Kaniu v Family Bank Limited; Central Bank of Kenya & another (Interested Parties) (Petition E342 of 2023) [2024] KEHC 15767 (KLR) (Constitutional and Human Rights) (13 December 2024) (Judgment)
Neutral citation:
[2024] KEHC 15767 (KLR)
Republic of Kenya
Petition E342 of 2023
LN Mugambi, J
December 13, 2024
Between
Kenneth Kaniu
Petitioner
and
Family Bank Limited
Respondent
and
Central Bank Of Kenya
Interested Party
Capital Markets Authority
Interested Party
Judgment
Introduction
1.The Petition dated 12th September 2023 is supported by the Petitioner’s affidavit in support of even date and further affidavits dated 8th November 2023 and 8th April 2024.
2.The gravamen of this Petition is the Petitioner’s allegation that the Respondent’s unlawful termination of his employment and its adverse publication of the same has rendered him unemployable. He is aggrieved that the Respondent’s action has violated his right to a livelihood and is in violation of inter alia his right to life under Article 26 of the Constitution.
3.Consequently, the Petitioner seeks the following reliefs against the Respondent:i.A Declaration of interpretation that the fundamental right to life guaranteed by Article 26 of the Constitution, extends to and includes the right to a livelihood.ii.A Declaration that by the publication vide letter dated 24th July 2022, the Respondent has violated the Petitioner's rights guaranteed and protected under Articles 26 and 28 of the Constitution.iii.A Declaration that the Petitioner is entitled under Article 35(2) of the Constitution, to the correction or deletion of untrue and misleading information in letter dated 24th July 2022, alleging that there is in existence a negative report against the Petitioner from the Central Bank of Kenya or any other person and/ or institution.iv.A mandatory injunction compelling the Respondent to within seven (7) days of issuance and service of the Order of Court, to prominently publish a correction of the untrue and misleading information on the existence of a negative Report from Central Bank of Kenya against the Petitioner in newspapers of nationwide circulation in Kenya, specifically the Daily Nation, Business Daily and the Standard Newspapers;v.An appropriate Order for compensatory damages for violation of the Petitioner's fundamental right to protection of life and livelihood guaranteed under Article 26 of the Constitution, for the lost period of 23 years, guided by the rate of the Petitioner's last permanent and pensionable salary of Kshs. 2.6 Million per month.vi.An appropriate Order for compensatory damages for violation of the Petitioner's fundamental right to human dignity guaranteed by Article 28 of the Constitution.vii.Any other additional appropriate relief that the Court shall deem fit to grant in vindication and protection of the violation of the Petitioner's fundamental rights;viii.Costs on indemnity basis.
Petitioner’s Case
4.The Petitioner states that he is a professional who has worked in the Finance and Management industry for many years. He adds that during his career, he has maintained professionalism, discipline, diligence and integrity in all his undertakings. Owing to his reputable reputation he has had the privilege of working with numerous financial institutions such as Commercial Bank of Africa, Stanbic Investment Management Services (EA) to mention but a few.
5.He depones that back in 2021, the Respondent through Deloitte and Touche’ conducted a rigorous selection process for the position of Chief Commercial Officer. At the end of the process, the Petitioner was appointed to the position vide a letter dated 24th December 2021. This appointment was however subject to a successful vetting process by the 1st Interested Party. He informs that prior to being appointed in this position, he held the position of Chief Executive Officer at Britam Asset Managers for 6 years earning a salary of Ksh.2.6 million.
6.He depones that in a turn of events, he received a letter dated 24th May 2022, which informed him of the termination of his current position. This was due to the background checks conducted by the Respondent and the 1st Interested Party which yielded a negative report. This communication is said to have been disseminated to the Respondent’s Finance and Human Resource Department and the Board of Directors.
7.He alleges that the negative report by the Respondent was false as it was later unearthed that no report was ever issued in the first place. In fact, the 1st Interested Party’s fit and proper test was withdrawn at the Respondent’s behest. The Petitioner asserts that the Respondent’s aim was to un-procedurally and illegally terminate his contract of employment.
8.Furthermore, he is aggrieved that owing to the nature of the Finance and Management industry, such a negative report bears serious consequences. Worse in his case, the report was shared widely yet it was a false report. Due to this, he has not been able to be considered for employment. He avers that this was pointed out by the 2nd Interested Party in June 2022.
9.In addition to the Respondent’s act being prejudicial to him, he makes known that his constitutional rights to dignity and livelihood have been infringed. He avers that his attempt to have this false information deleted and corrected by the Respondent has been futile. He for these reasons urges this Court to intervene so that he may receive justice.
10.It is further noted that the Petitioner filed ELRC Cause No. E534 of 2022; Kenneth Kaniu v Family Bank Limited wherein he sought redress for his unlawful employment termination. The parties entered into consent for the amicable settlement of the suit out of Court. He states in his further affidavit that a consent Judgment was entered on 6th June 2023 on the terms that:
11.He claims that the instant suit is distinct from the employment suit as relates to his life after termination of his employment and seeks compensatory damages for the loss of livelihood for the remaining 23 years which the Petitioner could have been employed and earned a living.
12.He as well informs that he had filed Nairobi High Court Civil Case No. E 104 of 2023 Kenneth Kaniu v. Family Bank Limited which he ultimately withdrew, thus the matter was not heard on merit.
Respondent’s Case
13.In answer to the Petition, the Respondent filed its Replying Affidavit by its Chief Legal Officer, Eric Murai sworn on 25th October 2023.
14.On an opening note, he states that the Petition does not raise any constitutional issues as the dispute is an employment contract matter couched as such. As such, the issues between the parties are private as regulated by the attendant agreements between them.
15.He adds that the mechanism for redress in such matters is provided for under the Employment Act, 2007 and hence this Court lacks the requisite jurisdiction to entertain the matter as the same is vested in the Employment and Labour Relations Court (ELRC).
16.Furthermore, the Petition is sub- judice as the issues raised herein are substantially in issue in two suits filed by the Petitioner currently before the ELRC (ELRC Cause No.E534 of 2022) and civil division of the High Court (Civil Case No.E104 of 2023 ;Kenneth Kaniu v Family Banl Limited). He asserts thus that this Court lacks jurisdiction to entertain this matter on this basis. Considering this, the Petitioner is said to be forum shopping.
17.Additionally, it is argued that the Petitioner had the opportunity of raising the matters herein before the ELRC but failed to do so, hence should be estopped from raising the same here. In light of these preliminary issues, the Petition is deemed to be frivolous, scandalous mischievous and an abuse of the Court process.
18.Turning to the substantive issue, he depones that the Petition is misconceived as is premised on non-existent facts in an attempt to mislead the Court. For instance, he states that the Respondent did not publish or circulate the Petitioner’s termination to the persons and institutions mentioned as alleged. In fact, he points out that no evidence was adduced by the Petitioner to support this claim.
19.For context, he depones that the Petitioner was employed by the Respondent as the Chief Commercial Officer on 24th December 2021.The Petitioner agreed to the terms and issued the signed copy on 28th December 2021.
20.He notes that the Petitioner voluntarily agreed to submit himself to management background checks and even signed a consent form on 28th December 2021.To perform this check, the Respondent engaged the services of private investigators. In the end, they returned a confidential negative report on the Petitioner’s suitability.
21.It is on this premise that the Respondent resolved to terminate the Petitioner’s employment vide the letter dated 24th May 2022.The letter was hand delivered to the Petitioner by the Respondent’s Managing Director and Chief Human Resources Officer. He states that in light of this, the Respondent duly communicated the termination and also stated the reasons for termination.
22.Contrary to the Petitioner’s allegation, he avers that the Respondent did not receive any negative report from the 1st Interested Party in relation to the Petitioner and neither was the same communicated to the Petitioner.
Interested Parties Cases
1st Interested Party’s Case
23.The 1st Interested Party through its General Counsel, Kennedy Kaunda Abuga, filed its response sworn on 5th February 2024. He commences by stating that since there is no relief sought against the 1st Interested Party, this party was wrongly joined in this suit and hence should be struck out.
24.He notes that the Petition seeks to challenge the Petitioner’s termination of employment by the Respondent. As such this matter is based on a private employment relationship between the two parties, of which the 1st Interested Party is a stranger to.
25.He further avers that the issues raised in the Petition are substantially in issue in before the ELRC in ELRC Cause No. E534 of 2022. Accordingly, that by dint of Article 162 (2) of the Constitution and Section 12(3) of the Employment and Labour Relations Court Act, this Court does not have jurisdiction to entertain this suit or even grant the reliefs sought. Similarly that this suit offends the doctrine of sub judice hence an abuse of the Court process.
26.He informs that by dint of Section 9A of the Banking Act every financial institution such as the Respondent is required to ensure that a person appointed as a senior officer is fit and proper to control an institution. This vetting process is an independent process conducted by the 1st Interested Party but the financial institution can also conduct its own due diligence through a background check.
27.He depones that when the Petitioner’s termination letter was issued by the Respondent, the 1st Interested Party had not concluded its vetting process of the Petitioner. As such no adverse report had been issued by the 1st Interested Party to the Respondent concerning the Petitioner.
28.He stresses that although the 1st Interested Party is a regulator, it does not micromanage the day to day affairs of financial institutions. In this context, the Respondent was not obligated to seek approval from the 1st Interested Party before terminating the Petitioner’s employment.
2nd Interested Party’s Case
29.The 2nd Interested Party’s response and submissions to the instant Petition are not in the Court file or Court Online Portal (CTS).
Parties’ Submissions
Petitioner’s Submissions
30.In the submissions dated 11th April 2024, Echessa and Bwire Advocates LLP outlined the issues for discussion as: whether the present Petition is sub judice; whether the Petition raises issues that are res judicata and the jurisdiction of the Employment and Labour Relations Court in constitutional violations.
31.Counsel in this matter submitted that at the time of filing this suit on 12th September 2023, the impugned two suits did not exist hence the Respondent’s argument in this regard does not apply in the context of Section 6 of the Civil Procedure Act. This is because ELRC Cause No. E534 of 2022 had been concluded on 6th June 2023 and Civil Suit No. E104 of 2023 had been withdrawn on 7th August 2023.Nonetheless it was argued that the issues raised herein are not even the same as those raised in those suits.
32.On whether the matter is res judicata, Counsel submitted that with reference to ELRC Cause No. E534 of 2022 the matter was specifically focused on the Petitioner’s rights as an employee not his unemployability and loss of livelihood as raised herein. This is as a result of the Respondent’s malicious publication. The jurisdiction to hear the latter is thus vested in the High Court.
33.Equally that the issues raised herein were not prevailing at the time ELRC Cause No. E534 of 2022 had been filed thus this suit cannot be deemed to be res judicata. Similarly this doctrine was argued not to be applicable with regard to Civil Case No. E104 of 2023 as the suit was withdrawn and thus never heard on merit.
34.Reliance was placed in Kenya Commercial Bank Ltd v Benjoh Amalgamated Ltd [2017] eKLR where the Court of Appeal held that:
35.In like manner, Counsel submitted that the issues raised herein do not relate to employment and labour relations to warrant invoking of the ELRC jurisdiction. To support this claim, Counsel cited the case of Abdikadir Suleiman -Versus-County Government of Isiolo and Another [2016] eKLR where it was held that:
36.Turning to the third issue, Counsel asserted that this Court as guided by the principles of interpretation under Article 259 of the Constitution ought to interpret the right to life as encompassing the right to livelihood. Further that the Petitioner’s right in this regard had been violated by the Respondent owing to the false and prejudicial publication that rendered him unemployable.
37.Reliance was placed in Independent Electoral and Boundaries Commission & 4 others v Ndii & 312 others; Ojwang & 4 others (Amicus Curiae) [2021] KECA 363 (KLR) where it was held that:
38.Similar dependence was placed in Peter K. Waweru v Republic [20061 eKLR, Musa Mbwagwa Mwanasii & 9 others v Chief of the Kenya Defence Forces & another [2021] eKLR.
39.Counsel submitted that the implication of a bad report in the financial industry is detrimental and has legal implications as seen under Section 9A, 32A and 48 of the Banking Act.
40.It was submitted that the Petitioner being 42 years was expectant to practice his career until 65 years. Further that in his last permanent and pensionable employment at Britam he received a salary of Ksh.2.6 million and hence his career yield for the remaining 23 years would have been Ksh.717 million. Accordingly, it is argued that this is the appropriate remedy for the violation of the loss of his right to livelihood.
41.Correspondingly it was argued that his right to dignity under Article 28 of the Constitution had been violated. Relying on the averments in the Petitioners affidavit, Counsel submitted that it was evident that the Petitioner had developed and cultivated a reputation in the financial industry which was ultimately destroyed by the Respondent’s publication.
42.Reliance was placed in MW K & another v Attorney General & 3 others [2017] eKLR where it was reiterated with approval that:
43.Furthermore, Counsel submitted that Article 35(2) of the Constitution makes it clear that it is a person’s right to correction and/deletion of untrue or misleading information. Consequently, the Petitioner is entitled to this remedy in view of the Respondent’s adverse publication. It is argued however that the Respondent has failed, ignored and refused to delete the said untrue and misleading information.
44.To buttress this point reliance was placed in Linus Simiyu Wamalwa v. University of Nairobi & Another [2015] eKLR where it was held that:
Respondent’s Submissions
45.On 23rd May 2024, Waweru Gatonye and Company Advocates filed submissions where the highlighted issues for determination were set out as:whether or not the instant Petition is incompetent and defective on basis of jurisdiction; whether or not the Petition offends the doctrine of constitutional avoidance and ripeness; whether or not the Petition offends the principle of sub judice and/or res judicata; whether or not the Petition amounts to forum shopping and whether or not the Respondent published and/or circulated the Petitioner's termination letter dated 24th May 2022.
46.It was submitted in the first issue that the substratum of the instant Petition is the termination of the Petitioner’s employment vide the letter dated 24th May 2022.Counsel stressed that this is a private employment contract between the Petitioner and the Respondent thus falls within the ELRC jurisdiction as set out under Article 162 (2)(a) of the Constitution as read with Section 12 of the Employment and Labour Relations Court Act and the Employment Act.
47.Consequently, being an employment dispute, it was contended that this Court is not vested with the requisite jurisdiction to entertain the matter. Reliance was placed in Muli -v- Kenya Water Institute & 2 others KEELRC 942 (KLR) where it was held that:
48.Comparable dependence was placed in Jabir Singh Rai & 3 others -v- Tarlochan Singh Rai & 4 others [2013] eKLR; Republic -v- Paul Kihara Kariuki and 3 others, Ex-parte Law Society of Kenya [2020] eKLR; Judicial Service Commission -v- Gladys Boss Shollei & another [2014] eKLR; Ruth Njiru James -v- Njoroge Ndirangu & 3 others [2015] eKLR;and Abno Software International Limited -v- Sammy Ochieng Onyango [2021] eKLR.
49.Moving to the second issue, Counsel submitted that since there exists an alternative remedy for the Petitioner to pursue, this Petition effectively invokes the doctrine of constitutional avoidance and ripeness. These mechanisms are reasoned to be adequate to resolve the Petitioner’s dispute and hence should be utilized. Reliance was placed in Communications Commission of Kenya & 5 others -v- Royal Media Services Limited & 5 others [2014] eKLR where it was held that:
50.Like dependence was placed in Hussein Khalid ft 16 others -v- Attorney General & 2 others [2019] eKLR; Gabriel Mutava & 2 others -v- Managing Director Kenya Ports Authority & another [2016] eKLR and Aliela -v- Kenton College Trust & another KEELRC 226.
51.On the third issue, Counsel in view of ELRC Cause No. E534 of 2022 stated that the instant suit is res judicata as the Petitioner is seeking further compensation as a result of his alleged unlawful termination. This is despite having been duly compensated in the Consent Judgement dated 6th June 2023. Owing to this it is argued that the instant Petition is in breach of the principles under Section 7 of the Civil Procedure Act. In addition, it is pointed out and revealed that the Petitioner thereafter filed the Civil Case No. E104 of 2023 which was later transferred to the Chief Magistrates Court under Milimani MCCC No.421 of 2023.In this regard, the instant suit is sub judice.
52.Tying to this, Counsel stated that it was clear that the Petitioner was forum shopping owing to the multiple suits that he had filed and an abuse of the Court process. Reliance was placed in Paul Kihara Kariuki case (supra) where it was held that:
53.Lastly, Counsel submitted that the Petitioner’s allegation of publication of termination of his employment was false as the same was shared with the relevant persons only on a need to know basis. Infact as already deponed in the Respondent’s affidavit the communication was hand delivered to the Petitioner specifically by the Managing Director and Chief Human Resource Officer. Be that as it may it was argued that the Petitioner had not adduce any evidence to support the allegation that he missed out on other employment opportunities as a result of the adverse report.
54.Reliance was placed in Selina Patani & another -v- Dhiranji V. Patani [2019] eKLR where it was held that:
1st Interested Party’s Submissions
55.Iseme Kamau and Maema Advocates filed submissions dated 11th June 2024 and set out the issues to consider as follows: whether the Court is divested of Jurisdiction to hear the dispute;and whether the 1st Interested Party has been wrongly enjoined in the proceedings.
56.Counsel in the first issue, submitted that this Court lacks jurisdiction to entertain this matter by virtue of Article 162(2) of the Constitution as read with Section 12(3) of the Employment and Labour Relations Court Act. This is since the issues raised herein revolve around the termination of the Petitioner’s employment also raised in ELRC Cause No. E534 of 2022.Consequently it was argued that it is the ELRC that has jurisdiction to entertain the issues raised herein.
57.Reliance was placed in Attorney General & 2 others v Okiya Omtata Okoiti & 14 others [2020] eKLR where the Court of Appeal held that:
58.Like dependence was placed in National Social Security Fund Board of Trustees v Kenya Tea Growers Association & 14 others [2023] KECA 80 (KLR).
59.On second the issue, Counsel asserted that the 1st Interested Party had been wrongly enjoined in these proceedings as is a stranger to the employment contract and termination of the Petitioner by the Respondent. Further it was stressed that the 1st Interested Party did not issue any adverse report concerning the Petitioner before his termination. In view of this, Counsel submitted that the 1st Interested Party ought to be struck out from these proceedings.
Analysis and Determination
60.It is my considered view that the issues that arise for determination are as follows:i.Whether this Court has jurisdiction to entertain this suit.ii.Whether an interpretation of Article 26 of the Constitution includes livelihood.iii.Whether the 1st Interested Party was improperly joined in this suit and thus should be struck out.iv.Whether the Respondent violated the Petitioner’s constitutional rights.v.Whether the Petitioner is entitled to the relief sought.
Whether this Court has jurisdiction to entertain this suit.
61.Jurisdiction of this Court was objected to on two main grounds, namely that this mattera.Properly belongs to the jurisdiction of the Employment and Labour Relations Court, and two;b.It is barred by the Doctrine of Res Judicata.
62.Jurisdiction refers to the competence or the legal capacity of the Court to adjudicate a dispute. The Court of Appeal in the locus classicus case of Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] eKLR explained the significance of jurisdiction as follows:
63.This Court’s jurisdiction to entertain constitutional matters is founded in Article 165 which has among others Sub-Article 3 (d) which provides thus:
64.The Supreme Court addressing its mind on the issue of jurisdiction in Samuel Kamau Macharia & Another v. Kenya Commercial Bank Limited & others (2012)eKLR guided as follows:
65.Equally, In the Matter of the Interim Independent Electoral Commission (Applicant) [2011] KESC 1 (KLR) the Supreme Court held that:
66.The creation of Employment and Labour Relations Court (ELRC) is made reference to under Article 162 of the Constitution as one of the special courts that Parliament is conferred with authority to establish. Article 162 states:
1.The superior courts are the Supreme Court, the Court of Appeal, the High Court and the courts mentioned in clause (2).
2.Parliament shall establish courts with the status of the High Court to hear and determine disputes relating to—a.employment and labour relations; andb.the environment and the use and occupation of, and title to, land.
3.Parliament shall determine the jurisdiction and functions of the courts contemplated in clause (2).
67.To give effect to this Article, Parliament enacted the Employment and Labour Relations Court Act and conferred it with jurisdiction as provided for in Section 12 of the ELRC Act as follows:
68.Interpreting Section 162 (2) of the Constitution, the Court of Appeal in Law Society of Kenya Nairobi Branch v Malindi Law Society & 6 others [2017] eKLR held that High Court has no jurisdiction in respect of matters falling within the jurisdiction of the specialized courts and this extends to matters raising constitutional questions that flow from within the sphere of the specialized court’s jurisdiction.
69.Similarly, the Court in United States International University (Usiu) v Attorney General [2012] eKLR observed as follows:
70.Further on cross-cutting issues between the High Court and the specialized Courts, the Court in Benson Makori Makworo v Nairobi Metropolitan Services & 2 others (2022)eKLR borrowing from the Supreme Court and the Court of Appeal highlighted as follows:
71.It is already acknowledged that the dispute on termination of employment has already been settled before the Employment and Labour Relations Court by the Parties. The Petitioner claims that the circulated the information which has made him unemployable or unable to earn a living from any future employment owing to false negative report is a matter outside the scope of the Employment and Labour Relations Court and thus is a separate Constitutional issue. I am unable to agree with this reasoning given the authorities I have reviewed in the foregoing. The issue of unlawful termination is intertwines with the future loss of employment considering the facts of this case. It should have formed a supplementary or additional issue to be decided by the ELRC Court in the factual matrix of the matter that was before it. Instead litigating fully in that forum, the petitioner chose to litigate in bits by filing this Petition. Nothing bars the ELRC Court from hearing and determining a Constitutional issue flowing from a matter whose substratum lies within the competence of that Court. The High Court would be overstepping its boundaries to assume jurisdiction over such cases as the Petitioner wants through this petition.
72.Closely connected to the above is the doctrine of res judicata. Section 7 of the Civil Procedure Act states as follows:
73.The Supreme Court in Kenya Commercial Bank Limited v. Muiri Coffee Estate Limited & another Motion (2016)eKLR defined this doctrine as follows:
74.Similarly, the Supreme Court in John Florence Maritime Services Limited & another v Cabinet Secretary Transport & Infrastructure & 3 others [2021] KESC 39 (KLR) opined as follows:
75.The Court went on to observe that:
76.Reading the provisions of Section 7 of the Civil Procedure Act, particularly explanation number 4, it states:
77.This condition ensures that the litigation is not done in a piece meal as the Petitioner is attempting to do in this case. My take is that the dispute relating to and surrounding his termination and the consequences arising therefrom be they be constitutional or otherwise ought to have been part and parcel of the original litigation and not multiple cases he is now filing. I find and hold that the instant Petition is barred by the principle of res judicata.
78.Having found that I have no jurisdiction, I must, as be guided by the dicta in Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] down my tools immediately and take no further step in these proceedings. Accordingly, I shall not delve into consideration of any other issue as it will serve no useful purpose.
79.The upshot therefore is that this Petition is struck out with costs to the Respondents and the 1st Interested Party that participated in these proceedings.
DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 13TH DAY OF DECEMBER, 2024.……………………………………..L N MUGAMBIJUDGE