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Court of AppealDismissedCivil Appeal (Nairobi) - Memorandum of Appeal dated 12th May 2021 arising from HCCA No. 204 of 2004

Johmat Distributors Limited v Central Bank of Kenya & 3 others (Civil Appeal E263 of 2021) [2024] KECA 1178 (KLR)

Court of Appeal
20 September 2024
4,139 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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Kenya's Court of Appeal dismissed Johmat Distributors' appeal because it filed an incomplete record of appeal and offered no evidence for its interest claim.

What this practically means

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Executive summary

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The Court of Appeal (Kairu, Tuiyott and Ngenye-Macharia, JJA) dismissed an appeal by Johmat Distributors Limited against the Central Bank of Kenya arising from the High Court (HCCA No. 204 of 2004, Odunga, J.), in which the Central Bank had sued several parties, including Johmat, for losses of about Kshs. 205 million allegedly arising from fraudulent acquisition and transfer of proceeds of Treasury Bonds. The High Court dismissed the Bank's claim against the appellant as based on mere suspicion, but also dismissed the appellant's counterclaim for general and aggravated damages and loss of interest on Kshs. 14,000,000/= frozen during the litigation and later released by a consent of 3rd March 2020. The appeal, pressed only against the 1st respondent, raised three issues: the absence of the trial court's typed proceedings from the record of appeal; entitlement to interest on the withheld sum; and entitlement to costs. The Court held that under rule 89 of the Court of Appeal Rules, 2022 the trial judge's notes of hearing must form part of the record of appeal, and, applying the Supreme Court's decision in Law Society of Kenya vs. Centre for Human Rights & Democracy, that an incomplete record renders an appeal incompetent and prevents re-evaluation of the evidence. On interest, the Court held that a party claiming a particular rate must lead evidence on it, and that under section 26 of the Civil Procedure Act interest attaches to a decree for a principal sum adjudged, which no longer existed once the sum was released. On costs, applying section 27(1) of the Civil Procedure Act and Supermarine Handling Services, the trial judge's order that neither party receive costs was a sound exercise of discretion since both claims failed. The appeal was dismissed in its entirety with costs of the 1st respondent.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.The effect of the failure to provide the proceedings of the trial court in the record of appeal
  2. 2.Whether the appellant was entitled to interest on the sum of Kshs. 14,000,000/= withheld by the 1st respondent
  3. 3.Whether the appellant was entitled to costs

Key legal issues

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01

Effect of the failure to include the trial court proceedings in the record of appeal

Holding

The omission is fatal; without the trial proceedings the appellate court cannot re-evaluate the evidence and is unable to find for the appellant on the interest claim.

Reasoning

Rule 89 of the Court of Appeal Rules, 2022 mandatorily ('shall') requires the trial judge's notes of the hearing to form part of the record of appeal. Exclusion is only permitted on application under rule 89(3), which the appellant did not demonstrate. Citing the Supreme Court in Law Society of Kenya vs. Centre for Human Rights & Democracy, an appeal without a complete record is incomplete and incompetent, and the Court could not holistically examine the trial record to review the Judge's discretion.

p. 6
02

Whether the appellant was entitled to interest on the withheld Kshs. 14,000,000/=

Holding

No. The claim failed both for lack of evidence of the rate of interest and because, the principal sum having been released, there was no decree for a principal sum to which section 26 interest could attach.

Reasoning

Under section 26 of the Civil Procedure Act, award of interest is discretionary and attaches to a decree for a money principal sum adjudged. Here the Kshs. 14,000,000/= had been released by consent, leaving nothing to adjudicate. The appellant pleaded loss of interest only in bare terms and led no evidence on the applicable rate; citing Stima Investment and Francis Wainaina, a party claiming a particular rate must lead evidence on it, and the court cannot impose rates on parties.

p. 7
03

Whether the appellant was entitled to costs

Holding

No. The trial judge's decision to award no costs to either party, both claims having failed, was a sound exercise of discretion.

Reasoning

Section 27(1) of the Civil Procedure Act makes costs discretionary but ordinarily following the event. The trial judge reasoned that since both parties lost their respective claims, awarding costs that would cancel out made no sense. Following Supermarine Handling Services, an appellate court should not interfere with costs discretion unless exercised unjudicially or on wrong principles, and the Court found no point of departure from that reasoning.

p. 8

Legal principles established

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  • The trial court's proceedings (the trial judge's notes of the hearing) must form part of the record of appeal; an appeal from a superior court's original jurisdiction without a complete record is incompetent.
  • In the absence of a complete record of appeal, the appellate court cannot determine the appeal on the issues dependent on that record.
  • A party claiming a particular rate of interest must lead evidence on the same; it is not for the courts to impose interest rates on parties.
  • An appellate court should not interfere with a trial court's discretionary award of costs unless the discretion was exercised unjudicially or on wrong principles.

Court orders

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  1. 1.Appeal marked as withdrawn against the 2nd, 3rd and 4th respondents with no orders as to costs
  2. 2.Appeal dismissed in its entirety with costs of the 1st respondent

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
majority
On appeal from
High Court of Kenya
HCCA No. 204 of 2004
Jurisdiction invoked
First appellate jurisdiction under the Court of Appeal Rules, 2022, appealing a decision of the High Court in exercise of its original jurisdiction

Relief refused

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Interest on the sum of Kshs. 14,000,000/= at commercial rate compounded from the date the sum was seized to the date it was released

The appellant failed to lead evidence on the rate of interest it claimed, and there was no definitive principal sum left to be adjudged; additionally, the absence of the trial court proceedings disabled the appellate court from re-evaluating the evidence

p. 7

Costs of the suit and of defending the matter in the Criminal and Civil Divisions

Both parties lost their respective claims before the trial court, and the trial judge's discretionary decision not to award costs to either party was sound and based on correct principles

p. 8

Costs

Appeal dismissed in its entirety with costs of the 1st respondent; appeal against the 2nd, 3rd and 4th respondents withdrawn with no orders as to costs.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

The trial court’s proceedings, which are essentially the trial judge’s notes of the hearing, must form part of the record of appeal.
p. 5Record of appeal - mandatory contents under rule 89
In Law Society of Kenya vs. Centre for Human Rights & Democracy & 12 others (2014) eKLR, the Supreme Court held that in the absence of a complete record of appeal, the appellate court cannot be expected to determine the appeal. Such an appeal would be incomplete and incompetent.
p. 5Consequence of an incomplete record of appeal
For the above reasons, we find that the appellant’s appeal is devoid of merit. We accordingly dismiss it in its entirety with costs of the 1st respondent.
p. 8Final orders - dismissal with costs
it behooved the appellant to lead evidence on the interest it supposes that it was entitled to.
p. 7Burden of proof on interest claims
Thus, where a trial court has exercised its discretion on costs, an appellate court should not interfere unless the discretion has been exercised unjudicially or on wrong principles.
p. 8Non-interference with costs discretion

Issues in the judgment

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minor

The judgment states the plaint was 'dated 17th April 2004 and further amended on 27th February 2004', an internally inconsistent chronology (the amendment date precedes the filing date).

minor

The appellant's defence and counterclaim is described as dated 4th June 2007 in one passage and 11th June 2002 in another, an internal inconsistency in dates.

minor

Two passages of the trial judge's extracted judgment are both numbered '163', a numbering duplication in the judgment text.

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, "Johmat Distributors Limited v Central Bank of Kenya & 3 others (Civil Appeal E263 of 2021) [2024] KECA 1178 (KLR)", Case Analysis (2024). Civil Appeal (Nairobi) - Memorandum of Appeal dated 12th May 2021 arising from HCCA No. 204 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1178/eng@2024-09-20

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