https://new.kenyalaw.org/akn/ke/judgment/keca/2026/951

Vision Institute of Professionals Ltd v Maubi & 4 others (Civil Appeal E804 of 2024) [2026] KECA 951 (KLR) (15 May 2026) (Judgment) Neutral citation: [2026] KECA 951 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Appeal E804 of 2024 PO Kiage, LA Achode & WK Korir, JJA May 15, 2026 Between Vision Institute of Professionals Limited Appellant and Andrew Mokaya Maubi 1st Respondent Eunice Fibi Adhiambo 2nd Respondent Dennis Makhanu Cheloti 3rd Respondent Jackson Mwaiwa Kaviku 4th Respondent First Community Bank Limited 5th Respondent (An appeal from the ruling of the High Court of Kenya at Nairobi (J. Mulwa, J.) dated 16th November, 2023 in HCCC No. E144 of 2020) Judgment 1.By a plaint dated 9th October 2020 and a verifying affidavit of even date, the appellant filed a suit against the respondents claiming that between 1st January 2013 and 31st July 2017, the 1st, 2nd, 3rd and 4th respondents, in gross breach of their employment contracts, fraudulently transferred from its bank accounts held by the 5th respondent to their personal bank accounts, colossal amounts of money amounting to Ksh.34,163,308. The 1st to 4th respondents were employees of the appellant at the time, holding the following positions; the 1st respondent was finance manager, the 2nd respondent an accounts assistant, and, the 3rd and 4th respondents both accountants. The 5th respondent being the appellant’s banker was blamed for being negligent in approving the said payments to the 1st to 4th respondents. The appellant averred that the 5th respondent should have exercised reasonable skill and care and verified the signatures by calling its signatories to confirm the various payments which, on their face, appeared fraudulent. 2.Particulars of fraud were listed to include, interception of cheques intended to pay the appellant’s dues such as loan facility repayment, taxes and rent; swapping the duly approved remittance advice with forged ones; approving the remittance advice with a rubber stamp which was not the official rubber stamp of the appellant; changing instructions in the remittance advice for the funds to be transferred to the respective personal accounts of the 1st to 4th respondents; fraudulently transferring an aggregate of Ksh.13,668,173 to the 1st respondent’s personal bank account; Ksh.10,074,944 to the 2nd respondent’s personal bank account;Ksh.9,589,774 to the 3rd respondent’s personal bank account; and, Ksh.830,417 to the 4th respondent’s personal bank account. 3.It was pleaded that due to the 5th respondent’s negligence and failure to discharge its mandate, the appellant suffered serious loss and damage, particulars of negligence being;a.Failing to perform all due diligence relating to transactions involving the appellant’s accounts.b.Failing to ensure that transactions on the appellant’s accounts were properly authorised by the recognised signatories, and to direct any inquiries or correspondence to the numbers given by the appellant.c.Failing to verify that the cheques issued by the appellant with beneficiary details have been properly signed by the appellant’s authorised signatories.d.Breach of the basic duty of care to pay out the appellant’s cheques as per its mandate.e.Failing to verify whether the remittance advice by the appellant are correct and properly signed and/or stamped in accordance with the agreed mandate.Particulars of loss and damage were enumerated as;a.Actual financial loss of an aggregate of Ksh.34,163,308 b)Inability by the appellant to pay staff pension contributions, staff medical cover and salaries, leaving it exposed to anticipated litigation.c.Accrued payments on the appellant’s loan facilities with the 5th respondent.d.Accrued interest and penalties with the Kenya Revenue Authority resulting from non-payment of taxes; and,c.Accrued interest and penalties with the appellant’s landlord for non-payment of rent. 4.As a result of the foregoing averments, the appellant sought judgment against the respondents jointly and severally for;a.General damages.b.The sum of Ksh.34,163,308.c.Interest on (a) and (b) above.d.Costs of the suit ande.Any such other relief as the court may deem appropriate. 5.In opposition to the suit the respondents filed their statement of defence, in which they denied the allegations by the appellant. They asserted that at all material times the Director in charge of finance, Mr. Anson Muyah, approved all payments and was the one contacted by the 5th respondent to verify and approve all transactions. Specifically, the 1st respondent denied the jurisdiction of the High Court indicating that he would shortly be objecting to the jurisdiction of the trial court as there existed Employment and Labour Relations Court Case No. 258 of 2020 in respect of the same subject matter. 6.The appellant made a rejoinder to the statements of defence by the 1st, 2nd and 5th respondents vide responses dated 22nd August 2022. It reiterated that the respondents’ action of fraudulently effecting the transfer of funds from its accounts to their respective personal accounts, without authority, amounted to unjust enrichment and caused it grave financial loss. It contended that the suit which was filed earlier by the 1st respondent at the ELRC, was an employment dispute which does not relate to the instant suit which dealt with fraudulent actions. Further, the other respondents in this matter are not party to that suit. The appellant asserted that it was the 5th respondent’s responsibility to ensure that transactions in its accounts were properly authorised by the recognised signatories. It urged that the suit’s cause of action involved negligence on the part of the 5th respondent and, therefore, fell within the jurisdictional ambit of the High Court. 7.Before the hearing of the suit commenced, the 1st respondent raised a preliminary objection, dated 22nd August 2022, seeking to strike out the suit on grounds that;1.The Honourable Court does not have requisite jurisdiction to hear and determine the matter raised in the instant suit as the same is an Employment and Labour Relations matter. The circumstances and facts therein arise out of an employment relationship between the plaintiff and the 1st to 4th respondents herein.2.The Honourable court is guided by the court of appeal’s decision in Co-operative Bank of Kenya Limited v. Patrick Kang’ethe Njuguna & 5 Others, Civil Appeal No. 83 of 2016 [2017] eKLR where the court adopted the pre-dominant test to determine the jurisdiction of the court to hear and determine a matter that has cross-cutting issues which are the exclusive jurisdiction of the special courts under Article 162(2)(a) of the Constitution of Kenya,2010.3.Further to the above, section 6 of the Civil Procedure Act outlines what the court should consider in suits that are sub-judice.4.As per paragraph 10 of the 1st defendant’s defence to the suit there was already a suit filed on or about 9th April 2020 by the 1st defendant against the plaintiff. The plaintiff has had the opportunity to raise all issues raised in the instant suit in Employment and Labour Relations suit no. 258 of 2020. 8.The preliminary objection was canvassed by way of written submissions and by a ruling rendered on 16th November 2023, the learned Judge allowed the preliminary objection citing lack of jurisdiction. In exercise of her discretion, she transferred the case to the Employment and Labour Relations Court (ELRC) for hearing and determination. 9.Aggrieved by the ruling, the appellant filed the instant appeal raising four (4) grounds, which were later converted to four (4) issues for determination in the written submissions as follows; whether the learned Judge erred by finding that the High Court was not seized of jurisdiction to determine the suit that was properly filed before it; finding that the issues to do with fraud between a bank and its client can be canvassed by the ELRC; failing to appreciate the issues presented before court and directing that the suit be transferred to the ELRC; and, condemning the appellant to pay costs to the 1st respondent in respect of the Notice of Preliminary Objection. 10.During the hearing of the appeal, learned counsel Ms. Wanja appeared for the appellant, Ms. Mwikali holding brief for Mr. Omwanza appeared for the 1st respondent while Mr. Asuma appeared for the 2nd respondent. There was no appearance for the 3rd to 5th respondents despite service. Mr. Asuma indicated that the appellant and the 1st respondent were the main parties to the appeal and so his client was not participating. Counsel sought to rely on their filed written submissions. 11.Upon our inquiry, Ms. Mwikali confirmed that prior to the transfer of the suit by the learned Judge, the 1st respondent had filed a suit at the ELRC, seeking against the appellant damages for unfair termination. We further questioned counsel whether in her opinion the ELRC had the jurisdiction to deal with the allegations that had been levelled against the respondents, to which she responded in the affirmative. 12.Submitting on the issue of jurisdiction, Ms. Wanja faulted the learned Judge for failing to appreciate that claims to do with fraud between a bank and its client cannot be canvassed by the ELRC. It was submitted that pursuant to Article 165(3) of the Constitution, the High Court has a broad mandate to adjudicate civil disputes making it the primary forum for matters that do not exclusively fall within the jurisdiction of specialised courts. Citing the locus classicus case of Owners Of Motor Vehicle M.v. Lilian S Vs. Caltex Oil (kenya) Limited (1989) Klr, And Phoenix Of E.a. Assurance Company Limited Vs. S. M. Thiga T/a Newspaper Service [2019] eKLR, for the proposition that a question of jurisdiction once raised by a party or by a court on its own motion must be decided forthwith on the evidence before court, counsel asserted that the High Court had the requisite jurisdiction to hear and determine the suit. It was submitted that the dispute primarily involves allegations of fraud in banking transactions between the appellant and its bank, working in collusion with the appellant’s employees in the accounts’ department. Consequently, the subject matter fell squarely within the purview of the High Court’s civil jurisdiction as the dispute relates to recovery of funds. Further, counsel argued that there exists no employment relationship between the appellant and the 5th respondent, who was the appellant’s provider of banking services and therefore the learned Judge misdirected herself on the question of jurisdiction when she transferred the matter to the ELRC. 13.Relying on this Court’s decision in National Social Security Fund Board Of Trustees Vs. Kenya Tea Growers Association & 14 Others (Civil Appeal 656 of 2022) [2023] KECA 80 (KLR), to the effect that matters in contention have to arise from an employer-employee dispute for the ELRC to assume jurisdiction, it was submitted that the issues implicated in the suit cannot be canvassed in the ELRC. Counsel contended that the alleged fraud, at the heart of this dispute, was committed jointly and severally by all the respondents with each playing a crucial role. To establish liability, it was imperative to determine the extent of involvement of all the five (5) as exclusion of any of them was likely to sever the chain of causation and undermine the claim. Moreover, fraud by its very nature imposes personal liability and at the material time, the 1st to 4th respondents could not have been acting within the scope of their employment when the fraud was committed. 14.It was submitted that the existing employment related matter being ELRC No. 258 of 2020, is solely between the appellant and the 1st respondent pertaining to procedural issues on termination of the 1st respondent. On the question of costs, counsel contended that given that jurisdictional matters are legal questions that can be complex and subject to judicial debate, imposing costs on the appellant for pursuing a legitimate legal position amounted to unfair penalisation. Counsel castigated the learned Judge for condemning the appellant to pay costs arguing that her decision was not based on sound judicial reasoning or on legitimate arguments that were raised by the appellant. In the end we were urged to set aside the impugned ruling and affirm the jurisdiction of the High Court over the matter, and that the costs of the preliminary objection be borne by each party or as otherwise deemed just and equitable. 15.In opposition to the appeal, counsel for the 1st respondent identified three (3) issues for determination namely, whether the preliminary objection was merited; when does a court take up jurisdiction in cross-cutting issues between a specialised court and the High Court; and, costs of the appeal. On the first issue, while relying on this Court’s decision in East African Cargo Logistics Vs. Eden Transport And Logistics Limited (Civil Appeal E098 of 2021) [2024] KECA 413 (KLR), counsel submitted that the learned Judge proceeded with the matter based on the appellant’s admission that there was another suit filed earlier by the 1st respondent at the ELRC. Accordingly, the preliminary objection was merited. On the question of jurisdiction, it was asserted that the dispute was the exclusive reserve of the ELRC. Articles 162(2) and 165 of the Constitution as well as section 12 of the Employment and Labour Relations Court Act (ELRC Act) were cited to distinguish the jurisdictional ambit of the High Court and the ELRC. Further, several decisions were cited to demonstrate the distinction including, REPUBLIC Vs. Chengo & 2 Others [2017] Kesc 15 (klr); Paramount Bank Limited Vs. Vaqvi Syed Qamara & Another [2017] Keca 528 (klr); National Social Security Fund Board Of Trustees Vs. Kenya Tea Growers Association & 14 Others [2023] Keca 80 (klr); Farmland Aviation Limited Vs. Kiptoo [2024] Keca 1792 (klr); Kenya Tea Growers Association & 2 Others Vs. The National Social Security Fund Board Of Trustees & 13 Others [2024] KESC 3 (KLR). 16.Counsel contended that it was inconceivable for the High Court to hear and determine any question that relates to the fraudulent actions without first considering the question of the employment agreement and its breach and/or contravention as between the appellant and the 1st to 4th respondents. On reliance of section 27(1) of the Civil Procedure Act, and JASBIR SINGH RAI & 3 OTHERS Vs. TARLOCHAN SINGH RAI & 4 OTHERS [2014] eKLR, we were urged to award the 1st respondent costs of the proceedings in the High Court and of the appeal, and dismiss the appeal. 17.Although there was no appearance for the 5th respondent at the hearing of this appeal, the record bears submissions dated 23rd June 2025, filed on its behalf by the law firm of Igeria & Ngugi Advocates. Counsel raised a single issue for determination in those submissions being, whether the learned Judge erred by finding that the ELRC was the appropriate forum for the hearing and determination of the matter. It was submitted that the appellant’s suit against the 1st to 4th respondents stemmed from the underlying employment relationship and that the appellant admitted that the alleged fraud occurred while the 1st to 4th respondents were employed by it, having assigned them the duties and responsibilities of being agents of its bank accounts with the 5th respondent. Counsel urged that the learned Judge was correct when she found that there existed an employment relationship between the appellant and the 1st to 4th respondents, when the alleged fraud occurred, which brought the dispute within section 12(1)(a) of the ELRC Act. It was submitted that the learned Judge’s holding was in line with Articles 162(2) of the Constitution and section 86(1) and (2) of the Employment Act. Counsel defended the transfer of the appellant’s case to the ELRC for want of jurisdiction arguing that the claim was premised on the 1st to 4th respondents’ mandate to operate the appellant’s bank accounts, under their employment contract. For this submission reliance was placed on this Court’s decision in Co- Operative Bank Of Kenya Limited Vs. Patrick Kang’ethe Njuguna & 5 Others [2017] Eklr And Daniel N. Mugendi Vs. Kenyatta University & 3 Others [2013] KECA 41 (KLR). 18.It was contended that the trial court could not confer upon itself jurisdiction that it did not have. Moreover, the mere joinder of the 5th respondent in the case is not enough to invoke the inherent jurisdiction of the High Court as it would defeat the purpose for creation of specialized courts under Article 162 of the Constitution. Counsel argued that the learned Judge rendered a fair ruling by directing that the matter be transferred to the ELRC as opposed to dismissing it. To justify this assertion, reliance was placed on this Court’s decision in Phoenix Of E.a Assurance Company Limited Vs. S. M. Thiga T/a Newspaper Service (Civil Appeal 244 of 2010) [2019] KECA 767 KLR where the Court held that a suit filed devoid of jurisdiction is dead on arrival and cannot be remedied. In the end counsel implored us to dismiss the appeal with costs for being misconceived and unfounded. 19.Having carefully considered the submissions made before us, we decipher that the central issue for our consideration is whether the learned Judge erred by finding that the High Court was not seized of jurisdiction to determine the suit. 20.It is trite that when a court is called upon to exercise its discretion, it ought to do so judiciously. That is because discretional power is derived from the law and must be exercised upon certain legal principles and according to the circumstances of each case, to the end of doing substantial justice to the parties. See Patriotic Guards Ltd Vs. James Kipchirchir Sambu [2018] eKLR. 21.The appellant is inviting this Court to interfere with the discretion of the learned Judge. We are cognisant of the fact that this Court can only interfere with the judicial discretion of the learned Judge if satisfied that she misapprehended the facts; or misdirected herself on law; or that she took into account matters of which he should not have; or failed to take into account considerations which she should have; or that her decision was plainly wrong. See Mbogo & Another Vs. Shah [1968] EA 93. 22.In allowing the preliminary objection and holding that the High Court was not clothed with jurisdiction to entertain the case, the learned Judge reasoned as follows;“22.I am persuaded that section 12(1)(a) of the ELRC Act is applicable in this suit, and that the dispute and cause of action herein arose and relates to a dispute out of employment between the plaintiff and the defendants; employer and employee existing relationship.The alleged fraudulent or illegal transfer of funds by the defendants from the plaintiffs Bank Accounts to the defendants’ personal accounts could only have been done when the defendants were in the employment of the plaintiff; and not after their employment was terminated.23.That in my view brings the dispute right under section 12(1)(a).” 23.The appellant faults the learned Judge for failing to appreciate that claims to do with fraud between a bank and its client cannot be canvassed by the ELRC. It asserts that the subject suit squarely fell within the purview of the High Court since the dispute primarily involved allegations of fraud in banking transactions between itself and its banker, the 5th respondent, working in concert with the 1st to 4th respondents, who were its employees. Concerning the related matter that had been filed earlier at the ELRC, it is submitted that the parties therein are the appellant and the 1st respondent only and, the dispute there pertains the manner of termination of the 1st respondent’s employment. 24.In contrast, the 1st and 5th respondents defend the learned Judge’s decision contending that the preliminary objection was merited since the appellant admitted that there was another suit at the ELRC and the learned Judge proceeded to determine the matter on that basis. On reliance of several cited decisions, the 1st and 5th respondents insist that the suit was the exclusive reserve of the ELRC since the appellant’s suit against the 1st to 4th respondents stemmed from the underlying employment relationship. 25.On the question of existence of another suit before the ELRC being ELRC No. 258 of 2020, we note that the learned Judge made a finding that the matter involved a different cause of action from the suit herein which is a standalone case. That being the case, it is our finding that the issue of the existence of that other suit was rendered moot and nothing turns on it. 26.Turning to the central issue of jurisdiction, the 1st respondent cited the Supreme Court’s decision in Kenya Tea Growers Association & 2 Others Vs. The National Social Security Fund Board Of Trustees & 13 Others (supra) in support of his argument that where a dispute arose out of an employer and employee relationship, then it should be determined by the ELRC. In that decision, however, when the court was evaluating whether the ELRC had jurisdiction, one of the factors that it considered was the parties to the dispute and whether they were among the disputants contemplated under section 12(2) of the ELRC Act. That provision states that;An application, claim or complaint may be lodged with the Court by or against an employee, an employer, a trade union, an employer's organisation, a federation, the Registrar of Trade Unions, the Cabinet Secretary or any office established under any written law for such purpose.” 27.In the instant matter it is evident that the dispute is not only between the appellant and its employees but also and essentially its banker, the 5th respondent, where the alleged fraudulent banking transactions occurred. It would seem, therefore, as rightly argued by the appellant, that the dispute herein is not one that solely relates to an employer-employee relationship within the meaning of section 12(1)(a) of the ELRC Act. A third party who is critical to the dispute is also implicated. Indeed, it seems to us plain that the heart of the dispute is not employment but fraud and negligence in the matter of banking at the centre of which is the 5th respondent as the appellant’s banker. 28.This establishment of the nature of the dispute is in keeping with Mumba & 7 Others (Sued on their own behalf and on behalf of predecessors and or successors in title in their capacities as the Registered Trustees of Kenya Ports Authority Pensions) Vs. Munyao & 148 Others (Suing on their own behalf and on behalf of the plaintiffs and other members/beneficiaries of the Kenya Ports Authority Pensions Scheme)) [2019] KESC 83 (KLR), where the Supreme Court directed that;137.To give a prescriptive answer to the jurisdictional question, the first port of call is to determine the nature of the dispute.” 29.The plaint filed by the appellant at the High Court discloses allegations of fraud on the part of the 1st to 4th respondents, and negligence by the 5th respondent, which ostensibly caused the appellant loss and damage. In the result the appellant claims general damages as well as recovery of its funds which it asserts were embezzled by the 1st to 4th respondents in collusion with the 5th respondent. To our mind, the crux of the instant suit being recovery of stolen funds, the case does not fall within the jurisdictional purview of the ELRC. We think, therefore, that the learned Judge misdirected herself in ousting the jurisdiction of the High Court and transferring the case to the ELRC. The case was properly before the High Court pursuant to Article 165(3)(a) of the Constitution and we so find. 30.Ultimately, we allow the appeal and set aside the impugned ruling in entirety. We substitute therefor an order affirming the jurisdiction of the High Court over the matter and dismissing the preliminary objection with costs. 40.Costs of this appeal shall be borne by the 1st respondent. DATED AND DELIVERED AT NAIROBI THIS 15TH DAY OF MAY, 2026.P. O. KIAGE…………..………………… JUDGE OF APPEALL. ACHODE……………….…………… JUDGE OF APPEALW. KORIR………………..…………… JUDGE OF APPEALI certify that this is a true copy of the original.SignedDEPUTY REGISTRAR