|Civil Appeal 191 of 2005
|Mukawa Hotels Holding Ltd v Beat Koch
|08 Apr 2011
|Court of Appeal at Nairobi
|Samuel Elikana Ondari Bosire, Philip Nyamu Waki, Erastus Mwaniki Githinji
|Mukawa Hotels Holding Ltd v Beat Koch  eKLR
|(Being an appeal from the judgment of the High Court of Kenya at Nairobi (Milimani ) (Ibrahim, J.) dated 2nd March, 2004 in H.C.C.A. No. 868 of 2001)
|History Docket No:
|H.C.C.A. 868 of 2001
|Mohammed Khadhar Ibrahim
Civil practice and procedure-appeal-appeal against the decision of the court ordering the appellant to pay damages-order arising out of suit for termination of employment-action for damages for wrongful and unlawful dismissal without the requisite three months’ notice-whether the first letter by the appellant constituted a notice of termination of the respondent’s employment-whether the appeal had merit
|The information contained in the above segment is not part of the judicial opinion delivered by the Court. The metadata has been prepared by Kenya Law as a guide in understanding the subject of the judicial opinion. Kenya Law makes no warranties as to the comprehensiveness or accuracy of the information
(Being an appeal from the judgment of the High Court of Kenya at Nairobi (Milimani ) (Ibrahim, J.) dated 2nd March, 2004
By his plaint dated and filed in the High Court Commercial Division, Nairobi on 13th June 2001, Beat Koch, as the plaintiff prayed for judgment in the sum of Kshs. 2,815,000 against Mukawa Hotels Holding Limited, as defendant in the suit, made up as follows:
He also prayed for costs and interest on both the sums claimed and costs at commercial rates.
By a contract of service entered into between the parties sometime in October, 1999, Mukawa Hotels Holdings Limited, the appellant, agreed to engage Beat Koch, the respondent, as General Manager of its operations for two years, on agreed terms, among them, the following:
We have set out the above letter in full because both at the hearing of the case before the superior court and before us an issue arose as to whether or not the letter constituted a notice of termination of the respondent’s engagement with the appellant. The appellant’s case before the superior court and before us is that the letter was the termination notice envisaged by the contract of service. The respondent on the other hand has treated it as a warning letter.
M.K. Ibrahim J. who heard the case agreed with the respondent that the letter was in the nature of a warning in view of its conditional nature.
A notice of termination of employment must of necessity be categorical and certain. It should not be capable of more than one interpretation. The purpose of a termination notice is to warn the party receiving the notice of the impending change so that he or it may prepare for the change. It is a requirement intended to obviate surprise and sudden hardship. For instance in the case of an employee he would need to look for alternative employment so that at the end of the notice he might not find himself without income. In the case of the employer he or it might want to look for a replacement.
Whether or not a notice given is intended to terminate employment is a question of fact. The intention of the party giving the notice must of necessity be gathered from the language of the notice. In our case what was the intention of the appellant in giving the notice which we reproduced earlier?. A careful reading of the notice shows that the appellant was not happy with the respondent’s performance. The notice advised him as much. He had not attained the expected goals. The notice required him to pull up his socks failing which he would be replaced. The notice was not categorical that the respondent would certainly be replaced at the expiry of three months from the date of the letter. It would have not been necessary to ask the respondent to improve his performance if the appellant had indeed wanted to replace him at the expiry of the notice. Paragraph 5 of the notice which Mr. Owang referred us to, contrary to what learned counsel suggested, does not say the respondent would be replaced at the expiry of the notice. The paragraph reads as follows:-
From that paragraph it is clear that the respondent had a chance to continue after the expiry of the notice if he attained the set goals within the period of the notice. His replacement was conditional and depended on a failure to meet the set goals which the appellant would advise him of.
We have no evidence that the appellant notified the respondent thereafter that he had failed to improve in his performance. The letter to the respondent dated 29th November 2000 effectively terminated the respondent’s employment with the appellant. That letter, in pertinent part, reads as follows:
In its written statement of defence the appellant averred that it gave the requisite three months notice and paid the respondent all monies he was entitled to receive from it. It therefore denied the respondent’s clam in its entirety.
Ibrahim J. as we stated earlier, heard the suit. He was satisfied that the termination of the respondent’s employment was without the requisite three months, and was summary in nature. We have already held that the learned Judge came to the correct decision on that issue, and affirmed his decision. We do not wish to say more on the issue of notice.
In his judgment Ibrahim J. found as fact that the specific goals and performance level attainable were not agreed between the parties before the termination of the respondent’s employment with the appellant. He also found as fact that the termination was not strictly due to non-performance or misconduct, but pursuant to the appellant’s right under the contract of service to do so. He then expressed himself further thus:
“ If it give the required 3 months notice which is a right and gave reasons as to the justification, then the employer could use its discretion in setting the amount of incentive compensation either upwards to a maximum of the US$18,000 or downwards to a minimum of US$10,000 using any set criteria of assessment.”
On the heads of school fees and house rent, the learned Judge did not think the respondent was entitled to them as no evidence was tendered before him to show the respondent had paid any as to be entitled to reimbursement. It was the learned Judge’s view, that according to the contract of service these two items would only become due if the respondent had adduced evidence to show he had made payment of the same. We agree. The respondent would only seek reimbursement of what he had already incurred on the two heads. In the end the learned Judge gave judgment in favour of the respondent in the sum of US$22,000 together with costs and interest at court rates, which amount comprised three months salary in lieu of notice and US$10,000 as incentive compensation.
In this appeal, the appellant complains that the superior court erred, inter alia in holding that the letter of 30th August 2000 was not a termination notice, it erred in awarding the respondent US$10,000 as incentive compensation, it erred in holding that the termination of the respondent’s employment was contractual and not on the basis that he had not met certain set goals, and that the court erred in giving judgment in foreign currency.
We have already held that the respondent’s dismissal was summary in nature. The only outstanding issues, are twofold. First, whether the respondent was entitled to incentive compensation. Second, whether judgment was properly given in foreign currency.
On the first issue, Ibrahim J. awarded US$ 10,000 as incentive compensation. It was payable to the respondent upon completion of one year of service. The appellant’s case before the trial court was that it would not be paid if the respondent failed to achieve certain set goals. It was its case that the goals were mutually agreed upon but the respondent failed to meet them. In its view, therefore, incentive compensation was not payable even assuming the respondent had served for at least one year. It did not however, think the respondent had served for at least one year to be entitled to payment.
The respondent on the other hand testified that the commencement date of his contract was 15th October, 1999. He was dismissed on 30th November 2010, after working for at least one year. In his view, therefore he was entitled to incentive compensation. He did not think payment of that compensation was pegged on good performance.
The clause in the contract of service dealing with incentive compensation stipulates that the said compensation would be computed on the basis of specific goals and performance levels attainable. We think that in view of the wording of that clause the exact amount to be paid is the one which was dependent of performance. The discretion on how much to pay was however circumscribed. As stated by the trial Judge, the minimum payable was fixed in the contract document. If the respondent wanted to be paid an amount higher than the minimum it was incumbent upon him to show that his performance, on the basis of the agreed specific goals, had improved. In his evidence he did not so demonstrate. We do not agree with the appellant that the respondent would not be entitled to any payment on that head unless he showed his performance had improved. Had that been the case there would have been no basis for fixing a minimum amount payable. We agree with the trial Judge that in absence of evidence to show improvement in performance, he had a discretion to award the respondent what, in the circumstances of the case was justifiable. He considered the minimum payable as a proper yardstick. We find no basis for faulting him on that score.
The second and last point we need to consider is the issue as to the propriety of the judgment being given in foreign currency, namely US dollars. In his judgment Ibrahim J. gave judgment in favour of the respondent for “ a total of USD.22,000 together with costs and interest at court rates.” In its memorandum of appeal the appellant complains that:
“…the learned Judge erred in law and fact in failing to appreciate the fact that the decretal amount in dollars and Kenya Shillings was different and the award of 33% per annum on the decretal amount was harsh, punitive, excessive, unconsciousable and unreasonable”.
As regards interest we do not understand how the appellant arrived at 33% interest. The trial Judge decreed interest to be at court rates. As far as we are aware the court rate of interest is not 33% but 12% per annum. To the extent that the appellant has not shown how the interest of 33% came about as to be the subject of an appeal, we have no basis for expressing our view as to its propriety or not. All we would want to say is that the trial court ordered interest to be at court rate and not otherwise.
In the foregoing circumstances this appeal lacks merit. It is accordingly dismissed with costs.