EMPLOYMENT LAW: KRA LOSES UNFAIR DISMISSAL LAWSUIT

(Also reported in the Daily Nation issue of Sept. 29 2008 page 14 column 1 as "KRA shelled out Sh 12 Million for unfair dismissal of worker")

Murgani v Kenya Revenue Authority [2008] eKLR (www.kenyalaw.org)

High Court at Nairobi

J.B. Ojwang, J

September 22, 2008

 

By Michael M. Murungi

 

Managers of public institutions who exercise high handedness in the dismissal of employees run the risk of violating constitutional and legal provisions and committing the civil wrong of misfeasance of public office. Last week, the High Court reprimanded the Kenya Revenue Authority (KRA) and issued judgment against it for over Kshs. 12 Million for failing to observe fairness and natural justice in dismissing its employee.

 Menginya Salim Murgan had been employed in 1996 as a Senior Research Officer and by the time of his dismissal in 2001, he had risen to the rank of Senior Assistant Commissioner. His dismissal had been the culmination of what the KRA termed as a disciplinary procedure instituted against him for breaching KRA’s Code of Conduct by “failing to prevent a conspiracy to defraud the Government of revenue through evasion of duty on goods”. But Murgani felt that his dismissal had been unwarranted and actuated by malice. As far as he was concerned, he had dutifully investigated the tax evasion incident which was the subject of the disciplinary proceedings and helped in the recovery of duty owing to the KRA but because of his disagreement with a senior officer, he was suspended from duty and subjected to a travesty of disciplinary proceedings.

 In 2002, Murgani had filed a suit against the KRA for wrongful termination of employment occasioning a destruction of his working career and for the wrong of misfeasance in public office occasioning him harm. His case was that the KRA had breached his contract of employment when it had wrongfully dismissed him without due cause and without giving him six months’ notice or salary in lieu of such notice. He stated that he had been a permanent and pensionable employee and that he had contributed to a pension scheme operated by the KRA through monthly deductions from his salary. He characterized KRA’s deliberate disregard of rules of natural justice as an abuse of public office amounting to the civil wrong (tort) of misfeasance in public office for which he was entitled to exemplary or punitive damages.  

 Murgani was represented by Dr. Gibson Kamau Kuria while the suit was defended by Mr. Ontweka on behalf of the KRA.

 The KRA had denied the claim and asserted that Murgani’s dismissal was warranted, procedural and that it did not amount to a breach of any contract of employment. However, as Justice J.B. Ojwang found after hearing and analyzing the evidence for either side, no specific evidence was given to show how and to what extent Murgani had violated the ethics governing his work.  It was apparent that somebody within the KRA had suspicions regarding his performance and this led to repeated suspensions, and, eventually, to the termination of his employment.  His disciplinary case was heard repeatedly by the same officers at the Staff Committee level and the Board of Directors level, a collective mode of hearing that blurred the line of appeal.  The officers who heard the disciplinary matter, were also, at least partially, the same officers who had taken the decision to suspend him and the suspicions which led to the suspensions and to the termination of employment were not set out in a document availed to him to enable him to respond.  For the most part, he did not share a forum with his accusers, so that the differing views could be resolved through an informed process.

 

Justice Ojwang deprecated KRA’s conduct, observing that the status quo of the employment relationship inherently vests in the employee both normal rights, and legitimate expectations.  In a public institution, he further observed, there will invariably be codes of management which lay down the rights and expectations of the employees, as well as procedures of discipline and termination of employment.  Such disciplinary procedures in public bodies are tribunal matters requiring fair procedures of resolution, these being expressed in particular in the rules of natural justice.

 The Judge found that Murgani’s dismissal from employment was required to be in line with the Code of Conduct, a document which would serve as the basis of fairness and natural justice. It was not open to the KRA to terminate his employment at will even by the mere payment of several months’ salary in lieu of notice. He was entitled to a fair hearing and both the Staff Committee and the Board of Directors had not complied with the rules of natural justice which apply to tribunals exercising powers of discipline. The wrongful dismissal had caused Murgani to suffer damage and loss for which he was entitled to an award of damages. Further, because the action taken by the KRA violated basic constitutional and legal principles and amounted to the tort of misfeasance of public office, Murgani was entitled to claim a further award of exemplary or punitive damages. The Court nevertheless recalled the principle of law that where a party sustains a loss by reason of a breach of contract, the purpose of compensation should be, so far as money can do so, to place him in no more than the situation he would have been if the contract had been performed.

 Dismissing a procedural point raised by the KRA, Justice Ojwang ruled that the suit was not of a  nature requiring the service of a prior notice of intention to sue on the Attorney General under the Government Proceedings Act. In any case, based on the correspondence exchanged by the parties in the time leading to the litigation, the judge was satisfied that the requirements any law contemplating such notices had been satisfied.

 Ultimately, judgment was entered against the KRA for over Kshs. 12 million representing Kshs. 1 Million for exemplary damages and special damages composed of Murgani’s pension, his leave allowance, his gross salary with interest from the date of termination of employment to the date of judgment and the costs incurred by him in the litigation.

 

WHEN BAD CHARACTER EVIDENCE MAY BE ALLOWED

By Michael Murungi

(This report was also published in the August 18, 2008 Edition of the Daily Nation Newspaper (page 14 column 1) under the heading 'Convict spoils appeal by raising issue of 'his bad character'")

August 2008

Mohamed Hassan Osman v Republic [2008] Eklr (www.kenyalaw.org)

Court of Appeal at Mombasa

R.S.C. Omolo, E.O. O’Kubasu & J.W. Onyango Otieno JJ.A

July 18, 2008

The Court of Appeal has reiterated that the evidence of an accused person’s previous bad character may not be adduced against him unless he has himself brought the matter of his character in issue in the trial. Accordingly, a court which is presiding over a criminal trial should warn an accused person who unwittingly raises the issue of his character that he could be waiving the protection given to him by the rule barring the prosecution from calling damning evidence of his criminal record.

The Court made the remarks in a judgment in the case of Mohamed Hassan Osman who had appealed against his conviction and sentence of death for the offence of robbery with violence. Osman had been tried and convicted in the Senior Resident Magistrate’s Court at Mombasa for having participated in the 1998 bank robbery at the Housing Finance Company of Kenya Ltd (HCFK) in Mombasa. Among the various witnesses called by the prosecution, the eight had been an eye-witness to the robbery. He had told the court that on the day of the robbery, he had seen Osman, who was well known to him, walking out of the bank with a pistol in one hand and a bag slung back over his shoulder. Osman had reportedly winked at the witness and muttered to him “kauka”, a popular street term which the witness understood to mean as a discrete command to stay put or keep quiet.

The witness testified that Osman was his neighbour in a residential estate of Mombasa and that he had led the police to Osman’s house where he was arrested. It appears that Osman did not have the benefit of legal representation during his trial and that he might have unwittingly asked a question during his cross-examination of the witness which brought in issue the question of his general character. In answer to that question, the witness had stated: “I knew you for two years prior to this incident. You live ten blocks away from my house. You are a well known person in that area. You are a criminal and people fear you as such..”.

While conducting his defence, Osman had conceded that he knew the witness but he told the court that the witness’s had been motivated by a grudge to falsely testify against him.

The trial magistrate found that the witness was credible and that Osman had been identified through recognition by a person known to him. This evidence, considered together with the rest of the prosecution’s case, led the trial court to find that the prosecution had established the guilt of Osman beyond reasonable doubt, and Osman was sentenced to death.

When the High Court examined the record of the trial court during its consideration of Osman’s first appeal, it found that there was no basis for interfering with the trial court’s findings of fact and its application of the law. The conviction and sentence were confirmed, prompting Osman to lodge a second and final appeal in the Court of Appeal, this time with the benefit of legal counsel in the person of Francis Kadima. Among the grounds raised in his second appeal, Osman’s advocate argued that the witness had wrongly brought the question of Osman’s character in issue because he (Osman) had not raised it. He further submitted that the trial court ought not to have admitted the bad character evidence and that the court should have prevented Osman from asking the questions regarding his character or it should have at least restrained the witness from answering them.

The Court of Appeal agreed that it was an established principle of our criminal justice system that the evidence of an accused person’s previous bad character is inadmissible unless the accused himself has put his own character in issue. In the circumstances of this case, the Court observed that it was obvious from the record of the proceedings in the trial court that it was Osman who had put his character in issue in his mode of questioning during the cross-examination of the witness. It was Osman who had asked the questions that had led to the answers touching on his character. The Court of Appeal regretted that the trial magistrate had failed to caution Osman about asking such questions but noted that the witness was bound to answer them and Osman could not complain at the appeal stage about an issue which he had “brought upon himself”. Ultimately, the Court of Appeal ruled that there was nothing in the complaint raised by Osman that could not justify the reversing of the decision of the High Court.

Furthermore, upon a consideration of rest of the evidence, the Court of Appeal was satisfied that Osman had been properly convicted and that the charge against him had been established beyond reasonable doubt. Osman’s appeal was therefore dismissed.

The writer is an advocate and the Assistant Editor of the Kenya Law Reports.

UNJUST ENRICHMENT THROUGH ECOMONIC DURESS: HIGH COURT DECISION REVERSED

Reported by Michael Murungi

(This report was also published in the August 18, 2008 edition of the Daily Nation newspaper (page 14 column 1) under the heading 'Politics Finally Cost Media Owner Shs. 56M)

Kenya Commercial Bank Ltd & another v Samuel Kamau Macharia & 2 others [2008]eKLR (www.kenyalaw.org)
Court of Appeal at Nairobi
P.K. Tunoi, E.M. Githinji & J.W. Onyango Otieno JJ.A
July 31, 2008

The Court of Appeal has reversed a decision of the High Court awarding Kshs. 56 Million to businessman and media magnate Samuel K. Macharia in a protracted litigation with government-owned financial institutions that had the high drama of the political intrigues characteristic of the 1980’s and 90’s.

Justice (Rtd.) Richard Kuloba had in January 2003 ruled in favour of Macharia and his company, Madhupaper International Ltd, after he found that the Kenya Commercial Bank (KCB), the Kenya Commercial Finance Company (KCFC) Ltd and the Kenya National Capital Corporation had abused the influence of the then President Dianel Arap Moi and Joseph Arap Letting, then the Head of Public Service and Secretary to the Cabinet, in applying unconscionable pressure and economic duress on Macharia and his company to overpay a loan by over Kshs. 56 Million. (see Madhupaper International Ltd & another V Kenya Commercial Bank Ltd & 2 others [2003] KLR 31 or on www.kenyalaw.org case search).

Madhupaper had borrowed Kshs. 50 Million from the three institutions in 1981 with a view to establishing a plant for the manufacture of tissue paper from recycled waster paper collected within the city of Nairobi. As a security for the loan, Madhupaper had given the lending institutions a charge over all its assets. After the company defaulted in its repayments, the lenders executed the terms of the charge by placing it in receivership to recover an outstanding Kshs. 54 Million made up of the balance of the unpaid principal sum and interest.

Macharia filed three suits against the lenders and the government but he would later withdraw them after the parties reached a negotiated settlement. Under that settlement, Madhupaper paid Kshs. 54 million in settlement of the loans and withdrew its litigation and in return, KCB and the other two lenders lifted the receivership. However, one week later, the lenders returned the money to Madhupaper and restored the receivership citing certain conditions that Madhupaper had attached to the settlement which they did not find acceptable. Further negotiations ensued and in July 1989, when soaring interest and other costs had raised the outstanding loan to over Kshs. 110 Million, Madhupaper executed a deed which would later become the subject of renewed litigation. Under the deed, Madhupaper paid Kshs. 110 Million to the lenders in full and final settlement of the loans. The receivers were recalled and Macharia finally resumed the management of Madhupaper.

In 1992, Macharia and Madhupaper filed a suit in the High Court claiming that their actual indebtedness at the time of the deed was Kshs. 54 Million and that the extra Kshs. 56 million had been extracted from them through undue influence and fraud. After almost a decade of litigation, Justice Kuloba delivered a judgment in which he analyzed and applied the principles of economic duress, restitution and unjust enrichment. He found that Macharia and Madhupaper had been subjected to illegitimate pressure and had been coerced through the unconscionable conduct of KCB and the other lenders to pay surplus monies over and above what they actually owed. Accordingly, judgment was entered in favour of Macharia and Madhupaper in the amount of Kshs. 56 million representing the surplus monies paid to the financial institutions. KCB and the other lenders had filed an appealed against the decision in 2004.

While the Court of Appeal agreed with the High Court’s exposition of the principle of unjust enrichment and its application to Kenya – generally, that a person who has received an unjust benefit at the expense of another should not be allowed to retain the benefit – it differed with the manner in which the High Court had applied the principle to the facts of the case. Restitution or repayment cannot be ordered where the benefit in question was conferred through a valid legal obligation owed by the claimant to the defendant, the Court of Appeal observed. In other words, a person who has an honest claim in law to the money of another person, whether though a loan agreement, a charge, etc, cannot be said to have been unjustly enriched if he is paid that which was legally owed to him.

Having evaluated the evidence on which the High Court had based its decision, the Court of Appeal found that the agreement for the payment of Kshs. 110 Million had voluntarily signed by the parties to it in the presence of their directors or advocates. In fact, Appeal Judge P. Tunoi noted that “Macharia and Madhupaper were represented by some of the most able and prominent counsel in the country”. Macharia had signed the deed on behalf of Madhupaper in the presence of his advocates without raising any protest or question as to their willingness to pay the money and they had not challenged the validity of the deed.

Moreover, the Court found no evidence of any compulsion or duress having been brought upon Macharia and Madhupaper to pay the money. In fact, the High Court had been wrong in finding that KCB and the other lenders had roped Joseph Arap Letting into the affair “for the purpose of creating terror” in Macharia and Madhupaper. On the contrary, the Court of Appeal found, it was Macharia who had courted the intervention of the then President Moi and Letting. There was no evidence of any direct intervention by the former President or at least any undue intervention by Letting.

The Court of Appeal further observed that Macharia and Madhupaper had voluntarily committed themselves to pay by entering into a valid deed. Therefore, by making the payment, they were performing an obligation owed to KCB and the other institutions which had a valid and honest claim against them. The High Court had arrived at a wrong decision after it had misdirected itself by misconstruing the facts and the evidence, and on that account, the Court of Appeal had the jurisdiction to interfere with the decision.

The judgment of the High Court was set aside and substituted with an order dismissing Macharia’s claim. Macharia and Madhupaper were ordered to pay to the other parties the costs of the appeal.

The writer is an advocate and the Assistant Editor of the Kenya Law Reports.

WHY ELECTORAL COMMISSION WAS ORDERED TO DECLARE KAMUKUNJI RESULTS

(This report was also published in the Daily Nation newspaper (page 14 column 1) on August 4, 2008)

By Michael Murungi
August 2008
Republic v The Returning Officer, Kamukunji Constitutency & another [2008] eKLR
(www.kenyalaw.org)
High Court at Nairobi
Justices J.G. Nyamu and R. Wendoh
July 29, 2008

The High Court has ruled that the Electoral Commission of Kenya (the ECK) acted in abuse of its powers when it postponed or nullified the Parliamentary election results for Kamukunji Constituency in Nairobi during the General Elections held on December 27, 2007. Judges J. Nyamu and R. Wendoh made the ruling in a judicial review application filed by Simon Ng’ang’a Mbugua, who was one of the candidates in the election and who claimed to have been on the verge of winning the election before the ECK called off the vote tallying exercise ostensibly due to chaos in the counting hall.

The Court clarified that the law does not empower the ECK to cancel an election which has taken place. The ECK can only postpone an election which has not started for specific reasons provided by law and to order the cancellation, postponement or nullification of election results is the sole function of an Election Court.

Mbugua had filed his application for judicial review on January 17, 2008 asking the court to issue an order compelling the returning officer for the election and the ECK to discharge their legal duty to tally the results and to publicly declare and gazette the winner of the election. He asked for an order restraining the Commission from undertaking repeat elections for the constituency.

Mbugua had told the court that voting in Kamukunji had been peaceful and after all the votes had been counted, results were publicly announced and declarations of results prepared in the prescribed Form 16A of the National Assembly and Presidential Elections Act. After the announcement of results by the Presiding Officers in all the constituency’s polling stations, the forms were forwarded to the Returning Officer at Shauri Moyo Social Hall for tallying of the total Constituency results. This exercise was to take place mainly December 28, 2007. On the evening of same day, Mbugua further told the Court, the Returning Officer announced “provisional results” showing him as the winner. On the following day, a local daily newspaper reported that he had won the election with a tally of 9,524 votes. Later, as the results from the last polling stations were being tallied, Mbugua claimed that agents of the losing candidates disrupted the exercise forcing the police to evacuate the tallying hall. Mbugua faulted the Returning Officer for failing to resume the tallying even after calm returned to the hall. Instead, she could not be traced and the Electoral Commission sitting at the KICC later declared that the Kamukunji elections would be repeated. This decision, Mbugua submitted, was illegal because only the High Court had the power to cancel or nullify the results and because the Returning Officer was legaly bound to reconvene and complete the tallying exercise.

The application was opposed by the ECK, the Returning Officer and a number of the other parliamentary candidates who had joined the dispute as interested parties. The substance of the ECK’s defence was that by the time the vote tallying exercise was violently disrupted, the results of 22 polling stations had not been tallied and documents for three ballot boxes had been destroyed. In these circumstances, the ECK argued, the final results could not be tallied or announced, and this prompted the ECK to exercise the power granted to it by regulation 25A of the National Assembly and Presidential Election Regulations “to postpone, annul, start or restart elections”.

The High Court observed that the ECK had not offered any explanation why some of the results had gone missing at the tallying stage when they had been received from the presiding officers from all the polling stations. Further, regulations 25, 25A and section 34 of the National Assembly and Presidential Elections Act did not empower the ECK to cancel elections which had taken place. The law only empowered the ECK to postpone an election which had not started for the specific reasons spelt out in the Regulations. In canceling or postponing the elections, the ECK was exercising a power which is only given to an election court. “The objectives of the Electoral Law is to do justice to all the parties” said the Judges. “It is unacceptable that because some results were missing which ought to have been in the possession of the ECK and the returning officer and which had been signed for by the candidates or their agents at each polling station, that should prevent the announcement of the overall results”. This point was supported by the fact that the returning officer had admitted that the missing results could be retrieved from the secured ballot boxes and that they would not have made any difference to the overall result. Moreover, the returning officer had announced Mbugua as the winner during the tallying stage. The High Court reiterated that the issue of the missing ballot boxes and their effect on the overall result would have been a matter for an election court yet no such court could be constituted because the final result had not been announced.

In the High Court’s view, it would have been more consistent with the proper management of elections for the ECK to instruct the Returning Officer to complete the vote tallying rather than to “give in to the forces of anarchy and chaos”. Even after calm had returned to the country, the ECK could have applied to the Court to lift any order staying the tallying exercise and to proceed with and complete the exercise.

The Judges reiterated that they were not sitting as an election court considering an election petition but rather as a judicial review court asked to review the decision of an administrative body, i.e. the ECK. More particularly, they were sitting to determine whether the ECK had failed to discharge the duty placed upon it by law. It having been established that the ECK had failed in its duty, it was the Court’s duty to order the ECK to comply with the law and also to prohibit it from exercising a power that it did not have. ECK’s order cancelling, nullifying or postponing the Kamukunji elections was therefore quashed and an order was issued compelling it to tally the results for each candidate and to publicly declare and gazette the winning candidate.

MIXED FORTUNES FOR MPs FACING ELECTION PETITIONS

By Michael Murungi

July 2008

John Michael Mutotho v Jayne Njeri Kihara & 2 others [2008] eKLR

Joel Omagwa Onyancha v Simon Nyaundi Ogari & another [2008] eKLR

Court of Appeal at Nairobi

June 6 & June 11 2008

It has been a month of mixed fortunes for the few sitting MPs against whom election petitions have been filed. While the petitions against Magarini MP Amason Kingi Jeffah and his Kitui West counterpart Charles Mutisia Namai have been dismissed, two other MPs have failed in their bids to block the continuation of the hearing of the petitions filed against them. Naivasha MP Hon. John M. Mututho and his Bamachoge counterpart, Hon. Joel Onyancha have lost their separate applications asking the Court of Appeal to temporarily halt the hearing of their petitions pending the hearing of the appeals they filed against certain decisions made by their respective election courts.

The petition against against Hon. Mutotho was filed in the High Court in Nakuru in February by former MP. Jayne Kihara. Hon. Mututho had asked the Court of Appeal to temporarily order Lady Justice Martha Koome to halt the hearing of his election petition while he appealed against a decision made by the Judge. The decision against which Hon. Muthoto intended to file an appeal was a refusal to strike out the petition on the ground that Mrs. Kihara had failed to comply with a provision of law requiring that the results of the election should be expressly stated in the petition. Justice Koome had found no merit in Hon. Mutotho’s application and dismissed it before giving fresh dates for the continued hearing of the petition. Hon. Mutotho then hurriedly lodged a notice of appeal in the Court of Appeal and an application asking that the hearing of the petition should stop while the appeal was being determined.

Hon. Onyancha, on the other hand, has been defending himself against an election petition filed in the High Court at Kisii by two petitioners, Simon Ogari and Zephania Nyagwara. Early in February this year, Hon. Onyancha had filed an application asking the presiding judge, Justice Daniel K. Musinga, to dismiss the petition because it had not been personally served on him as required by law. The judge had considered the application and in a ruling delivered on March 13, dismissed it after coming to the conclusion that the petition had been properly served. Hon. Onyancha intended to appeal against that decision and before he could do that, he asked the Court of Appeal to stay the proceedings in the High Court pending the hearing and determination of the intended appeal.

Ordinarily, in an application for stay of proceedings pending appeal, a long line of previously decided cases have established that the person making the application should satisfy the court on two matters. Firstly, that on the face of it, the intended appeal was an arguable one and not frivolous, and secondly, that if the proceedings in the High Court were not halted, he would be so prejudiced that even if his appeal was to succeed, the victory would be without meaning – i.e. the success of the appeal would be rendered nugatory.

The Court of Appeal, which was comprised of Appeal Judges R.S.C Omolo, P.K. Tunoi & J.W. Onyango Otieno, did not find any merit in Hon. Muthotho’s application. Even if it was to assume that he had an arguable appeal, the Court observed, there were no special factors showing that the success of the appeal would be rendered nugatory if the hearing of the petition was to continue.

A differently constituted bench of the Court later expressed similar sentiments in dismissing Hon. Onyancha’s application. Appeal Judges P.K. Tunoi, E.O. O’Kubasu and E.M. Githinji observed that even if the appeal was to succeed while the petition proceeded, it would only render the proceedings in the High Court unnecessary and an appropriate order for the payment of litigation costs would be made to appease the aggrieved party. Moreover, the Court felt that to allow Hon. Onyancha’s application would defeat the principle that election petitions should be decided expeditiously.

Esposito Franco v Amason Jeffah Kingi [2008] eKLR

High Court at Malindi (Justice N.R.O. Ombija)

July 10, 2008

Francis Mwanzia Nyenze v Charles Mutisya Nyamai [2008]eKLR

High Court at Machakos (JusticeI. Lenaola)

June 9, 2008

It was a sigh of relief for Hon. Kingi Jeffah and Hon. Charles Nyamai after the petitions against them were dismissed, though the petitioners may choose to exercise their right of appeal. The petition against Hon. Kingi was filed in the High Court at Malindi by Esposito Franco who alleged that the elections for Magarini Constituency had not been conducted in accordance with the law as they were marred by violence and disruptions of the vote counting process. However, Hon. Kingi had filed an application asking Justice N.R. Ombija to dismiss the petition on the ground that the petitioner had not deposited Kshs. 250,000 in court as security and that he had not served the petition within 28 days from the date of publication of the election results as required by law. The results had been published in a Kenya Gazette Notice dated December 30, 2007 and as the court found, this meant that the petition should have been served by January 27, 2008. Instead, the petitioner had only served the petition on Hon. Kingi on February 1, 2008 which was out of the time prescribed by law. On that account and also owing to the petitioner’s failure to deposit the money in court, Hon. Kingi’s application was allowed and the petition against him was dismissed.

In Hon. Onyancha’s case, Justice I. Lenaola sitting at Machakos ruled that the petitioner, Francis Mwanzia Nyenze, had failed to exercise due diligence in ensuring that the petition had been personally served on the MP. Though the Judge agreed that a petitioner may resort to other forms of serving the petition such as through an advertisement in a newspaper, this should only be done after all reasonable efforts to personally serve it on the respondent have failed as in the case of a respondent who evades service by going into hiding. Similarly, the petition was struck out with an order that the petitioner should pay the costs to the respondents.

WHY COURT HALTED ORDER ON MAYOR’S TERM

By Michael Murungi

Town Clerk, Municipal Council of Embu & another v John N.M. Nyaga [2007] eKLR
(www.kenyalaw.org)
Court of Appeal at Nairobi
(Appeal Judges S.E. Bosire, E.M. Githinji & W.S. Deverell)
December 7, 2007

John N. M. Nyaga was elected as a councillor of Kamiu ward for Municipal Council of Embu in the year 2001 and subsequently, on 6th July, 2006 he was elected as the mayor of the Municipal Council of Embu. On 23rd October, 2007 the Minister for Local Government dissolved all councils to pave way for the civic election to be held together with Presidential and Parliamentary General Elections on 27th December, 2007.

The dissolution of the council was published in the Kenya Gazette No. 10228 of 23rd October, 2007. On the same day the Permanent Secretary in the Ministry of Local Government issued guidelines to all Town Clerks on how the affairs of the councils were to be managed. The circular notified the Town Clerks that with the dissolution, the offices of the Mayors, Chairmen and Councillors had been rendered vacant and that all office holders should vacate their offices and surrender all properties of councils.

John Nyaga filed a suit in the High Court against the Municipality of Embu and its town clerk. He stated that as a Mayor he was supposed to continue in office until a succeeding Mayor was elected and asked the Court for a declaration to that effect. He also asked for a permanent injunction restraining the Town Clerk and the Municipal Council from barring him from performing any duty as a Mayor and from enjoying his office, civic regalia, motor vehicles and other facilities due to his office. By an interlocutory application filed with the plaint, he asked for an injunction against the respondents and to be allowed to continue in his office as a Mayor. The application was heard and allowed on 7th November, 2007 and an order was issued allowing John Nyaga to continue in office.

The Municipal Council and the Town Clerk filed an appeal against the decision and brought an application asking the Court of Appeal to stay the order of the High Court pending the hearing of the appeal. The following is an excerpt from the decision of the Court of Appeal on that application.

“The decision of the High Court was mainly dependent on the construction of section 13 (2) of the Local Government Act which provides:

“Subject to section 16 the mayor shall, unless he resigns or ceases to be qualified or becomes disqualified, continue in office until his successor is elected and assumes offices”.

The High Court construed that section to mean that Parliament did not intend that the office of the mayor should at any time be vacant; that Parliament never intended the occupant of the office to be removed until a replacement is in office.
Section 58 (1) of the Act under which the Minister dissolves all councils provides:

“Where there is general election under the National Assembly and Presidential Elections Act, there shall simultaneously be held an election of all councillors required to be elected under this Act and for that purpose the Minister shall forthwith upon dissolution of Parliament, dissolve all Local authorities”.

Section 12 (1) provides, among other things, that a Municipal council shall consist of a number of councillors as may be elected, nominated or appointed. Under Section 13 (1), a Mayor of a municipal council shall be elected by the council from among the councilors at the first meeting of the council and subsequently at each second annual meeting of the council. Section 27 (1) limits the term of office of the elected councillor to 5 years.
The Acting Town Clerk swears in the supporting affidavit, among other things, that section 13 (2) of the Act is inapplicable once the council is dissolved; that a mayor cannot continue to be in office while enjoying the perks and privileges of such office when a council is dissolved; that the respondent who by operation of law ceased to be a councillor cannot sit as a mayor; that the respondent did not move the High Court to quash the order of the minister dissolving all councils and that section 13 of the Act was not properly construed.
It is clear from the Act that the Mayor is elected from amongst the councillors and that the mayor and the councillors constitute a council.
It is not also contested that a Mayor is elected periodically every two years and that the Minister acted lawfully when he dissolved all councils to pave way for civic elections. Some of the pertinent questions which arise, are firstly, whether section 13 (2) of the Act applies to periodic elections of Mayors or to all cases including when the Council has been dissolved pursuant to law, and secondly, whether the office of a Mayor can legally exist when the whole council including the offices of councillors has been lawfully dissolved. On analysis, we are satisfied that the intended appeal raises a serious question of national importance on the interpretation of the law regarding the term of office of a Mayor.
The Acting Town Clerk further deposes that unless the orders of the High Court are stayed, the intended appeal would be rendered nugatory.
The respondent has been granted at an interlocutory stage the same reliefs that he seeks in the suit. The interlocutory orders are operative pending the hearing and determination of the suit. It is highly improbable that the respondent would be interested in the prosecution of the suit having obtained the desired orders or that the suit would be heard before the 27th December, 2007 when national civic elections are due. It would be unjust and a heavy financial burden to the Council which is run by public funds to maintain a Mayor in office indefinitely when the existence of the office is seriously contested. Furthermore, the Council would suffer great financial loss, if it is ultimately found that the office of a Mayor to which the respondent has been restored by a court order did not legally exist after the dissolution of the Council. On the other hand, if the application is allowed and the appeal is ultimately dismissed, the respondent can be adequately compensated for any financial loss that he may have suffered.
In the final analysis, the application is allowed with the result that the execution of the Ruling/Orders of the High Court dated 7th November, 2007 is stayed pending the hearing and determination of the intended appeal.
The costs of this application shall be costs in the intended appeal”.

FACTORY EMPLOYEE TO BE COMPENSATED FOR INDUSTRIAL ACCIDENT

Reported by Michael Murungi

Cosmo Plastics Ltd v Stephen Kiamba Nzuva [2007] eKLR (www.kenyalaw.org)
Court of Appeal at Nairobi
(Appeal Judges S.E.O. Bosire, E.M. Githinji & J.W. Onyango-Otieno)
December 7, 2007

A factory employee who was disabled in an industrial accident and was unable to find gainful employment thereafter will be compensated by his former employer for past and future medical expenses and for loss of earning capacity. Early in December of 2007, the Court of Appeal dismissed an appeal filed by Stephen Kiamba Nzuva’s former employer, Cosmo Plastics Ltd, against an award of over Kshs. 2 Million given to Nzuva by the High Court.

Nzuva had joined Cosmo Plastics in July 1995. The company was engaged in the printing business and Nzuva had been employed as a fitting machine operator at one of its factories in Nairobi. On September 2, 1999, Nzuva was assigned to work on a piece of equipment known in the industry as a six column machine. After working on it for two hours, his supervisor moved him to a four column machine on which he was required to fix a roller. It appeared that during its last servicing, the machine had not been restored to its proper condition - a pin that was usually attached inside two rotating shafts had been replaced with a protruding four-inch metal plate. While he was operating the machine, Nzuva’s overalls were caught by the protruding metal and the machine drew him into its belly. By the time his colleagues freed him, his right hand had been mangled at the shoulder and the elbow.

Nzuva was admitted at the Nairobi West Hospital where he underwent surgery and he was discharged after for 8 days. His employer later referred him to the Kenyatta National Hospital and while there, he underwent further surgery to remove gangrene that had developed on his hand. Though his discharge voucher from that hospital was signed on November 22, 1999, he was detained on account of an outstanding medical bill of Kshs. 213,000. He was released from the hospital a month later after a relative pledged his motor vehicle as security for the bill. Nzuva’s employment at Cosmo Plastics would later be terminated in December, 2001. He could not keep his next job because the accident had severely limited the use of his arm.

In July of 2000, Nzuva filed a suit in the High Court against Cosmo Plastics claiming damages for pain, suffering, loss of the amenities of life, past and future medical expenses, loss of earnings and loss of future earning capacity. He told the court that the accident and the losses that he had suffered had been caused by the negligence of Cosmo Plastics. He gave testimony on his own behalf and called two witnesses. For its part, the company denied the claim and argued that Nzuva’s injuries had been solely caused or substantially contributed to by his own negligence. The company did not call any witnesses though its advocate conducted a cross-examination of the testimony of Nzuva and his witnesses.

On September 23, 2002, the High Court delivered its verdict apportioning the liability for the accident at 70% against Cosmo Plastics and 30% against Nzuva. This meant that Nzuva had contributed to the accident by his own negligence or failure to observe caution and therefore any award made against the company was to be reduced by the extent of his contribution. The Court awarded Nzuva Kshs. 800,000 for pain and suffering; Kshs. 450,000 for future medical care; Kshs. 1,620,000 for loss of future earning capacity and Kshs. 217,500 for direct expenses (special damages). All of these reduced by 30% and by a further Kshs. 213,000 which was to be paid directly to Kenyatta National Hospital would leave Nzuva with Kshs. 1,945,450.

However, Cosmo Plastics was not satisfied with the decision of the High Court. It filed an appeal against it in the Court of Appeal challenging both its liability for Nzuva’s injuries and the manner in which the High Court had arrived at its awards of damages.

The Court of Appeal did not find any merit in the argument that the company was not liable for the factory accident. It was clear that Nzuva had been tasked to operate a machine without being sufficiently advised on a matter which was important for his safety – the fact that a replacement piece of metal had been left dangerously protruding from the machine. As an employer, therefore, the company had failed to observe a legal duty placed on it by the Factories Act (Chapter 514 of the Laws of Kenya). However, the Court of Appeal also agreed with the High Court on its finding that Nzuva also had the duty to exercise diligence and carry out his own inspection and inquiry to confirm the safety of operating the machine. The appellate court therefore found no reason to interfere with the decision of the High Court apportioning the liability for the accident to both Cosmo Plastics and Nzuva.

On the question of the monetary assessment of the injuries and losses suffered by Nzuva, the Court of Appeal observed that it was not in a good position to evaluate the decision of the High Court. Firstly, it had not had the advantage of seeing Nzuva in person and secondly, Cosmo Plastics had not annexed the medical reports prepared by two doctors who had examined Nzuva. “How can we conclusively and with any precision decide on the award for pain and suffering when we have no medical report to enable us see what injuries the doctors said the respondent suffered and compare the same with the conclusions made by the [High Court]… It would be an impossible task and no fairness can be claimed in regard to such a decision”, the Court of Appeal stated in its judgment. In the absence of the medical reports, the appellate court had no alternative but to accept the High Court’s awards for pain and suffering and for future medical care.

Finally, on the award for loss of future earning capacity, the Court of Appeal considered that since Nzuva was aged 39 years when he filed his suit and since he would normally have retired at the age of 55 years, the High Court could not be faulted for applying a multiplier of 15 years against his salary in order to arrive at its award.

Ultimately, the Court of Appeal found no merit in the entire appeal. It dismissed it and awarded the costs to Nzuva.