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Court of AppealDismissedCivil Appeal from Kisumu High Court Civil Case No. 97 of 1981 (appellate record; appellate case number not stated in judgment)

Construction Engineering & Builders (Kenya) Ltd v Municipal Council of Kisumu [1981] KECA 27 (KLR)

Court of Appeal of Kenya
25 January 1982
3,393 words in judgment
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The bottom line

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What this practically means

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Executive summary

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The Court of Appeal at Kisumu (Potter, Law and Miller JAs) dismissed an appeal against an interlocutory order of Scriven J of May 28, 1981, in High Court Civil Case No. 97 of 1981. The dispute arose from a 1978 contract for construction of water works. After the Employer invoked Clause 63(1)(d) and took possession of the site, the Employer sued for a declaration of forfeiture and an injunction restraining removal of plant and materials, and obtained a temporary injunction; the Contractor applied under section 6 of the Arbitration Act (Cap 49) for a stay of the suit pending arbitration under Clause 67. The judge continued the injunction, stayed further proceedings save in relation to the injunction, and made costs costs in cause. The appellant's principal contention was that the discretion to stay could only be exercised as to the whole suit or not at all. The court rejected this, holding that a partial stay is lawful: Lindley LJ in Ives and Barker v Willans and Lord Parker in Bristol Corporation v John Aird & Co, on statutory provisions materially identical to section 6, and the Court of Appeal's own decision in Kenya Oil Co Ltd v Rajwani, all support a stay as to some matters with the action proceeding as to others. No ground of appeal attacked the injunction on its merits, and the allegations of removal of materials were not denied, so the appeal against the injunction failed. The costs orders were held unimpeachable, the Employer having succeeded on the injunction which was the primary purpose of the suit. Costs of the appeal were awarded to the respondent. The judgment binds subordinate courts on the power to order partial stays under section 6 of the Arbitration Act.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the High Court, on a stay application under section 6 of the Arbitration Act (Cap 49), may stay only part of the proceedings rather than the whole suit or nothing
  2. 2.Whether the learned judge erred in continuing the injunction while staying further proceedings in the suit pending arbitration
  3. 3.Whether the judge erred in his orders as to the costs of the suit and of the application

Key legal issues

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01

Whether a stay under section 6 of the Arbitration Act must be of the whole suit or may be partial

Holding

A partial stay is lawful. English authorities under statutory provisions in material respects identical to section 6 of the Kenya Act, and the Court of Appeal's own decision in Kenya Oil Co Ltd v Rajwani, establish that the court may stay part of an action and let the rest proceed.

Reasoning

Mr Behan's all-or-none submission was unsupported by any authority. Potter JA relied on Lindley LJ in Ives and Barker v Willans and Lord Parker in Bristol Corporation v John Aird & Co, noting that sections 4 of the English Arbitration Acts 1889 and 1950 and section 6 of the Kenya Act are in substantially the same terms. Law JA added that Bristol Corporation was cited with approval and followed by this Court in Kenya Oil Co Ltd v Rajwani. The judge was therefore entitled to stay further proceedings while preserving the injunction.

p. 4
02

Whether the continuation of the injunction alongside the stay was erroneous

Holding

The appeal against the continuation of the injunction failed. No ground of appeal attacked the injunction on its merits, and there was no denial on the record of the Employer's allegations of removal of materials.

Reasoning

Potter JA noted the memorandum of appeal contained no ground attacking the injunction on its merits and that the record disclosed no denial of the allegations in the plaint and the supporting affidavit. The injunction was the primary purpose of the suit, and the Employer had succeeded in obtaining and maintaining it. Miller JA likewise found the judge's discretionary order was intended to protect the works and was justified by the sworn and unchallenged averment that materials were being removed.

p. 4
03

Costs of the suit and application

Holding

The judge did not err in making the costs of the application costs in cause; the appellant's real purpose in seeking the stay was to discharge the injunction, in which it failed.

Reasoning

Rule 13 of the Arbitration Rules gives the judge a wide discretion on costs on a stay. The primary purpose of the suit was to obtain and maintain the injunction, in which the Employer succeeded; the main purpose of the stay application was to obtain discharge of the injunction, in which the appellant failed. The appellant therefore could not complain of costs in cause. The costs of the appeal were awarded to the respondent.

p. 4

Legal principles established

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  • Under section 6 of the Arbitration Act (Cap 49), the High Court has power to stay an action as to some matters and allow it to proceed as to others; the discretion is not 'all or none'.
  • Where matters agreed to be referred to arbitration are mixed in one action with matters not agreed to be referred, the court may stay as to the former and let the action continue as to the latter.
  • A stay of proceedings under section 6 does not automatically terminate interlocutory orders in the suit, such as a continuing injunction; the court may keep the injunction alive pending arbitration.
  • Rule 13 of the Arbitration Rules confers a wide discretion on the judge as to costs on a stay of proceedings.

Court orders

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  1. 1.Appeal dismissed
  2. 2.Costs of the appeal awarded to the respondent
  3. 3.The order of Scriven J of May 28, 1981 (continuing the injunction, staying further proceedings save in relation to the injunction, and costs in cause) left intact

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority

Wrote the judgment

concurring

Law JA agreed with Potter JA's draft judgment, separately citing the Court of Appeal's own decision in Kenya Oil Co Ltd v Rajwani as having followed Lord Parker's dictum in Bristol Corporation v John Aird & Co.

That authority was cited with approval and followed by this Court in Kenya Oil Co Ltd v Rajwani (Civil Appeal No 50 of 1977 unreported).p. 4
concurring

Miller JA delivered his own reasoning, emphasising constitutional access to the High Court under sections 77 and 84, the discretionary nature of the order below, the public-interest character of the water works contract, and the sworn allegations that the appellant was removing materials; he agreed the appeal should be dismissed.

I would myself have made the same order as the learned judge of the High Court made, particularly in the light of the sworn and unchallenged averment on behalf of the respondent Council, that the materials for the performance of the contract and works had been and were being secretly filched away by the appellant.p. 5
On appeal from
High Court of Kenya at Kisumu
Civil Case No. 97 of 1981
Jurisdiction invoked
First appellate jurisdiction over an interlocutory order of the High Court (the judgment does not state the precise statutory basis); constitutional backdrop cited: Section 77(9), (10) and Section 84(1) of the Constitution

Relief refused

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An unconditional stay of the whole suit

The court held a partial stay is lawful; the appeal against the conditional/partial stay failed.

p. 4

Discharge of the injunction

No ground of appeal attacked the injunction on its merits and the allegations underpinning it were not denied on the record.

p. 4

Costs of the suit and application below to the appellant

The Employer succeeded in obtaining and maintaining the injunction, which was the primary purpose of the suit; the appellant failed in its real objective of discharging the injunction.

p. 4

Costs

Costs in cause below (as ordered by Scriven J); costs of the appeal awarded to the respondent.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

In my view, Mr Behan's proposition is not sound, and the learned judge was permitted by law to grant a stay only as to part of the court proceedings.
p. 4Partial stay under section 6 of the Arbitration Act
The court may stay an action as to one matter and allow it at the same time to proceed as to another, even if both matters are within the reference.
p. 4Court of Appeal's settled position on partial stay (Madan JA in Kenya Oil Co Ltd v Rajwani, cited by Law JA)
It follows, in my opinion, that the learned judge was entitled to exercise his discretion in the way he did, by staying only further proceedings in the suit. I see no reason to interfere with that exercise of discretion.
p. 4Non-interference with discretionary orders
I would dismiss this appeal and award the costs of the appeal to the respondent.
p. 4Disposition and costs of appeal
As Miller JA also agrees, it is ordered that this appeal be dismissed as proposed by Potter JA.
p. 5Final orders of the Court

Issues in the judgment

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minor

The judgment does not state the case number of the appeal itself or the parties' actual names; the parties are referred to only as 'the Contractor' and 'the Employer', and the respondent is variously described as the Employer and as the Municipal Council/Council.

minor

Potter JA's judgment is written in the first person singular and describes the discretion as being that of the court, while Law and Miller JAs express agreement, leaving the final disposition recorded only in Law JA's short concurring opinion rather than a formal disposition section.

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Construction Engineering & Builders (Kenya) Ltd v Municipal Council of Kisumu [1981] KECA 27 (KLR)", Case Analysis (1982). Civil Appeal from Kisumu High Court Civil Case No. 97 of 1981 (appellate record; appellate case number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1981/27/eng@1981-01-25

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.