In a unanimous judgment delivered on Friday, a three-judge bench comprising Justices Agnes Murgor, Pauline Nyamweya, and Grace Ngenye ruled against Jeremiah Kambi, the Chief Executive Officer of Aiducation International (K), after finding that he had created a hostile work environment for his then-subordinate, identified in court papers only as EMK.

The court did not stop at the Ksh1 million award. It also directed that the organisation settle the employee’s outstanding terminal dues of Ksh531,000, bringing the total liability against the employer to over Ksh1.5 million.

The road to Friday’s ruling was long and contested. EMK had initially filed her case before the Mombasa Employment and Labour Relations Court (ELRC), where Justice  Byram Ongaya dismissed it in November 2021, finding that the WhatsApp messages did not satisfy the legal threshold for sexual harassment under Section 6 of the Employment Act.

Justice Ongaya had characterised the communications as private exchanges within a complex family context, noting that they did not promise preferential treatment or threaten detrimental employment consequences.

 He further concluded that the sexual harassment complaint was an afterthought.

EMK refused to accept that outcome. She appealed to the Court of Appeal in Mombasa, arguing that the trial judge had misapplied the law and failed to properly weigh the power dynamics at play between herself and her CEO.

At the heart of the case were WhatsApp messages that Kambi sent to EMK during the course of her employment.

The appellate judges noted a critical fact: Kambi did not deny sending the messages.

EMK had testified that she was subjected to repeated sexual advances and sexually explicit messages from her boss, who served as both her direct supervisor and the organisation’s chief executive.

 She told the court that the messages were unwelcome, that she made her rejection clear, and that the conduct left her humiliated, embarrassed, and psychologically distressed, ultimately making her work environment untenable.

Kambi and his company argued that the communications had been taken out of context, that portions of the conversation thread had been omitted, and that the relationship between the two parties was intertwined with family connections.

They maintained that no harassment had taken place and that EMK’s departure from employment was by mutual agreement.

The appellate court was unpersuaded. Upon re-examining the record, the judges found the messages to be overtly sexual in nature and EMK’s responses to be an unmistakable indication that the advances were unwanted.

The Court of Appeal used the case as an opportunity to deliver a comprehensive ruling on the scope of sexual harassment law in Kenya, drawing on international treaties, regional human rights instruments, and the Constitution of Kenya.

The judges identified what they described as a fundamental error by the trial court: its exclusive focus on one type of sexual harassment while ignoring another. Section 6 of the Employment Act, the court explained, distinguishes between two forms of the offence.

The first, sometimes called “quid pro quo” harassment, involves sexual demands tied to employment benefits or threats.

The second, and the one at the centre of this case, concerns the creation of a hostile work environment through unwelcome sexual language, visual material, or physical conduct that has a detrimental effect on job performance or satisfaction.

“We find that the trial judge misdirected himself by focusing exclusively on the ‘quid pro quo’ test under Section 6(1)(a) and failing to properly analyse the claim under the ‘hostile work environment’ provisions in Sections 6(1)(b), (c) and (d),” the three judges ruled.

One of the most consequential aspects of the judgment is its treatment of electronic communication.

The trial court had characterised the WhatsApp messages as private communications falling outside the scope of workplace sexual harassment.

The Court of Appeal flatly rejected this reasoning.

The judges held that the medium of communication, whether email, WhatsApp, SMS, or otherwise, does not alter the legal character of the conduct.

What mattered, the court emphasised, was not the platform used but the nature of the relationship between the parties: that both were employees of the same organisation, that Kambi was EMK’s direct supervisor, and that the communications occurred within the employment context.

The court went further, expressly affirming that the transmission of unwelcome sexual communication through electronic platforms between employees in an employment context constitutes sexual harassment where the statutory elements are met.

The court also addressed a question of profound significance: who determines whether conduct is unwelcome? Its answer was unequivocal.

The test is subjective, it is for the victim to determine what is offensive and unacceptable, not the perpetrator, and not the court applying its own standards.

The absence of any intent to harass, the judges held, is not a defence.

The court also dismissed the defence that the existence of a family relationship between Kambi and EMK neutralised the harassment.

Such ties, the judges ruled, are legally immaterial where the sexual conduct occurs within an employment relationship.

The trial court, they found, had improperly downgraded the sexual discourse to a family dispute and failed to give proper weight to the power imbalance inherent in a supervisor-subordinate relationship.

With its legal analysis complete, the court turned to remedy. It ordered Aiducation International (K) to pay EMK her terminal dues of Ksh531,000, and awarded an additional Ksh1 million in general damages for sexual harassment.

“It is our finding that Aiducation International (K) pays the lady her terminal dues of Ksh531,000, and we award Ksh1,000,000 in general damages for sexual harassment,” the bench declared.

The decision is expected to have far-reaching implications for employers and employees across Kenya.

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In a judgment delivered on Friday, a five-judge bench led by Chief Justice Martha Koome ruled that the lower courts wrongly applied the doctrine of exhaustion to bar the petition filed by Dr. Magare Gikenyi, a trauma and general surgeon.

Dr. Gikenyi had challenged the December 2022 appointments, arguing that the composition of the Principal Secretaries violated the Constitution, as only 11 out of the 51 appointees were women, representing 21 per cent, contrary to the two-thirds gender principle.

He further questioned the appointment of Bernice Sialaal Lemedeket as Principal Administrative Secretary to the National Police Service Commission, arguing that the position was not provided for under the Constitution.

The ELRC struck out the petition, holding that Dr. Gikenyi ought to have first submitted objections to Parliament under Section 6(9) of the Public Appointments (Parliamentary Approval) Act, which allows members of the public to contest the suitability of nominees during approval hearings. The Court of Appeal upheld that decision.

However, the Supreme Court disagreed, finding that the lower courts mischaracterized the nature of the dispute.

“The appellant’s contention was not with the suitability of the candidates, but rather the overall composition of the appointees and what he considered to be a prima facie failure to reflect the two-thirds gender rule and a balance of ethnic, regional and cultural diversity,” the court stated.

The judges clarified that Section 6(9) of the Act is limited to challenges on the suitability of a candidate and does not extend to broader constitutional questions concerning the collective composition of appointments.

“The appellant’s challenge went beyond the suitability of individual nominees and touched on broader constitutional questions regarding adherence to the two-thirds gender principle and the equitable representation requirements under Articles 10, 27, 73, 75 and 232 of the Constitution, issues that squarely fall within the province of judicial determination,” the bench held.

In rejecting a blanket application of the exhaustion doctrine, the court relied on its earlier decision in reiterating that constitutional litigation should not be stifled by procedural technicalities.

“The right to access the court for redress of alleged constitutional violations should not be impeded or stifled in a manner that frustrates the enforcement of fundamental rights and freedoms,” the judges emphasized.

Despite ruling in Dr. Gikenyi’s favour on jurisdiction, the Supreme Court declined to determine the merits of the petition or remit it back to the trial court, citing ongoing proceedings before the ELRC, including Petition No. E513 of 2022 which will now proceeds to its logical conclusion

“We therefore emphatically decline the invitation to pre-empt their determination by pronouncing ourselves on the issues therein,” the court said.

The court ordered each party to bear its own costs due to the public interest nature of the case and directed that the Kshs. 6,000 security deposit paid by Dr. Gikenyi be refunded.

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In a judgment delivered by Justices Daniel Musinga, Fatuma Tuiyott, and George Odunga on Friday, the appellate court upheld part of a High Court decision that found the Chandaria companies, referred to in the case as “obligors,” liable to pay the agreed purchase price for Guilders International Bank in 1999 but overturned the order that placed primary liability on Guardian Bank Limited, which is also associated with the family.

“We find that the Chandarias’ obligation to pay the purchase price fell squarely on the family’s obligors and not on Guardian Bank as purchaser,” the judges ruled, clarifying that the companies, and not the bank itself, were responsible for meeting the Sh196 million payment to Shivali Investments.

The Court ruled that the Chandaria-owned firms, and not Guardian Bank, were contractually obligated to pay the Sh196 million agreed in a 1999 share sale agreement with Shivali Investments and three other vendors, Naval Holdings, Ketty Investments, and Saaf Holdings and associated parties owned by Mr. Rajendra (Raju) Sanghani.

According to court documents, the dispute traces back to a complex deal that began with a “Memorandum of Understanding” (MoU) dated October 13, 1999, and culminated in a formal sale agreement on December 30, 1999.

The sellers, Shivali Investments, Naval Holdings, Ketty Investments and Saaf Holdings, said they agreed to sell 200,000 ordinary shares in Guilders for Sh 196,000,000, a price tied to Guilders’ net asset value as at December 31, 1998.

The purchasers were Guardian Bank (the 1st appellant) and a group of obligors drawn from the Chandaria family and related companies (2nd–9th appellants).

The purchase price was pegged at Sh196 million, subject to adjustment based on the recoverability of certain loans in Guilders’ books by December 31, 2001, the “cut-off date.”

What followed was years of recovery work, counter-accusations and litigation over whether the purchasers had properly exhausted recovery avenues, whether the sellers misrepresented the recoverable loan portfolio, and who, as between Guardian Bank and the obligors, ultimately had to pay.

The appellants argued that many of the loans turned out to be non-performing and that they were therefore entitled to deduct huge sums from the purchase price.

Guardian and the obligors argued that the High Court judge erred in treating the MoU (which was expressly “subject to contract”) as part of the binding agreement.

The trial court accepted the sellers’ case and ordered return of securities and payment of the Sh 196 million consideration with interest at 12% as provided in the MoU.

However, the Court of Appeal found that the Chandarias’ firms failed to observe the contractual timelines and procedures for such deductions.

“It would be re-writing the contract between the parties to allow one of them extend obligations of the others and benefits for itself beyond the agreed time,” the judges ruled.

“The cut-off date was supposed to be extended in writing. It was not. Any purported sale or disposal of the securities offered by the plaintiff at any time after the cut-off date was outside the terms of the contract, irregular, null and void.”

The court added pointedly: “The horse had left the barn.”

Through their lawyers, the Chandaria companies argued that the 1999 Memorandum of Understanding (MoU), which preceded the sale agreement, was “subject to contract” and could not bind the parties unless a formal agreement was executed

They further claimed that the High Court wrongly relied on the MoU in ordering payment and return of securities.

Counsel for the appellants submitted that Guardian Bank and the obligors had lawfully set off unrecovered debts based on an independent audit conducted years later by Mr. Bhatt.

The audit, the court heard, showed that the recoverable loan portfolio had shrunk significantly, leaving the appellants with a negative balance of over Sh827 million.

However, the appellate judges dismissed the reliance on the 2014 audit report as “unsustainable and contrary to the contract’s express time limitations.”

“The evidence that emerges is that the 1st appellant had not demonstrated that it had exhausted all avenues in making full recovery of the warranted loans by the cut-off date,” the Court said.

“To admit post-2001 audits as the basis of set-offs would amount to rewriting the bargain struck by the parties.”

Lawyers for Shivali Investments, led by Mr. Sanghani, countered that the Chandaria firms never paid a single cent of the purchase price since 1999.

They argued that the appellants took over the bank, continued to profit from its operations, yet refused to remit the agreed consideration.

“The buyers cannot hide behind audits conducted over a decade later to justify non-payment,” Sanghani told the court.

“They were in control of the bank, they knew the loan book, and they chose not to honour their bargain.”

The Court agreed with this position, holding that the purchasers had full access to Guilders’ books and the opportunity to ascertain bad debts before the cut-off date.

“Had the parties taken the trouble of establishing the state of the loans as of 31st December 2001, this controversy would not have arisen,” the Court observed.

Another contentious issue involved four “blanket securities” that Guardian Bank sold to recover alleged losses.

The High Court had nullified those sales and ordered the return of the securities to the sellers.

On appeal, the Chandaria companies contended that the properties had been sold to third parties who were never heard in the proceedings, rendering the nullification a violation of the audi alteram partem principle, the right to be heard.

The Court of Appeal agreed, holding that the trial judge erred in voiding the sales without involving the third-party buyers.

“The properties are now in the hands of third parties who were not parties to the proceedings and cannot be condemned unheard,” the judges ruled.

The appellate court therefore declined to order the restitution of those securities.

In conclusion, the appellate court declared the appeal partially successful and proceeded to set aside the High Court’s judgment of February 17 2023, substituting it with fresh orders.

The bench, led by Justice Musinga, ordered the Chandaria obligors (2nd–9th appellants), jointly and severally, must pay the Sh196,000,000 to the sellers, with interest at court rates from the date the suit was filed until payment.

The court further ordered that Guardian Bank (the 1st appellant) must “discharge and return the securities specified in the Sale Agreement to the respondents, save for LR numbers 209/9832, 3734/549, 209/8000/150 and 1870/II/6,” or pay their equivalent value if unable to do so.

“Ultimately, while the appeal succeeds in part, the obligation to pay the purchase price lies squarely on the Chandaria obligors. Guardian Bank’s role is confined to releasing the securities as stipulated, and nothing more,” the Judges ruled

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