MARIAM SAID MWABORA & 70 OTHERS V HOTEL SPAN LIMITED & 3 OTHERS [2013] KEHC 4202 (KLR)

REPUBLIC OF KENYA

High Court at Mombasa

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MARIAM SAID MWABORA & 70 OTHERS ...............................................PLAINTIFF

VERSUS

1. HOTEL SPAN LIMITED.......................................................1ST DEFENDANT

2. RT DUNET …...........................…........................................2ND DEFENDANT

3. TRANS NATIONAL BANK LTD. .........................................3RD DEFENDANT

4. SPIRE PROPERTIES (K) LTD.............................................4TH DEFENDANT

RULING

1. The central point to be determined in this motion is whether or not this file ought to be transferred to the Industrial Court. The Plaintiff/   applicants motion dated 16th February, 2012, seeks orders that:

i)      “This Honourable Court be pleased to make an order for the transfer of this suit from this Honourable Court to the Industrial Court of Kenya for hearing and disposal

ii)     This Honourable Court be pleased to make an Order the costs of the suit up to and until the transfer of the suit to the industrial Court of Kenya shall be assessed and/ or taxed under the provisions of Schedule VI of the

Advocates (Remuneration) Order, 2006.

iii)    The Honourable Court be pleased to make such further or other orders as it may deem just and expedient in the circumstances    of     this case.

iv)    The Costs of this application be costs in the cause”.

2. Prayers 2, 3 and 4 are consequential to prayer one. The application    was disposed off by written submission of the Applicant and 3rd and     4th Defendants.

3. The background facts according to the amended plaint, are as  follows: the plaintiffs were employees of Diani Reef Grand Hotel (“the Dian Reef”) owned by the 1st defendant. They allege they were permanent and pensionable employees having an annual leave    entitlement. The 1st Defendant allegedly borrowed some money from the third defendant and owing to inability to pay, the 3rd Deferent  put the 1st Defendant into receivership in 1998. The 2nd Defendant  who was the receiver, sold the 1st Defendant to the 4th Defendant who then terminated the    employment of the plaintiff en masse.

4. The plaintiffs allege that the terminations were based on a string of fraudulent actions and decisions including corruption and bad faith on       the part of the defendants. Particulars of fraud are set out in paragraph 10 of the plaint. The plaintiffs seek declarations as to their terminal benefits, judgment, for Shs. 32,457,007 in respect of such dues, general damages and costs and interest.

5. The 3rd Defendant's arguments against the transfer of the suit to the Industrial Court include the following: that there has never been a          contractual employment relationship between them and the plaintiffs;  and that the Industrial Court lacks jurisdiction to deal with the issues raised by the plaintiffs. Counsel argued that Article 162 (2) of the Constitution read with both Article 165 (5) should be read  together with Section 22 of the 6th Schedule which requires all pending proceedings to continue in the  same court.

6. The 4th Defendant's submission as highlighted by counsel,are that when the 1st Defendant was sold to them, they did not absorb the 1st  Defendants employees. They also argue that the plaintiffs claim against them has its basis in fraud which can only be adjudicated by    the High Court as this does not fill the mandatory employer-employee relationship for determination in the industrial court.

7. Article 162 (2) of the Constitution establishes the system of courts in  Kenya. All the parties relied on it in support of their disparate        arguments and it provides as follows:

“Parliament shall establish courts with the status or the High Court to hear and determine disputes relating to -

a) employment and labour relations........”

The following are to be noted from this provisions: first is that that court is a superior court – like the high court and having the status of  the     High court. Second, it is established to deal with causes of action or disputes on employment and labour relations.

8. Article 162 (3) then provides for Parliament to determine and clarify the jurisdiction of that court, within the scope of its constitutionally          established overriding function. The industrial Court Act 2011 was thus enacted by Parliament, pursuant to Article 162 (2). Section 12 of the Industrial Court Act provides:

“2 The court shall have exclusive original and appellate jurisdiction to hear and determine all disputes referred to it in accordance with Article 162 (2) of the provisions or this Act or any other written law which extends jurisdiction to the court relating to employment and labour relations including:-

a)     Disputes relating to or arising out of employment between an employer and an employee.

9. Given the provisions of Article 162 (2) and the Industrial Court Act 2011 cited above, the primary constitutional concern in this matter is       whether on a proper reading of the pleadings, the dispute herein relates to employment and labour relations. I have no doubt in my mind that the dispute herein relates to employment and labour relations. The sole monetary prayer is for payment of terminal benefits from employment of the plaintiffs who were allegedly  employees of the 1st Defendant,  subsequently put under receivership  of the 2nd Defendant  allegedly with the involvement of the 3rd  Defendant.

10. The secondary question that arises in this case is whether, given the  nature of the pleadings the dispute relates to or arises out of employment between an employer and employee in terms of Section 12 of the Industrial Court Act. Again by the same argument, I have no doubt that the disputes in the plaint arise out of an employment scenario.

11. Against this the Defendants have argued that there were no employer-    employee relationships between the second, third or fourth  defendant     with the plaintiffs. I think that is a matter of evidence to be determined after hearing the parties. It does not detract from the claim the fact that the plaintiffs seek terminal dues for work done and services rendered to the 1st Defendant and for which the 1st Defendant,  and or the other defendants, became liable or partly liable expressly or impliedly, on the grounds indicated in the plaint.

12. In addition, as I have already noted, the Industrial Court is a superior  court of record. It has the status of the High Court. It comprises of         judges learned in the law, just like Judges of the High Court. Their Jurisdiction is narrowed down to all matters relating to employment and          labour relations. Whatever legal or factual scope of such  matters, whether involving fraud or receivership or company law, the learned judges of the Industrial Court are entitled to address them  fully and substantively. That is how wide the scope of their jurisdiction is.

13. Thus the argument of of the 3rd and 4th Defendants that, that court cannot deal with matter of fraud is hollow and unpersuasive so is    that that court cannot deal with employment in cases or issues of receivership or arraignment of contract or novation or any other legal issues affecting     employment. Such arguments wholly misunderstand the object of  Article 162 (2) which is to create a court similar to High court, but where focus is indeed all matter related to employment and labour relations.

14. For all the foregoing reasons, I hold in favour of the plaintiffs and allow their application. Costs shall be in the cause. The file is to  be placed before a judge in the Industrial Court for directions within fourteen (14) days.

Dated and signed this 4th day of April, 2013

R.M. MWONGO

JUDGE

Read in open court by:

Date                      4th April, 2013

Coram:

Judge:Hon. M. Odero

Court clerk:Mutisya

In Presence of Parties/Representative as follows:

a)……………………………………………………………………….......................................

b)……………………………………………………………………….......................................

c)………………………………………………………………………........................................

d)………………………………………..........................................................................

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