West Kenya Sugar Company Limited v Agriculture & Food Authority & another (Civil Appeal E973 & E981 of 2023 (Consolidated)) [2025] KECA 527 (KLR)
The bottom line
#Kenya's Court of Appeal slashed a Kshs 500 million damages award to about Kshs 18 million, ruling that only proven, non-speculative losses are recoverable when a court undertaking is enforced.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the appellant was justified in filing the judicial review application.
- 2.Whether it is necessary for the Court to make a finding that the stay ought not to have been sought before the undertaking can be enforced and whether the learned Judge erred in finding that the stay order ought not to have been made.
- 3.Whether the High Court was the proper forum to issue a relief in respect of an undertaking given in judicial review proceedings.
- 4.Whether the 2nd respondent was the correct party to seek compensation in proceedings where the respondent was the 1st respondent.
- 5.Whether the High Court can give relief that is not expressly provided for under section 8 of the Law Reform Act or Order 53 of the Civil Procedure Rules such as special damages.
- 6.Whether the appellant was protected by section 6 of the Judicature Act.
- 7.Whether the 2nd respondent's claim was proved.
- 8.Whether the award of interest from date of filing suit till date of payment was proper.
- 9.Whether the Court erred in apportioning liability between the appellant and the 1st respondent at 70:30.
Key legal issues
#Whether the High Court was the proper forum to enforce the undertaking as to damages given in judicial review proceedings
Yes. Since judicial review law did not provide for an award of damages, the only way the conditional stay order could be implemented was by a separate suit for damages in the High Court.
The Court read the conditional stay order: the appellant's liability was to arise only upon demonstration that the stay ought not to have been granted. Because the law as it then stood provided no relief of damages in judicial review proceedings, the undertaking could only be implemented through an ordinary suit. The filing of the enforcement suit in the High Court rather than before the judicial review judge was therefore proper.
Whether the enforcing party must show the stay ought not to have been granted before the undertaking is enforced
Yes. Liability under the undertaking was conditional, and the burden lay on the party seeking enforcement to show that the stay was not justifiably sought and granted; withdrawal of the judicial review application did not by itself discharge that burden.
The Court construed the undertaking as conditional on demonstration that the stay ought not to have been made. Withdrawal can occur for many reasons and does not equate to loss of the case. The Court then examined the circumstances, notably the unexplained agreement of 21st July 2006 whereby the appellant undertook to pay Butali's relocation costs, and the parties' non-disclosure, and concluded on a balance of probabilities that the stay was not justifiably sought.
Whether the trial court erred in awarding the full quantum of damages
Yes. The awards for loss of profits (both heads), escalation in costs, increase in construction costs and additional interest were speculative or outside the contemplation of the applicant at the time of the stay; only the specifically proved preliminary expenses of Kshs. 18,267,438/70 survived.
The Court noted that the substantial damages were predicated on the mill commencing operations by June 2006, yet production only started in January 2011 due to multiple unexplained interferences which PW1 did not attribute solely to the stay. Anticipatory losses require proof that they would in all probability be incurred and must be scrupulously analysed to rule out speculation. The Court therefore set aside the impugned heads and substituted the award with the proved preliminary expenses only.
Whether liability was properly apportioned at 70:30 between the appellant and the 1st respondent
No. No justification was given for the apportionment, which was arbitrary; the appellant and the 1st respondent ought to have been found jointly and severally liable.
The trial judge found that the 1st respondent's CEO made representations and assurances that secured the appellant's zone, and that a party making a misrepresentation on which another acts to its detriment is liable for damages. Yet the judge apportioned liability at 70:30 without any explained basis. The appellate court held such an apportionment, unmoored from any principle, could not stand and substituted joint and several liability.
Whether the appellant was protected by section 6 of the Judicature Act
No. Section 6 protects judges, magistrates and persons acting judicially, not litigants who benefit from orders issued in judicial review proceedings.
The Court reproduced section 6 of the Judicature Act, which shields judicial officers and persons executing lawful process from civil suit for acts done in the discharge of judicial duty. The appellant was a litigant who obtained a stay, not a person acting judicially, and could therefore not invoke the provision to escape liability under its undertaking.
Whether the appellant was justified in filing the judicial review application
The Court differed from the trial judge on this point: judged by the circumstances prevailing at the time, the appellant had a basis for moving the judicial review court, given the CEO's assurances, the Board's earlier refusals and the Ministry's position.
The Court held it inappropriate to judge the propriety of the 2005 stay by reference to later decisions striking down zoning. On the material then existing, including the letter of 23rd September 2004 and prior refusals of the 2nd respondent's applications on proximity grounds, the appellant's apprehension of threatened interests was reasonable. The appellant's culpability arose instead from its subsequent conduct in the compromise agreement and non-disclosure.
Legal principles established
#- An undertaking as to damages is given to the court, not to the nominal respondent in judicial review proceedings, and any person likely to be adversely affected by a conditional stay has locus to enforce it.
- Liability under an undertaking as to damages given as a condition of a stay in judicial review proceedings is conditional upon a finding that the stay ought not to have been sought or granted; mere withdrawal of the judicial review application does not crystallise that liability.
- Once a judicial review application is withdrawn, the judicial review judge becomes functus officio and cannot determine whether the stay was properly granted; the court enforcing the undertaking may make that determination, but is confined to whether the applicant was justified in seeking the stay, not whether the application was merited.
- The High Court is the proper forum for a suit to enforce an undertaking as to damages given in judicial review proceedings, because the law did not provide for the relief of damages in judicial review proceedings.
- Discontinuance or withdrawal of a suit in which an interlocutory order was obtained is not an admission that the order was wrongly obtained; the surrounding circumstances of obtaining the order and of the discontinuance must be considered.
- The propriety of a stay in judicial review proceedings must be judged on the circumstances existing at the time the stay was sought, not on the basis of court decisions made afterwards.
- In enforcing an undertaking in damages, the court is not bound by the contractual measure of damages; the test is whether the damages claimed may reasonably be supposed to have been in the contemplation of the applicant at the time of applying for and obtaining the stay.
- Enforcement of an undertaking in damages is discretionary and the enforcement and assessment of damages may be conducted in one combined proceeding rather than in two separate stages.
Court orders
#- 1.The awards for loss of profits for delay, loss of profits due to sugar price change (COMESA protection), interest due to additional borrowing, increase in construction costs and escalation in costs of machinery were set aside as speculative or not within the contemplation of the applicant at the time of the stay.
- 2.The trial court's assessment of damages was set aside and substituted with an award of Kshs. 18,267,438/70 in respect of preliminary expenses, with interest at court rates from the date of filing the suit until payment in full.
- 3.The trial court's apportionment of liability at 70:30 between the appellant and the 1st respondent was set aside and judgment entered for the 2nd respondent against the appellant and the 1st respondent jointly and severally in the sum of Kshs. 18,267,438/70 with interest at court rates from the date of filing the suit till payment in full.
- 4.Each party to bear its own costs.
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya, Nairobi (Commercial and Tax Division)
- Civil Case No. 168 of 2007
- Jurisdiction invoked
- First appeal to the Court of Appeal under rule 31(1)(a) of the Court of Appeal Rules from the judgment of the High Court
- Consolidated with
- Nairobi Civil Appeal No. E981 of 2023
Relief refused
#The 1st respondent's (AFA's) appeal against the indemnity finding
The Court instead held the parties jointly and severally liable, so the 1st respondent's bid to escape liability entirely was refused in substance
The appellant's contention that its liability under the undertaking crystallised only upon a merits determination in the judicial review proceedings
The Court held that the enforcing party must show the stay ought not to have been granted, and found on the circumstances of the compromise that it was not justifiably sought
The bulk of the 2nd respondent's claimed special damages (over Kshs. 524 million of the award)
The claims for anticipatory loss of profits and escalation costs were speculative and could not be attributed solely to the stay order
The appellant's challenge to the ruling under section 99 of the Civil Procedure Act and to the rejection of its Supplementary List of Documents
The appeal was against the main judgment, not the slip-rule ruling, and no appeal had been filed against the evidentiary ruling
Costs
There has being partial success and partial loss in this appeal. Let each side party bear its costs.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Having considered the material on record, the submissions and the law, we set aside the judgement by the learned Judge to the extent that it apportioned liability as between the appellant and the 1st respondent and substitute therefor, judgement for the 2nd respondent against the appellant and the 1st respondent jointly and severally in the sum of Kshs. 18,267,438/70 with interest at court rates from the date of filing the suit till payment in full
There has being partial success and partial loss in this appeal. Let each side party bear its costs.
Any person, who was, reasonably in the contemplation of the court and the applicant, likely to be adversely afiected by the order has the right to commence proceedings for the enforcement of the undertaking.
The appellant's liability was not “absolute” as the 2nd respondent submits, but was conditional upon a finding that the stay ought not to have been made.
Once the judicial review application was withdrawn, the proceedings therein came to an end and the Judge, in those proceedings, became functus oficio and could not thereafter interrogate whether the stay was properly granted.
It is, therefore, from the conduct of the appellant giving rise to the compromise of the proceedings and their non-disclosure of material facts, rather than from the mere act of withdrawal of the proceedings, that we find, on a balance of probabilities, that the order for stay was not justifiably sought and granted.
in enforcing undertaking in damages, the court, in determining the award in a claim for damages for breach of undertaking, is not enjoined to adopt the principles for award of damages resulting from breach of contract or tort where the damages are awarded based on a wrong done to a party.
it would be inappropriate to judge the merits of the stay on the basis of court decisions which had not been made at the time the stay was sought and granted.
Issues in the judgment
#Arithmetic error in the trial court's total award, noted by this Court: the itemised heads total Kshs. 542,552,088.70 but the decree was for Kshs. 507,799,612.00 because head (g) was omitted from the calculation.
The judgment inconsistently designates the parties (1st respondent/2nd defendant) within the quoted passages of the trial judgment, e.g. attributing the undertaking to a wrong date/party in the trial court's excerpt.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "West Kenya Sugar Company Limited v Agriculture & Food Authority & another (Civil Appeal E973 & E981 of 2023 (Consolidated)) [2025] KECA 527 (KLR)", Case Analysis (2025). Nairobi Civil Appeal Nos. E973 of 2023 and E981 of 2023 (consolidated). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/527/eng@2025-03-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.