Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCDismissedNot stated in judgment· [2019] KEELRC 1949 (KLR)

Terry Njagi Muia v Chase Bank (Kenya) Limited & 2 others [2019] KEELRC 1949 (KLR)

Employment and Labour Relations Court
8 March 2019
OMOnesmus N. Makau
1,670 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~7 min to read original · ~4 min brief

The bottom line

#

A Kenyan employment court refused to sue the bank's receiver directly, but on its own joined SBM Bank as the proper party in a terminated employee's claim.

What this practically means

#

Executive summary

#
The claimant sued the respondent bank (placed under receivership by the Central Bank of Kenya in April 2016) for compensation for unfair termination and terminal dues. Following CBK announcements that the bank's assets were being acquired, the claimant filed a Notice of Motion dated 5.6.2018 seeking to enjoin the proposed 2nd Respondent (the statutory receiver) and proposed 3rd Respondent as parties and for leave to amend the claim to add them. The proposed 2nd Respondent argued that as a statutory receiver and agent of the institution under receivership under section 50(4)(f) of the KDIC Act, she could only sue or be sued in the name of the institution. The proposed 3rd Respondent argued it was a separate legal person from SBM Bank (Kenya) Limited, the actual acquirer, and was a stranger to the employment contract. The court framed two issues: joinder of the proposed respondents and leave to amend. It held the receiver, as agent of a disclosed principal, could not be enjoined as a substantive party. It declined joinder of the proposed 3rd Respondent since the claimant admitted SBM Bank (Kenya) Limited, not the proposed 3rd Respondent, was the acquirer, and the application did not seek SBM's joinder. However, on its own motion the court found SBM Bank (Kenya) Limited a necessary party and ordered it joined as 2nd Respondent, granting leave to amend within 14 days. The motion was dismissed with no order as to costs.

Key legal issues

#
01

Joinder of the statutory receiver (KDIC) as a party

Holding

The receiver cannot be enjoined as a substantive party because she acts as agent of a disclosed principal and can only sue or be sued in the name of the institution in receivership

Reasoning

Section 50(4)(f) of the KDIC Act empowers the Corporation, while acting as official receiver, to sue or defend only in the name of the institution under receivership. The court accepted the receiver's submission that as an agent of a disclosed principal, she is not the proper substantive party to a claim against the institution itself.

p. 2
02

Joinder of the proposed 3rd Respondent (acquiring bank's parent)

Holding

Declined because the acquiring entity was SBM Bank (Kenya) Limited, not the proposed 3rd Respondent, and the application did not seek joinder of the actual acquirer

Reasoning

The claimant admitted that per the CBK press release of 17.4.2018, SBM Bank (Kenya) Limited and not the proposed 3rd Respondent was acquiring the respondent's assets. The application, filed after that press release, did not request joinder of SBM Bank (Kenya) Limited, so the joinder of the proposed 3rd Respondent was declined.

p. 2
03

Suo motu joinder of SBM Bank (Kenya) Limited

Holding

The court, on its own motion, found SBM Bank (Kenya) Limited to be a necessary party as the entity acquiring the respondent's assets and ordered its joinder as 2nd Respondent

Reasoning

Because the actual acquirer of 75% of the respondent's assets had not been named in the application, the court exercised its discretion to ensure effective adjudication and potential execution, joining SBM Bank (Kenya) Limited as 2nd Respondent and granting leave to amend the claim accordingly within 14 days.

p. 3

Legal principles established

#
  • A statutory receiver under section 50(4)(f) of the KDIC Act is an agent of the institution under receivership and cannot be enjoined as a substantive party to a claim against the institution
  • A court may, on its own motion, enjoin a necessary party to a suit

Court orders

#
  1. 1.The Notice of Motion dated 5.6.2018 is dismissed with no order as to costs
  2. 2.SBM Bank (Kenya) Limited be enjoined to this suit as the 2nd Respondent (suo motu)
  3. 3.Leave granted to amend the claim to enjoin SBM Bank (Kenya) Limited as the 2nd Respondent within 14 days

Authorities

#

Legislation

  • Kenya Deposit Insurance Corporation Actsection 44(2)(b)
  • Kenya Deposit Insurance Corporation Actsection 45(b)(ii)
  • Kenya Deposit Insurance Corporation Actsection 45(a)
  • Kenya Deposit Insurance Corporation Actsection 50(4)(f)
  • Kenya Deposit Insurance Corporation Actsection 56(1)
  • Law of Contract Actsection 3(1)

Cases cited (2)

  • Ashok L. Doshi & Another Vs CBK & Another
    [2016] eKLR
  • Agricultural Finance Corporation Vs Lengetia Ltd
    [1985] KLR 763
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment claims; joinder and amendment governed by the Kenya Deposit Insurance Corporation Act and civil procedure principles

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Terry Njagi Muia v Chase Bank (Kenya) Limited & 2 others [2019] KEELRC 1949 (KLR)", Case Analysis (2019). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/1949/eng@2019-03-08

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