Desertion constitutes employee-initiated termination, and not unfair dismissal by the employer: The Case of Mumali v Blink Studio Limited [2025] KEELRC 2112 (KLR)

Full Case: Mumali v Blink Studio Limited [2025] KEELRC 2112 (KLR)

1. Facts of the Case

The Claimant, Mr. Mumali, was an employee of Blink Studio Limited under a contract governed by the Employment Act, 2007. During the subsistence of his employment, the Claimant stopped reporting to work without giving any notice or communication to the Respondent.

The Respondent attempted to contact the Claimant but received no response or indication of his intention to return to work. Consequently, the Respondent issued a one-month notice of termination, citing abscondment of duty and breach of the employment contract.

The Claimant subsequently filed a suit at the Employment and Labour Relations Court, alleging unfair termination on the grounds that the Respondent had not followed the procedural safeguards required under the Employment Act.

The Respondent defended the claim, asserting that the Claimant’s conduct amounted to desertion, constituting repudiation of the contract, and that the Respondent merely accepted that repudiation through a notice of termination.

2. Issues for Determination

1. Whether the Claimant’s prolonged absence without communication amounted to desertion of duty.
2. Whether the Respondent’s issuance of a termination notice constituted unfair termination under the Employment Act, 2007.
3. Whether the Respondent’s actions met the requirements of procedural fairness under Kenyan employment law.

3. Arguments by the Parties

(a) Claimant’s Arguments

• The Claimant alleged that the Respondent unlawfully and unfairly terminated his employment.
• He argued that he was not given a notice to show cause, nor was he subjected to a disciplinary hearing as required under Section 41 of the Employment Act.
• He sought compensation for unfair termination, notice pay, and other terminal dues.

(b) Respondent’s Arguments

• The Respondent contended that the Claimant absconded duty and failed to communicate any intention to resume work.
• It was submitted that the Claimant’s conduct constituted desertion, thereby repudiating the employment contract.
• The Respondent’s issuance of a termination notice was an acceptance of that repudiation, not a dismissal.
• The Respondent argued that, under these circumstances, it had acted reasonably and within the law.

4. Court’s Determination / Holding

The Court held in favour of the Respondent and made the following findings:

1. Desertion of Duty:
   The Claimant’s absence from work without communication or explanation constituted desertion. His actions demonstrated an intention not to resume employment.
2. Repudiation of the Contract:
   The Court held that such desertion amounted to repudiation of the employment contract by the employee himself.
3. Acceptance of Repudiation:
   The Respondent’s act of issuing a notice of termination was interpreted as acceptance of the employee’s repudiation, not an act of unfair termination.
4. Procedural Fairness:
   The Court found that in cases of desertion, the obligation to conduct a disciplinary hearing is limited, since the employee has effectively abandoned the employment relationship. The procedure adopted by the Respondent was therefore fair, reasonable, and lawful.

The Claimant’s case was dismissed in its entirety.

5. Ratio Decidendi (Legal Reasoning)

• Desertion occurs where an employee absents themselves from duty without leave or reasonable cause, and with no intention to return.
• Such conduct amounts to repudiation of the employment contract, entitling the employer to treat the contract as terminated.
• When the employer issues a termination letter in these circumstances, it is not a dismissal but a formal acceptance of the repudiation.
• The procedural requirements under Section 41 (right to a hearing) are not strictly applicable when the employee has effectively severed the employment relationship through their own actions.

6. Legal Significance / Precedent Value

This case reinforces the principle that:

• Desertion by an employee amounts to self-termination or repudiation of the employment contract.
• Employers are protected where they act reasonably and document attempts to contact an absent employee.
• The decision aligns with earlier authorities confirming that desertion is a valid ground for termination, and that procedural fairness requirements are context-dependent.

The case provides useful clarification for employers on handling abscondment or desertion cases, affirming that issuing a termination notice after prolonged unexplained absence is lawful and fair.

7. Statutory References

• Employment Act, 2007 (Kenya):
• Section 41: Procedural fairness — requirement for a hearing before termination (subject to practicality in desertion cases).
• Section 43: Proof of reason for termination — employer must justify the reason for termination.
• Section 44(4)(a): Grounds for summary dismissal — absence from work without leave or lawful cause.
• Section 45: Unfair termination — conditions that render a termination unfair (not applicable where the employee deserts).

8. Related Case Law / Authorities

1. Felistas Acheha Ikatwa v Charles Peter Otieno [2018] eKLR
• Held that desertion occurs when an employee leaves work without intention to return, and the employer’s acceptance of that act is not unfair termination.
2. Seabolo v Belgravia Hotel (2011) ZALCJHB 23 (South Africa)
• Frequently cited in Kenya; held that where an employee deserts employment, the employer need not go through a disciplinary hearing if the employee has effectively terminated the contract by conduct.
3. Joseph Nzioka v Smart Coatings Limited [2017] eKLR
• The court found that failure to report to work without notice or communication constituted desertion and justified termination.
4. Bernard Wanjohi Muriuki v Kirinyaga Water & Sanitation Company Ltd & Another [2012] eKLR
• Established that procedural fairness under Section 41 can be dispensed with when the employee’s conduct amounts to repudiation or desertion.

9. Key Takeaway

An employee who absconds or deserts duty without communication effectively terminates their own employment. In such situations, the employer’s issuance of a notice of termination is merely an administrative confirmation of that fact and does not amount to unfair termination.

Employers should, however, make reasonable efforts to contact the employee, keep records of such efforts, and issue formal notice confirming the termination to ensure compliance with the spirit of fairness under the Employment Act.

 

An Overview of Family and Succession Law in Kenya: A Legal and Policy Analysis

Background/Abstract

Family and Succession Law in Kenya constitutes one of the most dynamic and socially significant branches of private law. It governs personal relations within the family unit, the rights and duties of spouses, parents, and children, and the distribution of property upon death. This commentary explores the legal framework regulating family and succession matters in Kenya, with a focus on the Law of Succession Act (Cap 160), the Marriage Act, 2014, the Children Act, 2001 (as revised in 2022), and the Matrimonial Property Act, 2013. It further examines the principles of testate and intestate succession, estate administration, and the protection of dependants. The commentary concludes by highlighting the evolving nature of family law in Kenya, particularly the constitutional emphasis on equality, human dignity, and the best interests of the child.

1. Introduction

Family and succession law in Kenya serves as the cornerstone of the legal system governing interpersonal relationships and inheritance. It reflects both the constitutional vision of equality and human dignity under the Constitution of Kenya, 2010, and the socio-cultural realities of Kenyan society. The framework is designed to provide legal certainty in matters of marriage, divorce, child welfare, and the distribution of property after death.

The enactment of the Law of Succession Act (Cap 160) in 1981 and the Marriage Act, 2014 marked major milestones in the codification and unification of family law. These statutes harmonized previously fragmented systems derived from African customary law, Islamic law, Hindu law, and English common law traditions.

2. Legal Framework

2.1 The Law of Succession Act (Cap 160)

The Law of Succession Act is the principal legislation governing inheritance in Kenya. Section 2(1) provides that the Act applies to all persons domiciled in Kenya at the time of death, except where the deceased was subject to Islamic law, in which case succession is governed by Sharia principles (s. 2(3)).

The Act recognizes two main types of succession:

2.1.1 Testate Succession

Testate succession arises when a deceased person leaves a valid will that specifies how their estate should be distributed. For a will to be valid, it must comply with the formal requirements under sections 5–11 of the Act: the testator must be of sound mind, the will must be made voluntarily, and it must be duly signed and witnessed.
Upon death, the executor named in the will applies to the High Court for a Grant of Probate, authorizing them to administer the estate. The court ensures that the will’s provisions comply with the law and that all dependants are adequately provided for.

2.1.2 Intestate Succession

Intestate succession occurs when a person dies without a valid will. In such cases, the estate is distributed according to the hierarchy of heirs under Part V of the Act.

• If the deceased leaves a spouse and children, section 35 provides that the surviving spouse receives a life interest in the estate, while the children inherit upon its termination.
• Where there is no surviving spouse or children, the estate devolves upon the parents, siblings, and other relatives as provided under sections 36–39.
  The court issues Letters of Administration Intestate, appointing administrators to manage and distribute the estate in accordance with these provisions.

The Law of Succession Act also provides mechanisms for confirmation of grants (section 71) and for dependant relief (section 26), ensuring equitable treatment of persons who were financially dependent on the deceased.

2.2 The Marriage Act, 2014

The Marriage Act, 2014 consolidated multiple marriage regimes into a single statute, promoting uniformity and legal clarity. It recognizes five systems of marriage under section 6: Christian, civil, customary, Hindu, and Islamic marriages.

2.2.1 Formation and Validity

Marriage is defined under section 3(1) as “the voluntary union of a man and a woman,” and must be entered into with free consent. The Act also imposes minimum age requirements and prohibits marriages within prohibited degrees of consanguinity.

2.2.2 Dissolution of Marriage

Sections 65–80 of the Act govern the dissolution of marriage and outline grounds such as adultery, cruelty, desertion, and irretrievable breakdown. The procedure and applicable grounds depend on the system of marriage.

2.2.3 Property Rights

The Matrimonial Property Act, 2013, complements the Marriage Act by regulating ownership and division of property acquired during marriage. Section 7 provides that ownership of matrimonial property vests according to the contribution made by each spouse. In Echaria v Echaria [2007] eKLR, the Court of Appeal emphasized that contributions may be financial or non-financial, including domestic work and child care.

The principle of equality between spouses, enshrined in Article 45(3) of the Constitution, ensures that both partners enjoy equal rights during and after marriage, as reaffirmed in P.N.N v Z.W.N [2017] eKLR.

2.3 The Children Act, 2001 (Revised 2022)

The Children Act implements the rights of children under Article 53 of the Constitution and Kenya’s international obligations, including the Convention on the Rights of the Child (CRC).

Key provisions include:

• Parental Responsibility (Part III): Both parents share equal responsibility for the care, maintenance, and education of their children (s. 23).
• Custody and Maintenance (Part VII): Courts determine custody based on the best interests of the child, a principle reaffirmed in J.O v S.A.O [2016] eKLR.
• Adoption and Guardianship: The Act regulates both local and international adoptions (Part VIII) and provides for guardianship orders where necessary.

The revised Act also strengthens protection against child abuse and ensures that children’s courts are child-sensitive in both procedure and environment.

3. Core Concepts and Procedures

3.1 Estate Planning

Estate planning involves organizing one’s assets and affairs to ensure orderly distribution upon death. This may include making a will, establishing trusts, or creating joint ownership arrangements.
Effective estate planning minimizes conflict and ensures compliance with the testator’s intentions within the framework of the Law of Succession Act.

3.2 Probate and Administration

Probate refers to the process of proving and validating a will, while administration relates to the management of estates where no will exists.
The High Court (Family Division) exercises jurisdiction to issue grants of probate or letters of administration. Upon confirmation, the estate may be distributed to beneficiaries as per the confirmed grant (s. 71, Cap 160).

3.3 Inheritance Disputes

Disputes often arise over the validity of wills, claims by excluded beneficiaries, or alleged mismanagement by administrators. The courts apply principles of fairness, transparency, and family equity.
In In re Estate of L.N.W (Deceased) [2016] eKLR, the court emphasized that all beneficiaries must be heard before confirming a grant, to safeguard the right to fair hearing under Article 50(1) of the Constitution.

3.4 Dependant’s Relief

Section 26 of the Law of Succession Act allows any person who was being maintained by the deceased and has not been adequately provided for to apply for reasonable provision. Courts exercise equitable discretion, as demonstrated in In re Estate of Solomon Ngatia Kariuki (Deceased) [2013] eKLR, where the court granted relief to a dependant omitted from the will.

3.5 Matrimonial Property and Division

The Matrimonial Property Act, 2013, read with the Marriage Act, provides that property acquired during marriage is to be divided according to each spouse’s contribution. The courts have progressively interpreted “contribution” to include non-monetary inputs, ensuring gender equity in property distribution (E.N.K v N.K [2015] eKLR).

4. Policy and Constitutional Dimensions

Family and succession law operates within the broader framework of constitutional rights. The Constitution of Kenya, 2010 introduced transformative values that emphasize equality, non-discrimination, and the protection of vulnerable groups.

• Article 27 prohibits gender-based discrimination.
• Article 45 affirms the equality of spouses.
• Article 53 guarantees children’s rights.

Kenyan courts have increasingly interpreted family law in light of these constitutional values, promoting justice and social stability within the family unit.

5. Conclusion

Family and Succession Law in Kenya provides a coherent and evolving framework for the regulation of marriage, children, and inheritance. While statutory reforms have enhanced clarity and inclusivity, practical challenges remain — particularly regarding overlapping jurisdictions, cultural practices, and enforcement of court orders.

Nevertheless, the courts have played a central role in harmonizing statutory law with constitutional principles. Through progressive jurisprudence, they continue to shape a family law system that upholds human dignity, gender equality, and the best interests of all family members.

References

• The Constitution of Kenya, 2010.
• Law of Succession Act (Cap 160, Laws of Kenya).
• Marriage Act, No. 4 of 2014.
• Matrimonial Property Act, No. 49 of 2013.
• Children Act, No. 8 of 2001 (Revised Edition 2022).
• Echaria v Echaria [2007] eKLR.
• In re Estate of L.N.W (Deceased) [2016] eKLR.
• P.N.N v Z.W.N [2017] eKLR.
• J.O v S.A.O [2016] eKLR.
• In re Estate of Solomon Ngatia Kariuki (Deceased) [2013] eKLR.

 

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

Constitutionality of Sections 57, 58(2), 59, and 99 of the Tax Procedures Act Affirmed: The Case of Okiya Omtatah Okoiti v Attorney General & Kenya Revenue Authority [2020] eKLR

1. Background

On 20 February 2020, the High Court of Kenya rendered judgment in Okiya Omtatah Okoiti v Attorney General & Kenya Revenue Authority [2020] eKLR, Petition No. 156 of 2017, upholding the constitutionality of sections 57, 58(2), 59, and 99 of the Tax Procedures Act, No. 29 of 2015 (hereinafter “the TPA”).

The petitioner, Okiya Omtatah Okoiti, had moved the Court seeking declarations that the said provisions were unconstitutional on the grounds that they violated the right to privacy under Article 31 and the right to a fair trial, specifically the privilege against self-incrimination under Article 50(2)(l) of the Constitution of Kenya, 2010.

2. Impugned Provisions and Their Application

The impugned sections of the TPA confer upon the Kenya Revenue Authority (KRA) powers necessary for enforcement and compliance purposes. In particular, they authorize the Commissioner to:

• Enter premises and inspect goods, records, and equipment for tax purposes (s. 57);
• Require any person in possession of documents or information relevant to a taxpayer’s affairs to produce them (s. 58(2));
• Obtain and make extracts or copies of such documents or information (s. 59); and
• Seize documents where necessary to determine the tax liability of a person (s. 99).

Failure to comply with such requests constitutes an offence punishable by a fine not exceeding Kenya Shillings one million (KES 1,000,000), imprisonment for a term not exceeding three (3) years, or both, pursuant to section 99(2) of the TPA.

The KRA routinely invokes these provisions to obtain information from third parties such as banks, financial institutions, and debtors of a taxpayer in order to establish the taxpayer’s correct liability and facilitate collection of unpaid taxes.

3. Petitioner’s Case

The petitioner argued that the said provisions infringed upon taxpayers’ constitutional rights to privacy and to protection from self-incrimination. He further alleged that the KRA had previously exercised these powers in a manner that amounted to political harassment, citing the instance in 2017 when KRA sought financial information from Diamond Trust Bank concerning Governor Ali Hassan Joho.

4. Respondents’ Position

The Respondents — the Attorney General and the Kenya Revenue Authority — maintained that the powers in question were consistent with the Constitution and necessary for the proper administration of tax laws. They submitted that any limitation of rights occasioned by the provisions was reasonable and justifiable within the meaning of Article 24 of the Constitution.

5. The Court’s Determination

The High Court dismissed the petition and held that sections 57, 58(2), 59, and 99 of the TPA are constitutional.

The Court reasoned as follows:

1. Legitimate Purpose: The impugned provisions serve a legitimate purpose in enabling the KRA to discharge its statutory mandate of assessing, collecting, and accounting for tax revenue, as established under the Kenya Revenue Authority Act, Cap 469.
2. Right to Privacy: The Court held that the enforcement powers under the TPA do not amount to an unreasonable intrusion into the private affairs of individuals within the meaning of Article 31 of the Constitution. Information obtained by the KRA is restricted to matters relevant to taxation and is protected by the confidentiality provisions under section 6(1) of the TPA, save for the specific exceptions under section 6(2).
3. Privilege Against Self-Incrimination: The Court found that the privilege under Article 50(2)(l) is not absolute and does not relieve citizens from their statutory duty to comply with tax laws. The privilege cannot be invoked to shield individuals from lawful investigations or to obstruct the performance of statutory duties by revenue authorities.
4. Safeguards: The Court further observed that the statutory confidentiality obligations imposed on the KRA are sufficient safeguards to prevent abuse of power.

Accordingly, the Court held that the use of compulsory powers to obtain documents or information which may later be used in judicial proceedings does not infringe the right against self-incrimination.

6. Related Jurisprudence

The Court distinguished this case from Robert K. Ayisi v Kenya Revenue Authority, Petition No. 421 of 2016 [2018] eKLR, in which the High Court declared section 59(4) of the TPA unconstitutional for violating advocate–client privilege protected under section 137 of the Evidence Act (Cap 80, Laws of Kenya). The Court in Omtatah clarified that the invalidation of section 59(4) was limited to instances involving privileged communication and did not extend to the broader enforcement powers under sections 57, 58(2), 59, and 99.

7. Implications of the Judgment

This decision reaffirms the broad investigative and enforcement authority of the Kenya Revenue Authority to obtain information from taxpayers and third parties for purposes of assessing tax liability and enforcing compliance.

While the judgment strengthens the KRA’s capacity to pursue non-compliance, it also raises continuing policy concerns regarding potential misuse of these powers for politically motivated or selective enforcement. The Court did not conclusively address the question of safeguards against politically instigated investigations, leaving open the need for administrative oversight and legislative clarification.

8. Conclusion

The High Court’s decision in Okiya Omtatah Okoiti v Attorney General & Kenya Revenue Authority confirms that the Tax Procedures Act, 2015 validly empowers the Kenya Revenue Authority to obtain and utilize information for tax administration purposes, consistent with constitutional principles. The Court’s interpretation underscores the balance between the State’s interest in efficient revenue collection and the protection of individual rights under the Constitution.

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

 

Legal Analysis: A Review of Limited Grants under the Law of Succession Act (Kenya)

1. Introduction

Under the Law of Succession Act (Cap 160) of the Laws of Kenya, only individuals who have been granted letters of administration or probate may lawfully deal with the estate of a deceased person. Any action taken without this authority, including for the benefit of dependants, constitutes intermeddling, which is prohibited.

However, the law recognizes that urgent circumstances may arise before full administration is granted. In such cases, parties may apply for limited grants to allow specific and urgent acts in respect of the estate.

2. Legal Basis

• Law of Succession Act – Cap 160
• Probate and Administration Rules – Rule 36(1)
• Schedule 5 – Types of limited grants
• Article 53(1)(b), Constitution of Kenya 2010 – Right to education for children

3. Types of Limited Grants

3.1. Grants Limited as to Purpose

a) Grant ad Colligenda Bona

Issued for collection and preservation of the estate. No authority to sell or distribute assets.

Case Law:

• Re Estate of Mary Syokwia Kyalili (eKLR) – Allowed where urgent action is needed and full grant would take time.
• Re Estate of Daniel A. Korir Kipkurui (eKLR) – Granted to access funds for school fees; upheld children’s constitutional right to education.
• Re Estate of Mary Wanja Wairimu (eKLR) – Rent collection preserved through joint account during pending grant process.

b) Grant ad Litem

Granted for the sole purpose of representing the estate in legal proceedings — either as plaintiff or defendant.

Case Law:

• Re Estate of Jennifer Kusuro Musiwa (eKLR) – Limited grant for pursuing a civil suit.
• Re Estate of Helena Wangechi Njoroge (eKLR) – Clarified that ad litem grants do not permit distribution of estate assets.

3.2. Grants Limited as to Property

a) Administration Pendente Lite

Issued when there is ongoing litigation concerning the estate. The appointed administrator acts under court supervision with no powers of distribution.

b) Grant de Bonis Non

Granted when the original executor/administrator dies or becomes incapacitated before completing administration. New administrator completes distribution.

Case Law:

• Faith Wanjiku Maganjo v Rebean Muriithi Maganjo (eKLR) – Defined role of "administrator de bonis non" in completing estate administration.

3.3. Grants Limited as to Time

Applicable where the validity or existence of a will is uncertain or delayed.

• Probate of copy or draft of lost will – Granted when original was lost without intention by testator.
• Probate of copy where original exists abroad – Allowed when original is withheld abroad but action is urgent.
• Administration until will is produced – Temporary administration pending retrieval or discovery of will.

4. Legal and Practical Importance in the Kenyan Context

• Urgency: Limited grants allow dependants, especially minor children, to access funds for school fees and upkeep without unnecessary delay.
• Protection of Estate: Prevents wastage or unauthorized dealings with estate assets (e.g., rent, perishables).
• Court Control: All limited grants are subject to court supervision and specific limitations.
• Prevention of Intermeddling: Ensures only legally authorized persons act on behalf of the estate.

5. Recommendations for Legal Practitioners and Clients

• Apply early for limited grants in urgent circumstances.
• Use Grant ad Litem when legal representation of the estate is needed in a civil suit.
• Secure storage of will with a trusted legal advisor.
• Provide executor and family contacts to ensure swift action upon death.

6. Conclusion

Limited grants serve as a critical legal mechanism under Kenyan succession law to balance the need for urgent intervention with the requirement for orderly administration of estates. Legal practitioners should advise clients on their availability and use, particularly in safeguarding the welfare of dependants and preserving estate assets.

 

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

Excise Duty based on Kenya’s tax framework, economic realities, and policy goals:

In Kenya, excise duty is governed by the Excise Duty Act, 2015 and administered by the Kenya Revenue Authority (KRA). It applies to a defined list of goods and services — both locally manufactured and imported — that the government considers either luxury items or goods with potential social or health impacts. These include:

• Alcoholic beverages (beer, spirits, wine)
• Tobacco and nicotine products (including e-cigarettes and shisha)
• Petroleum products (fuel, kerosene, etc.)
• Motor vehicles (especially luxury and high-capacity vehicles)
• Telecommunication services (airtime, mobile money transactions, internet data)
• Betting, gaming, and lottery services

1. Fiscal Purpose: Revenue Generation

Excise duty is a major revenue stream for Kenya’s national government. It provides a stable and predictable source of income, particularly useful because the consumption of these goods and services tends to be less elastic — meaning demand doesn’t drop drastically even when prices rise.

In the 2024/2025 fiscal year, excise duty contributed significantly to Kenya’s domestic revenue, helping fund public services such as education, health, and infrastructure. For example, excise taxes on fuel help finance road maintenance and development through allocations to the Road Maintenance Levy Fund.

2. Regulatory Purpose: Behavioral and Policy Influence

Beyond revenue, Kenya’s excise duty serves regulatory and social policy objectives:

• Public Health: High excise rates on alcohol and tobacco aim to discourage excessive consumption and reduce the burden of lifestyle-related diseases on the health system.
• Environmental Protection: Taxes on motor vehicles and petroleum products encourage energy efficiency and align with Kenya’s Green Economy Strategy and Implementation Plan.
• Social Responsibility: Levies on betting and gaming activities aim to curb gambling addiction, particularly among youth, while ensuring the industry contributes to national revenue.

This dual role means excise duty is both a fiscal tool and a social policy instrument, reflecting Kenya’s attempt to balance economic growth with public welfare.

3. Structure of Excise Duty

Excise duty in Kenya can take two main forms:

• Specific Rate: Charged per quantity or unit (e.g., KSh 134 per litre of spirits, KSh 3.59 per stick of cigarette).
• Ad Valorem Rate: Charged as a percentage of the value (e.g., 20% on motor vehicles, 15% on betting stakes).

The Finance Acts passed annually by Parliament often revise these rates to account for inflation, policy priorities, or changing market conditions.

4. Impact on Businesses and Consumers

For businesses, especially in sectors like manufacturing, telecommunications, and betting, excise duty significantly affects pricing, compliance, and competitiveness. Companies must register for excise licenses, maintain proper records, and file returns through KRA’s iTax platform.

For consumers, excise duty influences the cost of living. For example, increases in fuel excise rates directly raise transport and production costs, leading to broader inflationary effects.

5. Alignment with National Goals

Excise taxation aligns with Kenya’s Vision 2030 and the Bottom-Up Economic Transformation Agenda (BETA) by:

• Promoting sustainable revenue mobilization, reducing reliance on debt.
• Encouraging healthier lifestyles and environmental sustainability.
• Creating a fairer tax system where higher-income consumers bear a greater share of luxury and sin taxes.

Conclusion

In Kenya, excise duty is not merely a source of government revenue; it is a strategic policy tool that shapes social behavior, supports sustainable development, and reinforces the government’s broader economic and environmental goals. Understanding its structure and intent enables businesses and citizens to engage more effectively with the country’s fiscal framework and national development agenda.

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

 

On the liability of valuers for negligent misstatement: The Case of Guaranty Trust Bank Kenya Limited v NW Realite Limited [2025] KEHC 12495 (KLR)

Full Case: Guaranty Trust Bank Kenya Limited v NW Realite Limited [2025] KEHC 12495 (KLR)

Facts of the Case:

• In 2014, Guaranty Trust Bank Kenya Ltd engaged the Defendant, NW Realite Ltd, a professional valuer, to conduct a valuation of a Kwale property offered as security for a loan by Micro Mobile Ltd.
• The valuation report provided by NW Realite stated:
• Open Market Value: KShs. 190,000,000
• Mortgage Value: KShs. 150,000,000
• Forced Sale Value: KShs. 142,500,000
• Based on this report, the bank extended an overdraft facility of KShs. 80,000,000 to its client.
• Upon loan default, the bank sought to recover the debt by selling the charged property.
• However, the actual market value turned out to be significantly lower than reported—indicating the valuation was negligent and grossly overstated.
• The bank sued the valuer for professional negligence and sought compensation for the financial loss suffered due to reliance on the faulty valuation.

Legal Issues for determination:

1. Was NW Realite Ltd professionally negligent in the valuation report it issued?
2. Was Guaranty Trust Bank entitled to recover damages for losses suffered due to the negligent valuation?

Court's Holding:

• The Court found NW Realite Ltd liable for professional negligence.
• The Court awarded KShs. 29 million+ in damages to Guaranty Trust Bank, representing part of the financial loss directly caused by the inaccurate valuation.

Court's Reasoning:

• The valuer owed a duty of care to the bank, its client, who was relying on the valuation report to assess the risk of lending.
• The valuation report grossly overstated the market value of the property, without a reasonable or factual basis.
• The Court emphasized that a professional valuer must exercise skill, diligence, and objectivity, particularly when their opinion directly influences major financial decisions.
• The Court rejected the valuer’s defenses that market conditions had changed or that the bank had alternative recourses.
• The damage was reasonably foreseeable, and there was a direct causal link between the inflated valuation and the loss incurred by the bank.

Legal Principles Applied:

• Professional Negligence: A professional owes a duty of care to their client and may be liable for economic loss arising from a breach of that duty.
• Duty of Care in Valuations: Established in Hedley Byrne & Co. Ltd v Heller & Partners Ltd [1964] AC 465, a valuer owes a duty not only to avoid misstatement but to exercise reasonable care.
• Causation and Foreseeability: The loss must be a foreseeable consequence of the negligent act and closely connected to the breach.

Commentary and Analysis:

This case reinforces the legal accountability of professionals, especially in valuation and financial advisory roles. It serves as a cautionary tale for valuers and banks alike:

• For valuers: Courts will not hesitate to hold you liable if you overstate property values without due diligence, especially where financial institutions suffer real economic loss.
• For banks: The ruling emphasizes the importance of independent verification, multiple valuations, or relying on a panel of vetted valuers before disbursing substantial credit.

From a broader legal perspective, the case affirms the expanding scope of liability in tort for pure economic loss, especially in the realm of professional services. The judgment mirrors global common law trends that impose higher standards of care on experts, particularly in sectors like banking, construction, and auditing.

Significance of the case:

• Establishes a strong precedent in Kenyan case law on the liability of valuers for negligent misstatement.
• Encourages more rigorous standards in valuation reporting and due diligence in financial risk assessment.
• May impact the way banks structure their credit risk policies and manage professional liability in lending.

Disclaimer: This article is for informational purposes only and does not constitute legal advice.