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Court of AppealAllowedCivil Application NAI 243 of 2005 (UR. 147/2005)· [2005] KECA 306 (KLR)

Republic v Charles Lutta Kasamani t/a Kasamani & Company Advocates [2005] KECA 306 (KLR)

Court of Appeal
7 October 2005
ROR.S.C. OmoloEGE.M. GithinjiPWP.N. Waki
931 words in judgment
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The bottom line

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Kenya's Court of Appeal halted orders to liquidate United Insurance, ruling the regulator must follow the law's step-by-step process before winding up any insurer.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal at Nairobi (Omolo, Githinji and Waki, JJ.A) on a single-judge-referred application for stay of execution pending an intended appeal. The applicant, the Republic (effectively the Minister for Finance and the Commissioner of Insurance), sought stay of orders of the High Court at Kisumu (Tanui, J) of 29th July 2005 in Misc. Civil Application No. 125 of 2005, by which mandamus issued commanding the Minister and Commissioner to commence, prosecute and conclude winding-up proceedings against United Insurance Company Ltd, and prohibiting the issuance of a licence to that company under the Insurance Act. The respondent, advocate Lutta Kasamani, had obtained those orders to enforce claimed unpaid taxed costs. The Court held, prima facie, that under sections 67C and 123 of the Insurance Act neither the Minister nor the Commissioner could straightaway commence liquidation of an insurer: the Commissioner had a discretion whether to appoint a manager, whose report would inform recommendations to the Minister, and mandamus could not compel the exercise of that discretion in a particular manner (relying on Kenya National Examinations Council v Gathenji). Finding the intended appeal clearly arguable on those weighty issues, and that commencing winding-up was a grave, possibly irreversible step that could render the appeal and the manager's recommendations nugatory, the Court allowed the motion and stayed the High Court orders until the appeal is filed, heard and determined or until further orders, with costs in the intended appeal.

Key legal issues

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01

Statutory power to commence liquidation of an insurer

Holding

On a prima facie reading of sections 67C(2), (6), (7) and (8) and section 123 of the Insurance Act, neither the Minister nor the Commissioner of Insurance may straightaway commence liquidation of an insurer; a manager must first be appointed, whose report informs the Commissioner's recommendations to the Minister, who retains a discretion.

Reasoning

The Commissioner has a discretion whether or not to appoint a manager, and it is the manager who recommends revival or liquidation. The Commissioner may then only make recommendations to the Minister, whose decision need not comply with those recommendations. Section 67C(8) gives the Minister a discretion to decide on liquidation. These are arguable points warranting stay.

p. 2
02

Limits of mandamus over statutory discretion

Holding

Citing Kenya National Examinations Council v Gathenji, the court doubted that mandamus can compel an official to exercise a statutory discretion in a particular manner.

Reasoning

The discretion to appoint a manager is bestowed on the Commissioner, not the court, and authority suggests the court has no power to compel its exercise in a particular manner. Counsel for the respondent conceded these were arguable points, and the court found them weighty issues of law for the intended appeal.

p. 2
03

Nugatory value test for stay

Holding

The appeal would be rendered nugatory without stay because commencing winding-up proceedings is a grave step the insurance company might not recover from, and the manager's possible recommendation of revival could be rendered nugatory.

Reasoning

The judge's order required the applicants to commence, prosecute and conclude winding-up proceedings, a grave and effectively irreversible step. A manager had already been appointed who might recommend revival; executing the order would pre-empt that statutory process. Stay was therefore granted pending determination of the appeal.

p. 2

Legal principles established

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  • A court cannot, by an order of mandamus, compel the Commissioner of Insurance to exercise in a particular manner a discretion bestowed on him by statute, and neither the Minister nor the Commissioner may straightaway commence liquidation of an insurer without the statutory manager process under section 67C.

Court orders

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  1. 1.The notice of motion dated 9th August 2005 is allowed
  2. 2.The orders of the superior court made on 29th July 2005 are stayed until the appeal shall have been filed, heard and determined or until further orders of the Court
  3. 3.The costs of the motion shall be in the intended appeal

Authorities

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Legislation

  • Insurance Actsection 67C(2)
  • Insurance Actsection 67C(6)
  • Insurance Actsection 67C(7)
  • Insurance Actsection 67C(8)
  • Insurance Actsection 123

Cases cited (1)

  • Kenya National Examinations Council v Gathenji & Others
    [1996] LLR 483
On appeal from
High Court of Kenya at Kisumu
Misc. Civil Application No. 125 of 2005
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules (application for stay pending appeal); appeal against judicial review orders of the High Court

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (4)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Republic v Charles Lutta Kasamani t/a Kasamani & Company Advocates [2005] KECA 306 (KLR)", Case Analysis (2005). Civil Application NAI 243 of 2005 (UR. 147/2005). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2005/306/eng@2005-10-07

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