[2013] KEELRC 897 (KLR)
The court found that the respondent had established a valid lease over the Mwanzi farm in Rumuruti, Laikipia County, as the lease was executed between two separate legal entities, notwithstanding that the directors were the same individuals. The principle of corporate personality dictates that companies are distinct...
Source-derived case information.
- Citation
- [2013] KEELRC 897 (KLR)
- Parties
- Applicant: Kenya Plantation & Agricultural Workers Union; Respondent: Shalimar Flowers (K) Limited
- Court
- Employment and Labour Relations Court
- Court Station
- Employment and Labour Relations Court at Nakuru
- Jurisdiction
- Kenya
- Case Number
- Cause 359 of 2013
- Procedural Posture
- Employment Cause / Judgment
- Outcome
- Claim partly allowed; declarations granted; costs to be borne by each party.
- Judges
- B Ongaya
- Legal Topics
- Collective Bargaining Agreement, Employee Transfer, Employment Contracts, Lease Agreements
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Kenya Plantation & Agricultural Workers Union
Applicant
Shalimar Flowers (K) Limited
Respondent
Procedural Posture
Employment Cause / Judgment
Legal Issues
- 1 Whether the respondent has a valid lease over the Mwanzi farm in Rumuruti, Laikipia County, justifying the transfer of employees under the CBA.
- 2 Whether the transfer of employees to the new farm is in breach of clause 26 of the CBA.
- 3 Whether the collective agreement and recognition agreement provisions on housing and transport costs apply to the transfer.
Ratio Decidendi
The court found that the respondent had established a valid lease over the Mwanzi farm in Rumuruti, Laikipia County, as the lease was executed between two separate legal entities, notwithstanding that the directors were the same individuals. The principle of corporate personality dictates that companies are distinct from their directors, and thus the lease is valid. Consequently, the transfer of employees to the new farm was not in breach of clause 26 of the CBA. The court further held that the collective agreement and recognition agreement, particularly the provisions on housing and transport costs, must be upheld by the respondent in relation to the transfer. Each party was ordered to...
Court Disposition
Claim partly allowed; declarations granted; costs to be borne by each party.
Orders
- A declaration that upon transfer, the respondent's employees, also being the claimant's members, will continue in the employment of the respondent under the valid lease agreement with Mwanzi Limited for the new farm over Marmanet/North Rumuruti Block II (Ndurumo)/195.
- A declaration that the collective agreement and the recognition agreement, specifically provisions on housing and transport costs consequential to the transfer, shall be upheld by the respondent.
Full Case Text
Judgment text and source record
24 paragraphs
REPUBLIC OF KENYA
IN THE INDUSTRIAL COURT OF KENYA AT NAKURU
CAUSE NO. 359 OF 2013
KENYA PLANTATION & AGRICULTURAL
WORKERS UNION...................................................................CLAIMANT
VERSUS
SHALIMAR FLOWERS (K) LTD......................................RESPONDENT
JUDGMENT
The claimant is Kenya Plantation & Agricultural Workers Union and the respondent is Shalimar Flowers (K) Limited. The claimant filed the memorandum of claim on 22. 10. 2013 and prayed for judgment against the respondent for:
(a) setting aside, dismissing or discharging the letters of transfer dated 11. 10. 2013 for the transfer of the employees to the new farm in Rumuruti, within Laikipia county;
(b) a declaration that the new farm in Rumuruti within Laikipia County is not Shalimar Flowers (K) Limited, therefore the transfer under clause 26 of the CBA of employees of Shalimar Flowers (K) Limited to the new farm is in outright breach of the said clause;
(c) a declaration that the respondent do forthwith comply with clause 26 of the C.B.A. in effecting any transfers of any employee within Shalimar Flowers (K) Limited; and
(d) Costs of the suit to be provided for.
The memorandum of response was filed on 12. 11. 2013. In view of the urgency of the matter taking into account the productivity concerns, the parties agreed that the case be heard on Thursday 14. 11. 2013 at 2. 30 p.m. At the hearing as scheduled, the parties agreed that the only issue for determination was whether the respondent has a lease over the suit land covering the area known as Mwanzi farm in Rumuruti, Laikipai County in which event the C.B.A. will apply to the transfers in issue.
For the respondent, it was submitted that the relevant lease is exhibit IW1 on the further affidavit of Issa Wafula filed on 12. 11. 2013. The claimant's only objection is that the lease between Mwanzi Limited and Shalimar Flowers Kenya Limited has been executed between the two companies by their directors and who are the same persons namely Mamta Mahajan and Peeush Mahajan.
For the respondent, it has been submitted that the lease is valid as concluded between the two companies which are legal persons separate from their respective directors.
It is a well established legal principal that a company is a legal person separate from its directors. In view of that principle, the court finds that the respondent has established a valid lease over the farm it has transferred its staff to known as Shalimar farm in Rumuruti, Laikipia County as referred to in the inter office memorandum being exhibit 4 on the memorandum of claim as, thus “...our new farm in Rumuruti, within Laikipia county”.
In conclusion, judgment is entered for the parties for:
a declaration that upon transfer the respondent's employees also being the claimant's members will continue in the employment of the respondent; the respondent having concluded a valid lease agreement with Mwanzi Limited for the respondent's new farm over Marmanet/North Rumuruti Block II (Ndurumo)/195per lease dated 2. 9.2013 and filed in court.
A declaration that the collective agreement and the recognition agreement and specifically provisions on housing and transport costs consequential to the transfer shall be upheld by the respondent; and
each party to bear own costs of the suits.
Signed, dated and delivered in court at Nakuru this Thursday 14th November, 2013.
BYRAM ONGAYA
JUDGE