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Court of AppealPartially AllowedCivil Application No. NAI. 42 of 2015 (UR) 38 of 2015· [2015] KECA 361 (KLR)

Wells Fargo Limited v Cyrus Kioko & 48 others [2015] KECA 361 (KLR)

Court of Appeal of Kenya
9 October 2015
3,107 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 let a security company hire casual workers during an appeal, but ordered it to keep paying dismissed staff half salary.

What this practically means

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Executive summary

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This was an application under rule 5(2)(b) of the Court of Appeal Rules for stay of execution of an interlocutory ruling of the Employment and Labour Relations Court (Wasilwa, J.) dated 3rd February 2015, in which the trial court had declined to reinstate 49 summarily dismissed employees but treated them as on suspension, entitled to half pay pending the hearing of their unfair dismissal suit, and barred the employer, Wells Fargo Limited, from filling the posts previously occupied by them. The applicant argued that the intended appeal was arguable - particularly on the trial court's jurisdiction to effect reinstatement-like orders at the interlocutory stage - and that continued half-pay of Kshs.600,000 monthly to 49 employees not working, coupled with the recruitment ban leaving one employee in a department ordinarily staffed by fifty, would cripple its business and render the appeal nugatory. The respondents opposed on points of law, relying on the discretionary-decision principles in Mbogo v Shah and Section 12(3) of the Industrial Court Act. The Court (P. Kihara Kariuki, PCA, Okwengu and Otieno-Odek JJ.A) found a single arguable ground sufficed, rejected the unparticularised 'persons of straw' allegation for want of an affidavit of means, but held the recruitment ban would cripple the applicant's commercial enterprise. It set aside the ruling of 3rd February 2015 in its entirety and substituted orders permitting the applicant to engage casual workers while continuing to pay the respondents half salary pending the intended appeal, with costs of the application abiding its outcome. The judgment underscores that interlocutory orders must preserve, not financially cripple, the substratum of the suit and the parties' commercial interests.

Key legal issues

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01

Whether the intended appeal is arguable

Holding

The intended appeal was arguable, particularly on whether the trial court could convert summary dismissal into suspension and order reinstatement at the interlocutory stage

Reasoning

The court examined the draft memorandum of appeal and identified arguable points: whether the trial court had jurisdiction to grant interlocutory reinstatement before a hearing on merit, whether it erred in converting summary dismissal into suspension, and whether it erred in barring recruitment of replacements. An arguable ground need not succeed; it need only not be frivolous.

p. 4
02

Whether the appeal would be rendered nugatory if stay is refused

Holding

Stay was justified: the prohibition on recruitment would cripple the applicant's business and render the appeal nugatory, while the respondents suffered no comparable prejudice as they received half pay for no work

Reasoning

The court weighed the respective prejudice of the parties. The respondents were already on half pay for no work done, so they would suffer little prejudice if the applicant temporarily filled positions. By contrast, the order barring recruitment left the applicant with one employee in a department ordinarily served by fifty, disrupting its commercial operations. Undue hardship to the applicant warranted stay.

p. 5
03

Whether the 'persons of straw' submission established nugatory-ness

Holding

The submission failed because no affidavit of means proved the respondents' impecuniosity

Reasoning

The applicant alleged that the respondents were persons of straw and that monies paid could not be recovered. The court held that this was a bare allegation unsupported by an affidavit of means and therefore insufficient to show the appeal would be rendered nugatory on that ground.

p. 4
04

Reinstatement as a statutory remedy subject to reasonableness and practicability

Holding

Since the Employment Act, Industrial Relations Act and Industrial Court Act of 2007, damages and reinstatement are statutory remedies, and Section 49(4) of the Employment Act requires reasonableness and practicability before reinstatement

Reasoning

The court noted that reinstatement is not an automatic right of an employee but discretionary, to be considered on the merits of each case, and that courts should not force a personal employment relationship to continue where it would engender unhealthy friction. The reasonableness and practicability of the trial court's interim order barring replacement of the respondents was an arguable point for the intended appeal.

p. 4

Legal principles established

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  • A single non-frivolous ground of appeal suffices to satisfy the arguability threshold under rule 5(2)(b)
  • At an interlocutory stage a court should not make orders that cripple the financial and commercial interests of a party; interim orders preserve the substratum of the suit
  • Bare allegations of a respondent's impecuniosity, unsupported by an affidavit of means, cannot establish that an appeal will be rendered nugatory
  • In dealing with rule 5(2)(b) the Court of Appeal exercises original and discretionary jurisdiction, which is not an appeal from the judge's discretion

Court orders

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  1. 1.The ruling and consequential orders made by the trial court on 3rd February 2015 are set aside in entirety
  2. 2.The applicant shall be at liberty to engage casual workers pending the hearing and determination of the intended appeal
  3. 3.The applicant shall continue to pay the respondents one half of their monthly salary until the hearing and determination of the intended appeal
  4. 4.Costs of the application to abide the outcome of the intended appeal

Authorities

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Legislation

  • Employment ActSection 49(3)
  • Employment ActSection 49(4)
  • Industrial Court ActSection 12(3)
  • Court of Appeal RulesRule 5(2)(b)

Cases cited (13)

  • Kenya Medical Lab Technicians -v- Prime Communications Ltd
    (2014) eKLR
  • Reliance Bank Ltd. -v- Norlake Investments Ltd.
    (2002) 1 EA 227
  • Kenya Airways Limited -v- Aviation & Allied Workers Union Kenya & 3 Others
    (2014) eKLR
  • Mbogo & Another -v- Shah
    (1968) EA 93
  • Giella -v- Cassman Brown & Co. Ltd
    (1973) EA 358
  • Githunguri vs. Jimba Credit Corporation Ltd. (No. 2)
    (1988) KLR 838
  • J.K. Industries Ltd. vs. Kenya Commercial Bank Ltd.
    (1982 – 88) 1 KAR 1088
  • Reliance Bank Limited (In Liquidation) vs. Norlake Investments Limited
    Civil Application No. 98 of 2002 (unreported)
  • Stanley Kang’ethe Kinyanjui -v- Tony Keter & 5 Others
    Civil Application No. NAI. 31/2012
  • Paramount Bank Ltd. -v- Mohammed G. Qureishi & Another
    Civil Appeal No. 239 of 2001 (2005) eKLR
  • Oraro & Rachier Advocates v Co-operative Bank of Kenya Ltd.
    Civil Appl. No. Nai. 358/99 (ur)
  • Clarkson (Insurance Brokers) Ltd vs. South Coast Fitness Centre
    Civil Appl. No. Nai. 204/95 (ur)
  • Trust Bank Ltd & Another vs. Investech Bank Ltd & 3 others
    Civil Appl. No. Nai. 258 & 315 of 1999 (ur)
On appeal from
Employment & Labour Relations Court
H.C. Cause No. 26 of 2015
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules - application for stay of execution pending an intended appeal

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (8)

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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, "Wells Fargo Limited v Cyrus Kioko & 48 others [2015] KECA 361 (KLR)", Case Analysis (2015). Civil Application No. NAI. 42 of 2015 (UR) 38 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/361/eng@2015-10-09

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