https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1699

Kitavi v Ikons Hotels Ltd & 3 others (Employment and Labour Relations Cause E068 of 2021) [2026] KEELRC 1699 (KLR) (22 June 2026) (Ruling) Neutral citation: [2026] KEELRC 1699 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Nairobi Employment and Labour Relations Cause E068 of 2021 HS Wasilwa, J June 22, 2026 Between Robert Kitavi Claimant and Ikons Hotels Limited 1st Respondent David Itibi Ndungu 2nd Respondent John Njunu Kiarie 3rd Respondent Peter Kariuki Mwai 4th Respondent Ruling 1.The Claimant/ Applicant filed a Notice of Motion application dated 9th September 2025 seeking orders: -1.That leave be granted for the Directors of the 1st Respondent /Judgment Debtor; David Itibi Ndungu,John Njunu Kiarie and Peter Kariuki Mwai be orally examined on oath as to the debt owing to the Claimant resulting from the Jjudgment of this court delivered on 25th October,2024 and what properties or means of satisfying the judgment that the 1st Respondent /Judgment Debtor possesses.2.That in default of the Directors of the 1st Respondent / Judgment-Debtor Company complying with the above orders, an order for committal to civil jail and/or sequestration of personal property be made against the said Directors personally, or such further orders as the Court may deem fit and just to make.3.That this Honourable Court be pleased to direct the 1st Respondent /Judgment Debtor’s said Directors to produce in court for inspection, books of accounts and other statutory books, records and/or documents belonging to the 1st Respondent /Judgment Debtor.4.That the court does order the Directors of the 1st Respondent/Judgment Debtor herein to personally satisfy the decree given on 25th October,2024 as well as the certificate of costs dated 26th February,2025 for the total outstanding amount of Kshs. 191,875/-.5.That the costs of this application be borne by the 1st Respondent /Judgment Debtor in any event. Claimant/Applicant’s Case 2.The Applicant avers that judgment was delivered on 25th October 2024 in his favour as against the 1st Respondent for a total sum of Kshs. 191,875 inclusive of the decretal amount and costs, together with interest from the date of judgment until payment in full. It is his case that the Court entered judgment against the 1st Respondent for unlawful dismissal. 3.The Applicant contends that attempts to have the 1st Respondent satisfy the judgment sum have proved unsuccessful, the 1st Respondent having refused and/or failed to settle the decretal sum. 4.He states that he has been unable to ascertain or identify any attachable property belonging to the 1st Respondent/Judgment Debtor for purposes of execution, consequently, he is unable to realize the fruits of his successful litigation, continuing to suffer prejudice as a result. 5.It is the Applicant's case that the Directors of the 1st Respondent, namely David Itibi Ndungu, John Njunu Kiarie and Peter Kariuki Mwai, ought to be orally examined on oath as to the debt owing to him. 6.He further contends that the Court ought to intervene to enable him enjoy the fruits of the judgment, which judgment has not been challenged. Respondent’s Case 7.In opposition to the application, the Respondents filed a replying affidavits both dated 4th December 2025 and sworn by the 2nd and 4th Respondents respectively. 8.It is the Respondents' case that the 1st Respondent has been experiencing severe financial hardship since 2020, following the government's presidential directive on closure of all hotels and restaurants during the COVID-19 pandemic, from which it has never recovered. 9.They aver that the 1st Respondent is currently undergoing voluntary insolvency proceedings aimed at paying off its debts, including the decretal sum herein. 10.They further aver that matters worsened on 4th November 2023 when the 1st Respondent was unlawfully evicted from its business premises by Ndumberi Nyakiambi Women Building Company Ltd with the assistance of Little Vineyards Auctioneers, who confiscated all its property, furniture, equipment, and financial records. 11.The Respondents contend that since that eviction, the 1st Respondent has had no operations, no income, and no attachable assets, and that they have filed Kiambu MCCC/E434/2023 challenging the eviction and awaiting recovery of those assets. 12.The Respondents assert that the 1st Respondent is a body corporate with limited liability, separate and independent from its members and officials, and that its officials are mere office bearers, agents, and trustees who cannot be held personally liable for company debts unless there is proof of direct involvement in embezzlement, fraud, frustration of the execution process, or any other exception recognised in law. 13.They contend that personal liability cannot be visited upon the officials merely by reason of the 1st Respondent's inability to settle the decretal sum. 14.It is further the Respondents' case that the Applicant has neither demonstrated that the 1st Respondent is unable to pay the decretal sum, nor shown that the 1st Respondent's assets, whether liquidated or not, are insufficient to satisfy it. 15.They aver that the Applicant has not furnished any private investigation reports or other sufficient proof that the 4th Respondent fraudulently disposed of the 1st Respondent's assets with a view to frustrating execution. 16.The Respondents contend that the threshold for lifting the corporate veil is extremely high, and that no evidence of fraud, misrepresentation, or wrongful dissipation of assets has been presented against the Directors. 17.The Respondents assert that the application is contrary to the rules of natural justice, would severely prejudice the 4th Respondent, and that the prayers sought are legally untenable, oppressive, and premature. Applicant’s Submissions 18.On whether the Court should summon the directors for examination, the Applicant submitted that Order 22 Rule 35 of the Civil Procedure Rules expressly empowers the court to summon directors of a judgment debtor company for examination as to its assets and means. 19.He further submitted that in Nyaga v Nyapela & another; Chhabhadiya Enterprises Limited (Third party) [2025] KEHC 6150 (KLR) the court emphasized that the summoning of directors is often a necessary precursor to establish whether grounds exist for piercing the veil of incorporation. It was submitted that execution attempts have been futile and that there is reasonable basis to believe that the directors possess material information regarding the 1st Respondent's assets. 20.On whether the corporate veil should be lifted and the directors held responsible for the company's debt, the Applicant placed reliance in Musyoka & 33 others v Insulae Africana Limited & 2 others [2025] KEELRC 385 (KLR): “A Company is a judicial person. The law expressly permits the incorporation of a business to enable its shareholders and directors to escape personal liability, as held in Salomon v Salomon & Co (1897) AC. However, there are instances when the veil of incorporation may be lifted. In such instances, the law goes behind the corporate personality to attach responsibility to the individual shareholders or directors, thereby ignoring the separate personality of the company in favour of the economic reality prevailing in the circumstance.” He further relied on Ukwala Supermarket v Jaideep Shah & another [2022] KEHC 2207 (KLR) and Jocelan Consultantants Ltd v County Developers Limited [2019] eKLR. 21.It was submitted that a valid decree remains unsatisfied, that all other means of execution have failed, and that the directors have not discharged the burden of disproving responsibility for the decretal sum. The Applicant argued that the Respondents have merely made allegations of voluntary insolvency without any proof and have not produced any books of accounts. He further argued that the directors have made no proposals towards settlement of the decretal sum. 22.On whether execution should issue personally against the directors, it is the Applicant's submission that all other means of execution have been pursued and proved futile and that execution should issue personally against the directors towards the ends of justice. 23.He submitted that the Applicant is entitled to the fruits of their judgment and cited Musyoka & 33 others v Insulae Africana Limited (Supra), where the court held that where a company is effectively a shell and execution is frustrated, the veil may be pierced to ensure justice is achieved. 1st and 4th Respondents’ Submissions 24.The Respondents submitted that the nature of a corporate entity as expounded in Salomon v Salomon is that a company is capable of suing and being sued in its own capacity, is separate from its directors, and that a veil of incorporation exists to protect those directors. They submitted that the debts of a corporation cannot therefore be the debts of its directors. 25.The Respondents further submitted that the exception to this rule arises only where there is fraud or dishonesty with intent to commit an injustice, and that he who alleges the existence of a fact bears the burden of proving it. They relied on Ukwala Supermarkets Limited v Shah & another [2023] KEHC 198 (KLR), where the court, in dismissing an application for lifting of the corporate veil held: “In Pamba Ong'weno Amila v John Juma Kutolo [2015] eKLR where the court stated that:Fraud is a conclusion of law. The facts alleged to be fraudulent must be set out and evidence led thereon to prove fraudulent intent.... We also bear in mind that allegations of fraud must be proved to a standard above balance of probabilities but below beyond reasonable doubt." 26.It was submitted that the Applicant has merely sought orders for lifting of the corporate veil without sufficient proof that the exceptions laid out by the courts have been met, and that there is no evidence that the directors have disposed of or intend to dispose of the assets of the 1st Respondent. The Respondents urged the Court to dismiss the Notice of Motion with costs. 2nd and 3rd Respondents’ Submissions 27.On the oral examination of directors, the Respondents submitted that while the Applicant seeks to examine the directors on the 1st Respondent's assets, the 1st Respondent's operations were crippled by an unlawful eviction on 4th November 2023 during which all financial records, books of accounts, and assets were seized by Little Vineyards Auctioneers, leaving no current records capable of examination. They submitted that an order for oral examination would be lex non cogit ad impossibilia as the 1st Respondent is not concealing assets but is devoid of them, with the matter pending in Kiambu MCCC/E434/2023. 28.On the doctrine of separate legal personality, the Respondents submitted that the Applicant's prayer to compel the directors to personally satisfy a corporate debt is contrary to the bedrock principle in Salomon v Salomon & Co. Ltd [1897] AC 22. 29.On lifting the corporate veil, the Respondents submitted that the Applicant has failed to provide any evidence of fraud, siphoning of funds, or use of the company as a sham or façade. They argued that the 1st Respondent's financial difficulties are attributable to the COVID-19 pandemic and the subsequent illegal eviction, and that the inability to settle the decretal sum should not be interpreted as an intent to defraud on the part of the 2nd, 3rd and 4th Respondents, particularly where the Applicant has not demonstrated such intent. 30.The Respondents urged the Court to disallow the prayer seeking committal of the directors to civil jail in a matter where no fraud has been established against them. 31.They further submitted that the 2nd, 3rd, and 4th Respondents are actively engaged in court proceedings aimed at resuscitating the 1st Respondent, upon the success of which the Applicant's claim will be settled. 32.It is the Respondents’ submission that it should not be misunderstood that the Respondents have refused to pay; they are unable to pay due to factors beyond their control that are being addressed, and urged the Court to dismiss the application with costs. 33.I have examined all the averments and submissions of the parties herein. All that the applicants seeks is examination of the directors of the 1st respondent in order to ascertain if they have the means or not to pay off the debt. The summoning of the directors as held in Nyaga vs Nyapela (supra) is a pre cursor in ascertaining whether real grounds exist for the court to move to the next stage. The court finds no prejudice in summoning the directors for cross examination which would aid the court in making a just resolution of the suit. No prejudice would be suffered in the circumstances as the cross examination would bring out the true position of the 1st respondents assets. 34.I therefore find the application to cross examine the 1st respondents directors viable and is allowed. Costs in the cause. DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 22ND DAY OF JUNE, 2026.HELLEN WASILWAJUDGE