Madison Insurance Company Kenya Limited v Commissioner of Domestic Taxes [2021] KECA 781 (KLR)
The bottom line
#The Court of Appeal stopped Kenya Revenue Authority from collecting Sh41 million from Madison Insurance until its tax appeal is decided.
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 has an arguable appeal under Rule 5(2)(b) of the Court of Appeal Rules
- 2.Whether the appeal would be rendered nugatory if the orders of injunction and stay of execution sought are not granted
Key legal issues
#Whether the appellant's intended appeal is arguable under Rule 5(2)(b)
The court found the grounds raised by the appellant were arguable, satisfying the first limb of the Rule 5(2)(b) test.
The court applied the settled two-limb test: an applicant must show an arguable appeal and that the appeal would be rendered nugatory absent the orders. Arguability requires only one bona fide point worthy of decision. The court considered the grounds raised and found them arguable, citing established authority on the single-arguable-point standard.
Whether the appeal would be rendered nugatory if the injunction is not granted
The court held the nugatory limb was satisfied because the appellant stood to suffer immense losses, and noted that half of the decretal sum had already been deposited, securing the respondent's interests.
The court found that if the orders were not granted, the appellant would suffer immense losses and the appeal would be rendered nugatory. It noted the respondent had sought only a conditional stay requiring deposit of half the decretal sum, and confirmed the appellant had already deposited Kshs. 21,000,000 of the Kshs. 41,000,000, which weighed in favour of preserving the status quo pending appeal.
Legal principles established
#- To succeed under Rule 5(2)(b), an applicant must demonstrate an arguable appeal and that the appeal would be rendered nugatory if the orders sought are not granted; an appeal is arguable if it raises at least one bona fide point worthy of decision.
- The threshold for arguability is a low one: at least one bona fide point calling for a response from the respondent and worthy of decision by the Court.
Court orders
#- 1.Injunction restraining the Respondent from executing, enforcing, issuing agency notices or otherwise collecting from the Appellant Kshs. 41,087,678 as per its demand and confirmed Assessment Notice No. 0305200900055/6 dated 3rd September 2012, pending the inter partes hearing and determination of the application
- 2.Injunction restraining the Respondent from executing, enforcing, issuing agency notices or otherwise collecting from the Appellant Kshs. 41,087,678 pending the hearing and determination of the intended appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules
Relief refused
#Stay of execution of the judgment and decree of the High Court delivered on 17th September 2020 (prayer (d))
The court's final order granted only the injunction in prayers (b) and (c); no order of stay was made despite the prayer for stay being before it.
Costs
No costs order appears in the judgment; the ruling is silent on 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.
For an appellant to succeed in obtaining relief under Rule 5(2)(b) of this Courts Rules, it must show that it has an arguable appeal and that if the orders sought, be they of stay of execution or injunction are not granted, the said appeal would be rendered nugatory or useless, illusory, academic and of no effect.
For an appeal to be considered arguable, it needs only raise at least one bona fide point that calls for a response from the respondent and is worthy of decision by the Court hearing the appeal.
For these reasons, we find that this application has merit and we therefore allow it. We hereby grant the injunction as sought prayers (b) and (c).
Issues in the judgment
#The coram attributes the judgment below to Gitari, J., but the motion seeks to stay a judgment 'delivered by the Honorable Justice Mary Kasango on 17th September 2020', creating an inconsistency as to the judge of the decision appealed from.
The prayer for stay of execution (prayer (d)) is before the court and the court discusses a conditional stay, but the final order grants only the injunction in prayers (b) and (c), leaving the stay prayer unaddressed in the disposition.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Madison Insurance Company Kenya Limited v Commissioner of Domestic Taxes [2021] KECA 781 (KLR)", Case Analysis (2021). Civil Application No. E361 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2021/781/eng@2021-03-19
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.