https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1251

Assets Recovery Agency v Auma & another (Civil Appeal (Application) E504 of 2025) [2026] KECA 1251 (KLR) (3 July 2026) (Ruling) Neutral citation: [2026] KECA 1251 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Appeal (Application) E504 of 2025 DK Musinga, AO Muchelule & GV Odunga, JJA July 3, 2026 Between Assets Recovery Agency Applicant and Ruth Atieno Auma Respondent and Mwananchi Credit Limited Interested Party (Being an application for stay of execution pending hearing and determination of an appeal against the Judgment and Decree of the High Court of Kenya at Nairobi (B.M. Musyoki, J.) dated 5th June 2025 in Civil Suit No. E028 of 2024) Ruling 1.The application before us is dated 17th July 2025, and is brought pursuant to Article 164(3) of the Constitution, sections 3, 3A and 3B of the Appellate Jurisdiction Act, the Judicature Act and rule 5(2)(b) of the Court of Appeal Rules, 2022. The applicant seeks the following orders:i.That this Honourable Court be pleased to certify this application as urgent and be admitted for hearing on priority basis.ii.That this Honourable Court be pleased to grant a stay order of execution of the judgment (by B.M. Musyoki) dated 5th June 2025 at the Anti-corruption and Economic Crimes Division (Milimani Law Courts) Suit Number E025 of 2024 between Asserts Recovery Agency vs Atieno Auma & Mwananchi Credit Limited pending hearing and determination of the applicant’s appeal filed vide Civil Appeal E504 of 2025 between Assets Recovery Agency and Ruth Atieno Auma and Mwananchi Credit Limited.iii.That this Honourable Court be pleased to grant an order staying the judgment of Hon. B.M. Musyoki dated 5th June 2025 and any consequential orders flowing from the same.iv.That the respondent/applicant be at liberty to apply for such further orders and/or directions as this Honourable Court may deem just and expedient to grant. 2.The applicant seeks stay of execution of the judgment by B.M. Musyoki, J. dated 5th June 2025 at the Anti-corruption and Economic Crimes Division (Milimani Law Courts) Suit No. E025 of 2024), Assets Recovery Agency vs Atieno Auma & Mwananchi Credit Limited pending hearing and determination of the applicant’s appeal. The applicant also seeks stay of any consequential orders flowing from the said judgment. 3.The background to the application is that the applicant herein applied to the High Court on 6th September 2024, seeking orders that all that property known as Mavoko Municipality Block 40, parcel No. 63 and motor vehicle registration numbers KCX 488H Toyota and KDC 273R Toyota (the assets herein), all owned by the respondent, were proceeds of crime and liable to forfeiture to the government, and that the said properties be forfeited to the applicant on behalf of the government. 4.The respondent opposed the application, asserting that she was the legal and beneficial owner of the properties in question. She acknowledged that in August 2020 she was arrested and charged with offences relating to the trafficking of narcotic and psychotropic substances, but maintained that this did not detract from the fact that the assets had been acquired through hard work and lawful business activities. She contended that, in the absence of evidence, the application before the High Court amounted to a mere witch-hunt. She further argued that the applicant had failed to establish any nexus between the alleged narcotics trafficking and the assets in question, and had consequently failed to demonstrate a prima facie case to support the allegations. Finally, she stated that during the pendency of the criminal proceedings, she proved that the motor vehicle registration number KCX 488H legitimately belonged to her, resulting in its release. 5.The High Court in its judgment rightly observed that in forfeiture proceedings under Proceeds of Crime and Anti- Money Laundering Act (POCAMLA), the applicant bears the initial burden of establishing a prima facie case by connecting the assets sought to be forfeited to a probable crime. Only upon meeting this threshold does the burden shift to the respondent to demonstrate, albeit not with strict proof, that the assets were acquired through legitimate means. In the present case, although the applicant showed that the respondent had been arrested and charged with narcotics- related offences, the court held that this fact alone was insufficient to establish a nexus between the alleged criminal conduct and the specific assets targeted for forfeiture. The applicant was not required to await the outcome of the criminal trial, but it was nonetheless obligated to conduct proper investigations and present evidence tracing the assets, on a balance of probabilities, to proceeds of crime. 6.Upon reviewing the bank and M-Pesa statements produced, the Court observed that while some accounts reflected substantial transactions in 2020, the applicant neither sought forfeiture of the funds in those accounts nor demonstrated how those transactions were linked to the acquisition of the impugned assets. The Court further found that the applicant failed to investigate or provide financial trails for the years in which the motor vehicles were acquired (2019 and 2021), thereby leaving critical gaps in its case. 7.With respect to the charged property, the court noted that it appeared to have been acquired through a bank loan secured by a registered charge. The applicant failed to show that the loan repayments were derived from proceeds of crime or to accord the chargee an opportunity to be heard, rendering forfeiture untenable. 8.The Court emphasized that the applicant’s mandate extends beyond identifying and seizing assets to investigating the root of title and disclosing evidence that connects the assets to criminal proceeds. General allegations, unsupported suspicions, or selective investigations were held to be insufficient. The Court cautioned against conflating forfeiture proceedings under POCAMLA with recovery of unexplained assets under the Anti-Corruption and Economic Crimes Act, noting that the two regimes have distinct legal foundations, mandates, and investigative thresholds. 9.Ultimately, the court concluded that the applicant had failed to conduct sufficient investigations or establish a prima facie case linking the assets to proceeds of crime. Consequently, the originating motion was dismissed with costs to the respondent. 10.Aggrieved, the applicant filed the instant application, which is premised on the grounds on the face of it and an affidavit sworn on even date by Bernard Gitonga, the head of investigations with the applicant. He stated that on 14th April 2023 the applicant received information that the respondent had acquired the listed properties using proceeds derived from the illicit trade in narcotic drugs. Consequently, Inquiry File No. 36/2023 was opened to investigate the acquisition of those assets. Through Miscellaneous Criminal Application No. E086 of 2023, the applicant obtained court orders authorizing the search, inspection, and retrieval of bank records for several accounts held by the respondent at Absa Bank Limited. Upon analysis of the bank statements, the applicant established that there were suspicious cash deposits in both the bank accounts and associated mobile phone numbers, made in tranches of Kshs. 1,000,000, allegedly to evade the reporting threshold prescribed under Central Bank of Kenya guidelines. It was contended that the bank accounts and mobile money platforms were used as conduits for money laundering, thereby demonstrating that the assets were acquired from the proceeds of the illegal narcotics trade. 11.It was further contended that on 14th August 2020, the respondent had been arrested by the Directorate of Criminal Investigations for trafficking narcotic drugs, contrary to the Narcotic Drugs and Psychotropic Substances (Control) Act, by storing the same. A total of 368.5 kilograms of cannabis (bhang), valued at Kshs. 11,055,000, was recovered from the respondent. The respondent was subsequently arraigned in court and charged with the offence of trafficking in narcotic drugs. In the course of investigations, it was asserted that the assets in question were acquired using proceeds of crime arising from the illicit narcotics trade. On 7 June 2024, the applicant secured preservatory orders over the assets, which culminated in the filing of the application before the High Court, an application that was ultimately dismissed. 12.The applicant urged that the High Court erred in dismissing the application by failing to appreciate that the assets were acquired using funds that constituted proceeds of crime. It was further argued that the learned judge disregarded cogent evidence tendered by the applicant, which had not been rebutted by the respondent, and erroneously introduced an unknown and unwarranted principle in civil forfeiture proceedings under POCAMLA, namely, a requirement to establish a direct correlation between the proceeds of crime in the respondent’s possession and the offence charged herein, contrary to the nature, scope, and purpose of the Act. 13.The respondent opposed the application vide a replying affidavit sworn on 23rd July 2025. She contends that the High Court correctly found that the assets in question were lawfully acquired by the respondent prior to the criminal proceedings relied upon by the applicant. No nexus was established between the assets, the respondent’s bank accounts, and any alleged criminal conduct. It was further noted that the respondent was acquitted of the charges for lack of evidence, reinforcing the position that the assets were lawfully acquired. In particular, motor vehicle registration number KCX 488H was lawfully released to the respondent pursuant to a court order. No evidence was adduced to demonstrate that the assets constituted proceeds of crime. As these are civil proceedings, the applicant bears the burden of proof on a balance of probabilities, a threshold it failed to meet. It was therefore asserted that no prejudice would be occasioned to the applicant if the orders sought were declined. 14.The application came up for hearing before us on a virtual platform on 24th November 2025. Learned counsel Mr. Adow appeared for the applicant, while the firm of Omondi Ogutu is on record for the respondent. However, there was no appearance for the respondent, despite service, but she had filed and served written submissions. The application was canvassed by way of written submissions with limited oral highlights. 15.Mr. Adow argued that, notwithstanding the High Court’s dismissal of the forfeiture application, the appeal automatically triggered a stay under section 97 of the POCAMLA. He maintained that under the POCAMLA regime, any decision, whether allowing or dismissing a forfeiture application, is automatically stayed upon the filing of an appeal, thereby preserving the status quo without the need for a separate application for stay or injunctive relief. 16.He explained that the applicant’s understanding, based on prior pronouncements of this Court, was that once a substantive appeal is filed, section 97 operates to keep all existing preservation or seizure orders in force pending the determination of the appeal. On this basis, the applicant believed there was no necessity to seek restraining or injunctive orders. The present application was therefore filed only because, in the applicant’s view, the respondent had disregarded section 97 by seeking and allegedly obtaining the release of at least one motor vehicle following the High Court judgment. 17.Mr. Adow further contended that, to the best of his knowledge, the assets remained in the custody of the agency and had not been transferred or disposed of, disputing the respondent’s assertion that motor vehicle KCX 488H had already been released. He emphasized that the applicant’s core grievance was the respondent’s non-compliance with the automatic stay envisaged under section 97, which had created procedural uncertainty. 18.In response to questions from the bench on why no restraining order had been sought, Mr. Adow reiterated that this was not due to difficulty or oversight, but flowed from the applicant’s bona fide interpretation of section 97 as providing sufficient protection upon the filing of an appeal. He nonetheless indicated willingness, subject to the Court’s directions, to amend the prayers or file a fresh application seeking restraining orders if the Court found that course necessary. 19.Finally, Mr. Adow urged the Court to reaffirm the position that section 97 provides for an automatic stay pending appeal, to certify the appeal as urgent given the risk of depreciation of the assets, and to fast-track the hearing of the substantive appeal. 20.We have considered the application, the grounds in support thereof, the submissions, the authorities cited, and the law. The jurisdiction of this Court under rule 5(2)(b) of this Court’s Rules is discretionary and guided by the interests of justice. 21.On 7th June 2024 the applicant obtained preservation orders in respect of the aforesaid properties under section 82 of the Act. It was gazetted on 21st June 2024. Under section 84, such orders expire ninety (90) days after the date on which notice of the making of the order is published in the Gazette, unless: -a.there is an application for a forfeiture order pending before the court in respect of the property subject to the preservation order;b.there is an unsatisfied forfeiture order in force in relation to the property subject to the preservation order; orc.the order is rescinded before the expiry of that period. 22.The applicant made an application under section 92 for forfeiture of the said sums on 6th September 2024. That is the application that was heard and eventually dismissed, prompting the filing of an appeal and this application. 23.Section 97 of the POCAMLA states as follows: -“Any preservation order and any order authorizing the seizure of the property concerned or other ancillary order which is in force at the time of any decision regarding the making of a forfeiture order under section 92(1) shall remain in force pending the outcome of any appeal against the decision concerned.” 24.Although the marginal note to section 97 reads “Appeal against forfeiture order”, a proper reading of the provisions thereof reveal that even in instances where a forfeiture order has not been made, as was the case in this matter, if there was a preservation order in force, (as was the case in this matter), or any order authorizing the seizure of property at the time the court is making any decision on the application for forfeiture, which it may either grant or dismiss, the preservation order or the order authorizing the seizure, or any other ancillary order that had been made earlier, shall remain in force if any appeal has been filed. Such an appeal may be filed either by the Assets Recovery Authority if the forfeiture application has been dismissed, or by the person concerned or affected, if a forfeiture order has been made. 25.In our view, section 97 protects preserved assets from being dissipated or transferred while an appeal is pending before this Court. It may be viewed as a “safety net” for the State to ensure that assets that are suspected to be proceeds of crime and had lawfully been preserved pursuant to a trial court’s order are not released immediately after dismissal of forfeiture proceedings, if the State has appealed. The section also provides a statutory framework for an affected person or entity to appeal against forfeiture orders, so that property is not forfeited to the State before the appellate process is exhausted. 26.The section complements section 92(6) which dictates that a final forfeiture order to the government cannot be executed or take effect before the period allowed for an application for variation and rescission of the order under section 89, or an appeal under section 96 has expired, or before such an application or appeal has been disposed of. 27.In other jurisdictions, there are similar provisions as section 97 of POCAMLA. In South Africa, section 55 of Prevention of Organized Crime Act (POCA),1998, provides as follows: “Any preservation of property order and any order authorising the seizure of the property concerned or other ancillary order which is in force at the time of any decision regarding the making of a forfeiture order which is in force at the time of any decision regarding the making of a forfeiture order under section 50(1) shall remain in force pending the outcome of any appeal against the decision concerned.” 28.In National Director of Public Prosecutions V Falk [2020] ZASKA 117, the South African Supreme Court of Appeal dealt with the continuation of POCA orders during appeals. The Court affirmed that the legislature’s intent was to freeze the status quo so that assets are not dissipated while appellate proceedings are ongoing. 29.Earlier on, in National Director of Public Prosecutions V Mohamed 2003(4) SA 1(CC), the Constitutional Court of South Africa endorsed the civil forfeiture scheme as a vital preventive measure for ensuring that property alleged to be proceeds of unlawful activity remains frozen while all legal challenges-including appeals, are exhausted. 30.In Namibia, section 66 of Prevention of Organized Crime Act 29 of 2004 is almost word for word with section 55 of POCA, South Africa. It states: “Any preservation of property order and any order authorising the seizure of the property concerned or ancillary order which is in force at the time of any decision regarding the making of a forfeiture order under section 61(1) remains in force pending the outcome of an appeal against the decision concerned.” 31.In The Prosecutor-General V Erastus G.Heita (HC-MD-CIV- MOT-POCA-2021-00443)[2024] NAHCMD 87, the Namibian High Court reviewed the process of forfeiture of funds associated with crime and discussed the application of the aforesaid section of the country’s POCA. The Court affirmed that properties under preservation are barred from being dissipated while an appeal is pending. 32.In Nigeria, section 20 of the Proceeds of Crime (Recovery and Management) Act, 2022 provides that: “A preservation order and any order authorising the seizure of the property concerned or other ancillary order that is in force at the time of any decision regarding the making of a forfeiture order under this Act shall remain in force pending the outcome of any appeal against the decision concerned.” 33.In this matter, while we appreciate that the forfeiture application was dismissed, and ordinarily an order of stay of execution cannot issue from a negative order, the compelling provisions of section 97 of POCAMLA and the nature of this matter cannot be disregarded. Section 97 provides a statutory stay to ensure that property that is subject to a preservation order is not dissipated or released while appellate proceedings are ongoing. 34.We believe that the interests of justice will be best served by granting the orders sought and directing that the pending appeal be heard and disposed of expeditiously. 35.Consequently, we make the following orders:a.Execution of the judgment by Musyoki, J. dated 5th June 2025 and the subsequent orders relating to unconditional release to the respondent of properties known as Mavoko Municipality Block 40, parcel No. 63 and motor vehicles registration numbers KCX 488H Toyota and KDC 273R is hereby stayed pending hearing and determination of Civil Appeal No. E504 of 2025.b.The said appeal should be heard within sixty (60) days from the date hereof and determined expeditiously thereafter.c.The costs of this application shall abide the outcome of the appeal. DATED AND DELIVERED AT NAIROBI THIS 3RD DAY OF JULY 2026.D. K. MUSINGA....................................JUDGE OF APPEALA. O. MUCHELULE....................................JUDGE OF APPEALG. V. ODUNGA....................................JUDGE OF APPEALI certify that this is a true copy of the original.SignedDeputy Registrar