[2015] KECA 408 (KLR)

IN THE COURT OF APPEAL

AT MALINDI

(CORAM: MAKHANDIA, OUKO & M’INOTI, JJ.A.)

CIVIL APPLICATION NO. 34 OF 2015

BETWEEN

HARRY JOHN PAUL ARIGI ……………………………………………………………..1ST APPLICANT

JOAN ZAWADI KAREMA …………………………………………….………………..2ND APPLICANT

RENSON JUMA THOYA (Suing as Elected

Trustees of the KENYA PORTS AUTHORITY

RETIREMENT BENEFITS SCHEME, 2012 ………………………………….3RD APPLICANT

AND

THE KENYA PORTS AUTHORITY………………………………...………...1ST RESPONDENT

MANAGING DIRECTOR,

KENYA PORTS AUTHORITY.....................................................2ND RESPONDENT

GENERAL MANAGER, BOARD AND LEGAL SERVICES,

KENYA PORTS AUTHORITY ……………………………………..…………….3RD RESPONDENT

(Being an application for stay of execution or implementation of the orders of the High Court of Kenya at Mombasa (Emukule, J.) dated 2nd June, 2015,

in

Constitutional Pet. No.24 of 2015)

*************

RULING OF THE COURT

We have once more been asked to walk this familiar and well-trodden path by the applicants who in their motion on notice pray that the orders made on 2nd June, 2015 by the High Court (Emukule, J.) and further proceedings in the High Court, Constitutional Petition No.24 of 2015 be stayed pending the hearing and determination of an intended appeal challenging the aforesaid order of 2nd June, 2015. This is briefly how this dispute arose. The applicants are the elected trustees of the Kenya Ports Authority Retirement Benefits Scheme, having been elected as such on 27th November, 2014. The affairs and business of the scheme are transacted through a board of trustees on which the members and the founder (the Kenya Ports Authority) are represented. The board of trustees are permitted by the trust deed to invest in a prescribed manner.

Pursuant to this power the board resolved during its meeting of 24th October, 2014 to purchase some two properties from its sister scheme, -the Kenya Ports Authority Pension Scheme (Defined Benefit). The two properties which comprised vacant land at Shimanzi, in Mombasa had been advertised for sale. The board also resolved to purchase 100 acres at a cost of Kshs.7,000,000 per acre in Kikambala, along Mombasa-Malindi road. It is this last property that is the subject of the dispute. Following an actuarial evaluation the acreage intended to be purchased was scaled down to 60 from 100 acres.

As the negotiations advanced the founder, through its General Manager, Board and Legal Services, (the 3rd respondent), who is also a member of the board of trustees, raised certain concerns regarding the planned purchase of the said Kikambala property. These concerns escalated to a point where the 1st respondent’s Board of Directors found it necessary to invite the chairman of the board of trustees of the scheme and the scheme administrators to discuss issues surrounding the intended transaction. Reacting to the invitation, the board of trustees convened a special board meeting, following which a letter was addressed to the Board of Directors of the 1st respondent challenging its decision and power to summon the chairman of the board of trustees and the administrators. By a letter dated 6th April, 2015 the 2nd respondent, suspended the purchase of the aforesaid properties pending forensic audit of the scheme. In furtherance of this intention the 2nd respondent proceeded to procure the services of an audit firm to conduct forensic audit.

These events prompted the applicants to move to the High court by way of a constitutional petition in which they asked the Court to:-

(i) declare as unconstitutional, unlawful and invalid the actions of the respondents, which in their opinion amounted to intermeddling in the affairs and management of the scheme;

(ii) declare that only the applicants and the board of trustees have the constitutional and legal right to manage and make investment decisions under the scheme, as such they are not under the control or direction of the respondents or members of the scheme;

(iii) restrain the respondents by an order of permanent injunction from intruding, obstructing, hindering, meddling and getting involved in the purchase of the Kikambala properties and/or from approving forensic auditors, accountants and experts;

(iv) order that the respondents, and especially the 2nd and 3rd respondents jointly and severally be held personally liable for any and every loss that the scheme may incur or suffer as a result of their illegal acts of interference; and

(v) order that costs of the petition be borne by the respondents.

Simultaneous with the petition, the applicants filed a notice of motion under Article 22 and 23 of the Constitution, Sections 40 and 41 of the Retirement Benefits Act and unspecified provisions of the Constitution of Kenya, (Protection of Rights and Fundamental Freedoms and Enforcement of the Constitution) Practice and Procedure Rules, 2013 (the Mutunga Rules). The motion sought, on an interim basis conservatory orders in the form of injunction to restrain the respondents as explained above until the determination of the petition. The motion was placed before Muya, J, who on 17th April, 2015 certified it urgent and directed that it be served on the respondents for interparteshearing on a date to be taken at the court registry. He declined to grant the interim relief sought. The concatenation of the events that followed this must be understood clearly hence we shall take some time to explain them. Apparently on 21st April, 2015, only four days after the initial appearance, counsel for the applicants returned exparte before the learned Judge and after submissions to the effect that the sale agreement had been concluded and a deposit of Kshs.7,000,000 paid, the learned Judge once again certified the application urgent, issued conservatory orders for 14 days restraining the respondents as prayed until the hearing and determination of the motion interpartes and further directed that the application be heard interpartes on a date to be fixed at the registry. In the meantime it would appear the respondents themselves brought an application seeking to discharge, ex debitio justitae Muya J.’s exparte orders of 21st April, 2015 and for conservatory order to issue directing the applicants to maintain the status quo and refrain from concluding the sale transaction, and further that there be an injunction against the release of funds in respect of the transaction which were held by Messrs Kanyi J & Co. Advocates. Finally the respondents invited the court to strike out or dismiss the petition.

When the two matters came up before Emukule, J. on 4th May, 2015 counsel for both sides seemed, from their submissions to apply for more time, for different reasons. It is not clear from the record why counsel for the applicants wanted the file placed aside, but learned counsel holding brief for the respondent’s advocates sought time as the latter was engaged in the Court of Appeal. Counsel however drew the learned Judge’s attention to their application for discharging the exparte orders of 21st April, 2015 and asked the court to consider, while granting adjournment to also grant conservatory orders as prayed but on temporary basis. From the scanty record of that day the learned Judge directed that;

“1. The application dated 30. 4.2015 is certified urgent.

2. Serve upon the applicants’ counsel.

3. Applicants’ counsel is granted leave to file and serve a replying affidavit within 3 (three) days. Corresponding leave to the Respondents/Applicants.

4. The status quo – that is to say no transaction shall proceed between the applicants and the third parties who are not parties to these applications pending the simultaneous determination of the

Applicants’ application dated 16. 4.2015 and the Respondents’ application dated 30. 4.2015.

5. Hearing on the 12. 5.2015”

One week after this, on 11th May, 2015 the applicants brought yet another application for amendment of both the petition and the motion. The court directed, on this occasion that the applications be set down for hearing the next day, on 12th May, 2015. When the three applications came up as directed counsel for the applicant sought directions that the application for amendment be heard first, thereby prompting the respondents’ counsel to seek and was granted an adjournment to obtain instructions on the application. Emukule, J set 26th May, 2015 as the hearing date and ordered, in the meantime, maintenance of status quo in terms of his earlier orders of 4th May, 2015.

On 18th May, 2015 the applicants’ advocates filed a notice to wholly withdraw the petition. That application was placed before the Deputy Registrar whose name is not disclosed in the proceedings, who endorsed it. Even before the notice to withdraw the petition was filed, the applicants had on 15th May 2015 filed H.C.C.C. No.64 of 2015 against the respondents in which the very prayers in the petition were sought. On the same day a notice of motion brought simultaneously with the fresh suit was placed before Kasango, J. who proceeded to grant interim orders of injunction to restrain the respondents from intruding, obstructing, hindering, meddling or being involved in the purchase of the subject properties. So that when the three applications came up for arguments on 26th May, 2015 as earlier directed the only argument before the learned Judge was whether the withdrawal of the petition, which in effect terminated all the other interlocutory applications, was proper and regular. According to Mr. Tindika, learned counsel for the applicants, the petition was the property of the applicants, who had the freedom to withdraw it at will and without any conditions. He relied on this passage from the decision of the Supreme Court in Nicholas Kiptoo Arap Korir SalatvThe Independent Electoral & Boundaries Commission & 7 others (2014) eKLR.

“A party’s right to withdraw a matter before the court cannot be taken away. A court cannot bar a party from withdrawing his matter. All that the court can do is to make an order as to costs where it is deemed appropriate.”

The Supreme Court in the above case also cited its own earlier decision (of a single judge) in John Ochanda v Telkom Kenya Limited, Motion No.25 of 2014 where the learned single Judge pointed out that;

“…….. a prospective Appellant is at liberty to withdraw a Notice of Appeal at any time before the Appeal has been lodged and any further steps taken. No proceeding have commenced strictly. I am also of the view that just like under the Civil Procedure Rules, or the Court of Appeal Rules, the right to withdraw or discontinue proceedings or withdraw a Notice of Appeal respectively ought to be allowed as a matter of right subject to any issue of costs which can be claimed by the Respondents (if any).”

For his part Mr.Khagram for the respondents thought the applicants’ argument was not only misplaced but also failed to consider that there is a specific provision in Rule 27 of the Mutunga Rules for withdrawing constitutional petitions. That provision and the procedure it articulates are intended to protect the public interest, and to ensure the court process is not abused as was held in a three judge bench decision of the High Court in Eric Mutua & 13 othersvthe Principle Secretary, Ministry of Energy & Petroleum & others, Machakos H.C. Constitutional Petition No.305 of 2012; that under Rule 27 aforesaid a petition cannot be withdrawn, except on notice to the court and the respondent and only with leave of the court after hearing the parties.

The learned Judge considered these rival arguments and held that the applicants’ purported withdrawal of the petition was not only in extreme bad faith but also in breach of Rule 27. The learned Judge relying on the decision of the Supreme Court of India in S.P. AnandvH.D Deve Gowala (1996) 6 SCLR 734 and the Eric Mutua decision (Supra) concluded that:-

“22 ... Apart from the fact and the law that the purported orders of withdrawal of Petition by the Deputy Registrar was without jurisdiction, the withdrawal was also tainted with ill motive to circumvent the status quo order of this court, and the immediate filing of HCCC No.64 of 2015 in which contrary orders were granted. That is a classic case of an abuse of process. The court will not accept the abuse of its process. No Petitioner is permitted to either forum shop, nor to abuse the process of court.

ORDERS OF THE COURT

23. In the circumstances, I make the following orders:-

(1) The orders of the Deputy Registrar made on 11th May,

2015 purporting to withdraw the Petition are hereby set

aside.

(2) The oral application by the Petitioner’s counsel made on

26th May, 2015 to withdraw the Petition is declined.

(3) The Petition be set for hearing on priority by either the

Petitioners or Respondents.

(4) The costs herein be in the cause.”

This is the order the applicants have evinced in their notice of appeal to challenge in this Court.

In the meantime they seek under Rule 5(2) (b) of the Court’s rules that both the order directing that the petition proceeds to hearing and further proceedings in Mombasa High Court Petition No.24 of 2015 be stayed until the intended appeal is filed, heard and determined. To satisfy the two well-known principles upon which an application under this rule is premised, the applicants have submitted that the intended appeal is arguable because;

(i) the learned Judge exhibited bias against the applicants in the manner he dealt with the application and issued orders as well as the unjustified remarks made by the learned Judge against the applicants’ counsel and another court; thereby reaching a decision on issues which were not before him.

(ii) the learned Judge erred in holding that the appellants could not freely withdraw the petition.

(iii) the learned Judge failed to appreciate that after withdrawing the petition the applicants could properly bring a fresh suit on the same issues.

(iv) no order was made by the Deputy Registrar on 11th May 2015 hence the petition and the application stood withdrawn.

On the nugatory aspect of the intended appeal it was submitted that if an order staying execution or further proceedings is not issued the applicants face enormous risk as the petition would proceed to hearing in gross abuse of the applicants’ rights.

The two principles are old hat and everyday fare in this Court hence authorities on the same are legion. The relevant considerations in applying these principles are also now firmly settled by a long line of authorities including those cited before us. These considerations include, in so far as the matter before us is concerned;

(i) that the applicant is obliged to satisfy both principles See Peter Mburu NdururivJames Macharia Njore Civil Application No.29 of 2009.

(ii) The applicant is not obliged to establish a multiplicity of arguable grounds; even a single arguable issue will suffice. See Transouth Conveyors LtdvKenya Revenue Authority & Another Civil Application No.37 of 2007.

(iii) the applicant is not required to show that the appeal or intended appeal will definitely succeed or that it has a very high chances of success. It is sufficient if it can be shown that it raises serious questions of law or reasonable arguments that deserve court’s consideration; that the appeal or intended appeal is not frivolous.See Retreat Villas Ltd v Equitorial Bank Ltd & others, Civil Application No.40 of 2006. See also Pastuer Dukuzumuremyi v Anthony Milimu Lubulellah & Associates Advocates Civil Application No.325 of 2013.

(iv) the court seized of an application under Rule 5 (2) (b) cannot rule on the substantive issues in dispute, that being the duty of the bench that will ultimately hear the appeal.

(v) the orders sought to be stayed must be capable of enforcement. It must command the doing of a particular act. See First American Bank of Kenya LtdvGrandways Ventures Ltd (2003) IEA 60.

(vi) the parties’ interests and rights must be balanced in order to avoid any loss or prejudice to any one of the parties. SeeMukuma v Abuoga (1988) KLR 645 at 647.

The grounds upon which the applicants intend to challenge the decision of the High Court relate to the High Court’s jurisdiction on the question whether a petition brought pursuant to the Mutunga Rules can be withdrawn without notice or leave, and whether the learned Judge was biased against the applicant. The other obvious question is whether the applicants are engaged in an abuse of the court process. We entertain no doubt that these are indeed not frivolous matters upon which we cannot express any view either way at this stage. It is in the intended appeal that the Court will have the opportunity to hear arguments and make conclusive findings on those points.

The substratum of the intended appeal is High Court Constitutional Petition No.24 of 2015 which was purportedly withdrawn. The withdrawal has not only been reversed but the learned Judge has directed that it be set down for hearing, which direction constitutes a command, capable of enforcement. If the hearing was to commence before the intended appeal is filed, heard and determined the Court will have acted in vain and judicial time will have been expended without cause. Without staying proceedings in High Court Civil Suit No. 64 of 2015 and High Court Petition No. 24 of 2015, an absurdity will result as there will be two concurrent suits on the same subject. In addition and in the interest of justice, we order that the sale of the suit property be suspended until the appeal is heard and determined.

We think, in the circumstances the order that commends itself to us is that there will be a stay of execution of the orders of 2nd June, 2015 directing that the petition be set down for hearing and stay of the proceedings in High Civil Suit No. No.64 of 2015 pending the hearing and determination of the intended appeal. Costs shall be in the intended appeal.

Dated and delivered at Malindi this 30th day of September,2015

ASIKE-MAKHANDIA

……………………….……………..

JUDGE OF APPEAL

W. OUKO

……………………..……………..

JUDGE OF APPEAL

K. M’INOTI

……………………………………..

JUDGE OF APPEAL

I certify that this is atrue copy of the original.

DEPUTY REGISTRAR