Khasiani v Barclays Bank of Kenya Limited & another (Cause 926 of 2016) [2022] KEELRC 1487 (KLR) (10 June 2022) (Judgment)
Neutral citation:
[2022] KEELRC 1487 (KLR)
Republic of Kenya
Cause 926 of 2016
SC Rutto, J
June 10, 2022
Between
Abungaana Khahuu Khasiani
Claimant
and
Barclays Bank of Kenya Limited
1st Respondent
Reli Cooperative Savings and Credit Society Limited
2nd Respondent
Judgment
1.The instant suit was instituted vide a plaint filed at the High Court on September 11, 2003. The matter was later transferred for hearing and determination before the Employment and Labour Relations Court vide the Court’s Ruling on April 19, 2016.
2.The claimant avers through the plaint that he was dismissed from employment on October 22, 2002, on the basis of misrepresentation by the 1st respondent, Barclays Bank of Kenya Limited through its letter dated September 11, 2002. He further termed the letter dated September 11, 2002 as defamatory as it contained malicious inuendo and negligent misrepresentation that caused his dismissal. Accordingly, the claimant prays for: -a.General damages for defamation and/or malicious and negligent misrepresentation;b.General damages for breach of contract and benefits for the reminder of contract period;c.Costs of the suit;d.Interest at court rates; ande.Any other relief that the Court may deem apt.
3.The 1st respondent disputed the claim and averred that in as much as it sent the letter dated September 11, 2002, its contents did not contain words that were to be understood to bear or were capable of bearing any meaning defamatory of the claimant. It asked the Court to dismiss the suit with costs.
4.On its part, the 2nd respondent denied that the claimant’s dismissal was callous and/or actuated by malice. It denied that the claimant is entitled to any terminal benefits and /or damages for breach of contract having been summarily dismissed for gross misconduct. It asked the court to dismiss the suit with costs.
5.The matter proceeded for hearing on January 19, 2022. The claimant and the 1st respondent presented oral evidence. However, the 2nd respondent did not participate in the trial as counsel on record filed an Application dated November 11, 2021, to cease acting for want of instructions and which Application, was allowed.
Claimant’s case
6.The claimant testified in support of his case, and at the outset, sought to rely on his witness statement and bundle of documents, which were adopted to constitute part of his evidence in chief. The documents were also produced as the claimant’s exhibits before court.
7.The claimant testified that at the material time, he was a General Manager of the 2nd respondent and was earning a gross salary of Kshs 100,000. That he was also a customer of the 1st respondent bank. It was his testimony that he received a letter dated 19th September, 2002 from the 2nd Respondent, informing him that he had misappropriated funds as he had paid himself a double salary. That he replied to the letter and was later sent on compulsory leave. That he was subsequently dismissed from employment on October 22, 2002. That prior to that, on 29th August, 2002, and before the 1st respondent had made any payments, the 2nd respondent had instructed the 1st respondent not to credit his salary and return the sum of Kshs 73,328/= as he had been paid his salary in cash, through Reli Co-operative Sacco Limited SASA Section.
8.He further testified that vide a letter dated September 11, 2002, the 1st respondent through a Mr. Wanjau stated that his account had already been credited with the salary and the funds utilised hence could not be returned.
9.It was his further testimony that the statement by the said Mr. Wanjau, was erroneous as there had been no bank transfer by the 1st respondent to his account. That the credit made to his account was a cash credit and not a bank transfer.
10.That further, on September 11, 2002, the 1st respondent made out a banker’s cheque in the sum of Kshs 73,078/= and the same was returned to the 2nd respondent as instructed on 29th August, 2002. That the same was subsequently acknowledged by the 2nd respondent on October 14, 2002.
11.The claimant informed Court that the letter of September 11, 2002 is a misrepresentation of facts and that it was that letter that formed the basis for his dismissal from employment. He further termed the letter as defamatory, malicious and negligent. He termed his dismissal as unfair, unlawful and unmerited as it affected his prospects of future employment.
12.Upon cross examination, the claimant maintained that he was terminated from employment based on the letter dated September 11, 2002, from the 1st respondent.
1st Respondent’s case
13.The 1st respondent presented oral evidence through Mr. Michael Massawa who testified as RW1. He identified himself as a Legal Counsel at the 1st respondent bank. He adopted his witness statement and the documents filed on behalf of the 1st respondent to constitute part of his evidence in chief. The documents were also produced as part of the 1st respondent’s exhibits.
14.He testified that vide a letter dated August 29, 2002, the 1st respondent was instructed by the 2nd respondent not to credit the claimant’s account and to return his salary of Kshs 73,328/=. That the letter did not state the reason for the refund.
15.That the letter dated September 11, 2002, from the 1st respondent, was a statement of fact with no defamatory meaning. That on 2nd October, 2002, the 2nd respondent sought further clarification from the 1st respondent as regards the letter of September 11, 2002 and the 1st respondent responded as follows: -
16.That subsequent to this clarification, the 2nd respondent forwarded a cheque to the 1st respondent on October 14, 2002. He stated that the 1st respondent is an innocent party to the internal wrangles between the claimant and the 2nd respondent. That the claimant had no case against the 1st respondent.
Submissions
17.It was submitted on behalf of the claimant, that the 2nd respondent had failed to discharge its evidential burden by showing that there were valid grounds for his summary dismissal. That the 2nd respondent had the burden to prove the reasons for his dismissal as per section 43(2) of the Employment Act. That the claimant was dismissed on the basis of the 1st respondent’s erroneous reckless, negligent and false advice as contained in its letter of September 11, 2002. The claimant further stated that the exhibits by the 1st respondent were inadmissible in light of section 177 of the Evidence Act. The cases of Kenya Commercial Bank Limited vs James Kuria Njine (2002) eKLR and Guardian Bank Limited vs Skyflyers Travel and Tours Limited (2004) eKLR were cited in support of this argument. That further, the claimant was not afforded a fair hearing prior to his dismissal nor given copies of the evidence against him, despite requesting for the same. Reliance was placed on the determination in Postal Corporation of Kenya vs Andrew K. Tanui (2019) eKLR.
18.Through its supplementary submissions, the claimant argued that the Employment Act, 2007 had retrospective effect and on this score, reliance was placed on the case of Cooperative Bank of Kenya Limited vs Yator (2021) eKLR. That the claimant is entitled to damages for tort of malicious/false and negligent misrepresentation or defamation. That the 1st respondent owed the claimant a duty of care not to negligently/ falsely/maliciously represent his account.
19.It was submitted on behalf of the 1st respondent that it was not liable for breach of the claimant’s contract of employment. That as such, it cannot be held liable for damages for termination when there was no privity of contract. That general damages could not be awarded for breach of contract. The case of Municipal Council of Thika vs Elizabeth Wambui Mukuna (2004) was cited in support of this position. It was the 1st respondent’s further submission that the applicable law in the instant case was the Employment Act (1976). Reliance was placed on the authorities of Abubakar Ali Shee vs Tourism Promotions Services (Kenya) Limited eKLR and Anthony Makala Chitavi vs Malindi Water & Sewerage Company Limited (2013) eKLR.
20.In further submission, the 1st respondent argued that it did not make any statement capable of defaming the claimant. That no particulars of the alleged malicious innuendo and negligent misrepresentation has been placed before the Court. Reliance was placed on the case of Peter Maina vs Ndirangu t/a Express Service Agency vs Standard Group Limited (2016) eKLR. That pursuant to article 162(2) of the Constitution and section 12(1) and (2) of the Employment and Labour Relations Act, the Court has no jurisdiction to determine a claim for defamation.
Analysis and Determination
21.Flowing from the pleadings, the evidence on record and the rival submissions, it is evident that this Court is being called to resolve the following questions: -i.Is the Employment Act, 2007 applicable to the case?ii.Whether the 2nd respondent is liable for the dismissing the claimant from employment?iii.Whether the 1st respondent is liable to the claimant for negligent misrepresentation?iv.Whether the 1st respondent is liable to the claimant for defamation?v.Is the claimant entitled to the reliefs sought?Applicability of the Employment Act, 2007
22.It is notable that the cause of action arose in 2002 before the enactment of the Employment Act, 2007. The claimant has averred that the Employment Act, 2007 has a retrospective effect hence is applicable to the case herein.
23.In support of its position, the claimant has relied on the determination by the Court of Appeal in the case of Cooperative Bank of Kenya Limited vs Yator (Civil Appeal 87 of 2018) [2021]. I have carefully considered that decision and note that the Court considered the import of section 93 of the Act, which is basically a transition clause. In this regard, the learned Judges rendered themselves thus: -
24.It is also instructive to note that this determination contradicts an earlier determination by the Court of Appeal in the case of David Ngugi Waweru vs Attorney General & another [2017] eKLR in which it was held that: -
25.In my view, the transition clause under section 93 of the Employment Act, 2007, is a saving clause which was meant to save contracts of service that were valid at the time the current Act was being enacted.
26.The claimant’s contract of employment had already been terminated by the time the Employment Act, 2007 was being enacted. It was not valid anymore hence did not fall under the contracts of employment which were transited to the new Act.
27.Besides, it will be unfair to expect an employer to comply with provisions of an Act that came into force 6 years later. It is further unfair to judge an employer’s conduct based on a standard that was non existent at the time the employment was terminated.
28.The upshot of the foregoing is that I find that the applicable law in resolving the question of the claimant’s dismissal from employment, ought to be the law that was in force at the time and that is the repealed Employment Act.Whether the 2nd respondent is liable for the dismissing the claimant from employment?
29.The process leading upto the claimant’s dismissal from employment was commenced vide a letter dated September 19, 2002 which is couched as follows: -
30.Through his response dated September 26, 2002, the claimant responded to the letter from the 2nd respondent’s denying the allegations as follows;
31.Subsequently, the claimant was sent on compulsory leave on September 27, 2002 for a period of 30 days. Thereafter, he was dismissed from employment vide a letter dated October 22, 2002 which reads in part: -
32.It is apparent that the claimant’s dismissal flowed the allegations of double payment of salary initially levelled by the 2nd respondent. It is therefore imperative to revisit the events and circumstances that gave rise to the said allegations and which largely transpired through correspondence.
33.The letter dated 11th September, 2002 from the 1st respondent and which is at the heart of this dispute, reads as follows;
34.It is apparent that the above letter was triggered by the 2nd respondent’s letter of August 29, 2002, through which it instructed the 1st respondent to return the claimant’s salary of Kshs 73,328/=. It was upon receiving a response through the letter of September 11, 2002, that the 2nd respondent sought a clarification from the 1st respondent vide its letter dated 2nd October, 2002, as follows: -
35.On record, is a letter from the 1st respondent dated October 9, 2002, through which the following clarification was given thus: -
36.Subsequently, it would seem that on October 14, 2002 and upon the receiving the foregoing clarification from the 1st respondent, the 2nd respondent, enclosed a banker’s cheque to the 1st respondent with instructions that it recredits the claimant’s account with the sum of Kshs 73,078/=. The letter reads in part: -
37.It is notable that the 2nd respondent sent the letter of October 14, 2002 and returned the money for recrediting of the claimant’s account, before his dismissal. It is also apparent that this action by the 2nd respondent was upon the clarification by the 1st respondent.
38.It is also apparent that the claimant’s dismissal was undertaken despite full information and knowledge by the 2nd respondent, that he had not double paid his salary. It is therefore not clear what informed the 2nd respondent’s actions when it dismissed the claimant from employment. This was despite the 1st respondent owning up to the error in communication through its letter of October 9, 2002.
39.In the end, the 2nd respondent dismissed the claimant on the basis of allegations that were unsubstantiated.
40.As a matter of fact, the 2nd respondent maintained in its defence that the claimant was dismissed on account of gross misconduct. Those grounds turned out to be baseless as no evidence was produced to back up the allegations of gross misconduct by the claimant.
41.Accordingly, the claimant’s dismissal was wrongful and the 2nd respondent is liable.Is the 1st respondent liable for negligent misrepresentation?
42.The claimant has submitted that the 1st respondent is liable for negligent misrepresentation and that it owed him a duty of care not to misrepresent the state of his account.
43.The Black’s Law Dictionary (10th Edition) defines negligent misrepresentation to mean: -
44.It is not disputed that the claimant and the 1st respondent had a banker customer relationship at the material time.
45.The claimant submitted that the 1st respondent owed him a duty of care to ensure that it does not misrepresent his accounts and to ensure that it does not disclose his accounts to a third party.
46.In evaluating the duties of a banker towards its customers, the Court of Appeal in the case of Fidelity Commercial Bank Limited vs Italian Market Kenya Limited [2017] eKLR, cited with approval the holding by Brightman J in Karak Brother Company Ltd vs Burden [1972] 1 All ER 1210, where it was held as follows: -
47.Further, in Equity Bank Limited & another vs Robert Chesang [2016] eKLR, the court cited the case of Encyclopedia of Banking Law C.21 Selangor United Rubber Estate Ltd V Cradock (No.3) [1968] 2 ALL ER 1073) where it was held that: -
48.I echo the sentiments expressed in the above authorities and apply the same to the case herein. It is my expectation that the 1st respondent acting as a responsible banker and exercising reasonable skill and care, ought to have confirmed the actual status of the claimant’s account and ascertained the source of the money credited into his account, before communicating to the 2nd respondent.
49.As it later turned out, its communication of 11th September, 2002 was not a true reflection of the status of the claimant’s account as the money was a cash credit hence had no connection with the 2nd respondent’s funds.
50.Further, the 1st respondent owed the claimant a duty not to disclose his banking information to any party including the 2nd respondent, regardless of whether it was his employer. Indeed, the 1st respondent appear to have reversed roles as regards its duty as a banker and was acting on the instructions of the 2nd respondent, to the detriment of its own customer, the claimant. As such, it totally disregarded its duty of care towards the claimant as its customer. The Bank’s duty to secrecy regarding a customers’ account and matters relating to it is never in dispute. As was stated in the English case of Tournier vs National Provincial and Union Bank of England Ltd [1923] All ER 550, in which Banker LJ stated as follows:
51.In this case, the 1st respondent had a contractual duty of confidentiality to the claimant and it breached that duty by disclosing information in regards to his bank account to the 2nd respondent. That was unauthorised disclosure.
52.My finding on this issue is that the 1st respondent was negligent, imprudent and incautious in its communication to the 2nd respondent, through the letter dated 11th September, 2002. This is the reason why: -
53.It is no doubt that the claimant’s eventual dismissal was triggered by the 1st respondent’s letter of September 11, 2002. It is also evident that the 1st respondent communicated the contents of the letter of September 11, 2002 without verifying the facts. By the time it was verifying the facts and stating the correct position, vide its letter of October 9, 2002, the damage had already been done as the claimant was already on the firing line.
54.This chain of events was no doubt detrimental to the claimant and moreso, considering that he was at the pinnacle of his career.
55.The upshot of the foregoing is that the 1st respondent failed to discharge its duty to exercise skill and care towards the claimant in the manner it communicated to the 2nd respondent, regarding the status of his bank account. It cannot run away from this responsibility.
56.In light of the role played by the 1st respondent in the circumstances leading to the claimant’s dismissal from employment, it cannot escape liability for negligent misrepresentation.Is the 1st respondent liable for defamation?
57.The 1st respondent has submitted that this court lacks jurisdiction to entertain the claim for defamation as the same does not relate to an employer-employee dispute. It has based this argument on the provisions of article 162(2) of the Constitution and section 12(1) and (2) of the Employment and Labour Relations Court Act.
58.It is not disputed that the alleged defamation arose in the cause of an employment relationship.
59.In determining this issue, I will echo the determination of the court in the case of Beatrice Achieng Osir vs Board of Trustees Teleposta Pension Scheme [2012] eKLR where it was held that: -
60.It is therefore my finding that this Court has jurisdiction to determine the issue of defamation, the same having arisen within the employment relationship. Aside from that, it is not practical to mutilate the claim and have another portion thereof, determined in another Court without taking into context the circumstances under which the alleged defamation took place. It is only prudent that the claim be handled by one court and this being the Court vested with the primary jurisdiction to determine the main dispute, which is employment in nature, has jurisdiction to determine all the ancillary issues arising therefrom.
61.Having resolved the issue of jurisdiction, I now move to consider the 1st respondent’s liability in light of the alleged defamation.
62.The claimant has termed the letter of 11th September, 2002 as defamatory in that it contained malicious innuendo and negligent misrepresentation. I will reproduce the letter once again thus: -
63.The ingredients of defamation were summarized in the case of John Ward vs Standard Ltd, HCCC 1062 of 2005 as follows: -
64.The 1st respondent has denied that the letter was defamatory in any way and has averred that the same was a statement of fact.
65.Having reviewed the circumstances that transpired before and after the communication by the 1st respondent, the contents of the letter cannot be termed as factual. This is because the funds credited to the claimant’s account and which were being referred to by the 1st respondent, had been as a result of a cash credit and had not emanated from the 2nd respondent. Therefore, if the communication was at all factual, it would have been couched differently. Besides, it admitted in its letter of 9th October, 2002 that its communication on September 11, 2002, that the claimant’s account had been credited, was inadvertent.
66.Be that as it may, the claimant had the burden of proving publication of the statement which it deemed defamatory. It is not doubt that the letter of September 11, 2002 was addressed to the 2nd respondent, specifically, the “Chairman Reli SACCO”
67.On the issue of the publication of a defamatory statement, the Court of Appeal reckoned as follows in Selina Patani & another v Dhiranji vs Patani [2019] eKLR: -
68.In this case, the claimant did not prove that the letter in question was published to third parties.
69.In determining the burden of proof in regards to the issue of publication, the Court went on to hold in Selina Patani & another v Dhiranji vs Patani (supra) as follows: “The burden to prove publication is on the claimant, in this case the appellants.”
70.To this end, it was upon the claimant to prove that the contents of the alleged defamatory letter were indeed, published. The claimant has stated that the letter containing the alleged defamatory material was published to third parties namely, the 2nd respondent and all its officers who had sight of the letter. First, the 2nd respondent is a corporate entity hence on its own, lacks the capability of deeming the letter as defamatory or otherwise. Second, the officers who apparently had sight of the letter, were not named by the claimant nor any of them called to testify to that effect.
71.In further addressing this issue of publication to third parties, the Court in Selina Patani & another v Dhiranji vs Patani (supra) went on to hold that:-
72.In light of the determination in the authority above and applying the same to the case herein, it is my finding that the claimant has failed to prove a claim for defamation against the 1st respondent as per the requisite standard.
Reliefs
73.As the Court has found that the claimant was wrongfully dismissed, he is entitled to damages to the extent permissible by the repealed Employment Act and which is limited to one month’s salary in lieu of notice. This award is backed by the determination in Kenya Broadcasting Corporation vs Geoffrey Wakio [2019] eKLR where it was held that: -
74.Further in Central Bank of Kenya vs Julius Nkonge Nkabu [2002] eKLR the Court determined that: -
75.In light thereof, the court awards the claimant damages equivalent to one month’s salary, against the 2nd respondent,.
76.The court further awards the claimant damages for negligent misrepresentation against the 1st respondent.
Orders
77.In the final analysis, I enter Judgment in favour of the claimant against the respondents as follows;a.The 2nd respondent to pay to the claimant damages, equivalent to one month’s salary in lieu of notice, being the sum of Kshs 100,000.00.b.The 1st respondent to pay to the claimant damages for negligent misrepresentation being the sum of Kshs 1,000,000.00c.Interest on the amount in (a) at court rates from the date of filing the suit until payment in full.d.Interest on the amount in (b) at court rates from the date of Judgment until payment in full.e.The respondents shall bear the costs of the suit in equal proportion.
DATED, SIGNED AND DELIVERED AT NAIROBI THIS 10TH DAY OF JUNE 2022.………………………………STELLA RUTTOJUDGEAppearance:For the Claimant Mr. LubullelahFor the 1st Respondent Mr. KimaniFor the 2nd Respondent No appearanceCourt Assistant Barille SoraORDERIn view of the declaration of measures restricting court operations due to the COVID-19 pandemic and in light of the directions issued by His Lordship, the Chief Justice on 15th March 2020 and subsequent directions of 21st April 2020 that judgments and rulings shall be delivered through video conferencing or via email. They have waived compliance with Order 21 Rule 1 of the Civil Procedure Rules, which requires that all judgments and rulings be pronounced in open court. In permitting this course, this court had been guided by Article 159(2)(d) of the Constitution which requires the court to eschew undue technicalities in delivering justice, the right of access to justice guaranteed to every person under Article 48 of the Constitution and the provisions of Section 1B of the Civil Procedure Act (Chapter 21 of the Laws of Kenya) which impose on this court the duty of the court, inter alia, to use suitable technology to enhance the overriding objective which is to facilitate just, expeditious, proportionate and affordable resolution of civil disputes.STELLA RUTTOJUDGE