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Court of AppealAllowedCivil Application E235 of 2021· [2022] KECA 172 (KLR)

Kenya Revenue Authority v Transouth Conveyors Limited

Court of Appeal
18 February 2022
KMK. M'INOTIJMJ. MOHAMMEDSKS. ole KANTAI
1,058 words in judgment
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The bottom line

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Kenya's Court of Appeal paused a Ksh.504 million judgment against KRA, confirming that even one arguable appeal point can justify a stay.

What this practically means

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Executive summary

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The Kenya Revenue Authority applied to the Court of Appeal under rules 1(2), 5(2)(b) and 75 of the Court of Appeal Rules and sections 3A and 3B of the Appellate Jurisdiction Act for stay of execution of a High Court judgment (Otieno, J., Mombasa, 17 May 2021, H.C.C.C. No. 26 of 2009) ordering it to pay Transouth Conveyors Limited Ksh.504,274,887, USD576,751.80 and exemplary damages of Ksh.1,000,000 with costs and interest. The dispute arose from the respondent's importation of 5,000MT of raw white sugar from Egypt under COMESA duty-free arrangements, which the Authority declined to process as outside the published importation period. The applicant filed a Notice of Appeal and a draft memorandum contending the judge erred on special damages, punitive damages and mitigation. At the virtual hearing on 19 January 2022 only the applicant appeared; the respondent, though served, filed no submissions. Applying the settled two-limb test, the court found the intended appeal arguable - a single arguable point sufficing - and held the appeal would be rendered nugatory absent stay, given the unrebutted assertion that the respondent might be unable to refund the huge judgment sum. The court allowed the motion, staying execution pending the intended appeal, with costs of the motion in the intended appeal. The ruling binds subordinate courts and the High Court on the applicable stay principles.

Key legal issues

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01

Arguability of the intended appeal

Holding

The draft grounds on special damages needing pleading and proof, punitive damages and failure to mitigate were arguable.

Reasoning

The court perused the draft memorandum of appeal and found the proposed grounds - that special damages must be pleaded and proved, that damages were punitive, and that the respondent failed to mitigate - to be arguable. It reiterated that an arguable point need not be one that will succeed, and a single arguable point suffices.

p. 2
02

Nugatory value of the intended appeal

Holding

The appeal would be rendered nugatory absent stay because the respondent may be unable to refund the huge judgment sum.

Reasoning

The respondent, though served, did not appear or file submissions and did not rebut the applicant's contention that it may be unable to refund the judgment sum if the appeal succeeded. The judgment sum of over Ksh.504 million and USD576,751.80 was held to be a huge amount, invoking the Reliance Bank v Norlake formulation of 'nugatory'.

p. 2

Legal principles established

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  • An applicant for stay pending appeal must demonstrate the appeal is arguable and that it would be rendered nugatory absent stay.
  • A single arguable point suffices; there is no requirement to raise a multiplicity of arguable points.
  • Nugatory value is assessed case by case and includes trifling, not only worthlessness.

Court orders

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  1. 1.Stay of execution of the High Court judgment dated 17th May 2021 pending hearing and determination of the intended appeal
  2. 2.Costs of the Motion to be in the intended appeal

Authorities

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Legislation

  • Court of Appeal Rulesrule 1(2)
  • Court of Appeal Rulesrule 5(2)(b)
  • Court of Appeal Rulesrule 75
  • Appellate Jurisdiction Actsection 3A
  • Appellate Jurisdiction Actsection 3B

Cases cited (4)

  • Stanley Kangethe Kinyanjui v Tony Ketter & 5 Others
    [2013] eKLR

    Summary of principles for stay of execution pending appeal - arguability and nugatory value.

  • Dennis Mogambi Mongare v Attorney General & 3 Others
    [2012] eKLR

    An arguable point on appeal is not one that will necessarily succeed.

  • Damji Pragji Mandaria v Sara Lee Household and Body Care (K) Limited
    Civil Application No. NAI 345 of 2004

    A single arguable point suffices for stay; no need for a multiplicity of arguable points.

  • Reliance Bank Limited v Norlake Investments Limited
    [2002] EA 227

    Meaning of 'nugatory' - worthless, futile, invalid or trifling, considered case by case.

On appeal from
High Court of Kenya at Mombasa
H.C.C.C. No. 26 of 2009
Jurisdiction invoked
Rules 1(2), 5(2)(b), 75 of the Court of Appeal Rules and Sections 3A and 3B of the Appellate Jurisdiction Act

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, "Kenya Revenue Authority v Transouth Conveyors Limited", Case Analysis (2022). Civil Application E235 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/172/eng@2022-02-18

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