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Court of AppealDismissedCivil Appeal 300 of 2009

Teachers’ Service Commission v Simon P. Kamau & 19 Others [2010] KECA 57 (KLR)

Court of Appeal of Kenya
12 November 2010
2,845 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal confirmed that retired teachers were entitled to have a 1997 salary increment included in their final salary when calculating their pensions.

What this practically means

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Executive summary

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The Court of Appeal at Nakuru (Ole Keiwua, Onyango Otieno and Nyamu, JJA) dismissed the Teachers Service Commission's appeal against the judgment of Maraga, J. in H.C.C.C. No. 65 of 2006, which had awarded retired teachers the benefit of a lump sum salary increment agreed in the 1997 remuneration package between the Commission and the Kenya National Union of Teachers. The Court held that the collective agreement covered both serving teachers and retirees, and that it became part and parcel of the retirees' individual contracts of service, giving them a contractual right to have the agreed increment reflected in the 'last salary' used to compute pensions under section 10 of the Pensions Act. The Commission's argument that it had discharged its obligations by implementing only the 1997 phase, and that the proper defendant was the Director of Pensions under section 3 of the Pensions Act, was rejected: because the last salary could not be ascertained without the employer first reflecting the increment in the pay slips, the Commission was properly sued. The Court accepted that the superior court erred by adding words to an unambiguous statute, but held that fairness implied in the exercise of delegated administrative power produced the same result, relying on Lord Scarman, Lord Mustill and other House of Lords authority. The contention that the suit, filed four months after leave for a representative action, was a nullity failed because it was not raised below nor properly raised on appeal, and being procedural could not defeat the ends of justice under sections 3A and 3B of the Appellate Jurisdiction Act. The appeal was dismissed with costs to the respondents.

Questions the Court framed

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

  1. 1.Whether the respondents, as retirees, had a contractual right under the 1997 agreement to have the lump sum salary increment reflected in their 'last salary' for pension purposes
  2. 2.Whether the Teachers Service Commission was the proper defendant, or whether the claim should have been brought against the Director of Pensions under section 3 of the Pensions Act
  3. 3.Whether the decree of the superior court was capable of compliance and execution
  4. 4.Whether the respondents' filing of the suit outside the 21 days permitted by the leave order for a representative suit was fatal to the suit
  5. 5.Whether the superior court erred in construing section 10(1) of the Pensions Act by adding words to an unambiguous provision

Key legal issues

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01

Whether the 1997 collective agreement conferred a contractual right on retirees to have the lump sum increment reflected in their final salary

Holding

Yes. The agreement covered both serving teachers and retirees; the lump sum salary and benefits were contractually due and became part of the contract of service, and the Commission was obliged to reflect them in the pay slip as the last salary.

Reasoning

The court read the agreement according to its natural meaning: it expressly covered serving teachers and those on leave pending retirement or already retired. The agreed lump sum was converted by a conversion table and gazetted. The court refused to rewrite the bargain, holding its duty was to enforce the bargain struck. The entitlement was sufficiently clear without straining the language, so the 1997-phase argument failed.

p. 5
02

Whether the claim lay against the Commission or the Director of Pensions

Holding

The Commission as employer was the proper defendant because the responsibility to ascertain and reflect the last salary lay with it; the Director of Pensions comes in only afterwards.

Reasoning

The last salary under section 10 of the Pensions Act could not be ascertained at retirement without reflecting the unpaid increment, for which the Commission was responsible. The plaintiffs therefore rightly sued the Commission for the lump sum award. The court used the metaphor that the Commission is the horse and the Director of Pensions the cart, and the suit placed them in the correct order.

p. 5
03

Whether the superior court erred by adding words to section 10(1) of the Pensions Act

Holding

The court agreed the superior court should not have added the words 'or supposed to be drawn by him at the date of his retirement' to the unambiguous statute, but held the same result was reachable through the implied duty of fairness in the exercise of delegated administrative power.

Reasoning

The court endorsed Lord Scarman in Council of Civil Service Unions, Lord Mustill in Doody, and Pearlberg v Varty for the proposition that administrative powers conferred by statute carry a presumption of fairness. Fairness in the circumstances demanded that the agreed increment be reflected in the last salary, so the misdirection did not vitiate the outcome.

p. 6
04

Whether filing the suit outside the 21 days allowed by the leave order was fatal

Holding

No. The point was not raised in the superior court nor included in the grounds of appeal without leave, and in any event it was procedural and could not defeat the ends of justice given sections 3A and 3B of the Appellate Jurisdiction Act.

Reasoning

The court noted the issue was never raised at trial and no leave had been sought to add it as a fresh ground. Even if properly raised, the overriding objective in sections 3A and 3B obliged the court to act justly, so on the peculiar facts it declined the appellant's invitation.

p. 6

Legal principles established

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  • A collective agreement on remuneration, once concluded and gazetted, becomes part and parcel of the individual teacher's contract of service, entitling the retiree to have the agreed increment reflected in the 'last salary' for pension computation.
  • Where the last salary for pension purposes cannot be ascertained without the employer first reflecting the agreed increment, the proper defendant is the employer (the Commission), not the Director of Pensions; the employer must first correct the pay slips and release them to the Pensions Department.
  • Courts cannot add words to an unambiguous statute; but where Parliament delegates an administrative power, there is an implied duty of fairness in its exercise.
  • A procedural irregularity, such as filing suit outside the period fixed in an order for leave, cannot be allowed to defeat the ends of justice where it was not raised in the superior court.

Court orders

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  1. 1.Appeal dismissed with costs to the respondents
  2. 2.Judgment of the superior court (Maraga, J.) upheld

The bench

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

majority
majority
On appeal from
High Court of Kenya at Nakuru
H.C.C.C. No. 65 of 2006
Jurisdiction invoked
First and final appeal to the Court of Appeal under the Appellate Jurisdiction Act (including sections 3A and 3B)

Relief refused

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Appellant's invitation to allow the appeal and set aside the superior court's award on the basis that the suit was against the wrong party and that the leave to file a class action had lapsed

The Commission was the proper party as employer responsible for reflecting the increment in the last salary; non-compliance with the leave order was a procedural point not raised below and could not defeat the ends of justice

p. 6

Costs

The appeal is dismissed with costs to the respondents

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 hold that the agreement became part and parcel of the retirees contract of service with the appellant.
p. 5Collective agreement incorporated into individual contracts of service
As a court of law we cannot rewrite the agreement for the parties and our cardinal duty is to enforce the bargain struck by the parties and not to thwart it either.
p. 5Judicial role in contract enforcement
It was incumbent upon the Commission to reflect the increment in the pay slip as the last pay and release the payslips to the Pensions Department to every entitled respondent retiree.
p. 5Employer's duty in pension computation
We therefore hold that the last salary should be computed in a way that incorporates all the terms of the agreement between the parties. In the result we uphold the superior court's judgment. The appeal is accordingly dismissed with costs to the respondents.
p. 7Final orders - dismissal of appeal

Issues in the judgment

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minor

The judgment states counsel for the appellant, Mr. Bosire, submitted that the true nature of the claim related to retirement benefits and the proper defendant should have been the Director of Pensions or the Attorney General, but this passage is introduced as the submission of 'Mr. Bosire, respondent', creating ambiguity as to whose submission it was.

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, "Teachers’ Service Commission v Simon P. Kamau & 19 Others [2010] KECA 57 (KLR)", Case Analysis (2010). Civil Appeal 300 of 2009. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2010/57/eng@2010-11-12

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.