Wajir Wasco Limited alias Wajir Water & Sewerage Company & another v Mohamed & 2 others [2023] KECA 1498 (KLR)

Wajir Wasco Limited alias Wajir Water & Sewerage Company & another v Mohamed & 2 others (Civil Appeal (Application) E396 of 2023) [2023] KECA 1498 (KLR) (8 December 2023) (Ruling)

Neutral citation: [2023] KECA 1498 (KLR)

Republic of Kenya

In the Court of Appeal at Nairobi

Civil Appeal (Application) E396 of 2023

PM Gachoka, MSA Makhandia & S ole Kantai, JJA

December 8, 2023

Between

Wajir Wasco Limited alias Wajir Water & Sewerage Company

1st Applicant

County Government of Wajir

2nd Applicant

and

Safi Abdullahi Adant

1st Respondent

Abdi Jikre Mohamed

2nd Respondent

Maryan Farah Salah

3rd Respondent

(An application for stay of execution and proceedings from the ruling and order of the Employment and Labour Relations Court of Kenya at Nairobi (Byram Ongaya, J.) dated 25th May 2023 in ELRC Petition No. E076 of 2023 Petition E076 of 2023 )

Ruling

1. Before me is a Notice of Motion dated 19th June 2023 expressed to be brought under Article 164(3) of the Constitution, sections 3, 3A & 3B of the Appellate Jurisdiction Act and rule 5(2) (b) of the Court of Appeal Rules, seeking the following prayers that:a.Spent.b.Spentc.This Honourable Court be pleased to grant an order of stay of execution of the ruling/order of the Employment and Labour Relations Court delivered on 25th May 2023 in Constitution Petition No. E076 of 2023- Safi Abdullahi Adan & 2 Others v Wajir WASCO Ltd. alias Wajir Water & Sewerage Company Ltd. pending the hearing and determination of the appeal.d.This Honourable Court be pleased to grant an order of stay of proceedings of the Employment and Labour Relations Court in Constitutional Petition No. E076 of 2023- Safi Abdullahi Adan & 2 Others v Wajir WASCO Ltd. alias Wajir Water & Sewerage Company Ltd. pending the hearing and determination of this application and the appeal.

2. The background to this application is straightforward. It is common ground that the respondents (suing on behalf of 76 others) were employed by the 1st applicant. The 2nd applicant is the County Government of Wajir and it is alleged that it fully owns the 1st applicant. It is also common ground that the respondents and the 76 others were employed by the 1st applicant between the years 2014 and 2020 in various job categories. Further, the applicants did not deny that they stopped paying the respondents' salaries in October 2022 and that all the respondents were summoned to appear at the head office on 15th December 2022 for an internal human resource audit. After the audit, the applicants stopped paying the respondents' salaries leading to the filing of Petition No. E076 of 2023 in the Employment and Labour Relations Court (ELRC). The respondents also filed an application seeking orders to compel the applicants to pay the withheld salaries and to continue paying future salaries pending the hearing of the petition. The applicants filed a preliminary objection to the petition on among other grounds that some of the applicants were not employees and therefore an employee-employer relationship did not exist.

3. Upon hearing the parties in an interlocutory application, the ERLC (Byram Ongaya, J.) made the following orders:1. That the preliminary objection is dismissed with costs in the cause.2. That pending the hearing and determination of the petition, a conservatory order is hereby issued directing the 1st respondent and its agents to pay the petitioners together with the aggrieved employees all withheld salaries from the month of October 2022 to date and further directing the 1st respondent to continue paying the petitioners and the aggrieved employees their salaries as and when they fall due without any further delay for as long as the respective contracts of service are in place.3. That parties to set down the petition for mention for directions for the expeditious hearing and determination.

4. Aggrieved by the ruling, the applicants filed a notice of appeal on 29th May 2023 and subsequently filed the instant appeal upon which this application is hoisted on 7th June 2023. In a supporting affidavit to this application sworn on 19th June 2023, the applicant’s managing director, Roble Ahmed states as follows: that the order will paralyze the operations of the applicants; that the order directs it to pay persons who are not parties to the proceedings; that final orders were made at the interlocutory stage; that the order will lead to loss of public funds; that the respondents instituted contempt proceedings to enforce payment and that the order offends the principle of prudent use of public funds.

5. The applicants also filed written submissions dated 10th July 2023, which were highlighted orally at the hearing. The submissions reiterate that the applicants have an arguable appeal and that the appeal will be rendered nugatory unless the order for stay is granted. The applicant cites the cases of Safaricom Limited v Ocean View Beach Hotel Limited & 2 others [2010] eKLR and Stanley Kangethe Kinyanjui v Tony Keter & 5 Others [2013] eKLR in support of the application. They urge that they have arguable grounds namely: that the judge ignored the import of section 77 of the County Government Act; the judge failed to appreciate the import of section 82 of the Water Act in relation to water service providers; and that final orders of a mandatory nature were made at an interlocutory stage.

6. In opposition, the 1st respondent filed a replying affidavit sworn on 7th July 2023. The affidavit gives the background to the appeal and we take the liberty to summarize it as follows: that the audit exercise is an investigative process and not a disciplinary process as envisaged by the law; that the intended appeal is not arguable and is frivolous as section 77 of the County Government Act is not applicable in relation to their employment; that there were special circumstances to warrant grant a mandatory injunction; that in any event the appeal will not be nugatory; and the stay of proceedings should not be granted as the hearing of the petition is in the best interest of all the parties.

7. The respondents also filed written submissions dated 14th July 2023, which reiterated the facts deponed in the replying affidavit. They cite the case of Kenya Wildlife Service v James Mutembei [2019] eKLR, in support of the argument that stay of proceedings is a grave judicial action that interferes with the right of a litigant to conduct proceedings and therefore it should be granted sparingly.

8. The principles that apply in applications under rule 5(2) (b) of this Court’s Rules for stay of execution or proceedings pending appeal or intended appeal have long been settled. To be successful, an applicant must first show that the intended appeal, or appeal (if any) is arguable, and not merely frivolous. Secondly, the applicant must show that the appeal, or the intended appeal, if successful, would be rendered nugatory, if execution or further proceedings arising from a judgment, decree, or order are not stayed. These principles have been enunciated in various judicial pronouncements of this Court, including those cited by the parties.

9. On the first limb of the twin principles, in Anne Wanjiku Kibe v Clement Kungu Waibara & IEBC [2020] eKLR this Court held that for stay orders to issue, the applicant must demonstrate that the appeal or intended appeal is arguable and would, in the absence of stay be rendered nugatory. This brings us to the question: Is the intended appeal arguable?

10. I have carefully considered the grounds in the memorandum of appeal. As already noted, the applicants have raised a number of grounds in the memorandum of appeal. On their part, the respondents have devoted at least 4 comprehensive paragraphs in the replying affidavit to demonstrate that the intended appeal is not arguable. In my view, the question of whether a final order of a mandatory nature was issued at an interlocutory stage, together with the other grounds on the applicable law that governs the dispute cannot be deemed to be frivolous. This Court has stated severally that an arguable ground is not one that will necessarily succeed at the hearing.

11. See Nicholas R. O. Ombija v Kenya Commercial Bank Ltd [2009] eKLR. As to whether the applicants will succeed, that is an issue to be determined by the bench that will hear and determine the appeal. In view of the foregoing, the applicants have satisfied the first limb of the twin principle.

12. On the second limb, I note that the applicants are praying for both stay of execution of the order for payment of the salaries and also for stay of proceedings. I will first deal with the question whether an order for stay of proceedings should be granted. I note that the impugned ruling only dealt with the question of whether the respondents should continue receiving salaries pending the hearing of the petition. I am in agreement with the applicant that it is in the interest of all the parties for the petition to be heard and for the rights of each party to be determined. I do not see how the applicants will be prejudiced if the petition proceeds to a full hearing. An order for stay of proceedings ought to be granted sparingly and only when it is clear that there will be a miscarriage of justice if the hearing is to proceed, even when there is a pending interlocutory appeal. I note that in the course of a hearing, the trial court is bound to issue directions and rulings and it is not every direction or ruling that should attract an order for stay of proceedings. In the application before me, there is no demonstration that the applicants’ right to a fair trial has been infringed or is likely to be infringed if the hearing proceeds. Accordingly, I am not satisfied that the appeal will be rendered nugatory if an order for stay of proceedings is not granted.

13. As regards the prayer for stay of execution, I have already addressed the arguability elsewhere in this ruling. I now turn to consider nugatory aspect. I have carefully considered the rival arguments on this question. No case is on all fours like another and therefore each case will be considered in its own circumstances. I note that the three respondents filed the suit on their own behalf and 76 others. The financial status of all the respondents is not known. All the respondents are in different categories of employment and in their own words, the salary ranges between Kshs.20,000 to Kshs.60,000. In this scenario, I agree with the applicants that in the event they succeed, it will be difficult to recover the sums paid out as per the order and which will have been paid out of public funds. This may very well render the appeal nugatory! The respondents have invited me to balance the competing interests of both parties and in the event that I am inclined to grant an order for stay of execution, I should make an order for the sums to be deposited in an interest- earning account to be opened by the advocates for the parties. However, even on this question of the sums payable, it is not clear from the affidavits or the documents on the amount that is due. From what I discern from the submissions of the parties, the amount ranges between Kshs.40 Million to Kshs.70 Million. In the circumstances, the order that commends to me is that there will be a stay of execution on condition that the applicant shall deposit a sum of Kshs. 30 Million in an interest-earning account to be opened by the advocates for the parties.

14. Accordingly, I allow the application only to the extent that an order for stay of execution shall issue on condition that the applicants shall deposit a sum of Kshs.30 Million in an interest- earning account to be held jointly by the advocate for both parties. The amount shall be deposited within the next 30 days, failing which the stay shall lapse and the application will stand dismissed.

15. Further, in view of the nature of this dispute, I order that this appeal should be listed for hearing on a priority basis. Costs of this application shall abide the outcome of the appeal. As Asike- Makhandia, J.A and Kantai, J.A also agree these will be the orders of the Court on the application.

Ruling of Asike-makhandia, J.A. 1. I have had the benefit of reading in draft, the ruling of my brother M. Gachoka, J.A. with which I entirely agree with the reasoning and have nothing useful to add.

Ruling of Kantai, JA 1. I have had the advantage of reading in draft the ruling by my brother Gachoka, JA. I am in total agreement and I have nothing useful to add.

DATED AND DELIVERED AT NAIROBI THIS 8TH DAY OF DECEMBER 2023. M. GACHOKA CIArb, FCIArb..............................JUDGE OF APPEALASIKE-MAKHANDIA................................JUDGE OF APPEALS. ole KANTAI...............................JUDGE OF APPEALI certify that this is a true copy of the originalSignedDEPUTY REGISTRAR