Kenya Revenue Authority v Attorney General & 1 other
The bottom line
#Kenya's Court of Appeal confirmed KRA unlawfully seized a trader's goods using the wrong customs form, though it reduced the damages awarded.
What this practically means
#Executive summary
#Key legal issues
#Legality of the seizure and detention of the goods using Form F89
The seizure and detention by the appellant and the 2nd respondent using Form F89 was unlawful; Form C53 under rule 267 was the proper instrument, and detention exceeded the 21 days allowed under sections 34 and 39 of the Act.
The court, following its own decision in Kenya Revenue Authority v Doshi Iron Mongers [2016] eKLR, held that Form F89 is not listed in the First Schedule to the Customs and Excise Act and only underpins deposit of goods in a customs warehouse pending proof of compliance or payment of taxes. It cannot be used to effect a seizure on suspicion of an offence. Having used the wrong form and detained the goods beyond 21 days, the appellant's action was unlawful and the subsequent forfeiture tortious.
Proof of special damages against the appellant
Only Kshs 6,682,467.00 was proved against the appellant (invoice of Kshs 6,239,250.00 stamped 'paid' plus receipts totalling Kshs 443,217.00), not the claimed Kshs 7,126,010.00.
The invoice stamped 'paid' was produced without objection and could not later be impugned. Following Great Lakes Transport and Hatangimbabazi, an invoice endorsed 'paid' becomes a receipt. However, items claimed beyond those in the invoice were unsupported, and the three receipts totalled Kshs 443,217.00. The court therefore substituted Kshs 6,682,467.00 for the Kshs 7,126,010.00 awarded by the trial court.
Proof of special damages against the 2nd respondent
The claim of Kshs 6,296,140.00 against the 2nd respondent was not strictly proved and that award was set aside.
No invoice or document supported the value of the goods released by the 2nd respondent, and PW1 conceded on re-examination that he had no document proving the value of the expired goods. The trial judgment gave no reason for the award. Strict proof of special damages was lacking, so the cross-appeal succeeded on this head.
Whether the trial Judge applied the judgment in Nairobi High Court Misc. Application No. 206 of 2004
The learned Judge did not transpose the two cases; he only applied the ratio in the earlier decision that use of F89 rather than C53 was fatal.
The court examined the only passage in the trial judgment referencing the earlier decision and found the judge merely adopted its ratio on the use of Form F89. The goods in the two cases being different did not render the adoption improper, as the legal principle on the forms was what was applied.
Res judicata
The defence of res judicata failed: it was not expressly pleaded, and the cause of action (expiry of the goods after release) arose after the earlier determination.
Relying on Order 2 rule 4(1) of the Civil Procedure Rules and the pleading principles in IEBC v Mutinda Mule, the court held that a party intending to rely on res judicata must plead it, else the opponent is taken by surprise. Further, applying Siri Ram Kaura v M J E Morgan, the fact of the goods' expiry was a fresh circumstance that could not have been known when the earlier suit was filed.
Denial of the 2nd respondent's opportunity to call its witness
The 2nd respondent was not denied a fair hearing; it failed to utilise the opportunity given and filed no appeal against the ruling declining its request.
The 2nd respondent obtained 30 days' leave to file witness statements but did not comply; its request to have an unfiled witness testify as an expert was declined, it sought stay and certified proceedings for an intended appeal but never filed one. Applying Union Insurance v Ramzan Abdul Dhanji, a party given and not utilising a reasonable opportunity of being heard cannot later complain.
Award of general damages and interest
Both the award of Kshs 300,000.00 general damages each and the interest orders were unobjectionable and were left undisturbed.
The trial judge justified the general damages on the high-handed, oppressive and arbitrary conduct of the defendants, and no basis was laid to disturb it. On interest, applying Dipak Emporium, interest on special (liquidated) damages runs from the date of suit while general damages attract interest from judgment; the trial court had done exactly that, and delay in the proceedings is not a reason to deny a successful party interest.
Legal principles established
#- Customs Form F89 (Notice of Goods Deposited in Customs Warehouse) is not a lawful instrument for seizing goods suspected of an offence; the proper form for a seizure is Form C53 under rule 267 of the Customs and Excise Regulations, and detention under sections 34 and 39 of the Customs and Excise Act cannot exceed 21 days.
- A party cannot raise an unpleaded ground (here, non-payment of tax) at the appellate stage; pleadings define and delimit the matters in controversy.
- An invoice endorsed 'paid' and produced without objection may constitute proof of payment for purposes of special damages; a party may not impugn the authenticity of a document it did not object to at trial.
- Special damages must be specifically pleaded and strictly proved, the degree of particularity depending on the circumstances and nature of the acts.
- A first appellate court reconsiders and evaluates the evidence and draws its own conclusions, departing from the trial court's factual findings only where they are not evidence-based, proceeded on wrong principles, or the discretion was exercised injudiciously.
Court orders
#- 1.Partly allow the appellant's appeal by setting aside the award against it of Kshs 7,126,010.00 and substitute therefor an award of Kshs 6,682,467.00
- 2.Partly allow the 2nd respondent's Notice of Cross Appeal and set aside the award against it of Kshs 6,296,140.00
- 3.Affirm the other awards in the impugned judgment, including general damages of Kshs 300,000.00 each and interest as ordered by the trial court
- 4.Make no order as to the costs in the appeal
- On appeal from
- High Court of Kenya
- HCCC arising from plaint dated 16th May 2006 (amended 13th May 2022)
- Jurisdiction invoked
- First appellate jurisdiction under the Court of Appeal Act, statutory right of appeal against the High Court judgment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Revenue Authority v Attorney General & 1 other", Case Analysis (2024). Court of Appeal Civil Appeal arising from Nairobi HCCC suit; memorandum of appeal dated 13th April 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/176/eng@2024-02-23
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.