Connect with us

Business News

KCAA to pay Busia plane crash company Sh1.3bn




Kenya Civil Aviation Authority (KCAA) building at JKIA. FILE PHOTO | NMG 

The Kenya Civil Aviation Authority (KCAA) is set to pay a heavy price for suspending the operating licence of a private airline following a 2003 air crash in Busia that killed a Cabinet minister.

The aviation regulator has to pay African Commuter Services more than Sh1 billion after the Supreme Court, in a December 7 judgment, upheld the lower court’s finding that it illegally suspended the airline’s licence.

The Supreme Court decision also means that KCAA has lost all avenues of appeal. A five-judge Bench said it was not persuaded that KCAA’s appeal raised any matter of general public importance to warrant a hearing in the apex court.

The then Transport minister suspended African Commuter Services’ licence following the accident in Busia that killed the Labour minister Ahmed Khalif and injured other dignitaries.

Mr Khalif and the two pilots flying the plane died in a nearby hospital shortly after the 5 p.m. accident while three other ministers — Raphael Tuju (Tourism), Linah Kilimo (Office of the President), and Martha Karua (Water) — were later airlifted to Nairobi with injuries.

The officials had attended a homecoming party for then vice-president Moody Awori at his Funyula home.

The High Court in 2008 awarded the airline the hefty amount for loss of revenue, a decision that was upheld by Court of Appeal and ultimately at the Supreme Court.

“The applicant has not demonstrated how failure to mitigate damages by the 1st responded comprises a matter of general public importance,” the Supreme Court said before it dismissed the suit.

KCAA is also set to bear the legal cost incurred by the airline in its defence of the case.

The decision brings to a close a 15-year legal battle, even as it opens another phase for KCAA to find means of settling the claim.

The Busia accident occurred on January 24, 2003 as the 22-seater Gulfstream One plane took off from a local airstrip. The then Transport minister, John Michuki, cancelled African Commuter Services’ licence and rejected a plea by the airline to reinstate it, prompting the firm to file a suit in November 2003.

African Commuter Services told the High Court that despite participating in the commission of inquiry that was established to investigate the cause of the accident, its plea to be given the official report of the inquiry was rejected.

The company asked the High Court to order the Transport minister to release the report on the cause of the plane crash, reinstate its licence and award it special damages of Sh1.34 billion, general damages and interest.

Justice Roselyn Nambuye on December 18, 2008 ruled in favour of African Commuter Services, and directed KCAA to share the report with the firm within 30 days of the decision, even as she awarded the airline Sh1.4 billion in damages.

The judge however declined to reinstate the license on grounds that it can only be issued after an audit and assessment of compliance with statutory requirements.

KCAA moved to the Court of Appeal seeking to quash the decision on grounds that as the regulator, it took the decision to suspend the airline in the interest of the general public.

The appellate court rejected the appeal but revised the damages to Sh363 million plus costs and the interest accrued since 2003, prompting KCAA to move to the Supreme Court.

The costs and interest have since been accruing and are expected to have topped more than Sh1 billion, including the legal costs the airline incurred during the 15-year court battle.

The Court of Appeal agreed that the airline had lost revenue and awarded it Sh110 million for gross turnover average, Sh93 million for loss of aircraft 9XR-AL and 9XR-A as well as Sh67 million for another aircraft 9XR-AB.

African Commuter Services also won Sh21 million for leasing instalments it had paid for aircraft 5Y-EMK and Sh10 million for another 5Y-EMK. The company was further awarded Sh50 million for consequential losses and Sh10 million for aggravated damages.

African Commuter Services had also sought permission to move to the Supreme Court where it wanted a determination as to whether the KCAA’s decision to suspend its Air Operator’s Certificate (“AOC”) was in public interest and whether the firm’s AOC expired during the suspension, a request that the Court of Appeal rejected.

The Supreme Court in its decision noted that the intended appeal did not raise any issue of law that required clarifications.

The judges further ruled that the firm had not demonstrated how determination on the issue of expiry of licence was of public importance and declared that the order stopping execution of the judgment stood vacated, paving the way for the airline to seek the payment.

African Commuter Services had following the 2014 Court of Appeal victory gone back to the High Court for orders compelling KCAA to pay the award.

KCAA told the High Court then that the award would cripple its operations and expose it to sanctions by the International Civil Aviation Authorities.

The regulator subsequently sought a stay of execution of the judgment at the Court of Appeal where it once again lost the case.