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ELRCDismissedCause No 853 of 2018· [2023] KEELRC 61 (KLR)

Kalele & 53 others v Universal Corporation Limited (Cause 853 of 2018) [2023] KEELRC 61 (KLR)

Employment and Labour Relations Court
20 January 2023
5,834 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~23 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court upheld an out-of-court settlement at 70% of employees' claims, ruling that settlements can only be undone for fraud, misrepresentation, or mistake.

What this practically means

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Executive summary

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The Claimants, former employees of the Respondent, sued in 2018 seeking declarations of permanent employment, damages, service pay, leave pay, NSSF remittances, maternity leave pay and punitive damages. Their former counsel, the firm of Gitau Mathu and Associates, negotiated an out-of-court settlement under which the Respondent paid each Claimant 70% of the amounts claimed, and a document captioned 'Consent' dated August 17, 2018 recording full and final settlement was later placed on record. The Claimants applied to set aside the consent, asserting it was entered without instructions, fraudulently backdated, never adopted as a court order, and conditional on payment of a further 30% and issuance of written contracts. The court first rejected a functus officio objection, holding the doctrine applies only where an issue has been determined on merit, and the earlier formal-proof directions were merely procedural. On the merits, the court found from the email correspondence and payment acknowledgments that the parties agreed to full and final settlement at 70% of the claims, that counsel had ostensible authority to compromise, and that the fraud allegations were bald and unproved. The court held the document was a settlement agreement, adopted it as an order of the court, marked the suit as duly settled, directed the respondent to pay the court fees for the consent within 7 days, and ordered each party to bear its own costs of the application.

Key legal issues

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01

Whether the court was functus officio

Holding

The doctrine does not apply; no prior court had determined the consent issue on its merits, the directions for formal proof being merely procedural

Reasoning

The court held functus officio arises only where a court has rendered itself on issues submitted to it. The prior directions to proceed to formal proof were procedural and did not constitute a determination of the consent question; hence the court retained competence to examine the consent.

p. 7
02

Whether the negotiations culminated in a full and final settlement

Holding

Yes - the correspondence and payment acknowledgments showed the claims were fully and finally settled at 70% of the sums claimed, with no outstanding 30% balance

Reasoning

Emails from both counsel consistently used the phrase 'in full and final settlement'; the tabulations showed cheques equalled 70% of claims; the 1st Claimant executed a payment acknowledgment in full settlement and omitted the alleged 30% balance when questioned in court, evidencing final settlement.

p. 9
03

The nature of the document dated August 17, 2018

Holding

It is a settlement agreement evidencing full settlement and extinguishment of the claims

Reasoning

The document recorded that all outstanding claims and agreed costs had been paid in full final settlement. The court treated it as a settlement agreement whose effect was to extinguish the Claimants' right to pursue the claims further.

p. 10
04

Whether the consent could be vitiated for lack of instructions, fraud or unfulfilled conditions

Holding

No - counsel had ostensible authority, and the fraud allegations were unsupported by cogent evidence

Reasoning

The Claimants admitted their counsel had instructions to negotiate; the correspondence showed negotiated terms. Fraud is a serious allegation requiring proof; the Claimants' assertions were mere assertions. The claimed unfulfilled conditions (written contracts, 30% balance) were not terms of the agreement.

p. 11

Legal principles established

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  • A consent or settlement agreement can only be vitiated on grounds which would justify setting a contract aside - misrepresentation, fraud, mistake, coercion and frustration, or if certain conditions remain to be fulfilled
  • Counsel ordinarily has ostensible authority to compromise a suit so far as the opponent is concerned
  • Allegations of fraud must be proved by cogent evidence; bald allegations do not suffice
  • The functus officio doctrine applies only where a court has considered and determined an issue on its merits, not where only procedural directions were given
  • A party to successful negotiations is estopped from running away from the outcome of the settlement

Court orders

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  1. 1.The settlement agreement/consent dated August 17, 2018 is adopted as an order of the court.
  2. 2.The suit is marked as duly settled.
  3. 3.The respondent to pay court fees for the consent within 7 days.
  4. 4.Each party to bear its own costs of the application.

Authorities

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Legislation

  • Constitution of KenyaArticle 159
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Civil Procedure ActSection 1B
  • Civil Procedure RulesOrder 51 rule 10
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (11)

  • Geoffrey M Asanyo v Attorney General
    [2020] eKLR, Petition No 7 of 2019
  • Flora N Wasike v Destimo Wamboka
    [1988] eKLR
  • JM Mwakio v Kenya Commercial Bank Limited
    Civil appeals 28 of 1982 and 69 of 1983
  • Purcell v FC Trigell Limited
    [1970] 2 All ER 671
  • Savana Saw Mills Limited v George Mwale Mudamo
    [2005] eKLR
  • Nation Media Group & another v Awale Transporters Limited
    [2022] eKLR
  • Stephen Ndegwa & another v KCB
    [2021] eKLR
  • Damondar Jihabhai & Co Limited and another v Eustale Sisal Estates Limited
    [1967] EA 153
  • Globe Motors Inc & others v TRN Lucas Electric Steering Limited and others
  • Waugh v HB Clifford & Sons
    [1982] Ch 374
  • Coastal Bottlers Limited v Kimathi Minthika
    [2018] eKLR
Jurisdiction invoked
Inherent powers and overriding objective of the court; Article 159 of the Constitution

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, "Kalele & 53 others v Universal Corporation Limited (Cause 853 of 2018) [2023] KEELRC 61 (KLR)", Case Analysis (2023). Cause No 853 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/61/eng@2023-01-20

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