[2023] KEELRC 1170 (KLR)

Lusaka v Daystar University (Cause 1850 of 2017) [2023] KEELRC 1170 (KLR) (15 May 2023) (Ruling)

Neutral citation: [2023] KEELRC 1170 (KLR)

Republic of Kenya

In the Employment and Labour Relations Court at Nairobi

Cause 1850 of 2017

NJ Abuodha, J

May 15, 2023

Between

Kim Jackson Daniel Lusaka

Claimant

and

Daystar University

Respondent

Ruling

1. By a Motion dated February 15, 2023, the respondent/applicant sought orders among others that:a.The Claimant/Decree Holder be permanently restrained from executing the Decree herein pursuant to the Doctrine of Lien available to the Respondent/Judgment Debtor.b.Permanent stay of execution be issued.

2. The application was supported by the affidavit of Mueni-Nyokabi Kahumbura who deponed on the main that:a.She was employed by the Respondent University as its Legal Manager and thereby duly authorized to swear this Supporting Affidavit.b.Their Counsel on record, Donald B. Kipkorir of KTK Advocates advised on the Ruling delivered on February 3, 2023 which copy she has perused and verily understand.c.The material judgment dated April 25, 2022 was clear that they pay the Claimant payment in Lieu of Notice, Leave Pay and unpaid half salaries less statutory deductions and Loans owed to Biblia Sacco.d.Where a Respondent owes a Claimant money, there is no need for filing a counterclaim as the Right of Lien is automatic and self-help remedy.

3. In the foregoing, the Court do find that our reconciliation is proper and that the Claimant owes them the sum of Kshs 181,030. 00.

4. In the submissions in support of their application, Mr. Kipkorir for the applicant submitted that the decretal sum owing to the claimant was Kshs 788,697. 00 has statutory deductions at Kshs 228,993. 00 leaving a net of Kshs 559,704. 00 whilst the claimant owes the respondent/applicant the sum of Kshs 740,734. 00 thus the variance of Kshs 181,030. 00 in favour of the respondent/applicant. Counsel therefore submitted that in reliance on the appellate Courts rationale on the doctrine of lieu, the respondent was right within the law to exercise their inherent right under common law doctrine of lieu to credit the said decretal sum to the claimant’s outstanding loan account. In this regard, Counsel relied on the case of Barclays Bank of Kenya Ltd. v Kepha Nyabera & 191 Others [2013] eKLR, and the Indian case ofShivam Construction Co. and Others v Vijaya Bank, Ahmedabad and Others.

5. According to Counsel, the respondent’s financial institution, Daystar Multipurpose Sacco was right within the legal confines by exercising its inherent right under Common Law Doctrine of lieu to credit the said decretal sums to the claimant’s outstanding loan accounts.

6. Ms. Chadianya for the Claimant on the other hand submitted that the doctrine of lieu was the right of an individual to retain goods and securities in is possession that belongs to another until certain legal debts due to the person retaining the good are satisfied. Lieu did not endorse a power of sale but only to retain the property. According to Counsel, the respondent ought to have counterclaimed for the alleged outstanding amount rather than placing reliance on the doctrine of lieu which did not apply in the circumstances since there was no property or goods that were held by the respondent over the claimant. The so called Sacco loans were therefore an afterthought and merely meant to delay the execution of the judgment. The doctrine of lieu was not available to the respondent post judgment. The respondent ought to have pleaded in the response to the claim or through a counterclaim. To support the submissions, Counsel relied on the cases of Banking, Insurance and Finance Union v Barclays Bank of Kenya Ltd & Another [2017] eKLR, and Booth Extrusion (Formerly) Booth Manufacturing Africa Ltd v Dumbeyia Nelson Muturi Harun t/a Nelson Harun & Company Advocates[2014] eKLR.

7. Ms. Chadianya further submitted that the Court was functus officio in the matter and that the issue of stay in absence of substantive appeal was unknown to law of a permanent injunction against execution.

8. The Court has reviewed and considered the application as well as submissions by both Counsel together with authorities relied on and is grateful to Counsel.

9. Section 19(1)(h) of the Employment Act provides:“an employer may deduct from an employee (h) an amount due and payable by the employee under and in accordance with the terms of an agreement in writing by way of repayment or part payment of a loan of money made to him by an employee…”

10. The Claimant herein was the respondent’s employee until his service was terminated giving rise to the present suit and ultimately the judgment herein. The Court has had the opportunity to look at his payslip which was one of the documents he attached with his claim and noted that the claimant used to make contributions to Biblia Sacco and Multipurpose Sacco. As at December, 2016, he owed Biblia Sacco Kshs 621,493. 00 and Multipurpose Sacco Kshs 843,198. 00. If the Claimant continued in employment, he could faithfully paid these loans through the checkoff system from his monthly salary and even borrowed more. It therefore remained a fact that as at the time of termination of employment, the Claimant owed money to his Sacco. This has not been denied by the Claimant. He successfully said the respondent and was awarded the decretal sum. The respondent however reserves the right to pay him the sum awarded less deductions for loans he took and benefitted from while in employment. The outstanding loan does not belong to the respondent but to Sacco’s closely associated with the respondent. The respondent therefore could not counterclaim for the outstanding loan amounts but had the responsibility to pay the Claimant net of deductions for loans he took. It would not only be unjust enrichment for the Claimant to get away with his loan responsibilities but unfair to his former colleagues who would lose money from the pool they borrow from. Sacco would find it difficult to operate if employers were to be prohibited from recovering loans owed by staff exiting employment.

11. From the foregoing, the Court finds the Motion dated February 25, 2023 merited and hereby allows prayers 3 and 4 of the same. The applicant shall further have costs of the Motion.

12. It is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI ON THIS 15TH DAY OF MAY 2023. Abuodha J. N.JudgeIn the presence of:-No appearance for the Claimant/Decree HolderKipkorir for the Respondent/Applicant