Dominon Petroleum Kenya Ltd & another v Commissioner of Domestic Taxes
The bottom line
#Kenya's Court of Appeal let a KSh 187 million tax appeal proceed, but only after the company deposits KSh 30 million as security.
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- 1.Whether the respondent's Notice of Appeal should be struck out for non-compliance with rule 75(3) of the repealed Court of Appeal Rules, 2010
- 2.Whether the applicant has satisfied the twin principles for the grant of a stay under rule 5(2)(b) of the Court of Appeal Rules
Key legal issues
#Effect of non-compliance with rule 75(3) of the repealed Court of Appeal Rules, 2010
The Notice of Appeal's failure to specify the part of the judgment appealed against was a failure of particulars, not outright non-compliance; striking out was declined as no prejudice or risk of ambush was demonstrated
The notice stated the appeal was against 'part of the decision', indicating partial compliance. The applicant itself had appealed the WHT on Deemed Interest finding, so the disputed part was obvious to both sides. Guided by the Supreme Court in Obado, a party's right of appeal should not be abruptly excluded for procedural non-compliance absent apparent prejudice. Striking out is draconian and reserved for plain and outright instances.
Whether the intended appeal is arguable under rule 5(2)(b)
Arguability was established from the motion and affidavit despite the absence of a draft memorandum of appeal; a single bona fide arguable ground suffices
The applicant challenged the finding that WHT on Deemed Interest applied pre-2014, contending the financing from overseas related parties was quasi-equity financing rather than loans, falling outside section 16(3) of the Income Tax Act. Citing Cabinet Secretary Ministry of Health v Aura, grounds may be raised on the face of the motion. An arguable appeal need not necessarily succeed.
Whether the appeal would be rendered nugatory absent a stay
Nugatory-ness was demonstrated given the substantial sum of Kshs. 187,807,449 and the applicant's ceased operations, warranting a conditional stay
The amount involved was substantial and the applicant had shut down its Kenyan operations. Although the respondent was capable of refunding, collection of the colossal sum before appeal could cause irreparable financial hardship. The respondent's legitimate interest in the fruits of judgment was safeguarded through a conditional security deposit of Kshs. 30,000,000, balancing both parties' interests.
Legal principles established
#- Rule 75(3) of the repealed Court of Appeal Rules, 2010 requires a party appealing against part only of a decision to specify the part complained of, in mandatory terms
- A notice of appeal that indicates an appeal against 'part of the decision' without specifying the part is a failure to provide sufficient particulars, not an outright non-compliance, and may be excused where no prejudice or risk of ambush arises
- Both limbs of the rule 5(2)(b) twin test - arguability and nugatory-ness - must be satisfied for a stay to issue
- Absence of a draft memorandum of appeal is not fatal to a rule 5(2)(b) application where arguable grounds are discernible from the motion and supporting affidavit
- In monetary decrees, a stay decision must balance the applicant's opportunity to appeal against the respondent's right to enjoy the fruits of judgment
Court orders
#- 1.The applicant's Civil Application No. E434 of 2021 lacks merit and is hereby dismissed
- 2.The applicant's Civil Application No. E439 of 2021 is allowed on condition that the applicant deposits Kshs. 30,000,000 in an interest-earning account in a reputable Kenyan bank (preferably the respondent's bankers) in the names of counsel for the parties within ninety (90) days from the date of the ruling; failure to comply will result in the automatic lapse of the stay order
- 3.The costs of both applications shall abide the outcome 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
- Tax Appeal No. E093 of 2020 (HCCC No. E093 of 2020)
- Jurisdiction invoked
- Rule 5(2)(b) and rule 84 of the Court of Appeal Rules (inherent appellate jurisdiction over notices of appeal and stay of execution pending appeal)
- Consolidated with
- Civil Application E439 of 2021
Relief refused
#Striking out of the respondent's Notice of Appeal dated 1st December 2021
The notice partially complied with rule 75(3); the omission was a procedural error occasioning no prejudice, and there was no risk of ambush as both parties knew the issues in contention
Unconditional stay of execution of the High Court judgment
The offer of Kshs. 5,000,000 as security was manifestly inadequate given the substantial amount due; stay granted only on condition of depositing Kshs. 30,000,000
Costs
The costs of both applications shall abide the outcome of the intended appeal.
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.
The applicant's Civil Application No. E434 of 2021 lacks merit and is hereby dismissed
The applicant's Civil Application No. E439 of 2021 has merit and is hereby allowed on condition that the applicant deposits the sum of Kshs. 30,000,000 in an interest-earning account in a reputable Kenyan bank
Failure to comply will result in the automatic lapse of the stay order
The costs of both applications shall abide the outcome of the intended appeal
we find that there is no risk of ambush because both parties already know the substantive issues in contention
absence of a formal draft memorandum of appeal is not always fatal to the application
Issues in the judgment
#Narrative of the High Court outcome is inconsistent between paragraphs 2 and 3 on whether the Judge upheld the Tribunal or partially allowed the respondent's appeal
Coram lists 'L NDOLO' but the signature block reads 'L. M. NDOLO'
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Dominon Petroleum Kenya Ltd & another v Commissioner of Domestic Taxes", Case Analysis (2026). Civil Application E434 & E439 of 2021 (Consolidated). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1806/eng@2026-09-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.