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Court of AppealAllowedCivil Application No. 47 of 2016 (UR 40/16)· [2016] KECA 76 (KLR)

China Road & Bridge Corporation (K) Ltd v African Gas & Oil Co Ltd & 3 others [2016] KECA 76 (KLR)

Court of Appeal
25 November 2016
3,193 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~13 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal halted a Kshs 2 billion payment order, ruling that unproven contempt claims don't disqualify a party from staying execution pending appeal.

What this practically means

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Executive summary

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China Road and Kenya Railways sought stay of execution, under rule 5(2)(b) of the Court of Appeal Rules, of a ruling of the ELC at Mombasa (Omollo, J.) dated 21 July 2016. The impugned ruling directed the respondents to deposit Kshs 519,913,977 and Kshs 1,475,486,485 in an escrow interest-earning account within 21 days and confirmed ex parte conservatory orders restraining construction on compulsorily acquired Miritini properties pending payment of compensation. The two civil applications were consolidated. African Gas opposed, contending first that the applicants had violated the conservatory orders by continuing construction, as evidenced by photographs, and had come to court with dirty hands. The court examined the photographs and found no basis for a finding of contempt capable of disentitling the applicants to the equitable and discretionary remedy of stay. Applying the twin conditions for rule 5(2)(b) relief, the court held the intended appeals were arguable, raising issues such as whether title had passed upon compulsory acquisition, whether the Land Act permitted possession before compensation in cases of urgent necessity, whether injunctive conservatory orders were justified for liquidated monetary claims, and whether the deposit order was made without being sought or without a hearing. On the nugatory test, the court noted the massive undisputed losses from halted construction and held both conditions were satisfied. The court allowed the consolidated applications, stayed execution of the ELC ruling and order pending the intended appeals, directed the appeals be filed within 30 days, and ordered costs of the application to abide the outcome of the appeals.

Key legal issues

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01

Whether the alleged violation of conservatory orders barred the applicants from obtaining stay of execution

Holding

The court made no finding of violation and held the point did not disentitle the applicants to the equitable and discretionary remedy of stay.

Reasoning

African Gas relied on photographs said to show continuing construction works. The court examined the six photographs: four showed only equipment with no persons, making it impossible to tell whether work was going on; the other two showed people standing by, but African Gas itself acknowledged the parties had been allowed access to secure equipment. No evidence of initiatives suggestive of contempt was before the court, so no finding of violation could be made.

p. 4
02

Whether the intended appeals were arguable

Holding

The intended appeals were found not to be frivolous, raising several legitimate and arguable points.

Reasoning

The court reviewed the ruling and draft grounds of appeal and identified multiple bona fide issues: whether title to compulsorily acquired properties had passed; whether the Land Act permitted possession before compensation in urgent necessity; whether injunctive conservatory orders were justified for liquidated-sum claims; whether African Gas' title was finally established; whether the deposit order was made without being sought or heard; and whether an undertaking on damages ought to have been made. It declined to elaborate further lest it prejudge the appeal.

p. 5
03

Whether the intended appeals would be rendered nugatory without stay

Holding

The court was satisfied that the nugatory test was met, given the massive losses the conservatory orders were occasioning and the petitioners' failure to seriously dispute them.

Reasoning

The court noted that what renders an appeal nugatory depends on the circumstances of each case and that the court must weigh the respective hardship each party stands to suffer, not merely the ability to pay. The applicants averred massive daily losses from idle equipment and a mobilised workforce; the petitioners did not seriously dispute those averments, relying instead on the unproven contempt allegation. Both rule 5(2)(b) conditions were satisfied.

p. 5

Legal principles established

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  • To obtain stay of execution under rule 5(2)(b), an applicant must satisfy both the arguability and nugatory tests.
  • An arguable appeal need not succeed; a single bona fide issue deserving of full consideration suffices.
  • Where an applicant seeks an equitable discretionary remedy, unproven allegations of contempt will not disqualify them absent evidence of initiatives suggestive of contempt.

Court orders

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  1. 1.Stay of execution of the ruling and order of the ELC dated 21st July 2016 pending the filing, hearing and determination of the intended appeals
  2. 2.The intended appeal to be filed within 30 days from the date of the ruling
  3. 3.Costs of the application to abide the outcome of the intended appeal

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 68(v)
  • Land ActSection 120(2)
  • Court of Appeal RulesRule 5(2)(b)

Cases cited (13)

  • Titus Gicharu Mwangi v. Mary Nyambura & Another
    CA. No. Nai. 162 of 2013 (UR 111/2013)
  • David Kamau Gakuru v. National Industrial Credit Bank Ltd
    CA No. 84 of 2001
  • Jaribu Holdings Ltd v. Kenya Commercial Bank Ltd
    CA. No. 314 of 2007
  • Kenya Ports Authority v. James Nderitu Gachagua t/a Jagar Consultants
    CA. No. Nai. 181 of 1998
  • Kenya Railways Corporation v. Edermann Properties Ltd
    CA. No. Nai. 176 of 2012
  • Kenya Tea Growers Association & Another v. Kenya Planters & Agricultural Workers Union
    CA. No. Nai. 72 of 2001
  • Central Bank of Kenya Deposit Protection Fund Board v. Uhuru Highway Development Ltd & Others
    CA. No. 95 of 1999
  • David Morton Silverstein v Atsango Chesoni
    CA No. Nai. 189 of 2001
  • Kenya Airports Authority v. Mitu-Bell Welfare Society & Another
    CA No. 114 of 2013 (UR 77/2013)
  • Oraro & Rachier Advocates v. Co-operative Bank of Kenya Ltd
    CA No. Nai. 358 of 1999
  • Reliance Bank Ltd v. Norlake Investments Ltd
    [2002] 1 EA 232
  • Nation Media Group & 2 Others v. John Joseph Kamotho & 3 Others
    CA. No. 108 of 2006
  • Erwen Electronics Ltd & 3 Others v. Radio Africa Ltd & Another
    CA. No. Nai. 82 of 2011
On appeal from
High Court of Kenya at Mombasa (Environment and Land Court)
ELC Const. Petitions Nos. 170 & 171 of 2016
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (6)

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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, "China Road & Bridge Corporation (K) Ltd v African Gas & Oil Co Ltd & 3 others [2016] KECA 76 (KLR)", Case Analysis (2016). Civil Application No. 47 of 2016 (UR 40/16). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2016/76/eng@2016-11-25

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