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Court of AppealAllowedCivil Application E448 of 2021· [2022] KECA 480 (KLR)

Jambo East Africa Limited & another v Harit Sheth Advocates & 6 others

Court of Appeal
25 March 2022
KMK. M'INOTIJMJ. MOHAMMEDKLDR. K. I. LAIBUTA
3,695 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal allowed Jambo East Africa to keep a KSh 314 million escrow release on hold until its appeal is heard.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal at Nairobi on a Notice of Motion dated 10th December 2021 by Jambo East Africa Limited and Catalyst Britania Brands Limited seeking stay of execution of a ruling of the High Court (Mabeya, J.) dated 8th December 2021, pending an intended appeal. The dispute arises from a business transfer agreement under which a retention amount was deposited in escrow; an LCIA arbitral award directed its release to the applicants, but the High Court in interpleader proceedings ordered the retention amount released to the 2nd to 6th respondents, holding the award unenforceable on public policy grounds. At the hearing, the 2nd to 6th respondents raised a preliminary objection that the applicants, having allegedly disobeyed the High Court order, should not be heard until they purge their contempt. The Court, applying Communications Commission of Kenya v Terra Radio Limited and AB v RB by parity of reasoning, held that no competent court has adjudged the applicants in contempt and no proper contempt proceedings have been instituted, and dismissed the objection. On the merits under Rule 5(2)(b), applying Trust Bank v Investech Bank and Stanley Kang'ethe Kinyanjui v Tony Ketter, the Court found the intended appeal arguable on the jurisdiction of the High Court to entertain the interpleader proceedings and on entitlement to the retention amount, and found that release of the retention amount would be irreversible, rendering the appeal nugatory. The application was allowed, costs to abide the outcome of the intended appeal, and the intended appeal was directed to be heard on a priority basis.

Key legal issues

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01

Right of audience of a party alleged to be in contempt

Holding

The applicants have a right of audience; no competent court has adjudged them in contempt and no proper contempt proceedings have been instituted, so the 2nd to 6th respondents' objection fails.

Reasoning

Applying Communications Commission of Kenya v Terra Radio Limited by parity of reasoning, the court held that before it can deny a party audience on contempt grounds, the alleging party must first institute proper contempt proceedings and a competent court must adjudicate the contempt. The applicants do not admit contempt and have raised non-frivolous grounds, including the stay application itself. The preliminary objection was therefore dismissed.

p. 4
02

Arguability of the intended appeal

Holding

The intended appeal is arguable; it is arguable whether the High Court had jurisdiction to entertain the interpleader proceedings and which party is entitled to the retention amount.

Reasoning

Applying Trust Bank v Investech Bank and Stanley Kang'ethe Kinyanjui v Tony Ketter, the court needed only a single bona fide arguable ground without making definitive findings of fact or law. It found arguable the questions of the High Court's jurisdiction over the interpleader proceedings despite the arbitration clause, and entitlement to the retention amount, without saying more to embarrass the bench hearing the main appeal.

p. 6
03

Nugatory aspect

Holding

The appeal would be rendered nugatory if stay is not granted, because release of the retention amount to the 2nd to 6th respondents would be irreversible.

Reasoning

Applying the Kang'ethe Kinyanjui formulation that nugatory depends on whether what is sought to be stayed is reversible or compensable by damages, the court weighed the conflicting claims of both parties on their merits. It found that if the retention amount of KShs. 314,811,882.92 plus interest were released and the intended appeal succeeded, the release would be irreversible. Both twin principles were thus satisfied.

p. 7

Legal principles established

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  • There is no general rule that a court cannot hear a person in contempt of court before they have purged their contempt; whether to hear a contemnor is a matter of discretion depending on the circumstances of each case.
  • A party alleging contempt must first initiate proper contempt of court proceedings and obtain an adjudication by a competent court before a court can be moved to deny the alleged contemnor audience.
  • To succeed under Rule 5(2)(b), an applicant must show that the appeal or intended appeal is arguable and that, unless stay is granted, the appeal if successful will be rendered nugatory.

Court orders

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  1. 1.Preliminary objection raised by the 2nd to 6th respondents dismissed
  2. 2.Application dated 10th December, 2021 allowed - stay of execution of the ruling and order of Mabeya, J. dated 8th December, 2021 granted pending the hearing and determination of the intended appeal
  3. 3.Costs to abide the outcome of the intended appeal
  4. 4.Intended appeal to be heard on a priority basis

Authorities

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Legislation

  • Court of Appeal RulesRule 5(2)(b)
  • Constitution of KenyaArticle 50(1)

Cases cited (9)

  • Communications Commission of Kenya vs. Terra Radio Limited
    [2013] eKLR

    Courts' inherent power to ensure compliance with their orders; a court may refuse to hear a contemnor until contempt is purged.

  • The Board of Governors, Moi High School, Kabarak vs Malcom Bell & Another

    Power to safeguard itself against contemptuous or disruptive intrusion as an attribute of inherent power.

  • Hadkinson Vs Hadkinson
    (1952) 2 ALL ER 567

    Disobedience of a court order is not of itself a bar to being heard; discretion to refuse hearing where disobedience impedes justice.

  • AB & another vs. RB
    [2016] eKLR

    No general rule that a court cannot hear a person in contempt before purging contempt; Article 50(1) fair hearing rights.

  • Rose Detho v. Ratilal Automobiles Ltd & 6 Others
    CA No. 304 of 2006 (171/2006 UR)

    No absolute legal bar to hearing a contemnor who has not purged contempt; discretionary depending on circumstances.

  • Burchell v. Burchell Case No 364/2005

    Importance to the rule of law of compliance with and enforcement of court orders.

  • Trust Bank Limited and Another v. Investech Bank Limited and 3 Others
    [2000] eKLR

    Twin principles under Rule 5(2)(b): arguability and nugatory aspect.

  • Stanley Kang'ethe Kinyanjui v Tony Ketter & 5 Others
    [2013] eKLR

    Definition of arguable appeal and meaning of nugatory; no definitive findings at interlocutory stage.

  • Niazsons (K) Ltd V China Road & Bridge Corporation Kenya
    (2001) eKLR

    Cited by 2nd to 6th respondents: existence of an arbitration clause does not oust the jurisdiction of the Court.

On appeal from
High Court of Kenya at Nairobi
Miscellaneous Civil Case No. E054 of 2020
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 (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, "Jambo East Africa Limited & another v Harit Sheth Advocates & 6 others", Case Analysis (2022). Civil Application E448 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/480/eng@2022-03-25

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