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Court of AppealAllowedCivil Application No. NAI 68 of 2015 (UR. 58/2015)· [2015] KECA 511 (KLR)

Aaa Growers Limited v Collins Oroto Lukhale [2015] KECA 511 (KLR)

Court of Appeal
10 July 2015
AVAlnashir VisramFSF. SichaleSKS. ole Kantai
1,297 words in judgment
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The bottom line

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Kenya's Court of Appeal halted collection of a Kshs 1.32 million employment award because the winner could not afford to repay the money if the appeal succeeded.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal at Nairobi (Visram, Sichale and Kantai, JJ.A) on a notice of motion dated 14th March 2015 under Rule 5(2)(b) of the Court of Appeal Rules, in which AAA Growers Limited sought stay of execution of a judgment of the Industrial Court (M. Mbaru, J) dated 25th September 2014 in Industrial Cause No. 100 of 2012. The Industrial Court had found the termination of the respondent accountant's employment unlawful, awarding Kshs. 720,000 for unfair termination and Kshs. 600,000 for loss of office, with costs at 50%. The Industrial Court had granted an interim stay conditioned on payment of Kshs. 720,000 and deposit of Kshs. 600,000. Before the Court of Appeal, the respondent conceded that the intended appeal was arguable, leaving only the nugatory question for determination. The court applied the settled twin principles from Ishmael Kagunyi Thande vs Housing Finance of Kenya Ltd and Reliance Bank Ltd vs Norlake Investments Ltd, holding that whether an appeal's success would be rendered nugatory is a question of fact. It found that the respondent, earning a net monthly salary of Kshs. 79,427 with no substantial asset beyond land with a forced-sale value of Kshs. 700,000, could not refund the decretal sum if the appeal succeeded. The court allowed the application, stayed execution of the Industrial Court award pending the intended appeal, and required the applicant to furnish a bank guarantee for Kshs. 1,320,000 within 60 days as security. Costs of the application were ordered to abide the outcome of the appeal.

Key legal issues

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01

Twin principles for stay under Rule 5(2)(b)

Holding

The applicant demonstrated that the appeal, if successful, would be rendered nugatory because the respondent would be unable to refund the decretal sum.

Reasoning

The court reiterated that Rule 5(2)(b) jurisdiction is discretionary and guided by the twin principles of an arguable appeal and nugatory-ness. With arguability conceded by the respondent, the court assessed the respondent's means: a net monthly salary of Kshs. 79,427 and no substantial asset beyond land with a forced-sale value of Kshs. 700,000, which would be insufficient to refund the decretal sum of over Kshs. 1.3 million if the appeal succeeded.

p. 2

Legal principles established

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  • An applicant under Rule 5(2)(b) must satisfy the twin tests of an arguable appeal and that the appeal will be rendered nugatory if stay is not granted
  • Whether the success of an appeal will be rendered nugatory is a question of fact to be assessed on the circumstances of each case

Court orders

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  1. 1.Stay of execution of the award of the Industrial Court dated 25th September 2014 pending the hearing and determination of the intended appeal
  2. 2.The applicant to furnish security to the respondent in the form of a bank guarantee for Kshs. 1,320,000/= within 60 days
  3. 3.Costs of the application to abide the outcome of the appeal

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 159
  • Constitution of Kenya, 2010Article 162(2)
  • Constitution of Kenya, 2010Article 164(3)
  • Civil Procedure ActSections 1A, 1B and 3A
  • Industrial Court ActSection 12(3)(i) and (viii); Section 17(1) and (2)
  • Industrial Court (Procedure) RulesRules 16 and 27
  • Court of Appeal RulesRule 5(2)(b)
  • Employment Act, 2007Sections 5, 35, 41 and 44

Cases cited (4)

  • Ishmael Kagunyi Thande vs Housing Finance of Kenya Ltd
    Civil Application No. Nai 157 of 2006 (unreported)
  • Githunguri vs Jimba Credit Corporation Ltd, No. 2
    (1988) KLR 838
  • J. K. Industries Ltd vs Kenya Commercial Bank Ltd
    (1982-1988)
  • Reliance Bank Ltd vs Norlake Investments Ltd
    (2003) IEA 232
On appeal from
Industrial Court of Kenya at Nairobi
Industrial Cause No. 100 of 2012
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules

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, "Aaa Growers Limited v Collins Oroto Lukhale [2015] KECA 511 (KLR)", Case Analysis (2015). Civil Application No. NAI 68 of 2015 (UR. 58/2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/511/eng@2015-07-10

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