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Court of AppealDismissedCivil Application E372 of 2021· [2022] KECA 860 (KLR)

Erdemann Property Limited & 2 others v Ethics and Anti-Corruption Commission & 5 others

Court of Appeal
10 June 2022
2,740 words in judgment
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The bottom line

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Kenya's Court of Appeal refused to pause an anti-corruption prosecution, confirming criminal trials continue during appeals unless exceptional circumstances are proven.

What this practically means

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Executive summary

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The applicants, Erdemann Property Limited and its directors Zeyun Yang and Zhang Jing, faced criminal charges before the Magistrates' Anti-Corruption Court under the Anti-Corruption and Economic Crimes Act for alleged irregular procurement and inflation of costs. Their constitutional petition in the High Court (ACEC Petition No. 20 of 2019, Wakiaga J) seeking to halt the prosecution was dismissed on 28 September 2021. They filed an appeal to the Court of Appeal and moved under Rule 5(2)(b) of the Court of Appeal Rules for stay of the criminal proceedings pending the appeal, contending that the prosecution was an abuse of prosecutorial power anchored on a commercial dispute with the Lake Basin Development Authority over Kshs. 645 million. The respondents opposed, arguing that the High Court judgment was a negative order incapable of being stayed and that the prosecution was a matter of public interest. The Court held that it has jurisdiction under Rule 5(2)(b) to stay criminal proceedings where those proceedings bear on the appeal, since they formed the substratum of the petition. It found the intended appeal arguable, but held that a criminal prosecution is not an irreversible event, that the trial court must ensure a fair trial, and that the applicants had not demonstrated the exceptional circumstances required to interfere with a prosecution, being merely speculative. The application was dismissed with costs. The ruling binds subordinate courts on the availability and limits of stay of criminal proceedings under Rule 5(2)(b).

Key legal issues

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01

Availability of stay of criminal proceedings under Rule 5(2)(b)

Holding

The Court has jurisdiction under Rule 5(2)(b) to stay criminal proceedings where they form the substratum of the appeal, even though the judgment below was a negative order incapable of execution.

Reasoning

Although the dismissal of the constitutional petition was a negative order incapable of execution, the criminal proceedings sought to be stayed formed the substratum of the suit in the High Court. Because the proceedings bear directly on the appeal, the Court has jurisdiction to entertain the stay application under Rule 5(2)(b).

p. 5
02

Arguability of the intended appeal

Holding

The applicants need only establish one arguable issue; the grounds raised were bona fide issues capable of argument and not frivolous.

Reasoning

The memorandum of appeal raised several issues including the applicable law, the propriety of the prosecution, alleged violation of constitutional rights, and the existence of an arbitration clause. The Court held that a single arguable issue suffices and found the grounds bona fide and capable of argument.

p. 5
03

Nugatory aspect and exceptional circumstances

Holding

Criminal prosecution is not an irreversible event since the Court can set aside trial court findings; the applicants failed to demonstrate exceptional circumstances and were merely jumping the gun.

Reasoning

The nugatory test asks whether what the applicants seek to stop is irreversible and not compensable in damages. A criminal prosecution is reversible on appeal. The criminal trial court is obliged to ensure a fair trial, and the applicants retain appeal rights; mere speculation of prejudice does not constitute exceptional circumstances.

Legal principles established

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  • Under Rule 5(2)(b), the Court of Appeal has power to grant stay of criminal prosecution proceedings where those proceedings have a bearing on the appeal before it.
  • An applicant under Rule 5(2)(b) must satisfy the twin requirements of arguability and that the appeal would be rendered nugatory absent a stay.
  • Stay of criminal proceedings pending appeal is granted only in exceptional circumstances.

Court orders

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  1. 1.The application for stay of proceedings in CM A.C.E.C. No. 26 of 2019 is dismissed with costs

Authorities

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Legislation

  • Anti-Corruption and Economic Crimes Act
  • Appellate Jurisdiction Actsections 3, 3A & 3B
  • Court of Appeal Rules, 2010Rule 5(2)(a) & (b), Rule 59, Rule 75
  • Constitution of Kenya, 2010Articles 10, 27, 28, 47, 50, 157, 159

Cases cited (9)

  • David Kipruto Chingi & Another v Director of Public Prosecutions & 2 Others
    [2016] eKLR

    Courts should not interfere with other State Organs unless they violate the Constitution; protection of DPP's independence.

  • Judicial Service Commission v Speaker of the National Assembly and 8 Others
    Nairobi HC Petition No. 518 of 2013

    Each State Organ must be allowed to function without interference.

  • Ian Gakoi Maina & 3 Others v Republic & Another
    [2020] eKLR

    Scope of Rule 5(2)(a) versus 5(2)(b); stay in criminal proceedings only in exceptional circumstances.

  • Jayendra Khimji Malde & 2 Others v Republic
    Criminal Application No. Nai 14 of 2010 (unreported)

    Rule 5(2)(a) as read with Rule 59 applies where the applicant has already been convicted and sentenced.

  • Republic v The Kenya Anti-Corruption Commission & 2 Others
    Civil Application No. Nai 51 of 2008 (Unreported)

    Jurisdiction to stay criminal proceedings depends on the prayers sought and the circumstances of each case.

  • Diana Kethi Kilonzo vs Republic
    [2016] eKLR

    Stay of execution, injunction or stay of proceedings is available where both sub rules 5(2)(a) and 5(2)(b) are invoked; considerations for stay of criminal proceedings.

  • Reliance Bank Ltd. -v- Norlake Investments Ltd.
    [2002] 1EA 227

    Twin requirements of arguability and nugatory aspect.

  • Githunguri -v- Jimba Credit Corporation Ltd. & Others (No.2)
    [1988] KLR 838

    Twin requirements of arguability and nugatory aspect.

  • Republic v. Kenya Anti-Corruption Commission & 2 others
    [2009] KLR 31

    Twin requirements of Rule 5(2)(b).

On appeal from
High Court of Kenya, Anti-Corruption and Economic Crimes Division
HC ACEC PET 20 OF 2019
Jurisdiction invoked
Sections 3, 3A & 3B of the Appellate Jurisdiction Act and Rule 5(2)(b) of the Court of Appeal Rules, 2010

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, "Erdemann Property Limited & 2 others v Ethics and Anti-Corruption Commission & 5 others", Case Analysis (2022). Civil Application E372 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/860/eng@2022-06-10

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