Gateway Insurance Company Ltd v Aries Auto Sprays [2011] eKLR

Key Facts

Transaction Type

Issues

Holdings

• The court agrees with Visram, JA's judgment, dismissing the appeal with costs to the respondent. The consent order's stipulations were clear and unambiguous, and the failure to comply with the 14-day deadline triggered the default clause, vacating the prior orders. No jurisdiction exists to extend time under such circumstances.
• The court holds that the High Court erred in dismissing the application for extension of time, as the consent order did not finally determine the dispute. The appeal is allowed with costs to the appellant, and the order of the superior court is set aside. The court retains control over the case post-consent order, allowing for discretionary relief from penal clauses.
• The court determines that the consent order, being a contractual agreement between the parties, cannot be altered without grounds such as fraud or mistake. The application for extension of time was made beyond the stipulated period, activating the default clause. The appeal is disallowed as the consent order was binding and the court had no jurisdiction to interfere.

Remedies

Monetary Damages

Legal Principles

• The court applied the principle of 'Pacta Sunt Servanda' to determine that consent orders, once entered into by parties, have contractual effect and cannot be unilaterally altered unless there is evidence of fraud, misrepresentation, collusion, or mistake. The judgment emphasized that the parties freely agreed to the terms of the consent order without such grounds, and thus the court could not vary its conditions.
• The court addressed the inherent power of a court to extend time for procedural compliance under CPR rules and the Civil Procedure Act, even in consent orders. This principle was used to argue that the court retained discretion to grant extensions post-consent, though the majority held that the specific terms of the consent order precluded such relief in this case.

Precedent Name

• Gogardhan v Barsati
• Brooke Bond Leibig (T) Ltd v Mallya
• Periasami Asari v Illuppur Penchayat Board
• Mungai v Ndaba
• Flora Wasike v Destimo Wamboko
• John Ndungu Mbugua v Muchoni Gikonyo

Key Disputed Contract Clauses

• The default clause (clause c) in the consent order automatically vacated the prior judgment-setting aside orders if any term was not met. This clause was triggered when Gateway failed to comply with the 14-day deadline, forming the basis for the respondent's argument that the court had no jurisdiction to extend time.
• The 'leave to apply' clause (clause d) in the consent order permitted parties to seek court intervention for extensions of time. This clause was central to the dispute over whether the court retained jurisdiction to extend the 14-day deadline for filing the deposit slip, despite the parties having freely entered into the consent order.

Cited Statute

• Civil Procedure Act
• Code of Civil Procedure Act
• Interpretation and General Provisions Act

Judge Name

• E. M. Githinji
• R. S. C. Omolu
• Alnashir Visram

Passage Text

• The consequence of failing to file and serve the certified copy of deposit slip as stipulated in clause (c) of the consent orders could only have been penal.
• In my view a consent or compromise reached by parties is, when recorded and signed by the court merged or subsumed in the judgment or order of the court. It becomes a judgment or order of the court. The time stipulated in such a consent order or judgment becomes the time fixed or granted by the court and the court would generally have discretion to enlarge such time in furtherance of the ends of justice.
• I disallow this appeal with costs to the respondent.

Damages / Relief Type