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Court of AppealPartially AllowedCivil Appeal No. 147 of 2013 (consolidated with Civil Appeal No. 137 of 2013)· [2016] KECA 151 (KLR)

Gilgil Telecoms Industries Limited v Duncan Nderitu & 57 others [2016] KECA 151 (KLR)

Court of Appeal of Kenya
4 November 2016
5,608 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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Kenya's Court of Appeal upheld improved employment benefits for 56 former workers but cancelled their arrears award because the specific amounts were never pleaded or proved.

What this practically means

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Executive summary

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These consolidated first appeals (Civil Appeals Nos. 147 and 137 of 2013) arose from a High Court judgment by Kimaru, J. dated 13th July 2011, which found in favour of Duncan Nderitu and 55 others, former employees of the then Kenya Post and Telecommunication Corporation split into three entities between 1998 and 1999. The respondents, whose services were terminated on 15th June 2006 during restructuring, claimed improved terms of service negotiated under a recognition agreement between Telkom Kenya and their union. The Court of Appeal first held that the over-two-year delay in delivering the High Court judgment did not render it a nullity, since Order 21 Rule 1 prescribes no consequence for non-compliance, though the Court did not condone the delay. It then found the respondents were Gilgil Telecoms' employees, there being no contracts of service with Telkom Kenya. Nevertheless, it upheld the lifting of the corporate veil: although incorporated as separate entities, the two companies operated as one - the union represented employees of both, circulars applied across the board, Gilgil's board comprised Telkom's officers, and Telkom's human resource department executed the terminations. The declaratory order that respondents were entitled to the revised terms was therefore upheld. However, the Court set aside the award of accrued salary and house allowance arrears, finding them to be special damages that were neither specifically pleaded nor strictly proved, and noting the schedules relied on were of unclear basis and authorship. The appeal succeeded in part only, with each party bearing its own costs in the appeal.

Key legal issues

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01

Whether delay in delivering judgment exceeding 60 days under Order 21 Rule 1 renders the judgment a nullity

Holding

It does not. The rule prescribes no consequence for non-compliance; declaring such judgments void would cause more injustice than justice.

Reasoning

The Court adopted its earlier reasoning under the equivalent former Order XX Rule 1: the rule is important but its breach should be met with censure of the judicial officer rather than nullification, as a lot of time and resources spent in litigation would be wasted. The delay here, though not condoned, was not such as to warrant nullity.

p. 5
02

Whether the respondents were employees of Gilgil Telecoms (1st appellant) or Telkom Kenya (2nd appellant)

Holding

The respondents were the 1st appellant's employees; no contract of service existed with the 2nd appellant, whose payroll services did not alter that reality.

Reasoning

No respondent produced a contract of service with the 2nd appellant; contracts of service on record showed absorption or appointment by the 1st appellant, some before the 2nd appellant was established in 1999. Pay slips printed by the 2nd appellant until 2001 merely reflected payroll assistance pending the 1st appellant's system being set up.

p. 7
03

Whether the benefits under the revised terms of service extended to the respondents despite their being the 1st appellant's employees

Holding

Yes. The two appellants, though separate legal entities, operated as one entity, justifying lifting the corporate veil; the declaratory order was properly granted.

Reasoning

The Union represented unionisable employees of both companies; circulars harmonizing terms applied across the board including to management of the 1st appellant; the 1st appellant's Board comprised the 2nd appellant's officers and permanent secretaries; and the 2nd appellant's human resource department executed the terminations and issued certificates of service, evidencing management control.

p. 8
04

Whether the court could lift the corporate veil although the issue was said not to be pleaded

Holding

A court may base a decision on an unpleaded issue where it appears from the course followed at trial that the issue was left to the court for determination; here the character and nature of the two appellants arose for determination.

Reasoning

Following Attorney General v Halal Meat Products and Odd Jobs v Mubia, the Court found the exception applicable; further, determining whether the benefits extended to the respondents necessarily entailed consideration of the character, nature and dealings between the appellants, as endorsed in Merchandise Transport Ltd v British Transport Commission.

p. 7
05

Whether the arrears of salary and house allowance were special damages requiring specific pleading and strict proof

Holding

Yes; the respondents did not particularize the figures, and the trial Judge erred in relying on unexplained schedules, so the award of arrears was set aside.

Reasoning

The respondents sought only an order for payment of accrued arrears without tabulating the figures; the schedules produced by PW3 were of unclear basis and authorship. Cases are decided on actual evidence tendered, and proof of special damage cannot be supplied by pleadings or submissions.

p. 9
06

Whether the trial court improperly framed issues for determination

Holding

The issues were relevant and arose from both the pleadings and the evidence adduced at trial.

Reasoning

Pursuant to Order XIV Rule 3 of the former Civil Procedure Rules, a court has power to frame issues it considers pertinent. The three issues framed by the trial court went to employment, coverage of the negotiated terms, and entitlement to arrears, all arising from pleadings and evidence.

p. 6

Legal principles established

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  • A judgment delivered out of time contrary to Order 21 Rule 1 of the Civil Procedure Rules is not, for that reason alone, a nullity; non-compliance calls for administrative censure, not vitiation of the judgment.
  • A court may decide an unpleaded issue where, from the course followed at trial, the issue has been left to the court for determination.
  • Special damages must be pleaded with as much particularity as circumstances permit and must be strictly proved; particulars not known at filing may only be introduced by amending the plaint.
  • In determining whether to lift the corporate veil between a holding and subsidiary company, the court may go behind the legal entity and consider the character, nature and dealings between the companies, including control of management and common operations.
  • On a first appeal, the court has a primary role to reassess and re-evaluate the evidence and reach its own conclusions, bearing in mind it neither saw nor heard the witnesses.

Court orders

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  1. 1.The declaration by the High Court that the respondents were entitled to the benefits under the revised terms of service is upheld
  2. 2.The order and award in favour of the respondents in respect of accrued salaries and house allowance arrears is set aside
  3. 3.Each party shall bear its own costs in this appeal

Authorities

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Legislation

  • Civil Procedure Rules, 2010Order 21 Rule 1
  • Former Civil Procedure RulesOrder XX Rule 1
  • Former Civil Procedure RulesOrder XIV Rule 3
  • Civil Procedure Rules, 2010Order 15 Rule 2
  • Employment Act, Chapter 226 (repealed)Definition of employee and employer
  • Trade Disputes Act, Chapter 234 (repealed)Section 2 - definition of recognition agreement

Cases cited (25)

  • Thomas De La Rue (K) Ltd -vs- David Opondo Omutelema
    (2013) eKLR
  • Captain Harry Gandy -vs- Caspar Air Charters Ltd
    (1956), 23 EACA, 139
  • Central Bank of Kenya -vs- Martin King'ori
    (2009) eKLR
  • Coast Bus Service Ltd -vs- Sisco Murunga Ndanyi & 2 Others
    Civil Appeal No. 192 of 1992
  • Charles C. Sande -vs- Kenya Co-operative Creameries Ltd
    Civil Appeal No. 154 of 1992 (UR)
  • Teachers Service Commission -vs- Kenya Union of Teachers & 3 Others
    (2015) eKLR
  • Smith, Stone & Knight Ltd -vs- Birmingham Corp
    (1939) 4 ALL ER 116
  • John Richard Okuku -vs- South Nyanza Sugar Co. Ltd.
    (2012) eKLR
  • Musera -vs- Mwechelesi & Another
    (2007) KLR 159
  • Johnson M. Mburugu -vs- Fidelity Shield Insurance Company Ltd
    [2006] eKLR
  • Nyagwoka Ogora alias Kennedy Kemoni Bwogora -vs- Francis Osoro Maiko
    Civil Appeal No. 271 of 2000 (unreported)
  • Epaphrus Muturi Kigoro -vs- William Mukui Nyaga
    [2015] eKLR
  • County Assembly of Kisumu & 2 Others -vs- Kisumu County Assembly Service Board & 6 Others
    [2015] eKLR
  • Standard Chartered Bank Kenya Ltd -vs- Intercon Services Ltd & 4 Others
    (2004) eKLR
  • Salmon -vs- A. Salmon & Co. Ltd.
    (1897) A.C 22
  • Attorney General -vs- Halal Meat Products Limited
    [2016] eKLR
  • Nairobi City Council -vs- Thabiti Enterprises Limited
    (1997) eKLR
  • Odd Jobs -vs- Mubia
    (1974) EA 476
  • Merchandise Transport Ltd -vs- British Transport Commission
    [1961] 3 ALL ER 495
  • Riccatti Business College of East Africa Limited -vs- Kyanzavi Farmers Company Limited
    [2016] eKLR
  • Littlewoods Mail Order Store Ltd -vs- McGregor
    [1969] 3 All ER 855
  • William Kiplangat Maritim & Another -vs- Benson Omwenga
    Civil Appeal No. 180 of 1993 (unreported)
  • Coast Bus Service Ltd -vs- Murunga Danyi & 2 Others
    Civil Appeal No. 192 of 1992 (unreported)
  • Robert Okeri Ombeka -vs- Central Bank of Kenya
    [2015] eKLR
  • Douglas Odhaiambo Apel & Emmanuel Omolo Khasin -vs- Telkom Kenya Limited
    Civil Appeal No. 115 of 2006
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 165 of 2006
Jurisdiction invoked
First appellate jurisdiction of the Court of Appeal over appeals from the High Court

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (5)

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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, "Gilgil Telecoms Industries Limited v Duncan Nderitu & 57 others [2016] KECA 151 (KLR)", Case Analysis (2016). Civil Appeal No. 147 of 2013 (consolidated with Civil Appeal No. 137 of 2013). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2016/151/eng@2016-11-04

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