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Court of AppealDismissedApplication dated August 1, 2023 in Civil Appeal No. 204 of 2016

Mukuha v Gashwe & 14 others (Civil Application E064 of 2023) [2023] KECA 1482 (KLR)

Court of Appeal of Kenya
8 December 2023
KMK. M'InotiFSF. SichaleFOF. Ochieng
4,810 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~19 min to read original · ~4 min brief

The bottom line

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The Court of Appeal dismissed a bid to jail Naivas-linked parties for contempt, ruling the disputed shares were untouched and contempt must be strictly proved.

What this practically means

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Executive summary

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This was a contempt-of-court application dated August 1, 2023, brought before the Court of Appeal at Nakuru by a beneficiary of the estate of the late Peter Mukuha Kago, whose 10,000 shares in Naivas Limited are the subject of pending succession-related disputes. The applicant sought the committal of fifteen respondents to civil jail, fines, cancellation of post-2021 transactions involving Naivas International (including the sale of a controlling stake to Mambo Retail Limited, a subsidiary of the IBL Group of Mauritius), disclosure of sums paid, and alternative deposit of monies in court, all premised on an order of November 25, 2021 directing maintenance of the status quo with respect to the disputed shares pending the hearing of Civil Appeal No. 204 of 2016. The respondents countered that the status quo order was limited to the 10,000 disputed shares in Naivas Limited, which remained intact, while the impugned transactions occurred at the level of Naivas International and other corporate entities; they also questioned the order's precision. The court grounded its jurisdiction in Section 5(1) of the Judicature Act, noted that Section 35 of the Court of Appeal (Organization and Administration) Act had been deleted, and restated the elements of civil contempt: a clear and unequivocal order, knowledge, and intentional breach, proved to an intermediate standard above balance of probabilities but below beyond reasonable doubt. It held that a status quo order preserves the situation as it existed when made, that contempt cannot be founded on an expansive reading of an order, and that attributing the acts of Naivas International to the individual respondents would require a prior application to lift the corporate veil, none of which was before the court. The application was dismissed, with each party bearing their own costs as a family dispute.

Questions the Court framed

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

  1. 1.Whether the respondents were in contempt of the court order dated 25th November, 2021 requiring the status quo with regard to the shares in dispute in Naivas Limited to be maintained pending the hearing and determination of Civil Appeal No. 204 of 2016

Key legal issues

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01

Whether the respondents were in contempt of the status quo order dated 25th November 2021

Holding

The application was dismissed; the applicant failed to establish contempt because the disputed 10,000 shares in Naivas Limited were not shown to have been altered, and the impugned transactions occurred at the level of Naivas International and other entities

Reasoning

The court analysed the terms of the status quo order, held that it preserved the disputed shares in Naivas Limited as at 25th November 2021, and found no explicit contravention. The applicant did not refute that the shares of Naivas Limited had not been interfered with; the transactions complained of related to Naivas International. To attribute those acts to the respondents would require lifting the corporate veil, for which no application was before the court. The elements of contempt - clear order, knowledge, and intentional breach - were not established to the intermediate standard.

p. 10
02

The meaning and effect of a status quo order

Holding

A status quo order preserves the state of affairs as it existed when the order was made; it does not relate to past or future events and is an ancillary preservation order distinct from an injunction

Reasoning

Adopting Shimmers Plaza Limited v National Bank of Kenya Limited and the Baobab Beach Resort decision, the court explained that a status quo order freezes the situation as it stands at the time of the order pending determination of the dispute, without requiring proof of a right or prima facie case. It is directed at preserving the subject matter so that the substratum of the dispute is not eroded before judgment.

p. 7
03

Elements and standard of proof for civil contempt

Holding

The applicant must prove the terms of the order, knowledge of them, and failure to comply, to a standard above balance of probabilities but not beyond reasonable doubt; willfulness and bad faith are then inferred unless rebutted

Reasoning

Drawing on Carey v Laiken, the Burchell case from the Eastern Cape High Court of South Africa, and Hadkinson v Hadkinson, the court set out the elements of contempt: a clear and unequivocal order, actual knowledge (possibly inferred or via willful blindness), and intentional breach. Deliberate disregard alone is insufficient where the non-complier acts in good faith on a genuine albeit mistaken belief.

p. 8

Legal principles established

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  • Every person against or in respect of whom a court order is made is under a plain and unqualified obligation to obey it unless and until it is discharged, even where they believe it to be irregular or void
  • A status quo order preserves the situation as it exists at the time the order is made; it is an ancillary preservation order distinct from an injunction
  • A party cannot be held in contempt where to find contempt the court would have to read into the order more than its explicit words; the order must state clearly and unequivocally what should and should not be done
  • Contempt must be proved to the intermediate standard, above the balance of probabilities but not beyond reasonable doubt
  • Before attributing the acts of a company to individuals for contempt, the applicant must first obtain an order lifting the corporate veil
  • The applicable law in contempt proceedings in Kenya is the law applicable in the High Court of Justice in England at the time the application for contempt was filed

Court orders

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  1. 1.The application dated August 1, 2023 is dismissed
  2. 2.Each party shall bear their own costs, the dispute being a family dispute

The bench

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

KM
majority
FS
majority
FO
majority
Jurisdiction invoked
Section 5(1) of the Judicature Act; Sections 3A & 3B of the Appellate Jurisdiction Act; Section 35 of the Court of Appeal (Organization and Administration) Act

Relief refused

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Committal of the respondents to civil jail for contempt of the order of November 25, 2021

The applicant failed to demonstrate willful disobedience of the status quo order or the specific order contravened

p. 10

Imposition of fines on the respondents for disobedience of court orders

The tests for contempt were not satisfied

p. 10

Cancellation of all transactions from November 25, 2021 involving any direct or indirect sale or acquisition of a stake in Naivas Limited through Naivas International or otherwise

The transactions were with regard to Naivas International and the disputed shares in Naivas Limited had not been shown to have been interfered with

p. 9

Disclosure and filing of documents showing sums paid and received on account of the transactions, or deposit of such monies in court

The application was found to be without merit and dismissed

p. 10

Costs

This being a family dispute, each party shall bear their own 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.

In the result, we find that the application dated August 1, 2023 is without merit and it is dismissed. This being a family dispute, each party shall bear their own costs.
p. 10Disposition - dismissal of the contempt application and costs order
we are not persuaded that the applicant has demonstrated that the respondents willfully failed, refused and or neglected to obey the court order
p. 10Failure to establish willful contempt
the applicant has not demonstrated to us that the status quo pertaining to the disputed 10,000 shares in Naivas Limited, has been violated by the respondents
p. 9No violation of the status quo order proved
if there is need to read into an order more than that which is explicitly stated therein, the Court would not be expected to find a party to be in contempt of court
p. 10Contempt cannot rest on an expansive reading of the order
the applicant would be expected to first move the Court to lift the corporate veil; and if successful, that would expose the persons who might be in contempt
p. 10Corporate veil and attribution of company acts for contempt
the jurisdiction of the court to commit disobedient litigants for contempt of court when they fail or refuse to obey court orders has at its heart the very efiectiveness and legitimacy of the judicial system
p. 10Purpose of contempt jurisdiction

Issues in the judgment

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minor

The judgment inconsistently refers to the related appeal as Civil Appeal No. 204 of 2016 and Civil Appeal No. 204 of 2014

minor

The opening paragraphs of the judgment are blank and the case title/number of the application itself is not stated in the header as provided

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (6)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Mukuha v Gashwe & 14 others (Civil Application E064 of 2023) [2023] KECA 1482 (KLR)", Case Analysis (2023). Application dated August 1, 2023 in Civil Appeal No. 204 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/1482/eng@2023-12-08

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