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Why KBC pensioners risk losing Sh1.4 billion savings

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The Kenya Broadcasting Corporation offices.

Photo credit: File | Nation Media Group

The Kenya Broadcasting Corporation (KBC) pensioners risk losing Sh1.4 billion to a city lawyer as legal fees, in a battle with the Board of Trustees over the recovery of unremitted contributions.

Morara Omoke trading as Morara Omoke Advocates has moved to the Employment and Labour Relations Court (ELRC) to ask for the correct amount of legal fees he incurred for representing the pensioners in a legal dispute with the Board of Trustees.

The advocate has challenged the decision of the taxing master to only award his company Sh57.5 million as legal fees despite representing the pensioners in a Sh19 billion legal battle with the KBC Board of Trustees.

“The decision of the taxing master in ELRC at Nairobi, Hon Aziza Ajwang, delivered on December 22, 2023, in respect of the applicant’s advocate and client bill of costs dated June 7, 2023, be set aside and taxed afresh by this court,” Mr Omoke said in his fresh court documents

Mr Omoke has lamented that the taxing master erred in fact and in law by proceeding on the wrong premise that the parties in the main case filed in 2018 did not file their computations for purposes of ascertaining the amount owed by the Board of Trustees in accordance with the judgment delivered on April 27, 2022.

Sh19.3 billion

He has also faulted the taxing master saying he erred  in fact and in law by failing to find that the value of the subject matter of the case was Sh19.3 billion, comprising Sh18.4 billion, being the computation of the claim plus interest as of the date of the Judgment, April 27, 2022, in line with the judgment of the court); a  further Sh230 million being the amount he had already recovered via a ruling delivered in 2020 and Sh928 million being the costs of the suit forming part of the Judgment sum as per the judgment.

“This amount which is verifiable from the Computations of the parties in the main suit both of which are on record ought to have been included while ascertaining the subject matter value,” he said

According to the advocate, the taxing master omitted compound interest at 3 per cent per month under Section 53A of the Retirement Benefits Act despite this item having been awarded in the judgment in determining the subject matter value.

The advocate has also faulted the taxing master for ignoring the fact that the claim was a moving target which kept changing throughout the life of the case Cause No. 1352 of 2018 owing to accruing compound interest at 3 per cent per month.

“The most reliable figure would be the one arising from the judgment in accordance with the formula set out therein. In determining the subject matter value, the taxing master erred in law by resorting to the pleadings to ascertain the subject matter value yet it is trite law that where judgment has been entered, the subject matter value should be as per the judgment,” he stated.

 By using the wrong subject matter value, the advocate noted that the taxing master’s calculation of instructions fees, her calculation of getting up fees, and the 50 per cent adjustment in accordance with Schedule 6(B) of the Advocates (Remuneration) Order are all erroneous.

Also, Mr Omoke has lamented that the taxing master ignored the specific elements of the complexity of the matter he advanced, which were verifiable from the record of the main suit filed in 2018.

“The Taxing Master erred in fact and in law by not studying the pleadings, the evidence on record and the judgment in the main case keenly to ascertain the complexity of the matter,” he said.

In 2018 the KBC Pension scheme sought court assistance to recover from the sponsor (KBC) the deducted and unremitted Sh820 million, including Sh53.1 million deducted from employees.

Legal battle

The pension Trustees procured the services of the advocate for this legal battle.

Justice Maureen Onyango then delivered a ruling on April 27, 2022, in favour of the scheme for recovery of the unremitted pension contributions, compound interest, rental income and all outstanding remittances as at the date of judgment. 

The court directed that KBC shall pay compound interest at the rate of 3 per cent per month on the unremitted deductions.

The parties then entered into negotiations and agreed to file a consent for the sum of Sh6.5 billion but the scheme’s counsel refused and insisted on KBC paying Sh18 billion.

KBC then sought the assistance of Attorney General Justin Muturi on the agreed Sh6.8 billion who advised that interest would only be applicable on non-remitted employee deductions amounting to Sh53.1 million and not employer non-remittances as this was a gift.

Court records show that the computation of this figure plus employer non-remittances amounting to Sh767.1 million raised the total owed to the scheme to Sh2.1 bn.

Judgment on this is pending before Justice Ann Ngibuini after the court ordered that Mr Omoke be paid his dues before the reconciled document can be delivered in court for final orders.

Mr Omoke then moved to the court and filed a taxation cause E117 of 2023 before Employment and Labour Relations Court Deputy Registrar Aziza Ajwang’ to be paid by the pension scheme Sh1.4 billion his fees.

However, the judicial officer ruled that Mr Omoke be awarded Sh57.5 million as legal fees but the advocate has since petitioned against this award.

However, Chairman KBC Staff Retirement Pension Scheme Martin King’asia maintained that the Taxing Master considered the case and the law before awarding the advocate his cost.

“From a perusal of the ruling of the taxing master, it is our belief that though the same is out of the scheme’s reach on account of the book balances, the same was in essence reflective of the scope of work as undertaken by the advocate,” he said in a replying affidavit.

Mr King’asia described the advocate’s application as an attempt to be over-compensated far and beyond what is envisaged in law and logic as he is seeking to be compensated a sum thrice the instruction fees thus the application for reference should fail.

“The taxing master was cognizant of the issues as raised in the application and on giving them due consideration on account of submissions of the parties rightfully opined that the same was untenable and would probably be akin to unjust enrichment,” he said

He further said that the advocate should appreciate that the scheme comprises membership from past and present KBC employees with no active income upon retirement and subjecting them to such a ridiculous claim on legal fees goes outside the realms of fair compensation

The scheme is currently seeking recovery of Sh3.2 billion from KBC. The Scheme is 71 per cent underfunded.

The more than 140 retirees, resignations, deferred and deceased stretching back to January 2021 are owed over Sh635 million.

In January this year, the Retirement Benefits Authority ordered the cessation of deductions on employee emoluments due to years of non-remittance.