[2019] KEELRC 1430 (KLR)
The Court found that the Respondent erroneously withheld tax from the decretal sum by treating it as legal fees, despite the sum being awarded as compensation to the Claimant. The Respondent admitted the error and sought time to rectify it. The Court held that there was no legal basis for the withholding and ordered...
Source-derived case information.
- Citation
- [2019] KEELRC 1430 (KLR)
- Parties
- Applicant: Grace Akinyi Ahawo; Respondent: Kenya Airport Authority
- Court
- Employment and Labour Relations Court
- Court Station
- Employment and Labour Relations Court at Nairobi
- Jurisdiction
- Kenya
- Case Number
- Cause 985 of 2014
- Procedural Posture
- Employment Cause / Post Judgment Application for Settlement of Decretal Sum and Rectification of Withholding Tax Error
- Outcome
- application allowed in part
- Judges
- MSA Makhandia
- Legal Topics
- Withholding Tax on Decretal Sum, Execution of Judgment, Rectification of Payment Errors
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Grace Akinyi Ahawo
Applicant
Kenya Airport Authority
Respondent
Procedural Posture
Employment Cause / Post Judgment Application for Settlement of Decretal Sum and Rectification of Withholding Tax Error
Legal Issues
- 1 Whether the Respondent was justified in withholding tax from the decretal sum on the basis that it constituted legal fees.
- 2 Whether the Respondent should be ordered to settle the outstanding decretal sum and rectify the erroneous withholding tax deductions.
- 3 Whether the Respondent has legal competence to cancel KRA withholding certificates issued in error.
Ratio Decidendi
The Court found that the Respondent erroneously withheld tax from the decretal sum by treating it as legal fees, despite the sum being awarded as compensation to the Claimant. The Respondent admitted the error and sought time to rectify it. The Court held that there was no legal basis for the withholding and ordered the Respondent to rectify the error and settle the outstanding balance. The Court declined to order cancellation of the withholding certificates, noting that the parties had not addressed whether the Respondent had the legal competence to do so. Costs were awarded to the Claimant.
Court Disposition
application allowed in part
Orders
- The Respondent is to rectify the error and settle the balance of the decretal sum or such due sum after reconciliation within 30 days.
- The Claimant is awarded costs.
Full Case Text
Judgment text and source record
30 paragraphs
REPUBLIC OF KENYA
IN THE EMPLOYMENT AND LABOUR RELATIONS COURT AT NAIROBI
CAUSE NO. 985 OF 2014
GRACE AKINYI AHAWO........................................CLAIMANT
VERSUS
KENYA AIRPORT AUTHORITY........................RESPONDENT
RULING NO. 2
1. In a judgment delivered on 21 May 2018, the Court entered judgment in favour of the Claimant, and awarded her Kshs 230,400/-, being the equivalent of 3 months’ pay in lieu of notice; Kshs 460,800/- being 6 months’ salary as compensation and costs of the suit.
2. The decree issued by the Court indicated the decretal sum as Kshs 730,285/94, while costs were taxed as Kshs 157,647/-.
3. When settling the decretal sum, the Respondent paid to the Claimant’s advocate Kshs 625,655/-, and withheld the balances on account of tax.
4. The Respondent, it appears treated the decretal sum as legal fees, hence the withholding of the tax element.
5. Attempts by the Claimant’s advocate to resolve the deductions with the Respondent did not succeed, and on 20 February 2019, the Claimant moved the Court seeking orders
1. …
2. THAT the Honourable Court do issue an order directed at the Managing Director of the Respondent to settle the balance of the decretal sum being Kshs 262,277.
3. THAT this Honourable Court do issue an order directing the Respondent to cancel KRA withholding Certificate Nos. KRAWHTWON0025310619 and KRAWHTWON00033261319 for Kshs 29,794 and Kshs 35,752 respectively which were erroneously withheld.
6. The Respondent filed grounds of opposition to the application on 5 March 2019, and the parties addressed the Court on the same day.
7. The Court has considered the application, the grounds and supporting affidavit in support, the Respondent’s grounds of opposition and the oral submissions made in Court.
8. The Respondent, in opposing contended that the motion was an execution application which did not meet and comply with the requirements of Rule 32(2) of the Employment and Labour Relations Court (Procedure), Rules 2016, and Order 22 of the Civil Procedure Rules.
9. Despite challenging the competence of the application, the Respondent admitted during the submissions that there was an error when it made payments to the Claimant’s advocate, and sought for time to rectify the error.
10. There being no dispute that the Respondent made an error when it purported to deduct withholding tax on the decretal sum on the supposition that the same was legal fees, the Court has no option but to allow the application.
11. However, the parties did not address the Court on whether the Respondent has the legal competence to cancel a withholding certificate, and therefore in lieu of the orders in the application, the Court will order that
(i) The Respondent do rectify the error it made and settle the balances of the decretal sum or such due sum after reconciliation, within 30 days.
12. Claimant to have costs.
Delivered, dated and signed in Nairobi on this 9th day of April 2019.
Radido Stephen
Judge
Appearances
For Claimant Mr. Ojienda instructed by Ojienda & Co. Advocates
For Respondent Ms. Kanyiri, instructed by the Federation of Kenya Employers
Court Assistant Lindsey