Adellah Kavisa Kalume & 66 others v Kenya Post Office Savings Bank [2018] KECA 757 (KLR)
The bottom line
#Kenya's Court of Appeal dismissed 67 ex-employees' claim for Ksh. 45 million in pension salary deductions, finding they acquiesced and sued too late.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the salary deductions made between 1st May 1999 and 31st July 2007 were done without the appellants' consent and were therefore unlawful
- 2.Whether the deductions constituted fraud, misrepresentation, concealment or non-disclosure of material facts
- 3.Whether the claim was statute barred under the Employment Act 2007 and the Limitation of Actions Act
Key legal issues
#Whether the pre-2007 deductions were made without consent and were unlawful
Although the deductions were made without the written consent of the appellants, they were notified by internal memos, raised no objections, and suffered no net financial disadvantage as the deductions were matched by salary increments
The 1997 Trust Deed and Rules were non-contributory and Rule 8(a) provided members were not required to pay. Member contributions were only introduced by the 2005 Trust Deed. The deductions prior to 2007 were not sanctioned by the then Scheme Rules, but memos dated 2nd March 1999 and 6th May 1999 notified members, no one objected, and the amounts were loaded onto pay slips as salary increments before deduction. Acquiescence and estoppel therefore preclude a refund claim.
Whether the deductions amounted to fraud, misrepresentation or concealment
No fraud, concealment or misrepresentation was established; the money went to the Pension Scheme Fund and benefited the appellants on retirement
The court found the deductions were remitted to the pension fund and eventually paid out to the appellants as commuted pension. The employer's failure to amend the Scheme Rules was a procedural lapse only, without substantive breach. Since no fraud was proved, a claim under section 26 of the Limitation of Actions Act for fraud-based extension would also have failed.
Whether the claim was statute barred
The trial judge erred in fixing the last deduction at 2004; deductions ran to 31st July 2007, but under the Employment Act 2007's three-year limitation the claim filed in December 2012 was time barred
The court corrected the accrual date: deductions were continuous from 1st May 1999 to 31st July 2007, so time ran from 2007. The governing statute was the Employment Act 2007 with a three-year limitation period. The suit filed in December 2012, five years after the last deduction, was clearly out of time, so the trial judge's conclusion on limitation was correct despite the erroneous date.
Legal principles established
#- A first appellate court must subject the entire evidence to a fresh and exhaustive analysis and make its own independent inferences, while paying deference to trial court findings unless based on no evidence, a misapprehension of the evidence, or plainly wrong
- An employer's failure to strictly follow the procedure for amending pension scheme rules does not render salary deductions unlawful where there is no substantive breach of the Trust Deed and no financial disadvantage to the employee
- Employees who are notified of salary deductions and raise no objection, and who ultimately receive the deducted amounts as commuted pension, are estopped from claiming a refund; refund would amount to unjust enrichment
Court orders
#- 1.The appeal is dismissed
- 2.The appellants to pay costs of the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- Industrial Court (now Employment and Labour Relations Court) at Nairobi
- Industrial Cause No. 2436 of 2012
- Jurisdiction invoked
- First appellate jurisdiction under the Court of Appeal Rules (Rule 29(1) invoked for rehearing of evidence); appeal from the Industrial Court
Relief refused
#Refund of Ksh. 45,688,117 being amounts allegedly unlawfully deducted from salaries between 1st May 1999 and 31st July 2007, with interest at 14% and costs
The deductions were notified to and acquiesced in by the appellants, were cushioned by equal salary increments, were paid into the Pension Scheme Fund and returned to the appellants as commuted pension; the claim was also time barred
Costs
Appeal dismissed with costs to the respondent
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Our view of the matter is that the deductions prior to 2007, were not sanctioned by the Scheme Rules as there was no consent by the appellants for their salaries to be deducted.
The procedure was not strictly followed but evidently there was no substantive breach of the terms of the Trust Deed. We do not find any evidence of fraud, concealment or misrepresentation on the part of the employer.
They therefore acquiesced to the deductions being made. Moreover, the appellants were not subjected to any financial disadvantage because the deductions were cushioned by the employer.
The governing statute in force then was the Employment Act 2007 under which the period of limitation is 3 years. The appellants' suit was filed in December 2012, which is 5 years after the date of the last deduction. This would therefore clearly mean that the claim was time barred and the learned Judge cannot be faulted for so finding.
We think we have said enough to demonstrate that this appeal is for dismissal. The same is hereby dismissed with costs
Issues in the judgment
#The judgment states the deduction memos continued under a Trust Deed 'until 18th January, 2007' while elsewhere describing the New Defined Contribution Scheme as effective 1st August 2007 and consents signed up to 17th August 2007, and elsewhere referring to a Trust Deed signed on 18th January, 2008
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Adellah Kavisa Kalume & 66 others v Kenya Post Office Savings Bank [2018] KECA 757 (KLR)", Case Analysis (2018). Civil Appeal No. 264 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/757/eng@2018-02-16
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.