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Court of AppealPartially AllowedCivil Appeal No. 37 of 2016· [2017] KECA 528 (KLR)

Paramount Bank Limited v Vaqvi Syed Qamara & another [2017] KECA 528 (KLR)

Court of Appeal
11 May 2017
AMAsike MakhandiaWilliam OukoW. OukoKMK. M'inoti
4,959 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 confirmed employers can be sued in the Employment Court for defamation and malicious prosecution, but a bank avoided paying after acting on reasonable suspicion—though its failure to hear the employee before dismissal still cost it six months' salary.

What this practically means

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Executive summary

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The respondent, Chief Manager of the appellant bank's Mombasa branch, was arrested and charged with stealing Kshs.9,000,127 from the bank's vault following a report by the bank to police. The Director of Public Prosecutions directed withdrawal of the charges under Section 87(a) of the Criminal Procedure Code, and the bank then suspended and summarily dismissed him. The Employment and Labour Relations Court (Rika, J.) awarded him Kshs.6,800,000: Kshs.1,800,000 as six months' salary compensation for unfair termination, Kshs.2,500,000 general damages for defamation, and Kshs.2,500,000 jointly and severally against the bank and the Attorney General for malicious prosecution. The Court of Appeal held that the ELRC had jurisdiction over the defamation and malicious prosecution claims because they flowed directly from the dismissal. However, on the facts - the respondent and one Lawrence Atieno being the exclusive custodians of the vault keys - the court found the bank held an honest belief and reasonable suspicion, so the prosecution was not malicious; the malicious prosecution award was set aside. The newspaper report was held to be a factual and accurate account of proceedings, not defamatory, and that award was also set aside. The court upheld the finding that the dismissal was procedurally unfair for breach of Section 41(2) of the Employment Act and the award of six months' compensation. The appeal was partially allowed with each party bearing its own costs of the appeal.

Key legal issues

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01

Jurisdiction of the ELRC over defamation and malicious prosecution claims

Holding

The claims, flowing directly from the summary dismissal, were within the ELRC's jurisdiction under Section 12 of the Employment and Labour Relations Court Act.

Reasoning

The ELRC Act establishes the court to determine disputes relating to employment and labour relations and for connected purposes. Since the dispute originated as an employer-employee dispute involving alleged theft, suspension and summary dismissal, the consequential claims for defamation and malicious prosecution arose directly from the dismissal and the court could entertain the dispute in all its aspects.

p. 4
02

Elements of malicious prosecution and their application

Holding

The malicious prosecution claim failed: the appellant had reasonable and probable cause and acted without malice.

Reasoning

The court restated the four elements from Mbowa v. East Mengo District Administration: institution of proceedings, absence of reasonable and probable cause, malice, and favourable termination. On the objective test from Kagame, the facts - the respondent's exclusive custody of vault keys with Lawrence Atieno and the timing of the theft - reasonably grounded suspicion. No evidence of spite or ill-will was presented.

p. 6
03

Defamation based on newspaper and TV reports

Holding

The newspaper statement was a factual, accurate report of court proceedings and not defamatory; the award of Kshs.2,500,000 was set aside.

Reasoning

The statement merely reported that the respondent was a bank manager, was charged with stealing Kshs.9 million, denied the charge, and was released on bond. Such a report does not lower a person in the estimation of right-thinking members of society. Further, without joining the media house, the source could not be established and no evidence linked publication to the appellant.

p. 7
04

Fairness of summary dismissal

Holding

The summary dismissal was procedurally unfair because the appellant did not afford the respondent a hearing under Section 41(2) of the Employment Act; the award of six months' salary compensation was proper.

Reasoning

Section 41(2) requires an employer to hear and consider representations before terminating or summarily dismissing an employee on grounds of misconduct. The appellant did not afford the respondent an opportunity to be heard. Section 49 permits compensation of up to twelve months' gross salary, and the trial judge properly weighed the procedural unfairness against the respondent's immediate better-paying employment in awarding six months.

p. 8

Legal principles established

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  • The Employment and Labour Relations Court has jurisdiction to hear and determine defamation and malicious prosecution claims that arise directly from an employment relationship and to award damages in respect of them
  • Regardless of the gravity of alleged misconduct, an employer must comply with section 41(2) of the Employment Act by hearing the employee before summary dismissal
  • Withdrawal of criminal charges under section 87(a) of the Criminal Procedure Code, with no fresh prosecution brought after a substantial period, amounts to a termination of the prosecution in the accused's favour for purposes of malicious prosecution
  • A mere factual and accurate report of court proceedings is not defamatory

Court orders

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  1. 1.Appeal allowed to the extent that the Kshs.2,500,000 awarded in general damages for defamation is set aside
  2. 2.Kshs.2,500,000 awarded for malicious prosecution set aside
  3. 3.Award of Kshs.1,800,000 (six months' salary compensation) for unfair termination upheld
  4. 4.Each party to meet their own costs of this appeal

Authorities

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Legislation

  • Penal CodeSection 281
  • Criminal Procedure CodeSection 87(a)
  • Criminal Procedure CodeSection 29
  • Criminal Procedure CodeFirst Schedule
  • Employment and Labour Relations Court ActPreamble
  • Employment and Labour Relations Court ActSection 12
  • Employment Act 2007Sections 41, 41(2), 43, 44, 44(3), 44(4), 45, 49

Cases cited (11)

  • Beatrice Achieng Osir v. Board of Trustees Teleposta Pension Scheme
    Industrial Court Cause No. 665 of 2011
  • George Onyango Akuti v. G4S Security Services Limited
    Cause No. 107 of 2013
  • Stanley Mungai Muchai v. National Oil Corporation
    Cause No. 447 (N) of 2009
  • Murunga v. The Attorney-General
    1977 KLR 138
  • Gichanga v. BAT Kenya Limited
    H.C.C.C. No. 1417 of 1981
  • Mbowa v. East Mengo District Administration
    [1972] EA 352
  • Gitau v. Attorney General
    (1990) KLR 13
  • Kagame & Others v. AG & Another
    (1969) EA 643
  • Egbema v. West Nile Administration
    [1972] EA 60
  • Nzoia Sugar Company Ltd v. Fungututi
    [1988] KLR 399
  • Mbogo & Another v Shah
    [1968] EA 93
On appeal from
Employment and Labour Relations Court at Mombasa
ELRC Case No. 346 of 2014
Jurisdiction invoked
First appeal against the judgment/award of the Employment and Labour Relations Court under the Employment and Labour Relations Court Act

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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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, "Paramount Bank Limited v Vaqvi Syed Qamara & another [2017] KECA 528 (KLR)", Case Analysis (2017). Civil Appeal No. 37 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/528/eng@2017-05-11

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