Manga v Prime Bank Ltd
The bottom line
#Kenya's Court of Appeal confirmed employers can sue employees for fraud in the Employment Court, and a former bank officer must repay Kshs.4.6 million.
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 Employment and Labour Relations Court had jurisdiction to entertain the respondent's counterclaim
- 2.Whether the counterclaim was statute-barred
- 3.Whether the allegations of fraud were proved to the required standard
- 4.Whether the superior court properly evaluated the evidence and applied the correct legal principles
Key legal issues
#Jurisdiction of the ELRC over a counterclaim framed in fraud
The ELRC properly assumed jurisdiction because the counterclaim arose directly from the employment relationship and alleged losses occasioned in the course of the appellant's duties.
Applying Owners of the Motor Vessel 'Lillian S', jurisdiction is determined from the pleadings and the nature of the dispute. The counterclaim was anchored on alleged breach of employment obligations and misuse of office during employment, causing financial loss to the employer. Fraudulent characterisation of the claim does not, without more, remove it from the ELRC's mandate under Article 162(2)(a) and section 12 of the ELRC Act.
Limitation defence raised for the first time on appeal
The limitation defence failed because it was not pleaded or canvassed before the superior court and cannot be raised at this stage to impeach the judgment.
Limitation is a substantive defence that must be specifically pleaded and strictly proved. Section 26 of the Limitation of Actions Act may postpone time where concealment is proved, but that too must be specifically pleaded and established. No evidential basis was laid before the superior court to sustain the defence.
Standard of proof for fraud and sufficiency of evidence
The respondent discharged the burden of proving fraud to the heightened standard through documentary evidence, the audit report, and the document examiner's report corroborated by other evidence.
Fraud must be strictly proved to a standard higher than balance of probabilities. The Head of Internal Audit testified to altered and inflated vouchers, fictitious claims and irregular disbursements, supported by documentary exhibits. The document examiner's report, though opinion evidence, was admissible and corroborated per Mutonyi v Republic. The superior court evaluated the evidence with due caution.
Effect of failure to file a defence to the counterclaim
The appellant's failure to defend or attend left the respondent's evidence uncontroverted, which the superior court was entitled to evaluate and act upon if credible and sufficient.
Relying on Postal Corporation of Kenya v Associated Auctioneers, uncontroverted evidence, if credible and sufficient, may properly form the basis of a finding. Absence of a defence does not entitle the claimant to automatic judgment, but the evidence remains subject to evaluation against the requisite standard of proof.
Joint liability for the loss
Civil liability for fraud may be joint where participation in a common scheme is established; the superior court was entitled to find the loss was jointly occasioned.
The evidence demonstrated a coordinated scheme involving manipulation of payment and verification processes with more than one actor. On that evidence the superior court was entitled to find the loss of Kshs.4,611,490 was jointly occasioned through the scheme.
Legal principles established
#- The mere framing of a claim in terms of fraud does not oust the jurisdiction of the ELRC where the dispute is substantially rooted in employment; jurisdiction is determined from the pleadings and the nature of the dispute.
- Allegations of fraud must be strictly proved to a standard higher than a balance of probabilities, though not beyond reasonable doubt.
- Failure to defend a claim does not entitle a claimant to automatic judgment; uncontroverted evidence remains subject to evaluation on its own merit and, if credible and sufficient, may found a finding.
- Limitation is a substantive defence which must be specifically pleaded and strictly proved, and cannot be raised for the first time on appeal.
- On a first appeal, the appellate court re-evaluates the evidence and draws its own conclusions, but will not interfere with findings of fact unless based on no evidence, misapprehension of the evidence, or wrong principles.
Court orders
#- 1.The appeal is dismissed with costs to the respondent
- 2.The judgment of the superior court on the counterclaim is upheld
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the judgment
Wrote the judgment
- On appeal from
- Employment & Labour Relations Court at Nairobi
- Jurisdiction invoked
- Article 163(4) of the Constitution / first appeal to the Court of Appeal against the judgment of the Employment & Labour Relations Court
Relief refused
#Setting aside of the judgment and decree of the superior court on the counterclaim
The appellant failed to demonstrate any error of law or fact; jurisdiction was properly assumed, limitation not established, and fraud proved to the required standard
Costs
The appeal is dismissed with costs to the respondent
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.
The mere framing of the claim in terms of fraud does not, without more, oust the jurisdiction of the ELRC where the dispute is substantially rooted in employment.
It is trite that limitation is a substantive defence which must be specifically pleaded and strictly proved.
allegations of fraud must be strictly proved, though not beyond reasonable doubt, but to a standard higher than a balance of probabilities
failure to defend a claim does not entitle a party to automatic judgment, but it leaves the respondent's evidence uncontroverted and subject to evaluation on its own merit
The appeal is accordingly devoid of merit and is dismissed with costs to the respondent, and the judgment of the superior court on the counterclaim is hereby upheld.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Manga v Prime Bank Ltd", Case Analysis (2026). Civil Appeal 563 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1785/eng@2026-09-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.