James Obare Ong’ondo v Olkurruk Lodge Ltd t/a Angama Mara [2022] KEELRC 330 (KLR)

REPUBLIC OF KENYA

EMPLOYMENT AND LABOUR RELATIONS COURT

AT KERICHO

CAUSE NO. 9 OF 2020

JAMES OBARE ONG’ONDO.............................................CLAIMANT

VERSUS

OLKURRUK LODGE LTD T/A ANGAMA MARA.....RESPONDENT

JUDGMENT

1. The claimant brought  this suit on 10/2/2020 seeking he following reliefs:-

a. Declaration that the summary dismissal/termination of the claimant from Employment by the Respondent was unfair, irregular and illegal and the same amounted to unfair labour practices, contrary to the provisions of section 41 of the Employment Act No. 111 of 2007

b. Payment of  damages in the sum of Kshs 1,558,700/- only ( as detailedin paragraphs 6,7, and 8 hereof)

c. Interest at  court rates ( 14% per annum)

d. Costs of this suit

e. Any other or further relief the Honourable court may deem fit and just to grant.

2. The respondent filed defence on 30/6/2020 admitting that it employed the claimant as a clinical officer in October 2016 for a gross salary of Kshs 100000 per month.  It further admitted that it dismissed the claimant for defrauding the entity of money through fraudulent procurement of medicine.  It further averred that it accorded the claimant a hearing before the dismissal.   Therefore they denied the allegation that the dismissal was unfair and prayed for the suit to be dismissed with costs.

3. The hearing went to full hearing where both parties gave evidence and thereafter filed written submissions

EVIDENCE

4. The claimant testified as CW1 and adopted his written statement dated 5/4/2019 as his evidence. He further produced six documents as exhibits.

5. In brief, he stated that he worked for the respondent as a clinical officer from15/10/2016 until 5/4/2019 when he was unfairly dismissed from service for no valid reason without prior notice and without being accorded a fair hearing.

6. He testified that on 21/3/2019, he took a normal off duty ten days and he was scheduled to report back on 31/3/2019. However, on 29/3/2019, at 9. 15 PM he received a text message from the respondents Regional Director Mr. Shannon Davis telling him that he was to attend disciplinary hearing on 31/3/2019 at 9. 30 a.m. in office.

7. owever, on 29/3/2019, at 9. 15 PM he recedived a test message from the respodnents. Reguibak Dirctgor Mr Shannon avis telling him thatHe came to learn that his termination had been pre-determined because another clinical officer was recruited while he was away for the ten days.

8. HhHe further contended that the hearing was rescheduled to 5/4/2019 but he was not accorded a fair hearing.    He testified that during the hearing, the allegations against him were not clearly explained to him.  Instead he was just asked questions and then he was told to wait outside.  After 30 minutes, he was called back only to be given a dismissal letter and direction to clear with the company.

9. He testified that the Chief executive Mr. Collins Radiga and the Head of Security led himto the staff house for handing over. After packing his belongings, in his car he was led straight to the police station where he was held until 6/4/2019 at 6 pm when he was released on cash bail of Kshs 80000.  However he was never charged with any criminal case the complaint was withdrawn

10. He maintained that the dismissal was unfair and therefore he was entitled to compensatory damages plus costs as prayed in the claim.

11. On cross-examination he admitted that his duties included among others managing and controlling stock of medicines, equipment’s and other supplies.  It was also his duty to ensure accuracy of orders always and managing supplier relationship and ensuring getting the best products for value.   He contended that the suppliers were many but the main ones were SK Pharmaceuticals and JIMDOM EAST AFRICA Limited.

12. He He admitted that he is the one who recommended for engagement of the said two main suppliers.  He contended that he recommended JIMDOM in order to increase efficiently and that JIMDOM supplied medicine to the respondent from 2018.

13. He further testified that on 15/3/2019, JIMDOM delivered medicine but the respondent alleged that the delivery was   not accurate.  The consignment was accompanied by Invoices.   The first invoice was for Kshs 164,000 and the second was for Kshs 886,635 they were all paid for in advance.

14. He admitted that he is the Director of JIMDOM Pharmaceuticals and the (CR 12) Certificate of Registration for the company shows that he was the only shareholder and Director for the company. He further admitted that he was aware of all the transaction JIMDOM was doing.  However, he stated that he was never asked to disclose details of the company when he recommended it as a supplier.

15. He admitted that he wrote an email apologizing for the discrepancies in the order.  He further admitted that Receipts and invoices for TranschemPharmaceuticals were not tallying with those from JIMDOM.  He contended that Transchem is grant supplier from where JIMDOM places orders and since Transchem does not supply all the required medicine, JIMDOM gets the same elsewhere.  He contended that JUMDOM offered the best prices, which was agreed upon by the respondent.

16. Further, he admitted that he was called for disciplinary hearing but he denied that the panel asked him about his intention to call a witness.  He contended that the copy of the proceedings of the hearing filed by the respondent was not a true reflection of what transpired at the meeting.

17. However, he admitted that he was asked to explain the discrepancy between the invoice by JMDOM and that charged by Transchem.  He contended that the panel did not have a medic and as such all, his explanation was not understood.

18.  He admitted that the dismissal letter dated 5/4/2019 stated that investigations revealed that there was fraudulent payments to JIMDOM but he maintained that he was not given a chance to explain himself.  He further admitted that the Invoice dated 20/2/2019 for Kshs 164000 cited KRA Pin as XXXXXXXXXXXwhile the KRA Compliance certificate for JIMDOM cited the PIN as XXXXXXXXXXX.  He maintained that there was nothing wrong with the PIN numbers being different.

19. On re-examination, he contended that there was no bar for JUMDOM to supply medicine.  He further contended that the medicines were intercepted by Mr. Mishack Murage and the documents were confiscated.  He further contended that the medicine was verified interns and security personnel.

20. The claimant testified that his role was to indicate the stock levels then Mr. Murage and Sharon would approve payment.  He maintained that the documents were properly tallying but the counting of the medicines was verified by non-medics.

21. He further stated that the invoices for Kshs 164,000 and Kshs 800000 were not shown to him during the disciplinary hearing.  He contended that the correct PIN number was used in all the payment.  However, he admitted that the PIN in the invoices was wrong but the one in the compliance certificate is the correct one.  He contended that the discrepancy in the PIN numbers was not raised during the disciplinary hearing.

22. He testified that he was not asked to attend the hearing with another employee and maintained that the termination was not procedurally fair.

23. The respondent called its former financial controller Mr. Mishack Murage who testified as RW1.  He also adopted his written statement dated 26. 6.2020 and 9 documents in the list dated 255/10/2021.  He stated that his role included budget, and overseeing financial records to ensure that they were well kept among others duties.  He interacted with the claimant frequently.

24. RW 1 further testified that on 14/3/2019, he was instructed by the management to intercept supplier ordered by the claimant.  The instruction was given when they were preparing for audit.

25.  RW1 further stated that in the morning of 15/3/2019, a Vehicle delivering medicine from JIMDOM EAST AFRICA COMPANY LIMITED was intercepted by the security officers and they called him. When he counter checked the medicines, he noticed a huge variance between what the respondent paid for and what was received.

26.  He also found an Invoice from Transchem Pharmaceutical Limited in one of the boxes indicating that the supplies were bought at Kshs 245739. 08 while the respondent paid JIMDOM Pharmaceutical (EA) limited Kshs 164,000 plus Kshs 886,635 for the same supplies on 7. 3.2019.  According to the RW1, the respondent paid the Kshs 804,895. 92 more for the medicine, which went to JIMDOM Pharmaceutical.

27. RW1 further noted that the KRA PIN number and the company registration number in the  invoices from JIMDOM Pharmaceutical belonged to Spill way Kenya Limited which was supplying medicine to the respondent before the claimant requested for the tender to be given to JIMDOM Pharmaceuticals (EA) limited.

28. RW1 went on to discover that JIMDOM pharmaceuticals (EA) limited was non-existent company and the payments made to it went through a cooperative Bank account number xxxxxxxxxxx0, Cooperative House branch, which belonged to the claimant.

29. RW 1 further testified that they called the claimant to explain the discoveries made from the intercepted delivery but he failed to do so and became violent.  As a result, RW1 spoke with the supplier via a phone call.

30. RW1 further testified that the claimant was summoned for disciplinary hearing on 5/4/2019 where RW1 also, present.  After the hearing, the claimant was issued with a dismissal letter, which cited the reason for the dismissal.

31. On cross-examination, RW1 admitted that there was no procurement protocol in the respondent but he stated that the regional Managers and heads of Department did the vetting of suppliers.  In this case, he contended that the appointment of supplier was done on claimant’s recommendation.  He admitted that JIMMDOM was given the mandate to supply.

32. RW1 noted adopted that the reason for the dismissal pleaded in the defence but clarified that the correct reason is the one set out in the dismissal letter, namely fraud and conflict of interest.  He further stated that he was not aware whether the claimant was notified of the offences before attending the hearing. However, the he was confident that the claimant was shown all the documents during the disciplinary hearing and he went through them.

33. DW 1 admitted that the invoices contained all the items ordered for but contended that, there was discrepancy between the prices in the invoices by Transchem and JIMDOM.  He admitted that he did not file any Audit report to prove of the said discrepancy.  He stated that the instruction to intercept the delivery was given by Mr. Stephen Mitchel.

34. RW1 confirmed that the claimant was arrested in connection with the said supply but the charges were dropped.

35. He denied that the dismissal of the claimant was premeditated and that another clinical officer was employed to replace him before the dismissal.  He clarified that Miss Caroline Rudenyi was always a Clinical Officer in the organization and she used to stand for the claimant whenever he was away.

36. On re-examination, he stated that he was member of the respondents Board and he sat to hear the claimant’s case.  He further stated that the reasons for the claimant’s dismissal were discussed during the hearing.  He clarified that before payment was made the supplier raised an invoices. Finally he stated that JUMDOM had the information for Spillway Company.

SUBMISSIONS

37. The claimant submitted that the respondent has failed to prove a valid reason for terminating his employment.  He contended that the RW1 did not produce in court copy of the order for the goods and internal Audit report to confirm the alleged discrepancies allegedly discovered from the intercepted delivery.

38. The claimant further submitted that the respondent has failed to prove that a fair, procedure was followed before dismissing him.  He contended that he was not served with any letter informing him of the charges against him and inviting him to give a written defence before appearing before the disciplinary hearing.  He further contended that the charges against him were generalized and without any particulars and as such the dismissal was unfair.

39. For emphasis, he relied on the case of Abraham Gumba v Kenya medical supplies Authority [2014] e KLR where the court held  that terminations of employment without explaining the specific charges to the employee was unfair.

40. Finally, the claimant submitted that he has proved his case to the required standards and therefore he is entitled to the reliefs sought in the claim totaling to Kshs 1,558,700 plus costs and interest.

41. On the other hand, the respondent submitted that the reason for dismissing the claimant was valid and justifiable.  It submitted that the claimants responsibilities under his contract of employment was “researching and providing quotes from suppliers for the supply of medical supplies and equipment in line with the respondent’s procurement protocol” However the claimant fraudulently misled it to award him a tender for supply of medicine through his own company called JIMDOM (E.A) Pharmaceuticals which he alleged to have fair prices.

42. The respondent submitted that at no point did the claimant disclose that he was a Director and Shareholder of JIMDOM E.A limited.

43. The respondent submits that it paid JIMDOM a total for Kshs 1,050,635 for the delivery made on 15. 3.2019 but the actual prices of the medicine according to the Transchem invoice was Kshs 245,739. The respondent submits that the difference in the above figures is what the claimant was unable to account for during the disciplinary hearing.

44. The respondent further contends that even if the JIMDOM had the authority to be a supplier, the use of KRA PIN number and company Registration number for another company amounted to fraud.  It further submitted that the conduct of the claimant also amounted to a breach of contract and a violation of the organizations values.  It submitted that the claimant’s conduct warranted summary dismissal under section 44(4) (g) of the employment.

45. For emphasis, it relied on the court of Appeal decision in Bamburi Cement Limited or William Kilonzo [2016] e KLR where the court agree with the Canadian Supreme  Decision inMc Kinley V B.C. Tel [2001 & S.C. R. 161 that  just cause for dismissal exists where the employee dishonestly violates an essential condition of the employment contract, breaches the trust inherentto work related relationship or fundamentally or directly inconsistent with the employees obligations to his or her employer.

46. The respondent further relied on Kenya Revenue Authority –V  ReuwelWaithakaGitahi   and 2 others [2019] e KLRandKenya Power & Lighting Co. Ltd  V AgrreyLukeritoWasike [2017] e KLRwhere it was held that the court cannot substitute the employers decision in dismissing an employee.

47. The   respondent further submitted that it followed a fair procedure before dismissing the claimant because it accorded the claimant a fair hearing on 5. 4.2019 as required by section 41 of the employment Act.    For emphasis it relied on the case of PiusMachafuIsindu v Lovington Security Guards Ltd [2017] eKLRwhere the court held that employer must prove that concern the termination of employee’s employment was terminated in accordance with a fair procedure as set out in section 41 and 45 of the employment Act.

48. Finally the respondent submitted that it has established that the dismissal of the claimant’s employment was fair and therefore he is not entitled to the reliefs sought in this suit.

ISSUES FOR DETERMINATION

49. There is no dispute that the respondent employed the claimant from 15/10/2016 to 5/4. 2019 when it dismissed him summarily for gross misconduct. The issues for determination are:-

a. Whether the  reason for the termination was valid and fair

b. Whether the procedure followed was fair

c. Whether the relief south are merited.

REASON FOR THE TERMIANTION

50. Section 45 (1) & (2) of the Employment Act provides that termination of employment contract of an employee is unfair if the employer fails to prove that it was grounded on a valid and fair reason or reasons.

51. In this case, the main reason for the dismissal was fraud by the claimant.  The termination letter accused him of using one of the respondent’s suppliers, JIMDOME E.A Limited to defraud the employer of money. They accused him also of using former supplier’s KRA PIN number and Company Registration number.  The letter explained that the said conduct by the claimant was not only shamefulbut it broke the trust between him and the employer.

52. The claimant admitted that he was the sole shareholder and Director of JIMDOM EA limited and that the KRA PIN number and Company Registration number used in the invoices and receipts were not for his company but that of Spillway Pharmaceutical, a former supplier of the respondent.  There is also evidence that the price for the offending delivery was paid through the claimants’ personal bank account in cooperative Bank being number xxxxxxxxxxx.

53. The claimant did not disclose to the respondent that he was the face behind JUMDOM E.A Limited. He also misled the employer that JIMIDOM E.A Limited had fair prices.

54. However, it was discovered by chances, on 15. 3.2019 that the claimant’s company was buying medicine from TranschemPharmaceuticals at fairly low prices and then resell the same to the respondent at very high prices.  For example, the claimant’s company charged Kshs 1,050,635 for the medicines delivered on 15. 3.2019 yet Transchem raised an invoices of Kshs 245,739. 08 for the same items.

55. Having considered the evidence and the submissions on record, I find and hold that the respondent was justified to dismiss the claimant for fraud and breach of trust. There was inherent trust in the contract betweenthe parties herein that the claimant would discharge his duties of soliciting quotes from suppliers in utmost good faith and without any conflict of interest.

56. As it is evidently clear, he breached the said trust by fraudulently using false KRA PIN number and Company Registration number to invoice his own employer, and had the money paid through his personal account and not his company’s account.

57. In the  case of Bamburi Cement Limited case, Supra, the court of Appeal cited with approval the decision of the Canadian Supreme Court in Mc Kinley  V  B.C Tel [2001] & S.C.R 161 that:-

“Whether an employer is justified in dismissing an employee on grounds of dishonesty, is a question that requires an assessment of the context of the alleged misconduct.  More specifically, the test is whether the dishonesty gave rise to a breakdown in the employment relationship.  This test can be exposed in different ways.  One could say, for example, that just Couse for dismissal exist where the dishonesty violates an essential condition of the employment contract, breaches the faith inherent to the work relationship, or is fundamentally or directly inconsistent with the employee obligation to his or her employer”

58. The employer in this case has adduced sufficient evidence to show that the claimant’s conduct breached the trust inherent in their employment relationship. Consequently, I am satisfied that the respondent has discharged its burden of proof, by establishing that the claimant acted dishonestly and fraudulently and it was justified to dismiss him summarily by dint of section 44 (4) (g) of the employment Act.

PROCEDURE

59. Section 41  of the Act provides that

“Subject to section 42 (1), an employer shall, before terminating the employment of an employee, on the grounds of misconduct, poor performance or physical incapacity explain to the employee, in a language the employee understands, the reason for which the employer is considering termination and the employee shall be entitled to have another employee or a shop floor union representative of his choice present during this explanation.”

60.  In this case, the claimant admitted that he was invited to a disciplinary hearing on 31/3/ 2019 but it was postponed to 5/4/2019 when he attended.  He admitted that he was asked question by the disciplinary panel and he answered.  Thereafter he was asked to step out for a while and when he was called back after 30 minutes, he was given a dismissal letter.

61. The foregoing analysis show that the claimant was afforded a chance to defend himself in an oral hearing. The panel considered his defence and after 30 minutes it gave him a dismissal letter.

RELIEF

62. In view of the finding that the employer has proved that the reason for the dismissal was valid and that a fair procedure was followed,I decline to declare that the dismissal was unfair and irregular.  For the same reason. I decline to award any compensatory damages under section 49 of the employment act.  Consequently I dismiss the suit with costs.

DATED, SIGNED AND DELIVERED AT NAKURU THIS 30TH DAY OF MARCH, 2022

ONESMUS N. MAKAU

JUDGE

Order

I view of the declaration of measures restricting court operations due to the Covid-19 pandemic and in light of the directions issued by his Lordship, the Chief Justice on 15th April 2020, this judgment has been delivered to the parties online with their consent, the parties having waived compliance with Rule28 (3) of the ELRC Procedure Rules which requires that all judgments and rulings shall be dated, signed and delivered in the open court.

ONESMUS N. MAKAU

JUDGE