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Court of AppealPartially AllowedCivil Appeal (Application) No. 190 of 2009 (UR 131/2009)· [2009] KECA 93 (KLR)

Caltex Oil (kenya) Ltd (Now renamed Total Marketing Kenya Ltd) v Evanson Njiiri Wanjihia

Court of Appeal of Kenya
16 October 2009
EOE. O. O'KubasuJOJ. W. Onyango OtienoJNJ. G. Nyamu
3,940 words in judgment
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The bottom line

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Kenya's Court of Appeal allowed an oil company to pause paying a court award, but only after depositing Kshs 15 million as security.

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 (O'Kubasu, Onyango Otieno and Nyamu, JJA) on a Notice of Motion under Rule 5(2)(b) of the Court of Appeal Rules by Caltex Oil (Kenya) Ltd, now Total Marketing Kenya Ltd, seeking stay of execution of a High Court ruling by Ali-Aroni, J dated 16th June 2009 in H.C.C.C. No. 5366 of 1993. The High Court had set aside a consent order under which the applicant was to deposit Kshs.3,000,000/= as security for a decretal sum of over Kshs.15 million, and ordered the applicant to deposit the decretal amount less the sum already in the joint account (about Kshs.12 million more). The respondent's counsel conceded the intended appeal was arguable, so argument was confined to whether the appeal would be rendered nugatory absent a stay. The applicant argued that a deposit of the full decretal sum (approximately Kshs.30-32 million) would disrupt its financial liquidity and that other claimants would follow suit; the respondent countered that the applicant's shareholding was being transferred in a secret, uncompleted transaction with no guarantees offered, risking irrecoverability of the decree. The court, applying the Norlake case and the newly introduced overriding objective under Sections 3A and 3B of the Appellate Jurisdiction Act, weighed the hardships of both parties and found the balance favoured the respondent. It granted a conditional stay: the applicant was to deposit Kshs.15,000,000/= (inclusive of the Kshs.3,000,000/= under the consent order) in a joint interest-earning account within 45 days, failing which the stay application would automatically stand dismissed. No costs order is recorded.

Key legal issues

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01

The nugatory aspect test under Rule 5(2)(b) and the weighing of hardship

Holding

The court accepted the intended appeal was arguable (counsel conceded) and determined the nugatory limb by putting both parties' hardships on the scales; given the applicant's confidential and uncompleted shareholding transaction and the absence of guarantees from third-party entities, the respondent risked substantial and irremediable loss, so the balance of convenience favoured the respondent.

Reasoning

The court held that the nugatory test is case-specific and requires weighing the conflicting claims of both sides. The applicant simultaneously claimed hardship from a deposit of about Kshs.30 million yet asserted it was a substantial multinational able to pay the decree in full. The applicant's proposed sale transaction remained confidential, with no indication when its details would be disclosed, and the named third-party companies offered no guarantees. That combination made the respondent's concerns genuine and tilted the balance against an unconditional stay.

p. 6
02

Effect of the overriding objective on stay applications

Holding

The court stated that Sections 3A and 3B of the Appellate Jurisdiction Act, introduced by Statute Law (Miscellaneous Amendment) Act No. 6 of 2009 with effect from 23rd July 2009, extended the Court's latitude and obliged it to act justly; in striking the balance between the parties the court gave effect to the overriding objective.

Reasoning

The court treated the overriding objective as relevant to interlocutory decision-making, holding that its principal aim is for the Court to act justly when interpreting the law or exercising its powers. By balancing the parties' respective hardships and moulding a conditional stay tailored to the special circumstances of the case, the court considered itself to be giving practical effect to Sections 3A and 3B rather than mechanically applying the Rule 5(2)(b) tests.

p. 6

Legal principles established

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  • Whether the success of an intended appeal would be rendered nugatory must be considered within the circumstances of each particular case, and the court is bound to weigh the conflicting claims of both parties.
  • In exercising its powers, including on stay applications, the Court must give effect to the overriding objective under Sections 3A and 3B of the Appellate Jurisdiction Act, whose principal aim is that the Court act justly in every situation.

Court orders

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  1. 1.Conditional stay of execution of the ruling and order of the High Court (Ali-Aroni, J) dated 16th June 2009 granted
  2. 2.Applicant to deposit within 45 days the sum of Kshs.15,000,000/= (inclusive of the Kshs.3,000,000/= deposit previously covered by the consent order) in a joint interest-earning account in the name of the advocates' firms representing both parties, to be maintained until the appeal is determined or upon further orders of the Court
  3. 3.In default of the deposit, the application for stay to automatically stand dismissed
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 5366 of 1993
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules (read with Sections 3A and 3B of the Appellate Jurisdiction Act, Cap 9)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "Caltex Oil (kenya) Ltd (Now renamed Total Marketing Kenya Ltd) v Evanson Njiiri Wanjihia", Case Analysis (2009). Civil Appeal (Application) No. 190 of 2009 (UR 131/2009). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2009/93/eng@2009-10-16

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