[2018] KEELRC 1571 (KLR)
The court held that it had jurisdiction to determine disputes relating to staff mortgage loans where the facility was extended as part of the employment relationship. The respondent failed to demonstrate that the adjustment of the interest rate from the staff rate to commercial rates was contractually or legally...
Source-derived case information.
- Citation
- [2018] KEELRC 1571 (KLR)
- Parties
- Applicant: Stephen Kivandi Kamula; Respondent: Barclays Bank of Kenya Limited
- Court
- Employment and Labour Relations Court
- Court Station
- Employment and Labour Relations Court at Nairobi
- Jurisdiction
- Kenya
- Case Number
- Cause 269 of 2016
- Procedural Posture
- Employment Cause / Interlocutory Application (injunction)
- Outcome
- Application partially allowed.
- Judges
- MSA Makhandia
- Legal Topics
- Preferential Staff Loans, Variation of Interest Rates, Injunctive Relief, Employer Employee Disputes
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Stephen Kivandi Kamula
Applicant
Barclays Bank of Kenya Limited
Respondent
Procedural Posture
Employment Cause / Interlocutory Application (injunction)
Legal Issues
- 1 Whether the Employment and Labour Relations Court has jurisdiction over disputes involving staff mortgage loans arising from the employment relationship.
- 2 Whether the respondent can lawfully vary the interest rate on the applicant's staff mortgage loan following termination of employment.
- 3 Whether the applicant is entitled to an injunction restraining the respondent from charging higher interest rates and disposing of the secured property pending determination of the main claim.
Ratio Decidendi
The court held that it had jurisdiction to determine disputes relating to staff mortgage loans where the facility was extended as part of the employment relationship. The respondent failed to demonstrate that the adjustment of the interest rate from the staff rate to commercial rates was contractually or legally justified. In the absence of clear contractual or statutory authority for the variation, and given the risk of prejudice to the applicant, the court found it appropriate to restrain the respondent from charging the higher interest rate pending full hearing. However, the court declined to grant orders relating to the secured property or a refund/set-off of overcharged interest at...
Court Disposition
Application partially allowed.
Orders
- Pending hearing and determination of the claim, the respondent is restrained by injunction from charging interest on the mortgage loan facility at 10% plus a margin of 4% or any other rate except the allowed staff account charges and staff interest rate of 6%.
- The cause to be determined within 180 days, failing which the orders lapse automatically.
Full Case Text
Judgment text and source record
49 paragraphs
REPUBLIC OF KENYA
IN THE EMPLOYMENT AND LABOUR RELATIONS COURT AT NAIROBI
CAUSE NO. 269 OF 2016
STEPHEN KIVANDI KAMULA CLAIMANT
v
BARCLAYS BANK OF KENYA LIMITED RESPONDENT
RULING NO. 2
1. Before the Court is an application dated 11 April 2018 by Stephen Kavinda Kamula (applicant) seeking orders
1. …
2. …
3. That pending the hearing and determination of the Claim the Respondent whether by itself, or its servants or agents, advocates or any other person acting for and or on their behalf be restrained by an order of injunction from charging interest rate on the mortgage loan facility at 10% plus a margin of 4. 00% or any other rate of interest save the allowed charges for staff accounts and the interest staff rate of 6% and further restrained from issuing threats of listing the Petitioner with the Credit Reference Bureau and further repossessing, offering for sale, selling, transferring, disposing or in any other way alienating or encumbering his family home which is LR No. 18111/281 in Nairobi County.
4. That this Honourable Court do issue orders compelling the Respondent to compute and refund already overcharged interests on the applicant’s loan by the time of filing this application or this Honourable Court directs that the amount that was erroneously overcharged be utilized to settle the applicant’s staff loans.
5. That the applicant be at liberty to apply for such further or other orders and/or directions as this Honourable Court would deem fit and just to grant.
6. That costs occasioned by this application be borne by the Respondent.
2. On 27 April 2018, the applicant filed submissions and authorities to buttress the application while the Respondent filed a replying affidavit sworn by its Human Resource and Employee Relations Manager in opposition to the application on 29 April 2018. It filed submissions on 7 May 2018.
3. When the application came up for hearing on 21 May 2018, the parties indicated that they would rely on the material already placed on record.
Background
4. The applicant was an employee of the Respondent until around September 2017 when he was dismissed from employment.
5. The dismissal aggrieved the applicant and he instituted legal proceedings against the Respondent alleging unfair termination of employment and breach of contract.
6. Hearing of the main Cause commenced before Mbaru J on 31 August 2016, and on 18 July 2017, the Respondent indicated that it would close its case without leading any witnesses.
7. After close of hearing, the applicant sought to file an amended Memorandum of Claim, and he was directed to file an appropriate application, which he did on 20 July 2017.
8. The parties proposed, and the Court agreed that the application be canvassed by way of written submissions and on 20 December 2017, the applicant was directed to file an Amended Memorandum of Claim within 14 days.
9. An Amended Memorandum of Claim was filed on 27 December 2017 and it introduced the head of claim in respect of the interest rate.
10. In regard to the present application it is worth noting that while in employment, the applicant had taken a loan facility from the Respondent at preferential rates.
11. Upon the dismissal, the Respondent purportedly reverted the rate of interest on the loan to market/commercial rates.
12. The applicant became apprehensive that the Respondent might dispose of the security he had given if he did not make repayments at the revised/increased interest rate, considering he is out of employment and thus the instant application.
Jurisdiction
13. The Respondent in opposing the application cited lack of jurisdiction on the part of the Court over disputes relating to mortgages/land; failure to satisfy the test for grant of injunctive orders and an intent by the applicant to delay determination of the main suit.
14. On the question of jurisdiction, this Court differently constituted has held that the Court has jurisdiction where a loan facility was extended within the sphere of an employer/employee relationship (see Boniface Lum Amunga Biko v National Bank of Kenya Ltd (2017) eKLR; Banking Insurance & Finance Union (K) v National Bank of Kenya (2016) eKLR and Nairobi Cause No. 437 of 2017, Timothy John Sitati v Barclays Bank of Kenya Ltd).
15. On the material placed before the Court, the Court finds no reason why it should depart from the conclusions of law in the cited cases to oust its jurisdiction.
Injunction on interest rates and alienation of charged property
16. The applicant and the Respondent had an agreement on the rate of interest. It appears that the Respondent has adjusted the rate of interest.
17. Unfortunately, none of the parties disclosed whether the adjustment was pursuant to contractual agreement or had any legal anchor.
18. Without the Respondent drawing the attention of the Court to the relevant provision of contract or law on adjustment and or variation of the interest rate, the Court is satisfied that the applicant has made a case to restrain the variation of the interest rest until the parties are heard fully on the issue.
19. On the question of the secured property, the Court notes that the applicant did not disclose/directly set out the property which had been used to secure the loan in the pleadings, and which he now wants the Court to injunct the Respondent from disposing off.
20. The applicant has also not demonstrated that the Respondent has threatened to invoke its contractual or statutory powers over the property.
21. The Court is therefore unable to make any order in respect to the property.
22. On proposed order 4, the Court is of the view that the order as sought is final in nature and it would not be prudent to allow it when the substance of the parties cases have not been presented on the merits.
23. Considering what has been stated in paragraphs 16 to 18 above, the Court will allow proposed order 3, but in an amended form to wit
(a) That pending the hearing and determination of the Claim the Respondent whether by itself, or its servants or agents, advocates or any other person acting for and or on their behalf are restrained by an order of injunction from charging interest rate on the mortgage loan facility at 10% plus a margin of 4. 00% or any other rate of interest save the allowed charges for staff accounts and the interest staff rate of 6%.
(b) The Cause be determined within 180 days failure to which the orders herein lapse automatically.
24. The Court is concerned that the parties have not been keen to have the main Cause heard and determined on the merit and therefore orders that each party bear own costs.
Delivered, dated and signed in Nairobi on this 13th day of July 2018.
Radido Stephen
Judge
Appearances
Muma & Kanjama, Advocates for applicant
Federation of Kenya EmployersforRespondent
Court Assistant Salome