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Court of AppealPartially AllowedCourt of Appeal Civil Appeal (Nairobi), Memorandum of Appeal dated 7th June 2023

Wajir Wasco Limited alias Wajir Water & Sewerage Company & another v Mohamed & 2 others (Civil Appeal E396 of 2023) [2024] KECA 937 (KLR)

Court of Appeal of Kenya
2 August 2024
PKP. O. KiageJMJ. MativoMGM. Gachoka
6,117 words in judgment
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The bottom line

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Kenya's Court of Appeal ruled that employees of county-owned companies must first take salary disputes to the Public Service Commission before going to court.

What this practically means

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Executive summary

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This is an interlocutory appeal by Wajir Wasco Limited and the County Government of Wajir against a ruling of the ELRC (Ongaya, J) dated 25th May 2023, which dismissed the appellants' preliminary objection and issued conservatory orders compelling payment of salaries withheld since October 2022 to the respondents and 76 other employees. Allowing the appeal in a unanimous judgment delivered at Nairobi on 2nd August 2024, the Court of Appeal (Kiage, Mativo and Gachoka, JJA) held that the water company is a county government entity because the County Government holds 4997 of 5000 shares and the employees' salaries are drawn from county funds, making them county public servants. Their grievance over stoppage of salaries fell squarely within section 77 of the County Governments Act and section 85 of the Public Service Commission Act, so the Public Service Commission was the first port of call. The suit also offended section 9(2) of the Fair Administrative Action Act, and no exemption was sought under section 9(4). The court further invoked the doctrine of constitutional avoidance, holding that the employer/employee dispute did not require constitutional interpretation notwithstanding the petition's framing. The court set aside the entire ruling, allowed the preliminary objection, dismissed the petition for offending the exhaustion doctrine, and ordered each party to bear its own costs in the appeal and below. The binding rule: employees of county-owned corporations must exhaust the Public Service Commission appellate mechanism before invoking the court's jurisdiction.

Questions the Court framed

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

  1. 1.Whether the respondents' suit offends the doctrine of exhaustion of remedies, including the requirement under section 77 of the County Governments Act, section 82 of the Water Act and section 9(2) of the Fair Administrative Action Act
  2. 2.Whether the learned Judge made conclusive findings of fact at an interlocutory stage

Key legal issues

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01

Whether Wajir Wasco Limited is a county government entity whose employees fall under section 77 of the County Governments Act

Holding

Yes. The 1st appellant is wholly owned by the County Government of Wajir and pays the respondents' salaries from county funds, making them county public servants whose grievance falls under section 77(2)(b) and (g).

Reasoning

The court examined the shareholding: of 5000 shares, the County Government holds 4997, with the rest held by two county executive members. It applied the definitions of a public body in section 2 of the Public Service Commission Act and a county government entity in section 2 and section 148 of the Public Finance Management Act, and noted the salaries were drawn from county funds. It concluded the trial judge took a narrow view by treating the 1st appellant as an independent limited liability company.

p. 8
02

Whether the respondents' suit offended the doctrine of exhaustion of remedies

Holding

Yes. The grievance over stoppage of salaries was appealable to the Public Service Commission under sections 77 and 85, and the suit contravened section 9(2) of the Fair Administrative Action Act; no exemption under section 9(4) was sought.

Reasoning

The court held that stoppage of salaries is a decision relating to engagement of a person in a county government within section 85 of the Public Service Commission Act, that section 87(2) bars court proceedings before exhaustion, and that section 9(2) and (3) of the Fair Administrative Action Act are peremptory. Since no application for exemption under section 9(4) was made, the petition was premature and the ELRC lacked jurisdiction to entertain it.

p. 10
03

Whether framing the dispute as a constitutional petition ousts the exhaustion doctrine

Holding

No. The germane dispute is an employer/employee dispute resolvable without constitutional interpretation, so the doctrine of constitutional avoidance applies.

Reasoning

The court held that not every dispute should be brought as a constitutional question; a constitutional question requires interpretation of the Constitution rather than a statute. The salary dispute could be resolved by interpreting the facts, the contracts and the relevant statutes. Relying on domestic and foreign authority, the court applied the avoidance principle: courts will not determine a constitutional issue where a remedy exists under other legislative provisions.

p. 10

Legal principles established

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  • Where a company is wholly or majority-owned by a county government and its employees' salaries are paid from county funds, those employees are county public servants whose grievances must be channeled to the Public Service Commission under section 77 of the County Governments Act read with section 85 of the Public Service Commission Act before invoking the court's jurisdiction.
  • Where a statutory dispute-resolution mechanism exists, a party must exhaust it before invoking the court's jurisdiction; the mere invocation of constitutional articles in a petition does not exempt a litigant from the exhaustion doctrine.
  • Courts should apply the doctrine of constitutional avoidance and decline to determine a constitutional question where the dispute can be resolved on another basis or under alternative statutory remedies.

Court orders

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  1. 1.The entire ruling dated 25th May 2023 delivered by Ongaya J together with all consequential orders is set aside
  2. 2.An order substituted allowing the appellants' Notice of Preliminary Objection dated 3rd May 2023
  3. 3.The respondents' petition before the ELRC is dismissed for offending the doctrine of exhaustion of remedies
  4. 4.Each party shall bear its own costs for this appeal and before the trial court

The bench

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

PK
majority
JM
majority
MG
majority
On appeal from
Employment and Labour Relations Court at Nairobi
Constitutional Petition No. E076 of 2023
Jurisdiction invoked
Section 3(2) of the Appellate Jurisdiction Act, Cap 9 Laws of Kenya (first appeal)

Relief refused

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Exemption from the obligation to exhaust remedies under section 9(4) of the Fair Administrative Action Act

The respondents never applied for exemption under section 9(4) despite its availability in exceptional circumstances

p. 10

Costs

Each party shall bear its own costs for this appeal and before the trial court.

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.

We therefore set aside the entire ruling dated 25th May 2023 delivered by Ongaya J together with all the consequential orders and substitute it with an order allowing the appellants' Notice of Preliminary Objection dated 3rd May 2023.
Disposition - setting aside the impugned ruling
The respondents' petition before the ELRC is hereby dismissed for offending the doctrine of exhaustion of remedies. Each party shall bear its own costs for this appeal and before the trial court.
p. 12Final orders - dismissal of petition and costs
It is our considered view that the Managing Director of the 1st appellant is an employee of the 2nd appellant since the 1st appellant is wholly owned by the 2nd appellant.
p. 8County entity status of the water company
Where there is a clear procedure for redress of any particular grievance prescribed by the Constitution or an Act of Parliament, that procedure should be strictly followed.
p. 5Exhaustion doctrine as stated in Speaker of National Assembly v Karume
the principle of avoidance means that a court will not determine a constitutional issue when a matter may properly be decided on another basis
p. 11Constitutional avoidance

Issues in the judgment

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minor

The judgment refers interchangeably to '1st appellant', '1st respondent' and '1st respondent' when discussing the water company, creating apparent inconsistencies

minor

The quoted passage from Secretary, County Public Service Board & Another v Hulbhai Gedi Abdille is garbled and internally incoherent as reproduced in the judgment

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (4)

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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, "Wajir Wasco Limited alias Wajir Water & Sewerage Company & another v Mohamed & 2 others (Civil Appeal E396 of 2023) [2024] KECA 937 (KLR)", Case Analysis (2024). Court of Appeal Civil Appeal (Nairobi), Memorandum of Appeal dated 7th June 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/937/eng@2024-08-02

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