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Court of AppealDismissedCivil Appeal No. 21 of 2019· [2019] KECA 121 (KLR)

Kenya Revenue Authority v Mohamed Saleh & Company Limited [2019] KECA 121 (KLR)

Court of Appeal of Kenya
28 November 2019
2,400 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that settlement agreements your lawyer signs bind you, and appeals cannot raise new arguments they never filed.

What this practically means

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Executive summary

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This was the Kenya Revenue Authority's appeal against a High Court judgment (P.J.O. Otieno, J., 31 January 2018) awarding Mohamed Saleh & Company Limited storage and demurrage charges arising from KRA's failure to comply with a mandamus order directing it to release the respondent's sugar imports under the COMESA zero-duty tariff. The claims rested on unappealed judicial review orders requiring KRA to release the sugar and bear storage, demurrage and related charges. During trial, counsel recorded a consent judgment for USD 104,160 (50% of the demurrage claim), leaving interest and costs to the judge, who awarded the proved storage charges of Kshs.5,523,731 with interest at 14% per annum. The Court of Appeal framed three issues: the consent judgment, the storage charges, and the interest rate. It dismissed all grounds. Applying Kenya Commercial Bank v Specialized Engineering and Brooke Bond Liebig v Mallya, it held the consent judgment binding, as no application to set it aside had been made and no fraud, collusion or misapprehension was proved, counsel having implied authority to compromise. The storage charges were proved by evidence, the appellant's contrary witness testimony being mere hearsay. The challenge to the 14% interest rate was rejected summarily under rule 104(a) of the Court of Appeal Rules as it did not feature in the memorandum of appeal and leave was not sought. The appeal was dismissed with costs to the respondent. This judgment binds lower courts on the principles for setting aside consent orders and on the prohibition against arguing grounds outside the memorandum of appeal without leave.

Key legal issues

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01

Validity and binding effect of the consent judgment for USD 104,160

Holding

The consent judgment was binding; the appellant neither applied to set it aside nor proved fraud, collusion, or misapprehension of material facts, and counsel had implied authority to compromise

Reasoning

The Court applied the settled principles in Kenya Commercial Bank v Specialized Engineering and Brooke Bond Liebig v Mallya. No formal application to set aside the consent was made; the issue was raised only in submissions. Counsel acting bona fide has general authority to compromise absent an express negative direction communicated to the other side, none of which was shown.

p. 2
02

Whether the Kshs.5,523,731 was proved as storage charges

Holding

The respondent proved payment of the sum as storage charges; the appellant's witness's assertion that it was handling charges was hearsay

Reasoning

The respondent's witness tendered evidence of storage charges for 193 days supported by a debit note, while the appellant's witness admitted he did not handle the matter in 2003 and relied on information from undisclosed persons given in 2009. The trial court's finding that the proved sum was storage charges was sound and unimpeached.

p. 3
03

Whether a ground not in the memorandum of appeal (interest rate) could be argued

Holding

No; under rule 104(a) such a ground must be rejected summarily absent leave

Reasoning

The ground challenging the 14% interest rate did not appear in the memorandum of appeal and no leave was sought. Rule 104(a) of the Court of Appeal Rules prohibits arguing grounds outside the memorandum without leave. The Court noted court rates had risen from 12% in 2004 to 14% by the date of judgment.

p. 3

Legal principles established

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  • A consent order entered into by duly instructed counsel is binding and cannot be set aside or varied unless obtained by fraud or collusion, by agreement contrary to the policy of the court, without sufficient material facts, or in misapprehension of facts
  • A duly instructed advocate has implied general authority to compromise and settle the action, and a client cannot rely on an unstated limitation of that authority unless it was brought to the notice of the other side
  • A party may not, without leave of the Court, argue a ground of appeal not specified in the memorandum of appeal or notice of cross-appeal

Court orders

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  1. 1.Appeal dismissed
  2. 2.Costs of the appeal awarded to the respondent

Authorities

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Legislation

  • Customs and Excise ActCap 472 (now repealed)
  • Civil Procedure Actsection 27
  • Court of Appeal Rulesrule 104(a)

Cases cited (2)

  • Kenya Commercial Bank Limited v Specialized Engineering Company Limited
    [1982] KLR 485
  • Brooke Bond Liebig (T) Ltd v Mallya
    [1975] EA 266
On appeal from
High Court of Kenya at Mombasa
H.C. Civil Suit No. 221 of 2004
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal Rules / Article 164 of the Constitution (as an appeal from the High Court)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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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, "Kenya Revenue Authority v Mohamed Saleh & Company Limited [2019] KECA 121 (KLR)", Case Analysis (2019). Civil Appeal No. 21 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/121/eng@2019-11-28

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