TROPICAL FOOD PRODUCTS INTERNATIONAL LIMITED v EASTERN AND SOUTHERN AFRICAN TRADE AND DEVELOPMENT BANK (THE PTA BANK) [2007] KECA 235 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that consent orders can be set aside for mistake, and courts cannot be given arbitration powers the parties' contract never gave them.
What this practically means
#Executive summary
#Key legal issues
#Grounds for setting aside a consent order
A consent order may be set aside on grounds including fraud, mistake, collusion, agreement contrary to the policy of the court, absence or ignorance of sufficient material facts, and any other sufficient reason; the categories are not closed.
The Court adopted the summary of grounds distilled by the learned Judge, guided by Flora Wasike v Wamboko and Hirani v Kassam. It endorsed the principle that an order made with the consent of counsel is prima facie binding but may be discharged where obtained by fraud, collusion, or where consent was given in misapprehension or ignorance of material facts, or for a reason which would enable the court to set aside an agreement.
Mistake as a ground of equitable relief
A contract or consent order may be set aside in equity where parties laboured under a common misapprehension as to facts or their respective rights, provided the misapprehension was fundamental and the party seeking relief was not at fault.
The Court relied on Lord Denning's exposition in Solle v Butcher and Treitel's commentary, holding that equity grants relief for mistake whether of primary or secondary fact, without distinguishing mutual from unilateral mistake. The Judge was entitled to believe the respondent's advocate that she had overlooked the ICC arbitration clause when recording the consent.
Appointment of arbitrator and jurisdiction
Where the parties' agreement designates the ICC as the appointing authority, the court errs in accepting a consent order empowering it to appoint an arbitrator; parties cannot confer jurisdiction on the court where none exists.
The Facility Agreement's Clause XIV provided for arbitration under ICC Rules with the Secretariat of the International Court of Arbitration as appointing authority. The consent order deviated from this by allowing the court to appoint an arbitrator in default of agreement. Since the court was not seized of the suit by virtue of the arbitration clause, and no appearance had been entered, the portion of the consent order inviting court intervention was erroneous.
Interference with judicial discretion on appeal
An appellate court will not interfere with a lower court's exercise of discretion unless satisfied the decision is clearly wrong, based on misdirection, wrong matters considered, or failure to consider relevant matters resulting in a wrong conclusion.
The Court applied the classic statements of Sir Clement De Lestang V-P and Sir Charles Newbold P. in Mbogo v Shah. It held that the choice by the Judge of which witness to believe on questions of fact was one with which the appellate court had no reason to interfere, and found no error of principle in the Judge's reliance on mistake and 'any other sufficient reason'.
Legal principles established
#- A consent order recorded in court is binding and may be varied or discharged only on grounds such as fraud, collusion, mistake, ignorance of material facts or any other sufficient reason; the categories are not closed.
- An appellate court will not interfere with a lower court's exercise of discretion unless satisfied that the decision is clearly wrong or that the judge misdirected himself, acted on wrong matters, or failed to consider relevant matters and arrived at a wrong conclusion.
- Parties cannot by consent confer jurisdiction on a court where none exists.
- Equity will relieve a party pleading mistake without distinguishing between mistake of fact or law, or whether it was common, mutual or unilateral.
Court orders
#- 1.The appeal is dismissed with costs
- On appeal from
- High Court of Kenya, Nairobi
- H.C.C.C. No. 1534 of 2001
- Jurisdiction invoked
- Appellate jurisdiction of the Court of Appeal over an appeal from the High Court in a civil matter
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "TROPICAL FOOD PRODUCTS INTERNATIONAL LIMITED v EASTERN AND SOUTHERN AFRICAN TRADE AND DEVELOPMENT BANK (THE PTA BANK) [2007] KECA 235 (KLR)", Case Analysis (2007). Civil Appeal 253 of 2002. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/235/eng@2007-10-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.