[2007] KECA 273 (KLR)

REPUBLIC OF KENYA IN THE COURT OF APPEAL OF KENYA PEAL AT MOMBASA Civil Appeal 86 of 2006

VAN LEER EAST AFRICA LTD (GREIF (K) LTD)

A BUSINESS OF GREIF BROS

CORPORATION...................................................................APPELLANT

AND

BAIBA DHIDHA MJIDHO ………............................…….…RESPONDENT

(Appeal from the judgment and decree of the High Court of Kenya

Mombasa (Hon. Lady Justice J. Khaminwa) dated 12th October, 2005in

H.C.C.C. NO. 159 OF 2003)

**************

JUDGMENT OF THE COURT

This is an appeal from the judgment of the High Court at Mombasa (Lady Justice J. Khaminwa) dated 12th October 2005 in HCCC No. 159 of 2003.

The appellant is Van Leer East Africa (Greif (K)) Ltd.

(hereinafter “the appellant”) which company was the defendant in the superior court.

The respondent to the appeal is Baiba Dhidha Mjidho (hereinafter “the “respondent”)who was the plaintiff in the superior court.

Paragraphs 3, 4,5,6,7 and 8 of the plaint dated 10th July 2003 were in these terms together with a summary of the defence thereto:-

3 “Vide a contract of service entered between the plaintiff and the defendant, the plaintiff was employed by the defendant as a quality management coordinator with effect from 1st January 1990 on permanent and pensionable terms and rose through the ranks to the position of commercial and logistics manager on salary terms revisable from time to time with the conditions of service set out in the defendant’s letter of appointment dated 21st December 1989. ”

This paragraph 3 was admitted in the defence dated 12th August 2003.

4 “Prior to the said appointment, the plaintiff had previously worked with the defendant from 1st August 1972 to 30th May 1989 when he terminated his services with the defendant as a commercial manager due to poor management at that time.”

This paragraph 4 was denied in the defence dated 12th August 2003 save that it was admitted that the plaintiff was employed by the defendant from 1st August 1972 to 30th May 1989.

5. “The plaintiff put in diligent service to the defendant for 31 years during which time he rose from a quality assurance officer in 1972 to a quality management coordinator during his second employment in 1990 to a commercial and logistics manager earning Kshs. 277,870/= per month at the time of termination of his services vide a letter dated 30th April 2003”.

Save that the defendant denies that the plaintiff was earning Kshs.277, 870/= per month as at 30th April 2003 to which the plaintiff is put to strict proof the rest of paragraph 5 of the plaint is neither denied nor admitted in the defence.

6. “On or about the said 30th April 2003, the defendant through a letter dated 30th April 2003, terminated the plaintiff’s employment with themselves for the reasons that there were structural and management reorganisation being undertaken worldwide by the defendant and further that the position held by the plaintiff would no longer be required by the defendant”.

This paragraph 6 was admitted in the defence dated 12th August 2003.

7. “Subsequent to the said termination, the plaintiff started negotiating with the defendant so that it could pay him his terminal benefits but the negotiations were not fruitful since the defendant declined to pay the plaintiff his rightful terminal benefits.

In paragraph 5 of the defence the defendant, in relation to paragraph 7 of the plaint, pleaded that the defendant denies refusing to pay the plaintiff his rightful terminal benefits as alleged and avers that it is the plaintiff who through unreasonable and baseless demands has frustrated such payment as tabulated by the plaintiff on the legally applicable basis.

8. “The plaintiff therefore prays that he be paid his terminal benefits as enumerated hereunder:-

(a) Three months salary with benefits in lieu of notice at Kshs 277,870/= per month x 3 = 833,610/-

(b) 85 days leave outstanding at Kshs. 9,262. 30 per day = 787,295. 50/=

(c) Gratuity at the rate of 23 days for each full year of service for 14 years Kshs. 2,982,460. 60/=

(d) Bonus for the year 2003 at 1 month and ¼ of the basic salary Kshs. 139,253/= is Kshs. 174,066. 25/=

(e) Two years salary to take care of the competition clause as in our client’s letter of appointment dated 21st December 1989 bearing in mind that the defendant has already stopped the plaintiff from seeking employment elsewhere by invoking the said clause to other competitors.

Two years salary - Kshs. 6,668,880/-

TOTAL TERMINAL BENEFITS - Kshs. 11,446,312. 35”

In answer to paragraph 8 of the plaint the defendant, in paragraphs 6 and 7 of the defence denies that the plaintiff’s terminal benefits are as enumerated in paragraph 8 of the paint and puts the plaintiff to strict proof thereof. It states that in the alternative and without prejudice to the foregoing the defendant has offered the plaintiff as full and final settlement, the sum of Kshs.1,693,598/= made out as legally required which the plaintiff has refused to accept even prior to filing this suit.

The plaintiff then concluded the plaint with a prayer for judgment against the defendant for:-

(i) Terminal benefits of Kshs.11,446,312. 35

(ii) General damages

(iii) Costs of the suit

(iv) Any further or other relief that this Honourable Court may deem just and expedient to grant.

(v) Interest on (i), (ii), (iii) above.

The amount of Kshs. 11,446,312. 35 sought in prayer (i) above is broken down in paragraph 8 of the plaint.

There is a Statement of Agreed Issues dated 9th September 2003 in the record which is as follows:-

1. What was the plaintiff’s monthly salary at the time of termination of his services by the defendant.

2. Are the plaintiff’s terminal benefits as tabulated in paragraph 8 of the plaint. How much is the plaintiff to receive from the defendant as full and final settlement of his dues.

3. Has the defendant refused to pay the plaintiff his rightful terminal benefits.

4. Is the plaintiff entitled to general damages.

We need not concern ourselves with issue No.4 as general damages were rightly not awarded by the superior court and there is no cross appeal on that issue.

The learned Judge came to three conclusions on the last page of her judgment as to the entitlement of the respondent herein:-

1. 3 months notice but as no notice was given. 3 month salary in lieu calculated on gross salary of Kshs.2,816. 20 per month total Kshs. 884,860/=

This was mathematically wrong and the total should have been Kshs.8,448/60 if the monthly gross salary figure was correctly stated. It is, however, clear that the monthly salary figure intended by the learned Judge, should have been Kshs. 281,620/= per month and not Kshs. 2,816. 20 resulting in the total of Kshs.884,860/= being mathematically correct on the assumption that Kshs.281,620/= was the proven monthly salary.

We have come to the conclusion that the monthly salary figure intended by the Judge to be the basis of her calculations of the award she was minded to make was neither the sum of Kshs.2,816. 20 nor the sum of Kshs.281,620/= but should have been the amount of salary indicated on the last pay slip of the respondent. This amount for basic monthly salary was Kshs. 139,253/=.

We consider that the word “salary” means just that and does not include other additional payments of allowances etc.

This Court (Gicheru, Omolo and Lakha, JJA) in Civil Appeal No. 120 of 1997 Kenya Ports Authority v. Edward Otieno had this to say in its judgment:-

“The other ground of appeal is whether Mr. Otieno was in law entitled to be awarded by way of damages for the loss of salary, medical allowance, housing allowance, leave allowance, mileage claim, telephone allowance and services as claimed by him. In our judgment, where as in the instant case, a contract of service includes a period of termination of the employment, the damages suffered are the wages for the period………. We find that Mr. Otieno was not entitled in law to any of the benefits and/or emoluments claimed.”

The second and third conclusion:

2. Leave outstanding is 57 days calculated at Kshs.4,642/= paid totals to Kshs.264,594/= basic (sic? “basically”) a claim for general damages and the same is disallowed.

2. Therefore judgment entered for the plaintiff in the sum of Kshs.7,685,420. 85 plus interest at court rates from the date of filling (sic) plaint plus also costs of the suit.

Dated this 12th day of October 2005. ”

This amount of Kshs. 7,685,420. 85 was shown in the decree to be due plus interest and costs.

There was an error relating to the amount of Kshs.174,066/= which was claimed in paragraph 8 (d) of the plaint and which was included in the award of the learned Judge despite her having disallowed the claim for this amount as being “Bonus promised for year 2003”. The learned Judge stated at page 19 of her Judgment “This being a contractual matter (sic). I find no evidence to Kshs. 174,066. 25 at monthly basis salary of the Kshs.139,253/=”

The amounts that need to be deducted from the above total of K.shs.7,685,420. 85 are therefore Kshs. 876,411/- and Kshs.174,066. 25 resulting in the mathematically correct total adjudged due by the learned judge to the respondent being reduced to Ksh.6,634,943/-

We will now turn away from correction of the figures used by the Learned Judge in her judgment and consider the other issues raised by the appeal.

The Memorandum of Appeal stated:-

“1. THAT the Honourable Judge erred in law in finding that the terms of the Respondent (sic) employment would be governed by the Collective Bargaining Agreement for unionisable employees.”

This ground of appeal raises three interesting issues.

The first of these is as to whether an employee of management status of a company, who is not a member of that company’s employees’ trade union, is nevertheless entitled to the enforcement of the provisions relating to redundancy contained in a Collective Bargaining Agreement between the Trade Union and that company. The plaint in the matter before us made no mention of the Collective Bargaining Agreement which was included in the Record of Appeal. The parties to the Collective Bargaining Agreement were stated to be The Engineering and Allied Industries Employers Association of The First Part and The Kenya Engineering Workers Union (hereinafter “the union”) of The Second Part. Clause 2 of the Collective Bargaining Agreement stated:-

“It is understood and agreed that the word “employee” in this Agreement shall cover all employees who are represented by the Union, and it shall mean both males and females unless specifically stated otherwise. It is appreciated that there may be other employees who are not Union members.”

It was not pleaded that the plaintiff was an employee “represented by the union.”

In these circumstances we consider that it is not open to the appellant to rely upon the provisions of an agreement to which the appellant was not a party and which agreement has not been pleaded as being in any way applicable.

The second issue is as to whether section 16A 1 (e) of the Employment Act Cap.226 of the Laws of Kenya applies to all employees irrespective as to whether the employee is of management level. There is nothing in the wording of that sub section or elsewhere in that Act to suggest that the management status of the employee is relevant to the application of section 16A 1 (e) of Cap 226 and we find that it is irrelevant.

The third issue is as to whether a plaintiff, such as the respondent herein, who does not plead in his plaint that a Collective Bargaining Agreement is in existence and that he is entitled to rely upon it, can nevertheless seek to rely upon it.

In these circumstances we consider that it is not open to the respondent to rely upon the provisions of an agreement to which the appellant was not a party and which agreement has not been pleaded as being in any way applicable.

The second and subsequent grounds of Appeal stated:-

2. “THAT the Honourable Judge erred in law in finding that the gratuity payable to the Plaintiff is irrespective of other payments made under the provident fund.”

We do not consider that payments either by an employee to Provident Fund Trustees or by such Trustees to an employee are in any way relevant to the ascertainment of the amount due to an employee under section 16A 1 (e) of Cap 226. The subsection relates to “wages” and we do not consider that the word “wages” or the word “salary” can in their ordinary meaning include arrangements such as provident funds.

3. “THAT the Honourable Judge erred in law in finding that the respondent’s salary for determining the dues was Kshs. 281,900/=”

The short answer to this ground is that the Judge did not refer to that sum anywhere in her Judgement. It is probably a mistake by the draftsman of the Memorandum of Appeal and the amount intended to be referred to was Kshs. 281,620/=. At page 17 of the Judgement the learned Judge states that “After calculating on the basis of January salary (increment month) the total income per month comes to Kshs. 281,620/=”. We have discussed these at pages 6 and 7 supraof this our judgment.

4. “THAT the Honourable Judge erred in law in finding that the contract for security services between the respondent and a third party was payable by the appellant.”

5. THAT the Honourable Judge erred in law in finding that the respondent had applied for a job with M/s Steel Africa Limited.

6. THAT the Honourable Judge erred in law in finding that the respondent had proved to suffer loss and was entitled to compensation

7. THAT the Honourable Judge erred in law in finding that the respondent’s contract of employment had put him at a disadvantage vis a vis the unionisable employees.

8. THAT the Honourable Judge erred in not factoring into the award a sum of Kshs. 5,893,951/= already paid to the respondent. (We have been unable to ascertain from the Record of Appeal what this amount refers to as the record of appeal only deals with the payment by the appellant of the interim decree for Kshs. 1,683,548/=).

9. THAT the Honourable Judge erred in law by not considering the submissions and evidence tendered by the appellant at all.

10. THAT the Honourable Judge erred in disregarding the authorities cited by the appellant.

11. THAT the entire judgement of the Honourable judge is flawed and without basis in the proceedings and evidence of the suit.

DATED at MOMBASA this 27th day of April 2006

It should be noted that there is no reference in the pleadings to the existence or effect of a Memorandum of Agreement between The Engineering and Allied Industries Employers Association(hereinafter referred to as the “ASSOCIATION“) of the FIRST PART

AND

The Kenya Engineering Workers Union (hereinafter referred to as the “UNION”) of the SECOND PART.

This agreement will hereinafter be referred to as the Collective Bargaining Agreement or CBA

It is not disputed that the appellant company was a member of the Association.

Clauses 1 and 2 of the Collective Bargaining Agreement are as follows:-

a. SCOPE OF AGREEMENT

The agreement shall be observed in respect of employees of Association Members other than those who are excluded by the terms of the current Industrial Relations Charter.

b. DEFINITION OF EMPLOYEE

It is understood and agreed that section 16 A (1) the word “employee” in this Agreement shall cover all employees who are represented by the Union, ........It is appreciated, however, that there may be other employees who are not Union members.”

It is not pleaded that the respondent was “represented by the Kenya Engineering Workers Union” or that he was member of it. The appellant’s case is that the respondent was neither.

The reason why we are referring to that unpleaded agreement is that the respondent sought to rely on the provisions in that agreement relating to redundancy and some of those provisions were relied upon by the superior court in reaching its decision.

The respondent relied in the superior court on section 16 A. (1) of the Employment Act Cap 226 which refers to redundancy although neither redundancy nor that section were referred to in the plaint. This section provides:-

S. 16 A. (1) A contract of service shall not be terminated on account of redundancy unless the following conditions have been complied with-

(a) The union of which the employee is a member and the Labour Officer in charge of the area where the employee is employed shall be notified of the reasons for, and the extent of, the intended redundancy;

(b) The employer shall have due regard to seniority in time and to the skill, and reliability of each employee of the particular class of employees affected by the redundancy;

(c) No employee shall be placed at a disadvantage for being or not being a member of the trade union;

(d) Any leave due to any employee who is declared redundant shall be paid off in cash;

(e) An employee declared redundant shall be entitled to one month‘s notice or one month’s wages in lieu of notice ;

(f) An employee declared redundant shall be entitled to severance pay at the rate of not less that 15 days pay for each completed year of service as severance pay.

(2) For the purposes of this section “trade union” means a trade union registered under the Trade Union Act;

and “redundancy” has the meaning assigned to it in section 2 of the Trade Disputes Act. Cap 234 which is:-

“redundancy” means the loss of employment, job, or career by involuntary means through no fault of an employee involving termination of employment at the initiative of the employer where the services of an employee are superfluous, and the practices commonly known as abolition of office, job or occupation and loss of employment due to the Kenyanization of a business; but it does not include any such loss of employment by a domestic servant;”.

A key part of the respondent’s case in the superior court was, and before this Court is, that the termination of the respondent’s contract of service amounted to “redundancy” as defined in this section of the Employment Act.

“The appellant did make the point in submissions that it was not expressly pleaded in the plaint that the dismissal of the respondent was a “redundancy.” However, all the facts giving rise to a “redundancy” as defined in section 16A(2) of the Employment Act were in our view adequately pleaded in paragraph 6 of the plaint which paragraph was admitted in the defence.

We therefore find that the learned Judge was right to treat the dismissal of the respondent as a case of redundancy.”

The learned trial Judge in the High Court dealt with this aspect of the case in the following passage in her judgment:-

“Regarding the retirement (sic) of the plaintiff by defendant on 30th April 2003. He was given the reason that there was reorganisation and restructuring of the company causing the abolition of his position. The plaintiff was therefore being dismissed on redundancy terms not because he had been found at fault at all. In the circumstances he was to be compensated for loss of employment for no fault on his part. The defendant failed to carry its contract to a lawful conclusion. The defendant admits that in his establishment (sic) he (sic) has entered into an agreement (CBA) for payment of compensation to employee declared redundant and rate of payments are stated. The principle (sic) of compensating employees cannot be confined to unionisable employee only (sic) it must apply to all employees of the defendant. Otherwise it is discriminatory. In the case of the plaintiff he has been in the employment over 30 years and the rate of payment is (sic). The plaintiff should not be put to a disadvantage see section 16A 1 (c) where it is stated “no employee shall be placed at a disadvantage for being or not being a member of the trade union”.

The award in this receipt (sic- should be “respect”) is Kshs. 2,982,460 which I find payable to the plaintiff.”

It would appear that the reference by the learned Judge to “23 years (sic) for each completed year” above should have read “23 days” and was intended to cover the claim made by the plaintiff in the plaintiff’s written submission for:-

“e) gratuity at the rate of 23 days for each full year of service for 14 years = Kshs. 2,982,460. 60 which appears to be based on clause 24 (f) (iii) of the CBA which states:-

(iii) Redundancy payment shall be as follows:-

10 years and above – 23 days for every completed year of service.

The amount of Kshs. 2,982,460. 60 would have been consistent with the provisions in the CBA but that agreement cannot be relied on as we have decided above.

The number of days applicable in the formula provided in the Act is 15 days only and not 23 days.

The correct calculation of the gratuity/severance pay in a redundancy in accordance with the Act is therefore:-

Kshs. 281,620/= per month divided by 30 = 9,387. 33 per day multiplied by 15 days = Kshs. 140,810/= multiplied by 14 being the number of completed years of service = Kshs. 1,971,340/=

However the learned Judge stated in her judgement that “he was promised gratuity at the rate of 15 days for each full year worked, three months notice, provident fund, payment of leave.”But the learned Judge corrected this and went on to say “He should have been given 23 days not 15 days per worked year (Employment Act).”

The superior court gave judgement in favour of the respondent for Kshs.7, 685,420. 85 plus interest at court rates from the date of filing the plaint plus costs of the suit.

The learned Judge, in reaching this figure, said “I find the plaintiff is entitled to 50% of his earnings based on his last salary. There is no defence whatsoever on this issue. The amount of Kshs. 3,379,440/= is therefore awarded.”

The latter amount is 50% of Kshs. 6,758,880. 00/= which sum is not half of his last salary. It is half of the total of the following three amounts as described by the learned Judge:-

3) Gratuity/compensate (sic) for loss of office at the rate of 23 days for each worked year Kshs. 2,982,460/60.

4) Bonus promised for year 2003 amounts to Kshs. 174,066. 25.

5) 50% gross salary under secrecy and competition undertaking Kshs. 3,379,440/=

This amount was held by the learned Judge to be 50% of the respondent’s earnings based on his last salary. It follows from this that the respondent’s last salary was considered by the learned Judge to total Kshs. 6,535,966/- which in turn appears to be made up of the following:-

Gratuity: Kshs. 2,982,460/=

Bonus: Kshs. 174,066/-. As we have seen above this item was not allowed by the learned Judge who found no evidence existed to support it and

Competition Kshs. 3,379,440/=

The learned Judge made two awards on the last page of her judgment for:-

1. 3 month’s notice but as no notice was given 3 months salary in lieu calculated on gross salary of 2,816. 20/= per month total Kshs. 884,860/-.

As we have seen on page 7 above the amount awarded in this award should have been 3 x 139,253 which is Kshs. 417,759/=.

Leave outstanding is 57 days calculated at Kshs. 4,642/= paid totals to Kshs. 264,594/= basic (sic presumably “basically”) a claim for general damages and the same is disallowed.

2. Therefore judgments (sic) entered for plaintiff in the sum of Kshs. 7,685,420. 85 plus interest at court rates from the date of filing plaint plus also costs of the suit.

The learned Judge stated that the sum of Kshs. 7,685,420. 85 was the total of the above sums under the description “Gratuity”, “Bonus”and “Competition”. However these three items in fact add up to Kshs. 6,535,966. The Kshs. 7,685,420. 85 thus includes an additional Kshs.149,454/= which amount would appear to be the total of 3 months salary in lieu of Notice - Kshs.884,860/=

Outstanding Leave - Kshs. 264,594/=

Total Kshs. 1,149,454/=

==============

The “Competition” description above referred to arose from the letter of appointment dated 21st December 1989 from the appellant to the respondent under the heading “UNDERTAKING” sub heading (c) “Competition” which was in these terms:-

b) “During his employment with the Company or any other company belonging to the Van Leer Group of Companies and during two years thereafter the employee shall not directly or indirectly be interested in an enterprise (including the carrying on of such enterprise by the employee on his own behalf) the activities of which are fully or partly competing with the activities of the Company or any other company belonging to the Van Leer Group of Companies. At the request of the employee the Company may release the employee of the said interdiction which request the Company shall not unreasonably refuse. If the employee proves to suffer damages as a consequence of such refusal, the Company shall for the duration of the suffering of damages and for the duration of the interdiction pay to the employee such monthly indemnity as will be reasonable under the circumstances, but such indemnity shall not exceed half of the last gross monthly salary of the employee of the Company. (emphasis added).

The employee shall never be entitled to any indemnity if the employee has been dismissed by the Company for urgent reasons caused by the employee.”

We consider that this clause in the contract of employment of the respondent by the appellant clearly imposes upon the respondent the burden of proving any damages suffered by the respondent under the “Competition” provision in the employment contract. The plaintiff should therefore have produced evidence to show that, as a result of an unreasonable refusal by the appellant to waive its entitlement to object to the respondent taking up employment, the respondent suffered loss.

The learned Judge’s approach to this issue in her judgment was to say:-

“.......The plaintiff sought to be released, he sought alternative employment but he was met with silence meaning refusal on the part of the defendant. The plaintiff suffered loss. On 8th May 2003 he applied for a job with Steel Africa Ltd. But on 9th May 2003 the defendant reminded him of “undertaking covering secrecy and competition which you are required to fully comply with.” He had a young family to put through college. He requested the company either to waive the province (sic? provision?”) or make necessary financial support as provided in the agreement.

I find the plaintiff is entitled to 50% of his earnings based on his last salary. There is no defence whatsoever on this issue. The amount of Kshs. 3,379,440/- is therefore awarded.”

We consider that for the respondent to succeed in a claim for damages for unreasonable refusal by the appellant to consent to the respondent taking up employment with a competitor of the appellant, the respondent would have to prove the following:-

1. That the appellant’s said refusal was unreasonable.

2. That the respondent suffered damage as a result of that refusal.

3. The quantum of such damage.

The learned Judge’s approach was to give judgment under this head for Kshs. 3,379,440/= without making a finding that the appellant’s refusal to consent to the respondent taking up such employment was unreasonable. The learned Judge arrived at the amount of Kshs. 3,379,440/= without explaining how this amount was proved by the respondent as the loss suffered by the respondent. No evidence was led as to what salary the respondent would have earned from the competitor.

The learned Judge stated that the Kshs. 3,379,440/= would be awarded to the respondent on the basis that the sum was 50% of his earnings from the appellant based on his last salary. This, with respect, would not have been the relevant calculation since the respondent’s loss arising from a wrongful refusal to sanction his taking up employment would depend on the salary which would have been paid by the competitor if the employment had been sanctioned by the appellant.

Furthermore the learned judge appears to have intended to award damages based on 50% of what the respondent was earning from the appellant by way of salary.

The learned Judge would appear here to be making a lump sum award of the above amount Kshs.3,379,440/= which is half of Kshs.6,758,880/= which latter amount would appear to be the amount the learned judge considered to be the respondent’s earnings based on his last salary. However the Kshs. 6,758,880/= was not the appellant’s salaryat the time of the termination of his employment. His salary, as we have seen on page 7 above, was Kshs.139,253/= per month which is Kshs.417,759/= per year.

For all of these reasons we find that the award of damages to the respondent for alleged breach of the Competition clause was erroneous both as to liability and as to quantum and the appeal against that award is upheld.

We have decided that the provisions of the Collective Bargaining Agreement between the Engineering and Allied Industries Employers Association of the First Part and the Kenya Engineering Workers Union of the Second Part are not binding on the appellant employer in relation to the respondent employee who was not a party to that agreement, the breach of which had not been pleaded in the plaint.

The respondent employee is however entitled, upon being made redundant, to rely upon both the provisions of the Employment Act Cap 226 of the Laws of Kenya (hereinafter “the Act”) and on the terms of his contract of employment with the appellant.

We find that the respondent is entitled to the following amounts subject to our resolution of an issue as to item 2 below:-

1. Three months salary in lieu of notice in accordance with paragraph (b) of the Termination clause in the employment contract between the respondent and the appellant:-

3 x Kshs. 139,253/= = Kshs. 417,759/=

2. 85 days accrued leave outstanding at Kshs. 4,641. 76 per day in accordance with section 16 (A) (i) (d) of the Act.

85 x Kshs. 4,641. 76 per day Kshs.394,550/=

3. Severance pay in accordance with section 16(A)(i)(f) of the Act at 15 days pay for each of 14 completed years of service:-

15 x 14 x 4,641. 76 Kshs. 974,769. 6/=

Total Kshs. 1,787,078/=

The issue in respect of item 2 above arises from the fact that the learned Judge disallowed this item in the final paragraph of her judgment on the basis that it was a claim for general damages which are irrecoverable in a claim for breach of contract.

The respondent did not cross appeal against this finding so we are precluded from disturbing the finding of the superior court disallowing the claim referred to in item 2 above. Had we not been so precluded we might well have reversed the finding of the superior court on item 2 as we do not consider that a claim in accordance with a statutory provision is a claim for general damages for breach of contract.

We have come to the conclusion that the appeal must be allowed. The final finding of the learned judge in giving judgment in favour of the respondent against the appellant for a total of Kshs.7,685,420. 85 cannot be upheld and it is hereby set aside.

We substitute for that judgment a judgment in favour of the respondent for Kshs.103,480/= being Kshs.1,787,078 less Kshs.1,683,548/= being the amount paid by the appellant to the respondent pursuant to the preliminary decree dated 14th October 2003.

Dated and delivered at Nairobi this 29th day of June, 2007.

P. K. TUNOI

……………………..

JUDGE OF APPEAL

J.W. ONYANGO OTIENO

………………………

JUDGE OF APPEAL

W. S. DEVERELL

……………………….

JUDGE OF APPEAL

I certify that this is a true copy of the original.

DEPUTY REGISTRAR