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Court of AppealAllowedCivil Application No. 51 of 2014

Akarim Agencies Company Limited & 2 others v International Air Transport Association & another [2014] KECA 498 (KLR)

Court of Appeal
27 June 2014
PKP. O. KiageSKS. Gatembu KairuJMJ. Mohammed
1,467 words in judgment
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The bottom line

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Kenya's Court of Appeal halted drastic asset-freezing orders against Akarim Agencies, confirming appeals with real issues and secured claimants justify a stay.

What this practically means

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Executive summary

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The applicants sought stay of execution, under Rule 5(2)(b) of the Court of Appeal Rules, sections 3A and 3B of the Appellate Jurisdiction Act and Article 159(2)(d) of the Constitution, of orders made by the High Court (Gikonyo, J) on 11th March 2014 in H.C.C.C 15 of 2014. Those orders comprised asset tracing and following, disclosure of assets up to Kshs.350,000,000, and a freezing order over the applicants' properties, granted in a suit by IATA and Mercantile Insurance based on a 1994 passenger sales agency agreement in which the applicants were said to have sold air tickets and failed to remit proceeds. The applicants argued they had an arguable appeal, that the judge granted reliefs not pleaded, and that the orders were drastic and invasive; the respondents contended that monies collected were held in trust under the agreement, that the applicant was technically insolvent, and that no nugatory effect had been demonstrated. The Court found the intended appeal arguable and, on the nugatory limb, took into account that the respondents' substantive claim is for a liquidated amount and that they are secured under a policy of insurance should the applicants' liability be established. It accordingly granted stay of the High Court orders pending the hearing and determination of the intended appeal, with costs of the application to abide the appeal. The ruling is binding on subordinate courts and High Courts on the applicable Rule 5(2)(b) principles.

Questions the Court framed

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

  1. 1.Whether the intended appeal is arguable
  2. 2.Whether the intended appeal will be rendered nugatory unless stay of execution of the High Court orders is granted

Key legal issues

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01

Whether the intended appeal is arguable

Holding

The Court found the intended appeal arguable, noting the applicants' grievances that the High Court granted unpleaded reliefs and issued drastic and invasive freezing and tracing orders.

Reasoning

The Court noted the applicants' complaints that the High Court granted orders that were not sought, delved into unpleaded matters, and that the freezing and tracing orders were drastic and invasive. On those grounds it could not dismiss the application as frivolous, satisfying the first limb of the Rule 5(2)(b) test.

p. 3
02

Whether the intended appeal will be rendered nugatory absent stay

Holding

The nugatory test was satisfied because the substantive claim is for a liquidated amount and the respondents are secured under a policy of insurance, so the respondents would not suffer irreparable loss if stay were granted.

Reasoning

The Court weighed that the respondents' substantive relief in the plaint is for a liquidated amount, and that if the applicants' liability is established, the respondents are secured under a policy of insurance. Given that security, granting stay would not irreparably harm the respondents, while refusing it could render the appeal nugatory.

p. 3

Legal principles established

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  • Rule 5(2)(b) of the Court of Appeal Rules requires an applicant for stay pending appeal to demonstrate that the intended appeal is arguable and that it would be rendered nugatory if stay is not granted.

Court orders

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  1. 1.Stay of the orders given by the High Court on 11th March 2014 in respect of the respondents' motion dated 17th January 2014, pending the hearing and determination of the intended appeal
  2. 2.Costs of the application to abide the outcome of the appeal

The bench

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

PK
majority
SK
majority
JM
majority
On appeal from
High Court of Kenya at Nairobi
H.C.C.C 15 of 2014
Jurisdiction invoked
Article 159(2)(d) of the Constitution; sections 3A and 3B of the Appellate Jurisdiction Act; Rule 5(2)(b) of the Court of Appeal Rules

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.

We are unable to say that the intended appeal is frivolous. We think the intended appeal is arguable.
p. 3Arguability of intended appeal
The orders given by the High Court on 11th March 2014 in respect of the respondents' motion dated 17th January 2014 are hereby stayed pending the hearing and determination of the intended appeal.
p. 3Final orders - stay granted

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, "Akarim Agencies Company Limited & 2 others v International Air Transport Association & another [2014] KECA 498 (KLR)", Case Analysis (2014). Civil Application No. 51 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2014/498/eng@2014-06-27

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