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Court of AppealPartially AllowedCivil Application No. Nai 107 of 2012· [2013] KECA 12 (KLR)

Youth Agenda v Rita Kijala Shako [2013] KECA 12 (KLR)

Court of Appeal of Kenya
15 March 2013
WKW. KaranjaMMM.A. MakhandiaKMK. M'inoti
2,838 words in judgment
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The bottom line

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The Court of Appeal paused collection of an employment award against an NGO, but only after it paid the portion of the debt it admitted owing.

What this practically means

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Executive summary

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This was an interlocutory application by Notice of Motion dated 13th April 2012 under rules 5(2)(b) and 42 of the Court of Appeal Rules, in which The Youth Agenda sought a stay of execution of the decree of the Industrial Court of Kenya at Nairobi (Mukunya, J.) dated 24th February 2012, by which the respondent, its former CEO, was awarded ten months' salary as compensation for unfair termination (Kshs.2,000,000) plus Kshs.377,762/60 as notice pay. The applicant argued the intended appeal was arguable - raising, among other grounds, whether the respondent was still on probation under section 42 of the Employment Act and whether awarding both compensation and notice pay amounted to double payment - and that payment would cripple it, as a donor-funded NGO, and could not be refunded by the respondent. The respondent opposed, contending the appeal was not arguable and that she was not a person of straw. Applying the twin rule 5(2)(b) principles, the Court held the appeal arguable since even one arguable ground suffices. On nugatory prejudice, it reiterated that money decrees are ordinarily repayable absent proof the decree-holder cannot refund, but accepted that hardship to the applicant's operations could be weighed under the Oraro & Rachier line of cases and the overriding objective. The Court granted a conditional stay: the applicant was to pay the conceded Kshs.377,162/60 within twenty-one days, failing which the stay would lapse automatically. Costs of the application were to abide the outcome of the intended appeal. The decision below was not disturbed at this interlocutory stage.

Key legal issues

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01

Arguability of the intended appeal

Holding

The intended appeal was arguable, particularly on whether the Judge was right to award both 10 months' compensation and 3 months' pay in lieu of notice.

Reasoning

The Court applied the settled rule that an applicant need only show the appeal is not frivolous, and that even one arguable ground satisfies the threshold. The grounds challenging the award of compensation for 10 months plus notice pay under sections 42, 45 and 47 of the Employment Act, and the alleged conflict between sections 36 and 41, were sufficient.

p. 4
02

Nugatory aspect in relation to a money decree

Holding

Although no evidence showed the respondent was a person of straw, the applicant's donor-funded financial position, evidenced by its annual report and financial statements, meant payment of the decretal sum would cause severe hardship; the balance of convenience favoured the applicant.

Reasoning

The general rule is that money decrees are repayable, defeating nugatory claims unless the respondent cannot repay. The applicant did not prove the respondent was destitute, but the Court accepted the Oraro & Rachier consideration of weighing both sides' claims, finding that payment of Kshs.2,377,672/60 could disrupt the NGO's operations and threaten its projects.

p. 4
03

Terms of the stay

Holding

Stay was granted conditionally: the applicant was to pay the conceded sum of Kshs.377,162/60 within 21 days, failing which the stay would lapse automatically.

Reasoning

The Court balanced the applicant's hardship against the respondent's right to the fruits of her judgment. Since the applicant conceded owing Kshs.377,162/60 (notice pay), there was no reason it should withhold that amount pending the appeal. Conditional stay protected both interests.

p. 5

Legal principles established

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  • An applicant for stay under rule 5(2)(b) must demonstrate that the appeal is arguable and that, if stay is not granted and the appeal succeeds, it would be rendered nugatory; one arguable ground suffices.
  • Ordinarily, an appeal arising out of a money decree cannot be rendered nugatory if payment is effected, since the decretal sum is presumed recoverable; to overcome this the applicant must show the respondent cannot repay, or rely on countervailing hardship considerations weighing the claims of both sides.
  • In assessing nugatory prejudice in money decrees, the Court may weigh the relative hardship to each party, including whether payment would cripple the applicant's operations, applying the overriding objective and balance of convenience.

Court orders

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  1. 1.Stay of execution of the decree of the Industrial Court dated 24th February 2012 and issued on 16th March 2012 granted pending the lodging, hearing and determination of the intended appeal
  2. 2.Stay granted on condition that the applicant pays the respondent Kshs.377,162/60 within twenty-one (21) days from the date of the ruling, failing which the order of stay will automatically lapse
  3. 3.Costs of the application to abide the outcome of the intended appeal

Authorities

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Legislation

  • Employment Actsection 45
  • Employment Actsection 47
  • Employment Actsection 42
  • Employment Actsection 41
  • Employment Actsection 36
  • Court of Appeal Rulesrule 5(2)(b)
  • Court of Appeal Rulesrule 42
  • Civil Procedure Actsections 1A and 1B
  • Appellate Jurisdiction Actsections 3A and 3B

Cases cited (5)

  • Bob Morgan Systems Ltd vs Jones
    (2004) 1 KLR 194
  • CFC Financial Services Ltd v Juja Road Fancy Stone Ltd
    Civil Application No. Nai 328 of 2009 (UR)
  • Oraro & Rachier Advocates vs Co-operative Bank of Kenya Ltd
    Civil Application No. Nai 358 of 1999 (UR)
  • Kenya Shell Ltd (supra)
  • E. Muriu Kamau & another (supra)
On appeal from
Industrial Court of Kenya at Nairobi
Civil Cause No. 583 of 2010
Jurisdiction invoked
Rules 5(2)(b) and 42 of the Court of Appeal Rules (application for stay of execution pending appeal)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Youth Agenda v Rita Kijala Shako [2013] KECA 12 (KLR)", Case Analysis (2013). Civil Application No. Nai 107 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2013/12/eng@2013-03-15

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