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ELRCPartially AllowedNairobi Cause No. 1444 of 2010 (transferred as Mombasa Cause No. 30 of 2012)· [2014] KEELRC 864 (KLR)

Nelson Onyango Otho & 5 others v Rashid Jumaa Nyale & another [2014] KEELRC 864 (KLR)

Industrial Court of Kenya
14 March 2014
4,590 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~18 min to read original · ~4 min brief

The bottom line

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Kenya's Industrial Court removed a trade union General Secretary for misusing union funds, treating union officials as trustees who must account transparently.

What this practically means

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Executive summary

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The Claimants, officials/members/contributors of the Kenya Shipping, Clearing and Warehousing Workers Union, sued the 1st Respondent (a former Assistant National Treasurer who resigned on 27 June 2009 but continued signing union cheques) and the 2nd Respondent (General Secretary), alleging misuse of union funds. They sought refund of all funds withdrawn from the union's account between 27 June 2009 and 1 April 2011, suspension of the Respondents from union office, and committal to civil jail. The Respondents pleaded res judicata, relying on Nairobi Causes Nos. 986 of 2010 and 2086 of 2011. The Court held that res judicata applies in the Industrial Court, but the plea failed because the award in Cause No. 986 of 2010 had been set aside and the pleadings struck out (the Claimants' advocate lacked a practising certificate), so there was no final determination on the merits, and Cause No. 2086 of 2011 concerned different issues (salary arrears). On the merits, the 1st Respondent admitted signing cheques after resignation and after his replacement had been notified to the Registrar of Trade Unions; the 2nd Respondent admitted procuring this, failed to update the bank mandate, and made payments without required constitutional approvals. The Court found the 2nd Respondent involved in misuse of union funds through unlawful and unauthorised transactions, declared him unfit to hold the office of General Secretary, and removed him forthwith, directing the Registrar of Trade Unions to cause the Union to convene an Annual Conference to elect a new General Secretary. The refund prayer was declined as unquantified, suspension was considered inappropriate, committal to civil jail was misplaced, and each party was ordered to bear its own costs. Judgment delivered at Mombasa on 14 March 2014 by Radido Stephen J.

Key legal issues

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01

Whether the Cause is res judicata given prior Causes 986 of 2010 and 2086 of 2011

Holding

The plea fails: the award in Cause No. 986 of 2010 was set aside and pleadings struck out, so there was no final determination on the merits; the issues in Cause No. 2086 of 2011 were not the same as those in the present Cause

Reasoning

Section 7 of the Civil Procedure Act underpins res judicata, and though the Industrial Court is not bound by that Act, the doctrine applies as a matter of judicial and public policy favouring finality of litigation. However, the prior award in Cause 986 of 2010 was set aside with pleadings struck out because the Claimants' advocate lacked a practising certificate, so no final determination on the merits existed. Cause 2086 of 2011 concerned salary arrears not in dispute here. Pleadings in the prior causes were not exhibited, an omission the Court found unsatisfactory.

p. 6
02

Whether the 2nd Respondent misused union funds

Holding

Yes - the Court was satisfied the 2nd Respondent was involved in misuse of union funds through unlawful/unauthorised transactions

Reasoning

The 1st Respondent admitted signing union cheques long after resigning on 27 June 2009 and after his replacement was notified to the Registrar of Trade Unions, at the 2nd Respondent's request. The 2nd Respondent failed to update the bank mandate, called upon a resigned official to sign cheques, made cheques to a third party without National Executive Council or Treasurer involvement as the Union Constitution required, and delayed payment of Kshs 350,000 received for members until they sued. The excuse that the Treasurer refused to cooperate could not stand given constitutional provisions for three of four signatories and removal of errant officials.

p. 7
03

Appropriate remedies for misuse of union funds

Holding

Refund declined (amount not quantified); suspension declined as inappropriate; instead the 2nd Respondent declared unfit to hold office and removed; committal to civil jail declined

Reasoning

Relying on section 47 of the Labour Relations Act and sections 12(1)(g), (3)(iv) and (vii) of the Industrial Court Act, the Court declared the 2nd Respondent unfit to hold the office of General Secretary and removed him forthwith, directing the Registrar of Trade Unions to cause an Annual Conference to elect a new General Secretary. The refund prayer failed because no precise figure was stated; suspension was considered a temporary measure not apt in itself; civil jail was misplaced and unaddressed.

p. 8

Legal principles established

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  • The doctrine of res judicata applies to Causes commenced in the Industrial Court
  • Res judicata cannot be raised on a decision that was set aside and pleadings struck out, as there was no final determination on the merits
  • A trade union official's position regarding union funds is akin to that of a trustee and demands financial probity, transparency and accountability
  • Costs do not follow the event in the Industrial Court as under the civil procedure regime

Court orders

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  1. 1.Declaration that the 2nd Respondent is not a fit person to hold the office of General Secretary of the Kenya Shipping, Clearing & Warehousing Workers Union
  2. 2.The 2nd Respondent stands removed from holding the office of General Secretary forthwith
  3. 3.Judgment/order to be served upon the Registrar of Trade Unions
  4. 4.The Registrar of Trade Unions to cause the Union to convene an Annual Conference to elect a new General Secretary
  5. 5.Each party to bear its own costs

Authorities

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Legislation

  • Civil Procedure Actsection 7
  • Industrial Court Actsection 12(1)(g), (3)(iv) and (vii)
  • Industrial Court (Procedure) Rules, 2010
  • Labour Relations Actsections 41 and 47
  • Trade Unions (Accounts) RegulationsRegulation 6

Cases cited (3)

  • James Katabazi and 21 Others v The Attorney General of the Republic Of Uganda
  • Kenya Hotel Properties Ltd v Willisden Investments Ltd & 4 Ors
    (2013) eKLR
  • Wille Versus Michuki & 2 others
    (2004) KLR 357
Jurisdiction invoked
Section 12(1)(g), (3)(iv) and (vii) of the Industrial Court Act; section 47 of the Labour Relations Act

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "Nelson Onyango Otho & 5 others v Rashid Jumaa Nyale & another [2014] KEELRC 864 (KLR)", Case Analysis (2014). Nairobi Cause No. 1444 of 2010 (transferred as Mombasa Cause No. 30 of 2012). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/864/eng@2014-03-14

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