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Court of AppealPartially AllowedCivil Appeal 178 of 2014· [2017] KECA 797 (KLR)

National Water Conservation & Pipeline Corporation v Jayne Kanini Mwanza

Court of Appeal
26 May 2017
PWP. N. WakiRNR. N. NambuyeHOH. M. Okwengu
4,371 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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The Court of Appeal allowed the National Water Conservation & Pipeline Corporation's appeal against a High Court (Industrial Court) award to its former General Manager, Human Resource & Administration, whose three-year fixed term contract expired on 16 December 2011. The employee had requested renewal six months before expiry as clause 7 required, received no response until the Monday after expiry, when the board declined to renew and invited her to reapply. The trial court (Nzioki Wa Makau, J.) held that continuing work past expiry implied renewal, and that failure to communicate refusal amounted to constructive renewal, awarding notice pay, compensation and leave pay. The Court of Appeal held that a fixed term contract terminates automatically on its sunset date unless extended in terms stated in the contract, and that the trial court's implied-renewal principle was too widely stated and contradicted the very definition of a fixed term. Distinguishing Ruth Gathoni Ngotho-Kariuki, where the contract itself obliged the employer to communicate renewal or refusal three months before expiry, the court found no such obligation here: renewal depended on the employee's request and the board's discretion. Applying the Supreme Court's test in Communications Commission of Kenya, there was no express, clear and unambiguous promise of automatic renewal and hence no legitimate expectation. The orders of the lower court were set aside and, noting the employee's long and exemplary service and her pursuit of a binding construction of the contract, the court ordered each party to bear its own costs both here and before the Employment and Labour Relations Court.

Key legal issues

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01

Whether a fixed term contract with a renewal option renews automatically upon the employee's request

Holding

No. The contract terminates on its sunset date unless extended in terms stated in the contract; renewal premised on the employer's discretion creates no obligation to renew.

Reasoning

The court held that a general principle that a fixed term contract continues if not terminated would contradict the definition of a fixed term, which has a definite start and end date. A court cannot rewrite the terms of a contract freely entered into. Here the renewal clause was premised on both the employee's request and the Corporation's discretion, both express terms, so there was no obligation on the Corporation to act or respond before expiry.

p. 7
02

Whether the employee had a legitimate expectation of renewal

Holding

No. There was no express, clear and unambiguous promise of automatic renewal, and no legitimate expectation of being given reasons for non-extension.

Reasoning

Applying the Supreme Court's four-part test in Communications Commission of Kenya, the court found no express, clear and unambiguous promise by the Corporation that the contract would be automatically renewed upon request. The employee knew the contract was not automatically renewable, acknowledged the expiry date in her letters, did not report to work after expiry, and there was no obligation on the Corporation to give reasons for non-extension.

p. 8
03

Whether the Ruth Gathoni Ngotho-Kariuki case supported the employee's claim

Holding

No. That case was an exception based on a contractual obligation on the employer to communicate renewal or refusal three months before expiry, absent here.

Reasoning

In Ruth Gathoni the renewal clause itself obligated the hospital board to inform the employee three months before expiry whether the contract would be renewed; the employer's failure created liability. In the present case the renewal clause was premised on the employee's request and the Corporation's discretion, both express terms, with no obligation to act, so the trial court erred in treating the case as supportive.

p. 5

Legal principles established

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  • A fixed term contract terminates automatically on its expiry date unless extended in terms stated in the contract; courts cannot rewrite the terms of a contract freely entered into.
  • The principle that continued work past contract expiry implies renewal was too widely stated; a general rule that a fixed term contract continues if not terminated contradicts the definition of a fixed term.
  • Employers are not obliged to give reasons for non-renewal of fixed term contracts unless such obligation is created in the expiring contract.
  • Legitimate expectation of renewal requires an express, clear and unambiguous promise, among other conditions.

Court orders

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  1. 1.Appeal allowed
  2. 2.Orders of the lower court set aside
  3. 3.Each party to bear its own costs both in the Court of Appeal and before the Employment and Labour Relations Court

Authorities

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Legislation

  • Employment ActSection 35(2)
  • Code of RegulationsClause 2.2.3 (Contractual Appointment)

Cases cited (13)

  • South African Clothing & Textile Workers Union and Another v CEDEMA Industries (Pty) Ltd
    [2008] ZALC

    Cited by trial court for the principle that non-renewal amounts to dismissal where there is legitimate expectation of renewal

  • Mediterranean Woollen Mills (Pty) Ltd v SA Clothing & Textile Workers Union
    [1988] 2 SA 11

    Cited by trial court for legitimate expectation of renewal principle

  • Banking Insurance & Finance Union (Kenya) v Kipsigis Teachers Sacco Society Limited
    [2013] eKLR

    Restatement of the legitimate expectation of renewal principle

  • Spellman & Walker Co. Ltd v University of Nairobi
    [2005] eKLR

    Held not relevant; relates to conditional acceptance of an offer

  • Ruth Gathoni Ngotho-Kariuki v Presbyterian Church of East Africa and Presbyterian Foundation
    [2012] eKLR

    Distinguished; an exception where the contract itself obligated the employer to communicate renewal or refusal before expiry

  • Communications Commission of Kenya & 5 others v Royal Media Services Limited & 5 others
    [2014] eKLR

    Four-part test for legitimate expectation, including an express, clear and unambiguous promise

  • Margaret A Ochieng v National Water Conservation & Pipeline Corporation
    [2014] eKLR

    Fixed-term contracts carry no expectancy of renewal; automatic renewal would negate the purpose of fixed-term contracts

  • Oshwal Academy (Nairobi) & Another v Indu Vishwanath
    [2015] eKLR

    Employers need not give reasons for non-renewal of fixed term contracts unless the contract so obliges

  • Bernard Wanjohi Muriuki v Kirinyaga Water and Sanitation Company Limited & another
    [2012] eKLR

    No obligation on an employer to give reasons for non-renewal of a fixed-term contract

  • Francis Chire Chachi v Amatsi Water Services Company Limited
    [2012] eKLR

    Restatement that reasons beyond effluxion of time are unnecessary absent a contractual clause

  • SA Rugby (Pty) Ltd v CCMA & others
    [2006] 27 ILJ 1041 (LC)

    A fixed term contract logically ends automatically without more, otherwise it would not be a fixed term contract

  • Frenchon v The Secretary-General of the United Nations
    UNAT Case No. 2010-125.T

    Exceptions to the non-renewal rule: legitimate expectation, improper motives, countervailing circumstances

  • Mwangi vs Wambugu
    [1984] KLR page 453

    First appellate court's liberty to interfere with findings based on no evidence, misapprehension, or wrong principles

On appeal from
High Court of Kenya at Nairobi (sitting as Employment and Labour Relations Court)
Industrial Court Cause No. 25 of 2012
Jurisdiction invoked
First appeal to the Court of Appeal from the High Court/Industrial Court (Employment and Labour Relations Court) decision

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (17)

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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, "National Water Conservation & Pipeline Corporation v Jayne Kanini Mwanza", Case Analysis (2017). Civil Appeal 178 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/797/eng@2017-05-26

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