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ELRCDismissedNot stated in judgment· [2015] KEELRC 12 (KLR)

Alfred Muthomi Mutiria & 2 others v National Bank Of Kenya Limited [2015] KEELRC 12 (KLR)

Employment and Labour Relations Court
6 November 2015
LNLinnet Ndolo
1,530 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court confirmed it can hear disputes over staff loans secured by property, but refused to stop a bank selling charged homes when borrowers stopped repaying.

What this practically means

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Executive summary

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This was a ruling on a Notice of Motion dated 18th May 2015 by the 1st and 3rd Claimants, former employees of the Respondent Bank, seeking to restrain the Bank from exercising its statutory power of sale over two charged properties pending determination of their claim arising from termination of employment. The claim arose after the Court's interim orders of 6th August 2014, which preserved the Claimants' preferential staff loan rates but required them to continue servicing the loans. The Claimants did not service the loans at all, citing lack of income after termination, prompting the Bank to issue notices of sale. The Bank opposed the motion, arguing the Claimants were contractually bound to service the loans, were in breach of the interim orders, and that the ELRC lacked jurisdiction over matters relating to land, which it said fell to the Environment and Land Court. The Court first held it had jurisdiction, following Rika J's decision in BIFU v Consolidated Bank and its own ruling in Abraham Nyambane Asiago v Barclays Bank, that a dispute over a charge securing a staff loan is a matter of employment and labour relations. On the merits, applying the Giella v Cassman Brown conditions, the Court noted the Claimants already enjoyed an injunction, had shown no tangible effort to mitigate losses, and that freezing loan servicing would encourage non-performing loans contrary to prudential regulation and the public interest. The application was dismissed with costs in the cause.

Key legal issues

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01

Jurisdiction of the ELRC over a dispute concerning charges securing staff loans

Holding

The Court has jurisdiction; disputes over charges securing staff loans arise from the employment relationship

Reasoning

Article 162(2)(a) and Section 12(1)(a) of the ELRC Act confer exclusive jurisdiction over employment disputes. Following Rika J's holding in BIFU v Consolidated Bank and the court's own decision in Abraham Nyambane Asiago v Barclays Bank, the employment relationship generates multiple rights and obligations beyond the express contract, including loans secured by charges. Traversing different courts would defeat legislative intent.

p. 3
02

Whether the Claimants satisfied the Giella v Cassman Brown conditions for an interlocutory injunction

Holding

They did not; the application was dismissed

Reasoning

Although the Claimants had existing interim orders, they had wholly failed to service their loans and showed no tangible effort to mitigate losses. Staff borrowers remain subject to Central Bank prudential guidelines, and non-performing loans harm the bank, the industry and the economy, so freezing loan servicing was not in the public interest.

p. 4

Legal principles established

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  • A dispute over a charge created to secure a staff loan is a matter of employment and labour relations within the ELRC's jurisdiction
  • An applicant for an interlocutory injunction must show effort towards mitigating losses

Court orders

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  1. 1.The Claimants' Notice of Motion dated 18th May 2015 is dismissed
  2. 2.Costs of the application to be in the cause

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 162(2)(a)
  • Employment and Labour Relations Court ActSection 12(1)(a)
  • Land ActNot specified (referred to by Respondent on jurisdiction)

Cases cited (3)

  • Banking Insurance & Finance Union (Kenya) Vs Consolidated Bank of Kenya Limited
    Cause No 900 of 2012
  • Abraham Nyambane Asiago v Barclays Bank of Kenya Limited
    [2013] eKLR
  • Giella Vs Cassman Brown & Co Limited
    [1973] EA 358
Jurisdiction invoked
Article 162(2)(a) of the Constitution; Section 12(1)(a) of 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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Cite this brief

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Cite this brief

Caselaw, "Alfred Muthomi Mutiria & 2 others v National Bank Of Kenya Limited [2015] KEELRC 12 (KLR)", Case Analysis (2015). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/12/eng@2015-11-06

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