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Court of AppealDismissedCivil Appeal 405 of 2018

Gisemba v Tausi Assurance Company

Court of Appeal
4 March 2022
3,735 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~15 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal upheld a Ksh. 1.2 million unfair termination award, confirming staff mortgage disputes belong in the employment court.

What this practically means

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Executive summary

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The appellant, a senior underwriting manager who served Tausi Assurance Company from 1996 until his dismissal in November 2014, sued in the ELRC alleging unfair termination, discrimination and breach of contract, claiming salary to retirement age and damages. The trial court (Mbaru, J) found only unfair termination proved and awarded three months' gross salary (Ksh. 1,200,000), with each party bearing its own costs. The appellant appealed seeking enhancement and relief concerning his staff-mortgaged property; the respondent cross-appealed against the finding of unfair termination. The Court of Appeal (Nambuye, Karanja and Kiage, JJA), hearing the appeal on written submissions, adopted the appellant's three issues and dismissed both the appeal and cross-appeal. It reaffirmed its first appellate duty under Rule 29(1)(a) to re-evaluate the evidence, applying Selle vs Associated Motor Boat Co. It held the trial Judge properly considered the section 41 and 45(5) Employment Act factors, including the appellant's admitted errors and apologies, and found the award fair and justified, declining to enhance it. On the suit property, the Court held the mortgage privilege was inextricably intertwined with employment, so the ELRC had jurisdiction, though the claim itself was unproved and properly dismissed. Discrimination and exemplary damages claims had failed at trial, a finding undisturbed. On costs, the Court declined to entertain the issue as it was not a ground of appeal, and ordered each party to bear its own costs of the appeal and cross-appeal.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the award given in the employment and labour relations court for unfair termination of employment ought to be enhanced
  2. 2.Whether the trial court had jurisdiction to deal with the matter of property no. Ngong/Ngong/29503
  3. 3.Who bears the costs of this suit

Key legal issues

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01

Whether the compensation award of three months' gross salary for unfair termination should be enhanced

Holding

The award was fair and justified in the circumstances; the appellate court declined to interfere.

Reasoning

The learned Judge considered all the evidence, the circumstances preceding the dismissal, and the section 45(5) Employment Act factors including the appellant's admitted errors, apologies and long service. The Court found the award neither inordinately low nor unjust, and, exercising restraint on discretionary awards, declined to enhance it. The cross-appeal attacking liability likewise failed as the finding of unfairness was supported by the evidence.

p. 6
02

Whether the trial court had jurisdiction over the dispute concerning the suit property charged to the respondent

Holding

The ELRC had jurisdiction because the mortgage privilege arose from and was intertwined with the employment relationship.

Reasoning

The mortgage was predicated on the employment relationship, and the charge document expressly provided that the staff interest rate would revert to commercial rates upon termination of employment. The transaction could not be extricated from the employer/employee relationship and so fell squarely within the trial court's jurisdiction; the claim itself, however, was not proved.

p. 7
03

Whether the appellant proved discrimination and entitlement to exemplary damages

Holding

Discrimination was not proved; the claim for exemplary damages consequently failed.

Reasoning

The matters complained of, such as overseas trips and allocation of duties, were discretionary benefits and not accrued rights. Being given instructions through junior officers, though distasteful and unprocedural, did not amount to discrimination. As exemplary damages were tied to the discrimination claim, they were also not proved.

p. 6

Legal principles established

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  • On a first appeal the Court of Appeal has a duty to reappraise, re-evaluate and reconsider the evidence on record.
  • Before terminating an employee for misconduct, poor performance or physical incapacity, an employer must explain the reasons to the employee in a language the employee understands, with a fellow employee or union representative present.
  • An employment-related mortgage benefit is inextricably intertwined with the employment relationship, so disputes over it fall within the ELRC's jurisdiction even if couched as commercial.

Court orders

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  1. 1.The appeal is dismissed
  2. 2.The cross-appeal is dismissed
  3. 3.Each party to bear its own costs of the appeal and cross-appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
majority
majority
On appeal from
Employment & Labour Relations Court at Nairobi
ELRC Cause No. 2264 of 2014
Jurisdiction invoked
First appeal under the Court of Appeal Rules (Rule 29(1)(a)) from the Employment & Labour Relations Court

Relief refused

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Enhancement of the Ksh. 1,200,000 award for unfair termination

The trial Judge considered all the evidence and circumstances; the award was fair and justified

p. 5

Relief relating to the suit property Ngong/Ngong/29503

Claim arising from the mortgage was within the trial court's jurisdiction but was not proved

p. 7

Costs of the appeal

Costs, though raised in submissions, was not a ground of appeal

p. 7

Costs

Appeal and cross-appeal dismissed with each party to bear its own costs of the appeal and cross appeal.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

This being a first appeal, we have a duty to reappraise, re-evaluate and reconsider the evidence on record as commanded by Rule 29(1)a of the Rules of this Court and amplified in the locus classicus case of Selle vs Associated Motor Boat Co. [1968] EA.
Duty of a first appellate court
We are not persuaded that the award was inordinately low as to call for our intervention. We have no reason to interfere with that award as we find it fair and justified in the circumstances of the case.
p. 5Non-interference with trial court award
Therefore, by virtue of his termination from employment the interest rate would revert to commercial rate.
p. 6Effect of termination on staff mortgage interest rate
Accordingly, for the reasons given above, we find no merit in the appeal and cross-appeal and they are both hereby dismissed with each party to bear its own costs of the appeal and cross appeal.
p. 7Final orders and costs

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, "Gisemba v Tausi Assurance Company", Case Analysis (2022). Civil Appeal 405 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/380/eng@2022-03-04

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