Heritage Insurance Company Limited v Angatia & 3 others [2024] KECA 1458 (KLR)

Heritage Insurance Company Limited v Angatia & 3 others (Civil Appeal 67 of 2019) [2024] KECA 1458 (KLR) (25 October 2024) (Judgment)

Neutral citation: [2024] KECA 1458 (KLR)

Republic of Kenya

In the Court of Appeal at Nairobi

Civil Appeal 67 of 2019

DK Musinga, MSA Makhandia & P Nyamweya, JJA

October 25, 2024

Between

Heritage Insurance Company Limited

Appellant

and

Rachel Asiko Angatia

1st Respondent

Mercy Gakii

2nd Respondent

Bancy Wangu Mahagwa

3rd Respondent

Paul Musili Mwendwa

4th Respondent

(Being an appeal against the ruling of the Employment and Labour Relations Court of Kenya at Nairobi (Makau, J.) dated 12th October 2018 in ELRC Cause No. 516 of 2016)

Judgment

1. The facts of this appeal from the record are fairly straightforward and clear. It is common ground that the respondents were employees of the appellant in various capacities until about 30th April 2015, when they were declared redundant by the appellant. The respondents were aggrieved by the decision and accordingly sought various reliefs in the Employment and Labour Relations Court (ELRC) in Claim No. 516 of 2016. In the main, the respondents sought a declaration that the redundancy was unlawful and illegal; the termination of the respondents’ employment by the appellant was unfair and illegal; damages for unfair termination in terms of section 49 of the Employment Act; damages for illegal and unlawful declaration of redundancy, damages for discrimination and for distress and agony caused to the respondents by the unfair termination and illegal redundancy. In response, the appellant denied the claim and maintained that the redundancy was justified and was carried out in accordance with the law, and the respondents were adequately compensated.

2. Prior to this and in a separate suit, the 24 other employees who had similarly been affected by the redundancy lodged Claim No. 781 of 2015 challenging the decision by the appellant to declare them redundant as well. They asked for more or less the same prayers as in the instant suit. Despite resistance to the claim by the appellant on the same grounds as above, the respondents in the earlier suit were successful in their claim as the ELRC agreed with them and declared the redundancy unlawful, unfair, and illegal. Accordingly, they were awarded general damages to the tune of Kshs 500,000. 00 each.

3. Aggrieved by the earlier decision, the appellant lodged an appeal to this Court being Civil Appeal No. 114 of 2016. This Court upon hearing the appeal allowed it and set aside the entire judgment and decree of the ELRC. The Court determined that the declaration of redundancy by the appellant was lawful, and further held that the respondents had been adequately compensated as a result. Dissatisfied with this Court’s decision, the respondents filed an application seeking leave to appeal to the Supreme Court by way of Civil Application No. Sup. 11 of 2018 so that they could challenge those findings in the Supreme Court. The application was resisted by the appellant.

4. On 19th June 2020, this Court (differently constituted), dismissed the application for certification and noted, inter alia: that the intended appeal to the Supreme Court would not raise matters of general public importance. That the dispute was purely a labour dispute between the employer and its employees and did not transcend the circumstances of the parties to the dispute.

5. On the basis of the decision by this Court, the appellant in countering the current suit moved the ELRC by way of a motion on notice dated 7th March 2018 to have the claim struck out on the grounds that it was res judicata. Equally, the appellant relied on the doctrine of stare decisis in arguing for the striking out of the claim, based on the fact that the aforesaid decision of this Court was binding on the ELRC.

6. The respondents opposed the application, arguing that both doctrines of res judicata and stare decisis were inapplicable to the circumstances of the claim. That the threshold for the application of both doctrines had not been met by the appellant.

7. The ELRC in its ruling dated 12th October 2018 dismissed the application and found that the decision of this Court was per incuriam and therefore the doctrines of res judicata and stare decisis could not be successfully invoked. That therefore the issue of unfair redundancy was still open for determination by the Court. Aggrieved by the said ruling and order, the appellant filed the instant appeal. In its memorandum of appeal dated 25th February 2019, the appellant raised nine grounds of appeal, inter alia, that the learned Judge erred in law and in fact by: failing to find that the suit was res judicata; purporting to overturn the findings of this Court in Civil Appeal No. 114 of 2016; disregarding the mandatory procedure for redundancy provided under sections 40 (a) and (b) of the Employment Act and terming the decision of this Court as per incuriam; failing to consider that the counsel for the respondents admitted that the current suit was similar to the one in Civil Appeal No. 114 of 2016; failing to apply the doctrine of stare decisis and judicial hierarchy in making his determination; failing to consider that departure from res judicata rule would open to all and sundry the door to challenge the correctness of decisions of higher courts on the basis of fresh arguments brought up long after the judgment or decision was delivered or made; arrogating himself jurisdiction to review the decision of this Court; constituting himself as an appellate court to the decision of this Court; finding that this Court’s decision failed to consider its other decisions before entering judgment; failing to consider the substantive submissions by the respondent's counsel on the issue of res judicata, and diametrically distancing himself from the authorities cited by the appellant on the same issue.

8. When served with the record of appeal, the respondents reacted by filing a Notice of Grounds Affirming Decision of the trial court pursuant to rule 94 of this Court’s Rules. This was on grounds that the ELRC was right in holding that the doctrines of res judicata and stare decisis did not apply to their claim. They proposed that the appeal be dismissed, the judgment of the ELRC be affirmed, and that the costs of the appeal be borne by the appellant.

9. The appeal was canvased by way of written submissions, with limited oral highlights. At the plenary hearing, Mr. Kigata, learned counsel, appeared for the appellant, whereas Mr. Wakwaya, learned counsel, appeared for the respondents. In highlighting the submissions, counsel for the appellant condensed the grounds of appeal into three main thematic areas, namely, whether: the claim was res judicata in light of this Court’s judgment in Civil Appeal No. 114 of 2016; the claim was therefore, an abuse of the Court process and whether the ELRC breached the doctrine of stare decisis.

10. On the first issue, it was submitted that the respondents were among the employees who were rendered redundant just like the 24 others who had sued the appellant earlier in ELRC No. 781 of 2015. That the prayers that they sought in the current claim were similar to those sought in earlier suit. That the ELRC erred in failing to find that the suit was res judicata, the issues therein having been directly and substantially been in issue and having been heard and determined with finality by this Court. That when the appellant appealed to this Court as aforesaid, this Court considered the redundancy process in light of section 40 of the Employment Act and allowed the appeal. The respondents then filed an application for certification to the Supreme Court, which was dismissed with costs, meaning therefore that the judgment of this Court still stands.

11. It was submitted that departure from the res judicata rule would open floodgates to all and sundry to challenge the correctness of the decision of a higher court on the basis of fresh arguments brought up long after the judgment or decision was delivered or made. The result will be anarchy and chaos in the administration of justice. While relying on the cases of Independent Electoral & Boundaries Commission vs. Maina Kiai & 5 Others [2017] eKLR and William Koros (Legal personal representative of Elijah), C.A. Koross vs. Hezekiah Kiptoo Komen & 4 Others [2015] eKLR, counsel submitted that the claim fell within the provisions of section 7 of the Civil Procedure Act as the matter was substantially the same as the one wherein this Court had rendered its decision and thus res judicata. The rule of res judicata ensures that there is an end to litigation and facts that have been finally resolved are not re-litigated again. That a Court that has been called upon to decide a suit or issues that have previously been canvassed should invoke the doctrine of res judicata as a bar to further suits and allow the successful litigant to reap the fruits of his success.

12. The appellant’s counsel further submitted that for the pending suit to proceed in the ELRC will be prejudicial to the appellant, noting that the issue in dispute, which is the legality of the redundancy process, has been heard and determined with finality by this Court. That by dismissing this Court’s decision as being per incuriam, the ELRC purported to overturn the decision of this Court, which decision considered the process of redundancy pursuant to the provisions of section 40 of the Employment Act. That this Court considered its previous decisions and analyzed the applicable law in making its decision and was therefore not ill-informed about the law or its previous decisions as claimed by the ELRC. The ELRC’s declaration that this Court’s decision was per incuriam was therefore incorrect.

13. Relying on the cases of Jasbir Singh Rai & 3 Others vs. Tarlochan Singh Rai Estate of & 4 Others [2013] eKLR, and Hezekiah Michoki vs. Attorney General & Another [2017] eKLR, counsel submitted that the ELRC erred in fact and in law by failing to apply the doctrine of stare decisis and judicial hierarchy in making its determination and constituted itself as an appellate court and arrogated itself jurisdiction to review the decision of this Court. It also failed to consider that the respondents through their counsel admitted that the dispute herein was similar to the one in the Civil Appeal which was heard and determined by this Court. That under Article 165 (6) of the Constitution, the ELRC does not have supervisory jurisdiction over this Court, hence, the ELRC did not have the power to superintend over this Court’s decision by dint of the doctrine of stare decisis. That the decision rendered by this Court was binding upon the ELRC under the doctrine of judicial hierarchy. On whether the claim was an abuse of the court process and ought to have been struck out, the appellant while relying on the cases of Muchanga Investments Ltd vs. Safaris Unlimited (Africa) Ltd & 2 Others [2009] eKLR, submitted that on 15th January 2018, it wrote to the respondents’ advocates to consider withdrawing the claim with no orders as to costs in the light of this Court’s decision aforesaid. That the letter did not elicit any response and the respondents proceeded with the claim. That the appellant is thus incurring unnecessary costs defending a claim that this Court has already made a determination on. Therefore, it was an abuse of the Court process for the respondents to maintain a claim in the circumstances.

14. On their part, the respondents submitted that for the claim to be deemed as res judicata, all the elements listed in section 7 of the Civil Procedure Act must be satisfied. That the earlier and current ELRC claims respectively did not involve the same parties or parties under whom they or any of them were litigating under the same title. On this issue alone, the plea of res judicata ought to fail. That to hold otherwise would amount to impugning on a party’s right to access justice as provided for under Articles 48 and 50 of the Constitution. That this is a right that cannot be limited by virtue of Article 24 of the Constitution. That as to whether the prayers in the two suits were the same, the respondent submitted that there is a divergence of prayers and the trial court is entitled to interrogate and make a decision on whether the respondents are entitled to the reliefs sought. That the additional prayer in the subsequent claim is for damages for discrimination, which was not a prayer in the earlier claim. That it was therefore not correct as advanced by the appellant that the prayers sought in the two claims were the same. It was submitted therefore that the doctrine of res judicata did not apply to bar the respondents from prosecuting their claim.

15. On the doctrine of stare decisis, the respondents submitted that it can only apply where a matter has been heard and determined on merits. It cannot be invoked to summarily dismiss a claim before a hearing on merits. That the respondents had a constitutional right by dint of Articles 24, 48, and 50 of the Constitution to submit themselves to the judicial process before the ELRC. That having so submitted themselves the ELRC was clothed with jurisdiction to determine the validity of the claim before it, which jurisdiction is granted by Article 162 (2) (a) of the Constitution and section 12 of the Employment and Labour Relations Court Act, as well as the Rules promulgated thereunder. The ELRC therefore had a constitutional mandate to entertain the claim and make a determination on the issues raised therein. The respondents submitted that the courts have severally held that the doctrine of stare decisis can be departed from in certain circumstances. For this proposition, counsel relied on the following authorities, Jasbir Singh Rai & 3 Others vs. Tarlochan Singh Rai Estate of & 4 Others [2013] eKLR; Ernst & Young LLP vs. Capital Markets Authority & Another [2017] eKLR; and Lalitmohan Mansukhlal Bhatt vs. Prataprai Luxmichand and Another [1964] EA 414.

16. The respondents submitted that there were numerous previous decisions of this Court on the issue of redundancy, which this Court failed to pay heed to and did not state the reasons for departing from them. That the common denominator in these decisions was that failing to issue the requisite notices amounted to an unfair declaration of redundancy and therefore unfair termination. Further, that where the employer fails to prove a reason for redundancy, the redundancy would be an unfair termination of employment. That this Court deviated from these previous decisions without stating reasons as to why it was doing so. It was submitted that the Court failed to address the issue of the procedural and substantive legality of the redundancy. The trial court was therefore right to hold that this Court’s decision was made per incuriam and was not bound to follow it. Counsel relied on the case of Michael Waweru Ndegwa vs. Republic [2016] eKLR, to submit that the reason(s) why the decision of this Court was held to be per incuriam and therefore not binding on the trial court were: the Court did not interrogate the issue of the redundancy process as outlined in section 40 of the Employment Act; the Court also failed to make a determination on whether the notice issued to both the employees affected and the labour office was adequate notice as contemplated by section 40 of the Employment Act.

17. Relying on the case of Muchanga Investments Ltd (supra), they submitted that the appellant had not shown that the respondents were barred from instituting a claim in their own respect, which right is accorded to them by dint of Articles 48 and 50 of the Constitution. That it cannot be said that in exercising their right to access justice and their right to be heard, the respondents are abusing the process of court. In the penultimate, the respondents submitted that they had shown and proved that the doctrines of res judicata and stare decisis did not apply in the instant case and the ELRC was correct in its findings under challenge. The respondents had also demonstrated that they were not guilty of abuse of the court process.

18. We have considered the record, submissions by respective counsel, and the law. We are well aware that what is before us is an interlocutory appeal against a ruling arising from an application. That being the case, we appreciate that our determination will either put to rest the claim or allow it to proceed in the ELRC. We must therefore eschew reaching definitive conclusions that may bind the trial court in the event that we dismiss the appeal.

19. In Mbogo & Another vs. Shah [1968] EA 93, this Court stated that an appellate court will not interfere with the exercise of discretion by a trial court unless the discretion was exercised in a manner that was clearly wrong because the judge misdirected himself or acted on matters which it should not have acted upon or failed to take into consideration matters which it should have taken into consideration and in doing so arrived at a wrong conclusion. We appreciate that the ELRC in dismissing the application by the appellant was exercising its unfettered discretion. Having said as much, the issues that fall for our determination are whether the judgment of this Court are binding on the ELRC, secondly, whether the current suit was res judicata and finally, whether the subsequent suit was an abuse of the court process.

20. The trial court ruled that it was not bound by the decision of this Court because it was decided per incuriam. The term ‘per incuria’ literally means ‘carelessness’. According to the Black’s Law Dictionary (Fourth Edition, 1891), per incuriam means through inadvertence. This means something done with oversight without considering all the relevant factors. Per incuriam, literally translated as “through lack of care” is a device within the common law system of judicial precedent. A finding of per incuriam means that a previous Court judgment or ruling had failed to pay attention to relevant statutory provisions, relevant factors and or precedents.

21. The significance of a judgment having been decided per incuriam is that it need not bind a lower court. Ordinarily, the ratio decidendi of a judgment or ruling is binding upon lower courts in similar cases. However, a lower court is free to depart from a decision of a superior court where that earlier judgment was decided per incuriam.

22. In the case of Jasbir Singh Rai & 3Others vs. Tarlochan Singh Rai & 4 Others [2013] eKLR, the Supreme Court had this to say about a decision being per incuriam:“For the special role of precedent in the certainty and predictability of the law as it plays out in daily transactions, any departure is to be guided by rules well recognized. It is a general rule that the Court is not bound to follow its previous decision where such decision was an obiter dictum (side-remark), or was given per incuriam (through inattention to vital, applicable instruments or authority). A statement obiter dictum is one made on an issue that did not strictly and ordinarily, call for a decision: and so it was not vital to the outcome set out in the final decision of the case. And a decision per incuriam is mistaken, as it is not founded on the valid and governing pillars of law.Comparative judicial experience shows that the decision of a superior Court is not to be perceived as having been arrived at per incuriam, merely because it is thought to be contrary to some broad principle, or to be out of step with some broad trend in the judicial process; the test of per incuriam is a strict one – the relevant decision having not considered some specific applicable instrument, rule or authority.Subject to that broad principle, certain directions may, on this occasion, be laid down:i.where there are conflicting past decisions of the Court, it may opt to sustain and to apply one of them;ii.the Court may disregard a previous decision if it is shown that such decision was given per incuriam;iii.a previous decision will not be disregarded merely because some, or all of the members of the Bench that decided it might now arrive at a different conclusion;iv.the Court will not depart from its earlier decision on grounds of mere doubts as to its correctness.”

23. Going by the above prescription, we are unable to see on what basis the trial court held that the decision of this Court was per incuriam. The holding does not fit in any of the above boxes. The reasoning of the trial court was that the decision had departed from several decisions of this Court on the issue under interrogation hence, it was per incuriam. It is trite that the decisions of this Court are not binding on itself. The mere fact that one bench of this Court reaches a different conclusion from that of another in a similar matter cannot be the basis of a lower court to hold that any of those decisions are per incuriam. Until the divergent decisions of this Court are harmonized by this Court by its own mechanism or by the Supreme Court, it is not in the place of the lower court, which is ordinarily bound by the decisions of this Court, to decide which one is per incuriam. All of them are still binding on it. All it can do is to follow either of them and give reasons for so doing.

24. The next issue is whether the suit was res judicata. Section 7 of the Civil Procedure Act on res judicata provides:“No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court.”

25. The provision is anchored on the doctrine that there should be an end to litigation. The doctrine exists to protect public interest so that a party should not endlessly be dragged into litigation over the same issue or subject matter that has otherwise been conclusively determined by a court of competent jurisdiction.

26. Res judicata will successfully be raised as a defence if the issue(s) in dispute in the previous litigation or suit were between the same parties as those in the current suit; the issues were directly or substantially in issue in the previous suit as in the current suit and they were conclusively determined by a court of competent jurisdiction. In that respect, this Court in the case of Independent Electoral and Boundaries Commission vs. Maina Kiai & 5 Others, [2017] eKLR, held that:“[F]or the bar of res judicata to be effectively raised and upheld on account of a former suit, the following elements must be satisfied, as they are rendered not in disjunctive but conjunctive terms:a.The suit or issue was directly and substantially in issue in the former suit.b.That former suit was between the same parties or parties under whom they or any of them claim.c.Those parties were litigating under the same title.d.The issue was heard and finally determined in the former suit.e.The court that formerly heard and determined the issue was competent to try the subsequent suit or the suit in which the issue is raised.”The Court went on to state on the role of the doctrine:“The rule or doctrine of res judicata serves the salutary aim of bringing finality to litigation and affords parties closure and respite from the spectre of being vexed, haunted, and hounded by issues and suits that have already been determined by a competent court. It is designed as a pragmatic and commonsensical protection against wastage of time and resources in an endless round of litigation at the behest of intrepid pleaders hoping, by a multiplicity of suits and fora, to obtain at last, outcomes favourable to themselves. Without it, there would be no end to litigation, and the judicial process would be rendered a noisome nuisance and brought to disrepute or calumny. The foundations of res judicata thus rest in the public interest for swift, sure and certain justice.”

27. We have considered the decisions and guidelines above and we are of the conclusion that indeed the suit was res judicata. This Court determined with finality the question of redundancy, procedural and substantive fairness of the process as well as the application of the provisions of sections 40 and 49 of the Employment Act in that regard. The instant suit by and large seeks the trial court to again interrogate the same issues. Parties cannot be allowed to litigate in installments or keep refashioning their cases with each passing day under the guise of a new cause of action, new parties and or even adding different prayers. As we say so, we are agree with the words of the court in E. T vs. Attorney General & Another [2012] eKLR where it was stated:“The courts must always be vigilant to guard litigants evading the doctrine of res judicata by introducing new causes of action so as to seek the same remedy before the court. The test is whether the plaintiff in the second suit is trying to bring before the court in another way and in a form of a new cause of action which has been resolved by a court of competent jurisdiction. In the case of Omondi vs. National Bank of Kenya Limited & Others (2001) EA 177 the court held that, ‘parties cannot evade the doctrine of res judicata by merely adding other parties or causes of action in a subsequent suit.’ In that case the court quoted Kuloba J., in the case of Njangu vs. Wambugu & Another Nairobi HCCC No. 2340 of 1991 (unreported) where he stated, ‘If parties were allowed to go on litigating forever over the same issue with the same opponent before courts of competent jurisdiction merely because he gives his case some cosmetic fact lift on every occasion he comes to court, then I do not see the use of the doctrine of res judicata…..”This is exactly what the respondents have purported to do in the current suit. The fact that they now bring the suit in the names different parties from the earlier suit and have added new prayers different from the earlier suit does not bar the invocation of the doctrine of res judicata. It is also not lost on us that counsel for the respondents did admit during the hearing of the application that the two claims were similar, save for the changes in the names of parties and an additional prayer sought. We also note that the pleadings in both claims are similar and were drawn by same firm of advocates. We are certain that when drawing the pleadings in the subsequent claim res judicata was at the back of their minds and that is why they tinkered with the claim by bringing in new parties and additional prayers, hoping to go round the doctrine of res judicata. However, this, as we have seen, was wasted effort.

28. Accordingly, the trial court erred in not holding that the current suit was not res judicata.

29. Having come to this conclusion, it automatically follows that the subsequent suit was an abuse of the court and the trial court ought to have so found. The complaint by the respondent that upholding the doctrines of res judicata and stare decisis would amount to impugning on their right to access justice as provided for under Articles 48 and 50 of the Constitution is neither here nor there. Access to justice has rules of engagement. Parties accessing justice must agree to play by the said rules. Res Judicata and stare decisis are some of the rules of the game. If they are engaged in proper cases as here, the affected party cannot run to the Constitution, pleading denial of access to justice and or denial of a fair hearing.

30. Before we pen off, we need to point out that none of the parties submitted on the Notice Affirming Decision of the Court filed by the respondents. However, in view of the decision we have arrived at, the omission is of no consequence.

31. Having said all the foregoing, the order that commends itself to us is that this appeal is merited and is accordingly allowed. The ruling and order of the ELRC is set aside. In lieu thereof, the application by the appellant is allowed as prayed, with the consequence that the respondents’ claim is struck out. Similarly, the respondents’ Notice Affirming Decision of the Court is dismissed. The appellant shall have the costs in the High Court as well as in this appeal.

DATED AND DELIVERED AT NAIROBI THIS 25TH DAY OF OCTOBER 2024. D. K. MUSINGA, (P)………………………………..JUDGE OF APPEAL ASIKE-MAKHANDIA……………………….………..JUDGE OF APPEALP. NYAMWEYA…………………………….…..JUDGE OF APPEALI certify that this is a True copy of the originalSignedDEPUTY REGISTRAR