Uhuru Highway Development Ltd v Central Bank of Kenya & 2 others [1995] KECA 140 (KLR)
The bottom line
#Kenya's Court of Appeal dismissed Uhuru Highway Development Ltd's bid to stop the sale of the Grand Regency Hotel, because the company hid key facts from the court when getting its emergency order.
What this practically means
#Executive summary
#Key legal issues
#Duty of full and frank disclosure on ex parte applications
UHDL deliberately concealed the dishonoured cheques, the 28th November 1994 repudiation letter and the statutory notice; the ex parte order was properly set aside
The applicant annexed three cheques but did not reveal that two had been dishonoured, creating a false impression of payment; it withheld the letter showing Pattni had repudiated the 29th September 1994 agreement and concealed service of the statutory notice. The court endorsed setting aside orders obtained on a misleading affidavit and observed judges should grant ex parte injunctions only in exceptional cases.
Test for injunction pending appeal under rule 5(2)(b)
The applicant failed both limbs: the intended appeal was not arguable and damages were an adequate remedy, so no nugatory prejudice arose
The court restated the Githunguri principles of arguability and nugatory-ness. On arguability it found the concealment findings and merits fatal; on nugatory-ness it accepted CBK's capacity to pay damages for the hotel, so the appeal could not be rendered nugatory by the sale.
Restraining exercise of statutory power of sale
A chargor cannot obtain an injunction merely by disputing the amount due; default and proper statutory notice were established
The court applied Halsbury and Bharmal Kanji Shah: the mortgagee is not restrained merely because the amount due is disputed. Default was undeniable, the notice complied with the Transfer of Property Act in essential respects, and the last-known address was properly served.
Illegality as a defence to enforcement of security
A party cannot resist enforcement by pleading that the public funds it received were paid in breach of the law
Omolo JA held that even if the CBK payments to Pattni breached the Central Bank of Kenya Act, the applicant who benefited from public resources could not invoke that illegality to retain the gains, as that would reward looting of public funds.
Movables not covered by the charge
The charge covered only the land and buildings; CBK could not lawfully sell the hotel's furniture and chattels under it
Kwach JA noted clause 7(c)(ii) of the charge treated furniture and chattels as the chargor's, and CBK held no debenture over movables; had the application been founded on that ground alone he would have granted the injunction. But the application challenged the charge itself, which was prima facie valid.
Legal principles established
#- An ex parte applicant owes the court a duty of full and frank disclosure of all material facts, failing which the order will be set aside and the court may decline to hear the merits at all
- On rule 5(2)(b) applications the test is that the appeal is arguable and would be rendered nugatory if unsuccessful
- A court will not restrain a mortgagee/chargee from exercising its statutory power of sale merely because the amount due is in dispute
Court orders
#- 1.The application under rule 5(2)(b) for a temporary injunction pending appeal is dismissed
- 2.Costs of the application to the Central Bank of Kenya
- On appeal from
- High Court of Kenya at Nairobi
- HCCC No 29 of 1995
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
Cite this brief
#Cite this brief
Caselaw, "Uhuru Highway Development Ltd v Central Bank of Kenya & 2 others [1995] KECA 140 (KLR)", Case Analysis (1995). Civil Application No NAI 140 of 1995 (65/95). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1995/140/eng@1995-07-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.