Commissioner of Customs & Excise v Kaaya Enterprises Limited & 3 others (Civil Appeal 204 of 2020) [2024] KECA 502 (KLR)
The bottom line
#Kenya's tax authority must auction confiscated goods only after publishing notices in the seller's home country, or it will pay the owner.
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 learned Judge erred in his interpretation of what constituted a valid notice under section 42(1) of the East African Community Customs Management Act
- 2.Whether the learned Judge erred to find the 1st respondent deserved to be restituted by the appellant for the consignment of goods sold
- 3.Whether the learned Judge was right in his finding on liability
Key legal issues
#Interpretation of the notice requirement in section 42(1) of the EACCMA as amended
Two publications are required: the EAC Official Gazette plus publication in the gazette of the partner state where the owner is domiciled or a newspaper of wide circulation there. Publication only in the Kenya Gazette was insufficient for a Ugandan owner.
The court read the amended provision purposively, applying the mischief rule. The word 'and' after 'Gazette' makes the partner-state publication additional to, not in substitution for, the EAC Gazette. The mischief was notices carried in publications out of reach of the party intended to receive them; the second notice must be published where the owner of the goods is domiciled.
Validity of the auction and liability of the appellant
The auction conducted on defective notice was un-procedural, vitiated the entire process, and unlawfully deprived the 1st respondent of its property; the appellant was liable.
Adopting Samuel Njoroge Gitukui, impropriety involves failure to adhere to procedural rules expressly laid down in a statute. The Commissioner's statutory duty to publish notice under section 42(1) cannot be delegated or waived, and the owner's indolence cannot excuse non-compliance. The appellant's subsequent processes culminating in the sale were all invalid.
Restitution of USD 40,000
The award of USD 40,000 as restitution stood; the doctrine deprives a party that has unfairly taken advantage of another.
The claim was proved special damages. The appellant's demand that taxes and charges be deducted was a new ground raised for the first time on appeal without a counterclaim and not raised at trial, so the Court lacked jurisdiction to entertain it. The doctrine of restitution, grounded in unjust enrichment, was fitting to the circumstances.
Competence challenge raised at submissions stage
The 2nd respondent's challenge to the appeal's competence on grounds of an incomplete record could not be raised for the first time at submissions; it was ambush.
Such objections must be raised timeously; raising them at the submissions stage amounts to ambush. Further, the alleged missing record was material the 2nd respondent could itself have included by way of a supplementary record of appeal under Rule 94 of the Court of Appeal Rules.
Liability of the 2nd, 3rd and 4th respondents
The trial judge's findings exonerating the 2nd, 3rd and 4th respondents were sound and unchallenged on appeal; those issues were moot.
The 2nd respondent ceded control upon delivery to the customs warehouse; the 3rd respondent's obligations were discharged under the bill of lading and notice was duly given; the 4th respondent was a bona fide purchaser for value. Neither the appellant nor the 1st respondent challenged those conclusions, so the Court found them moot.
Legal principles established
#- Under the amended section 42(1) of the EACCMA, the Commissioner must publish the auction notice in the Official Gazette of the East African Community and additionally in the gazette of the partner state where the owner of the goods is domiciled, or a newspaper of wide circulation there; publication only in the Kenya Gazette is invalid.
- Failure to issue valid notice under section 42(1) vitiates the entire auction process and the resulting sale.
- A party cannot introduce a new ground of appeal not raised or considered by the superior court.
- A challenge to the competence of an appeal on grounds of procedural laws or an incomplete record cannot be raised for the first time at the submissions stage.
Court orders
#- 1.Appeal dismissed with costs to the respondents
- 2.Judgment of P.J. Otieno, J. dated 29th May 2019 upheld (USD 40,000 with interest from August 2012 against the appellant)
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court
- Commercial Suit No. 193 of 2012
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal Rules (appellate mandate over first appeals from the High Court)
Relief refused
#Appellant's prayer to set aside the High Court judgment and dismiss the 1st respondent's suit
No merit in the appeal; the trial judge's decision was sound
Appellant's claim that customs duty and other charges be deducted from the USD 40,000 award
New ground raised for the first time on appeal, not pleaded by counterclaim nor raised at trial
Costs
Appeal dismissed with costs to the respondents.
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.
That option is not in lieu or substitution of the publication in the Oficial Gazette but is in addition to it.
Lack of proper notice to the owner of the goods as prescribed under section 42(1) of the Act was un-procedural and had the efiect of vitiating the entire process undertaken by the appellant
The legal position is that a party cannot introduce a new ground of appeal at the appeal.
That is ambush and cannot be countenanced.
Accordingly, we find no merit in this appeal and dismiss it with costs to the respondents.
Issues in the judgment
#The judgment identifies the appellant only as 'the appellant' and the 2nd respondent obliquely (evidenced as Kenya Ports Authority by the cited case name), so full party names are not expressly stated in the judgment body.
Internal inconsistency in the judgment's description of the 2011 amendment to section 42(1): the court refers to an amendment by the 2009 Act but elsewhere describes 'the amendment of the Act of 2011'.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Commissioner of Customs & Excise v Kaaya Enterprises Limited & 3 others (Civil Appeal 204 of 2020) [2024] KECA 502 (KLR)", Case Analysis (2024). Commercial Suit No. 193 of 2012 (appeal against judgment of 29th May 2019). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/502/eng@2024-04-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.