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ELRCPartially AllowedELRC Cause (Kericho) – claim filed 29/1/2016; applications dated 26th April 2021, 14th July 2021, 21st July 2021 and 20th September 2021· [2022] KEELRC 1072 (KLR)

Kenya Union of Domestic Hotels, Educational Institutions, Hospitals and Allied Workers (KUDHEHIA) v Management of Tea Hotel & 4 others; Yas Angwan Holdings Limited & another (Proposed Interested Parties) [2022] KEELRC 1072 (KLR)

Employment and Labour Relations Court
18 January 2022
10,233 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~41 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court in Kericho cancelled a Kshs 110 million hotel auction because the auctioneer sold the wrong parcel without following the required procedures.

What this practically means

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Executive summary

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This ruling of the Employment and Labour Relations Court at Kericho by Hellen Wasilwa J disposes of four interlocutory applications arising from an employment claim filed on 29/1/2016 by a union claimant against Tea Hotel Limited for salary arrears and terminal dues. A consent of 25/7/2016 was not honoured, leading to execution. Execution was authorised against Block 4/313, but the auctioneer, Hegeons Auctioneers, advertised and sold Block 4/295 to third parties for Kshs 110,000,000. The hotel's management (applicant) sought annulment of the sale, cancellation of register entries, accounts, revocation of the auctioneer's licence and discipline of the claimant's advocate. Kemboi Chambers Advocates filed an interpleader over the residue of the purchase price; Migiro & Co. Advocates and Ndege Chai Sacco sought joinder. The court dismissed both joinder applications, finding their claims lay elsewhere, and rejected the interpleader, holding that PAYE and SACCO remittance questions belong to the Tax Tribunal and Co-operative Tribunal. On the main application the court held it was not res judicata, distinguishing earlier stay applications and a Court of Appeal ruling. Finding the advertisement deviated from Form No. 15 under Order 22 rule 57(6) and that a different parcel was sold than authorised, it held the sale fraudulent. The court ordered cancellation of the register entries, set aside the sale and transfer, and compelled the respondents and the auctioneer to render full accounts, leaving the claimant free to institute proper execution thereafter. Costs of the application were awarded to the claimants. Prayers for revocation of the auctioneer's licence and discipline of the advocate were not granted.

Key legal issues

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01

Whether the auction sale of Block 4/295 complied with Order 22 Rule 57 of the Civil Procedure Rules

Holding

The sale did not comply and was tainted with fraud; the advert deviated from Form No. 15 and a different parcel was sold than that authorised for execution

Reasoning

The court found no directions were given on the mode of sale as required by Order 22 rule 57(5), and the advert placed by the auctioneer deviated from the prescribed Form No. 15 under rule 57(6). Further, the court had authorised sale of Block 4/313, yet the auctioneer advertised and sold Block 4/295, a different parcel altogether, leading to the conclusion that the sale was fraudulent.

p. 12
02

Whether the application dated 26.4.2021 was res judicata

Holding

It was not; the prior applications and appeal concerned stay of execution, not cancellation of register entries

Reasoning

The court distinguished the earlier applications before J. Mbaru and the Court of Appeal, which related to staying execution and were struck out or dismissed, from the current application seeking cancellation of entries in the register. Since the earlier matters dealt with stay and left the applicant room to file a proper application, section 7 of the Civil Procedure Act was not offended.

p. 13
03

Whether the court could entertain the interpleader and the PAYE/SACCO remittance directions sought

Holding

The chamber summons was rejected for want of jurisdiction over those remittance issues

Reasoning

The court accepted the purchasers' submission that questions of remitting PAYE to the Kenya Revenue Authority and SACCO loan deductions fall within the Tax Tribunal and Co-operative Tribunal, not the ELRC. Consequently the chamber summons by Kemboi Chambers Advocates seeking those directions and release of balances was unmerited and was rejected.

p. 11
04

Whether the advocates and the SACCO should be joined as interested parties

Holding

Both joinder applications were dismissed as they would add no value to the proceedings

Reasoning

Migiro & Co. Advocates' claim was solely against the applicant and was already before the court in Misc. Application No. 14 of 2021, the correct forum. Ndege Chai Sacco's claim was against its members who are not parties to the suit and could be pursued separately. Joinder of either would not aid just and expeditious determination.

p. 11

Legal principles established

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  • An execution sale by public auction must comply strictly with the prescribed advertisement format; deviation renders the sale fraudulent and liable to be set aside
  • A stay application disposed of earlier does not bar a later substantive application to cancel register entries; such an application is not res judicata
  • The Employment and Labour Relations Court has no jurisdiction to direct remittance of PAYE to KRA or SACCO deductions; those belong to the Tax Tribunal and Co-operative Tribunal

Court orders

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  1. 1.An order of mandatory injunction compelling the Chief Land Registrar, Kericho to cancel the illegal entries on L.R. No. Kericho Municipality Block 4/295 measuring 5.831 acres
  2. 2.Orders setting aside the purported sale and eventual transfer of L.R. No. Kericho Municipality Block 4/295 to the purported purchasers
  3. 3.A mandatory injunction compelling the Respondents to file before the court the true and just accounts of monies paid by the purchasers and amounts paid to each employee out of the sale
  4. 4.A mandatory injunction compelling Hegeons Auctioneers to file before the court the details of the public auction including date, time, place, records of the auction, bidders and respective bids
  5. 5.Liberty to the claimant to institute proper execution proceedings devoid of fraud after accounts are rendered by the auctioneer
  6. 6.Costs of the application dated 26.4.2021 to be borne by the claimants
  7. 7.Dismissal of the application dated 21/7/2021 by Migiro & Co. Advocates seeking joinder
  8. 8.Dismissal of the application dated 20/9/2021 by Ndege Chai SACCO Ltd seeking joinder
  9. 9.Rejection of the chamber summons dated 14th July 2021 by Kemboi Chambers Advocates

Authorities

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Legislation

  • Civil Procedure Actsections 1A, 1B, 3, 3A and 7
  • Civil Procedure Rules 2020Order 34 rules 1 & 2; Order 22 rules 57 and 69(1); Order 2 rule 4(1); Order 1 rule 10(2); Order 51 rule 1
  • Civil Procedure Rules 2010Order 1 rule 10(2)
  • Auctioneers Actsections 23 and 28
  • Auctioneers Rules 1997Rules 11(1)(b) and 15(b)
  • Advocates Actsection 56
  • Registered Land Act (RLA)section 72
  • Income Tax Act / Tax Procedure Actrecovery powers of KRA (referred generally)
  • ELRC (Court) RulesRule 32

Cases cited (17)

  • Kwanza Estate v Dubai Bank Limited
    [2014] eKLR
  • Labhsons Ltd v Monura Hauliers Ltd
    [2004] eKLR
  • Republic v Ahmad Abolfathi Mohammed & Another
    [2019] eKLR
  • Kenya Commercial Bank v Adala
    [1979] eKLR
  • Owners of Motor Vessel "Lillian S" v Caltex Oil (Kenya) Limited
    [1989] KLR 1
  • Uhuru Highway Development Limited v Central Bank of Kenya & 2 others
    [1996] eKLR
  • Gurbachan v Yowani Ekori
    [1958] EA 450
  • Vijay Morjaria v Madhusingh Darbar & Another
    [2000] eKLR
  • Kinyanjui Kamau v George Kamau
    [2015] eKLR
  • B v Attorney General
    [2004] 1 KLR 431
  • Erick Wambua Muli & Another v Prime Bank Ltd & 3 others
    [2017] eKLR
  • Crossley Holdings Ltd v Cabinet Secretary, Ministry of Agriculture, Livestock and Fisheries & 5 others
    Kisumu ELC Petition Number 6 of 202
  • David Katan Ngomba v Shafi Grewal Kaka
    [2014] eKLR
  • Joyce Wairimu Karanja v Kames Mburu Ngure & 3 others
    [2018] eKLR
  • Giella v Cassman Brown
  • Safina Properties Limited & Another v Barclays Bank of Kenya Limited & Another
    [2015] eKLR
  • Stanley Ngethe Kinyanjui v Tony Ketter & 5 others
    [2015] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over the employment dispute, with reliance on Rule 32 of the ELRC Court Rules and the Civil Procedure Rules for execution; the court also asserted power under section 56 of the Advocates Act and sections 23 and 28 of the Auctioneers Act

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, "Kenya Union of Domestic Hotels, Educational Institutions, Hospitals and Allied Workers (KUDHEHIA) v Management of Tea Hotel & 4 others; Yas Angwan Holdings Limited & another (Proposed Interested Parties) [2022] KEELRC 1072 (KLR)", Case Analysis (2022). ELRC Cause (Kericho) – claim filed 29/1/2016; applications dated 26th April 2021, 14th July 2021, 21st July 2021 and 20th September 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/1072/eng@2022-01-18

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