[2024] KENET 360 (KLR)

Coldstone Investment Limited v Director General National Environment Management Authority & another (Tribunal Appeal 15 of 2023) [2024] KENET 360 (KLR) (Environment and Land) (4 March 2024) (Ruling)

Neutral citation: [2024] KENET 360 (KLR)

Republic of Kenya

In the National Environment Tribunal - Nairobi

Environment and Land

Tribunal Appeal 15 of 2023

Emmanuel Mumia, Chair, Winnie Tsuma, Vice Chair, Duncan Kuria & Ronald Allamano, Members

March 4, 2024

Between

Coldstone Investment Limited

Applicant

and

Director General National Environment Management Authority

1st Respondent

Khaleej Towers Limited

2nd Respondent

Ruling

1. Before the Honorable Tribunal is the Appellant/Applicant’s Application dated 4th October 2023 seeking inter alia to cite the directors of Khaleej Towers Limited for being in contempt of the Tribunal for the deliberate disobedience of the orders issued on 21st September 2023. The Application is supported by the affidavit of Daniel Waihenya sworn on the same date.

2. The 2nd Respondent is opposed to the Application vide the Replying Affidavit sworn by its director Omar Hassan Hussein on 17th October 2023.

3. The 1st Respondent did not file a response to the application. However, the Tribunal has considered the letter by the 1st Respondent dated 8th December 2023 and the status report prepared by the 1st Respondent dated 5th October 2023.

4. Having Considered the Applicant’s Application, the 2nd Respondent’s Replying affidavit, and the documents filed by the 1st Respondent, it is our considered view that the only issue arising for determination is whether the Applicant is entitled to the orders sought.

5. The Applicant is seeking to cite the directors of Khaleej Towers Limited for being in contempt of the Tribunal for the deliberate disobedience of the order issued on 21st September 2023. According to the Black’s Law Dictionary:‘Contempt is a disregard of, disobedience to, the rules, or orders of a legislative or judicial body, or an interruption of its proceedings by disorderly behavior or insolent language, in its presence or so near thereto as to disturb the proceedings or to impair the respect due to such a body.’

6. Further, in Hadkinson v Hadkinson (1952) 2 All ER. 567, it was held that: “It is plain and unqualified obligation of every person against or in respect of, who an order is made by a court of competent jurisdiction to obey it unless and until that order is discharged. The uncompromising nature of this obligation is shown by the fact that it extends even to cases where the person affected by an order believes it to be irregular or even void.”

7. The principles governing grant of contempt orders are now well settled. As stated in the case of Samuel M. N. Mweru & Others v National Land Commission & 2 others [2020] eKLR:‘It is an established principle of law that in order to succeed in civil contempt proceedings, the applicant has to prove (i) the terms of the order, (ii) Knowledge of these terms by the Respondent, (iii). Failure by the Respondent to comply with the terms of the order. Upon proof of these requirements the presence of willfulness and bad faith on the part of the Respondent would normally be inferred, but the Respondent could rebut this inference by contrary proof on a balance of probabilities’

8. Writing on proving the elements of civil contempt, learned authors of the book Contempt in Modern New Zealand have authoritatively stated as follows:‘There are essentially four elements that must be proved to make the case for civil contempt. The applicant must prove to the required standard (in civil contempt cases which is higher than civil cases) that:-(a)the terms of the order (or injunction or undertaking) were clear and unambiguous and were binding on the defendant;(b)the defendant had knowledge of or proper notice of the terms of the order;(c)the defendant has acted in breach of the terms of the order; and(d)the defendant's conduct was deliberate.’

9. On the first element, we note that on 21st September 2023 the Tribunal issued orders inter alia stopping construction on the suit property pending the filing of a status report by the 1st Respondent on compliance by the 2nd Respondent with the conditions contained in the letter dated 6th March 2023. This order was clear, unambiguous and binding on the 2nd Respondent.

10. On the second element, the 2nd Respondent has not denied knowledge of the said orders. Further, its advocates were present during the issuance of the orders. There is therefore a presumption, which is not unfounded that they must have informed their client. This was the holding of the Court of Appeal in Shimmers Plaza Limited v National Bank of Kenya Limited, [2015] eKLR, where the Court held that the knowledge of the court order by the advocate of the alleged contemnor is sufficient for the purposes of contempt proceedings. The Court stated as follows:‘Would the knowledge of the judgment or order by the advocate of the alleged contemnor suffice for contempt proceedings? We hold the view that it does. This is more so in a case such as this one where the advocate was in Court representing the alleged contemnor and the orders were made in his presence. There is an assumption which is not unfounded, and which in our view is irrefutable to the effect that when an advocate appears in court on instructions of a party, then it behoves him/her to report back to the client all that transpired in court that has a bearing on the client’s case.’

11. It is therefore our finding that the 2nd Respondent had knowledge and/or proper notice of the orders. On the final element, the Applicant contends that the 2nd Respondent continued construction on the suit despite the Tribunal’s orders stopping any further construction. To support this assertion, the Applicant has annexed photographs showing continued construction.

12. On the other hand, the 2nd Respondent simply states that they have been in compliance with the orders provided by their advocate. We find this response to be unsatisfactory and it our finding that the Applicant has proved that the 2nd Respondent continued with the construction despite the Tribunal’s orders. This is a deliberate disobedience of the Tribunal orders and the same amounts to contempt of the Tribunal.

13. That said, we note that the Applicant is seeking to cite the directors of the 2nd Respondent for being in contempt of the Tribunal. The said directors are not parties to these proceedings. The 2nd Respondent is a limited liability company. It is an elementary principle of company law that a company is a separate legal entity from its directors, and the corporate veil has to be lifted for a director of the company to be held personally liable for the acts or omissions of the company.

14. The Applicant did not apply to cite the 2nd Respondent for contempt, nor did they seek to pierce the corporate veil. It therefore follows that the orders seeking to cite the 2nd Respondent’s directors for contempt are legally untenable. Our finding is informed by the holding of the Court in Katsuri Limited v Kapurchand Depar Shah [2016] eKLR, where it was held as follows:‘The other important aspect to mention is that the alleged contemnor is a director of the company. He is not a party to these proceedings in his personal capacity. The company is a legal entity. The proper procedure for the applicant was first to apply to lift the corporate veil then go for the directors in their personal capacities. As matters stand now, the director is not personally liable for debts, actions or omissions of the company, hence the application before me is misdirected.’

15. The above position was upheld by the Court of Appeal in the case of Geoffrey Kathuri Kison & 10 others v East African Portland Cement Co. Ltd & 5 others [2021] eKLR, where the Appellate Court observed as follows:‘It follows, therefore, that failure by the applicants to cite the 1st respondent for contempt and to lift the corporate veil of the 1st respondent denied them the chance to cite the 2nd to 6th respondents for contempt as directors or accounting officers of the 1st respondent’

16. In view of the above analysis and findings, the conclusion becomes irresistible that the Applicant’s Application dated 4th October 2023 is without merit. We hereby dismiss the same with no orders as to costs.

DATED AND DELIVERED AT NAIROBI, THIS 4TH DAY OF MARCH 2024EMMANUEL MUMIA - CHAIRMANWINNIE TSUMA - VICE-CHAIRDUNCAN KURIA - MEMBERRONALD ALLAMANO - MEMBER