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ELRCDismissedCause No 162 of 2020· [2022] KEELRC 1232 (KLR)

Mang’ati v ABSA Bank Limited (Formerly Barclays Bank of Kenya Limited) (Cause 162 of 2020) [2022] KEELRC 1232 (KLR)

Employment and Labour Relations Court
21 July 2022
LNLINNET NDOLO
1,686 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~7 min to read original · ~4 min brief

The bottom line

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A Kenyan court refused to protect a former employee's home because he stopped repaying his staff loan and waited too long to go to court.

What this practically means

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Executive summary

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This is a ruling by the Employment and Labour Relations Court at Nairobi (Linnet Ndolo, Judge, delivered virtually on 21st July 2022) on the Claimant's Notice of Motion dated 19th March 2020. The Claimant, a former employee of the Respondent bank, sought interim injunctions restraining the Respondent from threatening CRB listing, repossessing, selling or alienating his family home on LR No. 209/8572/115, House No. H33 Laiboni Gardens, Nairobi, and from charging interest on his staff loans at any rate other than the preferential 6% staff rate. He claimed the Respondent had unfairly terminated his employment on 24th August 2017 and thereafter converted his loan interest from the staff rate of 6% to commercial rates with penalty interest, endangering his home. The Respondent replied through Vaslas Odhiambo, asserting the Claimant was on a fixed term contract that expired by effluxion of time on 31st August 2017, that preferential rates were a fringe benefit ceasing on termination per the loan terms and conditions, and that the Claimant had been in default since February 2020, prompting statutory and redemption notices under the Land Act. Applying Giella v Cassman Brown and Mrao, the Court found the Claimant had not demonstrated a prima facie case: he was in default, had made no repayment efforts, and delayed over two years after termination before moving to court. Relying on Elijah Arap Bii and Jacob Kelly Omondi Onyango, the Court held that a defaulting borrower is undeserving of equitable relief. The application was dismissed, the interim orders of 26th March 2020 were vacated, and each party was ordered to bear their own costs in light of the Claimant's precarious financial situation.

Key legal issues

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01

Whether the Claimant established a prima facie case for interim injunction

Holding

The Claimant failed to demonstrate a prima facie case with a probability of success

Reasoning

The Court applied Giella v Cassman Brown. The Claimant was employed on a fixed term contract that expired by effluxion of time, did not seek reinstatement, had been in default on his loan repayments since February 2020, made no effort to repay even at the preferential rate, and waited over two years after termination before filing the application without explaining the delay. Interim relief on interest rates is unavailable to a non-paying borrower.

p. 4
02

Whether a defaulting borrower is entitled to equitable relief

Holding

A borrower in default cannot obtain equitable relief restraining the lender from exercising its statutory rights

Reasoning

Relying on Elijah Arap Bii v Kenya Commercial Bank and Jacob Kelly Omondi Onyango v National Bank of Kenya, the Court held that banks operate in a strictly regulated environment and every borrower must meet their financial obligations; it is never in the public interest to allow non-performing loans, and a defaulting former employee is undeserving of equitable relief.

p. 4

Legal principles established

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  • An employee who fails to service loans advanced by their former employer is undeserving of any equitable relief
  • Preferential staff interest rates are a fringe benefit available only to employees, and cease upon termination of employment

Court orders

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  1. 1.The Claimant's application dated 19th March 2020 fails and is disallowed
  2. 2.The interim orders granted on 26th March 2020 are vacated
  3. 3.Each party to bear their own costs

Authorities

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Legislation

  • Land Actstatutory notices in event of default under a legal charge

Cases cited (4)

  • Giella v Cassman Brown & Co Ltd
    (1973) E.A
  • Mrao v First American Bank of Kenya & 2 others
    [2003] KLR
  • 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 (Court referred to as 'this Court' hearing employment and loan dispute)

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, "Mang’ati v ABSA Bank Limited (Formerly Barclays Bank of Kenya Limited) (Cause 162 of 2020) [2022] KEELRC 1232 (KLR)", Case Analysis (2022). Cause No 162 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/1232/eng@2022-07-21

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