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Court of AppealDismissedCivil Appeal 42 of 2017· [2022] KECA 1123 (KLR)

Achelis Material Handling Ltd v Rawal

Court of Appeal
21 October 2022
SKS. Gatembu KairuPNP. NyamweyaJLJ. Lesiit
3,751 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed an employer must pay 1% commission on overseas sales because its contract failed to expressly exclude them.

What this practically means

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Executive summary

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The respondent, former Branch Manager of the appellant's Mombasa office, claimed 1% overseas commission on indent sales to Kenya Ports Authority and Kenya Ferry Services, alleging the appellant, as middleman for European suppliers Hyster Europe and SET, received payment on sales he negotiated but withheld his commission upon his resignation. The ELRC (Rika, J.) awarded the commission of Kshs. 12,341,079.99 with 14% interest and costs. The appellant appealed on two consolidated grounds: entitlement to commission on indent sales, and limitation under section 90 of the Employment Act. The Court of Appeal, in a unanimous judgment, re-evaluated the evidence as a first appellate court and upheld the finding that the respondent was the focal man in the transactions and that the appellant was a local agent of the European companies. Interpreting the commission clause ('Commission KES 1% of (Mombasa office) paid up sales'), the Court held that since the employer drew the contract and the Mombasa office handled both local and overseas trade, it was obliged to expressly exclude overseas sales if that was intended; the Computation of Final Dues Form listing an overseas commission head ('LD TO ADVICE') confirmed the commission was recognised as payable. On limitation, the Court held the jurisdictional issue was raised for the first time in final submissions at trial and could not be entertained on appeal, applying Mary Kitsao Ngowa and George Owen Nandy. The respondent's late competency challenge under Rule 86 was also rejected as out of time. The appeal was dismissed with costs to the respondent.

Key legal issues

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01

Interpretation of the commission clause in the letter of appointment

Holding

The clause 'Commission KES 1% of (Mombasa office) paid up sales' covered overseas indent sales handled at the Mombasa office; the employer, having drawn the contract and handled both local and overseas trade, should have expressly excluded overseas sales if that was intended.

Reasoning

The Court identified three conditions for commission: sales handled at the Mombasa office, sales paid up, and 1% of total sales. The Mombasa office handled both local and overseas sales. The Computation of Final Dues Form listed separate heads for local and overseas commission, with 'LD TO ADVICE' under the overseas head, showing the overseas commission was recognised as payable. The employer bore the statutory duty under sections 9 and 10 of the Employment Act to draw a written contract with clear terms.

p. 5
02

Whether the respondent was the focal man in the indent sales to KPA and KFS

Holding

Yes; the ELRC's finding that the appellant was a middleman and local agent of the European companies, and that the respondent was the focal man in the SEC and Hyster transactions, was upheld on re-evaluation of the evidence.

Reasoning

The respondent's uncontroverted evidence was that he purchased tender documents, processed tenders, oversaw the success of the transactions and even testified for the appellant when procurement disputes arose. Contracts between KPA and Hyster and between SET and KFS attested in the supplementary record bore the appellant's signature. The appellant's General Manager admitted he was not involved in those transactions.

03

Limitation under section 90 of the Employment Act

Holding

The limitation ground failed because it was raised for the first time in the appellant's final submissions at trial, not as a preliminary point, and the ELRC was in effect finding the issue had not been presented for determination.

Reasoning

Limitation is a jurisdictional issue that must be raised at the first opportunity. Following Mary Kitsao Ngowa and George Owen Nandy, a court cannot be said to have erred on an issue never argued before it; allowing litigants to hold back issues and raise them on appeal if they lose sets a bad precedent and wastes judicial time.

p. 6

Legal principles established

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  • On a first appeal, the Court of Appeal must re-evaluate, re-assess and re-analyze the evidence and draw its own conclusions, while making due allowance for not having seen or heard the witnesses.
  • Where an employment contract drawn by the employer is silent on whether commission extends to overseas sales, and the office handled both local and overseas trade, the employer cannot later restrict the commission to local sales; ambiguity is construed against the employer who was obliged to state exclusions expressly.
  • A jurisdictional issue such as limitation must be raised at the first opportunity, as a preliminary point; raising it for the first time in final submissions after trial is unfair and the appellate court cannot fault a judge for not determining an issue never argued before it.

Court orders

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  1. 1.The appeal is dismissed with costs to the respondent

Authorities

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Legislation

  • Employment ActSection 90
  • Employment Act, 2007Sections 9 and 10
  • Employment Act, 2007Section 9(2)
  • Limitation of Actions Act (Cap. 22)Section 4(1)
  • Court of Appeal Rules, 2010Rules 75(3), 79(1)(a)(b)(3), 87(1)(b), 82(1)
  • Court of Appeal Rules, 2022Rule 86

Cases cited (4)

  • Kenya Ports Authority v Kuston (Kenya) Limited
    (2009) 2EA 212

    Duty of a first appellate court to reconsider, evaluate the evidence itself and draw its own conclusions.

  • National Bank of Kenya Ltd v. Pipeplast Samkolit (K) Ltd
    [2001] eKLR

    Proposition that a court cannot re-write a contract for the parties (relied on by appellant's counsel).

  • Mary Kitsao Ngowa & 36 Others v Krystalline Limited
    [2015] eKLR

    An appellate court cannot fault a judge on an issue never canvassed before the trial court.

  • George Owen Nandy v Ruth Watiri Kibe
    [2016] eKLR

    Raising an issue for the first time on appeal after trial sets a bad precedent and wastes judicial time.

On appeal from
Employment and Labour Relations Court at Mombasa
ELRC Cause 593 of 2014 (Originally Nairobi IC Cause 115 of 2010)
Jurisdiction invoked
First appellate jurisdiction over the ELRC decision (Court of Appeal Rules; appeal from Employment and Labour Relations Court)

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, "Achelis Material Handling Ltd v Rawal", Case Analysis (2022). Civil Appeal 42 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/1123/eng@2022-10-21

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