https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1382

AVC Management Company Ltd t/a Mnarani Club v Mwangero (Civil Appeal E016 of 2024) [2026] KECA 1382 (KLR) (10 July 2026) (Judgment) Neutral citation: [2026] KECA 1382 (KLR) Republic of Kenya In the Court of Appeal at Malindi Civil Appeal E016 of 2024 AK Murgor, KI Laibuta & GW Ngenye-Macharia, JJA July 10, 2026 Between AVC Management Company Ltd t/a Mnarani Club Appellant and Fredrick Kazungu Mwangero Respondent (Being an appeal from the Judgment and Decree of the Employment and Labour Relations Court of Kenya at Malindi (A. K. Nzei, J.) delivered on 23rd May 2024inAppeal No. E007 of 2023) Judgment 1.Before us is a second appeal from the Judgment and Decree of the Employment and Labour Relations Court (the ELRC) at Malindi (A. K. Nzei, J.) delivered on 23rd May 2024 in ELRC Appeal No. E007 of 2023. 2.The genesis of the appeal is the suit filed by the respondent (Fredrick Kazungu Mwangero) against the appellant, AVC Management Company Ltd t/a Mnarani Club, in Kaloleni CM ELR Cause No. E025 of 2020 (later renumbered as Kilifi CM ELR Cause No. E026 of 2022). 3.In his Memorandum of Claim dated 28th October 2020, the respondent sought: a declaration that the termination of his employment was unfair, unjust and wrongful; orders that the appellant be ordered to pay him his terminal and contractual dues amounting to Kshs. 1,901,877.08; costs of the claim plus interest thereon at court rates; and any other relief that the court deemed just and fit to grant. 4.The respondent’s case was that he was employed by the appellant with effect from 1st March 2004 as an Assistant Security Officer; that, on 7th October 2020, the appellant retired him as a result of an economic downturn and terminated his employment after 16 years of service; that he was earning a salary of Kshs. 47,523 per month at the time of termination; and that he was unfairly and unlawfully dismissed from employment contrary to the provisions of sections 40, 45 and 499 of the Employment Act. 5.The respondent further averred that he was not given any notice or appraised of the selection criteria used in terminating his employment; that the appellant had no genuine reason to terminate him as the appellant, through its senior officers, had been calling him to return to work and offer his services on short term contract, thereby demonstrating that the appellant’s business was still operational, and that it was using the COVID-19 pandemic situation to engage in unfair labour practices; and that he was terminated without following due process, and without payment of his contractual and terminal dues. 6.In reply, the appellant filed a Response to Claim dated 19th November 2020 generally denying the respondent’s allegations as set out in the Memorandum of Claim. The appellant’s case was that the cessation of movement in and out of large urban areas in the wake of the COVID-19 pandemic in April 2020 had adversely affected the appellant’s operations put a restriction on the its income, being a three star hotel serving largely foreign and local corporate and leisure clients; and that it was later allowed to re-open for business under strict pandemic social distancing protocols that reduced the restaurant’s seating capacity from 160 persons to 70 persons, and the conferencing facility capacity from 150 persons to 70. 7.The appellant further averred that, on 31st August 2020, the appellant called for a meeting with all staff at which the issue of redundancy was discussed; that the declaration of the respondent as redundant was fair, just and procedural; that it was guided by the Collective Bargaining Agreement and the provisions of the Employment Act; that the respondent was issued with the necessary retirement notice formally notifying him of the retirement and reasons for the same; and that it computed and paid to the respondent terminal and contractual dues. 8.The appellant denied that the respondent was entitled to 4 months’ pay in lieu of notice, severance pay, travelling allowance, unpaid salary, salary arrears and compensation for unfair termination as claimed. It urged the court to dismiss the respondent’s claim with costs. 9.In its judgment dated 17th March 2023, the trial court (Hon. J.M. Kituku, SPM) first considered the issue of whether the respondent’s termination was on redundancy or retirement, and found that, although the termination letter mentioned both retirement and economic downturn, the decisive factor was age; that the Collective Bargaining Agreement (CBA) provided that employees aged 57 and above could be retired at the employer’s discretion; and that, since the respondent was aged 58 years at the time, he was lawfully retired under the CBA and that, therefore, redundancy did not apply. 10.On the reliefs sought, the court found that the respondent had already been paid four months’ salary in lieu of notice as well as travelling allowance and, accordingly, no further dues were payable. Regarding the severance allowance claimed, the court found that the payslip produced into evidence disclosed payment of Kshs. 218,398 to which he was entitled and, in view of the foregoing, his claim was dismissed. 11.With regard to the unpaid salary balance of 75% between April and July 2020, the court held that the respondent was estopped from claiming it because the arrangement to stagger salaries and place staff on unpaid leave had been reached pursuant to consultative agreements with union and staff representatives during the pandemic. The court applied the same reasoning to the claim for unpaid salary between August and October 2020, as well as salary arrears arising from the non-implementation of the 8% increment. Accordingly, the court disallowed both claims on grounds of estoppel since the respondent had participated in a staff meeting where decisions were made on salary reductions and non-implementation of increments. Consequently, the court dismissed the respondent’s claim in its entirety with costs to the appellant. 12.Aggrieved by the trial court’s judgment, the respondent moved to the ELRC in appeal No. E007 of 2023 on the grounds that the learned Magistrate erred in law and fact by: disregarding his evidence that procedure was not followed by the appellant before termination; by finding that the respondent had complied with the CBA and the Employment Act before terminating him, despite evidence to the contrary; and by dismissing his claim, stating that he was estopped from claiming the amounts stated despite evidence to the contrary. 13.In its judgment dated 23rd May 2024, the ELRC (A. K. Nzei, J.) first addressed the issue as to whether the respondent’s termination amounted to unfair dismissal. The court noted that the CBA formed part of the appellant’s terms of employment and expressly provided for retirement at the age of 58. The court held that, since the appellant admitted he was 58 at the time of termination, he was lawfully retired under the CBA, and not unfairly dismissed. Accordingly, his claim for compensation for unfair termination was declined. 14.On the question of what terminal dues the respondent was entitled to, the ELRC found that the respondent’s entitlements had been computed in accordance with the CBA, including severance pay of Kshs. 757,626, notice pay of Kshs. 190,092, and a travelling allowance of Kshs. 5,600, all amounting to Kshs. 953,318. The court further observed that, while the appellant’s witness testified that the sums aforesaid had been paid in instalments, no documentary proof of payment was produced. Accordingly, the court found that the trial Magistrate erred in concluding that payment had been made in full, and in dismissing the claim. The court held instead that the respondent’s retirement benefits had not been settled, and set aside the dismissal order. 15.In its considered judgment, the ELRC dismissed the respondent’s claims for salary arrears and increments, finding that they had not been proved. However, it entered judgment in his favour for terminal dues in the total sum of Kshs. 953,318, subject to statutory deductions, together with costs of both the appeal and of the proceedings in the court below, as well as interest at court rates from the date of the trial court’s judgment. 16.Aggrieved, the appellant filed the instant appeal on five grounds set out in its Memorandum of Appeal dated 30th May 2024, namely that:“1.The learned superior court Judge misdirected herself on the burden of proof of payment of the computed terminal dues.2.The learned superior court Judge misdirected herself in law when she failed to consider the evidence of payment of terminal dues placed before her by the Appellant.3.The learned superior court Judge misdirected herself in law and fact in allowing the appeal.4.The learned superior court Judge misconstrued the evidence adduced in holding that the Respondent had not been paid terminal dues.5.The learned superior court Judge misdirected herself in awarding costs to the Respondent.” 17.Learned counsel for the appellant, M/s. Khalwale & Company, filed written submissions dated 10th December 2024 and, in rebuttal, learned counsel for the respondent, M/s. Otieno Asewe & Company, filed written submissions and a list of authorities dated 3rd March 2025. 17.Unless otherwise provided, this Court’s mandate on 2nd appeal is limited to points of law. Section 72 (1) of the Civil Procedure Act provides that:72.Second appeal from the High Court 18.Except where otherwise expressly provided in this Act or by any other law for the time being in force, an appeal shall lie to the Court of Appeal from every decree passed in appeal by the High Court, on any of the following grounds, namely—a.the decision being contrary to law or to some usage having the force of law;b.the decision having failed to determine some material issue of law or usage having the force of law;c.a substantial error or defect in the procedure provided by this Act or by any other law for the time being in force, which may possibly have produced error or defect in the decision of the case upon the merits. 19.In Stanley N. Muriithi & another v Bernard Munene Ithiga [2016] eKLR, this Court held that:“We are conscious of our limited jurisdiction when dealing with a second appeal. Our reading of Section 72(1) of the Civil Procedure Act, Chapter 21, Laws of Kenya, which provides for the circumstances when a second appeal shall lie from the appellate decrees of the High Court, indicates that the appeal must be on matters of law.” 20.In the same vein, this Court held thus in Kenya Breweries Ltd v Godfrey Odoyo [2010] eKLR that:“In a second appeal however, such as this one before us, we have to resist the temptation of delving into matters of facts. This Court, on second appeal, confines itself to matters of law unless it is shown that the two courts below considered matters they should not have considered or failed to consider matters they should have considered or looking at the entire decision, it is perverse. In the case of Stephen Muriungi and another vs.Republic (1982-88) 1 KAR 360, Chesoni Acting JA (as he then was) said at page 366:‘We would agree with the view expressed in the English case of Martin v Glywed Distributors Ltd (t/a MBS Fastenings) 1983 ICR 511 that where a right of appeal is confined to questions of law only, an appellate court has loyalty to accept the findings of fact of the lower court (s) and resist the temptation to treat findings of fact as holdings of law or mixed findings of fact and law, and, it should not interfere with the decisions of the trial or first appellate court unless it is apparent that, on the evidence, no reasonable tribunal could have reached that conclusion, which would be the same as holding the decision is bad in law.’” 21.In our considered view, only one decisive issue commends itself for our determination, namely whether the learned Judge erred in finding that there was no proof or payment of the computed terminal dues, and in proceeding to award the same with costs to the respondent. 22.In setting aside the trial court's decision, the learned Judge found that the respondent's benefits, as computed by the appellant upon his retirement, had not been paid to him. The learned Judge observed that, whilst the respondent had testified that no payment was made, the appellant's witness (RW-1) had testified that a sum of Kshs. 953,318 had been paid into the respondent's bank account, the last instalment having been made on 14th April 2021. The learned Judge noted, however, that no proof of such payment had been exhibited by the appellant. She further observed that the primary suit had been filed within less than a month of the termination of the respondent's employment, and that the termination letter itself had proposed payment of the computed dues in three instalments. The learned Judge reasoned that, had payment in fact been made, as alleged by RW-1, there was no satisfactory explanation for the appellant's failure to produce proof thereof during the pendency of the suit. On that basis, the learned Judge concluded that the trial court had fallen into error in finding that payment had been made, and in proceeding to dismiss the suit. Accordingly, she set aside the dismissal order. 23.Counsel for the appellant submitted that the learned Judge failed in her duty as a first appellate court to properly analyse and re-evaluate the evidence on record, as required by the principle established in Damiano Migwi v Timothy Maina Waitugi [2009] KECA 219 (KLR). Counsel contended that among the documents adduced by the appellant were funds transfer forms filled out by the appellant, instructing its bankers, Kenya Commercial Bank (KCB), to transfer funds from the appellant's account to the individual bank accounts of its employees, including the respondent. Those documents, counsel pointed out, bore the stamps of both KCB and KUDHEIA Workers Union, and had been duly exhibited before the court. It was submitted that the learned Judge failed to give adequate consideration to this documentary evidence of the transfer of funds from the appellant's account to the respondent's account. 24.Counsel further submitted that, upon the production of that documentary evidence, the evidential burden shifted to the respondent to demonstrate that the funds had not in fact been deposited into his account, and that the respondent had failed to discharge that burden. In support of this submission, counsel relied on Raila Amolo Odinga & Another v Independent Electoral and Boundaries Commission & 2 Others [2017] eKLR for the proposition that, whilst the legal burden of proof remains constant throughout the trial and rests with the party asserting a fact, the evidential burden shifts from party to party depending on the effectiveness with which evidence is adduced, its position at any given moment being determined by asking which party would lose if no further evidence were introduced. 25.Counsel for the respondent submitted that the learned Judge committed no error of law of a nature that would warrant the intervention of this Court on second appeal. Counsel relied on Afrofreight Forwarders Limited v Pil (K) Limited [2023] KECA 1510 (KLR) for the proposition that the jurisdiction of this Court on a second appeal is confined to questions of law, namely, whether the decision appealed from is contrary to law or to some usage having the force of law, whether it failed to determine some material issue of law, or whether a substantial error or defect in procedure may have produced a wrong decision on the merits. It was submitted that the grounds of appeal raised by the appellant were, without exception, grounds of fact and therefore fell outside the proper scope of a second appeal. Counsel further submitted that, irrespective of the jurisdictional question, the appellant had failed to discharge the burden of proving payment. The documents exhibited by the appellant amounted to no more than instructions to its bank and an application for a funds transfer — in other words, evidence of an instruction to pay, not of actual payment. 26.Counsel contended that actual payment could readily have been proved by a bank statement evidencing the completed transaction, which was never exhibited, and whose absence was telling. In the circumstances, counsel submitted that it was open to the court below to find that the appellant had not proved payment and to order accordingly, with costs to the respondent as the successful party. 27.It is noteworthy that the appellant’s Resort Manager, Hendirck Venter, testifying as RW1, stated that the respondent’s terminal dues, amounting to Kshs. 953,318 less taxes and statutory deductions, were paid to the respondent in instalments, with the final payment made on 14th April 2021. To demonstrate payment of the dues, the appellant produced a document dated 5th November 2020 instructing its bank, Kenya Commercial Bank, to credit each of the listed staff accounts in Imarika Sacco, including the respondent’s account, with their respective final dues as indicated therein. This document was stamped as received by both Imarika Sacco and the respondent’s union. 28.In addition, the appellant produced an RTGS funds transfer form dated 5th November 2020 for the remittance of the said funds into its employees’ bank accounts in Imarika Sacco. In the form, the appellant specified the purpose of payment as being “Staff Final Dues (Phase1)”. The form was stamped as received by Kenya Commercial Bank Kilifi Branch and the respondent’s union. 29.In our considered view, the documentary evidence adduced by the appellant demonstrated on a balance of probabilities that it had indeed remitted the respondent’s final dues into his Imarika Sacco account. The burden therefore shifted to the respondent to demonstrate that the said payments were not remitted. 30.Addressing itself to the standard of proof in civil cases, this Court in Palace Investments Limited v Geoffrey Kariuki Mwenda & another [2015] KECA 616 (KLR) held that the burden of proof is placed upon the appellant and is to be discharged on a balance of probabilities (see Miller v Minister of Pensions [1947] 2 ALL ER 372 per Denning, J.). 31`.In Mbuthia Macharia v Annah Mutua Ndwiga & another [2017] KECA 290 (KLR), this Court made the following observations on the burden of proof and when it shifts to the opposing party. At paragraph 15, the Court noted that the Judge had alluded to the provisions of section 107 of the Evidence Act, which deals with the burden of proof in any case, and had aptly stated that it lies with the party who desires any court to give judgment as to any legal right or liability to show that the facts upon which his case depends exist. The Court observed that this is known as the legal burden, and proceeded to amplify the same principle of law by reference to the leading text, Halsbury's Laws of England, 4th Edition, Volume 17, at paragraphs 13 and 14, which describes it as the burden of proof that remains constant throughout a trial — that is, the burden of establishing the facts and contentions which will support a party's case — and that if, at the conclusion of the trial, a party has failed to establish these to the appropriate standard, he will lose. Paragraph 14 further states that the legal burden of proof normally rests upon the party desiring the court to take action, such that a claimant must satisfy the court or tribunal that the conditions entitling him to an award have been satisfied and that, in respect of a particular allegation, the burden lies upon the party for whom substantiation of that allegation is an essential of his case, with the consequence that there may be separate burdens in a case with separate issues. 32.At paragraph 16, the Court further held that the legal burden is discharged by way of evidence, with the opposing party having a corresponding duty of adducing evidence in rebuttal, which constitutes the evidential burden. The court therefore reasoned that, while both the legal and evidential burdens initially rested upon the appellant, the evidential burden may shift in the course of trial, depending on the evidence adduced, and that as the weight of evidence given by either side during the trial varies, so will the evidential burden shift to the party who would fail without further evidence. 33.The record as put to us shows that the respondent did not specifically controvert or rebut the appellant’s evidence that his terminal dues were paid in instalments, with the final payment being made on 14th April 2021. The respondent merely testified that he was aware that his dues were to be paid in instalments over three months; that he did not receive any dues into his account; and that the last time he went to his bank was in February 2020. 34.In our considered view, the respondent’s oral testimony was not sufficient to displace the documentary evidence of payment tabled by the appellant. It was upon the respondent to adduce much more concrete evidence, such as his account statement for the period the terminal dues instalments were alleged to have been remitted, in order to once again shift the burden of proof of payment back to the appellant. The respondent failed to do so. Accordingly, the learned Judge misdirected herself in her re-evaluation of the evidence on record, leading to the incorrect finding that no proof of payment of terminal dues was exhibited by the appellant. To our mind, the court ought to have found, on a balance of probabilities, that the said terminal dues were remitted to the respondent, and dismiss the first appeal. 35.In Zingo Investments Limited v Kenya Syntans & Chemicals Limited [2019] KECA 298 (KLR), this Court observed, with reference to the earlier holding in John Onyango & Another v Samson Luwayi [1986] eKLR, that it is not the practice of the Court to disturb concurrent findings of fact made by the two courts below unless it is manifest that both the Magistrate and the learned Judge so misapprehended the evidence that their respective conclusions rested on incorrect bases — a principle traceable to Abdul v Rubia (1917/1918) 7 EALR 73. The Court went on to state that, before it could intervene, it was necessary to satisfy itself not only that the lower courts had misapprehended the evidence and founded their conclusions on incorrect bases, but also, and more particularly, that the first appellate court had failed to properly analyse, reassess, and reconsider the evidence with a view to arriving at its own independent conclusion. In our respectful view, it failed to do so. 36.Having carefully considered the record of appeal, the grounds on which it was anchored, the impugned judgment, the rival submissions by the respective counsel, the cited authorities and the law, we find that the conclusion that the appeal succeeds is inescapable. Accordingly, it is hereby allowed with costs to the appellant. Consequently, the Judgment and Decree of the Employment and Labour Relations Court at Malindi (A. K. Nzei, J.) delivered on 23rd May 2024 is hereby set aside, and the Judgment and orders of the trial magistrates’ court of 17th March 2023 are hereby reinstated. DATED AND DELIVERED AT MOMBASA THIS 10TH DAY OF JULY, 2026.A. K. MURGORJUDGE OF APPEAL.......................................DR. K. I. LAIBUTA CArb, FCIArb.JUDGE OF APPEAL.......................................G. W. NGENYE-MACHARIAJUDGE OF APPEALI certify that this is a true copy of the originalsignedDEPUTY REGISTRAR