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ELRCAllowedNot stated in judgment· [2023] KEELRC 2430 (KLR)

Mwambire v Malindi Water & Sewerage Co Ltd & 3 others (Petition E002 of 2023) [2023] KEELRC 2430 (KLR)

Employment and Labour Relations Court
5 October 2023
2,904 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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A Kenyan employment court blocked the removal of a Managing Director, holding that a signed five-year contract stays valid until lawfully terminated.

What this practically means

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Executive summary

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This is a ruling of the Employment and Labour Relations Court at Mombasa (Nzei J) on the Petitioner's Notice of Motion dated 20/4/2023 seeking interim orders restraining the Respondents from terminating, removing or ejecting him from the office of Managing Director of the 1st Respondent, a private limited company. The Petitioner, first appointed Managing Director in 2017, was re-appointed by Board resolution of 4/8/2022 (Meeting No 125) for five years from 1/9/2022, evidenced by a re-appointment letter dated 5/8/2022 which he executed on 18/8/2022. The 3rd Respondent, purporting to act as Acting Managing Director, opposed the application, contending that the Board's three-year term had lapsed on 4/3/2022, that Board Meeting No 125 was null and void, and that the contract had been extended for only six months in September 2022. The Court found the re-appointment letter valid on a prima facie basis, noting the signatory was the Board chairperson and the Respondents' allegations of invalidity were unsubstantiated, while the Board continued functioning until the AGM of 24/3/2023. Applying the Giella v Casman Brown injunctive principles, the Court found a prima facie case with probability of success and irreparable harm, since loss of employment cannot be adequately compensated in damages. The Court also observed that the matter is an ordinary employment suit clothed as a constitutional petition, to be guided by the Employment Act, 2007. The Court granted the interim orders restraining termination or removal pending determination of the petition, ordered costs in the petition, and directed that the petition be fast tracked for hearing on a priority basis.

Key legal issues

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01

Validity of the Petitioner's five-year re-appointment contract of 5/8/2022

Holding

The contract is prima facie valid and subsisting; the Respondents' allegation of invalidity was unsubstantiated and must be tested at full trial.

Reasoning

The letter of re-appointment dated 5/8/2022 was executed by the Applicant on 18/8/2022 following departmental evaluation and Board resolution of 4/8/2022 (Meeting No 125). The allegation that the signatory was unauthorised or that the Board's term had lapsed was not substantiated; indeed the Board continued functioning until the AGM of 24/3/2023 elected new directors. The alleged invalidity is a matter for trial.

p. 4
02

Grant of interim relief pending determination of the petition

Holding

Injunctive principles apply; the Applicant demonstrated a prima facie case with probability of success and irreparable harm, warranting conservatory orders restraining removal from office.

Reasoning

The Court applied the Giella v Casman Brown test. The Applicant showed a subsisting five-year contract commencing 1/9/2022 and demonstrated that removal would cause irreparable damage since loss of employment cannot be adequately compensated in damages. The Respondents did not deny their intent to remove him and did not demonstrate incompatibility.

p. 6
03

Character of the suit as an employment matter presented as a constitutional petition

Holding

The suit is an ordinary employment suit clothed as a constitutional petition; the Court will be guided by the Employment Act, 2007, and the alleged invalidity of the contract will be tested at full trial.

Reasoning

Relying on Summaya Athman Hassan v Paul Masinde Simidi, where legislation gives effect to a constitutional right, a litigant cannot found a cause of action directly on the constitution without challenging that legislation. The Article 41 rights are enacted in the Employment Act and Labour Relations Act which provide adequate remedies.

p. 5

Legal principles established

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  • Where legislation has been enacted to give effect to a constitutional right, a litigant may not found a cause of action directly on the constitution without challenging the legislation
  • Courts must lean towards preservation of employment contracts except where the employer demonstrates an employee's incompatibility
  • An employment contract whose terms have not been varied in accordance with section 10(5) of the Employment Act remains valid until it lapses or is lawfully terminated

Court orders

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  1. 1.Pending hearing and determination of the petition, an order issued against the Respondents, their agents, employees, servants and/or any other person restraining them from terminating, removing or ejecting the Applicant out of office or in any manner interfering with the Applicant's five years' employment contract commencing on 1st September 2022
  2. 2.Costs of the application to be in the petition
  3. 3.The petition to be fast tracked and fixed for hearing on priority basis

Authorities

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Legislation

  • Constitution of KenyaArticle 159
  • Constitution of KenyaArticle 41 (as discussed in Summaya Athman Hassan)
  • Employment Act, 2007Section 10(5)

Cases cited (2)

  • Summaya Athman Hassan v Paul Masinde Simidi & another
    [2019] eKLR
  • Giella v Casman Brown & Co. Ltd
    [1973] E.A 358
Jurisdiction invoked
Article 159 of the Constitution of Kenya (application expressed to be brought under Article 159)

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, "Mwambire v Malindi Water & Sewerage Co Ltd & 3 others (Petition E002 of 2023) [2023] KEELRC 2430 (KLR)", Case Analysis (2023). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2430/eng@2023-10-05

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