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ELRCDismissedNot stated in judgment (Memorandum of Claim filed 16th July 2018)· [2021] KEELRC 677 (KLR)

Felix Ndereba Mwangi v Barclays Bank of Kenya Limited (Cause 466 of 2018) [2021] KEELRC 677 (KLR)

Employment and Labour Relations Court
21 October 2021
LNLinnet Ndolo
946 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~4 min to read original · ~4 min brief

The bottom line

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What this practically means

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Executive summary

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This ruling of the Employment and Labour Relations Court by Linnet Ndolo J deals with a Notice of Motion dated 24th May 2021 in which the Claimant, a former employee, sought to restrain the Respondent from exercising its statutory power of sale over his property, L.R No. Mainland North/II/4946 (CR.27516), held as collateral for a staff loan of Kshs. 3,150,000 advanced during his employment. The Claimant had sued for unfair termination on 7th September 2017 and sought to halt loan recovery pending determination of the main claim. The Respondent, through its Legal Recovery Officer Samuel Njuguna, deponed that the loan had not been serviced since November 2017 and that recovery had no nexus with the termination claim. The court framed a single issue: whether the Claimant had made out a case for stopping the sale. Applying the Giella v Cassman Brown conditions, the court held the Claimant undeserving of equitable relief, following Elijah Arap Bii v Kenya Commercial Bank, because the loan had been non-performing for nearly four years with no restructuring plan. Relying on Jacob Kelly Omondi Onyango v National Bank of Kenya, the court held it is never in the public interest to allow non-performing loans, and that loss of employment does not excuse a borrower from repaying. The only temporary relief available would have been retention of the original interest rates, a plea the Claimant had not made. The application was disallowed with costs in the cause and the interim orders of 10th June 2021 were vacated.

Key legal issues

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01

Whether the Claimant satisfied the Giella v Cassman Brown conditions for an interlocutory injunction to stop the statutory sale of his collateral

Holding

The Claimant failed to make out a case for the injunction; the loan was non-performing for close to four years with no restructuring plan offered, and equity will not aid him

Reasoning

The court applied the Giella v Cassman Brown test. It found the Claimant did not deny the loan had not been serviced since November 2017, making it non-performing for nearly four years with no restructuring offer. Following Elijah Arap Bii v Kenya Commercial Bank, a borrower who defaults on a loan from a former employer is undeserving of equitable relief. The only temporary relief the court could grant would be retention of interest rates at inception, a plea the Claimant had not made.

p. 2
02

Whether recovery of the loan is connected to the claim for unfair termination

Holding

The Respondent's recovery of the outstanding loan has no nexus with the Claimant's unfair termination claim

Reasoning

The Respondent's Legal Recovery Officer deponed that the recovery of the outstanding loan had no nexus with the Claimant's claim, and the court accepted that termination of employment does not excuse a borrower from performing the loan contract. Loss of employment through the employer's alleged fault does not justify withholding loan repayments; the proper remedy is compensation in the main claim.

p. 2

Legal principles established

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  • Employees who receive debt facilities from their employers must perform the contracts giving rise to those facilities; the only temporary relief available is retention of agreed interest rates pending determination of the termination claim
  • A claimant who fails to service loans advanced by their former employer is undeserving of equitable relief

Court orders

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  1. 1.The application dated 24th May 2021 is disallowed with costs in the cause
  2. 2.The interim orders granted on 10th June 2021 are vacated

Authorities

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Cases cited (3)

  • Giella v Cassman Brown & Co Ltd
    (1973) E.A
  • Elijah Arap Bii v Kenya Commercial Bank
    [2001] eKLR
  • Jacob Kelly Omondi Onyango v National Bank of Kenya
    [2017] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over the employment claim and the interlocutory application arising from it

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, "Felix Ndereba Mwangi v Barclays Bank of Kenya Limited (Cause 466 of 2018) [2021] KEELRC 677 (KLR)", Case Analysis (2021). Not stated in judgment (Memorandum of Claim filed 16th July 2018). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/677/eng@2021-10-21

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