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Court of AppealPartially AllowedNot stated in the judgment as provided

Salihiya Company Limited v Ouma & another (Civil Appeal 425 of 2019) [2025] KECA 310 (KLR)

Court of Appeal of Kenya
21 February 2025
2,212 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~9 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal threw out a Kshs.533,538 employment award because the employees proved no actual dismissal and the company's counterclaim came from the wrong entity.

What this practically means

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Executive summary

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This was a first appeal to the Court of Appeal at Nairobi from a judgment of the Employment and Labour Relations Court (Abuodha, J.) delivered on 23rd September 2016 in two consolidated claims by Mary Achieng Ouma and Jecinta Adhiambo Ouma against Salihiya Company Limited. The respondents claimed they had been unlawfully and unfairly terminated and were awarded by the trial court one month's pay in lieu of notice and three months' salary for unfair termination, plus costs. The appellant, which denied terminating their employment and asserted the respondents were employees of Salihiya Cargo & Shipping Agency and had deserted duty after being charged with cheque conversion, raised nine grounds of appeal. The Court of Appeal, per a single judgment of the bench (Musinga, M'inoti and Ochieng, JJA), re-evaluated the evidence in accordance with its first-appeal mandate as articulated in Kenya Ports Authority v Kuston (Kenya) Limited. It found no evidence that the appellant had taken any action to dismiss the respondents; counsel for the respondents conceded there was no formal termination and argued constructive dismissal, which the Court rejected as having no foundation in law. The appeal was allowed, the trial court's judgment set aside, and the respondents' suits dismissed. On the counterclaim for Kshs.533,538/-, the Court held it was mounted by Salihiya Cargo and Shipping Line Agency, which was not a defendant in the original suit, and could not be sustained as a counterclaim; the Court made no orders on it. Costs of the appeal were awarded to the appellant.

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 were employees of the appellant (Salihiya Company Limited) or of Salihiya Cargo & Shipping Agency
  2. 2.Whether there was any termination of the respondents' employment by the appellant, or whether the respondents ceased employment by desertion
  3. 3.Whether the trial court was justified in converting the cessation of the employment relationship and awarding one month's pay in lieu of notice and three months' salary for unfair termination
  4. 4.Whether the trial court erred in failing to determine the appellant's counterclaim for Kshs.533,538/-

Key legal issues

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01

Whether the appellant terminated the respondents' employment

Holding

There was no evidence of any action taken by the appellant to dismiss the respondents; both counsel conceded there was no formal termination, and no basis was established for constructive dismissal

Reasoning

On re-evaluation of the evidence, the Court found no proof of any dismissal by the appellant. The respondents' counsel conceded there was no formal termination and instead proposed constructive dismissal on the ground that the employer did not call the respondents back to work. The Court found no legal foundation for constructive dismissal, since the respondents themselves never returned to work after their arrests. The trial court's finding of termination was therefore unsupported and could not stand.

p. 5
02

Whether the counterclaim by Salihiya Cargo and Shipping Line Agency could be sustained

Holding

It could not, because the counterclaim was not mounted by the defendant in the original suit, and the Court accordingly lacked jurisdiction to grant judgment on it

Reasoning

The counterclaim asserted loss caused by the respondents to Salihiya Cargo & Shipping Agency, which was not a defendant in the consolidated claims. Under Order 7 Rule 3 of the Civil Procedure Rules, a set-off or counterclaim is to be set up by a defendant against the plaintiff's claim. Since the entity asserting the cross-claim was not a defendant, the claim could not be sustained as a counterclaim and no orders were made on it.

p. 5

Legal principles established

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  • On a first appeal, the Court of Appeal is enjoined to re-evaluate the evidence and draw its own conclusions, while making due allowance for not having seen or heard the witnesses
  • A counterclaim can only be mounted by the defendant in the suit; a claim by a non-party cannot be sustained as a counterclaim
  • A claim that an employer dismissed an employee must be proved by evidence of positive action taken by the employer to terminate the employment

Court orders

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  1. 1.Appeal allowed
  2. 2.Judgment of the trial court set aside
  3. 3.Findings of the trial court substituted with an order dismissing the respondents' suit
  4. 4.No further orders made with regard to the counterclaim
  5. 5.Costs of the appeal awarded to the appellant

The bench

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

majority
majority
majority
On appeal from
Employment and Labour Relations Court
Not stated
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction over the Employment and Labour Relations Court; no specific provision cited

Relief refused

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Judgment on the counterclaim for Kshs.533,538/- in favour of the appellant/Salihiya Cargo & Shipping Agency

The counterclaim was mounted by a party (Salihiya Cargo and Shipping Line Agency) that was not the defendant in the original suit and was therefore not a proper counterclaim; the Court lacked jurisdiction to grant judgment on it

p. 5

Costs

Costs of the appeal awarded to the appellant

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.

Accordingly, the appeal is allowed and we set aside the judgment of the trial court. We substitute the findings of the trial court with an order dismissing the respondents' suit.
p. 5Disposition - appeal allowed, suit dismissed
On a first appeal from the High Court, the Court of Appeal should reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses
p. 4Duty of a first appellate court
The counterclaim herein was not mounted by the defendant in the original suit. Therefore, it could not be sustained as a counterclaim.
p. 5Counterclaim by a non-defendant is incompetent
As costs follow the event, the costs of this appeal are awarded to the appellant.
p. 5Costs of the appeal

Issues in the judgment

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minor

The judgment inconsistently renders the name of the criminal case cited as Republic vs Mary Achieng Auma and Nancy Adhiambo Auma, which does not match the respondents' names (Mary Achieng Ouma and Jecinta Adhiambo Ouma)

minor

The judgment records Mr. Ojienda as counsel 'When canvassing the respondents' appeal before us', although the respondents are the respondents in this appeal

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "Salihiya Company Limited v Ouma & another (Civil Appeal 425 of 2019) [2025] KECA 310 (KLR)", Case Analysis (2025). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/310/eng@2025-02-21

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