Mumba & 7 others (Sued on their own Behalf and on Behalf of Predecessors and or Successors in Title in their Capacities as the Registered Trustees of Kenya Ports Authority Pensions Scheme) v Munyao & 148 others (Suing on their own Behalf and on Behalf of the Plaintiffs and other Members/Beneficiaries of the Kenya Ports Authority Pension Scheme) (Civil Appeal 38 of 2014) [2016] KECA 160 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that pension trustees cannot cut your retirement benefits or backdate rule changes without your consent.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the trial court erred in failing to determine the jurisdictional objection raised in the defence
- 2.Which is the proper forum with original jurisdiction over the dispute: the High Court, the Employment and Labour Relations Court, or the Chief Executive Officer of the Retirement Benefits Authority under Section 46(1) of the Retirement Benefits Act
- 3.Whether the CEO of the RBA was precluded by natural justice from reviewing a dispute concerning a Remedial Plan that the RBA itself had approved
- 4.Whether the 2002 amendments to the 1998 Trust Deed and the Remedial Pension Plan violated the proviso to Section 15(c) requiring members' consent
- 5.Whether the failure to disclose KPA's contribution arrears to the RBA amounted to fraud
- 6.Whether the backdating of the effective date of the Second Deed of Amendment was constitutional and contractually valid
- 7.Whether the trial court erred in determining an unpleaded issue (salary increment for five claimants)
- 8.Whether the trial court erred in the award of interest (cross-appeal)
Key legal issues
#Failure of the trial court to determine the pleaded jurisdictional objection
The trial court erred in law in failing to consider and determine the jurisdictional issue raised in the defence before proceeding to the merits, and consent to transfer the suit did not conclude the jurisdictional question.
Jurisdiction was pleaded in the defence of 11th January 2007 but the judgment did not determine it. Since jurisdiction goes to the root of a court's competence, it had to be resolved first. The parties' consent to transfer the suit from the High Court to the ELRC did not settle the question, as jurisdiction cannot be conferred by consent where none exists.
Proper forum with original jurisdiction over pension trustee disputes
The dispute could not be routed to the CEO of the RBA under Section 46(1) of the Retirement Benefits Act because the RBA had itself approved the Remedial Plan under challenge; natural justice barred the CEO from reviewing the RBA's own approval.
Section 46(1) permits review by the CEO of decisions of trustees, but nemo judex in re causa sua forbids a person from sitting in judgment over their own decision. Having actively approved implementation of the Remedial Plan, the RBA and its CEO were disqualified from reviewing that plan. The Court also held that constitutional rights claims do not confer exclusive jurisdiction on the High Court and can be raised in any competent forum.
Consent requirement in the proviso to Section 15(c) of the 1998 Trust Deed
The 2002 amendments and the Remedial Plan reduced accrued benefits without members' consent as required by the proviso, rendering them null and void notwithstanding RBA approval.
The proviso to Section 15(c) mandatorily required the consent of any pensioner, dependent or member whose benefits would be reduced. No such consent was obtained. The Remedial Plan was premised on the unprocedural amendment, so it too was null and void. A statutory plan cannot lawfully authorise the taking of vested contractual property rights without due process under the contractual instrument.
Whether non-disclosure of KPA's contribution arrears was fraudulent
The Court upheld the finding that the real cause of the deficit was not disclosed to the RBA, but reversed the trial court's finding of fraud.
The Revised Statutory Remedial Plan disclosed a deficit but concealed that its cause was the Sponsor's failure to remit over Ksh. 6.8 billion in contributions. That material non-disclosure meant the RBA acted on insufficient information. However, fraud must be proved on a balance of probability, and the non-disclosure could have been an oversight, negligent or inadvertent, so the trial court's finding of fraud was not sustained.
Backdating of the Second Deed of Amendment
Backdating the effective date of the amendment divested accrued contractual pension benefits without consent and was unconstitutional and contractually void.
The law presumes against retroactivity in contract absent consent. Since no consent was obtained as required by the proviso to Clause 15(c), backdating impaired contractual obligations and divested vested rights, amounting to a taking of property contrary to Section 75 of the repealed Constitution, applying by analogy the Supreme Court's criteria in Samuel Kamau Macharia.
Determination of an unpleaded issue (salary increment for five claimants)
The trial court was entitled to determine the unpleaded issue because it was raised and canvassed at trial, the appellant was given an opportunity to respond, and no prejudice was demonstrated.
Following Odd Jobs v Mubia and Nkalubo v Kibirige, a court may decide an unpleaded issue left to it at trial. The issue arose during the hearing, was cross-examined upon, and RW1 did not contest it. The Court declined to follow RW1's suggestion that claimants should visit his office for recalculation, holding the trial court was not obliged to adopt that course.
Cross-appeal on interest
The cross-appeal failed; the award of interest at court rates from the date of judgment was a discretionary exercise not shown to have been wrongly made.
Section 26 of the Civil Procedure Act makes interest discretionary. Following Omega Enterprises v Sirikwa Hotel, an appellate court will not interfere with a discretionary award unless it is shown to have been wrongly exercised. The respondents also failed to show the trial court ignored the adjusted claims in paragraph 12 of the plaint, as the aggregate award was expressly made under that paragraph.
Legal principles established
#- Trustees of a pension scheme may not amend the trust deed so as to reduce a pensioner's benefit or affect a member's accrued benefit without that member's consent, where the trust deed so provides; consent cannot be bypassed even under a statutory remedial plan.
- Violation of constitutional rights can be raised in any forum competent to hear a dispute between the parties; such a forum is bound by the Constitution, so the availability of a constitutional claim does not oust the jurisdiction of a specialised tribunal such as the RBA process.
- Where the Retirement Benefits Authority has played an active or perceived role in approving the decision under challenge, the CEO of the RBA cannot review that decision as that would offend the rule against bias (nemo judex in re causa sua).
- Backdating the effective date of a trust deed amendment that divests vested accrued benefits and impairs contractual obligations is unconstitutional and contractually null and void absent members' consent.
- Common law principles of judicial review have been subsumed under Article 47 of the Constitution and the Fair Administrative Action Act; there is now only one system of administrative law grounded in the Constitution.
- A court may base a decision on an unpleaded issue if it appears from the course of the trial that the issue was left to the court for decision and no prejudice is demonstrated.
Court orders
#- 1.The appeal is dismissed
- 2.The cross-appeal is dismissed
- 3.Each party to bear its own costs before the Employment and Labour Relations Court and in this appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- Employment and Labour Relations Court
- not stated (suit originally filed in High Court, Mombasa, plaint dated 27th November 2007, transferred by consent on 26th June 2013)
- Jurisdiction invoked
- Appellate jurisdiction of the Court of Appeal over appeals from the Employment and Labour Relations Court on matters of fact and law pursuant to the Statute Law (Miscellaneous) Amendment Act No. 18 of 2014
Relief refused
#Cross-appeal for interest at commercial rate of 20% per annum and from date of filing suit
Award of interest is discretionary under Section 26 of the Civil Procedure Act and the respondents did not demonstrate that the trial court's discretion was wrongly exercised
Costs
Each party to bear its own costs before the Employment and Labour Relations Court and in this appeal.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
A statutory remedial plan or any statutory provision cannot take away vested or acquired property rights without following the due process of law. Likewise, no statutory remedial plan can lawfully authorize the taking away of vested contractual property rights without following the due process in the contractual instrument.
It is our view that violation of constitutional rights can be raised in any forum that is competent to hear and determine a dispute between parties and such forum is bound by the Constitution in its interpretation and application of constitutional provisions and individual rights.
The provisions of Section 46 (1) of the RBA Act are to be invoked when there is no confiict of interest and any active or perceived role by RBA in relation to the decision that is subject to review.
It is our finding that the backdating of the efiective date of the Deed of Amendment was unconstitutional and contractually null and void because there was no consent of the respondents and other members of the Pension Scheme
the common law principles of administrative review have now been subsumed under Article47 Constitution and Section 7 of the Fair Administrative Action Act. In this regard, there are no two systems of law regulating administrative action the common law and the Constitution - but only one system grounded in the Constitution.
The totality of our re-evaluation of the evidence and the relevant law is that the appeal and the cross appeal have no merit and are hereby dismissed. Each party to bear its own costs before the Employment and Labour Relations Court and in this appeal.
Issues in the judgment
#The judgment gives conflicting dates for the trial court's judgment: paragraph 18 states 14th February 2014 while paragraph 41 states 14th February 2010.
Paragraph 70 refers to "Article 15 (c) of the 1998 Trust Deed Rules" although elsewhere the provision is consistently referred to as Section 15 (c) of the Trust Deed; the trust deed has no Articles.
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (2)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Kinuthia v Nairobi City Water and Sewerage Company Limited (Employment and Labour Relations Cause 66 of 2019) [2025] KEELRC 622 (KLR)[2025] KEELRC 622 (KLR)28 Feb 2025applied
- Mbogo & 111 others v Kenya Planters Co-operative Union (Petition 125 of 2016) [2025] KEELRC 427 (KLR)[2025] KEELRC 427 (KLR)14 Feb 2025applied
Cite this brief
#Cite this brief
Caselaw, "Mumba & 7 others (Sued on their own Behalf and on Behalf of Predecessors and or Successors in Title in their Capacities as the Registered Trustees of Kenya Ports Authority Pensions Scheme) v Munyao & 148 others (Suing on their own Behalf and on Behalf of the Plaintiffs and other Members/Beneficiaries of the Kenya Ports Authority Pension Scheme) (Civil Appeal 38 of 2014) [2016] KECA 160 (KLR)", Case Analysis (2016). Court of Appeal at Mombasa (appeal from Employment and Labour Relations Court; number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2016/160/eng@2016-02-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.