The National Oil Corporation of Kenya (Nock) won a reprieve after the Court of Appeal suspended a decision by a lower Court ordering it to pay a company Sh22.7 million as special and general damages for breach of contract.
The Court of Appeal issued the order pending hearing and determination of an intended appeal by the government-owned oil marketer against the decision of the High Court which was in favour of Great White Investment Ltd.
Appellate Judges Agnes Murgor, Kibaya Laibuta, and George Odunga ruled that Nock had satisfied the threshold and the requirements for the grant of orders to stay (suspend) execution of the judgement and decree.
“A consideration of the applicant’s (Nock) reasons as to why the appeal will be rendered nugatory in the event stay is not granted leads us to conclude that if immediate and precipitous payment of such sums would ground the applicant’s operations to its detriment, then such reasons sufficiently satisfy the second aspect for grant of an order of stay of execution,” ruled the three-judge bench appellate court.
The appellate judges noted that it would seem that Nock’s dissatisfaction with the judgment arose from its contention that the High Court failed to properly evaluate the evidence before it thus reached the wrong decision.
“It is trite that evaluation of documentary and oral evidence is a fundamental duty of the trial court and a complaint that the court failed to properly evaluate the evidence, if this was the case, is sufficient grounds on which to appeal. We consider this to be an arguable issue,” ruled the Court of Appeal.
In its appeal, Nock argued that it has an arguable appeal with a high probability of success as the High Court misinterpreted and misapplied the contractual clauses governing a relationship between the parties by erroneously relying on a clause of the contract relating to the transporter obligation during operation instead of one on termination.
Nock also argued that unless the stay of execution was granted, the appeal would be rendered nugatory and that execution of the decree would prejudice it if compelled to pay the money to Great White Investment Ltd as this would place it (Nock) under financial strain.
Great White Investment Ltd had argued that despite Nock filing a Notice of Appeal, it was yet to file the appeal and that stay orders cannot be granted in perpetuity waiting for an appeal to be filed.
However, the Court of Appeal ruled that Nock having filed a Notice of Appeal, which was a prerequisite to the seizure of jurisdiction by the court (Court of Appeal) grants it the necessary jurisdiction to hear Nock’s application for stay of execution.
Great White Investment Ltd also argued that Nock had not satisfied the conditions for stay of execution to be granted since it was not demonstrated that there was an arguable appeal that would be rendered nugatory if the stay was declined.
The company also argued that for a stay of execution to be granted, the applicant ought to demonstrate that it (the applicant) was ready to provide security if it lost the appeal.
The genesis of the dispute was that sometime in October 2016, Nock and Great White Investment Ltd signed an agreement for the provision of transport and site management services.
Great White Investment Ltd’s obligation under the agreement included transportation of automotive diesel from Nock’s depots to Kenya Ports Authority (KPA) sites and offloading into the storage tanks provided by the fuel purchaser (KPA).
It was also to ensure safety and preservation of quality until the title and risk pass to the fuel purchaser at the designated billing meter.
The court heard that the respondent (Great White Investment Ltd) failed to fulfil its obligations and on May 31, 2019, Nock terminated the contract by giving 30 days' notice from the date of the termination notice.
The reason for the termination, the court was told, related to the loss of products at KPA sites from October 2016 to the time of termination in 2019.
The court further heard that on June 17, 2019, upon reconciliation of the KPA cash account between the applicant and the respondent’s representative, Nock demanded Sh9.2 million from the respondent being the unexplained variance.
Subsequently, the court was told that KPMG conducted a forensic audit on the stock value on site where it was discovered that there were losses of Sh187.3 million attributable to the respondent.
Aggrieved by the termination, the court was told that Great White Investment Ltd filed a claim against Nock for special damages for unpaid monies and general damages for breach of contract.
Nock, the court heard, filed a counterclaim against the respondent, claiming Sh190.7 million for the value of products unaccounted for following alleged anomalies discovered during the respondent’s tenure as site manager and the cost of the forensic audit carried out.
