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ELRCPartially AllowedNot stated in the judgment· [2019] KEELRC 2001 (KLR)

John Nguri Kinyanjui v Equity Bank (K) Limited [2019] KEELRC 2001 (KLR)

Employment and Labour Relations Court
11 March 2019
2,451 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 blocked a bank from hiking a fired employee's loan rates, repossessing his property or blacklisting him with CRB until his unfair termination case is decided.

What this practically means

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Executive summary

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The Applicant, a former employee of the Respondent bank employed on 8th October 2012, applied on 1st October 2018 under Section 12(3) of the Employment and Labour Relations Court Act and Rule 17 of the ELRC Procedure Rules 2016 for interim relief following his termination on 2nd May 2018. He sought a stay of the variation of his loan interest rates from 8% to 13%, and injunctions restraining the Respondent from repossessing, selling or dealing with LR No. Ndumberi/Nduberi/3272 and Motor Vehicle KCM 277B, and from listing him with the Credit Reference Bureau. He contended he had never defaulted on his loans and that the hardship flowed from the allegedly unfair termination and unpaid terminal dues. The Respondent, through its Legal Manager Kariuki Kingori, replied that the first loan was not in arrears and no recovery process had begun; only the car loan was in arrears of Kshs. 79,602.50; and that under the letter of offer, letter of appointment and Human Resource Policy Manual, preferential rates lapse on cessation of employment with a 6-month grace period. Both parties relied on injunction jurisprudence including Giella v Cassman Brown and Nguruman. The court found that although the loan fell due on cessation of employment, the pending suit challenging the fairness of the termination and the Applicant's non-default history disclosed a prima facie case, and that condemning him before trial would amount to double jeopardy while the Respondent would lose nothing. The court allowed the application in terms of prayers 2 and 4, staying the interest variation and issuing an injunction against repossession, sale or CRB listing pending determination of the claim, with costs in the cause.

Key legal issues

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01

Whether the Applicant established a prima facie case for interlocutory relief

Holding

The pendency of a suit claiming unfair termination, coupled with the Applicant's history of non-default, disclosed a prima facie case warranting interim protection

Reasoning

The court noted the loan letters allowed the entire facility to fall due on cessation of employment, but the Claimant had filed a suit alleging unfair termination which was still pending. Given the disputed fairness of the termination and the Applicant's prior record of servicing the loans without default, there was prima facie evidence justifying preservation of the status quo until the truth could be established at trial.

p. 3
02

Where the balance of convenience lay

Holding

The balance of convenience tilted in favour of granting the Applicant the prayers sought

Reasoning

The court reasoned that if the claim succeeded after the Applicant had already been condemned on the loans, he would suffer double jeopardy. By contrast, the Respondent would lose nothing under the interim orders since the Applicant would continue servicing the loans as he had done previously. Accordingly, granting the prayers best met the ends of justice pending trial.

p. 3

Legal principles established

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  • Where the fairness of a termination is disputed and pending determination, an employee who has not defaulted in servicing his loans should not be condemned on the loans before the termination claim is resolved
  • In employment-related loan disputes, the balance of convenience may favour maintaining the status quo where the employer-respondent would lose nothing by the interim orders

Court orders

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  1. 1.Pending the hearing and determination of the claim, the Respondent's action of varying the Applicant's interest rates for all his facilities from 8% to 13% is stayed and/or suspended
  2. 2.Pending the hearing and determination of the suit, an injunction issued prohibiting the Respondent from repossessing, selling or in any other way dealing with LR No. Ndumberi/Nduberi/3232 and Motor Vehicle registration No. KCM 277B, and from listing the Applicant with the Credit Reference Bureau (CRB)
  3. 3.Costs in the cause

Authorities

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Legislation

  • Employment and Labour Relations Court ActSection 12(3)
  • Employment and Labour Relations Court [Procedure] Rules 2016Rule 17
  • Banking (Credit Reference Bureaus) Regulations 2013Not specified
  • Employment ActNot specified

Cases cited (10)

  • Boniface Lum Amunga Biko v National Bank of Kenya
    [2017] eKLR
  • Nguruman Limited v Jan Bonde Neilson & 2 Others
    Appeal No. 77 of 2012; [2014] eKLR
  • Giella v Cassman Brown
    (1973) EA 358
  • Mrao Ltd v First American Bank of Kenya Ltd & 2 Others
    [2003] eKLR
  • Curacid Kenya Limited v East African Development Bank
    [2008] eKLR
  • Stephen Mbugua Mwagiru & Another v Tatu City Limited & Another
    [2012] eKLR
  • Andrew M. Wanjohi v Equity Building Society & 2 Others
    [2006] eKLR
  • Francis J.K. Ichatha v Housing Finance Company of Kenya
    Civil Application No. 108 of 2005
  • Kenya Products and Investments Ltd v Kenya Post Office Savings Bank
    HCCC No. 2811 of 1995 (unreported)
  • New Age Developers & Construction Co. Ltd v Jamii Bora Bank Ltd
    [2017] eKLR
Jurisdiction invoked
Section 12(3) of the Employment and Labour Relations Court Act and Rule 17 of the Employment and Labour Relations Court [Procedure] Rules 2016

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, "John Nguri Kinyanjui v Equity Bank (K) Limited [2019] KEELRC 2001 (KLR)", Case Analysis (2019). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/2001/eng@2019-03-11

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