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ELRCDismissedNot stated in judgment (application dated 26th April 2016, filed 5th May 2016)· [2016] KEELRC 774 (KLR)

Samuel Muiruri Muhia v Sidian Bank (formerly known as K-rep Bank Ltd [2016] KEELRC 774 (KLR)

Employment and Labour Relations Court
19 August 2016
LNLINNET NDOLO
820 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 refused to stop a bank from recovering a former employee's loan, confirming staff loans are employment disputes but injunctions demand effort from borrowers.

What this practically means

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Executive summary

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This is a ruling of the Employment and Labour Relations Court at Nairobi (Linnet Ndolo, J) on the Claimant's application dated 26th April 2016 seeking a temporary injunction restraining the Respondent Bank from demanding loan repayment pending hearing and determination of the suit. The Claimant, a former employee, owed the Bank Kshs. 7,580,270.56 in principal and interest, secured by a charge over title number Ruiru/Ruiru West 3/1252. He asserted that his unlawful termination left him unable to service the loan. The Respondent opposed, contending the application was incompetent under Rule 16(3) of the Court's Rules, that the Court lacked jurisdiction since the Claimant sought no permanent injunction in the main claim, and that the Giella v Cassman Brown conditions were unmet. On jurisdiction, the Court applied its own precedents holding that disputes arising from loan facilities granted by banks to their employees are employment matters within its judicial province, and proceeded to determine the application on merit. Applying Giella v Cassman Brown, the Court found the outcome of the pending termination claim difficult to foresee, hence no prima facie case was established. It followed its earlier decision in Alfred Muthomi Mutiria & 2 Others v National Bank of Kenya Limited on the public interest against non-performing loans, and added that an applicant for an injunction must show steps taken towards ameliorating the situation, which the Claimant had not. The application was dismissed as without merit, the interim orders granted on 14th June 2016 were vacated, and costs were ordered in the cause.

Key legal issues

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01

Jurisdiction of the ELRC over employee loan disputes

Holding

The Court has jurisdiction because disputes arising from loan facilities granted by banks to their employees are employment matters

Reasoning

The Respondent argued that the loan agreement did not give rise to an employment relationship and that the Court therefore lacked jurisdiction to grant the interlocutory injunction. The Court relied on its own precedents holding that such disputes are employment matters within its judicial province, and proceeded to determine the application on merit.

p. 2
02

Whether the conditions for an interlocutory injunction were satisfied

Holding

The Claimant failed to demonstrate a prima facie case, irreparable harm, or the balance of convenience; the application was dismissed

Reasoning

Applying the Giella v Cassman Brown principles, the Court found the claim on unlawful termination pending and its outcome difficult to foresee, so no prima facie case was established. The Court also added that an applicant must show steps towards ameliorating the situation, and none were shown. Public interest against non-performing loans weighed against the injunction.

p. 2

Legal principles established

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  • Disputes arising from loan facilities granted by banks to their employees are employment matters falling within the judicial province of the Employment and Labour Relations Court
  • A party seeking an injunctive order must show steps taken towards ameliorating the situation
  • It is not in the public interest to have a non performing loan in any bank, and staff borrowers are not outside Central Bank of Kenya prudential guidelines

Court orders

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  1. 1.The Claimant's application dated 26th April 2016 is dismissed as without merit
  2. 2.The interim orders granted on 14th June 2016 are vacated
  3. 3.Costs of the application are in the cause
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Rule 16(3) of the Court's Rules invoked by Respondent)

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, "Samuel Muiruri Muhia v Sidian Bank (formerly known as K-rep Bank Ltd [2016] KEELRC 774 (KLR)", Case Analysis (2016). Not stated in judgment (application dated 26th April 2016, filed 5th May 2016). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/774/eng@2016-08-19

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