Notice; it is thus not a discovery that was not within the Objector’s knowledge.

8. The Claimants take the view that the Respondent’s dissolution was effected after judgment, with the sole purpose of escaping liability.

9. The Claimants take issue with the Objector’s failure to attach the requisite documents and/or application that supported the voluntary dissolution of the Respondent.

10. Ndiku states that any person making an application to the Registrar of Companies, for dissolution of a company must, within 7 days from the day on which the application is made, give notice to every person to be affected by the dissolution. Ndiku points out that at the time the Respondent made its application for dissolution, the Claimants had already obtained judgment against the Respondent.

11. Ndiku further points out that even where a company has been dissolved, the liabilities of each director, member and managing officers continue and may be enforced as if the company continues and has not been dissolved.

12. Ndiku notes that the Objector lacks the locus standi to move the Court on behalf of the Respondent.

13. Ndiku depones that immediately after orders were made on 4th February 2021, the Objector made a written proposal to have this matter settled only to turn around and file the present application.

14. The power of this Court to review its own decisions is donated by Section 16 of the Employment and Labour Relations Court Act and Rule 33 of the Employment and Labour Relations Court (Procedure) Rules. Rule 33(1) of the Procedure Rules provides as follows:

(1) A person who is aggrieved by a decree or an order from which an appeal is allowed but from which no appeal is preferred or from which no appeal is allowed, may within reasonable time, apply for a review of the judgment or ruling-

(a) if there is discovery of new and important matter or evidence, which after the exercise of due diligence, was not within the knowledge of that person or could not be produced by that person at the time when the decree was passed or the order made; or

(b) on account of some mistake or error apparent on the face of the record; or

(c) if the judgment or ruling requires clarification; or

(d) for any other sufficient reason.

15. The Objector’s application is based on Gazette Notice No. 666 dated 29th February 2021, showing that the Respondent has been dissolved.

16. From the Gazette Notice, it is evident that notice of the Respondent’s dissolution was published after my ruling of 4th February 2021. It is therefore safe to conclude that the Objector did not have knowledge of the Respondent’s dissolution at the time its objection application was considered by the Court.

17. According to the Gazette Notice, the Respondent was dissolved under Section 897(4) of the Companies Act, which provides for dissolution of companies pursuant to own application. Under Section 897(6) however, directors and other officers of a dissolved company may be pursued to settle liability as if the company had not been dissolved.

18. It follows therefore that dissolution of a company does not in any way, extinguish accrued liabilities, such as the decretal sum owed to the Claimants in this case. That being the case, the Objector cannot rely on the Respondent’s dissolution to reverse my finding that it had failed to establish interest in the goods proclaimed by the Claimants towards satisfaction of their judgment against the Respondent.

19. The Objector’s application for review dated 9th February 2021 is therefore declined with costs to the Claimants.

20. Orders accordingly.

DATED SIGNED AND DELIVERED AT MOMBASA THIS 27TH DAY OF MAY 2021

LINNET NDOLO

JUDGE

ORDER

In view of restrictions in physical court operations occasioned by the COVID-19 Pandemic, this ruling has been delivered via Microsoft Teams Online Platform. A signed copy will be availed to each party upon payment of court fees.

LINNET NDOLO

JUDGE

Appearance:

Mr. Nyange for the Claimants

Mr. Wameyo for the Objector