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ELRCDismissedNot stated in judgment

David Ohana v Kenol Kobil PLC [2021] KEELRC 1398 (KLR)

Employment and Labour Relations Court
27 April 2021
MMM. Mbaru
1,936 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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The respondent, Kenol Kobil PLC, applied under Order 26 Rule 1 of the Civil Procedure Rules for an order that the claimant furnish security for costs of Ksh.4,543,381.16 and USD 67,719.27, contending that upon termination of his employment the claimant relocated to Israel, has no known assets in Kenya, and that the respondent has a bona fides defence, so that any costs award would be irrecoverable. The claimant opposed the application, asserting it violated his constitutional right of access to justice under Article 48, was a delay tactic, and that his claim for terminal dues following alleged unlawful termination was meritorious and contract-based. The respondent filed a further affidavit asserting lawful termination for poor performance and that the bonus claim was discretionary. The court held that although Order 26 Rule 1 permits security for costs where a plaintiff has no known assets, the ELRC's objectives under section 3 of the Employment and Labour Relations Court Act require disputes to be heard without undue regard to technicalities, and costs in employment claims are discretionary under section 12(4) and do not automatically follow the event, as affirmed by the Court of Appeal in Alfred Mutuku Muindi v Rift Valley Railways. Following Archybald Masinde Munialo v Metal Crowns Limited, security for costs is only ordered where a claim is frivolous and has no possible chance of success. The issues of unlawful termination, discrimination and non-payment of terminal dues must be heard on the merits, and section 35(4) of the Employment Act preserves the employee's right to dispute the fairness of termination. The application dated 27th January, 2021 was declined; parties to be heard on the merits; no orders as to costs.

Questions the Court framed

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

  1. 1.Whether the claimant, resident outside the jurisdiction with no known assets in Kenya, should be ordered to furnish security for costs before the hearing of the main suit
  2. 2.Whether the respondent has demonstrated a bona fides defence such that security for costs should issue
  3. 3.How the objectives of the Employment and Labour Relations Court and the discretionary nature of costs under section 12(4) of the ELRC Act bear on an application for security for costs

Key legal issues

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01

Whether security for costs should issue against a claimant resident outside the jurisdiction

Holding

The application was declined; in employment and labour relations disputes, security for costs is only ordered where the claim is frivolous with no chance of success, and the matter must proceed to a hearing on the merits.

Reasoning

While Order 26 Rule 1 of the Civil Procedure Rules permits security for costs where a plaintiff has no known assets in the country, the ELRC's constitutive Act requires parties to be heard without undue regard to technicalities and to facilitate just, expeditious, efficient and proportionate resolution of disputes. Costs in this court are discretionary under section 12(4) of the ELRC Act and do not automatically follow the event, unlike commercial disputes. The issues raised - unlawful termination, discrimination and non-payment of terminal dues - must be heard on the merits before costs can be considered. Section 35(4) of the Employment Act preserves the employee's right to dispute the lawfulness or fairness of termination.

p. 3
02

Discretionary nature of costs in the ELRC

Holding

The award of costs is not a matter of course but discretionary based on what the court considers just, per section 12(4) of the Employment and Labour Relations Court Act.

Reasoning

The court distinguished commercial litigation where costs follow the suit, adopting the Court of Appeal's reasoning in Alfred Mutuku Muindi v Rift Valley Railways that the wording of section 12(4) gives the trial court discretionary powers to award costs or not, and costs in employment claims do not automatically follow the event.

p. 3

Legal principles established

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  • In employment and labour relations disputes, costs do not automatically follow the event but are discretionary under section 12(4) of the ELRC Act
  • Security for costs will not be ordered in employment disputes unless the claim is frivolous and has no possible chance of success
  • An employee retains the right to dispute the lawfulness or fairness of termination notwithstanding the employer's purported defence

Court orders

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  1. 1.The application dated 27th January, 2021 is declined
  2. 2.Parties shall be heard on the merits
  3. 3.No orders as to costs

The bench

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

MM
majority

Wrote the judgment

Jurisdiction invoked
Employment and Labour Relations Court Act, 2011

Relief refused

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Order that the claimant furnish security for costs of Ksh.4,543,381.16 and USD 67,719.27

Unless a claim is frivolous with no possible chance of success, the court will not order security for costs; the dispute must be heard on the merits

p. 3

Striking out of the claim in default of furnishing security

The application was declined in its entirety

p. 3

Costs

No orders to costs.

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.

Unless the claim filed by a claimant is found to be frivolous and has no possible chance of success, the court will not order for security for costs as a hurdle such party
p. 3Security for costs in employment disputes
accordingly, for reasons set out above, application dated 27 th January, 2021 is hereby declined. Parties shall be heard on the merits. No orders to costs.
p. 3Final orders
The costs in these kind of claims do not automatically follow the event unlike other civil claims
p. 3Discretionary costs under section 12(4) ELRC Act

Issues in the judgment

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minor

Claim amount stated inconsistently in the judgment

minor

Counterclaim amount stated inconsistently (67,719.27 vs 67,619.27)

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, "David Ohana v Kenol Kobil PLC [2021] KEELRC 1398 (KLR)", Case Analysis (2021). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1398/eng@2021-04-27

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