https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1601

National Environmental Trust Fund (NETFUND) v Ndegwa (Civil Appeal E497 of 2024) [2026] KECA 1601 (KLR) (31 July 2026) (Judgment) Neutral citation: [2026] KECA 1601 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Appeal E497 of 2024 P Lilan, DK Musinga & JO Okello, JJA July 31, 2026 Between National Environmental Trust Fund (NETFUND) Appellant and Catherine Gaki Ndegwa Respondent (Being an appeal from the Judgment and Decree of the Employment and Labour Relations Court at Nairobi (Gakeri, J.) dated 27th May 2024 in ELRC Cause No. 649 of 2019) Judgment Judgment Of D. K. Musinga, JA. 1.This appeal arises from the judgment of the Employment and Labour Relations Court (Gakeri, J.) delivered on 27th May 2024. The primary issue for determination is whether a Deed of Mutual Separation Agreement and Settlement, executed between a State Corporation and its outgoing Chief Executive Officer, remains valid and enforceable when the underlying employment contract is alleged to be illegal for violating term-limit guidelines, and where certain procedural clauses in the separation agreement itself are admitted to be contrary to statute. The appellant, The National Environmental Trust Fund (NETFUND), contends that the trial court erred in enforcing the agreement, asserting it was a “bad bargain” anchored on an illegal third-term contract and entered into without requisite regulatory approvals. 2.In the matter that gave rise to this appeal, the trial court held that the respondent had established her claim arising from the Deed of Mutual Separation and Settlement dated 28th February 2018 and consequently entered judgment in her favour against the appellant. 3.The background to this appeal is that the appellant and the respondent enjoyed an employer-employee relationship for approximately twelve years. The respondent was employed by the appellant as its Chief Executive Officer in November 2006, following a competitive recruitment process. Her contract of employment was subsequently renewed from time to time, the final renewal being by a contract dated 12th October 2016, which took effect on 1st November 2016 and was to run for a period of three years until 31st October 2019. Throughout her tenure, the respondent was answerable to the appellant's Board of Trustees, and was responsible for the day-to-day management of the appellant, implementation of its strategic plans and policies, financial management, staff supervision and the overall execution of the appellant's statutory mandate. 4.According to the respondent, sometime in 2018, the appellant's Board of Trustees resolved to pursue a different strategic direction, and concluded that the office of Chief Executive Officer required a person with stronger qualifications in financial matters. Following consultations between the parties, they executed a Deed of Mutual Separation and Settlement dated 28ᵗʰ February 2018, under which the respondent agreed to leave office before the expiry of her contract. In return, the appellant undertook to pay her twelve months' gross salary, gratuity in accordance with her contract of employment, and an ex-gratia payment equivalent to three months' basic salary, all within fourteen days from the date of separation. 5.The respondent's case before the trial court as borne out of the Statement of Claim dated 2nd October 2019, was that although the appellant paid her gratuity equivalent to two years' service, it failed to honour the remainder of its obligations under the separation agreement. She alleged that the agreed twelve months' gross salary, the three months' ex-gratia payment and one year's gratuity remained outstanding despite repeated demands. Consequently, she sought Kshs. 4,350,128.40 being twelve months' gross salary, Kshs. 1,087,523.10 being three months' ex- gratia payment, Kshs. 121,600.60 being one year's gratuity, together with interest, costs of the suit and any other appropriate relief. She further maintained that although the Deed of Mutual Separation and Settlement contained an arbitration clause, it did not oust the jurisdiction of the Employment and Labour Relations Court to hear and determine the matter. 6.In its response to the claim, the appellant contended, inter alia, that the Deed of Mutual Separation and Settlement was illegal, fraudulent and void, having been executed without the requisite approvals of the Parent Ministry, the National Treasury and the Salaries and Remuneration Commission (SRC), and in contravention of the applicable statutory and policy framework governing state corporations, including the Mwongozo Code of Governance for State Corporations. The appellant maintained that, having served as Chief Executive Officer for twelve years, any variation of the respondent's terms and conditions of service, including her separation from office and the attendant benefits, required the approval and participation of the relevant government agencies, including the Parent Ministry, the National Treasury, the State Corporations Advisory Committee (SCAC) and the SRC. It therefore asserted that the separation agreement was unlawful, null and void, and incapable of enforcement. 7.The appellant further maintained that the respondent was aware of the procedure governing any variation of her contract of employment, and that the separation agreement was intended to confer unlawful financial benefits upon her. It contended that the respondent's contract of employment comprehensively provided for the benefits payable upon termination and that she was therefore not entitled to the additional payments claimed under the separation agreement. On that basis, the appellant prayed that the claim be dismissed with costs. 8.At the hearing, the respondent testified as CW1 and adopted her witness statement dated 2nd October 2019 together with her bundle of documents as her evidence-in-chief. She reiterated that she had served the appellant as its Chief Executive Officer from November 2006 and that the last contract of employment was due to expire on 31st October 2019. She testified that the proposal for a mutual separation originated from the appellant's Board of Trustees after it resolved to pursue a different strategic direction.According to her, the Board prepared an exit plan and presented her with the Deed of Mutual Separation and Settlement, which had been prepared by the appellant's advocates, and she accepted the proposal. 9.During cross-examination, the respondent confirmed that her contract of employment did not expressly provide for termination through a mutual separation agreement. She nevertheless maintained that the Board of Trustees, being her employer, had authority to negotiate and execute such an agreement. She testified that all the trustees attended the meeting at which the separation proposal was discussed, and reiterated that the change in strategic direction originated from the Board and not from her. On re-examination, she maintained that she executed the agreement after the Board requested her to leave office before the expiry of her contract. 10.The appellant called Samson Toniok, its then Head of Finance, as its sole witness. He adopted his witness statement dated 13th February 2024 as his evidence-in-chief. He testified that although he served as the appellant's Head of Finance in 2018, he neither participated in the negotiations leading to the separation agreement nor witnessed its execution. He stated that after a new Board of Trustees assumed office, it questioned the legality of the agreement and sought legal advice from the Office of the Attorney General. He further testified that the payments contemplated under the agreement had neither been budgeted for nor approved in accordance with the applicable government policies and procedures. 11.During cross-examination, Samson Toniok acknowledged that the Deed of Mutual Separation and Settlement had been executed by the parties. He admitted that he had no evidence that the respondent procured the agreement through fraud or undue influence. He also confirmed that the subsequent Board merely sought legal advice on the legality of the agreement. He, however, maintained that the agreement contravened the law and applicable procedures. 12.Upon considering the pleadings, evidence and submissions, the learned judge delivered judgment on 27th May 2024. The court identified three issues for determination, namely, whether the respondent's contract of employment dated 12th October 2016 was valid and lawful; whether the Deed of Mutual Separation and Settlement dated 28ᵗʰ February 2018 was valid and legal; and whether the respondent was entitled to the reliefs sought. 13.On the first issue, the appellant contended that the respondent's renewal for a third term as Chief Executive Officer contravened the provisions of the State Corporations Act and the Mwongozo Code of Governance for State Corporations, rendering the contract of employment unlawful. The respondent, on the other hand, maintained that the contract had been validly executed by her employer, the appellant's Board of Trustees, and that its legality had never been challenged in the pleadings. The learned judge agreed with the respondent and held that, since the appellant had not pleaded the alleged illegality and had only raised it in its submissions dated 9th April 2024, the issue did not arise for determination, reiterating the settled principle that parties are bound by their pleadings. 14.On the validity of the Deed of Mutual Separation and Settlement, the learned judge observed that it was common ground that the parties had executed the agreement on 28ᵗʰ February 2018, and that it had been signed by four members of the appellant's Board of Trustees, including its chairperson. The court found that the appellant had failed to prove that the agreement was procured through fraud, undue influence, coercion, mistake, misrepresentation or any other vitiating factor. In particular, the court noted that the appellant's sole witness admitted during cross-examination that he had no evidence of fraud or undue influence on the part of the respondent, and further acknowledged that the agreement had been duly executed by the parties. The learned judge also rejected the appellant's contention that the agreement was founded on an illegal contract of employment, having already found that the legality of the employment contract did not arise for determination. 15.The learned judge further rejected the appellant's contention that the agreement required the approval or participation of the Parent Ministry, the National Treasury, the SCAC and the SRC. The court found that the appellant had not adduced any evidence demonstrating that such approvals were required by law, the constitutive documents of the appellant or the Mwongozo Code of Governance for State Corporations, or that the agreement contravened any statutory or policy provision. The court also found no evidence that representatives of the Parent Ministry or the National Treasury were required to attend the meeting or execute the agreement. It further observed that the appellant had failed to call any member, past or present, of its Board of Trustees to explain the circumstances under which the agreement was negotiated and executed. 16.The learned judge also rejected the appellant's argument that the respondent's contract of employment superseded the separation agreement. The court held that the termination clause in the employment contract contemplated only unilateral termination by either party and did not preclude the parties from subsequently negotiating a mutual separation. It further held that the clause providing that the employment contract superseded previous agreements was backward-looking and could not invalidate a subsequent agreement voluntarily entered into by the parties. 17.Applying the principle that what is created by agreement may be discharged by agreement (eodem modo quo oritur eodem modo dissolvitur), the learned judge concluded that the Deed of Mutual Separation and Settlement lawfully superseded the contract of employment, constituted a valid and legally binding agreement through which the parties mutually discharged their contractual obligations, and was therefore enforceable. 18.Having found the Deed of Mutual Separation and Settlement to be valid and enforceable, the learned judge held that the respondent was entitled to the benefits expressly stipulated therein.Accordingly, judgment was entered in her favour for Kshs. 4,350,128.40 being twelve months' gross salary, Kshs. 121,600.60 being one year's gratuity and Kshs. 1,087,523.10 being three months' ex-gratia payment, making a total award of Kshs. 5,559,252.10. The court further directed that each party bears its own costs. 19.Being aggrieved and dissatisfied with the judgment of the trial court, the appellant preferred this appeal. In the Memorandum of Appeal dated 25th June 2024, the appellant contends that the learned judge erred in law and in fact, inter alia, by finding that the Deed of Mutual Separation and Settlement dated 28ᵗʰ February 2018 was valid and lawful despite allegations that it was procured through fraud and concluded without a properly constituted meeting or the requisite quorum; holding that the respondent's contract of employment dated 12ᵗʰ October 2016 was lawful, notwithstanding that it allegedly contravened the Mwongozo Code of Governance for State Corporations; failing to find that the separation agreement was founded on an illegal and unlawful contract of employment; disregarding the respondent's admission at paragraph 6 of her statement of claim that her third-term contract allegedly contravened the applicable legal framework; and failing to uphold Clause 6.1 of the separation agreement requiring disputes arising therefrom to be referred to arbitration. 20.The appellant further faults the learned judge for awarding the respondent compensation on the basis of what it terms an illegal separation agreement; descending into the arena of the dispute by requiring the appellant to identify the specific law or policy violated by the separation agreement; failing to consider section 6(2) of the State Corporations Act, the Mwongozo Code of Governance for State Corporations, and the decision of this Court in Ben Chikamai & another v Peter Macithi Muigai & 2 Others [2020] eKLR; improperly shifting the burden of proof regarding the circumstances leading to the execution of the separation agreement to the appellant; and ultimately arriving at findings that were unsupported by both the law and the evidence on record. 21.At the hearing of this appeal, Ms. Mbilo, learned Deputy Chief State Counsel, appeared for the appellant, while the respondent was represented by learned counsel Mr. Achiando. Both counsel briefly highlighted their respective client’s written submissions. 22.Highlighting the appellant's written submissions Ms. Mbilo submitted that the appeal raises four broad issues, namely, whether the respondent's third-term contract of employment dated 12ᵗʰ October 2016 was lawful; whether the Deed of Mutual Separation and Settlement dated 28ᵗʰ February 2018 was valid and enforceable; whether the respondent could seek to enforce the agreement after admitting that clause 6.1 thereof was contrary to section 12 of the Employment and Labour Relations Court Act; and whether the learned judge erred in awarding the respondent benefits founded on what the appellant maintains was an illegal contract and separation agreement. 23.Addressing the first issue, counsel submitted that the learned judge erred in declining to determine the legality of the respondent's third-term contract of employment on the basis that the issue had not been pleaded. Counsel contended that the appellant had consistently challenged the legality of the Deed of Mutual Separation and Settlement on the ground that it was founded upon an unlawful contract of employment, and had pleaded that the agreement was illegal, fraudulent and void, having been executed in contravention of the applicable law and existing government guidelines. According to counsel, the respondent herself pleaded the dates of her appointment and successive renewals, identified the contract dated 12th October 2016 as the contract of employment governing the parties' relationship and incorporated it into the Deed of Mutual Separation and Settlement. Counsel further contended that the Deed itself expressly defined the "employment contract" as the contract dated 12th October 2016, thereby incorporating that contract into the respondent's own pleadings and placing its legality squarely before the trial court. Counsel maintained that the legality of the respondent's third-term contract was properly before the trial court and did not arise for the first time in submissions. 24.Counsel further submitted that the respondent's third-term contract of employment dated 12th October 2016, for the period commencing on 1st November 2016 and ending on 31st October 2019, was unlawful. He contended that the respondent had already served two consecutive five-year terms between 1st November 2006 and 30th October 2016 and was, therefore, ineligible for a further term. Counsel asserted that by the time the third-term contract was executed, the Mwongozo Code of Governance for State Corporations had already come into force, having been adopted pursuant to Executive Order No. 7 and issued jointly by the Public Service Commission and the State Corporations Advisory Committee in January 2015. Consequently, the respondent's reappointment contravened the applicable statutory and governance framework governing the tenure of Chief Executive Officers of state corporations. Counsel further submitted that the learned judge himself questioned in the impugned judgment how the respondent had been granted a third term of three years after serving two previous five-year terms, but failed to draw the legal consequence from that observation. He maintained that, had the learned judge properly applied the Mwongozo Code in accordance with the national values and principles of governance under Article 10 of the Constitution, he would have reached the inescapable conclusion that the third- term contract was unlawful. 25.In support of his contention that the learned judge erred in upholding the validity of the respondent's third-term contract of employment, counsel relied on Nairobi Civil Appeal No. 165 of 2007, D. Njogu & Company Advocates v National Bank of Kenya Limited [2016] eKLR, where this Court held that a contract entered into in contravention of a statute is illegal, void ab initio, and incapable of enforcement. Counsel also cited David Taylor & Son v Barnett Trading Co. [1953] 1 WLR, in which the English Court of Appeal declined to enforce a contract that was illegal at the time of its formation because it contravened a statutory prohibition. Counsel submitted that the respondent's third-term contract suffered the same fate, having been entered into contrary to the governing legal framework. 26.Counsel further relied on Ben Chikamai & Another v Peter Macithi Muigai & 2 Others (supra), where this Court affirmed that the Mwongozo Code of Governance for State Corporations derives its legal force from section 30 of the State Corporations Act, Executive Order No. 7 of 2015 and the Government Circular dated 28ᵗʰ April 2015, and governs the appointment and reappointment of Chief Executive Officers of state corporations. He also cited Republic v Cabinet Secretary, Ministry of East Africa Community and Regional Development; Ewasi Ngiro North Development Authority & Another (Interested Parties) Ex parte Omar Mohammed Sheikh [2019] eKLR, where the Employment and Labour Relations Court held that the reappointment of a Chief Executive Officer to a third term was inconsistent with the provisions of Mwongozo. Counsel submitted that those authorities confirmed that the respondent's third-term contract was unlawful and incapable of sustaining the subsequent Deed of Mutual Separation and Settlement. 27.Turning to the second issue, counsel submitted that the Deed of Mutual Separation and Settlement was equally illegal, not only because it was founded upon an unlawful contract of employment, but also because of the manner in which it was negotiated, approved and executed. Counsel asserted that the agreement was concluded in secrecy and in contravention of the governance framework prescribed under the Mwongozo Code of Governance for State Corporations, there being no evidence of notices convening the Board meeting, the agenda, venue, quorum, minutes or resolutions authorising the respondent's separation or the attendant payments. 28.He faulted the learned judge for holding that the appellant had failed to identify the legal or policy framework allegedly violated by the agreement, contending that the appellant had expressly pleaded in its response to the claim that the agreement was illegal, fraudulent and void for want of the requisite approvals from the Parent Ministry, the National Treasury and the Salaries and Remuneration Commission, and for having been concluded contrary to the State Corporations Act, the Mwongozo Code of Governance for State Corporations, and the applicable government guidelines. 29.Ms. Mbilo further submitted that the appellant had properly raised those matters in accordance with rule 14(3) of the Employment and Labour Relations Court (Procedure) Rules, which provides that "A party may, through pleadings, raise any point of law or quote any provision, statement or principle of law." She further submitted that the Deed itself defined "law" to mean all applicable Kenyan laws, rules, regulations, codes and applicable case law, with the result that the Mwongozo Code formed part of the contractual framework governing the agreement. She therefore contended that the learned judge erred in concluding that the appellant had failed to identify the legal or policy framework underpinning its defence. Counsel further submitted that the learned judge improperly shifted the burden of proof to the appellant, whereas it was incumbent upon the respondent, as the party seeking to enforce the agreement, to demonstrate that the Board meeting culminating in its execution was lawfully convened and conducted, and that the requisite approvals had been obtained. 30.To reinforce those submissions, counsel relied on Pamela Aboo v Assets Recovery Agency & Another, Nairobi Civil Appeal No. 452 of 2018, where this Court distinguished the legal burden of proof from the evidential burden, and reaffirmed that the legal burden remains upon the party asserting a fact. She also cited Gitobu Imanyara & 2 Others v Attorney General [2016] eKLR, in which this Court held that even where evidence is uncontroverted, a claimant must still prove the case on a balance of probabilities. Further reliance was placed on John Munuve Mati v Returning Officer, Mwingi North Constituency & 2 Others [2018] eKLR, where it was held that failure by a respondent to call witnesses does not relieve a claimant of the burden of proving the claim. Counsel further relied on Hosea Sitienei v University of Eldoret & 2 Others [2018] eKLR, where this Court held that decisions of a board that is not properly constituted are null and void. Counsel submitted that the respondent failed to discharge that burden, noting that during cross-examination she admitted that Board meetings had been held, but she did not have the minutes thereof. She further contended that, while neither party called a current or former member of the Board of Trustees to testify on the circumstances leading to the execution of the Deed, it was the respondent, as the party asserting the validity of the agreement, who bore both the legal and evidential burden of demonstrating that the Board meeting was lawfully convened and constituted, and that the agreement was duly authorised. 31.On the third issue, counsel submitted that the respondent had expressly pleaded that clause 6.1 of the Deed of Mutual Separation and Settlement which required disputes arising under the agreement to be referred to arbitration was contrary to section 12 of the Employment and Labour Relations Court Act. Counsel contended that, having admitted that one of the provisions of the agreement was unlawful, the respondent could not selectively enforce the remainder of the agreement while repudiating the arbitration clause. She maintained that the agreement contained no severability clause, and that the learned judge failed to appreciate the legal consequences of the respondent's admission. In support of that submission, counsel relied on Teachers Service Commission v Sarah Nyanchama Ratemo, Civil Appeal No. 14 of 2014, where this Court held that an admission by a party may be sufficient to determine a disputed issue. 32.Counsel further asserted that the respondent was estopped from approbating and reprobating the same agreement. She submitted that the respondent, through her advocates, actively participated in the negotiation and drafting of the Deed of Mutual Separation and Settlement and thereafter voluntarily executed it. Having accepted and sought to enforce the provisions conferring financial benefits upon her, counsel contended, the respondent could not at the same time repudiate clause 6.1 of the agreement as being contrary to section 12 of the Employment and Labour Relations Court Act, while insisting that the remaining provisions be enforced. In support of that proposition, counsel relied on National Bank of Kenya Limited v Hamida Bana & 103 Others [2017] eKLR, where this Court adopted the doctrine of election as articulated in State of Punjab & Others v Dhanjit Singh Sandhu, Civil Appeal No. 5698-5699 of 2009, to the effect that a party cannot accept and reject the same instrument or affirm and disaffirm the same transaction. According to counsel, a party who knowingly accepts the benefits of a contract is estopped from denying its validity. Counsel therefore submitted that the respondent was bound by the agreement in its entirety, and could not selectively enforce those provisions that were beneficial to her while disclaiming those that were not. 33.Counsel further submitted that the learned judge erred in awarding the respondent the benefits stipulated in the Deed of Mutual Separation and Settlement, notwithstanding that both the agreement and the underlying contract of employment were, in the appellant's view, unlawful and unenforceable. In support of that contention, counsel relied on Patel v Singh (2) [1987] KLR 585, where this Court approved the principle in Archbolds (Freightage) Ltd v S. Spanglett Ltd [1961] 1 QB 374, that courts will not enforce contracts prohibited by statute or contrary to public policy. 34.Lastly, on the issue whether the learned judge erred in awarding the respondent reliefs founded on an illegal contract of employment and an unlawful Deed of Mutual Separation and Settlement, counsel submitted that the trial court ought not to have enforced the agreement or granted the respondent the benefits claimed thereunder. In support of that submission, counsel relied on Attorney General v Law Society of Kenya & Another [2017] eKLR, where this Court reaffirmed the doctrine of ex turpi causa non oritur actio, namely, that no cause of action can arise from an illegal or immoral act. Counsel further noted that, in that decision, this Court cited with approval the celebrated dictum of Lord Mansfield, CJ. in Holman v Johnson (1775) 1 Cowp 341, that "no court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act." She, therefore, maintained that, having been founded on an unlawful third-term contract of employment, the Deed of Mutual Separation and Settlement was incapable of enforcement and could not lawfully form the basis of the reliefs awarded to the respondent. Accordingly, counsel urged this Court to allow the appeal, set aside the judgment of the trial court, dismiss the respondent's claim with costs, and award the appellant the costs of the appeal. 35.On his part, Mr. Achiando, highlighting the respondent's written submissions dated 29ᵗʰ January 2025, submitted that the appeal raises three broad issues, namely, whether the legality of the respondent's contract of employment dated 12th October 2016 properly arose for determination before the trial court; whether the trial court erred in finding that the Deed of Mutual Separation and Settlement dated 28ᵗʰ February 2018 was valid and enforceable; and whether the respondent was entitled to the reliefs awarded by the trial court. 36.On the first issue, counsel submitted that the appellant's contention that the respondent's contract of employment dated 12ᵗʰ October 2016 was unlawful because it violated the provisions of the State Corporations Act and the Mwongozo Code of Governance for State Corporations was never pleaded before the trial court and only emerged during submissions. According to counsel, throughout the pleadings and the hearing, the appellant confined its challenge to the validity of the Deed of Mutual Separation Agreement and never questioned the legality of the respondent's contract of employment. Counsel therefore maintained that the trial court correctly held that the issue was outside the pleadings and could not properly be determined. 37.To reinforce that argument, counsel relied on Thomas De La Rue (K) Ltd v David Opondo Omutelema [2013] eKLR, D E N v P N N [2015] eKLR, Wairimu Wanjohi v James Wambiru Mukabi [2021] eKLR, and David Sironga Ole Tukai v Francis Arap Muge & 2 others [2014] eKLR, for the proposition that parties are bound by their pleadings, courts determine only issues arising from those pleadings, and relief cannot be granted on matters that were neither pleaded nor placed before the court for determination. 38.Counsel further contended that the appellant sought to introduce the question of illegality only through written submissions, yet submissions do not constitute evidence. In support of that proposition, reliance was placed on Erastus Wade Opande v Kenya Revenue Authority & Another Kisumu HCCA No. 46 of 2007, as cited in Benson W. Kaos & 72 others v Attorney General & 85 others [2022] eKLR, together with Nancy Wambui Gatheru v Peter W. Wanjere Ngugi Nairobi HCCC No. 36 of 1993, for the principle that submissions merely crystallize the parties' respective cases and cannot introduce evidence or new issues not previously pleaded. Counsel therefore maintained that the appellant's arguments founded solely on submissions could not displace the pleadings or the evidence tendered before the trial court. 39.Counsel reiterated that the only dispute disclosed by the pleadings concerned the validity and enforceability of the Separation Agreement, not the legality of the respondent's employment contract. He submitted that the appellant had itself relied on the terms of that contract during the proceedings and could not, at the appellate stage, seek to impugn its validity. He further asserted that any challenge to the respondent's appointment was self-defeating because the appellant itself employed the respondent and subsequently confirmed her appointment through the contract dated 12ᵗʰ October 2016. Consequently, he submitted, the learned judge correctly confined himself to the issues arising from the pleadings and properly declined to determine an unpleaded question. 40.Turning to the second issue, counsel submitted that the Deed of Mutual Separation Agreement was voluntarily executed by the parties and was, therefore, valid, binding and enforceable. He contended that courts only interfere with contractual obligations where illegality, fraud, coercion, undue influence or other vitiating factors have been pleaded and proved, none of which had been established in the present case. In support, counsel relied on Stanley Kamere & 26 Others v National Housing Corporation & 2 Others [2015] eKLR. 41.On the question of the burden of proof, counsel maintained that it was incumbent upon the appellant to establish its allegations that the Deed of Mutual Separation and Settlement contravened the law or the applicable corporate governance framework. Relying on section 107 of the Evidence Act and the decision of AhmedMohammed Noor v Abdi Aziz Osman [2019] eKLR, counselcontended that the appellant failed to produce any statutory provision, policy document or other evidence demonstrating that the agreement had been executed contrary to law, or that approval from SCAC, the Parent Ministry, the National Treasury or the SRC was mandatory. According to counsel, the appellant merely advanced bare assertions unsupported by evidence and therefore failed to discharge the burden resting upon it. 42.Counsel also pointed to the appellant's own evidence before the trial court, arguing that it undermined its challenge to the validity of the Separation Agreement. He noted that the appellant's sole witness admitted that the dispute principally concerned clause 3.1 of the Deed of Mutual Separation Agreement and Settlement, which provided for the respondent's terminal benefits, and further conceded that the respondent was entitled to the settlement amount stipulated therein. In counsel's view, that evidence amounted to an admission that the appellant did not dispute the existence or execution of the agreement but only questioned the settlement amount payable under Clause 3.1. 43.In addition, counsel contended that the appellant's own conduct affirmed the validity of the Separation Agreement. He pointed out that the appellant had partly performed its obligations under theagreement by paying the respondent gratuity for two years and that the agreement had been executed by four trustees, including the Chairperson of the Board of Trustees, facts which the appellant had never disputed. Counsel therefore maintained that the appellant was estopped from denying the validity of the agreement after having partly performed its obligations thereunder. 44.Responding to the appellant's reliance on Hosea Sitienei v University of Eldoret & 2 Others (supra), counsel asserted that the authority was inapplicable because the appellant had neither pleaded nor proved that the Board of Trustees was improperly constituted. He also maintained that the learned judge correctly found that the appellant had failed to adduce evidence demonstrating that approval from SCAC, the Parent Ministry, the National Treasury or the SRC was a legal prerequisite to the execution of the Separation Agreement. According to counsel, the appellant equally failed to produce the Mwongozo Code or any policy document prescribing the procedures it alleged had been breached. 45.With regard to the respondent's evidence that she did not have the Board minutes, counsel submitted that employment records,Board minutes and resolutions were documents within the custody and control of the appellant as the employer and not the respondent. He therefore contended that the appellant could not rely on its own failure to produce those documents to impeach the validity of the Separation Agreement. 46.Turning to the principles governing contractual obligations, counsel relied on National Bank of Kenya Ltd v PipeplasticSamkolit (K) Ltd & Another [2001] eKLR, where this Court held that save for exceptional circumstances, it is not the function of a court of equity to relieve a party from what may appear to be a bad bargain, as courts do not rewrite contracts voluntarily entered into by parties. Counsel also relied on Pius Kimaiyo Langat v Co-operative Bank of Kenya Ltd [2017] eKLR, where this Court reaffirmed that parties are bound by the terms of their contracts unless fraud, coercion or undue influence is pleaded and proved. Counsel maintained that none of those vitiating factors had been pleaded or established, and that the appellant therefore remained bound by the terms of the Separation Agreement, including clause 3.1, which provided for the respondent's terminal benefits. 47.Regarding the appellant's argument that clause 6.1 of the Deed of Mutual Separation Agreement and Settlement was contrary tosection 12 of the Employment and Labour Relations Court Act, counsel submitted that the issue had never been raised before the trial court and was therefore an afterthought. Counsel acknowledged the settled principle that courts will not enforce contracts entered into in contravention of statute. He nevertheless argued that the appellant had failed to demonstrate that the Deed itself was illegal at its inception. In support of that proposition, counsel relied on Trans Mara Sugar Co. Ltd & Another v BenKangwaya Ayiemba & Another [2020] eKLR, where the court distinguished between contracts that are illegal at the time of their formation which, are generally unenforceable, and contracts that become tainted by illegality only in the course of their performance. Counsel submitted that the Court held that, where the illegality is confined to a particular provision and does not go to the root of the agreement, the offending provision may be struck out, while the remainder of the contract remains enforceable. Accordingly, counsel maintained that, even if clause 6.1 were found to be inconsistent with section 12 of the Employment and Labour Relations Court Act, that alone would not invalidate the entire Deed of Mutual Separation Agreementand Settlement or disentitle the respondent from enforcing its remaining provisions. 48.On the final issue, counsel submitted that, having established the validity and enforceability of the Separation Agreement, the respondent was entitled to the remedies granted by the trial court. Counsel reiterated that the appellant had already partly performed the agreement, and urged this Court to uphold the judgment of the trial court, dismiss the appeal in its entirety and award costs to the respondent. 49.As this is a first appeal, our duty is to analyze and re-assess the evidence on record and reach our own conclusions in the matter. It was put more appropriately in Selle -vs- Associated Motor Boat Co. [1968] EA 123, thus:“An appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled. Briefly put they are that this Court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular this Court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally ( Abdul Hameed Saif vs. _ Ali Mohamed Sholan (1955), 22 E. A. C. A. 270).” 50.I have considered the record, the submissions of counsel and the judgment of the trial court. In my view, this appeal turns on the following four issues: whether the learned judge erred in declining to determine the legality of the respondent's third-term contract of employment dated 12ᵗʰ October 2016; whether the learned judge erred in holding that the Deed of Mutual Separation and Settlement dated 28ᵗʰ February 2018 was valid, lawful and enforceable; whether the respondent was entitled to enforce the substantive provisions of the Deed notwithstanding her contention that clause 6.1 thereof was inconsistent with section 12 of the Employment and Labour Relations Court Act; and whether the learned judge properly awarded the respondent the monetary benefits stipulated under the deed. 51.On the first issue which is whether the learned judge erred in declining to determine the legality of the respondent's third-term contract of employment dated 12ᵗʰ October 2016, the appellant contends that the said issue properly arose from the pleadings because the Deed of Mutual Separation and Settlement expressly referred to and incorporated the respondent's contract of employment. It was therefore submitted that once the appellant challenged the legality of the deed, the legality of the underlying contract inevitably fell for determination. The respondent takes a contrary view. She maintains that her contract of employment was never impugned in the pleadings and that the appellant only sought to challenge its legality during submissions. She therefore supports the learned judge's finding that parties are bound by their pleadings. 52.I have carefully considered the rival submissions, the pleadings, the evidence on record and the applicable law. It is common ground that the respondent's claim was not founded upon her contract of employment dated 12ᵗʰ October 2016. Rather, her cause of action was founded upon the Deed of Mutual Separation and Settlement dated 28ᵗʰ February 2018, which she pleaded constituted a binding agreement governing the terms upon which the parties mutually agreed to bring the employment relationship to an end. 53.I have examined the pleadings and note that at paragraph 6 of the statement of claim, the respondent pleaded that her contract of employment had been renewed from time to time and was last renewed for a period of three years commencing on 1ˢᵗ November 2016 and was due to expire on 31ˢᵗ October 2019. In its response to the statement of claim, the appellant expressly stated that "the respondent does not deny the contents of paragraphs 3, 4, 5 and 6 of the Memorandum of Claim." By that admission, the appellant accepted, among other matters, the respondent's appointment under the contract dated 12ᵗʰ October 2016. 54.Equally significant is the fact that the appellant did not plead that the respondent's appointment to a third term was unlawful, nor did it seek any declaration impugning the validity of the contract of employment. Instead, its defence was consistently directed at the legality of the Deed of Mutual Separation and Settlement. At paragraph 8 of its response, the appellant pleaded that if such a deed existed, it was "illegal, fraudulent, void ab initio, ultra vires the powers of the parties thereto and unenforceable." It thereafter set out detailed particulars of fraud and illegality directed exclusively at the deed. 55.Those particulars reveal that the appellant's complaint was not that the respondent's contract of employment was itself unlawful. Rather, it alleged that the deed had been executed without following due process and without obtaining the approvals of the SCAC, the Parent Ministry, the National Treasury and the SRC; that it contravened the State Corporations Act, the Mwongozo Code of Governance for State Corporations, and the applicable Guidelines on Terms and Conditions of Service for State Corporations; that it purported to confer benefits beyond those provided under the respondent's contract of employment; and that no Board meeting had been convened or resolution passed authorising the respondent's exit package. It further pleaded that the respondent, being the appellant's Chief Executive officer and Secretary to the Board, was fully aware of those procedures and was therefore estopped from asserting otherwise. 56.The same position emerges from the appellant's witness statement. Samson Toniok acknowledged that the respondent had been reappointed under a three-year contract commencing on 1ˢᵗ November 2016. His complaint too was not directed at that appointment. Instead, he asserted that the alleged Deed was illegal because it had been executed without the requisite approvals, was inconsistent with the respondent's contract of employment, and unlawfully conferred terminal benefits beyond those contemplated therein. Throughout his statement, the emphasis remained on the alleged illegality of the deed rather than the validity of the respondent's employment contract. 57.In my view, the learned judge correctly appreciated the nature of the appellant's defence. Properly construed, the appellant's pleadings did not challenge the validity of the respondent's contract of employment dated 12ᵗʰ October 2016. Rather, they challenged the legality and enforceability of the Deed of Mutual Separation and Settlement on the grounds that it was allegedly executed in contravention of the applicable statutory and governance framework and conferred benefits inconsistent with the respondent's existing contract of employment. While the appellant relied on the terms of that contract to support its challenge to the Deed, it did not plead that the contract itself was unlawful or seek any relief directed at its validity. 58.It is trite law that parties are bound by their pleadings. In Dakianga Distributors (K) Ltd v Kenya Seed Company Limited [2015] eKLR, this Court held as follows on the importance of pleadings:“A useful discussion on the importance of pleadings is to be found in Bullen and Leake and Jacob's Precedents of Pleadings, 12th Edition, London, Sweet & Maxwell (The Common Law Library No. 5) where the learned authors declare:“The system of pleadings operates to define and delimit with clarity and precision the real matters in controversy between the parties upon which they can prepare and present their respective cases and upon which the court will be called upon to adjudicate between them. It thus serves the two-fold purposes of informing each party what is the case of the opposite party which he will have to meet before and at the trial, and at the same time informing the court what are the issues between the parties which will govern the interlocutory proceedings before the trial and which the court will have to determine at the trial.”Sir Jack Jacob in an article entitled “The Present Importance of Pleadings” published in (1960) Current Legal Problems and which article was quoted with approval by the Supreme Court of Malawi in Malawi Railways Limited v Nyasulu [1998] MWSC 3 states of the importance of pleadings:“As the parties are adversaries, it is left to each one of them to formulate his case in his own way, subject to the basic rules of pleadings... for the sake of certainty and finality, each party is bound by his own pleadings and cannot be allowed to raise a different or fresh case without due amendment properly made. Each party thus knows the case he has to meet and cannot be taken by surprise at the trial. The court itself is as bound by the pleadings of the parties as they are themselves. It is no part of the duty of the court to enter upon any inquiry into the case before it other than to adjudicate upon the specific matters in dispute which the parties themselves have raised by the pleadings. Indeed, the court would be acting contrary to its own character and nature if it were to pronounce any claim or defence not made by the parties. To do so would be to enter upon the realm of speculation. Moreover, in such event, the parties themselves, or at any rate one of them might well feel aggrieved; for a decision given on a claim or defence not made or raised by or against a party is equivalent to not hearing him at all and thus be a denial of justice...In the adversarial system of litigation therefore, it is the parties themselves who set the agenda for the trial by their pleadings and neither party can complain if the agenda is strictly adhered to. In such an agenda, there is no room for an item called “Any Other Business” in the sense that points other than those specific may be raised without notice.” 59.Guided by the foregoing principles, I am satisfied that the learned judge correctly confined himself to the issues emerging from the parties' pleadings. The appellant's defence did not place the legality of the respondent's contract of employment dated 12ᵗʰ October 2016 in issue. I reiterate that its challenge was directed at the legality and enforceability of the Deed of Mutual Separation and Settlement, which it contended had been executed contrary to the applicable statutory and governance framework and conferred benefits beyond those contemplated under the respondent's contract of employment. While the appellant relied on the terms of that contract in support of its challenge to the Deed, it neither pleaded nor sought any relief impeaching the validity of the contract itself. Therefore, I agree with the learned judge that the legality of the respondent's contract of employment did not arise as a substantive issue for determination. Whether the appellant established the alleged illegality of the Deed is a distinct question, to which I now turn. 60.As regards the issue whether the learned judge erred in holding that the Deed of Mutual Separation and Settlement dated 28ᵗʰ February 2018 was valid, lawful and enforceable, I take the view that the said issue lies at the heart of the appeal because the respondent's claim was founded exclusively upon the deed. The appellant's contention is that the deed was a nullity because it was executed without the requisite approvals, that it was executed in secrecy without a properly constituted meeting of the Board of Trustees; and that it was intended to confer unlawful financial benefits upon the respondent. The respondent, on the other hand, maintains that the deed was voluntarily negotiated and executed by the parties, that the appellant failed to prove any of the allegations of fraud or illegality pleaded in its defence, and that the learned judge rightly upheld its validity. 61.I note at the outset that there is no dispute that the parties executed the Deed of Mutual Separation and Settlement on 28ᵗʰ February 2018. Indeed, the execution of the deed was expressly admitted by the appellant's sole witness, Samson Toniok, who testified that although he neither participated in its negotiation nor execution, there was evidence that it had been signed by the respondent and four members of the appellant's Board of Trustees, including the Chairperson. Likewise, the respondent testified that the proposal for a mutual separation emanated from the appellant's Board following its decision to pursue a different strategic direction, and that the deed had been prepared by the appellant's advocates before being presented to her for execution. That evidence was never controverted by any member of the Board who participated in the negotiations or executed the agreement on behalf of the appellant. 62.It is equally common ground that the appellant did not dispute the authenticity of the deed. Its challenge was directed, not at the existence of the agreement, but at its legality. The appellant pleaded that the deed was illegal, fraudulent and void. In my view, those allegations by their very nature attracted a heightened evidential burden. It is trite law that fraud must not only be specifically pleaded but must also be strictly proved. The same principle applies where a party seeks to avoid contractual obligations on the ground of illegality or public policy. I hasten to add that mere suspicion, conjecture or dissatisfaction with the bargain struck by the parties cannot suffice. 63.Having reviewed the entire record, I am unable to find evidence capable of sustaining the appellant's allegations of fraud. In stating so, I note that during cross-examination, Samson Toniok unequivocally admitted that he possessed no evidence that the respondent procured the agreement through fraud or undue influence. He equally conceded that the subsequent Board merely questioned the legality of the agreement after assuming office and sought legal advice from the Office of the Attorney General. In other words, the appellant's challenge was not founded upon facts demonstrating fraudulent procurement of the deed but upon the subsequent Board's view that the agreement may have contravened the applicable legal and governance framework. Those concessions, in my view, significantly weakened the appellant's plea that the deed was vitiated by fraud. 64.The crux of the appellant’s contention appears to be that the deed was executed contrary to the Mwongozo Code of Governance for State Corporations and without the approval of the Parent Ministry, the National Treasury, SCAC and the SRC. There is no doubt that state corporations are subject to an elaborate governance framework designed to promote transparency, accountability and prudent management of public resources. This Court in Ben Chikamai & Another v Peter Macithi Muigai & 2 Others (supra) recognized that the Mwongozo Code derives normative force from, inter alia, section 30 of the State Corporations Act, Executive Order No. 7 of 2015 and the relevant government circulars. Compliance with that framework is therefore not optional. 65.I am alive to the appellant's submission that the respondent's third-term contract, having been executed in October 2016 after Mwongozo came into force in April 2015, contravened the Code. However, apart from relying on case law, the appellant neither pleaded nor adduced evidence on the manner in which Mwongozo was intended to operate in relation to office holders whose earlier terms predated its commencement. In any event, having already found that the legality of the respondent's third-term contract did not arise from the pleadings, I need not determine whether the appellant's contention would have entailed a retrospective application of Mwongozo or the proper scope of its transitional operation. 66.The germane question is whether the appellant discharged its burden of proving that the execution of the Deed contravened the applicable statutory and governance framework. In my view, it did not. Although the appellant repeatedly relied on the State Corporations Act, the Mwongozo Code of Governance for State Corporations and the applicable government guidelines, it failed to adduce evidence demonstrating that the execution of the Deed of Mutual Separation and Settlement was, in the circumstances of this case, subject to the prior approval of the Parent Ministry, the National Treasury, the SCAC, the SRC, or that such approvals were mandatory before the parties could lawfully execute the agreement. It also did not produce the relevant circulars, directives, statutory instruments or other documentary evidence establishing those requirements or demonstrating that they had been breached. Consequently, however vigorously advanced in the pleadings and submissions, the appellant's assertions were insufficient, without supporting evidence, to discharge the burden of proof resting upon it. 67.Significantly, the appellant did not call any current or former member of its Board of Trustees to testify before court. The respondent's evidence was that the trustees attended the meeting at which the separation proposal was discussed, that the Board resolved to pursue a different strategic direction, and that the deed was thereafter prepared by the appellant's advocates. Those assertions were squarely within the knowledge of the Board members who participated in the decision, yet none of them was called to testify that no meeting took place, that there was no quorum, that the Board never approved the deed, or that the signatures appearing thereon were unauthorised. Instead, the appellant relied entirely on the testimony of a witness who expressly admitted that he neither attended the meeting nor participated in the negotiations. 68.The above notwithstanding, the appellant nevertheless faults the learned judge for holding that it failed to prove the necessity for the approvals it alleged were required. I am unable to agree with the appellant's contention that the learned judge improperly shifted the burden of proof. Under section 107(1) of the Evidence Act, the burden of proving the existence of a fact rests upon the party who asserts it, while section 109 places the burden of proving any particular fact on the person who wishes the court to believe in its existence. Having pleaded that the Deed of Mutual Separation and Settlement was illegal for want of the requisite approvals and for contravening the applicable statutory and governance framework, the appellant bore the legal burden of proving those allegations. More importantly, the existence or otherwise of the alleged approvals, Board resolutions and internal governance processes were matters especially within the appellant's knowledge and custody, thereby attracting section 112 of the Evidence Act. In my view, once the respondent produced the executed Deed and testified to the circumstances leading to its execution, the evidential burden shifted to the appellant to demonstrate, by cogent evidence, why the agreement was unlawful and incapable of enforcement. That burden could not be discharged merely by alleging non-compliance with unspecified government procedures or governance requirements. 69.The respondent's evidence on the circumstances surrounding the execution of the deed remained largely intact throughout the proceedings. She consistently testified that the initiative for the mutual separation originated from the appellant's Board of Trustees; that the Board had resolved to pursue a different strategic direction; that the appellant's advocates prepared the deed; and that she merely accepted the proposal presented to her by her employer. During cross-examination, she readily conceded that her contract of employment did not expressly provide for termination by mutual separation. She nevertheless maintained that nothing precluded the parties from mutually agreeing to bring their contractual relationship to an end before the expiry of the contract. I find no legal error in that position. 70.Indeed, one of the more compelling aspects of the learned judge's reasoning was the application of the principle eodem modo quo oritur, eodem modo dissolvitur, which translates to "it is discharged in the same manner in which it was created.” The respondent's contract of employment undoubtedly regulated the parties' relationship while it subsisted. There was, however, nothing in that contract prohibiting the parties from subsequently entering into a fresh agreement terminating their relationship upon mutually agreed terms. As the learned judge correctly observed, the termination clause in the employment contract contemplated unilateral termination by either party. It did not, however, preclude the parties from negotiating an alternative mode of separation by mutual agreement. Similarly, the clause providing that the employment contract superseded previous agreements was backward-looking in nature and could not reasonably be construed as prohibiting the parties from subsequently varying or discharging their contractual obligations by mutual consent. That reasoning, in my view, accords with the settled principle that parties are at liberty to vary or discharge their contractual obligations by agreement, and that courts will ordinarily give effect to such bargains, unless they are shown to be vitiated by illegality, fraud, coercion, undue influence or any other recognised ground for avoiding a contract. I therefore find no basis for interfering with the learned judge's conclusion. 71.The appellant also contended that the deed conferred benefits not contemplated by the respondent's contract of employment and was therefore intended to defraud the Government. With due respect, I am not persuaded. Parties are generally at liberty to vary their contractual rights and obligations by mutual agreement, provided the variation is not prohibited by law or contrary to public policy. The mere fact that the deed in question conferred benefits different from those available under the employment contract did not, without more, render it unlawful. As this Court observed in National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another (supra), a court does not rewrite contracts freely entered into by parties merely because one party subsequently considers it to have made a bad bargain. That principle was reaffirmed in Pius Kimaiyo Langat v Co-operative Bank of Kenya Ltd (supra) where this Court held that parties remain bound by the bargains they voluntarily make unless recognised vitiating factors such as fraud, coercion or undue influence are established. None of those factors was proved in the present case. 72.I am also persuaded by the appellant's conduct immediately after the execution of the deed. The evidence demonstrates that the appellant partly performed its obligations by paying the respondent gratuity for two years. It was only after a new Board assumed office that the legality of the agreement was questioned. While partial performance cannot validate an otherwise illegal contract, it is nevertheless a relevant factual circumstance in assessing whether the parties themselves regarded the agreement as binding at the time of its execution. In the absence of evidence demonstrating that the deed was void ab initio, the appellant's subsequent change of position could not, without more, relieve it of the obligations it had voluntarily assumed. 73.For all the foregoing reasons, I am satisfied that the learned judge correctly concluded that the appellant failed to prove that the Deed of Mutual Separation and Settlement was procured through fraud, executed in contravention of any mandatory statutory provision or otherwise rendered void by illegality. I therefore find no basis for interfering with his conclusion that the deed constituted a valid and enforceable agreement between the parties. The appellant's challenge on this issue equally fails. 74.Turning to the third issue, the appellant faults the learned judge for failing to uphold clause 6.1 of the Deed of Mutual Separation and Settlement which provided that disputes arising from the agreement were to be referred to arbitration. It was contended that, having pleaded that the clause offended section 12 of the Employment and Labour Relations Court Act, the respondent could not simultaneously seek to enforce the remaining provisions of the deed. According to the appellant, the respondent was approbating and reprobating the same instrument. The appellant further maintained that the deed, being founded upon an illegal contract, was wholly unenforceable and that the learned judge ought to have declined to grant any relief thereunder. The respondent, on the other hand, maintained that the issue regarding clause 6.1 neither arose from the pleadings nor featured before the trial court and, in any event, did not affect the validity of the substantive obligations undertaken by the parties under the deed. 75.I have given due consideration to the rival arguments. In her statement of claim, the respondent pleaded that although clause 6.1 of the Deed of Mutual Separation and Settlement required disputes arising therefrom to be referred to arbitration, the clause could not oust the jurisdiction of the trial court. The appellant's response was that the respondent knew, or ought to have known, that the Deed was illegal, fraudulent, void, ultra vires the powers of the parties thereto and unenforceable, and had deliberately chosen to disregard only those provisions that did not favour her, particularly clause 6.1, while seeking to enforce the clauses providing for her terminal benefits. It characterized that conduct as "cherry picking" the Deed and contended that it demonstrated the respondent's own appreciation that the agreement was unenforceable. 76.However, and notwithstanding those pleadings, the appellant did not raise any preliminary objection to the jurisdiction of the trial court, nor did it invoke clause 6.1 by applying for a stay of the proceedings pending arbitration. Instead, it entered appearance, filed a response to the claim, participated fully in the proceedings, called evidence and cross-examined the respondent without seeking to enforce the arbitration agreement. It was only after the trial court had rendered judgment against it that the appellant sought to rely on clause 6.1 as a basis for challenging the respondent's claim. In the circumstances, I am persuaded by the respondent's contention that, although the appellant pleaded the existence of clause 6.1, it chose to submit to the jurisdiction of the trial court and litigate the dispute to its conclusion without seeking to enforce the agreed arbitral process. 77.Be that as it may, I do not consider the determination of this appeal to turn on the jurisdiction of the trial court. Rather, the appellant's principal complaint is that the respondent could not, on the one hand, seek to enforce the provisions of the Deed of Mutual Separation and Settlement that conferred financial benefits upon her while, on the other, disavowing clause 6.1 thereof, which required disputes arising under the Deed to be referred to arbitration. According to the appellant, the respondent was impermissibly seeking to approbate and reprobate the same instrument. The legal principle relied upon by the appellant is well settled. A party cannot ordinarily accept the benefits of a contract while repudiating its burdens. In National Bank of Kenya Limited v Hamida Bana & 103 Others (supra), this Court, adopting the decision of the Supreme Court of India in State of Punjab & Others v Dhanjit Singh Sandhu (supra), reiterated the doctrine of election to the effect that no party can accept and reject the same instrument, and that person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage. 78.The principles in National Bank of Kenya Limited v Hamida Bana & 103 Others (supra), however, presuppose that the contract is otherwise valid, and that the party seeks to affirm and disaffirm the same obligation. That is not the position before us. The respondent did not seek to avoid her substantive obligations under the deed while enforcing only those favourable to her. Rather, she questioned the legal efficacy of a single procedural provision relating to the forum for dispute resolution. In our view, there is an important distinction between challenging the enforceability of a contractual mechanism for resolving disputes and repudiating the substantive obligations assumed under the contract itself. 79.The appellant further contended that once clause 6.1 was found to be inconsistent with section 12 of the Employment and Labour Relations Court Act, the entire deed necessarily collapsed. I do not agree. The question is not whether one provision of the agreement may be impugned, but whether the alleged illegality permeates the entire contract so as to render it wholly unenforceable. 80.The distinction was examined by the High Court in Trans Mara Sugar Co. Ltd & Another v Ben Kangwaya Ayiemba & Another (supra). I find the reasoning in that decision persuasive and respectfully associate myself with it. The court undertook a careful examination of the law relating to contractual illegality and drew a distinction between contracts that are illegal at the time of their formation and those that become tainted by illegality in the course of their performance. It observed that whereas contracts that are illegal ab initio are generally void and incapable of enforcement, a different approach applies where the alleged illegality is confined to a particular contractual provision. In such cases, the court must determine whether the offending provision is severable from the remainder of the agreement. In answering that question, the court held that regard must be had to the intention of the parties, the nature and gravity of the illegality, the centrality of the impugned provision to the parties' bargain, and the demands of public policy. Where, upon consideration of those factors, the offending provision can be severed without defeating the parties' bargain or undermining public policy, the remainder of the agreement remains valid and enforceable. I respectfully adopt that approach. 81.Applying that reasoning to the present appeal, I am not persuaded that the alleged inconsistency between clause 6.1 and section 12 of the Employment and Labour Relations Court Act rendered the entire Deed of Mutual Separation and Settlement void. Clause 6.1 merely prescribed the forum through which disputes arising under the deed would be resolved. It neither created nor defined the parties' substantive rights and obligations. Those rights were principally contained in clause 3.1, which set out the respondent's separation package, including the payment of twelve months' gross salary, gratuity and the ex-gratia payment. The appellant did not demonstrate that those substantive obligations were dependent upon, or inseparable from the arbitration clause. 82.I am equally unable to accept the appellant's submission that the respondent's concession regarding clause 6.1 amounted to an admission that the entire deed was unlawful. A distinction must be drawn between an agreement that is unlawful in its entirety and one containing a provision which, for reasons of statute or public policy, cannot be enforced. The former is void ab initio; the latter may nevertheless remain enforceable in all other respects. As counsel for the respondent correctly submitted, the appellant failed to establish that the deed itself contravened any statutory prohibition, or that the parties' agreement to separate mutually was prohibited by law. 83.I am equally unpersuaded that the appellant can derive any assistance from the doctrine of ex turpi causa non oritur actio. In Attorney General v Law Society of Kenya & Another (supra), this Court reaffirmed the principle that no cause of action can arise from an illegal act, citing with approval the celebrated dictum of Lord Mansfield, CJ. in Holman v Johnson (supra) that "No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act." The doctrine, however, applies only where the illegality goes to the very root of the claimant's cause of action. As I have already found, the appellant failed to establish that the Deed of Mutual Separation and Settlement was tainted by illegality, or that the respondent's claim was founded upon an illegal act. The doctrine, therefore, has no application to the circumstances of this case. 84.In the end, I am satisfied that the learned judge did not err in declining to invalidate the entire Deed of Mutual Separation and Settlement merely because the respondent questioned the enforceability of clause 6.1. The appellant failed to demonstrate that the alleged invalidity of that clause rendered the Deed void or extinguished the parties' substantive contractual obligations. This ground of appeal therefore also fails. 85.The final issue is whether, having upheld the validity of the Deed of Mutual Separation and Settlement, the learned judge erred in awarding the respondent Kshs. 5,559,252.10 comprising twelve months' gross salary, one year's gratuity and an ex-gratia payment equivalent to three months' basic salary. The appellant contends that the learned judge thereby enforced benefits founded upon an illegal contract of employment and an equally unlawful separation agreement. It further contends that the respondent was not entitled to any payments outside those expressly provided under her contract of employment. The respondent, on the other hand, maintains that the award merely reflected the parties' contractual obligations under the deed, and that the appellant failed to demonstrate any legal basis upon which those obligations could be avoided. 86.Having found that the Deed of Mutual Separation and Settlement constituted a valid and enforceable agreement between the parties, it follows that the respondent's entitlement to the sums awarded falls to be determined by reference to the terms of that agreement. It is not disputed that clause 3.1 expressly provided for the payment of twelve months' gross salary, gratuity calculated in accordance with the respondent's contract of employment, and an ex-gratia payment equivalent to three months' basic salary. Equally, there was no dispute before the trial court as to the manner in which those sums were computed. The appellant's challenge was directed, not at the quantification of the award, but at the enforceability of the deed itself. 87.The evidence on record demonstrates that the appellant had already performed part of its obligations under the deed by paying the respondent gratuity equivalent to two years' service. Indeed, during cross-examination, Samson Toniok acknowledged that the respondent had received gratuity pursuant to the agreement, although he maintained that the remaining payments had neither been budgeted for nor approved in accordance with the applicable government procedures. That evidence is, in my view, significant. While partial performance cannot validate an agreement that is void ab initio, it is nevertheless consistent with the respondent's case that the parties initially regarded themselves as bound by the deed and only later differed on its legal effect following the appointment of a new Board of Trustees. 88.The appellant further submitted that the respondent's contract of employment comprehensively regulated the benefits payable upon termination, and that she could not lawfully receive additional benefits negotiated under the deed. I am unable to agree with that contention. I reiterate that parties to a contract are generally at liberty to vary, amend or discharge their contractual obligations by mutual agreement, provided such variation is not prohibited by statute or contrary to public policy. The deed represented precisely such an agreement. It was executed before the respondent's contract expired, and expressly set out the financial consequences of the parties' mutual decision to terminate their relationship prematurely. Having concluded that the deed has not been shown to be unlawful, there is no legal for this Court to substitute the benefits provided under the employment contract for those voluntarily agreed upon in the subsequent deed. 89.The appellant also contended that the respondent could not benefit from an agreement allegedly intended to defraud the Government. That submission is unsustainable on account of the evidence before us. Fraud is a serious allegation requiring cogent proof. As already observed, the appellant's sole witness expressly admitted that he had no evidence that the respondent procured the deed through fraud or undue influence. In addition, the appellant did not adduce evidence that the respondent participated in any scheme intended to circumvent the applicable legal framework. The learned judge was therefore correct in finding that the allegations of fraud remained unproved. 90.Equally, I am unable to accept the appellant's argument that the learned judge awarded benefits contrary to public policy. Public policy undoubtedly requires that public bodies conduct their affairs in accordance with the law and established governance standards. It also requires courts to refuse enforcement of agreements that are prohibited by statute or otherwise offend public interest. However, public policy equally demands that public bodies honour lawful contractual obligations voluntarily undertaken in the exercise of their powers. In my view, it would undermine commercial certainty and public confidence if state corporations were permitted to evade contractual obligations merely because a subsequent board takes a different view of a bargain lawfully concluded by its predecessor, absent proof of fraud, illegality or want of authority. 91.It follows, therefore, that the learned judge did not misdirect himself in awarding the respondent the specific sums claimed. The respondent pleaded the amounts payable under clause 3.1 of the deed, produced the agreement and the relevant computations, and her evidence on those matters was not materially challenged. The appellant did not place before the trial court an alternative computation, nor did it demonstrate that the sums awarded were inconsistent with the terms of the deed. In those circumstances, the learned judge cannot be faulted for entering judgment in the amounts contractually agreed by the parties. 92.In the end, having re-evaluated the entire record, I am satisfied that the learned judge properly directed himself on the applicable principles of law and correctly evaluated the evidence before him and thus arrived at the correct decision. Accordingly, I find no merit in the appeal. 93.As Lilan and Okello, JJ.A. agree, this appeal is hereby dismissed with costs to the respondent. Concurring Judgment of Paul Lilan, JA 1.I have had the advantage of reading in draft the judgment of Hon. D. K. Musinga, JA. I am in full agreement with his reasoning and conclusions and therefore, have nothing useful to add. Concurring Judgment of Okello, JA. 1.I have had the advantage of reading in draft the judgment of my brother, D. Musinga, JA. I am in full agreement with both the reasoning and the conclusion reached therein and have nothing useful to add. DATED AND DELIVERED AT NAIROBI THIS 31ST DAY OF JULY 2026.D. K. MUSINGA………………………………….JUDGE OF APPEAL PAUL LILAN……………….…………..JUDGE OF APPEALDR. J. O. OKELLO..............JUDGE OF APPEALI certify that this is a true copy of the original.Signed DEPUTY REGISTRAR