Muthike v Kenya Film Corporation Ltd [1989] KECA 69 (KLR)
The bottom line
#Kenya's Court of Appeal dismissed an employee's appeal, confirming his wrongful dismissal damages were correctly calculated on net salary, minus lawful deductions.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the Commissioner's assessment of damages for the 24 months of unlawful termination was correct
- 2.Whether the appellant was entitled to salary increments and increases under the Ramtu Commission Report
- 3.Whether the appellant was entitled to general damages for wrongful dismissal
- 4.How the deductions from salary (PAYE, NSSF, Provident Fund, Society contributions) should be treated
- 5.Whether the respondent's cross-appeal against the judgment of J.S. Patel could stand
Key legal issues
#Whether the damages assessment based on net salary as at December 1983 was correct
The assessment was not at fault; it correctly used the net salary on the payslip based on the basic rate and housing allowance as at December 1983
The plaintiff was reinstated to his former position as Senior Administration Officer at Shs 4,190 basic pay and Shs 1,450 housing allowance, with no pleaded or proved special terms entitling him to increments or Ramtu Commission increases. The Commissioner multiplied the net monthly salary of Shs 3,320 by 24 and deducted Shs 8,380 for notice and leave accruals, which the Court found compliant with the Letter of Appointment.
The effect of a preliminary decree and the need for a timely appeal against it
Patel J's decision establishing liability and entitlement to damages was a preliminary decree which required its own appeal; the respondent's failure to appeal meant the judgment stood, though without the Court's approval
Relying on Baker v Rush and section 68 of the Civil Procedure Act, the Court distinguished preliminary decrees, which conclusively determine rights, from interlocutory orders which only regulate procedure. Because no appeal was lodged against the preliminary decree in time, the Court was bound by it for the purposes of the damages assessment even though it did not endorse Patel J's reasoning.
Treatment of statutory and other deductions in a net-salary award
The appellant is entitled to presume the employer made the necessary deductions and holds them for the authorised recipients or the appellant
Because the award was computed on net salary, the employer must account for PAYE, NSSF, Provident Fund and Society deductions, and any queries from the Income Tax Department or fund holders may be referred to the respondent.
Legal principles established
#- Where liability is established by a preliminary decree, an appeal must be lodged against that preliminary decree within the proper time; it cannot be attacked by a mere cross-appeal in later proceedings
- A preliminary decree conclusively determines the rights of the parties on some issue or issues, whereas ordinary interlocutory orders merely regulate procedure and do not decide rights
- Where an employee is dismissed and then reinstated, the benefits claimable depend on the new contract or the terms of settlement, which must be pleaded and proved
- When compensation is awarded on net salary, the employer is presupposed to have made the lawful deductions and must hold them for the authorised recipients
Court orders
#- 1.Appeal dismissed with costs, subject to the question of the deductions referred to in the judgment
- 2.The respondent to hold the deducted sums on behalf of the legally authorised recipients or the appellant, who may refer any queries by the Income Tax Department or other authority or fund holder to the respondent
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- Civil Case No 1718 of 1986
- Jurisdiction invoked
- First appeal to the Court of Appeal against an assessment of damages by the High Court (Civil Procedure Act, section 68 discussed on preliminary decrees)
Relief refused
#General damages for wrongful dismissal
Unemployability was not caused by the termination but by the plaintiff's previous convictions for dishonesty
Salary increments and increases based on the Ramtu Commission Report
The Report was not produced in evidence and its contents were unproven; reinstatement was to the former position without special terms
Cross-appeal by the respondent challenging Patel J's judgment
Filed out of time; no leave to appeal out of time was sought
Costs
Appeal dismissed with costs to the respondent, subject to the question of the deductions referred to above
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
We order that the appeal be dismissed with costs, subject to the question of the deductions referred to above.
where liability has been established by a preliminary decree, it is necessary to appeal within proper time against that preliminary decree
The former conclusively determine the rights of the parties on some issue or issues though further proceedings must be taken before the suit can be completely disposed of.
Generally speaking once an employee has been dismissed that terminates his employment. If the employee is then reinstated the benefits which he may claim depends on the new contract between the employee and the employer.
If a court awards compensation based on the net salary, it is presupposed that the employer will make the necessary deductions.
Consequently there being no appeal against the preliminary decree, Mr Justice J.S. Patel’s judment had to stand; but without our approval.
Issues in the judgment
#Internal arithmetic inconsistency in the judgment: the damages figure is first stated as Shs 71,312/- and later as Shs 71,112/-
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Muthike v Kenya Film Corporation Ltd [1989] KECA 69 (KLR)", Case Analysis (1989). Civil Appeal (from Nairobi High Court Civil Case No 1718 of 1986). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1989/69/eng@1989-02-06
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.