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Court of AppealPartially AllowedCivil Application No. Nai. 203 of 2016· [2019] KECA 928 (KLR)

Intercountries Importers and Exporters Limited v Teleposta Pension Scheme Registered Trustees & 5 others

Court of Appeal
22 February 2019
3,234 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 set aside a consent order because one party hid existing leases, proving that non-disclosure of material facts can undo even agreed court orders.

What this practically means

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Executive summary

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This was a ruling of the Court of Appeal at Nairobi (Waki, Warsame and Murgor, JJ.A) on a Notice of Motion dated 15th March 2017 in which Intercountries Importers and Exporters Limited sought to set aside a consent order of 27th September 2016 entered between it and Teleposta Pension Scheme Registered Trustees and adopted by the Court in a stay application, together with an order joining Total Security Limited and Le~ Molok Limited as interested parties. The dispute concerned LR No. 209/13238, whose ownership the High Court (Ougo, J) had on 27th July 2016 vested in the applicant as an innocent purchaser for value. The consent order had, pending the intended appeal, directed joint receipt of rents and permitted the applicant to enter lease agreements with effect from 1st November 2016. The applicant argued that the 1st respondent had, before the consent, granted fresh two-year leases to the interested parties which were never disclosed, amounting to misrepresentation and material non-disclosure. The 1st respondent denied fraud or misrepresentation and attributed the difficulties to the applicant's conduct. The court restated the settled principles from Brooke Bond Liebig v Mallya and Flora N. Wasike v Destimo Wamboko: a consent order may be set aside only for fraud, non-disclosure of material facts, mistake or other grounds justifying rescission of a contract. Finding that the 1st respondent did not deny the existence of the undisclosed 2015-2017 leases, the court held there was non-disclosure of material facts sufficient to set aside the consent order. The application was allowed, the consent order set aside, the main application reinstated for hearing on a priority basis, and costs made to abide the outcome of the main application. The joinder of the interested parties was not argued and no order was made on it.

Key legal issues

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01

Whether non-disclosure of material facts justified setting aside the consent order

Holding

The 1st respondent's failure to disclose the existence of fresh leases running from 1st July 2015 to 30th June 2017, when only leases expiring October 2016 were mentioned, constituted non-disclosure of material facts sufficient to set aside the consent order.

Reasoning

The court found that the 1st respondent did not deny the existence of the 2015-2017 leases nor that the applicant and the Court were uninformed of them. The consent order's liberty to enter fresh leases from 1st November 2016 presupposed that the only tenancies were those expiring 30 days after the consent. Had the applicant known of the subsisting leases, it might not have consented. Full disclosure of prevailing tenancies was therefore absent, satisfying the threshold for setting aside.

p. 4
02

The governing principles for setting aside consent orders

Holding

Adopting Brooke Bond Liebig v Mallya and Flora N. Wasike v Destimo Wamboko, a consent judgment binds parties and may be set aside only on grounds of fraud, collusion, absence of consensus, public policy, mistake, non-disclosure of sufficient material facts, or other grounds available for rescission of a contract.

Reasoning

The court restated the settled principles: a consent order made with the consent of counsel is binding on all parties and those claiming under them, and cannot be varied or discharged unless obtained by fraud or collusion, contrary to public policy, without sufficient material facts, or for a reason which would enable a court to set aside an agreement. These authorities were applied to the facts of the present application.

p. 4
03

Whether alleged amendments to the consent order should be addressed

Holding

The court declined to address the alleged amendments to the consent order because it could not locate them on the record.

Reasoning

Counsel for the applicant referred to amendments to the consent order, but upon close scrutiny of the record the court was unable to locate them. In the absence of any documentary foundation, the court held it was not in order to address the alleged amendments, confining its determination to the consent order as adopted.

p. 4

Legal principles established

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  • A consent order may only be set aside where it is demonstrated that it was procured through fraud, non-disclosure of material facts or mistake, or for a reason which would enable a court to set aside an agreement

Court orders

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  1. 1.The consent order recorded on 27th September 2016 is set aside
  2. 2.The main application, Civil Application No. Nai. 203 of 2016 filed on 2nd September 2018, is reinstated for hearing
  3. 3.The main application to be heard on a priority basis
  4. 4.Costs of the application to abide the outcome of the main application
On appeal from
High Court
Jurisdiction invoked
Inherent appellate jurisdiction of the Court of Appeal to set aside a consent order adopted by it (arising from Civil Application No. Nai. 203 of 2016, a stay application in intended appeal against High Court judgment)

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, "Intercountries Importers and Exporters Limited v Teleposta Pension Scheme Registered Trustees & 5 others", Case Analysis (2019). Civil Application No. Nai. 203 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/928/eng@2019-02-27

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