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Court of AppealDismissedCivil Appeal (from Nairobi High Court Civil Case No 1718 of 1986)

Muthike v Kenya Film Corporation Ltd [1989] KECA 69 (KLR)

Court of Appeal of Kenya
6 February 1989
2,260 words in judgment
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The bottom line

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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

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Executive summary

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The appellant, a Senior Administration Officer of the Kenya Film Corporation, had his employment unlawfully terminated on 31st December 1983 and was reinstated with effect from 1st January 1986. Patel J struck out the Corporation's defence and entered judgment with damages to be assessed; Sampson CA assessed damages at the net figure of the appellant's December 1983 salary multiplied over 24 months, less Shs 8,380. The appellant appealed, contending the award should have reflected salary increments, Ramtu Commission Report increases, and his Letter of Appointment; the respondent's cross-appeal against Patel J's judgment had already been struck out as out of time. The Court of Appeal dismissed the appeal. It held the Ramtu-based claims were not proved since the Report was never produced; that reinstatement was to the former position without special terms, so increments were not payable; and that the assessment on net salary was not at fault. The Court clarified that while it did not endorse Patel J's judgment, that decision amounted to a preliminary decree which, following Baker v Rush and section 68 of the Civil Procedure Act, required its own timely appeal; no such appeal was lodged, so it stood. On deductions, the employer must hold the deducted sums for the authorised recipients or the appellant. The appeal was dismissed with costs, subject to the deductions question.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the Commissioner's assessment of damages for the 24 months of unlawful termination was correct
  2. 2.Whether the appellant was entitled to salary increments and increases under the Ramtu Commission Report
  3. 3.Whether the appellant was entitled to general damages for wrongful dismissal
  4. 4.How the deductions from salary (PAYE, NSSF, Provident Fund, Society contributions) should be treated
  5. 5.Whether the respondent's cross-appeal against the judgment of J.S. Patel could stand

Key legal issues

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01

Whether the damages assessment based on net salary as at December 1983 was correct

Holding

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

Reasoning

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.

p. 3
02

The effect of a preliminary decree and the need for a timely appeal against it

Holding

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

Reasoning

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.

p. 4
03

Treatment of statutory and other deductions in a net-salary award

Holding

The appellant is entitled to presume the employer made the necessary deductions and holds them for the authorised recipients or the appellant

Reasoning

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.

p. 3

Legal principles established

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  • 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

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  1. 1.Appeal dismissed with costs, subject to the question of the deductions referred to in the judgment
  2. 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

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One judgment of the whole court — no separate or dissenting opinions.

majority
majority
majority
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

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General damages for wrongful dismissal

Unemployability was not caused by the termination but by the plaintiff's previous convictions for dishonesty

p. 2

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

p. 2

Cross-appeal by the respondent challenging Patel J's judgment

Filed out of time; no leave to appeal out of time was sought

p. 2

Costs

Appeal dismissed with costs to the respondent, subject to the question of the deductions referred to above

Quotable passages

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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.
p. 4Final orders - dismissal of appeal
where liability has been established by a preliminary decree, it is necessary to appeal within proper time against that preliminary decree
p. 3Preliminary decrees and time for appeal
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.
p. 4Distinction between preliminary decrees and interlocutory orders
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.
p. 3Reinstatement and post-reinstatement benefits
If a court awards compensation based on the net salary, it is presupposed that the employer will make the necessary deductions.
p. 3Deductions in net-salary awards
Consequently there being no appeal against the preliminary decree, Mr Justice J.S. Patel’s judment had to stand; but without our approval.
p. 4Effect of failure to appeal a preliminary decree

Issues in the judgment

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minor

Internal arithmetic inconsistency in the judgment: the damages figure is first stated as Shs 71,312/- and later as Shs 71,112/-

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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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.