PRAHLAD BHOGAITA & 3 OTHERS v MINISTER FOR FINANCE & ANOTHER [2007] KECA 272 (KLR)

REPUBLIC OF KENYA IN THE COURT OF APPEAL OF KENYA AT NAIROBI

Civil Appli 253 of 2006 ( UR 141/2006)

1.  PRAHLAD BHOGAITA

2.  BHUPENDRA M. SHAH

3.  KAMAL SANGHANI

4.  NASEEM KAUSAR

(As the Chairman, Assistant Chairman, Secretary and Treasurer

respectively of the united Business Association suing for and on

behalf of UNITED BUSINESS ASSOCIATION..................................................................APPLICANTS

AND

1.  HON MINISTER FOR FINANCE

2.  KENYA REVENUE AUTHORITY……........................................................................RESPONDENTS

(Application for stay from the ruling and order of the High Court of Kenya

Nairobi (Wendoh, J) dated 27th July 2006

in

H.C. MISC. APP NO 373 OF 2006)

*********************

RULING OF THE COURT

This is an application under rule 5 (2) (b) of the Court of Appeal Rules, for stay of an order of the superior court in its Misc. Civil Case No. 373 of 2006.  The applicants are Prahlad Bhogaita, Bhupendra M. Shah, Kamal Sanghani and Naseem Kausar, described as Chairman, Assistant Chairman, Secretary and Treasurer, respectively of United Business Association, and suing for and on behalf of United Business Association. That the application is brought in a representative capacity has been challenged, but the issue is not available for consideration this not being an appeal.

It is now well settled, and we need not cite any authority on this that for an applicant to succeed in an application under rule 5(2) (b) he must first show his appeal or intended appeal, as the case may be, is arguable or as others would say, it is not frivolous.  Secondly, that if that appeal or intended appeal will be rendered nugatory, if it were to eventually succeed, unless he, the applicant is granted either a stay or injunction, as the case may be.

The facts of this case are brief. On 4th July, 2006, the applicants were granted, ex parte, leave to file judicial review proceedings to challenge the implementation of Legal Notice No. 54 of 15th June, 2006, which leave was ordered to operate as a stay of the implementation of that legal Notice.  That legal notice, which was made pursuant to the provisions of section 58 of the Value Added Tax Act, Cap 476, of the Laws of Kenya, was in effect meant to clarify the manner of implementing an earlier notice, to wit, Legal Notice Number 110 of 2004.

The aforesaid order of stay did not augur well with the Kenya Revenue Authority (KRA) which, on 21st July, 2006 brought an application under a certificate of urgency seeking orders, inter alia, that the order of stay be set aside, and that the applicants disclose the membership of the United Business Association.  Mr Waweru Gatonye who presented the application on behalf of the Kenya Revenue Authority, was heard on the question of urgency.  Wendoh J who heard arguments on the matter was satisfied the matter was urgent and ordered that the application be served on the other parties for hearing, inter partes, on 26th July 2006.  The application must have been served because on 26th July 2006, the other parties appeared by counsel.  The events of that and the next day gave rise to the present motion.

When the application was called, Mr Kariuki, for the applicants herein applied for adjournment on two basic grounds.  Firstly, that his clients had instructed Mr. Mwenesi, advocate to lead him in the matter, and, secondly, that he had not had ample time to respond to the issues which had been raised in KRA’s  application.  Mr Gatonye opposed the application for adjournment.  He was however, overruled, and the application was adjourned to the next day, 27th July 2006 at 2 p.m.  In her order, Wendoh J. rendered herself thus:-

“The Court has inherent jurisdiction to set aside its order made ex parte and it will set aside its order of stay if the applicants will not be ready to proceed.”

At 2p.m on 27th July, 2006, Mr Kariuki was not ready for the hearing of KRA’s application.  He informed the court that his lead counsel had lost his mother-in-law, a Muslim and he would not therefore be able to lead him.  Besides he needed time to go through papers which were filed earlier the same day by the other parties.  He concluded that there would be a miscarriage of justice if the matter proceeded then. He requested an adjournment to the following Monday at 2. 30p.m.

As expected, Mr Gatonye strenuously opposed the application for adjournment, and urged the Court to hear his client’s application on account of urgency.  He did not understand why Mr Kariuki, whom he regards as a seasoned advocate, could not handle the matter on behalf of his clients. Mr Mwaniki for the Minister for Finance concurred.

In her ruling Wendoh, J, while regretting the death of Mr Mwenesi’s mother-in-law, remarked that the matter before her had been listed on urgency basis; there was an order of stay in place which was highly contested; and that the court was soon breaking for Summer Vacation and any adjournment would cause a much longer delay in hearing the matter.  She also noted that on the previous day she had cautioned the parties that she would discharge the order of stay if, particularly the applicants, were not ready to proceed with the hearing of the matter.  She concluded her ruling thus:

“It is claimed that the order has paralysed the operations of KRA all over the Country.  Though the Court gave the orders ex-parte it has inherent power to set them aside ex-parte and I hereby do order that the stay order will be vacated in so far as it relates to the whole Country.  It will remain in force as relates to applicants listed as ex-parte applicants.”

It is that part of the ruling against which an appeal is intended.

In the motion before us Mr Kariuki for the applicants submitted that there are several arguable points raised by the order;  firstly, whether substantive orders could be made, as happened in the court below, upon an application for adjournment; secondly, whether the stay order was properly limited to the four named applicants in view of the fact that L.N. number 54 of 2006 had countrywide application and those four applicants were representing several other parties; and  thirdly, whether the learned trial Judge acted judicially in declining an adjournment. Mr Kariuki, also raised the issue relating to the capacity of the named applicants to sue on behalf of members of United Business Association.

Whether or not to grant an adjournment of a matter pending before a court is in the discretion of the Judge or Magistrate seised of it. It is a discretion which must be exercised judicially. (See Shah v. Mbogo [1967]E.A. 116. The applicant contends that Wendoh J did not exercise her discretion judicially when she declined an adjournment.  Whether or not she exercised her discretion judicially, is a matter which has since been overtaken by events.  A determination, one way or the other now,  will only be of academic benefit.

On the assumption that the applicant’s intended appeal is arguable, we do not think on the facts and circumstance of this matter that the success of that appeal will be rendered nugatory.  The applicant’s application before the superior court for judicial review is still pending.  The applicants have not explained why they are not pursuing it and preferred to pursue an appeal against the discharge of the stay order.  The stay order was discharged on 26th July 2006, about ten months ago.  We inquired in open court what the position was on the ground but Mr Kariuki for the applicants expressed ignorance on the matter. So if the applicant’s Association had any problem relating to the matters which brought them to court, they would have instructed their counsel on the issue.  Mr Gatonye for KRA, lamented that the membership of the United Business Association is unclear in absence of any registration certificate and list of members of the association.  We agree the membership of the aforesaid Association is unclear.  How then do we grant orders in favour of a party whose existence is at the moment unclear? What are their circumstances particularly the nature of their respective operations? It was not a difficult thing to avail the list of members.  If they exist there is no evidence that they are aware of this litigation.  To the extent that the affected members are unknown, we are unable to rule on the question whether unless we grant a stay the success of their intended appeal will be rendered nugatory.  The named applicants are personally not complaining as the stay order in their favour is still in place.  In the circumstances, we are not satisfied that the applicants have satisfied us on the nugatory aspect.  It is trite law that the applicant must not only show the existence of an arguable appeal but also that the success of that appeal will be rendered nugatory unless the stay or injunction prayed for is granted.  The applicants having failed to satisfy the second test there is no basis for granting them the orders they seek.

In the result, the application dated 29th September 2006 and lodged in Court on 2nd October, 2006 is hereby dismissed with costs.

Dated and delivered at Nairobi this 29th day of June, 2007.

S. E. O  BOSIRE

………..……………

JUDGE OF APPEAL

P.N. WAKI

……………..…………

JUDGE OF APPEAL

W.S. DEVERELL

………………………..

JUDGE OF APPEAL

I certify that this is a true copy of the original

DEPUTY REGISTRAR