' Introduction
1. On 4th June 2025, the Tax Appeals Tribunal (“the Tribunal”) dismissed the Appellant’s appeal and affirmed the Commissioner’s tax assessment of Kshs. 176,441,532.00 issued to the Appellant vide the Commissioner’s Objection Decision dated 9th May 2024. The Appellant, having been dissatisfied with this decision, lodged an appeal to this court. The Appellant also moved the court by way of Notice of Motion dated 14th April 2025 seeking orders that: -
a) There be a stay of execution and/or enforcement of the Respondent’s Agency Notices dated 9th May 2025 and tax demands pending hearing and determination of the appeal; and
b) The matter be referred to Alternative Dispute Resolution (ADR) under Section 55 of the Tax Procedures Act, 2015.
2. The Motion is premised on the grounds set out in the supporting affidavit of Mr. Kennedy O. Abincha, the Appellant’s County Executive Committee Member for Finance, who avers that the Respondent issued Agency Notices dated 9th May 2025 against the Appellant’s bank accounts demanding payment of alleged PAYE and withholding tax arrears amounting to Kshs. 176,441,532.00.
3. The Appellant contends that the said enforcement measures have paralyzed its financial operations, jeopardized payment of staff salaries, and disrupted essential county services. It maintains that the appeal raises arguable issues and that the matter is best resolved amicably through ADR proceedings.
4. The Respondent, the Commissioner of Investigations and enforcement (KRA), opposes the application through a Replying Affidavit sworn on 24th April 2025 by Ms. Mercy Mutisya, a manager in charge of the Respondent’s Debt Unit.
5. According to Ms. Mutisya, the tax assessments were properly raised and confirmed by the Tribunal in its judgment the subject of these proceedings. She maintained that that the Appellant has failed to satisfy the concurrent conditions for the grant of a stay of execution under Order 42, Rule 6 of the Civil Procedure Rules, 2010. Further, that ADR cannot be invoked as a shield against lawful enforcement.
6. The matter proceeded by way of written submissions. The Appellant through Odhiambo Oronga Advocates filed its submissions dated 2nd May 2025, whilst the Respondent’s Counsel – Ngetich Kipngeno, filed its submissions dated 15th May 2025.
Analysis and Determination
7. I have carefully considered the Application, Supporting Affidavit, and the Respondent’s Replying Affidavit. The primary issue for determination in the present application is whether this court should grant stay of execution of the Judgment/Decree of the Tax Appeals Tribunal at Nairobi dated 4th April 2025 in Tax Appeal No. E697 of 2024.
8. This being an appeal from the decision of the Tax Appeal Tribunal, Rule 20 of the Tax Appeals Tribunal (Appeals to the High Court) Rules, 2015 is germane. The Rule provides that the Civil Procedure Rules shall apply to tax appeals to the extent they are not inconsistent with the Act or the Rules.
9. Order 42 Rule 6 of the Civil Procedure Rules 2010 sets out the jurisdiction of this court to grant orders of stay pending appeal in order to secure the substratum of the appeal. It provides that: -
“Stay in case of appeal [Order 42, rule 6]
(1) No appeal or second appeal shall operate as a stay of execution or proceedings under a decree or order appealed from except in so far as the court appealed from may order but, the court appealed from may for sufficient cause order stay of execution of such decree or order, and whether the application for such stay shall have been granted or refused by the court appealed from, the court to which such appeal is preferred shall be at liberty, on application being made, to consider such application and to make such order thereon as may to it seem just, and any person aggrieved by an order of stay made by the court from whose decision the appeal is preferred may apply to the appellate court to have such order set aside.
(2) No order for stay of execution shall be made under subrule (1) unless—(a)the court is satisfied that substantial loss may result to the applicant unless the order is made and that the application has been made without unreasonable delay; and(b)such security as the court orders for the due performance of such decree or order as may ultimately be binding on him has been given by the applicant.
(3) Notwithstanding anything contained in subrule (2), the court shall have power, without formal application made, to order upon such terms as it may deem fit a stay of execution pending the hearing of a formal application.
(4) For the purposes of this rule an appeal to the Court of Appeal shall be deemed to have been filed when under the Rules of that Court notice of appeal has been given.
(5) An application for stay of execution may be made informally immediately following the delivery of judgment or ruling.
(6) Notwithstanding anything contained in subrule (1) of this rule the High Court shall have power in the exercise of its appellate jurisdiction to grant a temporary injunction on such terms as it thinks just provided the procedure for instituting an appeal from a subordinate court or tribunal has been complied with.
10. In Butt Vs. Rent Restriction Tribunal [1979], the Court of Appeal gave pointers on what ought to be considered in determining whether to grant or refuse stay of execution pending appeal. The court stated thus:
i. The power of the court to grant or refuse an application for a stay of execution is a discretionary, and the discretion should be exercised in such a way as not to prevent an Appeal.
ii. The general principle in granting or refusing a stay is, if there is no other overwhelming hindrance, a stay must be granted so that an Appeal may not be rendered nugatory should the Appeal court reverse the judge’s discretion.
iii. Thirdly, a judge should not refuse a stay if there are good grounds for granting it merely because, in his opinion, a better remedy may become available to the Applicant at the end of the proceedings.
iv. Finally, the court in exercising its discretion whether to grant or refuse an application for stay will consider the special circumstances of the case and its unique requirements.
11. The principles governing the exercise of discretion under the above rule are well settled. In Barnabas East Africa v County Government of Mombasa & 2 others [2024] KEELC 1361 (KLR), the Court reiterated that the three requirements are conjunctive and must all be satisfied, in the following words: -
“41. As already demonstrated in the case of: - “James Wangalwa & Another vs. Agnes Naliaka Cheseto (supra)” the three (3) conditions for granting stay of execution pending appeal MUST be met simultaneously. They are conjunctive and not disjunctive. It is my finding that the Applicants herein, though they brought this Application without undue delay and adequately demonstrated the substantial loss that they would suffer and they failed to furnish security as stipulated by sub-rule 2b.”
12. From the above provisions of the law and case law, it is evident that the power to grant stay pending appeal is discretionary and must be exercised in such a way that the appeal is not rendered nugatory. In exercising this power, the Court must be satisfied that: -
a) Substantial loss may result to the applicant unless the order is made;
b) The application has been made without unreasonable delay; and
c) Such security as the court orders for due performance of the decree has been given.
13. In tax matters, the Court (Majanja J) in Keroche Breweries Limited v Commissioner of Domestic Taxes ML HC ITA E012 of 2020 [2020] eKLR, Majanja J observed that the power of the Court to either grant of refuse an application for stay pending appeal is to be exercised having regard to the fact that while a taxpayer, if dissatisfied with the Tribunal’s judgment is entitled to exercise her statutory right of appeal, the Commissioner is equally entitled to the fruits of its judgment, that is, to collect the taxes to be paid by the Appellant. The Court stated that:
“5. In arriving at a balance, the court is to weigh the Respondent’s entitlement to exercise its statutory right of appeal and the Commissioner’s entitlement to the fruits of its judgment in this case to collect the taxes lawfully due from the Respondent. In doing this, the court should ensure that the appeal is not rendered nugatory by allowing execution to proceed in a manner that would render the ensuing appeal otiose (see Keroche Breweries Limited v Commissioner of Domestic Taxes ML HC ITA E012 of 2020 [2020] eKLR, and Superior Homes (Kenya) Limited v Musango Kithome MKS HC Civil Appeal No. 91 of 2017 [2018] eKLR). The onus of satisfying the court that unless stay is granted, it will suffer substantial loss is upon the applicant (see David Morton Silverstein v Atsango Chesoni NRB CA Civil Application No. 189 of 2001 [2002] eKLR).”
14. With the above in mind, I will now proceed and determine whether the Appellant has in the present application, met the threshold outlined above.
i. Whether the Appellant has demonstrated substantial loss
15. In the present application, the Appellant argues that the sum demanded constitutes public funds essential for county operations, including payment of salaries, healthcare, and development projects, and that enforcement will cripple the County’s operations. The Appellant cited the case of AEE Power Limited v Commissioner, Domestic Taxes [2024] KEHC 1567 (KLR), in support of its position.
16. The Respondent on the other hand disputes that any substantial loss has been demonstrated, contending that mere averments are not evidence. Citing among others, the case of Samvir Trustee Limited v Guardian Bank Limited [2007] KEHC 2438 (KLR), the Respondent asserted that an applicant must adduce empirical or documentary evidence to support the allegation of substantial loss, and that mere assertions are insufficient.
17. Having considered the parties’ respective submissions, I agree with the Respondent that the Appellant has not placed before the Court any documentary proof showing the County’s financial position, its expenditure obligations, or that the funds in its accounts are insufficient to meet both operational needs and the tax demand. In Zuleka Samji v Commissioner of Domestic Taxes [2021] KEHC 7324 (KLR) cited by the Respondent, the Court declined to find substantial loss in the absence of such material particulars. The Court stated that:
“The appellant contended that her husband was in real need of financial support. That he was dependent on her. However, an applicant who wishes the Court to exercise its discretion in his favour, he must be candid with the Court. 5 20. In the present case, the Court was not made aware of the total amount in credit in the sequestered accounts, the appellant’s means of income, the projected approximate medical expenses that her husband may require, whether or not the husband has an insurance cover. All these are matters that would have enabled the Court to deal with the issue of substantial loss with much ease. 21. With such scanty material, the Court cannot be able to gauge whether the appellant would suffer substantial loss or not if she pays the taxes found to be due. What was clear was that her husband needed complicated medical attention. The appellant would definitely need the funds in those accounts to fend for herself and take care of him.”
18. In any event, substantial loss must be viewed through the lens of whether the appeal will be rendered nugatory if stay is not granted. Gikonyo J observed in Geoffrey Muriungi & Another v John Rukunga M’Imonyo [2016] KEHC 6762 (KLR) that substantial loss refers to a situation where a successful appellant becomes “a holder of a barren result” due to the inability to realize the fruits of the appeal.
19. Applying that principle, the Court must ask whether the Appellant would be unable to recover the taxes if its appeal eventually succeeds. The answer is in the negative. Sections 47 and 47A of the Tax Procedures Act provide a statutory mechanism for the offset or refund of taxes paid in error or excess. In particular, Section 47 of the Act provides that:
“47. Offset or refund of overpaid tax
(1) Where a taxpayer has overpaid a tax under any tax law, the taxpayer may apply to the Commissioner in the prescribed form—(a)to offset the overpaid tax against the taxpayer’s outstanding tax debts and future tax liabilities including instalment taxes and input value added tax; or(b)for a refund of the overpaid tax—(i)in the case of income tax, within five years from the date on which the tax was overpaid; or(ii)in the case of any other tax, within twelve months from the date on which the tax was overpaid.
(2) he Commissioner shall ascertain and determine an application under subsection (1) within ninety days and where the Commissioner ascertains that there was an overpayment of tax—(a)in the case of an application under subsection (1)(a), apply the overpaid tax to such outstanding tax debts or future tax liability; and(b)in the case of an application under subsection (1)(b), refund the overpaid tax within a period of six months from the date of ascertainment and, if the Commissioner fails to refund, the overpaid tax shall be applied to offset the taxpayer’s outstanding tax debt or future tax liabilities.
(3) Where the Commissioner fails to ascertain and determine an application under subsection (1) within ninety days, the same shall be deemed ascertained and approved.
20. It therefore follows that to the extent that the law provides for a mechanism through which taxes paid in error, or where taxes are for some reason overpaid can either be refunded or offset against future tax liability, no irreparable or irreversible loss has therefore been demonstrated by the Appellant.
21. Consequently, I find that the Appellant has failed to satisfy the first condition under Order 42 Rule 6.
ii. Whether the application was brought without unreasonable delay
22. The Tribunal’s judgment was delivered on 4th April 2025 while the present application was filed on 14th April 2025. I am satisfied that the application was brought timeously, and this condition is accordingly met.
iii. Whether the Appellant has offered security for due performance
23. The Appellant has not offered any form of security despite the order of the Tribunal being a money decree. The law is settled that the requirement for security is not optional. In Gianfranco Manenthi & Another v Africa Merchant Assurance Company Ltd [2019] KEHC 7586 (KLR), the Court emphasized that a party seeking stay of a money decree must furnish adequate security for the due performance of the decree.
24. The fact that the Appellant is a County Government does not exempt it from compliance with this requirement. In County Government of Narok v British Pharmaceuticals Limited [2021] KEHC 9595 (KLR), and Narok County Government & Another v Mwavali [2024] KECA 1799 (KLR), both the High Court and the Court of Appeal imposed security conditions against county governments seeking stay. In the latter case, the Court of Appeal while ordering the provision of a security as a condition of stay stated that:
“We find no contest that the 1st appellant being a County Government entity funded by tax payers will be in a position to honour the decree in the event that the appeal is unsuccessful. No argument was urged before us to suggest that the respondent will be in a position to refund the colossal decretal sum in the event the appeal succeeds. However, as we seek to balance the interests of the respective parties, the approach we prefer in determining whether or not to grant the stay of execution is to ensure that applicants are not denied their opportunity to ventilate their appeal while at the same time, respondent is not denied the fruits of his judgment. It is noteworthy that the judgment was entered against the appellant after nearly 10 years of protracted litigation. We also not that the respondent sustained extremely severe injuries and is now confined in a wheelchair. It is also disturbing that there has been a delay in filing the appeal. Upon considering the respective parties’ positions, we find that the interests of justice tilts in favour of placing the parties on an equal footing as far as practicable pending the hearing of the appeal. 20. Accordingly, we allow the notice of motion dated 15th August, 2023 subject to the conditions that: (a) the applicants shall file their record of appeal within 30 days from the date hereof, (b) the applicants to pay the respondent a sum of Kshs.5 million within 45 days from the date hereof, (c) upon payment as aforesaid, the attached goods shall be released to the applicant, (d) in the event the applicant fails to comply with conditions (a) and (b) above, the application shall stand dismissed with costs and execution shall proceed, (e) the costs of the application shall abide the outcome of the appeal.”
25. The purpose of security is to guarantee the Respondent the fruits of the judgment should the appeal fail, and to prevent the use of appeals for the sole purpose of delaying execution. What is critical is for the Court to balance the competing interests of both parties; the Appellant’s right to pursue its appeal and the Respondent’s right to enjoy the fruits of its judgment. This principle was well articulated in Tabro Transporters Ltd v Absalom Dova Lumbasi [2012] KEHC 5549 (KLR) and Keroche Breweries Limited v Commissioner of Domestic Taxes (supra).
26. In the present case, the Appellant has offered no security at all. The Respondent submitted that should the Court grant the stay, it must be conditioned upon the Applicant depositing 50% of the taxes due (Kshs. 88,220,766) as cash security.
27. Given that all three conditions under Order 42, Rule 6 must be satisfied concurrently, the application for an unconditional stay as sought by the Applicant must fail.
28. However, pursuant to Order 42 Rule 6(6) of the Civil Procedure Rules, 2010 and in the exercise of this Court’s inherent and discretionary powers, I am inclined to grant a conditional order stay as this will serve the dual purpose of preserving the Appellant’s right of appeal, and at the same time safeguarding, to an extent, the Respondent''s right to the fruits of its judgment.
29. Accordingly, the Court makes the following orders: -
i. The Appellant’s Notice of Motion dated 14th April 2025 is hereby partially allowed on the following conditions:
a) A stay of execution of the judgment dated 4th April 2025 be and is hereby granted pending the hearing and determination of the intended appeal on the terms set out hereunder or until further orders of this court or the Court of Appeal.
b) The stay is strictly conditional upon the Applicant depositing with the Respondent 50% of the taxes due (Kshs. 88,220,766) within a period of forty-five (45) days from the date hereof.
c) In default of compliance with the terms of this Ruling as to the provision of security, the stay of execution shall automatically lapse and the Respondent shall be at liberty to proceed with execution without recourse to the court.
d) The costs of the application shall abide by the appeal.
30. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
27TH NOVEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
Oronga………..for the Appellant/Applicant
N/A……………. for the Respondent
'
1. On 4th June 2025, the Tax Appeals Tribunal (“the Tribunal”) dismissed the Appellant’s appeal and affirmed the Commissioner’s tax assessment of Kshs. 176,441,532.00 issued to the Appellant vide the Commissioner’s Objection Decision dated 9th May 2024. The Appellant, having been dissatisfied with this decision, lodged an appeal to this court. The Appellant also moved the court by way of Notice of Motion dated 14th April 2025 seeking orders that: -
a) There be a stay of execution and/or enforcement of the Respondent’s Agency Notices dated 9th May 2025 and tax demands pending hearing and determination of the appeal; and
b) The matter be referred to Alternative Dispute Resolution (ADR) under Section 55 of the Tax Procedures Act, 2015.
2. The Motion is premised on the grounds set out in the supporting affidavit of Mr. Kennedy O. Abincha, the Appellant’s County Executive Committee Member for Finance, who avers that the Respondent issued Agency Notices dated 9th May 2025 against the Appellant’s bank accounts demanding payment of alleged PAYE and withholding tax arrears amounting to Kshs. 176,441,532.00.
3. The Appellant contends that the said enforcement measures have paralyzed its financial operations, jeopardized payment of staff salaries, and disrupted essential county services. It maintains that the appeal raises arguable issues and that the matter is best resolved amicably through ADR proceedings.
4. The Respondent, the Commissioner of Investigations and enforcement (KRA), opposes the application through a Replying Affidavit sworn on 24th April 2025 by Ms. Mercy Mutisya, a manager in charge of the Respondent’s Debt Unit.
5. According to Ms. Mutisya, the tax assessments were properly raised and confirmed by the Tribunal in its judgment the subject of these proceedings. She maintained that that the Appellant has failed to satisfy the concurrent conditions for the grant of a stay of execution under Order 42, Rule 6 of the Civil Procedure Rules, 2010. Further, that ADR cannot be invoked as a shield against lawful enforcement.
6. The matter proceeded by way of written submissions. The Appellant through Odhiambo Oronga Advocates filed its submissions dated 2nd May 2025, whilst the Respondent’s Counsel – Ngetich Kipngeno, filed its submissions dated 15th May 2025.
Analysis and Determination
7. I have carefully considered the Application, Supporting Affidavit, and the Respondent’s Replying Affidavit. The primary issue for determination in the present application is whether this court should grant stay of execution of the Judgment/Decree of the Tax Appeals Tribunal at Nairobi dated 4th April 2025 in Tax Appeal No. E697 of 2024.
8. This being an appeal from the decision of the Tax Appeal Tribunal, Rule 20 of the Tax Appeals Tribunal (Appeals to the High Court) Rules, 2015 is germane. The Rule provides that the Civil Procedure Rules shall apply to tax appeals to the extent they are not inconsistent with the Act or the Rules.
9. Order 42 Rule 6 of the Civil Procedure Rules 2010 sets out the jurisdiction of this court to grant orders of stay pending appeal in order to secure the substratum of the appeal. It provides that: -
“Stay in case of appeal [Order 42, rule 6]
(1) No appeal or second appeal shall operate as a stay of execution or proceedings under a decree or order appealed from except in so far as the court appealed from may order but, the court appealed from may for sufficient cause order stay of execution of such decree or order, and whether the application for such stay shall have been granted or refused by the court appealed from, the court to which such appeal is preferred shall be at liberty, on application being made, to consider such application and to make such order thereon as may to it seem just, and any person aggrieved by an order of stay made by the court from whose decision the appeal is preferred may apply to the appellate court to have such order set aside.
(2) No order for stay of execution shall be made under subrule (1) unless—(a)the court is satisfied that substantial loss may result to the applicant unless the order is made and that the application has been made without unreasonable delay; and(b)such security as the court orders for the due performance of such decree or order as may ultimately be binding on him has been given by the applicant.
(3) Notwithstanding anything contained in subrule (2), the court shall have power, without formal application made, to order upon such terms as it may deem fit a stay of execution pending the hearing of a formal application.
(4) For the purposes of this rule an appeal to the Court of Appeal shall be deemed to have been filed when under the Rules of that Court notice of appeal has been given.
(5) An application for stay of execution may be made informally immediately following the delivery of judgment or ruling.
(6) Notwithstanding anything contained in subrule (1) of this rule the High Court shall have power in the exercise of its appellate jurisdiction to grant a temporary injunction on such terms as it thinks just provided the procedure for instituting an appeal from a subordinate court or tribunal has been complied with.
10. In Butt Vs. Rent Restriction Tribunal [1979], the Court of Appeal gave pointers on what ought to be considered in determining whether to grant or refuse stay of execution pending appeal. The court stated thus:
i. The power of the court to grant or refuse an application for a stay of execution is a discretionary, and the discretion should be exercised in such a way as not to prevent an Appeal.
ii. The general principle in granting or refusing a stay is, if there is no other overwhelming hindrance, a stay must be granted so that an Appeal may not be rendered nugatory should the Appeal court reverse the judge’s discretion.
iii. Thirdly, a judge should not refuse a stay if there are good grounds for granting it merely because, in his opinion, a better remedy may become available to the Applicant at the end of the proceedings.
iv. Finally, the court in exercising its discretion whether to grant or refuse an application for stay will consider the special circumstances of the case and its unique requirements.
11. The principles governing the exercise of discretion under the above rule are well settled. In Barnabas East Africa v County Government of Mombasa & 2 others [2024] KEELC 1361 (KLR), the Court reiterated that the three requirements are conjunctive and must all be satisfied, in the following words: -
“41. As already demonstrated in the case of: - “James Wangalwa & Another vs. Agnes Naliaka Cheseto (supra)” the three (3) conditions for granting stay of execution pending appeal MUST be met simultaneously. They are conjunctive and not disjunctive. It is my finding that the Applicants herein, though they brought this Application without undue delay and adequately demonstrated the substantial loss that they would suffer and they failed to furnish security as stipulated by sub-rule 2b.”
12. From the above provisions of the law and case law, it is evident that the power to grant stay pending appeal is discretionary and must be exercised in such a way that the appeal is not rendered nugatory. In exercising this power, the Court must be satisfied that: -
a) Substantial loss may result to the applicant unless the order is made;
b) The application has been made without unreasonable delay; and
c) Such security as the court orders for due performance of the decree has been given.
13. In tax matters, the Court (Majanja J) in Keroche Breweries Limited v Commissioner of Domestic Taxes ML HC ITA E012 of 2020 [2020] eKLR, Majanja J observed that the power of the Court to either grant of refuse an application for stay pending appeal is to be exercised having regard to the fact that while a taxpayer, if dissatisfied with the Tribunal’s judgment is entitled to exercise her statutory right of appeal, the Commissioner is equally entitled to the fruits of its judgment, that is, to collect the taxes to be paid by the Appellant. The Court stated that:
“5. In arriving at a balance, the court is to weigh the Respondent’s entitlement to exercise its statutory right of appeal and the Commissioner’s entitlement to the fruits of its judgment in this case to collect the taxes lawfully due from the Respondent. In doing this, the court should ensure that the appeal is not rendered nugatory by allowing execution to proceed in a manner that would render the ensuing appeal otiose (see Keroche Breweries Limited v Commissioner of Domestic Taxes ML HC ITA E012 of 2020 [2020] eKLR, and Superior Homes (Kenya) Limited v Musango Kithome MKS HC Civil Appeal No. 91 of 2017 [2018] eKLR). The onus of satisfying the court that unless stay is granted, it will suffer substantial loss is upon the applicant (see David Morton Silverstein v Atsango Chesoni NRB CA Civil Application No. 189 of 2001 [2002] eKLR).”
14. With the above in mind, I will now proceed and determine whether the Appellant has in the present application, met the threshold outlined above.
i. Whether the Appellant has demonstrated substantial loss
15. In the present application, the Appellant argues that the sum demanded constitutes public funds essential for county operations, including payment of salaries, healthcare, and development projects, and that enforcement will cripple the County’s operations. The Appellant cited the case of AEE Power Limited v Commissioner, Domestic Taxes [2024] KEHC 1567 (KLR), in support of its position.
16. The Respondent on the other hand disputes that any substantial loss has been demonstrated, contending that mere averments are not evidence. Citing among others, the case of Samvir Trustee Limited v Guardian Bank Limited [2007] KEHC 2438 (KLR), the Respondent asserted that an applicant must adduce empirical or documentary evidence to support the allegation of substantial loss, and that mere assertions are insufficient.
17. Having considered the parties’ respective submissions, I agree with the Respondent that the Appellant has not placed before the Court any documentary proof showing the County’s financial position, its expenditure obligations, or that the funds in its accounts are insufficient to meet both operational needs and the tax demand. In Zuleka Samji v Commissioner of Domestic Taxes [2021] KEHC 7324 (KLR) cited by the Respondent, the Court declined to find substantial loss in the absence of such material particulars. The Court stated that:
“The appellant contended that her husband was in real need of financial support. That he was dependent on her. However, an applicant who wishes the Court to exercise its discretion in his favour, he must be candid with the Court. 5 20. In the present case, the Court was not made aware of the total amount in credit in the sequestered accounts, the appellant’s means of income, the projected approximate medical expenses that her husband may require, whether or not the husband has an insurance cover. All these are matters that would have enabled the Court to deal with the issue of substantial loss with much ease. 21. With such scanty material, the Court cannot be able to gauge whether the appellant would suffer substantial loss or not if she pays the taxes found to be due. What was clear was that her husband needed complicated medical attention. The appellant would definitely need the funds in those accounts to fend for herself and take care of him.”
18. In any event, substantial loss must be viewed through the lens of whether the appeal will be rendered nugatory if stay is not granted. Gikonyo J observed in Geoffrey Muriungi & Another v John Rukunga M’Imonyo [2016] KEHC 6762 (KLR) that substantial loss refers to a situation where a successful appellant becomes “a holder of a barren result” due to the inability to realize the fruits of the appeal.
19. Applying that principle, the Court must ask whether the Appellant would be unable to recover the taxes if its appeal eventually succeeds. The answer is in the negative. Sections 47 and 47A of the Tax Procedures Act provide a statutory mechanism for the offset or refund of taxes paid in error or excess. In particular, Section 47 of the Act provides that:
“47. Offset or refund of overpaid tax
(1) Where a taxpayer has overpaid a tax under any tax law, the taxpayer may apply to the Commissioner in the prescribed form—(a)to offset the overpaid tax against the taxpayer’s outstanding tax debts and future tax liabilities including instalment taxes and input value added tax; or(b)for a refund of the overpaid tax—(i)in the case of income tax, within five years from the date on which the tax was overpaid; or(ii)in the case of any other tax, within twelve months from the date on which the tax was overpaid.
(2) he Commissioner shall ascertain and determine an application under subsection (1) within ninety days and where the Commissioner ascertains that there was an overpayment of tax—(a)in the case of an application under subsection (1)(a), apply the overpaid tax to such outstanding tax debts or future tax liability; and(b)in the case of an application under subsection (1)(b), refund the overpaid tax within a period of six months from the date of ascertainment and, if the Commissioner fails to refund, the overpaid tax shall be applied to offset the taxpayer’s outstanding tax debt or future tax liabilities.
(3) Where the Commissioner fails to ascertain and determine an application under subsection (1) within ninety days, the same shall be deemed ascertained and approved.
20. It therefore follows that to the extent that the law provides for a mechanism through which taxes paid in error, or where taxes are for some reason overpaid can either be refunded or offset against future tax liability, no irreparable or irreversible loss has therefore been demonstrated by the Appellant.
21. Consequently, I find that the Appellant has failed to satisfy the first condition under Order 42 Rule 6.
ii. Whether the application was brought without unreasonable delay
22. The Tribunal’s judgment was delivered on 4th April 2025 while the present application was filed on 14th April 2025. I am satisfied that the application was brought timeously, and this condition is accordingly met.
iii. Whether the Appellant has offered security for due performance
23. The Appellant has not offered any form of security despite the order of the Tribunal being a money decree. The law is settled that the requirement for security is not optional. In Gianfranco Manenthi & Another v Africa Merchant Assurance Company Ltd [2019] KEHC 7586 (KLR), the Court emphasized that a party seeking stay of a money decree must furnish adequate security for the due performance of the decree.
24. The fact that the Appellant is a County Government does not exempt it from compliance with this requirement. In County Government of Narok v British Pharmaceuticals Limited [2021] KEHC 9595 (KLR), and Narok County Government & Another v Mwavali [2024] KECA 1799 (KLR), both the High Court and the Court of Appeal imposed security conditions against county governments seeking stay. In the latter case, the Court of Appeal while ordering the provision of a security as a condition of stay stated that:
“We find no contest that the 1st appellant being a County Government entity funded by tax payers will be in a position to honour the decree in the event that the appeal is unsuccessful. No argument was urged before us to suggest that the respondent will be in a position to refund the colossal decretal sum in the event the appeal succeeds. However, as we seek to balance the interests of the respective parties, the approach we prefer in determining whether or not to grant the stay of execution is to ensure that applicants are not denied their opportunity to ventilate their appeal while at the same time, respondent is not denied the fruits of his judgment. It is noteworthy that the judgment was entered against the appellant after nearly 10 years of protracted litigation. We also not that the respondent sustained extremely severe injuries and is now confined in a wheelchair. It is also disturbing that there has been a delay in filing the appeal. Upon considering the respective parties’ positions, we find that the interests of justice tilts in favour of placing the parties on an equal footing as far as practicable pending the hearing of the appeal. 20. Accordingly, we allow the notice of motion dated 15th August, 2023 subject to the conditions that: (a) the applicants shall file their record of appeal within 30 days from the date hereof, (b) the applicants to pay the respondent a sum of Kshs.5 million within 45 days from the date hereof, (c) upon payment as aforesaid, the attached goods shall be released to the applicant, (d) in the event the applicant fails to comply with conditions (a) and (b) above, the application shall stand dismissed with costs and execution shall proceed, (e) the costs of the application shall abide the outcome of the appeal.”
25. The purpose of security is to guarantee the Respondent the fruits of the judgment should the appeal fail, and to prevent the use of appeals for the sole purpose of delaying execution. What is critical is for the Court to balance the competing interests of both parties; the Appellant’s right to pursue its appeal and the Respondent’s right to enjoy the fruits of its judgment. This principle was well articulated in Tabro Transporters Ltd v Absalom Dova Lumbasi [2012] KEHC 5549 (KLR) and Keroche Breweries Limited v Commissioner of Domestic Taxes (supra).
26. In the present case, the Appellant has offered no security at all. The Respondent submitted that should the Court grant the stay, it must be conditioned upon the Applicant depositing 50% of the taxes due (Kshs. 88,220,766) as cash security.
27. Given that all three conditions under Order 42, Rule 6 must be satisfied concurrently, the application for an unconditional stay as sought by the Applicant must fail.
28. However, pursuant to Order 42 Rule 6(6) of the Civil Procedure Rules, 2010 and in the exercise of this Court’s inherent and discretionary powers, I am inclined to grant a conditional order stay as this will serve the dual purpose of preserving the Appellant’s right of appeal, and at the same time safeguarding, to an extent, the Respondent''s right to the fruits of its judgment.
29. Accordingly, the Court makes the following orders: -
i. The Appellant’s Notice of Motion dated 14th April 2025 is hereby partially allowed on the following conditions:
a) A stay of execution of the judgment dated 4th April 2025 be and is hereby granted pending the hearing and determination of the intended appeal on the terms set out hereunder or until further orders of this court or the Court of Appeal.
b) The stay is strictly conditional upon the Applicant depositing with the Respondent 50% of the taxes due (Kshs. 88,220,766) within a period of forty-five (45) days from the date hereof.
c) In default of compliance with the terms of this Ruling as to the provision of security, the stay of execution shall automatically lapse and the Respondent shall be at liberty to proceed with execution without recourse to the court.
d) The costs of the application shall abide by the appeal.
30. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
27TH NOVEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
Oronga………..for the Appellant/Applicant
N/A……………. for the Respondent
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