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Court of AppealAllowedCivil Application No. NAI 19 of 2011 (UR 14/2011)· [2015] KECA 851 (KLR)

Kenya Revenue Authority v Changole & 3 others (Civil Application 19 of 2014) [2015] KECA 851 (KLR)

Court of Appeal
20 March 2015
RNR. N. NambuyeWKW. KaranjaWilliam OukoW. Ouko
1,875 words in judgment
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The bottom line

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Kenya's Court of Appeal paused the reinstatement of four dismissed KRA trainees, confirming employers can seek stays where reinstatement rewards misconduct or proves impractical.

What this practically means

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Executive summary

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The Court of Appeal (Nambuye, Karanja and Ouko, JJ.A.) delivered a single unanimous ruling on a Notice of Motion by the Kenya Revenue Authority seeking stay of execution of an award by Kosgei, J. of the Industrial Court, which had found that four Graduate Trainees summarily dismissed for examination cheating had suffered unfair loss of employment and ordered their reinstatement within seven days. The application was brought under Sections 3A and 3B of the Appellate Jurisdiction Act, Rules 5(2)(b) and 42 of the Court of Appeal Rules, and Section 27 of the Labour Institutions Act, pending an intended appeal which had not yet been filed. The court restated the settled twin principles for Rule 5(2)(b) relief: the applicant must show an arguable appeal and that the appeal will be rendered nugatory unless stay is granted, both limbs being cumulative. It found two arguable points - whether reinstatement was the appropriate remedy where breach of the employment contract was established, and whether the pardon by the Examination Board could bar termination by Human Resources seven months later, and whether a hearing was given before termination. On the nugatory limb, the court held that compelling a revenue-collection institution to reinstate employees found to have breached its code of conduct would dent its standing, that six years had passed making reinstatement impracticable, and that the balance of convenience favoured the applicant. The application was allowed, stay granted, conditional on the appeal being filed within 90 days failing which the stay would automatically lapse; costs were awarded in the appeal.

Key legal issues

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01

Arguability of the intended appeal

Holding

The intended appeal was not frivolous: whether reinstatement was the best remedy despite breach of the code of conduct, and whether the pardon by the Examination Board bound the Human Resources department, were arguable points.

Reasoning

The court found two arguable points. First, having found breach of the code of conduct and the employment contract, the Industrial Court's choice of reinstatement as the best remedy was contestable. Second, whether the pardon by the Examination Board could stop termination by the Human Resources department seven months later, and whether the respondents were given a hearing before termination, were issues meriting determination by the appeal court.

p. 3
02

Nugatory value and balance of convenience

Holding

Reinstating employees found to have breached the code of conduct of a revenue-collection institution would burden the applicant if the appeal succeeded, and reinstatement after six years was impracticable; the balance of convenience favoured the applicant.

Reasoning

The court weighed the institutional need for integrity in a revenue-collection body against the respondents' interests, noting the passage of about six years since termination and possible absence of vacancies. Reinstatement followed by success on appeal would be disruptive to both parties; it was more prudent for the respondents to await the appeal.

p. 4

Legal principles established

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  • An applicant under Rule 5(2)(b) must establish both that the appeal is arguable and that it will be rendered nugatory unless stay is granted; establishing one limb without the other is insufficient.
  • An arguable appeal is one that is not frivolous and raises issues meriting consideration; it need not be an appeal that will succeed, and one arguable point suffices.

Court orders

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  1. 1.Stay of execution of the award and decree of the Industrial Court of Kenya at Nairobi dated 12th January 2011 granted pending lodgment, hearing and determination of the intended appeal
  2. 2.The intended appeal to be filed within 90 days from the date of the Ruling, failing which the stay will automatically stand vacated
  3. 3.Costs of the application to be in the appeal

Authorities

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Legislation

  • Appellate Jurisdiction ActSections 3A and 3B
  • Court of Appeal RulesRules 5(2)(b) and 42
  • Labour Institutions ActSection 27(1) and (2)

Cases cited (6)

  • Ishmael Kagunyi Thande v HFCK
    Civil Application No. 156 of 2006
  • Githunguri vs Simba Credit Corporation Ltd
    2 [1988] KLR 838
  • J. K. Industries Ltd vs Kenya Commercial Bank Ltd
    [1982-88] 1088
  • Reliance Bank Limited vs Norlake Investment Ltd
    [2002] 1 EALR 227
  • Harveer Investments Company Limited vs Equatorial Commercial Limited & 3 Others
    [2009] EKLR
  • Oraro & Rachier Advocates vs Co-Operative Bank of Kenya Ltd
    [1999] 1 EA 236
On appeal from
Industrial Court of Kenya at Nairobi
Cause Nos. 759(N), 760(N), 761(N) & 762(N) of 2009
Jurisdiction invoked
Sections 3A and 3B of the Appellate Jurisdiction Act; Rules 5(2)(b) and 42 of the Court of Appeal Rules; Section 27(1) and (2) of the Labour Institutions Act

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, "Kenya Revenue Authority v Changole & 3 others (Civil Application 19 of 2014) [2015] KECA 851 (KLR)", Case Analysis (2015). Civil Application No. NAI 19 of 2011 (UR 14/2011). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/851/eng@2015-03-20

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