https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1752

Okal & 2 others v Lunchbowl Network Foundation Kenya & another (Cause E260 of 2025) [2026] KEELRC 1752 (KLR) (25 June 2026) (Ruling) Neutral citation: [2026] KEELRC 1752 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Nairobi Cause E260 of 2025 CN Baari, J June 25, 2026 Between Gordon Duya Okal 1st Claimant William Masaku 2nd Claimant Dominic Mutuku Muli 3rd Claimant and Lunchbowl Network Foundation Kenya 1st Respondent Acuity Capital Limited 2nd Respondent Ruling 1.Before Court is the Claimants/Applicants’ Motion application dated 10th February, 2026, brought pursuant to Article 159 of the Constitution, Sections 3 and 12 of the Employment and Labour Relations Court Act, Rule 45 (1),(2) and (5), 49, 68(1)(g), Rule 68(3), of the Employment and Labour Relations Court (Procedure) Rules, 2024, and Section 5 of the Judicature Act. The Claimants/Applicants seek orders:-i.Spentii.Spentiii.That this Honourable Court be pleased to make an order finding and holding that Lunchbowl Network Foundation Kenya Limited and Acuity Capital Limited, through their Directors, Stuart Douglas Mcgreevy And Sally Mcgreevy, are in contempt of Court for wilful disobedience of the Court Order issued on 19th May 2025.iv.That this Honourable Court be pleased to impose appropriate sanctions upon Lunchbowl Network Foundation Kenya Limited and Acuity Capital Limited and their Directors, Stuart Douglas Mcgreevy And Sally Mcgreevy, for contempt of the Court Order issued on 19th May 2025, including committal to civil jail.v.That the court makes an order that until the contemnors purge their contempt to the satisfaction of the court, the contemnors, the Respondents, ought not to be heard by this court or participate in these proceedingsvi.That the Court be pleased to issue such further and consequential orders as may be necessary to secure obedience to its orders and to preserve the efficacy of the proceedings.vii.That the costs of this Application be provided for. 2.The application is supported by grounds on the face and the supporting affidavit of Gordon Duya Okal, sworn on 10th February, 2025. The Applicants contend that on 19th May 2025, the Court ordered the Respondents to provide a bank guarantee of Kshs. 2,796,000 by 23rd May 2025 as security pending the hearing and determination of the claim, which order was to ensure that any eventual decree would not be rendered nugatory. 3.It is their position that they now seek the enforcement of the order to preserve and give effect to the Court's determination. 4.The Applicants maintain that the Respondents were fully aware of the Court's order of 19th May 2025, having been represented by counsel when it was issued, and having later sought its variation through an application supported by an affidavit. 5.The Applicants further contend that the Respondents' directors, being foreign nationals, pose a flight risk in light of the pending contempt proceedings. They further argue that the Respondents' admitted financial difficulties and intended closure of the school create a real risk of insolvency or dissipation of assets, potentially rendering any judgment unenforceable. 6.Accordingly, the Applicants state that the Respondents' continued non-compliance undermines the authority of the Court, prejudices the Claimants, and warrants immediate enforcement action. 7.The Respondents opposed the application vide a Replying affidavit sworn by Stuart Douglas Mcgreevy on 27th February, 2026. 8.The 1st Respondent states that it is a company limited by guarantee, incorporated in 2018 as a non-profit charitable foundation to educate, feed, and support underprivileged children in the Kibera informal settlement. 9.It avers further that its operations were largely dependent on donor funding and charitable contributions, with its principal donor being the 2nd Respondent, whose revenue generating activities financed the Foundation's charitable programmes. 10.The deponent states that the 2nd Respondent operated from leased premises and derived its income from services conducted there, and that its business was disrupted by protracted land disputes, culminating in ELC Case No. E495 of 2024, and that despite obtaining court orders in its favour, it continued to face harassment, vandalism, intimidation, inadequate action by state authorities, and operational interference. According to the Respondents, these challenges ultimately rendered the business commercially unviable and the school environment unsafe. 11.The deponent further avers that persistent interference made the 2nd Respondent’s business commercially unviable, resulting in its involuntary closure. They state that this closure caused the immediate loss of the 1st Respondent’s sole source of donor funding, leading to severe financial distress, with the consequence that they were unable to procure the bank guarantee that the court ordered, and instead applied to vary or substitute the order, proposing a school bus owned by the 1st Respondent as alternative security, asserting that its value was equivalent to the required Kshs. 2,796,000. 12.The Respondents acknowledge that the security order was intended to safeguard any eventual decree from being rendered nugatory. They state that the complete loss of donor funding, mounting creditor demands, and lack of operational income forced the Foundation's trustees and guarantors to cease operations and release over 300 beneficiary children to avoid further liabilities. 13.They further aver that their continued financial difficulties ultimately compelled them to withdraw their application seeking to substitute the bank guarantee. 14.The Respondents state that their financial incapacity led to the closure of the school where the Claimants worked. They further aver that, due to their financial distress, they have commenced liquidation proceedings before the High Court under the Insolvency Act, namely HCCOMMIP/E013/2026 and HCCOMMIP/E012/2026. According to the Respondents, the purpose of these proceedings is to facilitate an orderly and court supervised winding-up process, ensuring the preservation and equitable distribution of assets among all creditors. 15.The Respondents contend that, following the commencement of liquidation proceedings, all claims against the companies must be pursued within the insolvency process under the Insolvency Act. They argue that the Claimants should lodge and prove their claims as creditors in the liquidation proceedings and that the present application, particularly the prayer for contempt and coercive orders, is therefore legally untenable. 16.They further state that the Directors were already outside the Court's jurisdiction before the interim orders were issued, asserting that the allegation that they are flight risks is speculative and unsupported. 17.The Respondents deny any wilful disobedience of the Court's orders, attributing their non-compliance to genuine financial incapacity and the commencement of insolvency proceedings. They maintain that the 1st Respondent, as a company limited by guarantee, is a separate legal entity whose members and directors are not personally liable for its debts absent fraud, wrongful trading, or breach of statutory duty. 18.They further contend that, once liquidation proceedings have commenced, enforcement and coercive proceedings against the company must be conducted within the insolvency framework under the High Court's supervision. 19.Accordingly, they argue that allowing the present application would undermine the orderly administration of insolvency and improperly prefer the Claimants over other creditors, and urge the Court to dismiss the application and direct the Claimants to pursue their claims in the liquidation proceedings. 20.Parties canvassed the application through written submissions, which have been duly considered. Analysis and Determination 21.The issue for determination is whether the Respondents and their directors are in contempt of the Court order issued on 19th May 2025, requiring them to furnish a bank guarantee of Kshs. 2,796,000 within the stipulated period, and whether the subsequent commencement of insolvency proceedings and the alleged financial incapacity absolve them from compliance. 22.The power of this Court to punish for contempt is donated by Section 5 of the Judicature Act, and is also preserved under Sections 3 and 12 of the Employment and Labour Relations Court Act and the Employment and Labour Relations Court (Procedure) Rules. 23.In Teachers Service Commission v Kenya National Union of Teachers & 2 Others [2018] KECA 214 (KLR), the Court of Appeal held that court orders are not issued in vain and must be obeyed unless set aside or varied by a competent court. 24.Similarly, in Shimmers Plaza Limited v National Bank of Kenya Limited [2015] KECA 945 (KLR), the Court of Appeal reiterated that once a party becomes aware of a court order, whether through personal service or through counsel, the obligation to obey it arises immediately unless and until the order is discharged or varied. 25.Further, the applicable principles for establishing civil contempt were summarized in Samuel M. N. Mweru & Others v National Land Commission & 2 Others [2020] KEHC 9233 (KLR), namely that the applicant must demonstrate the existence of a valid court order, knowledge of the order by the alleged contemnor, breach of the order, and that the breach was deliberate and wilful. 26.Applying those principles to the present application, there is no dispute that on 19th May 2025, this Court (differently constituted) ordered the Respondents to furnish a bank guarantee of Kshs. 2,796,000 by 23rd May 2025. Equally undisputed is the fact that the order was made in the presence of counsel representing the Respondents. 27.Indeed, as correctly submitted by the Respondents, they shortly thereafter moved the Court seeking variation or substitution of the bank guarantee with a school bus, thereby expressly acknowledging both the existence of the order and their obligation thereunder. 28.Knowledge of the order has therefore clearly been established. 29.It is equally not disputed that the Respondents never furnished the bank guarantee as was ordered by the court. The more difficult question is whether the failure amounted to wilful disobedience. 30.The Applicants urge the Court to infer deliberate contempt from the Respondents' continued non-compliance. The Respondents, on the other hand, maintain that compliance became impossible because their principal donor ceased operations following protracted litigation, that their donor funding stopped, the Foundation closed its school, over 300 beneficiaries were released, and liquidation proceedings have since commenced before the High Court. 31.Contempt proceedings are quasi-criminal in nature. Consequently, the standard of proof is higher than proof on a balance of probabilities, though not as high as proof beyond reasonable doubt. (See Mutitika v Baharini Farm Limited.[1985] KLR 229, 234). The Court is therefore required to distinguish between deliberate defiance of a court order and genuine inability to comply. 32.The evidence placed before Court demonstrates that immediately after the order was issued, the Respondents did not simply ignore it, but instead, they approached the Court seeking substitution of the bank guarantee with alternative security, namely a school bus whose value they asserted approximated the required amount. 33.Although that application was eventually withdrawn owing to continued financial deterioration, its filing is inconsistent with an intention to deliberately disregard the Court's authority. 34.Further, the Respondents have exhibited evidence showing the commencement of liquidation proceedings before the High Court under the Insolvency Act. While the commencement of insolvency proceedings does not retrospectively extinguish obligations arising under existing court orders, it fundamentally alters the legal framework governing enforcement against the company's assets. Once liquidation commences, disposition of assets and enforcement processes become subject to the insolvency regime and supervision by the insolvency court. 35.That said, insolvency proceedings do not operate as a licence to disobey court orders already issued. Had the Respondents possessed the means to comply but deliberately elected not to do so, the pendency of insolvency proceedings would not shield them from contempt sanctions. 36.The Court must therefore consider whether the Applicants have demonstrated, to the requisite standard, that the Respondents possessed the ability to comply, but deliberately refused to do so. 37.In my view, they have not. The material before the Court points to genuine financial collapse rather than calculated defiance. The Applicants have not placed before Court evidence demonstrating that the Respondents concealed assets, diverted funds, dissipated property to defeat the order, or otherwise deliberately frustrated compliance. The mere fact that the Respondents have failed to comply does not automatically establish wilfulness where credible evidence of inability has been presented. 38.The Applicants have also sought orders against the individual directors. It is correct that directors who knowingly procure or facilitate a company's contempt may themselves be cited for contempt. However, contempt is personal in nature and must be established against each alleged contemnor individually. Beyond demonstrating that the directors were aware of the order, the Applicants have not demonstrated that they personally acted in deliberate defiance of the Court or that they possessed the ability to procure compliance but intentionally chose not to do so. 39.The Respondents have further explained that the directors had already departed the jurisdiction before the interim contempt proceedings were initiated. Although physical absence from Kenya is not, by itself, a defence to contempt, neither does it establish an intention to evade the Court. 40.Further, the Court is alive to the Applicants' legitimate concern that the Respondents' financial position may ultimately render recovery of any decree difficult. Indeed, that concern informed the original order requiring security. Nevertheless, contempt jurisdiction exists to punish deliberate disobedience rather than inability arising from financial collapse. 41.Accordingly, while the Respondents remain bound by the orders previously issued by this Court unless varied or set aside, the Applicants have not discharged the burden of proving, to the required standard, that the Respondents' non-compliance was deliberate and wilful. 42.The Court therefore declines to find the Respondents or their directors in contempt. 43.The Applicants, however, remain at liberty to pursue their claims in accordance with the applicable insolvency framework and any directions issued by the High Court in the pending liquidation proceedings, without prejudice to any rights they may have under the Employment Act and the Insolvency Act. 44.The Notice of Motion dated 10th February 2026 is therefore dismissed. 45.Each party shall bear its own costs of the application. 46.It is so ordered. SIGNED, DATED, AND DELIVERED BY VIDEO-LINK AND IN COURT AT NAIROBI THIS 25TH DAY OF JUNE, 2026.C. N. BAARIJUDGEAppearance:Mr. Kaaya present for the Claimants/ApplicantsMs. Mwongera h/b for Mr. Etemesi for the RespondentsMs. Esther S-CA.