Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCDismissedApplication dated August 5, 2022 (ELRC, Nairobi)· [2023] KEELRC 1632 (KLR)

Mulusa v Cooperative Bank Kenya Ltd (Cause E706 of 2022) [2023] KEELRC 1632 (KLR)

Employment and Labour Relations Court
6 July 2023
AMAnna Ngibuini Mwaure
1,314 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~5 min to read original · ~4 min brief

The bottom line

#

Kenya's Employment Court dismissed a former bank employee's bid to keep her 8% staff loan rate, ruling the contract allowed the bank to raise it to 13%.

What this practically means

#

Executive summary

#
The claimant, a former employee of the respondent bank, moved the court by application dated August 5, 2022 seeking a temporary injunction restraining the bank from varying the interest rate on her staff loan from 8% to 13%, and orders directing reversion to the staff rate, pending hearing of her claim. She deponed she obtained the staff loan to purchase a plot in Kitengela and was servicing it faithfully until her summary termination on April 22, 2022, after which the bank converted the loan to commercial rates, which she said were oppressive and would push her to default. The respondent opposed, asserting the loan agreement expressly provided that upon leaving the bank's service for any reason other than retirement a commercial rate would apply, and that the claimant, terminated for allegedly colluding in overvaluation of land causing a loss of Kshs 1,550,000, had not sought reinstatement nor faulted the agreement. The court, applying Five Forty Aviation Limited v Erwan Lande, held that courts enforce rather than rewrite contracts, and that the claimant had consented to the variation clause. It distinguished the claimant's authorities as cases where termination had been found unlawful. The court found the respondent contractually entitled to vary the rate, dismissed the application, ordered costs in the cause, and directed that the main suit be set down for hearing within 30 days.

Key legal issues

#
01

Entitlement to temporary injunction on staff loan rate

Holding

Application dismissed; the respondent was contractually entitled to charge commercial rates after termination of the claimant's employment

Reasoning

The loan agreement signed on February 18, 2021 expressly provided that upon leaving the bank's service for any reason other than retirement a commercial rate would be charged. The claimant consented to that term. Granting the orders would effectively decide the suit before trial, and the preferential rate was a privilege tied to employment which she no longer holds.

p. 2
02

Whether courts may rewrite the contract

Holding

No; courts enforce contracts rather than rewrite them absent coercion, fraud or undue influence

Reasoning

Relying on Five Forty Aviation Limited v Erwan Lande, the court reiterated that parties are bound by their contractual terms unless coercion, fraud or undue influence are pleaded and proved. The claimant pleaded and proved none, having signed the agreement and obtained the loan.

p. 3
03

Distinguishing authorities relied on by the claimant

Holding

The cited authorities were distinguishable because they arose where termination had been found unlawful

Reasoning

John Kinyanjui Gateru and Chris Kiire Chepkioit concerned claimants whose terminations had been held unlawful and unprocedural. Here the claimant's suit, including the lawfulness of her termination, has not yet been heard, so those precedents did not apply.

p. 3

Legal principles established

#
  • Courts enforce but do not rewrite contracts freely executed between parties
  • A preferential staff loan rate is conditional on continued employment where the contract so provides

Court orders

#
  1. 1.The claimant's application dated August 5, 2022 is dismissed
  2. 2.Costs to be in the cause
  3. 3.The main suit to be set down for hearing within 30 days

Authorities

#

Legislation

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

Cases cited (3)

  • Five Forty Aviation Limited v Erwan Lande
    [2019] eKLR
  • John Kinyanjui Gateru vs The Family Bank Limited
    Cause 743 of 2013
  • Chris Kiire Chepkioit vs National Bank of Kenya Ltd
    Case No 57 of 2017
Jurisdiction invoked
Employment and Labour Relations Court original jurisdiction; Constitution Articles 159(2)(d) and 48 and Section 1B Civil Procedure Act invoked on mode of delivery

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Mulusa v Cooperative Bank Kenya Ltd (Cause E706 of 2022) [2023] KEELRC 1632 (KLR)", Case Analysis (2023). Application dated August 5, 2022 (ELRC, Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1632/eng@2023-07-06

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