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Court of AppealAllowedCivil Application E454 & E460 of 2023 (Consolidated)· [2023] KECA 1670 (KLR)

Kenya Electricity Generating Company PLC v Lantech (Africa) Limited & 4 others

Court of Appeal
15 December 2023
6,160 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 stopped enforcement of a USD 26.7 million judgment against KenGen, ruling the appeal was arguable and the money could not be recovered if paid out.

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 (M'Inoti, Ngugi and Tuiyott, JJA) on two consolidated motions under Rule 5(2)(b) of the Court of Appeal Rules by KenGen and GDC seeking stay of execution of a garnishee ruling of the High Court (Mabeya, J) of 20th September 2023, which made a decree nisi absolute against them for about USD 26,687,017.47 in favour of Lantech, arising from an arbitral award against GDC. Lantech raised preliminary objections: that the notices of appeal were incompetent for want of leave under section 75 of the Civil Procedure Act, were defective under Rule 77(3)(a), and that the applications were an abuse of process given parallel High Court proceedings. The court rejected all objections. It held that whether leave was required turned on arguable questions about third-party claims under Order 23 rules 6 and 7 CPR; that the notice of appeal read with the draft memorandum sufficed for a stay application; that KenGen was a victim, not an abuser, of process, the High Court having issued rushed orders including a payout directed at a non-party bank on misinformation; and that GDC's review application did not bar its stay motion. On the merits, the intended appeals were arguable, and the appeals would be rendered nugatory because Lantech gave no evidence of ability to repay the colossal public funds at stake. Both applications were allowed with costs to be paid by Lantech.

Key legal issues

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01

Whether leave to appeal was required for the garnishee ruling

Holding

The notices of appeal could not be struck down at the stay stage because whether the ruling was a trial of a third-party claim under Order 23 rules 6 and 7 CPR, appealable as of right, was itself arguable.

Reasoning

The court held that whether Co-op Bank was a third party in terms of rules 6 and 7 of Order 23 CPR, and whether the receivables were encumbered, required involved argument. Such questions cannot be resolved summarily on a stay application and belong to a striking-out motion under Rule 84.

p. 7
02

Abuse of process

Holding

KenGen was not an abuser of process but a victim of it, having been overtaken by rushed High Court enforcement orders; GDC's parallel review application did not bar its stay motion.

Reasoning

The High Court's orders of 26th and 27th September 2023 leapfrogged KenGen's pending stay application and directed a non-party bank to pay USD 13,400,000 without hearing it. Filing a notice of appeal does not bar review; whether simultaneous review and stay motions are abusive depends on unique circumstances.

p. 8
03

Nugatory effect and ability to repay

Holding

The decretal sum of about USD 26,687,017.47 was public money; Lantech's bare assertion of ability to repay, without evidence, failed, so the appeals would be rendered nugatory without stay.

Reasoning

Relying on ABN Amro Bank N.V v Le Monde Foods Limited, the court held Lantech bore an evidential burden to demonstrate ability to refund the colossal sum. Its unsupported assertion meant the court must conclude it is unable to repay, imperilling the intended appeals.

p. 11
04

Arguability of the intended appeals

Holding

The intended appeals were arguable: the finding that steam-charge proceeds were not assigned to Co-op Bank despite the deed of assignment, and the trial court's suo moto reversal of its own orders, deserved appellate attention.

Reasoning

The court identified a single arguable point on the 20th September 2023 ruling - inconsistency between protecting the receivables account and finding no proof of assignment - and a non-trivial point on the 28th September 2023 orders where the trial court purported to sit on appeal over its own orders.

p. 11

Legal principles established

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  • Both conditions for stay under Rule 5(2)(b) - arguability and nugatory effect - must be satisfied.
  • A stay application against an order appealable only with leave, where leave was not obtained, fails only where it is crystal clear that leave was required and not obtained; otherwise the point awaits a striking-out motion.
  • For a stay application, a notice of appeal read with the draft memorandum of appeal suffices even if the notice itself does not specify the part challenged.
  • Filing a notice of appeal does not bar a party from seeking review of the same decision in the court below; each case turns on its circumstances.
  • A party asserting ability to repay a decretal sum bears an evidential burden to prove it; a bare assertion without evidence fails.

Court orders

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  1. 1.The applications dated 29th September 2023 and 4th October 2023 are allowed
  2. 2.Stay of execution of the High Court ruling of 20th September 2023 pending the hearing and determination of the intended appeals
  3. 3.Costs shall be paid by Lantech

Authorities

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Legislation

  • Civil Procedure Actsection 75
  • Civil Procedure Actsection 80
  • Civil Procedure RulesOrder 23 rules 1, 5, 6 and 7
  • Civil Procedure RulesOrder 43 rule 1
  • Civil Procedure RulesOrder 40 rule 7
  • Civil Procedure RulesOrder 45
  • Court of Appeal RulesRule 5(2)(b)
  • Court of Appeal RulesRule 77(3)
  • Court of Appeal RulesRule 84
  • Arbitration Actsection 35

Cases cited (4)

  • Peter Nyaga Muvake v Joseph Mutunga
    [2015] eKLR

    Stay application against an order appealable only with leave, where leave not obtained, is dead in the water.

  • Nguruman Limited v Jan Bonde Nielsen & 2 others
    [2014] eKLR, Nairobi Civil Appeal No. 77 of 2012

    Distinction between review under section 80 CPA/Order 45 and discharge or variation under Order 40 rule 7; whether appeal survives depends on extent of variation.

  • Multichoice (Kenya) Ltd v Wananchi Group (Kenya) Limited & 2 Others
    [2020] eKLR

    Filing a notice of appeal only cannot bar an intending appellant from seeking review of the same decision under Order 45 CPR.

  • ABN Amro Bank N.V v Le Monde Foods Limited
    [2002] eKLR

    Evidential burden on a party asserting ability to repay the decretal sum in a stay application.

On appeal from
High Court of Kenya at Nairobi
H.C. Misc. Application No. E776 of 2020
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules (application for stay of execution pending appeal)

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 Electricity Generating Company PLC v Lantech (Africa) Limited & 4 others", Case Analysis (2023). Civil Application E454 & E460 of 2023 (Consolidated). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/1670/eng@2023-12-15

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