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ELRCDismissedCause No 835 of 2019· [2021] KEELRC 1157 (KLR)

Alex Gatoto v Qed Solutions Limited [2021] KEELRC 1157 (KLR)

Employment and Labour Relations Court
14 July 2021
NMNzioki Wa Makau
3,164 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 jail a former employee, ruling his employer's confidentiality clause was too broad and unenforceable against him.

What this practically means

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Executive summary

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The Respondent/Applicant filed a Notice of Motion dated 1 March 2021 seeking contempt of court orders against the Claimant/Respondent, including committal to civil jail, for allegedly breaching interim injunctive orders issued by Ong'aya J. on 24 December 2019 requiring the parties to abide by the confidentiality clause in the Claimant's Confirmation of Employment Letter dated 19 May 2017. The Applicant, through its Chairman Alex Mbugua, alleged that the Claimant, now employed by a competitor M-tenders Africa Limited, was using confidential client lists, templates and trade secrets to solicit its clients. The Claimant denied the allegations, asserting there was no non-compete clause in his contract, that the client list was publicly displayed on the Applicant's website, and that the confidentiality clause could not bind third parties by virtue of privity of contract. He further argued that determining contempt would decide the substantive counterclaim at an interlocutory stage and prejudice his right to a fair trial under Article 50. The Applicant relied on the Burchell test for civil contempt; the Claimant relied on Mutitika v Baharini Farm on the standard of proof. The court, Nzioki Wa Makau J, held that the confidentiality clause was in essence a restrictive covenant that was too broad, offended public policy, and overreached by barring the Claimant from using knowledge and skills acquired for his livelihood rather than merely protecting confidential information. The Applicant's motion was dismissed with costs in the cause.

Key legal issues

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01

Validity and scope of the confidentiality/restrictive covenant clause

Holding

The clause was too broad and offended public policy; it could not sustain a contempt finding

Reasoning

The court held that a confidentiality clause is in essence a restrictive covenant which must conform to traditional contract requirements. The clause here went beyond protecting confidential information and effectively barred the Claimant from using knowledge and skills acquired during employment for his livelihood, denying him the opportunity to work in any similar company. Such an overreach was contrary to public policy and could not ground committal for contempt.

p. 3
02

Whether contempt was proved to the required standard

Holding

The Applicant failed to discharge the evidentiary burden; the motion was dismissed

Reasoning

The Claimant contended, and the court accepted, that the Applicant had placed mere assumptions and speculations before the court. The Applicant had to prove deliberate breach of a clear order by the Claimant personally, with cogent evidence. Given the court's finding on the breadth and public policy defect of the confidentiality clause, the alleged breach could not amount to contempt.

p. 3

Legal principles established

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  • A confidentiality clause that restrains an employee from using knowledge and skills acquired during employment for his livelihood, rather than merely from misusing confidential information, is an overreach and offends public policy
  • Civil contempt requires proof of clear and unambiguous terms, knowledge of the order, deliberate breach, and the burden is on the applicant to a standard higher than balance of probabilities but below beyond reasonable doubt

Court orders

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  1. 1.The Respondent/Applicant's Notice of Motion dated 1st March 2021 seeking contempt orders is dismissed
  2. 2.Costs to be in the cause

Authorities

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Legislation

  • Civil Procedure ActSection 63
  • Judicature ActSection 5
  • Constitution of Kenya, 2010Article 22
  • Constitution of Kenya, 2010Article 50

Cases cited (10)

  • Kristen Carla Burchell vs. Barry Grant Burchell
    Eastern Cape Division Case No. 364 of 2005
  • Republic v Kenya School of Law & 2 Others Ex parte Juliet Wanjiru Njoroge & 5 Others
    [2015] eKLR
  • Africa Management Communication International Limited v Joseph Mathenge Mugo & Another
    Civil Case No. 242 of 2013
  • Olive Mwihaki Mugenda & Another v Okiya Omtata Okoiti & 4 Others
    [2016] eKLR
  • Vivo Energy Kenya Limited v Maloba Petrol Station Limited & 3 Others
    [2015] eKLR
  • Stephen Kipkebut t/a Riverside Lodge and Rooms v Naftali Ogola
    [2009] eKLR
  • John Harun Mwau v Linus Gitahi & 13 Others
    [2016] eKLR
  • East African Portland
    null
  • North Tetu Farmers Company Limited v Joseph Nderitu Wanjohi
    [2016] eKLR
  • Mutitika v Baharini Farm
    [1985] eKLR
Jurisdiction invoked
Inherent power of the court; Applicant invoked Article 22 of the Constitution

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, "Alex Gatoto v Qed Solutions Limited [2021] KEELRC 1157 (KLR)", Case Analysis (2021). Cause No 835 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1157/eng@2021-07-14

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