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ELRCPartially AllowedCause No 367 of 2017· [2019] KEELRC 2213 (KLR)

Stephen Ayugi v National Housing Corporation & 4 others [2019] KEELRC 2213 (KLR)

Employment and Labour Relations Court
21 February 2019
3,352 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court awarded KShs 3.6 million for malicious prosecution and ruled an employer cannot discipline a worker after a valid resignation.

What this practically means

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Executive summary

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The claimant, a Clerical Officer employed by the National Housing Corporation (N.H.C) on a three-year contract from December 1989 and later promoted to Officer in Charge of the Kisumu office, was suspended on 22nd July 2003 following the loss of Kshs 1,695,079.90 in rent collections held at the Provincial Commissioner's Office, Nyanza. He tendered his resignation on 12th February 2004, which N.H.C purported to reject, and was arrested on 4th June 2004 and charged with theft alongside two others. All accused were acquitted under Section 210 of the Criminal Procedure Code on 10th January 2006, and N.H.C issued a letter of summary dismissal on 16th September 2004 without a disciplinary hearing. The claimant sought unpaid half salary during suspension, anticipated salary, and general damages for false imprisonment, malicious prosecution and defamation against N.H.C and four state actors. The court held that the employment contract ceased upon tender of resignation on 12th February 2004, rendering the subsequent summary dismissal null and void, and awarded unpaid half salary of Kshs 120,750. It found malicious prosecution proved against the 2nd to 5th respondents, who adduced no evidence, there being no reasonable and probable cause and malice having been shown; it awarded Kshs 3.5 million in general damages, totalling Kshs 3,627,500 with interest. Claims for anticipated salary, false imprisonment and defamation failed. The 1st, 3rd, 4th and 5th respondents were ordered to pay the costs of the suit.

Key legal issues

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01

Effect of rejection of resignation and subsequent summary dismissal

Holding

The employment contract ended on tender of resignation on 12 February 2004; the summary dismissal of 16 September 2004 was null and void, and only terminal benefits remained payable

Reasoning

The court found the claimant tendered his resignation on 12 February 2004 and N.H.C purported to reject it and proceed with disciplinary action. Since the contract had ceased, the only obligation left was to compute and pay terminal benefits. The subsequent arrest, charge and purported summary dismissal rested on a mistaken belief that employment subsisted, and any penalty imposed on that basis was void.

p. 3
02

Unpaid half salary during suspension

Holding

Claimant entitled to unpaid half salary for the suspension period, Kshs 120,750, per N.H.C staff regulations as confirmed by RW1

Reasoning

RW1 conceded that under N.H.C staff regulations an employee acquitted after suspension is entitled to the half salary withheld during suspension. The claimant was not paid at all. The court awarded Kshs 120,750 as special damages against the 1st respondent.

p. 3
03

Malicious prosecution against 2nd to 5th respondents

Holding

All elements of malicious prosecution established; no reasonable and probable cause and malice proved; damages of Kshs 3.5 million awarded

Reasoning

The claimant was acquitted under Section 210 without being placed on his defence. Investigations by the PC's office and N.H.C audit did not implicate him; indeed he had flagged the cash-handling problem. The 2nd to 5th respondents called no evidence in rebuttal. The court found no reasonable and probable cause and that the police acted maliciously, adopting the four-element test from Nelles v Ontario.

p. 4
04

False imprisonment and defamation

Holding

Both claims failed; claimant was on bail and defamation was not proved to the required standard

Reasoning

The claimant was released on bail upon arrest, so false imprisonment was not made out, the court distinguishing malicious prosecution from false imprisonment. The defamation claim failed because the 1st defendant denied publishing the claimant's photograph and story, and no publication by the defendants was proved to the standard required.

p. 4

Legal principles established

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  • An employment contract ceases upon tender and acceptance of resignation; any disciplinary action taken thereafter is null and void
  • Police must investigate a complaint before preferring charges; they are not mere conduits of complaints

Court orders

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  1. 1.Special damages of Kshs 120,750 against the 1st respondent being half salary during the period of suspension
  2. 2.General damages of Kshs 3,500,000 for malicious prosecution against the 3rd to 5th defendants, total award Kshs 3,627,500
  3. 3.Interest at court rates from date of judgment till payment in full
  4. 4.1st, 3rd, 4th and 5th respondents to pay costs of the suit

Authorities

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Legislation

  • Criminal Procedure CodeSection 210
  • Government Proceedings ActCap 40
  • Public Authorities Limitations ActCap 39

Cases cited (9)

  • Kiiru vs Joseph Mwamburi and 3 others
    CA Nairobi 171 of 2000
  • Nelles vs Ontario
    [1989] 2 SCR 170
  • Radford vs Stewart
  • Egbema vs West Nile Administration
    [1972] EA 60
  • Simba vs Wambari
    [1987] KLR
  • Dr. Willy Kaberuka vs Attorney General
    Kampala HCCS No. 160 of 1993
  • Daniel Njuguna Muchiri vs Barclays Bank of Kenya Ltd and another
    [2016] eKLR
  • Daniel Waweru Njoroge and 17 others vs Attorney General
  • Nagvi Sayed Omar vs Paramount Bank Ltd and another
    [2015] eKLR
Jurisdiction invoked
First-instance employment and labour relations claim; the judgment does not state the enabling provision

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, "Stephen Ayugi v National Housing Corporation & 4 others [2019] KEELRC 2213 (KLR)", Case Analysis (2019). Cause No 367 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/2213/eng@2019-02-21

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