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Court of AppealPartially AllowedCivil Appeal (Nairobi)· [2023] KECA 581 (KLR)

Capital Markets Authority v Ciano & another (Civil Appeal 314 of 2018) [2023] KECA 581 (KLR)

Court of Appeal
26 May 2023
HOHannah OkwenguJMJ. MativoGNG. W. Ngenye-Macharia
6,031 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 reinstated CMA enforcement action against a former Uchumi CEO, ruling he must first use the Capital Markets Tribunal before going to court.

What this practically means

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Executive summary

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The Capital Markets Authority appealed against a High Court judgment (Odunga, J, April 9, 2018) in Nairobi Judicial Review No 62 of 2016, which quashed a notification of enforcement action fining Jonathan Irungu Ciano Kshs 5,000,000 and banning him from holding office in listed companies, on the ground that he had not been furnished in good time with the KPMG forensic audit report relied upon. The Court of Appeal raised, on its own motion, a point not urged by the parties or the trial court: exhaustion of remedies. The Capital Markets Act establishes a Capital Markets Tribunal with appeal to the High Court on points of law, and section 9(2) and (3) of the Fair Administrative Action Act mandatorily requires exhaustion of such remedies before judicial review, subject only to exemption on application under section 9(4) upon proof of exceptional circumstances and the interest of justice. The Court held the judicial review proceedings offended the exhaustion doctrine and the trial court ought to have declined jurisdiction even on its own motion. On the merits, applying the context-sensitive standard of procedural fairness under Article 47 and section 4 of the FAA Act, the Court found the 1st respondent received the KPMG report four days before the hearing, fully participated with counsel, answered all questions, discredited the report, and raised no objection or adjournment request; his late-service complaint was an afterthought. Allowing the appeal, the Court set aside the High Court judgment, substituted an order dismissing the judicial review application, and ordered the 1st respondent to bear the costs of the appeal and the trial court.

Key legal issues

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01

Exhaustion of administrative remedies

Holding

The judicial review proceedings offended the doctrine of exhaustion; the Capital Markets Act provides a clear dispute resolution mechanism with an appellate process, and section 9(2) and (3) of the FAA Act is couched in mandatory terms.

Reasoning

The Capital Markets Act establishes a Capital Markets Tribunal to which decisions of the Authority are appealable, with appeal to the High Court on points of law only. Section 9(2) of the FAA Act bars judicial review unless internal and statutory remedies are first exhausted; the word 'shall' is mandatory. Exemption is only available on application under section 9(4) upon proof of exceptional circumstances and the interest of justice. The trial court ought to have declined jurisdiction even on its own motion.

02

Fair administrative action and adequate notice

Holding

There was no breach of procedural fairness; the 1st respondent received the KPMG report four days before the hearing, fully participated with his advocate, answered the questions and even discredited the report, without objection or request for adjournment.

Reasoning

Fairness is context sensitive; the objective test asks whether a reasonable person would conclude the affected person was notified of the allegations and afforded a reasonable opportunity to respond. The notice to show cause was detailed; the 1st respondent gave a detailed defence. The complaint about late service, first raised in the High Court, was an afterthought by a party who lost after full participation.

p. 15

Legal principles established

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  • Where a statute establishes a clear dispute resolution mechanism, an aggrieved party must exhaust it before invoking the High Court's judicial review jurisdiction; section 9(2) and (3) of the FAA Act is mandatory and exemption requires exceptional circumstances shown on application under section 9(4).
  • The degree of fairness under the right to fair administrative action is context sensitive; a party who fully participates in proceedings without objection or request for adjournment cannot later allege breach of procedural fairness.

Court orders

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  1. 1.Appeal allowed
  2. 2.Judgment of the High Court dated 9th April, 2018 set aside and substituted with an order dismissing the judicial review application before the High Court
  3. 3.The 1st respondent to bear the costs of the appeal and the costs before the trial court

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 47
  • Constitution of Kenya, 2010Article 50
  • Constitution of Kenya, 2010Article 22(3)
  • Constitution of Kenya, 2010Article 159
  • Capital Markets Actsection 5
  • Capital Markets Actsection 35A
  • Capital Markets Actsection 34A
  • Fair Administrative Action Actsection 2
  • Fair Administrative Action Actsections 3, 4(1), (2), (3)(a)-(g), (4), 6, 7(1)(a) & (2)
  • Fair Administrative Action Actsection 9(1)-(5)

Cases cited (11)

  • Judicial Service Commission v Mbalu Mutava and Another (2015) eKLR
    (2015) eKLR
  • Selvajan v Race (1976) 1 All ER 12
    (1976) 1 All ER 12
  • OL Pejeta Ranching Limited v David Wanjau Muhoro (2017) eKLR
    (2017) eKLR
  • Republic v Independent Electoral and Boundaries Commission (I.E.B.C.) Ex parte National Super Alliance (NASA) Kenya & 6 others (2017) eKLR
    (2017) eKLR
  • Speaker of National Assembly v Karume (1992) KLR 21
    (1992) KLR 21
  • Geoffrey Muthinja Kabiru & 2 Others v Samuel Munga Henry & 1756 Others (2015) eKLR
    (2015) eKLR
  • In the Matter of the Mui Coal Basin Local Community (2015) eKLR
    (2015) eKLR
  • Council of Civil Service Unions v Minister for the Civil Service (1985) 1 AC 374
    (1985) 1 AC 374
  • Kioa v West (1985) 159 CLR 550
    (1985) 159 CLR 550
  • R v Secretary of State for the Home Department, ex parte Doody [1994] 1 AC 531
    [1994] 1 AC 531
  • Baker v Canada (Minister of Citizenship & Immigration) 2 SCR 817
    2 SCR 817
On appeal from
High Court
Nairobi Judicial Review Application No 62 of 2016
Jurisdiction invoked
Section 9(5) of the Fair Administrative Action Act - appeal from judicial review jurisdiction of 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, "Capital Markets Authority v Ciano & another (Civil Appeal 314 of 2018) [2023] KECA 581 (KLR)", Case Analysis (2023). Civil Appeal (Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/581/eng@2023-05-26

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