Krystalline Salt Limited v Water Resource Management Authority [2018] KECA 155 (KLR)
The bottom line
#Kenya's Court of Appeal paused a Kshs. 3 billion water-fee judgment against Krystalline Salt, requiring only a Kshs. 100 million bank guarantee to keep the company afloat during appeal.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the intended appeal is arguable
- 2.Whether the appeal, if successful, would be rendered nugatory unless a stay of execution is granted
Key legal issues
#Whether the intended appeal is arguable
The intended appeal was arguable; the question whether sea water falls within the regulatory remit of the respondent under the Water Act 2002 is a matter requiring ascertainment by the Court.
The applicant raised grounds including whether the water used in salt extraction is sea water or mainland water, whether sea water is res nullius outside state regulation, and whether the Water Act 2002 envisages sea water as a leviable water resource. The court found these issues neither frivolous nor fictional, and one arguable ground suffices.
Whether the appeal would be rendered nugatory if stay is declined
Yes - the decretal sum of about Kshs. 3 billion far exceeded the applicant's assets of Kshs. 1 billion and its immediate payment would cripple the applicant as a going concern.
The applicant's assets were valued at Kshs. 1 billion, falling far short of the decretal amount; payment would destabilise or destroy the business, leaving no applicant to prosecute the appeal. However, because the decree was a money decree, the court ordered proportionate financial security of Kshs. 100 million rather than the onerous Kshs. 1.5 billion proposed.
What security is proportionate for a stay of a money decree
A reasonable financial security as a condition precedent - a bank guarantee of Kshs. 100 million within 60 days - was ordered.
The court held it must dispense proportionate justice in respect of a money decree. The respondent's proposed Kshs. 1.5 billion deposit was excessively onerous and tantamount to refusing stay; a Kshs. 100 million guarantee within 60 days balanced the parties' interests, with dismissal with costs as the default for non-compliance.
Legal principles established
#- Two principles guide the court under rule 5(2)(b): the appeal must be arguable, and the appeal must be rendered nugatory absent stay.
- In dealing with rule 5(2)(b) applications, the Court exercises original and discretionary jurisdiction, not an appeal from the judge's discretion.
- A single arguable ground of appeal suffices to meet the threshold that an intended appeal is arguable.
Court orders
#- 1.Stay of execution of the judgment and decree in Nairobi ELC Case No. 47 of 2013 dated 5 April 2018 granted as sought in prayer (2) of the Notice of Motion dated 4th June 2018
- 2.The applicant shall provide a banker's guarantee from a reputable bank for the sum of Kshs. 100 million
- 3.The guarantee shall be provided within 60 days of the ruling
- 4.In default of compliance, the application shall stand dismissed with costs without further application
- 5.If there is compliance, the costs of the application shall be in the intended appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- Environment and Land Court at Nairobi
- Nairobi ELC Petition No. 47 of 2013 (formerly Malindi ELC Case No. 29 of 2013)
- Jurisdiction invoked
- Sections 3, 3A and 3B of the Appellate Jurisdiction Act and rules 5(2)(b) and 42 of the Court of Appeal Rules
Relief refused
#Respondent's proposal that the applicant deposit Kshs. 1.5 billion in an interest-bearing account as security
The proposed amount was excessively onerous and would amount to a refusal of stay
Costs
If there is compliance with the conditions, the costs of the application shall be in the intended appeal; in default of compliance, the application stands dismissed with costs.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Firstly, an applicant is required to demonstrate that the appeal or intended appeal is arguable, or in other words, that it is not capricious or frivolous. Secondly, that unless he is granted a stay of execution or injunction as the case may be, the appeal or intended appeal, if successful, will be rendered nugatory.
an arguable ground of appeal is not one which must succeed but it should be one which is not frivolous; a single arguable ground of appeal would suffice to meet the threshold that an intended appeal is arguable.
we do find the proposed amount to be excessively onerous given the circumstances of the case. It would be tantamount to a refusal of an order of stay of execution were we to allow the application on that condition.
In the result, the application is allowed. In all the circumstances we grant an order for stay of execution as sought in prayer (2) of the Notice of Motion dated 4th June 2018
Issues in the judgment
#The respondent is described inconsistently in the grounds as both previously known as the Water Resource Management Authority and as established under the repealed Water Act 2002 and reconstituted under the Water Act 2016, without clarifying the change of name.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Krystalline Salt Limited v Water Resource Management Authority [2018] KECA 155 (KLR)", Case Analysis (2018). Civil Application No. 168 of 2018 (UR 137/2018). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/155/eng@2018-11-09
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.