Kiilu v Standard Chartered Bank Kenya Ltd [2023] KEELRC 2698 (KLR)

Kiilu v Standard Chartered Bank Kenya Ltd (Cause 1213 of 2017) [2023] KEELRC 2698 (KLR) (27 October 2023) (Judgment)

Neutral citation: [2023] KEELRC 2698 (KLR)

Republic of Kenya

In the Employment and Labour Relations Court at Nairobi

Cause 1213 of 2017

SC Rutto, J

October 27, 2023

Between

Steve Kiilu

Claimant

and

Standard Chartered Bank Kenya Ltd

Respondent

Judgment

1. The Claimant herein, Mr. Steve Kiilu, avers that he was employed by the Respondent as a teller with effect from 19th September 2013 and was confirmed on permanent and pensionable terms on 14th February 2014. Seemingly, the employment relationship was short-lived seeing that the Claimant was terminated from employment on 15th July 2015 for allegedly having unauthorized access to a customer’s account. The Claimant contends that his termination from employment was out of suspicion and not on concrete evidence. Terming his termination premature, devoid of any reason, and unlawful, the Claimant seeks the following reliefs against the Respondent:a.This Honorable Court is prayed to be pleased to declare that the termination of employment of the Claimant by the Respondent is unfair/unlawful.b.Twelve months’ salary being compensation for unfair/unlawful termination.c.Reinstatement.d.This Honourable Court be pleased to order for exemplary damages of Kenya shillings three million (3,000,000).e.Costs of this claim.f.Any other relief this Honorable Court deems just and necessary to award.

2. The Claim was opposed vide a Memorandum of Defence dated 16th November 2017 in which the Respondent avers that the Claimant was terminated on grounds of unauthorized access to a customer’s account between 2nd January 2015 to 17th February 2015, during which period 8 fraudulent cheque payments were made leading to a loss of Kshs 7,460,000/=. According to the Respondent, it had a valid reason to terminate the Claimant’s services since he admitted that he was the only one with access to his password. Consequently, the Respondent has asked the Court to dismiss the Claimant’s suit with costs.

3. The matter proceeded for hearing on diverse dates during which both sides called oral evidence.

Claimant’s case 4. The Claimant testified in support of his case and at the outset, sought to adopt his witness statement together with the bundle of documents filed alongside the Memorandum of Claim to constitute his evidence in chief.

5. The Claimant avers that on or about 10th March 2015, his line manager called him aside and informed him to proceed to the Branch Manager's office. He went to the Branch Manager's office and on arrival, he was informed that his PWID was seen viewing a customer's account several times between 2nd January 2015 and 17th February 2015. He was given the account name and asked if he knew that specific customer, or if he had served her before and the reasons of his PWD viewing the account.

6. To his knowledge he didn't know the customer in question. He had never served her before in the branch and he had never viewed that account at all. He shared with them incidents of forgery that had taken place in December 2014 and issues experienced with Ms. Winnie Kaaka from IT on 25th and 26th February 2015 in regards to his PWID being used by a computer that had data leakage.

7. The Claimant further stated that the Branch Manager insisted that it was his PWID that had viewed the account. He was totally surprised since he didn't have any knowledge of his PWID viewing the mentioned account. He contended that this is when the fraud and the viewing of the account was brought to his attention by the Branch Manager.

8. He was immediately suspended to give room for investigations and he was to report to the Branch Manager at the branch every Friday morning at 9:00 a.m to know the progress of the investigations.

9. He reported to the Branch Manager's Office at 9:00 a.m every Friday and no information was given to him on what exactly was being investigated until 10th April 2015, when he was directed by the Branch Manager, to see his line manager, who informed him that he was required to report to the Respondent’s Headquarters on 13th April 2015 for an interview with the investigation panel.

10. On 13th April 2015 he met the investigators, Ms. Nidar Dar and Mr. Christopher Awori who asked questions about the account in question. To his knowledge, he only came to know about the account details and the fraud that had taken place on the date of his suspension. He had never seen or served that client in person at the branch before and neither did he have any relationship with the client. That he wasn't aware of any viewing of the account that had taken place during the period in question using his PWID to the date of his suspension and he had never accessed the account in person in any way nor did he allow anyone to use his PWID to view the account in whatever way.

11. After close of the investigations, Ms. Nidar requested him to report the following day at 2:00 p.m for the review and signing of the minutes.

12. On 14th April 2015, he went to review and sign the minutes. He requested for a copy and he was informed that he could not get one as it was not the right procedure. He confirmed the minutes by signing.

13. Ms. Nidar then showed him an extract report of the Memento system where his PWID was seen viewing the account. According to the Claimant, this was the first time he heard about the Memento system. He tried to view other pages of the memento extract report but Ms. Nidar only allowed him to check the first page of the report which was displayed on the laptop's screen as she insisted there was no reason to move to the next pages since it was only his PWID that was seen viewing the account as per the report.

14. The Claimant averred that on 15th June 2015, he participated in a disciplinary hearing. The same questions regarding his viewing an account using his PWID arose and he responded the same way as per the previous interview that he did not view the said account and did not give out his PWID to anyone.

15. That he asked for clear evidence regarding the fraud based on CCTV footage for the period of 2nd January to 17th February 2015, which he was never given. The meeting was adjourned to 3rd July 2015.

16. On 3rd July 2015, the same questions were put to him as to why his PWID was viewing the account and he was asked to explain why he viewed the account. He didn't have any additional information on viewing of the account.

17. That on 15th July 2015, he was given his letter of termination. On 20th July 2015, he appealed the decision to terminate his employment, and on 30th July 2015, he attended the appeal hearing.

18. The Claimant further stated in evidence that on 3rd August 2015, he wrote a letter requesting for evidence. He contended that the only thing presented to him was the full Memento extract report. He noticed that there were time duplications on the report which the system couldn't allow.

19. On 21st September 2015, the appeal hearing took place and the focus was the Memento extract report which had demonstrated that his PWID had viewed an account 32 times between the 2nd January 2015 to the 17th of February 2015.

20. His appeal was not successful and he was advised as much on 6th October 2015.

Respondent’s case 21. On its part, the Respondent called oral evidence through two witnesses being Mr. Anthony Kilonzo and Ms. Nidaa Darr. Mr. Kilonzo was the first to go. He testified as RW1 and started by identifying himself as the Respondent’s Employee Relations Manager. He proceeded to adopt his witness statement to constitute his evidence in chief. He further produced the documents filed on behalf of the Respondent as exhibits before Court.

22. It was RW1’s evidence that the Respondent Bank carried out an investigation and did a search on Memento and established that the Claimant had without authority accessed account number 0100301247800 in the name of Dorcas Wairimu Njoroge 32 times between 2nd January 2015 to 17th February, 2015.

23. During the period of unauthorized access, the investigators discovered that 8 fraudulent cheques were paid from that account between 4th to 12th February 2015 leading to a loss of Kshs 7,460,000/=.

24. The Claimant was invited for disciplinary hearings to answer to the charges of unauthorized access to a customer's account between the period 2nd January 2015 to 17th February 2015. The Claimant was informed of his right to be accompanied by a fellow colleague or witness and was also informed of the panelists.

25. During the disciplinary hearings that took place on 15th June 2015 and 3rd July 2015, the Claimant denied viewing the account of Dorcas Wairimu Njoroge and denied ever serving the said customer. He maintained that he had never met her. He was however at pains to explain how his password was used to access the said account 32 times. He also denied sharing his password with any person.

26. That on 15th July 2015, the Claimant was terminated from the Respondent Bank's services.

27. The Claimant appealed the decision to terminate his services by a letter dated 20th July 2015, wherein he submitted that he wanted a review of his case as his termination was based on suspicion.

28. On 30th July 2015, the Respondent conducted an Appeal hearing in which the Claimant challenged the grounds to terminate his services. He connected the previous forgery case and access by the IT personnel as links to the reasons for termination. He further requested for an adjournment to enable him acquire evidence.

29. By a letter dated 3rd August 2015, the Claimant requested for evidence on his Appeal namely CCTV footage, Report from IT indicating the 32 times the account was viewed, Investigation Report on the 2 suspects who had been arrested, Report from the IT on what was being fixed on 26th February 2015, copies of minutes of 13th April 2015 and 15th July 2015, copies of forgery slips of December, 2014 and copies of emails from Winnie Kakaa.

30. The Respondent's HR Business Partner responded to the Claimant's letter of 3rd August 2015 and provided the documents and access to the documents that were available and within the scope of the case and further invited the Claimant for further Appeal hearing on 16th September 2015.

31. The Further Appeal hearing proceeded on 21st September 2015 wherein the Claimant and his representative Alphonse Were being present, made their representations on the possibility of his password being compromised. Nonetheless, it was not clear how that could have happened.

32. On 6th October 2015, the Respondent informed the Claimant that his appeal was not successful. He was issued with a hard copy of the said letter on 15th October 2015.

33. Ms. Nidaa Darr who testified as RW2 told the Court that she is employed by the Respondent as the Executive Principal, Head of Shared Investigative Services, Africa. Similarly, she sought to adopt her witness statement to constitute her evidence in chief.

34. It was RW2’s evidence that she led the investigations, which included a search on Memento and established that the Claimant had without authority, accessed the account number 0100301247800 in the name of Dorcas Wairimu Njoroge 32 times between 2nd January, 2015 to 17th February, 2015.

35. She averred that the Memento was a bank system that was designed to log all access by bank staff to client accounts and which could identify the person accessing through their names and bank ID's, the accounts accessed, the dates and times accessed and the number of times such access was done.

36. During the period of unauthorized access, the investigation revealed 8 fraudulent cheques were paid from that account between 4th to 12th February 2015, leading to a loss of Kshs 7,460,000/-.

37. According to RW2, the Claimant was availed with all the documents including the report showing the number of times he logged in to the suspect account and he was not able to explain how his unique credentials were used to view the account and later on, the customer account was affected.

Submissions 38. It was the Claimant’s submission that the Memento does not appear authentic and cannot be relied on as evidence since it lacked an IP address and the Mac address of the computer that generated it. He further posited that there were also no location markers of the computer that generated the Memento and time stamp to show when the Memento extract was printed out of the computer.

39. The Claimant further submitted that the Memento report showed that there were several viewings allegedly by him. He argued that this was not humanly possible for him to do and at the same time attend to customers as per his job description. In the same breath, he submitted that it is not possible that a person in the same day can have a double viewing of an account at the same hour, the same minute and the same second and still perform his duties as a teller.

40. It was further submitted by the Claimant that if the Respondent’s investigators had cared to view the CCTV footage on the material days as stated in the Memento report as the days he viewed the account, they would have discovered that he did not view the said account.

41. The Claimant further submitted that the Respondent has failed to demonstrate that he viewed the account 32 times as alleged.

42. With regards to procedural fairness, it was submitted that prior to the disciplinary hearing, the Claimant was never supplied with copies of the investigation report to prepare himself for the hearing, despite requesting to be supplied with the same. It was the Claimant’s further submission that the letter notifying him to attend the disciplinary hearing did not indicate specifically how he had unauthorized access to a customer’s account.

43. The Respondent on its part, submitted that save for minor insignificant details, the Claimant did not substantially dispute the fact leading to his termination on a balance of probability. That the Claimant was hard pressed to explain how his password could have been used 32 times in an unauthorized access to an account that was not his.

44. It was the Respondent’s further submission that the Claimant was properly terminated under the provisions of the Employment Act. That further, the Claimant demonstrated that he was incapable of being trusted hence it was unconscionable to retain him. In support of this argument, the Respondent placed reliance on the case of Moses Chavangi vs Barclays Bank of Kenya Ltd ELRC Cause No. 694 of 2010.

45. In conclusion, the Respondent stated that the substantive and procedural threshold in effecting the termination was met.

Analysis and determination 46. Having considered the pleadings filed by both parties, the evidentiary material before me and the opposing submissions, the issues falling for the Court’s determination can be distilled as follows;a.Whether the Respondent has proved that it was justified in terminating the employment of the Claimant;b.Whether the Respondent accorded the Claimant procedural fairness prior to termination;c.Is the Claimant entitled to the reliefs sought?

Whether the Respondent has proved that it was justified in terminating the employment of the Claimant 47. Section 43(1) of the Employment Act (Act) requires an employer to prove the reasons for termination and failure to do so, such termination is deemed to be unfair. Further, Section 45 (2) (a) and (b) of the Act provides that a termination of employment is unfair if the employer fails to prove that the reason for the termination is valid, fair and relates to the employee’s conduct, capacity or compatibility; or based on its operational requirements.

48. In the instant case, the Claimant was terminated from employment on grounds that he had unauthorized access to a customer’s account between 2nd January 2015 and 17th February 2015 during which period 8 fraudulent cheque payments were made on the account leading to a loss of Kshs 7,460,000. 00. In this regard, the Claimant was cited for gross misconduct.

49. On his part, the Claimant denied viewing the customer’s account and maintained that he did not know the customer in question. He further denied serving her before at the branch.

50. In support of its case, the Respondent exhibited an extract of what it referred to as the Memento report. According to the Respondent, the Memento system was designed to log all access by bank staff to client accounts. That the system could identify the dates, and times accessed and the number of times such access was done. It was the Respondent’s case that upon search on the Memento system, it established that the Claimant had without authority accessed account number 0100301247800 in the name of Dorcas Wairimu Njoroge 32 times between 2nd January 2015 and 17th February 2015.

51. A perusal of the extract of the Memento exhibited reveals that there were instances when there were double viewings on that same account. Case in point is, on 22nd January 2015, the Memento shows that the Claimant double viewed the client’s account at 14:33:21. This is the same case with 4th February 2015 which shows a double view at 18:10:43. Similarly, on 6th February 2015, there is a double view at 18:06:17. The double views are further evident on 9th February 2015, 11th November 2015, 12th February 2015 and 17th February 2015.

52. What manifests from the foregoing is that as per the Memento report, the Claimant was able to view the same account on the same day, the same hour, the same minute and the same second, more than once. The Claimant contended that this was not humanly possible.

53. It is also notable that during the disciplinary hearing one of the panelists by the name Eunice Waweru remarked as follows:“Our Memento system picked this. In the same period, you were working at your desk. In eBBS, you cannot have multiple log ins. You were carrying out other customer transactions around the same time, so we are certain you were logged in. Based on this we know only you could have viewed the account.”

54. Further, during cross examination, RW2 stated that it is the system that generates the logs and according to the manner in which the Respondent’s system works, only one person can log into an account at a time.

55. From the foregoing, it is evident that the Respondent’s system could not allow multiple log-ins. Therefore, it was impossible for a person to view the same account on the same day, at the same hour, at the same minute and at the same second, multiple times.

56. Bearing this in mind, I cannot help but question how the Memento system could generate multiple log-ins in this case. It is noteworthy that the Respondent did not offer any explanation as to how this was possible. It therefore remained a mystery.

57. Indeed, I am further led to question whether the Respondent’s system had errors thus generating inaccurate log-ins or whether its banking system was so infiltrated and compromised as to allow the double viewing.

58. In light of the foregoing, and noting that the extract of the Memento report was the Respondent’s smoking gun, I am led to further question its credibility and its evidentiary value in this case. I ask, was it a credible piece of evidence that a reasonable employer would use to hold the Claimant culpable of the allegations levelled against him? My answer is no.

59. In this case, the multiple log-ins alone were sufficient, to cast doubt on the credibility of the Memento report. Indeed, one wonders why the Respondent did not proceed to undertake a further inquiry so as to satisfy itself that indeed, the Claimant viewed the client’s account and from what computer he used to do the viewings. This would have dispelled any doubt regarding the Claimant’s culpability.

60. In my considered view, the Memento report on its own, was not credible and sufficient evidence to hold the Claimant culpable of the allegations levelled against him. As stated herein, the Memento report was the Respondent’s smoking gun hence the success of its case wholly depended on its credibility. Having cast doubt on the credibility of the Memento report, it follows that the Respondent’s case cannot hold. Inevitably, it falls apart.

61. The net effect of the foregoing is that the Respondent has failed to prove to the requisite standard that the Claimant had unauthorized access to a customer’s account between 2nd January 2015 and 17th February 2015.

62. To this end, this Court arrives at the inescapable conclusion that the Respondent has failed to satisfy the requirements of Section 43(1) read together with Section 45(2) (a) (b) of the Act and as such, it has not proved that it was justified to terminate the Claimant from its employment on the grounds advanced.

Procedural fairness 63. Over and above proving that it had reasons to terminate the services of an employee, an employer is required under the Act to go further and prove that it accorded an employee procedural fairness prior to terminating his or her employment.

64. This position is aptly captured under Section 45(2) (c) of the Act which stipulates that for termination to be fair, it ought to be in line with fair procedure. Section 41(1) of the Act provides for notification and hearing. In this regard, the employer is required to notify the employee of the reasons for which it is considering terminating the employment contract and to also grant the employer an opportunity to make representations in response to allegations levelled against him.

65. In this case, the Claimant’s disciplinary process was commenced on 10th March 2015 when he was placed on suspension pending investigations. At that point, he was notified of the allegations raised against him.

66. Further, as per the Claimant’s own admission, he appeared before the Respondent’s investigators and gave his version regarding the subject under investigation.

67. The Claimant was subsequently invited to appear for a disciplinary hearing which proceeded on 12th June 2015. Through the letter of invitation, the allegations against the Claimant were reiterated. He was further advised of the identity of the panelists as well as the date and time of the disciplinary hearing. He was also informed of his right to be accompanied by a work colleague and to call witnesses if he so wished.

68. From the record, the Claimant appeared for the hearing of his disciplinary case and was afforded an opportunity to present his defense. It was subsequent to the disciplinary hearing that the Claimant’s employment was terminated.

69. He appealed his termination and from the record, the appeal was considered by a differently constituted panel which upheld the Claimant’s termination.

70. In view of the foregoing, it is my finding that the Respondent accorded the Claimant procedural fairness hence it discharged its burden in terms of Section 45(2) (c) and 41 (1) of the Act. To this end, the Respondent cannot be faulted as it complied with the procedural strictures set out under the Act.

71. Be that as it may, the Claimant’s termination was unfair in substance as the Respondent failed to discharge its burden to demonstrate any justification to warrant the termination. Ultimately, the Claimant’s termination was unjustified and wrongful.

Reliefs 72. As the Court has found that the Claimant’s termination was without substance and hence wrongful, the Court being guided by the principles set out under Section 49(4) of the Act, awards him compensatory damages equivalent to five (5) months of his gross salary. In arriving at this determination, the Court has considered the length of the employment relationship as well as the circumstances attendant to the Claimant’s termination.

73. The claim for reinstatement is declined as it is not practical in the circumstances. It is also worth noting that in terms of Section 12 (3) (vii) of the Employment and Labour Relations Court Act, this Court can only order the reinstatement of an employee within three (3) years of dismissal. The Claimant in this case was terminated from employment with effect from 15th July 2015. Therefore, as of now, an order of reinstatement is not feasible as it will be contrary to Section 12 (3) (vii) aforesaid.

74. The claim for exemplary damages is similarly declined as the Claimant has been awarded compensatory damages. That should make good his loss. In so holding I will follow the persuasive South African decision of Le Monde Luggage cc t/a Pakwells Petze vs Commissioner G. Dun and others, Appeal Case No. JA 65/205, where it was determined that the purpose of compensation is to make good the employee’s loss and not to punish the employer.

Orders 75. It is against this background that I enter Judgment in favour of the Claimant against the Respondent in the following manner:a.A declaration that the Claimant’s termination was substantively unfair and wrongful.b.The Claimant is awarded compensatory damages in the sum of Kshs 300,000. 00 being equivalent to five (5) months of his gross salary.c.Interest on the amount in (b) at court rates from the date of Judgment until payment in full.

76. The Claimant shall also have the costs of the suit.

DATED, SIGNED AND DELIVERED AT NAIROBI THIS 27TH DAY OF OCTOBER, 2023. ....................STELLA RUTTOJUDGEOrderIn 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 March 2020 and subsequent directions of 21st April 2020 that judgments and rulings shall be delivered through video conferencing or via email. They have waived compliance with Order 21 Rule 1 of the Civil Procedure Rules, which requires that all judgments and rulings be pronounced in open court. In permitting this course, this court had been guided by Article 159(2)(d) of the Constitution which requires the court to eschew undue technicalities in delivering justice, the right of access to justice guaranteed to every person under Article 48 of the Constitution and the provisions of Section 1B of the Civil Procedure Act (Chapter 21 of the Laws of Kenya) which impose on this court the duty of the court, inter alia, to use suitable technology to enhance the overriding objective which is to facilitate just, expeditious, proportionate and affordable resolution of civil disputes.Stella RuttoJudge